Scan on International Freight: The Latin American Market October - - PowerPoint PPT Presentation

Scan on International Freight: The Latin American Market October 31-November 17; December 2-6, 2002

Mission

To identify:

• -international freight issues in Latin America;
• -the roles of individual countries that are currently

trading partners with North America;

• -future trends in logistics and trade infrastructure

that could affect such trade;

• -whether the LATTS projections and assumptions

are still valid and to provide guidance to LATTS 2

Mission, cont’d

To identify:

• -issues relating to security of freight movement as it

concerns imports into North America

• -Latin American countries’ experience with such

things as interoperability, standardization, equitable taxation and pricing; and the planning and financing of trade-related transportation infrastructure

Scan panel included representatives from:

• The Federal Highway Administration and Ministries of

Transport from Canada and Mexico

• Transportation Security Administration
• American Association of State Highway and Transportation

Officials

• Florida, Louisiana, and Mississippi Departments of

Transportation

• MPO—San Diego Association of Governments (SANDAG)
• Latin American Trade and Transportation Study (LATTS)
• University

Panel met with representatives from:

Government

• Ministry of Transportation and Other Transportation

Agencies—Argentina, Brazil, Chile, Uruguay, Panama, Mexico

• U.S. Embassy Commercial Experts---Uruguay and Panama
• Ports of Santos, Buenos Aires, Montevideo, San Antonio

(Chile); Several in Mexico

• Airport (Argentina)/Aviation (Panama)
• Customs (Argentina, Chile)

Facility Developers/Operators

• Terminal operators (Bahamas, Chile, Panama, Uruguay,

Mexico)

• Ports of Santos, Buenos Aires, Montevideo, San Antonio

(Chile), Colon (Panama), Mexico

Private Sector/Service Providers

• Trucking companies
• Terminal operators/shippers
• Logistics firms
• Chambers of commerce (Chile, Panama, Mexico)
• Free trade zone managers (Uruguay, Panama)

Motivation

• Latin American Trade and Transportation

Study (LATTS)

• Several bilateral Free Trade Agreements

(FTAs) between NAFTA and Latin American countries

• Increasing focus on security
• Trade is becoming more important to national

economies….and thus an interest in understanding implications to the transportation system

Percent of GDP Relating to Foreign Trade for Selected Countries Over Time

% of GDP

Trade Protection Trend toward more open trade

Great Britain Germany France México USA > 65% 50 40 30 20 10 1900 1913 1950 1973 1982 2000 1946 1996 1994

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

World and U.S. Merchandise Trade

Trade is growing and now accounts for 25% of U.S. GDP, up from 11% in 1970…expected to increase to 35% by 2020

35 42 28 11 25

5 10 15 20 25 30 35 40 45 1970 1997 2020 Percent Share of GDP

World Trade as Share of World GDP U.S. Trade as Share

• f U.S.

GDP

Source: World Bank, World Development Indicators 1999

Logistics Expenditures and GDP

After a long reduction, expenditures have stalled at about 10%…and may be increasing

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Percentage of GDP

1 9 7 7 1 9 7 8 1 9 7 9 1 9 8 1 9 8 1 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8

Administrative Transportation Inventory

Source: Cass/ProLogis 10th Annual State of Logistics Report, 1998

LATTS II Study Regions

Alliance Trade Growth Trends: Forecasts

World Total Latin America

1992 1996 2020

200 400 600 800 1,000 1,200 1,400 1,600 Million Tons

2 X 2 X

150 300 450 600 750 900 1,050 1992 1996 2020

3 X 3 X

Thus…

Latin America Rest of World

• The Latin American market is important

to the U.S…..

