Mexico sets container port investment priorities

Published on Monday,01 July 2019

Facing steady mid-single digit volume growth, Mexico’s federal ports agency will focus $2.6 billion in private and public investment over the next five years on expanding two of the country’s largest ports — Veracruz and Manzanillo — and the far smaller port of Progreso.

Remarks at a Mexico City trade show by Hector Lopez Gutierrez, coordinator general of the ports and merchant marine, offered a rare view of how President Andres Manuel Lopez Obrador (AMLO), who took office in December, plans to approach port investment. But Gutierrez gave little details on what type of investments would be prioritized. 

The most specific proposal was the intent to expand Manzanillo in the Lagoon of Cuyutlan, apparently a reference to a plan discussed by port authorities in the past to create additional capacity in a zone controlled by the port authority just outside the existing port. Manzanillo has struggled with truck congestion, and was described as “saturated” in a report last year by the Mexican Navy Institute for Strategic Research, an assessment echoed by some shippers.

The announcement by Gutierez came a few days before the arrival Monday of the first vessel in service to stop at thebrand new container terminal built by Hutchison Group in the Port of Veracruz, on the Gulf Coast. The 6,000-TEU CMA CGM White Shark stopped at the new terminal around 1 p.m., on the Victory Bridge route from North Europe to Veracruz and Altamira in Mexico, before heading to Houston, New Orleans, and Charleston, and then returning to Europe.

Growing cargo volumes

The opening of the 1.2 million-TEU, $450 million container terminal is the first phase of a $1.5 billion upgrade of the Gulf Coast port that was the most prominent project in a package of $5.2 billion in public and private funds created by AMLO’s predecessor, Enrique Peña Nieto. The package was designed to improve the maritime system to handle the growing logistical demands from rising cargo volumes and the country’s rapidly growing manufacturing sector, especially its auto factories.

That growth was demonstrated by the fact that the Mexican ports of Manzanillo, Altamira, and Lazaro Cardenas were among the fastest growing ports in North America in 2018, in the annual ranking compiled by JOC.com. Cargo through Mexican ports increased by  8.7 percent in 2018, over 2017, to about 5 million loaded TEU, according to the Mexican Secretariat of Communications and Transportation (SCT), which oversees the ports. That followed a 12 percent increase in 2017 over the year before, the figures show. But that grow slowed this year, with the ports handling 2.05 million TEU in the first five months of 2019, a 4.5 percent increase over the same period in 2018, SCT figures show.

Focusing multi-modal resources

The announced investment plans for Manzanillo, Veracruz, and Progreso accounted for about half of a total of 100,000 million pesos ($5.2 billion) in investments announced by Gutierrez, with the rest going to reactivate other parts of the shipping industry in Mexico, including development of the merchant marine system and construction of new ships.

A presentation that accompanied Gutierrez’s comments offered a diagnosis that underpinned the project proposals. It said there was “no focus” in the country’s “multi-modal transportation infrastructure.” It added that the connectivity between the “ports and the centers of production and consumption don’t correspond to the criteria of efficiency, effectiveness and security.”

The lack of details on the Manzanillo expansion frustrated Fortino Landeros, director general of Contecon Manzanillo SA de CV, which operates one of three container terminals in the port. He said the terminal has its own expansion plan under way, which will expand the terminal’s capacity from 1.2 million TEU at present to 1.6 million TEU by 2020, and eventually 2.2 million TEU.

“We are not in agreement as we have no details [on] how this new port will impact our concession of over 25 years,” he said. “We also believe [the] coordinator [Gutierrez] should meet with current concession owners to discuss construction of [the] new port.”

Prior to Gutierrez’s comments, the president’s main port-related focus was a project to upgrade a small rail link between the Pacific and Gulf coasts in southern Mexico known as the Isthmus of Tehuantepec, which links the ports of Coatzacoalcos on the Gulf Coast and Salina Cruz on the Pacific Coast. Supporters say the project could create an alternative transportation route through which to send cargo between the two coasts, and could feed the port of Veracruz, in doing so boosting the local economy.

Source: JOC