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

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