Mexican Port Hopes to Be Big in Containers : Transportation: Ensenada plans to expand to attract more of the lucrative cargo business. It wants some day to rival U.S. ports.
As a port of call, this town is best known as a scenic but sleepy haven for yachtsmen and tuna boat skippers attracted by the city’s great natural harbor and nearby schools of yellowfin tuna and albacore.
But Ensenada’s port is thinking big these days, emboldened by the growing maquiladora industry and the prospect of a North American Free Trade Agreement.
A proposal being ramrodded by Baja California Gov. Ernesto Ruffo--a former Ensenada mayor--envisions a $100-million expansion that could transform the port 90 miles south of San Diego into a significant competitor in the Pacific Coast ship container cargo market.
Ruffo and other proponents say the expansion would increase the city’s container cargo traffic 15-fold in five years, to 250,000 containers annually from the 16,000 now. That kind of expansion would rank Ensenada with the top 20 U.S. ports.
The promoters of Ensenada’s port--one of five on Mexico’s priority list for expansion--say its geography makes it a natural to fill two important niches: serving the booming maquiladoras along the California-Mexico border and taking on cargo that the much larger Los Angeles and Long Beach ports don’t find lucrative.
Fully 10% of international cargo destined for Mexico is offloaded in U.S. ports, then shipped by truck to the Mexican border.
The percentage is even higher for material and components destined for Mexican maquiladoras. The overwhelming bulk of raw material and parts imported from the Far East for maquiladoras in Tijuana operated by Japanese, Korean and Taiwanese consumer electronics and appliance manufacturers moves through Los Angeles or Long Beach.
Skeptics say Ensenada’s infrastructure of rail and trucking services isn’t good enough to lure customers away from U.S. ports, congested though some may be.
Ensenada also faces competition from other U.S. Pacific ports--including San Diego’s--that see opportunities arising from growing congestion at the Los Angeles and Long Beach ports.
Another disadvantage is that Ensenada’s longshoremen’s union is strong and its members relatively well paid--to the point that cost savings over U.S. facilities would not be great, sources say.
But other industry officials say shippers are increasingly interested in port options. “There is a congestion issue in Los Angeles-Long Beach, and depending on how that’s resolved, the port of Ensenada would become a good alternative,” said Leo Brien, president of the San Francisco-based Pacific Merchant Shipping Assn.
Others say Ensenada could succeed as a major league port simply by grabbing a piece of the maquiladora trade and a reasonable share of future cargo growth.
Despite the recession and limping recovery, international container shipments through U.S. ports should increase 4% this year, after growing between 5% and 10% annually the past decade, said Bill Ralph, vice president of the Journal of Commerce, a New York-based newspaper that follows the transportation industry. He projects a 10% increase next year.
Los Angeles port officials--while disputing that their facilities are choked with traffic--concede that there is a market for an expanded Ensenada port.
“They can take a portion of our cargo, most likely the Mexican or maquiladora- type cargo,” said Al Fierstine, director of marketing at the Port of Los Angeles. “That cargo is growing--not explosively, but our figures are that that cargo is moving and vessels are full inbound and outbound.”
In an interview at his Mexicali office, Ruffo said he will request $70 million in federal aid early next year from Mexican President Carlos Salinas de Gortari--funds that would enable Ensenada to extend its breakwater and deepen its ship channel to take on large container-cargo craft.
Once that’s accomplished, Ruffo said, it will be relatively easy to raise $30 million in private funds to expand shipside platforms, build warehousing and buy huge mobile cranes to load and unload cargo containers.
“A free trade agreement would be a big accelerator, but Ensenada will be growing by itself anyway,” Ruffo said. “It’s only natural. The port will grow faster or slower depending on whether there is a trade agreement.”
Ensenada was initially passed over when, in March, 1990, the Mexican government put four ports on a priority list for expansion: the Pacific ports of Salina Cruz near Manzanillo and Topolobampo near Los Mochis and the Gulf of Mexico ports of Veracruz and Alta Mira.
The government then declared that it would guarantee international investment in the ports to try to help them increase their international cargo business.
Ruffo said he persuaded the government to add Ensenada to the list last March, basing his case on the steady growth of Ensenada’s cargo traffic.