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LONG BEACH - Nearly a year after announcing an ambitious plan to tap into the booming flow of trade between the U.S. West Coast and Asia, Mexican authorities have renewed a push to build a massive container port in Baja California.

The $5 billion project, proposed for a natural deep-water harbor near the small west coast fishing village of Punta Colonet about 275 miles south of Los Angeles, may one day compete with Long Beach and Los Angeles for a share of containerized freight.

In August, the Mexican government opened bidding for private development of port terminals and docks, and completed land-use and right-of-way negotiations with landowners in the area. They've also surveyed rail routes leading to the U.S. Southwest, and have organized a consortium of legal experts to help swiftly navigate trade, property and customs regulations.

Then, on Oct. 7, Mexico's Consul General in Los Angeles, Juan Marcos Gutierrez, participated in a panel discussion with port officials from Long Beach and Los Angeles to discuss the effort, and will be meeting with top West Coast port officials again this week at a retreat in Manzanillo, Mexico.

"This is the most ambitious infrastructure project of our time," Gutierrez said during the forum at Cal State Dominguez Hills. "It's something that's needed not only for Mexico, but for the regional economy."

Mexico believes that a port in Colonet would create up to 58,000 permanent jobs in Mexico, help upgrade the country's railway system and would, in turn, provide a cheaper, more efficient freight movement system for U.S. consumers and retailers.


It's expected that more than 95 percent of goods shipped to a Colonet port would be bound for the U.S. market via railway and through border crossings in Yuma, Arizona and El Paso, Texas.

Union Pacific, which controls an existing rail link along the Southwestern U.S. border, has been in talks with Mexico to participate in the project, but no deals have yet been signed.

As for marine terminal development and operation, at least one major international developer has expressed interest. Hutchinson Port Holdings, based in Hong Kong, is believed to be the project's most likely developer, but has yet to commit. Hutchinson could not be reached for comment, but Mexico is offering a 45-year terminal management concession to the highest bidder.

The Punta Colonet project, in the works for more than two years, seeks to capitalize on the estimated 30 million freight containers sent from Asia to North America annually - about 75 percent of which goes through ports in California, Washington and Oregon.

Port would serve U.S. market

Mexico's goal is to capture about 6 million containers annually at Punta Colonet, then ship them via rail to points within the U.S. Very little of the cargo would be destined for Mexico's domestic market, which is served primarily by ports in Manzanillo and Lazaro Cardenas.

The Baja port is the latest challenge to Long Beach-Los Angeles' longtime role as America's busiest and most lucrative seaport. The twin ports currently handle more than $350 billion worth of cargo annually, a figure representing about 30 percent of the nation's maritime trade worth.

Competition grows

The ports are already being challenged by a new container port in Prince Rupert, British Columbia, expansions in Tacoma, Washington and Oakland, California and a modernized Hampton Roads in southeast Virginia. In addition, the expansion of the Panama Canal - now under way - allows passage for larger container ships from Asia to ports in the Gulf.

But there remain cost and time-prohibitive barriers for sending Asia-originated freight through the Panama Canal. It takes an average 21 days to ship cargo from China to the U.S. East Coast, but only 12 to the West Coast. With high energy costs, the extra nine days at sea makes much such trade prohibitive.

By building an alternative western port and offering cheaper labor and less costly tariffs, Mexico hopes to lure shippers whose goods would have passed through California or the Panama Canal and destined for the American Midwest.

"The market we're (trying for) is east of the Rockies," said Gutierrez. "It's a share of that 45 percent or so of freight that (Long Beach-Los Angeles) carry that is headed inland."

Professor Kaye Bragg, a Cal State Dominguez Hills economics professor, said the Punta Colonet proposal only makes sense if projections of growth are on the mark. Based on 20-year trends, economists expect the volume of containerized goods between Asia and Long Beach-Los Angeles to surpass 36 million 24-equivalent containers, or TEUs, by 2020.

Therefore, if Punta Colonet siphons six million TEUs from Long Beach-Los Angeles, it represents only a share of future growth, and not a chunk of current volume - potentially making competition less hostile and more collaborative.

Don Snyder, the Long Beach port's trade relations director, said that although labor costs and regulatory pressures will likely be less in Mexico, developers will need to recoup their investment costs, which may drive up transportation and dockage prices to levels comparable in Southern California.

"Someone's going to have to amortize the cost of building that rail track, building those terminals, building the infrastructure," Snyder said. "When you add those costs in, plus the transportation costs of using U.S. rail inside the States, is there a great savings?"

Long Beach Harbor Commissioner Mario Cordero, who visits Mexico this week to discuss regional trade, says projects like Punta Colonet represent the competitive realities of global trade.

"Everybody is developing megaports ... you see it in Asia, Europe, South America," Cordero said. "People are looking for their share. The difference this time is we have a big project being developed next door."

Snyder sees it as a stimulus to continue improving local port facilities and transportation links.

"Competition is a good thing because it keeps everyone sharp," Snyder said. "Our goal is to have the most efficient supply chain and be a leader in terms of helping introduce technologies that save fuel, pollute less and make the most economic sense for our customers."

Gustavo Torres