Latin America included 11

• f the top 50 trading partners
• f the U.S. in 2001

Canada's Imports with the WORLD - 2001

North America $225B 66% Africa $2B 1% Asia-Pacific $49B 14% Europe $45B 13% Latin America $19B 5% Middle-East $3B 1%

….and to Canada

U.S. Direct International Investment, 1997 to 2001

Europe 52.5% Canada 10.0% Latin America 19.5% Africa 1.1% Middle East 1% Asia 15.7%

Source: http://bea.doc.gov

Caribbean 13.4% NAFTA 2.7% Other 6.9% Andean Community 11.8% Western Europe 16.9% Central America 17.5% MERCOSUR 19.7%

East Asia 12.1%

• The Latin American market is important

to many states as well. Over 65% of trade through Florida ports is linked to NAFTA or Latin America

States With Exports to Central America Exceeding $400 Million Annually, 2001

FL

$2,164,106,000 TX $755,486,000 NC $753,382,000 CA $743,434,000 KY $440,548,000 GA $419,073,000

Source: http://ese.export.gov

000

States With Exports to South America Exceeding $400 Million Annually, 2001

TX

$4,758,712,000

IN

$1,019,246,000

FL

$5,991,862,000

OH

$973,020,,000

CA

$3,061,438,000

CT

$667,256,000

IL

$2,453,879,000

GA

$652,544,000

NY

$2,011,147,000

NC

$634,406,000

MI $1,533,849,000 MA

$573,398,000

NJ

$1,493,431,000

WI $572,525,000 PA

$1,211,152,000

MO

$553,024,000

WA

$1,029,518,000

TN

$516,623,000

MN

$420,960,000 Source: http://ese.export.gov

000

States With Exports to Mexico Exceeding $400 Million Annually, 2001

TX

$19,451,302,000

GA

$2,022,411,000

WA $1,031,050,000 MI

$15,451,313,000

NC

$1,952,927,,000

VA $992,224,000 CA

$13,598,830,000

AZ

$1,900,803,000

CT

$981,674,,000

OH

$5,,139,692,000

TN

$1,692,923,000

KS

$782,147,000

IL

$3,603,758,000

SC

$1,381,184,000

NM $760,841,000 NY

$2,971,943,000

MN $1,350,593,000 KY $721,086,000 FL

$2,589,688,000

MO $1,170,518,000 AL

$596,235,000

PA

$2,416, 006,000

MA

$1,169,281,000

MS

$495,574,000

IN

$2,346,196,000

WI

$1,055,424,000

MD $474,823,000 NJ

$2,192,870,000

CO

$1,039,016,000

DE $467,681,000

Source: http://ese.export.gov

California Exports to Mexico

(Billions of US Dollars) 17.8 15.3 13.1 12.1 9.1 7.7 7.4 1994 1995 1996 1997 1998 1999 2000

California Cross-Border Forecasted Trips (2000 – 2020)

50,000 100,000 150,000 200,000 250,000 300,000 San Diego/Tijuana Imperial County/Mexicali 2000 2020

116% 163% 124 268 125 47

Source: SANDAG

CA/Baja California 130%

• Evolution toward Free Trade Agreement

for the Americas (FTAA)

“….free trade, without subsidies or unfair practices, along with an increasing stream of productive investments and greater economic integration, will promote regional prosperity, thus enabling the raising

• f the standard of living, the improvement of working

conditions of people in the Americas and better protection of the environment.”

• -Final Declarations, Summit of the Americas, 2001

1998 Exports 1998 Imports

International Freight Gateways

1998 Import/Export Tonnage May Double by 2020

Source: FHWA Freight Analysis Framework

Truck Freight Flows, All Commodities

All truck types; highway freight density in tons- 1998

Gulf of Mexico Pacific Ocean Atlantic Ocean

M E X I C O C A N A D A

More than 1,000,000 500,001 to 1,000,000 250,001 to 500,000 1 to 250,000

(Tons)

Border Crossing to State Flows

LOS ANGELES

Inland Movement of Maritime Cargo by Truck (1998)

(Tons)

Network Flows

U.S. Department of Transportation Federal Highway Administration Office of Freight Management and Operations Operations Core Business Unit

1 to 250,000 250,001 to 500,000 500,001 to 1,000,000 More than 1,000,000

Potential Congested Segments - 2020

Freight Volumes Growing Faster Than Passenger Volumes

Increasing Congestion/Bottlenecks

Community and Land Use Impacts

Freeport, The Bahamas Sao Paulo/Santos, Brazil Montevideo, Uruguay Buenos Aires, Argentina Santiago, San Antonio, Chile Panama City/Colon, Panama Mexico City, Querétero, Mexico

Sites Visited

Why…

• -Argentina
• -Brazil
• -Chile
• -Mexico
• -Panama
• -The Bahamas
• -Uruguay???

