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Mexican importers shift cargo from US West Coast to home ports    16/05/2018
Lower ocean rates to send cargo from Asia through Mexico’s Pacific Coast ports compared with US West Coast ports, an increase in the number of shipping services, and the growing cost and difficulty of securing trucking services in the United States are spurring Mexican importers to route more cargo directly.

Port of Ensenada.

A super post-Panamax crane is positioned between two Panamax cranes at the Port of Ensenada, Mexico. Photo credit:

Shippers are sending cargo through Mexican ports such as the Port of Ensenada that otherwise would have gone through the ports of Los Angeles or Long Beach, 200 miles to the north, and sent by truck into Mexico, a logistics provider and and non-vessel-operating common carrier (NVOCC) said.

Mexican imports from China last year jumped 12.9 percent to 632,844 TEU, according to Container Trade Statistics (CTS). Further, that bullish trend has continued in early 2018: Mexican imports from China rose 14.2 percent in January and 35.4 percent in February, compared with the same months a year ago, according to CTS.

Loaded imports through Gulf Coast Ports grew by 15 percent in 2017 compared with 2016, according to Mexican Secretariat of Communication and Transportation (SCT), which oversees Mexico’s ports. Volume through Ensenada jumped 20 percent in 2017, to 164,805 TEU, with imports growing by 12 percent to 90,277 TEU. Imports through Ensenada grew by 15.7 percent in the first quarter, over the year before, and imports through the Pacific Coast as a whole grew by 6.1 percent.

In the first quarter of 2018, imports through the Port of Lazaro Cardenas grew by 8.7 percent over the same quarter in 2017, and imports through Manzanillo grew by 4.8 percent. Imports through Manzanillo increased 8.6 percent year-over-year in 2017 to 1.24 million laden TEU, and imports through Lazaro Cardenas grew by 7.6 percent in 2017 from 2016 to 564,000 laden TEU.

Bypassing US to reduce ocean carrier, truck transport costs

“We are seeing some shippers move via Mexico to save costs,” said a director of operations at a large-Asia-based NVOCC. “In most cases this is a combination of ocean and truck cost, which has become cheaper with better ocean freight rates into Mexico and higher trucking rates from US to Mexico.” Increased shipping capacity into Mexico has also made the route more “favorable” to shippers willing to explore alternatives, he said.

“We have seen trucking rates increase significantly from LA/LB across the Mexican border, and expect these to further increase,” the director said, adding that the as a result a transportation route through Ensenada could now bring savings “both in ocean freight and trucking.”

Paul Sarrapy, president of Porteo Group and CEO of Pilot Plus, both of Houston, Texas, told the 3rd Annual JOC Gulf Shipping Conference in April that more frequent direct Asia to Mexico sailings are reducing volume of southbound US to Mexico over-the-road freight, which used to be shipped through the United States and hauled into Mexico.

CargoSmart, the global shipment software provider, in April reported that services through the five biggest Mexican ports had increased by 8 percent — from 185 routes to 200 — from March 2017 to March 2018. Among the five, were the Pacific Coast ports of Manzanillo, Ensenada, and Lazaro Cardenas, where the number of services increased from 36 to 46, according to CargoSmart.

This year alone, APL has announced the launch of four new services that link Asia and Mexico, as well as other Latin American ports such as Colombia, Ecuador, Chile, and Central America. In April, Hamburg Süd launched a new service network between Asia and Mexico, Central America, and the Caribbean.

US trucking’s tight capacity — triggering changes throughout supply chain

Truck capacity has tightened in the United States in recent months, pushing rates up in part owing to the electronic logging device (ELD) mandate imposed on truck drivers Dec. 18, which has exacerbated shortages of trucks, equipment, and drivers. That tightness increased when full enforcement of the mandate began in April.

As a result, dry van truckload rates across the United States have gone up. Rates were up 17 to 25 percent on average in January, compared with a year ago, according to the North American Truckload Rate Index published by the Trans-Logistics Group. Flatbed spot market rates moved in concert with contract rates between January and April, rising from $2.00 to $2.20 per mile, excluding fuel surcharges, based on data from Morgan Stanley and DAT Solutions. Since then, the spot market has continued to rise above $2.30 per mile while contract rates have settled down.

With its proximity to Los Angeles-Long Beach, the Port of Ensenada in recent years has drawn cargo that otherwise would have gone through the West Coast’s two biggest ports. That was especially true in mid-2014 through early 2015, as shippers diverted cargo away from West Coast ports to avoid congestion that was exacerbated by the showdown between the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents employers. Cargo volumes through Ensenada International Terminal, jumped by 39-percent year-over-year in 2015.


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