Across the Border: Small steps may lead to intermodal leaps

Sept. 1, 2004
The West Coast ports strike two years ago was a rude awakening for Mexican carriers. It brought the realization that intermodal logistics are not in place,

The West Coast ports strike two years ago was a rude awakening for Mexican carriers. It brought the realization that “intermodal logistics are not in place,” as one public official stated.

The strike presented Mexico with two opportunities:

  • One was to take advantage of the immediate circumstances and have otherwise stranded vessels make calls on Mexican ports in order to unload.
  • The other was to introduce themselves to U.S. companies, to acquaint them with the fact that Mexico, too, presents West Coast opportunities for companies shipping goods from the Pacific Rim.

There was, however, an exception to those importers scrambling to find a place to land their products. Japanese auto manufacturer Nissan uses the Mexican port of Manzanillo to maintain a smooth flow of parts from Asia, trucking them to its plant in Smyrna, Tenn. Nissan's just-in-time throughput never felt a bump because of the dock strike.

After the strike was settled, Nissan's success was highly touted. But for Mexican carriers and the country's Secretariat of Communications and Transportation (SCT), there was a feeling the entire cargo industry was caught sleeping. No pun intended, but they knew they'd missed the boat.

The strike gave impetus to the Mexican government to bring together the diverse parts of the transportation industry in common cause, ultimately signing a preliminary document this past June called the “Agreement for the Coordination of Development of Intermodal Corridors.” Signers of the document include representatives from major Mexican ports, railroads and trade associations on the private business side, as well as several national government agencies.

The idea of having intermodal corridors is not a new one for Mexico. Eduardo Escamilla, a spokesman for negotiator Oscar Corzo Cruz, points out that the corridors have existed for a long time but making them cost efficient involves resolving a great number of issues, so the program remains at a pilot test level.

The agreement aims “to make more efficient merchandise dispatching and movement through an efficient coordination of intermodal transportation using the experience both of the government and private enterprise,” Escamilla says.

The agreement attempts to motivate private business to promote and use existing transportation through the intermodal corridors to reduce costs, increase safety and opportunity in cargo movement. Federal, state and municipal governments, on the other hand, commit themselves to make more efficient and “transparent” their procedures through a single revision, information exchange and issuing of clear and universal regulations. (“Transparent” refers to avoiding murky merchandise movements through corrupt officials at Mexican Customs, the Transport Police and other government units involved in the supervision of transportation.)

To the National Cargo Carriers Chamber (Canacar), this new intermodal corridor agreement means that the government and carriers recognize that a true competitive infrastructure just doesn't exist.

As Canacar spokesman Oscar Moreno notes, interconnection with other nations, particularly the U.S., is “just not there. Despite the fact that Mexico has a record number of free trade agreements [13], they have not been an incentive to take advantage of Mexico's geographical positioning, which many nations envy.”

Moreno says that from a logistics point of view, Mexico's geographical positioning is not viewed as a strength since the country lacks necessary infrastructure for intermodal activities. Ports, for instance, are considered average at best. Railroads, Moreno says, are viewed as antiquities. Good ample roads are few, with most four-lane highways overly crowded.

“The real problem is that transportation modes are not interconnected,” claims Moreno. “To create an efficient corridor requires an efficient infrastructure involving at least two modes of transportation that are able to move merchandise from abroad to final destination at a lower price.”

What's lacking, he says, is articulation. “Each mode of transportation has its own regulations and its own paperwork, which makes moving merchandise a complicated endeavor.”

Rates for all modes are under scrutiny by those signing the most intermodal corridors agreement. Each mode has its own rates and cost efficiencies.

“For road carriers like us,” continues Moreno, “a cost efficient load is up to 1,500 kilometers (930 miles). A longer haul is not economical for us. Beyond that length of haul, railways are the answer. What is needed is greater equity between road and railroad pricing. What we are facing now is a great organizational challenge, involving all modes of transportation in order to modernize Mexico's total transportation system.”

What emerged during negotiating sessions is that each sector has markedly different regional interests, and establishment of integrated corridors will be easier said than done. “We have yet to put aside differences in our market niches,” says Moreno.

Escamilla of the SCT agrees with Moreno's assessment, but he believes the government will ultimately pull everybody together to enable the desired integrated movement of merchandise.

A significant disagreement among participants is just where to place a corridor. The SCT says the best option for creating a new intermodal infrastructure is to establish a corridor from the port of Lazaro Cardenas to Mexico City.

To Canacar's Moreno, the best start would be to utilize the proven natural corridor from Mexico City to Laredo, which is the country's busiest in terms of road and rail merchandise transportation.

“If we establish a corridor model in a route we are all very familiar with, we can then apply that knowledge gained to other corridors,” says Moreno.

Arguments for and against various corridors are currently being debated. LT