Percent of U.S. Latin American Exports to Countries Visited, By Value, 2001

Brazil 10.0% Argentina 2.4% Chile 2.0% Panama 1.0% Uruguay 0.3% Other 21.3%

Source: http://oas.org

Percent of U.S. South American Exports, By Value, 2001

Venezuela 15.5% Brazil 43.6% Argentina 10.8% Colombia 9.8% Chile 8.6% Peru 4.3% Ecuador 3.9% Other 3.9%

Source: http://oas.org

Canada's Imports with LATIN AMERICA - 2001

Mexico $12B 72% Ecuador $0.1B 1% Uruguay $0.1B 1% Peru $0.2B 1% Argentina $0.3B 2% Brazil $1.5B 9% Venezuela $1.4B 8% Chile $0.6B 4% Columbia $0.4B 2%

Percent of MERCOSUR Exports to NAFTA Countries, 1998

19.8 % of value ($17 billion) 12.9% of volume

Percent of NAFTA Imports From MERCOSUR Countries (excluding intra-NAFTA trade), 1998

14.3% of value ($17 billion) 35.6% of volume

Most Important NAFTA Imports from MERCOSUR, 2001 By volume By value

Iron and precious metals Steel and iron goods Petroleum products Non-auto motor vehicles Steel and iron goods Fruits and vegetables Ore and fertilizer Leather goods Fruits and vegetables Autos and motorcycles Chemical products Non iron metals Wood pulp Energy machinery

Both The Bahamas and Panama were selected because of their strategic position in Latin American logistics

Important Points of Departure

• 1. Major population is concentrated in a few

countries

Mexico 19% Brazil 32.8% Argentina 7.1% Colombia 8.1% Chile 2.9% Peru 5.0%

Source: http://oas.org

Other 21.5% Venezuela 4.6%

Much of this population is located along the coast and is found mainly in port cities

• 2. The location and

geographic features (such as the Andes Mountains and the Darien Gap) create significant transport challenges

Coast-to-coast rail lines Darien Gap

• 3. And thus the strong dependence on maritime

transport for trade (except for Mexico and Paraguay)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Argentina Bolivia Brazil Chile Colombia Mexico Paraguay Peru Uruguay

Other Rail Road Air Maritime

Percent Exports By Mode, By Value

• 4. The Gross Domestic Product (GDP) of Latin

America is dominated by a few countries

200 400 600 800

Brazil Mexico Argentina Colombia Chile Peru Uruguay Venezuela

The highest GDP per capita is concentrated in the Southern Cone countries of Argentina, Uruguay and Chile as well as Mexico and Venezuela

1000 2000 3000 4000 5000 6000 7000 8000

Argentina Uruguay M e x i c

• Venezuela

Chile Panama B r a z i l Peru Colombia GDP/capita, 2000 $

24% 1% 3% 2% 1% 26% 16% 27% SOUTH AMERICA NORTH AMERICA EUROPE ASIA AFRICA OCEANIA CENTRAL AMERICA REST OF AMERICA

• 5. North America is not the only important

trading block for South America

South American Import Origins, 1994-1998 (millions $)

• 6. Different institutional arrangements can be

used to foster trade, e.g.,

• Tariff Preference
• Customs Union
• Free Trade Agreement
• Common Market

• 7. Many different trade groups have been

created to “liberalize” trade, e.g.,

• NAFTA
• MERCOSUR
• AC (Andean Community)
• CARICOM (Caribbean Common

Market)

• ALADI (Latin American

Integration Association)

The “Spaghetti Bowl”

These trade groups and individual countries continue to create new trade alliances and agreements

Source: Inter-American Development Bank, “The Spaghetti Bowl of Trade Liberalization,” Latin American Economic Policies, Third Quarter, 2002

• 8. Perhaps most importantly, as a point of

departure….. The transportation challenges of Latin American trade MUST be placed within a much broader international economic and competitive market context

Thus, for example, the following issues become important in understanding future transportation and trade flows….

