California’s container ports at Long Beach and Los Angeles will be over capacity, even when the Panama Canal expansion Is finished in 2014, says Juan Francisco Molina, Mexican Secretary of Communications & Transportation, and that makes the planned Pacific Coast mega-port at Punta Colonet all the more vital. Speaking on December 9, Molinar not only said that bidding for the mega-port will start in Spring 2011, he also said that the Mexican Government is committed to building the full-scale port it originally announced in 2004 – the 5,000 hectares port facility and city, complete with a power generation plant, a natural gas plant, hotels, industrial and commercial zones, housing, airport, highway and a rail connection to the U.S.
Two days earlier, on December 7, the head of Mexico’s largest railway, Ferromex director general Lorenzo Reyes Retana, said his company and its U.S. partner Union Pacific are actively re-evaluating the Punta Colonet railroad project, based on the Mexican government’s new commitment to completing the mega-port construction. "We must re-examine the ports of Long Beach and Los Angeles, how they evolve, if they develop capacity to meet the additional traffic volumes that are expected, and on that basis will announce a new position” on our intent to bid for the railway construction and operation, he said.
Retana noted that Ferromex had expressed interest in participating the project in 2008, when tenders were announced and the government said it was poised to invest 50 billion pesos in the mega-port. Contracts were to be awarded in September 2009, but the global economic crisis caused the entire project to be put on hold.
Dow Jones is reporting today that Mexico expects container traffic at its ports to rise 26% this year (2010) from 2009 to 3.62 million twenty-foot equivalent units, or TEUs, reflecting a sharp recovery in trade as well as public investments to increase capacity. Numbers were provided by Mexico’s Communications and Transport Ministry. Container traffic at Mexico's ports this year is expected to surpass the previous record of 3.32 million TEUs, set in 2008.
Trade has been a key part of Mexico's economic recovery, with exports in the January to October period rising 32% from a year earlier to $243.31 billion and imports up 30% to $246.11 billion.
The Mexican government will finally launch in 2011 the tender for construction of the long-delayed mega-port at Punta Colonet, on the country’s Pacific Coast, Secretary of Communications & Transport Juan Francisco Molinar announced on November 17.
Punta Colonet will take advantage of the transpacific trade, linking U.S. markets with Asian exporters, and competing with the ports of Long Beach and Panama.
The Mexican government plans to invest at least two billion dollars to develop the container port on more than five thousand acres, located 130 kilometers from Ensenada, and 240 from Tijuana.
Participating in a meeting organized by the Asociación de Terminales y Operadores Portuarios (ATOP), Molinar said that after the global economic crisis of 2009, there has been 30% growth to September of this year. "I think we're on the right track to put Mexico on the logistics platform," he said.
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Jose Rubio Soto, Mexico’s Executive Coordinator of the Punta Colonet Multimodal Project, said yesterday that planning for the mega-port 130 miles south of Ensenada is completed, and construction will begin in 2011. Bids will be accepted in the first quarter of 2011. Speaking at a Tijuana Innovation forum, he said the project is Mexico’s #1 infrastructure initiative, and that 19 companies have expressed interest in bidding on its construction and operation. Depending on the final design that is selected, he said the cost could reach five billion dollars. The port is expected to handle six million containers per year, mostly from Asia and destined for the U.S. and Canada; a new rail line will connect the mega-port with a U.S. trans-shipping center. The project involves 33,000 hectares plus 9,000 in reserve, and envisions port services areas as well as industrial, residential and business zones.
Juan Molinar, head of Mexico’s Communications and Transportation Secretariat, in an interview yesterday with El Financiero, confirmed that improvement in the global economic environment has convinced his government to move ahead with the long-delayed Punta Colonet project. He said the tender for construction bids will be launched soon, and the project will be “scalable”, meaning it will be built in stages, growing over several years to its ultimate capacity of six million containers/year.
We have just received an exclusive update on the status of the Punta Colonet mega-port from Barnard Thompson, editor of MEXIDATA.INFO, a respected e-journal covering Mexico and the Americas with weekly installments of commentary, opinion, news and information. Thompson writes:
While we have not seen or heard much on Punta Colonet in recent months, there has been some open source information of varying degrees of interest -- either at face value or perhaps reading between the lines.
A year ago, in October, when spokespersons for the Mexican Secretariat of Communications and Transportation (SCT) were quoted in news reports, saying that conditions did not appear appropriate at the time for the Punta Colonet "Megaproject," we found it interesting that SCT Secretary Juan Molinar Horcasitas said the project was being "resized" (redimensionado), adding that supposedly this would not reduce the planned capacity but instead allow a more gradual development. It seemed to us that for whatever reasons and/or politics the project was being moved to a back burner as far as the SCT was concerned.
However, in July 2010, SCT spokespersons announced that the ministry is coordinating efforts to initiate the port and multi-module transportation system before the Calderón administration leaves office in 2012. A possible contradiction – or maybe new instructions, yet one that suggests work is being done as a run-up to development and the bid processes.
On August 6, 2010, a coordination agreement was published in the federal Diario Oficial de la Federación that seems to suggest preparations are properly underway. The accord, published by the Secretariat of Environment and Natural Resources (Semarnat), relates to ecological and environmental studies and reports -- including those required in state and local codes, and other requisite work, all of which are part of the processes for the project(s) to move forward. The DOF agreement is signed by the secretary of Semarnat, the governor of Baja California, and the mayor of the Municipality of Ensenada (among others).
