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It's full speed ahead for Mexican seaport

Calderon will open bidding for infrastructure deals today. The project may transform the village of Punta Colonet.

August 28, 2008|Marla Dickerson | Times Staff Writer

MEXICO CITY — Mexico's government is setting sail with the largest infrastructure project in the nation's history, a $4-billion seaport that it hopes will one day rival those of Los Angeles and Long Beach.

President Felipe Calderon is scheduled to travel to northern Baja California today to open bidding on a development that his administration hopes will catapult Mexico into a major player in North American logistics.

Plans call for the construction of a massive port in the tiny coastal village of Punta Colonet, about 150 miles south of Tijuana, along with new rail lines to whisk Asian-made goods north to the United States. Mexico's aim is to snatch some Pacific cargo traffic from Southern California's ports, whose growth is constrained by urban development and environmental concerns.

Punta Colonet is expected to have a capacity of 2 million shipping containers annually when it opens in 2014, Mexico's transportation secretariat told The Times But officials envision it ultimately handling five times that amount. Last year, the ports of L.A. and Long Beach handled 15.7 million containers combined.

The massive development is to be privately funded, with the first phase estimated to cost $4 billion to $5 billion. The government is expected to award the 45-year concession in 2009.

A number of major players are expected to vie for the project, including Mexican billionaire Carlos Slim Helu, the world's second-richest man. Slim's infrastructure company, known as Ideal, has teamed with Mexican mining and railroad giant Grupo Mexico and New Jersey-based terminal operator Ports America Group to make a run at the deal.

"We've spent a lot of years working on this," said Miguel Favela, head of Mexican operations for Ports America. "It's going to make Mexico . . . much more competitive."

About 30 million shipping containers crossed the Pacific Ocean last year, a flow that increased about 10% annually in the last decade. A weak U.S. economy has slowed the trade, but experts predict it will rebound.

With shippers increasingly worried about congestion at L.A.-Long Beach, Punta Colonet has emerged as an attractive alternative. It's close to the United States. It possesses a wide, natural harbor. And it's in a lightly populated area offering room for expansion.

When Calderon visits the dusty hamlet of about 2,500 people today, he is expected to talk about the big changes in store. The village will need extensive upgrades to its roads, housing, electrical grid and water supply. State and local officials are planning for a city of about 200,000 to spring up around the port.

The changes envisioned are alarming environmentalists, who worry about the potential destruction of the area's plants and wildlife. But the farmers who scratch out a living there are thrilled at the prospect.

"What we need is employment for our kids," said Jesus Lara, representative of several peasant landowner groups that are eager to sell. "Everyone is excited. Having the president come to your town is like winning the Lotto."

But whether Punta Colonet turns out to be lucrative for Mexico won't be known for years. Competitors up and down the Pacific coast are in the midst of major upgrades. Panama has begun a $5.3-billion expansion of its landmark canal. Canada's Prince Rupert port in British Columbia began speeding containers to the American heartland by rail last year and is planning a major expansion.

Little of the cargo bound for Punta Colonet will stay in Mexico, making the port vulnerable to the whims of shippers, who can choose other routes to the U.S.

"Nothing is guaranteed," said Asaf Ashar, research professor with the National Ports and Waterways Institute in Washington. "It's a big risk."

Building a seaport from scratch would be difficult enough. But the overland transportation piece is likely to make or break Punta Colonet. The deal is being structured as a joint port-and-rail project, requiring terminal operators, railroads and construction companies to team up in consortia to win the bid. The railroad's ultimate route and U.S. crossing points will depend on which railway operator is chosen and how it manages to link up with existing rail networks on both sides of the border.

Union Pacific Corp. of Omaha and Fort Worth-based BNSF Railway Co. control the U.S. side of the tracks at most of the key U.S.-Mexico border crossings. Striking a deal with one of those companies to get the cargo to the American side will be crucial, said Paul Bingham, managing director of the global trade and transportation practice for Global Insight, a Massachusetts-based consulting firm.

"They have the ability to essentially choke off that port," Bingham said.

BNSF spokesman Patrick Hiatte said Wednesday that the company was "very interested" in the Punta Colonet project. He declined to say with whom the firm might collaborate to make a bid.

Union Pacific could not be reached for comment. The company earlier had teamed with Hong Kong-based Hutchison Port Holdings to make a run at the project, but that alliance dissolved last year.

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marla.dickerson@latimes.com

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