• -Strength of national economies
• -Logistics supply chains and areas of

productivity improvements

• -International economic competition in

relation to relative market advantages

• -National strategies, if they exist, on providing the

incentives to the private market to trade

World Class Logistics Platform World Class Logistics Platform

Imperceptible & Flexible Supply Chain Delivery Network Imperceptible & Flexible Supply Chain Delivery Network “Turn Key” Communications Infrastructure “Turn Key” Communications Infrastructure Commercial support with an “Expert Base” Commercial support with an “Expert Base” Cargo Consolidation to streamline the supply chain Cargo Consolidation to streamline the supply chain “Real Time”control and visibility of assets “Real Time”control and visibility of assets

Two Pre-Departure Meetings in New Orleans and Miami

In New Orleans, we heard about the….

• -Historic importance of the Latin America market

to the U.S.

• -Brazil is a dominant player in Latin America, but is

facing economic and political uncertainties; other countries have had weak economic performance

• ver the past decade as well
• -Southeastern U.S. ports are expecting increasing

trade volumes from Latin America

• -Brazilian agricultural products (e.g., soy) will have

a bigger impact on the competitive global market in the future, especially with investments on river feeder-to-port/distribution systems that serve Brazil’s agricultural interior

• -Security with respect to ship/cargo movements is

an important issue for homeland defense

In Miami, we heard about….

• -Importance of Latin American (especially Caribbean)

market to Florida ports (e.g., 65% of cargo through Port of Miami)

• -Port access is a key constraint to growth in many

Florida ports

• -Florida has created an innovative state Finance

Commission to provide funds for port improvements

• -Participants want a national trade strategy that links

economic policies with transportation investment

What did we observe

• n the scan?

Observation 1:

The economic downturn in the global economy has created economic and infrastructure challenges in Latin American countries

Observation 2:

Some countries more than others view trade from an “outward” or global perspective while

• thers focus more regionally

For example, Chile, Uruguay, Panama and Mexico have much more of a “trade” focus, partly explained by location, trade heritage, and governmental policies

Observation 3:

Ports are the major centers of international trade for Latin American countries

And most ports have ambitions to be a hub of international trade

Main Trade Routes

US-WC Asia-Pacific US-Gulf US-Atl EUR- NWC EUR- Med AUS-NZ SE-Asia Far-East MercoSur

15,800,000 m/tons 54%

Total Foreign Trade volume to/from economic influence area SAN ANTONIO SHARE

Courtesy of the Port of San Antonio, Chile

Port of Santos Port of Santos Port of Santos

Mexican Gulf Mexican Gulf East American and East American and Canadian Coast Canadian Coast American West Coast American West Coast Oceania Oceania South Africa, Middle South Africa, Middle East and Japan East and Japan North Europe North Europe Mediterranean Mediterranean East and West African East and West African Coast Coast

Courtesy of the Port of Santos, Brazil

PORT OF SANTOS PORT OF SANTOS Maritime Routes Maritime Routes

Important to understand….

• -Different economic impacts of transshipment

ports versus import/export ports

• -Role of ports in context of E-W major trade

flows and N-S feeder services

• -Ports provide not only a physical movement

capability, but in today’s global economy,

• ften offer a logistics support platform

Observation 4:

Port access is a problem everywhere… Difficult terrain can lead to…. and thus delay

And there are significant levels of congestion. Especially when accessing ports in crowded city centers where many ports are located

What have been some of the strategies adopted to provide improved port access?

• 24-hour operations
• Examining truck-only roads
• Trying to shift loads to rail and to a lesser

extent barge

• And use of private concessions to provide

needed investment capital for improvements….

Observation 5:

Economic difficulties in the 1990s and today have led to privatizing the provision and maintenance

• f transportation infrastructure…for highways,

railroads, ports, and airports.

New toll road extension accessing the Port of Santos, Brazil

Some examples….

• -New toll road concessions
• -Concessions for maintenance and upkeep
• f existing rail and road facilities
• -Port terminal concessions
• -Free trade zone leasing
• -Airport concession

HOWEVER….. In the absence of governmental involvement in the provision of transportation infrastructure, and especially in times of economic stress, the necessary provision and maintenance of transportation facilities suffers

Observation 6:

In the countries visited, national government policy has been to allow private investors to effectively determine port performance through concessions of terminal operations… …which, in most cases, involves major international logistics/freight corporations

Terminal operators most often work with favorable and flexible labor conditions, market their own terminal operations, provide investments in distribution/collection systems and have abilities to invest quickly in needed infrastructure Thus…..

