Ensenada Launches Container Ship Port

Dwarfed by the Long Beach-Los Angeles hub, Ensenada’s new container port and steamship service pose no threat to the hegemony of its neighbors to the north. If all goes well, Ensenada will move all of 35,000 containers this year--or half of 1% of the cargo handled in Southern California in 1998.

Still, the launch of Asia-to-Mexico container freight service here this month marks a turning point in Baja California’s burgeoning industrial evolution.

By adding a vital piece of transportation infrastructure to a rapidly modernizing region, the port could eventually extend Baja’s trade links to South America as well as Asia, setting the scene for continued growth.

The new port could also hasten the metamorphosis of sun-dappled Ensenada (population 360,000) from a sleepy weekend tourist destination and agricultural center to a bustling city directly linked to the global economy.

That’s assuming the port can deliver, as promised, cost and time savings on freight bound from Asia to Baja’s booming maquiladoras, the 1,000 foreign-owned factories that manufacture an array of goods, typically for the U.S. market.

Until now, companies such as Sony, Samsung, Matsushita and Sanyo that manufacture in Baja have imported much of their raw material and components through the ports of Long Beach and Los Angeles, then trucked them down for assembly in factories in Tijuana and other Baja cities, a process fraught with delays and red tape.

With the inauguration of the Ensenada container port and ocean cargo service by a joint venture of Transportacion Maritima Mexicana and American Presidential Lines, importers can now truck cargo directly from Ensenada to the maquiladoras. It’s an option that freight forwarders say can save two to four days and 10% to 15% in shipping and handling costs because shippers bypass the congestion at Long Beach and Los Angeles and avoid U.S. Customs.

“It offers a real alternative for importers and exporters operating in the northern Baja region,” said Jeffrey Thompson, a manager at AEI Ocean Services freight forwarders in Los Angeles, whose clients include several Fortune 500 companies.

Ensenada could see a quick test--and windfall--if longshoremen don’t reach agreement on a new West Coast labor contract by July 1. An International Longshore and Warehouse Union strike could bring the immense tide of West Coast cargo traffic to a halt--and make Ensenada a suddenly vital port.

Betting that Ensenada can pull it off are companies such as Samsung and Daewoo of South Korea and Scripto-Tokai of Japan, which were among Ensenada’s first customers this week.

Their containers were off-loaded Monday night from the giant TMM Quetzal, a $450-million container cargo vessel stretching two football fields in length and capable of carrying 2,500 containers. It is one of six ships in the TMM-APL fleet now calling here once a week.

Thompson said several U.S. electronics and toy companies are also eyeing the port 70 miles south of the U.S.-Mexico border.

Not everyone is jumping aboard, however. Some shippers are reluctant to entrust their cargo to Ensenada’s unproven service. One such skeptic is Dave Akers, managing director of the Cincinnati-based Toy Shippers Assn., a freight management and logistics firm that represents 147 importers.

“We wouldn’t use [the Ensenada port] until it’s a proven service, and my members are not in a position of wanting to prove it,” Akers said. Ensenada was “looked at” several years ago and found wanting, he said, before it underwent its recent privatization and hired an outside manager.

The port is now operated by Philippines-based International Container Terminal Services Inc., which won an open bidding contest against three competitors two years ago. Since Mexico began privatizing its ports, the firm has also won concessions to operate the Veracruz and Manzanillo cargo terminals.

International Container installed two giant container cranes and obtained a commitment from TMM-APL’S Asia-Mexico service to make at least one call per week at Ensenada, providing the region with its first direct link to Asia.

International Container spokesman Gonzalo Ortiz believes Ensenada can quickly capture a majority of the 80,000 containers annually shipped in and out of the Baja maquiladora industry. He also believes that before long, Ensenada should reach its current annual capacity of 200,000 containers per year.

This week, 12O containers were lifted off the TMM Quetzal at Ensenada, a figure that International Container’s Ortiz says could increase to 1,000 per week by the end of the year. But Ensenada port authority officials are considerably more conservative in their projections.

Growth depends on more steamship lines adding Ensenada to their ports of call, which would boost regional trade by facilitating exports of such Baja California products as wine, fish, pork and cotton to Central and South America and Asia. No additional steamship lines have yet committed to Ensenada.

One major obstacle to the growth of Ensenada’s port is the lack of a rail link to the maquiladora matrix in Tijuana and to the U.S. border. A 70-mile, $150-million line has been proposed, but city officials say it is years away.

Although the pace of development is open to debate, Ensenada’s growth seems beyond question. The city now has 75 maquiladoras, including factories operated by Alcoa; guitar maker Fender; and Schlage, the lock maker. The number is growing as foreign firms continue to flock to Baja in search of cheaper labor and to exploit the North American Free Trade Agreement.

To accommodate the growth, Ensenada’s municipal government has earmarked property for industrial expansion and plans a 20-mile highway loop around the city center, economic advisor Rolando Daniels said this week.

Long-delayed financing for a $45-million cruise terminal for the Ensenada harbor has just been approved, according to port marketing manager Carlos Jauregui.

The city also expects to benefit from the recent lifting of the U.S. embargo against Mexican tuna and at least a partial return of the tuna boats that once crowded the harbor, said Victor Nuza, the local delegate of the Baja California state office of economic development.