Port Colonet: Future challenge to Los Angeles / Long Beach?

February 19, 2008 by SwizStick  
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IF it can become a reality. As this news article rightly states “It’s also, for now, just a dream.” But that dream has some folks eagerly awaiting the arrival of a competitor to the high cost, highly regulated, heavily congested Los Angeles / Long Beach port complex while others are nervous about the idea of business being siphoned away to Mexico. This is an excellent overview of the Port Colonet port project being proposed in Baja, Mexico:

But the project has cleared several important hurdles, including a $1billion commitment from the Mexican government, political support from national, regional and local bureaucracy, and the resolution of important and often complicated land-use issues.

Plus, there’s growing interest from shippers and retailers concerned about growing costs associated with seaports in California and elsewhere.

“The time is right for this project,” said Ernesto Ruffo, a well-connected former Baja governor and northern border czar who founded Puerto Colonet Infraestructura (PCI), an international consortium of developers and shipping interests, to support the project.

“The ports of Long Beach and Los Angeles are getting crowded, the infrastructure is congested and people are looking for lower costs and efficiencies.”

We’ve briefly mentioned this project in the past here, here, and here. Port officials quoted in the article don’t seem too concerned about the possibility of a Port Colonet. But I agree with the sentiments of port related trade groups:

“Every rational person understands the need to protect the environment, but at a time when the economy is sputtering and Americans are losing their homes and struggling to pay bills, policymakers are practically stepping over each other in a rush to add more fees and surcharges to the movement of cargo through the ports,” Hein said. “These rising costs make Mexico an appealing alternative.”

A trade group representing ocean carriers said uncertainty about capacity at local ports and rising costs have already led to diversion from Southern California.

Michele Grubbs of the Pacific Maritime Shipping Association cites statistics showing that while volumes in Long Beach-Los Angeles were flat in 2007, they grew by 11percent in Houston and 20 percent in Savannah, Ga., ports fed by Asian trade moving through the Panama Canal. The PMSA represents most major West Coast ocean carriers and terminal operators

In addition, shippers are expected to increase volumes through Prince Rupert, Canada, in coming years as that port increases capacity.

“Cargo owners want reliable service at a competitive cost without complications or uncertainty and, like all business interests, cargo seeks the lowest cost and most efficient ports,” Grubbs said.

Grubbs said recent adopted or planned regulations affecting Long Beach-Los Angeles from local and state officials are of particular concern.

The big question is if and when Port Colonet can become a reality. The second question is how much business can they really handle once they get up and running. If they aren’t able to handle sufficient volume in an efficient manner, then perhaps the ports of Southern California don’t have to worry. But it’s true that cargo will follow the path of least resistance, everyone I have talked to concerning the Ports of Los Angeles / Long Beach would seriously consider alternate routings if they were available. If Port Colonet – or any other West Coast port for that matter – can fit the bill, then Southern California better watch out.

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