Observation 7:

Private terminal operators, most often representing major global businesses, have been able to enter a market and make an impact very quickly

• -Hutchinson Terminal, Freeport, Bahamas
• -Katoen Natie Terminal, Montevideo, Uruguay
• -Port of San Antonio, Chile
• -Manzanillo Terminal, Panama

Observation 8:

Private terminal operators have been the major initiators of the application of advanced information technologies in port

• perations

However, in most cases, the application of intelligent transportation system (ITS) technologies lags behind that found in NAFTA countries

CAL GATE IN EIR

LOCATION

Pre Gate Gate In Yard From Customer

Reception Process

Reception Reception & & Loading Loading Process Process: :

Courtesy of

Output to Customer:

Received cargo Booking status

(STTIF Format) NAVIS-Powerstow

RECEPTION

Loading Projections SEQUENCE

NAVIS (Powerstow) Yard Apron

Loading Process

Gate-In movements CODECO Format - EDI

LOADING

Loadings movements COARRI Format - EDI

Observation 9:

National strategic transportation policies that linked transportation investment to economic or trade policies were not apparent…

• -In some cases, no dedicated national transportation

funds

• -No multimodal integration in decision making
• -Lack of data on basic traffic flows and volumes
• -Trend toward semi-autonomous decisions at

strategic facility level

Observation 10:

To the extent that some “systems” level perspective is provided in planning and decision making, it takes the form of corridor planning aimed at strategic gateways

• -Market or commodity orientation
• -Determining feasibility of concessions
• -Focus on historical movements

The Santiago Belo- Horizonte Corridor

• 100 million

inhabitants

• US $800 billion

GNP

• US$ 8.000 per

capita income

MERCOSUR COUNTRIES Santiago de Chile-Belo Horizonte Corridor

• Belo

Horizonte Río de Janeiro Sao Paulo Curitiba Porto Alegre Montevideo Buenos Aires Rosario Córdoba Santiago Mendoza

• Courtesy of Katoen Natie

Observation 11:

Use of rivers for feeder services to hub ports is developing

Observation 12:

Security for freight movement is a concern to national officials, port and terminal operators… especially with respect to additional anticipated costs (and perceived competitiveness)

• -No changes in security procedures since 9/11
• -Everyone awaiting new requirements
• -Some expectations that private terminal operators

will bear the costs

• -Some looking at being a “security gateway” to the

U.S. as a niche market

Observation 13:

MERCOSUR is currently facing significant problems in developing a trade market

• -Border crossing issues
• -Political uncertainty with respect to Brazil/Arg.
• -Economic uncertainties
• -Primarily oriented toward internal protection
• f products versus fostering open global trade
• -Future with respect to hemispheric trade

influence is unclear

Observation 14:

Brazil, Uruguay, Chile and Panama seem to view NAFTA from a strategic perspective Brazil because of size of market and the others because of location (good and poor) and economic survival strategy

Observation 15:

In many cases, critical trade-related transportation facilities are extremely congested and vulnerable to disruption

Observation 16:

The Panama Canal is by far the most strategic facility for NAFTA in Latin America

• -13 to 14% of U.S. sea-borne trade passes

through Canal

• -Approximately 9,000 ships going through

Canal annually are going to or coming from U.S. ports (about 2/3’s of Canal movements)

• -Agricultural products from Brazil to Asia

in larger ships could have significant impact on trade competitiveness

Observation 17:

Because of it being at such a crossroads, Panama is rapidly becoming a major logistics service supplier and transshipment point

• -New container terminal expansions
• -Customer oriented logistics services
• -Government support of private initiatives
• -Free trade zones
• -Confluence of five major fiber optic cables

As a crossroads, Panama, and the freight being handled through the Canal and in container terminals, also becomes an important concern for homeland security and the security of freight movement

Observation 18:

The Europeans and Chinese are investing heavily in Latin America

• -Port terminals
• -Urban infrastructure
• -Commercial businesses in free trade zones
• -Concessions for roads

U.S. has also invested heavily in business, but not in infrastructure

Observation 19:

Mexico is investing in port facilities and transport corridors to develop integrated, intermodal service opportunities that could possibly compete with U.S. services

• -Port terminals
• -Highway and rail infrastructure

Goal is efficient logistics with security However, border is still a barrier!!

