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Tuesday, October 17, 2017

Punta Colonet Stirs up the Strategic Pot again

Posted to Martin Rushmere (by on November 1, 2009

If it goes ahead, the US will muscle in

Like poison oak, the issue of Punta Colonet port has flared again. Mexico's answer to Los Angeles/Long Beach has called for "interested parties" in the project to submit proposals by tomorrow, which has set off a new round of dissension and controversy.
Crime, drug running, floods of illegal immigrants, safety and pollution are the main concerns of the industry's reactions. Very few observers comment on whether the project makes economic sense.
Which is strange. Depending on whom you talk to, original estimates were for the Baja California port to handle about 2 million to 4 million TEU a year in its first phase. "Ludicrous" and "wishful thinking" summed up the feelings in late 2008 when the first bid specifications were announced, with some observers saying that 1 million was the right size.
Port authorities have done just that -- scaled down the forecast to about 1 million TEU, because of the world slump  – yet no one is saying anything. The concession will involve constructing and operating a railway line, providing rail transport facilities and related services, and building the port. The Mexican government is sticking to its condition to bid out construction along with a 45-year operating lease.
The inescapable conclusion is that the industry does acknowledge that the port has practical merit, but that "political dreaming" bedevils reality. Four corporate groups are said to be interested, including CMA CGM and Hutchison Port Holdings, but skeptical opinion is that practical details are so scarce that the scheme cannot  be taken seriously. .
Step forward Los Angeles and its San Pedro waterfront plan, first mooted six years ago. So far, only the environmental  details have been published (and they are a mind-numbing exercise, take it from me). Yet no skepticism is evident there.
Also missing from the debate is recognition of political reality in Mexico's northern neighbor. This dictates that if Punta Colonet is built, there will have to be a US commercial involvement, no matter who gets the contract. In addition, the ace in the hole will be the railway link to the US – which is essential for the port to become a success. All sorts of "logistical" problems will crop up if US companies are left in the cold, while proposed freight rates will be hugely expensive.
This brings the project full circle to the first consortia put together when the scheme was originally announce. These were made up largely of US railroad and engineering companies, which lost interest and disbanded when officials appeared to go to sleep whenever the phrase "Punta Colonet " was mentioned.
However, this loss of interest was also due to the railroads knowing their cooperation is vital for success. They are waiting for definite progress – when their interest will again revive.
Ports are far too important to be left to other countries to build and operate, it seems.

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