In what would appear to be a negative, in September 2010, the State of Baja California legislature passed a so-called "open sky" law. A claimed intent of this legislation is to protect the observatory in the San Pedro Mártir Mountains from lights, and to control light production and intensity that might interfere with astronomical work being done at the observatory. In other words, a serious concern would be the proximity of light from Punta Colonet, one would assume.
Later this month, on October 28 and 29, a major infrastructure-related conference is scheduled in Mexico City, at the Banamex Center. The by all appearances important "Infrastructure Congress" will discuss the Calderón government's "National Infrastructure Plan" (PNI), and one would certainly expect Punta Colonet and the Baja California Multi-module System to be subjects at that event.
Barnard Thompson, editor of MexiData.info, has spent 50 years in Mexico and Latin America, providing multinational clients with actionable intelligence; country and political risk reporting and analysis; and business, lobbying, and problem resolution services.
The Mexican Chamber of Construction Industry reports that from 2007 through the first quarter of 2010, Mexico’s government spent only 17% of the funds budgeted for 395 projects in the National Infrastructure Program. Of that, the largest expenditure (80%) was on energy projects (hydrocarbons), with just 20% devoted to ports, airports, roads, railways and water. This puts the lengthy delay in investment in the Punta Colonet mega-port project in context.
Container traffic at the Port of Los Angeles climbed 25% in August, compared to the year-ago period, reaching its highest level since August 2006. That's proof that the economic recovery has continued in advance of the key Fall shipping season. Loaded inbound containers totaled 399,150, up 23.3%. Overall, the total 763,837 containers through the port last month was the highest monthly total since 790,726 in August 2006. Container traffic through the Port of Los Angeles is up 17.9% so far in 2010, compared to 2009.
Clearly, pressure is building for the Mexican government to keep its promise to begin the bidding process this year for the long-delayed mega-port at Punta Colonet.
American-born Mexican politician and investor Ernesto Ruffo Appel is calling for immediate construction of major infrastructure projects in Baja California, including an international airport in Ensenada, and the mega-port at Punta Colonet. He says that within 15 years there will be a major shift of Mexico's economy from the center of the nation to its Western coast. In remarks yesterday in Tjuana, he said that California is showing signs of strain from the demands on its limited air- and seaport facilities. "The natural place to expand transportation facilities is the wide open expanse surrounding Ensenada," just south of the U.S. border. The new highways, power plants and other structures and systems that will be built to serve the two projects will take Baja California's economy to much higher levels, he said, and the airport and mega-port will add to each project's volume and success.
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*The 1994 North American Free Trade Agreement (NAFTA) moved Mexico from an isolationist to a globalized economy. Trade among the NAFTA countries – the U.S., Mexico and Canada – has increaseddramatically since the agreement. Mexico has benefited tremendously, due to its close proximity to the U.S. and its heavily consumption-oriented society.
Mexico’s Department of Communication & Transportation (SCT) is committed to building a mega-port in the community of Punta Colonet, 65 miles south of Ensenada, Baja California and 150 miles south of the U.S.-Mexico border. Punta Colonet has only 2,500 inhabitants -- subsistence fisherman and farmers.
According to the tender document, the SCT plans to develop a port extending 11 square miles (2,769 hectares); the site is divided into 83 hectares of federally owned land and 2,686 hectares of territorial ocean water. The tender document estimates that construction of the terminal, railways and other infrastructure will cost US$5 billion. Ultimately, the port will handle six million twenty foot equivalent units (TEUs).
Despite the recent economic downturn and the corresponding decrease in NAFTA trade volumes, port expansions in Canada and the U.S. are still underway, and Mexico remains committed to building its mega-port.
In October 2009, the SCT changed the tender document, saying the initial port design was incompatible with current market conditions. The SCT began consulting with industry to reassess market conditions and adjust the design. The SCT now says it will begin the process of contracting for the port in September 2010.
Locating a mega-port at Punta Colonet is an opportunity for Mexico to provide a solution for capacity constraints and high union costs at western U.S. ports, while absorbing the growing trade from China. Punta Colonet represents one of the shortest and most direct routes from Asia to the vast consumer market in the U.S.
The infrastructure required to make the mega-port fully operational includes a commercial port, airport, railroad station, rail lines and utilities, including water, electric power and natural gas. The SCT projects 24,000 construction jobs to build the port, and 59,000 jobs to operate the port and railway. Add to that some multiple volume of jobs in the city of 200-400,000 that will rise around the port. The Megaport will essentially serve as an economic engine for the local Punta Colonet community and its effects will reverberate throughout Baja California and the border region.
The port’s construction and operation will generate significant employment and investment opportunities, which will spur the development of a large city.
After the new tender document is released, the plans for transporting goods from the port via rail to the U.S. border will be decided by the winning bidder. Ferromex, a subsidiary of Grupo Mexicano, operates an existing railway whose path could be connected to run north from Punta Colonet to Mexicali. Ferromex operates a second route, which could connect with Punta Colonet and travel northeast into Nogales, Arizona. Other options include constructing a railway to Yuma, Arizona. The SCT is assessing possibilities for a highway program to move goods by truck.
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