Observation 20:

Mexico’s economy is changing; Government is promoting higher value-added manufacturing industries

500 1000 1500 2000 2500 3000 3500 4000 1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2

# of plants Some maquiladora plants have moved to Asia

Observation 20:

Even though the Latin American scan was focused on freight movement, it was striking to see the number of infrastructure improvements and high expectations associated with passenger cruise ships Which could certainly raise significant security challenges

Some Examples

The Bahamas Freeport

Freeport Hutchinson Terminal

• Combined airport/port/tourism/logistics/

development

• Port has seen remarkable growth in trans-

shipment of containers

1996: 0 TEU’s 2000: 800,000 TEU’s 2003: 1,000,000 TEU’s 2004: 2,500,000 TEU’s

• Strategic positioning in E-W trade flows

between Asia and Mediterranean market (and thus major competitors are Kingston/ Jamaica and, in the future, possibly Havana/Cuba)

• Can handle larger ships than many U.S.

east coast ports

• Potential for increasing feeder movements

from U.S. ports for E-W movements; and thus becomes part of U.S. logistics system

• Strong emphasis on productivity and

efficiency of container handling

• Privatization, along with government

cooperation and conducive excavation/construction conditions, have allowed rapid expansion of port facilities

Sao Paulo Port of Santos

33% Imports from NAFTA (by value) 27.6% Exports to NAFTA (by value)

Brazil

Port of Santos, Brazil

• Handles 24.4% of Brazil’s foreign trade

value; 11% of export/import tonnage; Brazil service area represents almost 50%

• f national GDP
• U.S. is the largest origin and destination
• Port access is a big issue; have gone to 24-

hour operation because of congestion; considering truck-only distribution road

• Primary container distribution mode is

truck (80%); railroad for bulk; concerted effort being made to improve freight rail transportation

Increasing Rail Tonnage Serving Port

• Port terminals operate under concession

arrangement (25 years); as do railroads serving port, both of which have resulted in benefits to productivity

Average Turnaround Time for Rail Car

Argentina Buenos Aires

24.4% Imports from NAFTA (by value) 12.4% Exports to NAFTA (by value)

Economic problems have been reflected in trade….and along with political uncertainties, will likely continue to have important trade implications

TEU’s moved through the Port of Buenos Aires

Source: Port of Buenos Aires

Argentina was a leader in privatizing transport infrastructure—has worked in port operations, facing difficulties in highways and railways Discussions on trade very much focused on regional issues, i.e., MERCOSUR

Issues noted:

• -Lack of national multi-modal, integrated

transport policy

• -Serious border delays for cross border truck

movements

• -Port access a serious concern given location
• f ports in urban areas
• -Trying to develop coastal/river transport

system

• -Port security requirements a concern

Montevideo

13.1% Imports from NAFTA (by value) 14.4% Exports to NAFTA (by value)

Uruguay

Located between two larger countries, Uruguay has tried to position itself as a logistics server for the region…. Uruguay

Government policy is to have Uruguay as a major gateway to North America, perhaps as a “high security” gateway Port of Montevideo is centerpiece of trade policy; terminal operations have been privatized

Katoen Natie Terminal Completely built in 16 months Connected to free trade zone (Zonamerica) River distribution to Paraguay and Brazil Centralized distribution has changed logistics….

