By Gavin van Marle

The spectre of terminal overcapacity is on the rise in Mexico. A slew of new projects could see terminals on both Pacific and Atlantic coasts scrambling for container cargo, while automotive manufacturers looking for ro-ro capacity are likely to remain woefully underserved.

John Bressi, General Manager of Stevedoring Services of America’s (SSA) Tuxpan terminal, told delegates at last week’s TOC Americas Container Supply Chain event in Cancun that some 70.9 million TEUs of new capacity was set to be built across Latin America – the equivalent of around 70 per cent of the region’s total port throughput last year. “Mexico, Costa Rica, Venezuela, Colombia and Peru have all been identified as trending towards high excess capacity,” he said.

Mr. Bressi is overseeing the development of Mexico’s newest port, at Tuxpan, on the Country’s Gulf Coast, and he admitted that capturing volumes immediately after opening would be difficult. “In the short term it is going to be slow – shippers have to become accustomed to new routes and new services carriers may want to offer,” he said. However, he also claimed that the longer-term dynamics would turn in its favour.

“I think there’s room for growth on the Gulf coast – there are some niche cargoes that are going to start moving out of Tuxpan’s immediate hinterland when we open. At the same time, there are increasing volumes currently moving by road to the U.S. that could move to shortsea shipping services, once we have established routes,” he said.

He said it was a trend which could be further consolidated as vessel sizes in Mexico’s Gulf coast trade begin to increase and shippers see the benefits of greater economies of scale. “There are a couple of larger ships already coming into the region, and eventually there will be a cascading effect hitting the Gulf coast – and we are currently the only terminal that will be capable of handling these size vessels,” he argued. When it opens late this year, SSA’s Tuxpan Port Terminal will offer carriers and shippers 800,000 TEUs of annual capacity.

Whether it remains the only port capable of handling the next generation of vessels to call at Mexico’s Gulf coast will depend on developments at the port of Veracruz. With container facilities managed by Hutchison, the port is the oldest in Mexico and the government is keen to develop new facilities outside the port area and move Hutchison’s operations there. If and when this new terminal becomes available, Mr. Bressi said, Veracruz was expected to add around 1.5 million TEUs in new capacity to the Gulf Coast.

In addition, Filipino operator ICSTI has a concession to develop the next phase of Tuxpan, which could bring another 700,000 TEUs of capacity. Current annual capacity across the Mexican Gulf coast is 2.1 million TEUs, in the medium term that will rise to 5.2 million TEUs once the developments listed above have been completed. Mr. Bressi said throughput at Gulf coast ports was projected to reach just under 1.7 million TEUs this year, representing 80 per cent of terminal utilization. “With annual projected growth in volumes of just 3 per cent, it’s going to take the next 37 years to consume all the upcoming capacity addition of 3.1 million TEUs,” he said.

And that is not all. The Mexican government also intends to modernize Altamira. Mexico’s director general of Merchant Marine, Pedro Bermudez, said: “We are working on a plan to deepen the access channel at Altamira and we can either build new terminals or expand the existing facilities.”

The situation is mirrored on the Pacific coast, where current capacity is 5.5 million TEUs, with this year’s throughput forecast to reach 3.75 million TEUs – or 68 per cent utilization – with another 3.3 million TEUs of capacity set to be added. With a projected annual growth rate of 4 per cent, it will take some 22 years before the additional capacity, mostly set to be built at Lazaro Cardenas, is used.

At the same time, there is enormous investment being ploughed into the country’s automotive manufacturing sector, but little to show in the way of ro-ro facilities for those exports. Last year 3.8 million cars were produced, which number is set to rise to 5 million within the next four years. However, overall car handling capacity at the country’s ports is expected to reach only 1.4 million units by 2017, clearly falling well behind likely demand.

Reprinted courtesy of The Loadstar (