Legal maneuvers put Mexican port in a sea of trouble

Jan. 12, 2004
Across the borderLegal maneuvers put Mexican port in a sea of trouble A little-known port on Mexico's Pacific coast has become the latest target of controversial

Across the border
Legal maneuvers put Mexican port in a sea of trouble

A little-known port on Mexico's Pacific coast has become the latest target of controversial shipping company Transportacion Maritima Mexicana (TMM), which is now fully linked to Stevedoring Services of America (SSA).

“I can't tell the difference between the two,” says Juan Paratore, administrator of the Port of Lazaro Cardenas (, about TMM and SSA.

The Port restarted container operations in November 2003 after eight years of devoting its facilities mostly to serving the needs of a local steel mill. Now TMM and its partner, SSA Mexico, have launched what appears to be a smear campaign against the new container operations. The two companies claim a court of law has declared the operations illegal and that TMM/SSA have the right to operate the Port, which is presently being managed by Hutchinson Ports and its Mexican counterpart, Controller and Operator of Terminals (COTSA).

Paratore claims the smear campaign is an obvious low blow aimed at the Port and questions the “moral quality” of both TMM and SSA Mexico, saying they are lying about the court mandate. “We know nothing about a legal resolution and have not been notified by any authority about it,” he says.

The background of the rift is described by Paratore: Eight years ago TMM was awarded management of Manzanillo, another Pacific port about 150 miles north of Lazaro Cardenas. As it took over operations, TMM was able to secure business from the entire area, handling 70,000 containers a year. Loss of business by Lazaro Cardenas made it a virtual ghost terminal.

As Paratore tells it, whenever the container terminal has gone up for bid, the bidding process has been blocked by TMM, which he suggested didn't want to see Lazaro Cardenas revived as a competitive port to Manzanillo.

Even so, the Port of Lazaro Cardenas resumed operations last November and by early December three large container vessels had docked there. According to Armando Herrera, the Port's marketing manager, “The future looks highly promising, as we already have requests from leading shipping companies to create additional facilities here.” Some projections say the port could ultimately manage as many as 200,000 containers a year.

COTSA manager Francisco Lopez feels the efforts of TMM/SSA to cast doubt on the ownership of the Port won't make a dent in port operations or create uncertainty among potential customers. “Over the next few years Lazaro Cardenas will become the most important port in the Mexican Pacific,” he says confidently.

Paratore agrees, feeling that what TMM and SSA Mexico really fear is the competition from Lazaro Cardenas with its deep sea docking facilities, with a 50-foot depth at one of its docks handling as much as 120,000 tons of cargo. A nearby superhighway is presently under construction. Lazaro Cardenas also has a rail spur, co-owned in part, ironically, by TMM's TFM Northeast Railroad and Kansas City Southern.

Jorge Lecona, the future Hutchinson Ports manager for Mexico, says his company has no doubt about the legality of its operations at Lazaro Cardenas, and plans to make new and significant investments in the new venture.

Mexico launches truck financing program

Mexican President Vicente Fox has signed and put into operation a truck financing program. The government will make available to carriers up to $28 billion over 10 years to update their vehicles.

“This funding will help make us more competitive in the globalization process,” says Leon Flores, president of the National Cargo Carriers Chamber (Canacar), who had lobbied President Fox to produce results. It took only four months to move the bureaucracy to put the program in place.

The program calls for junking ancient trucks. With the new funding, owners will have sufficient credit available to trade their rigs for brand new or slightly used trucks. Truck manufacturers will take the old trucks out of circulation and junk them. The program calls for renewal of some 300,000 trucks.

“Truck manufacturers will increase sales 100%, and a lot of new jobs will be created by this program,” adds Flores.

Flores cautions, though, that the program will only be successful if authorities stop the flow of contraband trucks from the U.S. Many of these trucks are illegally in Mexico, even though they have been awarded permits to operate.

According to President Fox, from now on, trucking permits will be issued only to brand new trucks made in Mexico. That's exactly what the truckers wanted to hear, since their worst headache is unfair competition from illegal truckers.

The money will be issued to small truckers through the Mexican government's financing bank, Nacional Financiera, and through commercial banks.

See article archives at “Mexico turns to trucking to fine tune its economy” for more details.

Bioterrorism Act terrorizes Mexican producers and truckers

Confusion reigns among Mexican exporters who now have to conform to the new U.S. Food and Drug Administration's (FDA) regulations.

“Even if the Mexican government called for and got an eight-month grace period to get accustomed to the new regulations, at least 5,000 of our members would suffer severe losses because they're not familiar with the FDA regulations,” says Manuel Muñoz Martinez, president of the Mexican Association of Importers and Exporters. The new regulations went into effect on Dec. 12.

The FDA has the power to stop food shipments at the border, forbidding their transport until the exporter registers with the FDA, and issues prior notification of the shipment.

In the Mexican states of Sonora, Sinaloa and Michoacan, leading produce shippers were able to attend seminars about the new FDA regulations in October and November. Still, says Silvano Aureoles, head of the government office of Agriculture and Livestock Development, despite the educational efforts, only 12 out of 200 exporters in the state of Michoacan had registered with the FDA by early December. That trend was similar among other produce exporters.

“We expect many problems,” says Muñoz. “It is obvious to us many companies are not complying, at least not just yet.”

He thinks the Bioterrorism Act will be beneficial for Mexican companies in the long haul. “It will make them more orderly and force them to meet prerequisites they do not meet today.” LT

January, 2004

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