Traditional Lead Times Traditional Lead Times

Producer RM Uruguay Chile Brasil Argentina

Warehouses in each country with nationalized inventories Warehouses in each country with nationalized inventories

Paraguay

45 days

Courtesy of Katoen Natie

Lead Time with Effective Logistics Lead Time with Effective Logistics

Argentina 72 hours Brasil 96 hours Paraguay 72 hours Uruguay 24 hours Chile 72 hours Producer RM

Terminal Cuenca del Plata Terminal Cuenca del Plata

JIT Just in Time Inventory Control Systems (.com) Courtesy of Katoen Natie

Santiago Port of San Antonio

32% Imports from NAFTA (by value) 17.8% Exports to NAFTA (by value)

Chile

Port of San Antonio, Chile

1990 50,000 TEU’s 2001 420,000 TEU’s Primary markets are Asia, North America, and Europe

Fractional Bulk Containers

1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 7.000.000 8.000.000 9.000.000 10.000.000

Metric Tonnes

1 9 9 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 2 1

Annual Cargo Through the Port of San Antonio, Metric Tons

1999 privatization law resulted in $140 million in investment Future expansion will accommodate larger ships and handle/store more containers

Panama Panama Panama City Colon

13-14% of U.S. sea-borne trade passes through Canal About 9,000 ships going to or from U.S. ports 6 million containers go through Canal

Source: Lynch, “The Price Is Right,” IAME Proceedings, Panama, Nov., 2002

New Post Panamax Dimension New Post Panamax Dimension

• Max. Draft

50 feet

• Max. Draft

50 feet

• Max. Beam 180 feet
• Max. Beam 180 feet
• Max. Length

1,265 feet

• Max. Length

1,265 feet

• Max. Draft 39.5

feet

• Max. Draft 39.5

feet

• Max. Beam 106 feet
• Max. Beam 106 feet

Max. Length 965 feet Max. Length 965 feet

Present Dimensions Present Dimensions

Source: Gerardo Maucci y Eduardo Lugo, Maritime Clusters – The Panamanian Case, IAME Proceedings, Panama, Nov., 2002

Source: Lynch, “The Price Is Right,” IAME Proceedings, Panama, Nov., 2002

Ports and Terminals for Transshipment

Panama Panama Ports Ports Company Company ( (Hutchinson Hutchinson Wampoa Wampoa) ) Cristobal Cristobal Terminal ( Terminal (Caribbean Caribbean) )

• -Storage

Storage of

• f 300,000 TEU’s

300,000 TEU’s

• -Cruise

Cruise ship ship terminal terminal Balboa Terminal ( Balboa Terminal (Pacific Pacific) )

• -Storage

Storage for for 600,000 TEU’s in 600,000 TEU’s in first first phase phase

SSA Manzanillo Terminal (Caribbean)

• -1.3 million TEU’s/year
• -50 containers/hour/crane
• -$300 million to date/$40 million

for expansion Evergreen Colon Terminal (Caribbean)

• -Warehousing 400,000 TEU’s
• -$100 million to date

Colon Free Colon Free Trade Trade Zone Zone

• Strategic

Strategic geographic geographic location location

• Access

Access to to four four ports ports in in the the Caribbean Caribbean and and one

• ne in

in the the Pacific Pacific

• More than 2000 companies

represented

• Importing and re-exporting of goods, warehousing,

repacking, manufacturing, among other activities

Destination Destination of

• f Goods

Goods Distributed Distributed from from the the Free Free Trade Trade Zone Zone— —Primarily to Central America Primarily to Central America

18.7% 9.4% 1.7% 17.2% 5.3% 1.0% 1.9% 3.3% 3.2% 2.6% 5.4% 6.7% 2.9% 3.4% 17.4%

MAIN COUNTRIES COLOMBIA ECUADOR PANAMA VENEZUELA UNITED STATES PARAGUAY CHILE EL SALVADOR CUBA BRAZIL COSTA RICA GUATEMALA NICARAGUA MEXICO OTHERS

Evergreen MIT Colon Ports Terminal Commercial area Panama Ports Railway Terminal Transportation Terminal Customs control

COMPONENTS OF THE PROJECT COMPONENTS OF THE PROJECT

Intl Airport

Mexico City, Querétaro

82.4% Imports from US and Canada (by value) 91.7% Exports to US and Canada (by value)

Mexico

Mexico …..

