Ensenada: Mexico’s fifth-largest port by container volume

Amid double-digit volume growth, the port of Ensenada, Mexico, is investing $100 million to expand its container capacity in an effort to lure cargo normally moving through the Los Angeles-Long Beach port complex 200 miles to the north.

Hutchison Group’s Ensenada International Terminal (EIT), the port’s only container terminal, last month received two new super post-Panamax cranes as part of an upgrade that will increase the facility’s container storage area, more than double the length of its 1,000-foot dock, and boost the terminal’s annual handling capacity from 300,000 TEU to 400,000 TEU.

The firm is hoping that the proximity of Ensenada to both the US border and a nearby manufacturing sector that includes plants operated by Samsung, Sony, Hyundai, Ford, and LG will bring in customers to take up the extra capacity.

“We are much closer to the industrial centers than Los Angeles and Long Beach,” Hutchison said in a statement. “And we also have an efficient service that can deliver the cargo the same day” to the regional manufacturing sector, the company said.

To succeed, the strategy would necessitate attracting cargo from far larger ports. Long Beach and Los Angeles, each of which sport six container terminals, handle about 30 times as much cargo annually as Ensenada. But shippers could avoid chronic congestion at the two ports, as well as the more than four-hour drive and often lengthy wait to cross the border experienced by truckers serving northeastern Mexico from Los Angeles and Long Beach.

Because US trucks can’t drive in Mexico, and vice versa, southbound cargo is dropped off at the US border and drayed across the border, either direct to its destination, if its near the border, or to another truck, which delivers it. Truckers say the cross border wait could take 20 minutes, but an hour or longer is not uncommon, and the time taken for a southbound load to go through Mexican customs and be released can take less than an hour to several hours.

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Mexico’s fifth-largest port by container volume, Ensenada handled 194,491 loaded TEU in 2018, an 18 percent increase from the previous year, according to the Mexican Secretariat of Communications and Transportation, which oversees Mexican ports. Imports grew by 28.8 percent, and exports rose by 5.3 percent, figures show, capping off a five-year run in which the port’s total loaded cargo volume has soared 125 percent.

Adding to the flow, CMA CGM in February started a weekly service that calls at Ensenada en route to China and Hong Kong after stops in Ecuador, Columbia, and Peru.

EIT, which can handle ships with a capacity of more than 10,000 TEU, hopes to expand its volumes by attracting shippers that use Long Beach and Los Angeles to serve the manufacturing zone of Tijuana and Mexicali, in northeastern Mexico, and even farther afield. Most of Ensenada’s eight services connect with Asia, and the relative ease of getting cargo out of the port should also help lure business, Hutchison said.

During longshore labor disruptions on the US West Coast in 2014 and 2015, for example, the port attracted extra cargo from Los Angeles and Long Beach as shippers looked for alternative routes to get cargo into the US. Ensenada’s cargo volume grew 13 percent year over year in 2014 and another 32 percent in 2015, as some cargo owners opted to keep their shipments flowing through Ensenada rather than routing it through Los Angeles and Long Beach after seeing how fast they could get their goods out of the port.

The port also hopes to attract shippers using Mexico’s other two main Pacific Coast container ports, Manzanillo and Lazaro Cardenas, especially those serving the northeastern border region and southwestern US. Both ports are more than 1,500 miles south of Ensenada and are mostly focused on serving central and southern Mexico. They are also much larger, with Manzanillo handling 2.18 million loaded TEU in 2018 and Lazaro Cardenas handling 864,000 loaded TEU in 2018. Manzanillo is operating at close to full capacity, with no expansion plan imminent, but Lazaro Cardenas has plenty of excess capacity.

Source: https://www.joc.com

Contact Hugh R. Morley at hugh.morley@ihsmarkit.com

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