James F. Mahoney, Attorney
Commentaries
 
     

March 2016

Nearby Mexican Ports Altering Western Truck Routes

Los Angeles and Long Beach turn times are causing shippers to look elsewhere to land cargo. What does this mean to you?

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The average turn time for southern California terminals is now more than 90 minutes. And you ask, “How does this affect my costs – how much will shippers pay for the ‘convenience of California?'” and “Who would ever want to be a contract dray driver now?” considering these slow turns deliver meager pay on leased or owned trucks that cost so much to comply with California and Port clean air rules. It’s no wonder the Teamsters are having so much success in the short term… That’s short term.

Who will pay? Shippers, cargo owners, motor carriers.

Shipper Alternatives?

The Mexican port of Lázaro Cárdenas is home to a deep-water port handling containers, dry bulk and liquids. APM’s new Terminal 2 project has direct access to US and Mexican corridors handling a million TEU’s. The US is the destination of 78% of Mexican exports, and also provides 49% of Mexico’s imports.  The U.S. and Mexican railroads pass freight from one jurisdiction to the other at six major border crossings. The U.S. sides of these crossings are in San Ysidro and Calexico, Calif.; Nogales, Ariz.; and El Paso, Eagle Pass, and Laredo, Texas.

We saw Kansas City Southern play this port more than ten years ago, gearing up their Mexican sub to bring direct rail access to Texas and all up into the Midwest. But why should you not think about more western crossings?

There’s also the small Port of Ensenada in Baja that’s siphoning cargo bound for the maquila manufacturing operations further inland in Mexico and the US.

Each offers transportation corridors to California, Arizona, and Nevada, bypassing the Los Angeles Basin and its problematic labor, over-the-top regulations, and expensive breakbulk warehouses.

How May This Affect Your Transportation Business?

Your customers will be looking for transport cost reductions. They may already be using Mexican ports. You may want to consider an alliance with a Mexican motor carrier. I can help with that.

If global trade is not currently part of your business, 2016 may be the year to think and act beyond U.S. borders. If you are already doing business internationally, that’s good, because approximately 95 percent of the world’s consumers live outside the United States, and the IMF estimates 87 percent of all economic growth will occur in the next five years.

The rise of e-commerce, combined with advances in shipping and logistics, allows even small organizations to reach customers abroad. If you can help the transportation needs of the nearly 300,000 American businesses that presently engage in global trade, you’re on the right track.