Friday, August 27, 2010

Punta Colonet Background

*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 increased dramatically 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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*This entry is excerpted, adopted and updated from “A Concise Background and History of the Punta Colonet Multimodal Project in Baja California” by Ryan Forster, Dec 15, 09; Trans-Border Institute, U. of San Diego

Monday, August 23, 2010

Union Pacific Confirms It Won't Bid on Punta Colonet Rail Link

Back on June 18, we wrote:

When the rail line is built from Mexico’s Punta Colonet mega-port to a U.S. “inland port”, Union Pacific won’t be involved. That’s the word from Zoe Richmond, director of public affairs and corporate relations at Union Pacific. Richmond said that Union Pacific is not interested in building in Mexico. “We had a lot of pushback at the local level, at the state level and at the congressional level,” Richmond said. “We had a lot of ‘not in my back yard’ attitude.” 

This blog has a fresh confirmation of Union Pacific's stance. An August 22 email from Richmond said succinctly, "The information in this article is correct and the company's position hasn't changed."

Either of two other railroads that presently operate in Mexico could win the bid for the Punta Colonet-U.S.A. line: Ferromex or Kansas City Southern de Mexico (KCSM).

Friday, August 13, 2010

Los Angeles Times: Mexico Preparing to Open Bidding on Punta Colonet Mega-Port

The LA Times has posted an 8-picture photo-story on the coming mega-port at Punta Colonet, Mexico. Idyllic beach and bay pictures accompany text that includes these items:
  • Mexico's government is preparing to open bidding on what would be the largest infrastructure project in the nation's history, a $4-billion seaport that could transform this poor village south of Tijuana into a cargo hub to rival the ports of Los Angeles and Long Beach. 
  • With the West Coast’s largest port complex, L.A.-Long Beach, constrained by urban development and environmental regulations, shippers are searching for alternatives.  
  • Punta Colonet, a one-light Baja town of 2,500, will need to be reinvented as a modern city with massive upgrades to its roads, housing, water system and power supply if the seaport project goes forward. State and local officials are planning for a city of about 200,000 to spring up around the port. 
  • A thick fog bank looms offshore from the natural bay at Punta Colonet that government leaders envision as the site of a new, $4-billion seaport that would handle a large chunk of the tens of millions of containers that cross the Pacific each year. One booster says the facility could one day rival the ports of Los Angeles and Long Beach, which last year handled 15.7 million containers combined.
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Monday, August 9, 2010

Expectations Build for September Release of Punta Colonet Mega-Port Contract Bid Details, the avowed leader in “global market intelligence”, has climbed on the Punta Colonet-is-about-to-happen bandwagon, issuing a lengthy press release to say that “Mexico´s off-on Punta Colonet port project appears to be back on track.” Their analysts point to the latest announcement from Mexico´s secretary of communications and transport, Molinar Horcasitas, saying the project will go ahead in September 2010. A timetable, to be released shortly, will name the concessionaires for the tender, with four companies expected to be drawn from a group that includes Mexican construction firm ICA, Hong Kong terminal operator Hutchison Port Holdings, Union Pacific railroad, and California-based cargo terminal operator MTC.  
It appears that “recent signs of a revival in both the economic climate and regional port throughput may have reawakened investors´ appetites, leading to the government´s decision to re-launch the tender,” CompaniesAndMarkets reports. The firm’s last comprehensive report on Mexico Freight Transport was issued in November 2009 and costs US$547.

Friday, August 6, 2010

Mexico Moving Closer to Construction of Punta Colonet Mega-Port

In today’s weekly government activity report, Mexico’s Secretary of Environment and Natural Resources advises that his agency has signed, along with the State of Baja California and the municipality of Ensenada, a “Coordination Agreement in order to lay the groundwork for the implementation of the process leading to the formulation, approval, issuance, execution, evaluation and modification of Local Ecological Program of Punta Colonet on the West Coast of the Municipality of Ensenada." In view of the statement two days ago by the president of the Logistics Cluster of Baja California that Mexico’s Ministry of Communications and Transportation (the SCT) will start the contracting process for the mega-port next month, today’s announcement suggests that all agencies are ramping up activities towards project launch. (The SCT had said in January 2010 that the bidding process would be launched "around July" of this year, and that construction would take 3-4 years to complete.)

Thursday, August 5, 2010

Mexico To Start Punta Colonet Mega-Port Contract Process in September?

In his weekly briefing yesterday, Humberto Inzunza Fonseca, president of the Logistics Cluster of Baja California (Clúster de Logística de Baja California), said that Mexico’s Ministry of Communications and Transportation (the SCT) will start the multi-billion-dollar contracting process for the long-delayed mega-port at Punta Colonet next month.  He said the SCT has not yet determined the route for rail service from the container port to the U.S., but is considering Mexicali, Tecate and San Luis Río Colorado as possible crossing points. He added that Grupo Slim and CMA remain extremely interested in bidding on the massive construction and operating contracts. 

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