Is the 5th largest importer in the world Is the 8th largest exporter in the world Is the largest exporter in Latin America Had the 3rd fastest growing foreign trade in the

world in the decade of the 90’s

Is the 2nd largest trade partner of the USA Doubled its business with the USA between

1993 and 2000

140.2 152.0 185.5 220.0 242.7 278.8 340.8 14.1% 16.2% 17.5% 326.8

Mexican Foreign Trade 1990 - 2001

(Billions of Dollars)

NAFTA

Average annual increase

117.2 102.3 92.7 82.3 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Latin American Exports by Sector, Percent of Export Value, 1980-1998

Port of Entry Laredo, Tx Otay Mesa, CA El Paso, Tx Hidalgo/Pharr, Tx Calexico East, CA Brownsville, Tx Nogales, AZ Others Total Total Vehicles 4,549 2,245 2,103 1,179 831 818 806 1,322 13,853 2,466 1,181 1,175 730 365 392 607 749 7,665 54% 53% 56% 62% 44% 48% 75% 57% 55% % Trucks Trucks

Average Daily Truck Crossings at U.S./Mexico Border, Northbound Direction, Selected Locations

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Ensenada Progreso Tuxpan Guaymas Topolobampo Puerto Vallarta Puerto Madero

Gulf of Mexico

Altamira Tampico Manzanillo Salina Cruz Veracruz Coatzacoalcos Lázaro Cárdenas Mazatlán

Pacific Ocean Caribbean Sea

Dos Bocas Quintana Roo Campeche Baja California Sur Tamaulipas Tabasco Bahías de Huatulco Cabo san Lucas Acapulco State Private FONATUR

Ports in Mexico

Federal

Progreso

Gulf of Mexico

Manzanillo Veracruz

Pacific Ocean

Altamira Ensenada

169 175 181 183 185 186 208 219 237 231 244 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

GRAPH No. 1 TOTAL CARGO IN MEXICAN PORT SYSTEM (Millions of Tons)

RAAG 1990-1995: 2 % RAAG 1995-2000: 5.7 %

Note: RAAG, Rate of Annual Average Growth. Source: Coordinación General de Puertos y Marina Mercante, Secretaría de Comunicaciones y Transportes.

Total Cargo in Mexican Port System, 1990-2000

28.7 27.4 29.9 30.0 34.2 37.4 47.3 50.4 56.3 56.5 61.6 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

CHART No. 2 TOTAL COMMERCIAL CARGO1 IN THE MEXICAN PORT SYSTEM (Millions of Tons)

RAAG 1990-1995: 5% RAAG 1995-2000: 10 %

Note: RAAG, Rate of Annual Average Grow th.

Source: Coordinación General de Puertos y Marina Mercante, Secretaría de Comunicaciones y Transportes.

Total Cargo in Mexican Port System, (Except Oil, Plaster, Salt), 1990-2000

0.27 0.3 0.4 0.4 0.5 0.56 0.7 0.9 1.0 1.1 1.3 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

GRAPH No. 3 CONTAINER OUTPUT IN MEXICAN PORT SYSTEM (Millions of teu´s)

RAAG 1990-1995: 16 % RAAG 1995-2000: 18 %

Note: RAAG, Rate of Annual Average Growth. Source: Coordinación General de Puertos y Marina Mercante, Secretaría de Comunicaciones y Transportes.

Total Container Cargo in Mexican Port System, 1990-2000

Table No. 1 CONTAINER CARGO IN THE MEXICAN MAIN PORTS BY COAST, 1988-2000 Percentage Market Share and Annual Average Growth Rate

PACIFIC COAST 1988 2000 RAAG GULF COAST 1988 2000 RAAG % % % % % % Ensenada 0.0 5.7

• Altamira

14.0 21.8 20.7 Guaymas 21.6

• Tampico

19.6 5.9 5.3 Mazatlán 2.5 3.6 19.4 Tuxpan 17.3 0.0

• Manzanillo

27.0 89.3 27.8 Veracruz 44.4 64.4 20.0 Lázaro Cárdenas 28.0 0.2

• 24.7

Coatzacoalcos 4.1 0.0

• Acapulco

2.2

• Progreso

0.4 7.1 48.8 Salina Cruz 18.5 1.2

• 8.2

Others 0.2 0.8

• Others

0.2

• Total

100.0 100.0 15.7 Total 100.0 100.0 16.4 Total Cargo in 1988 = 81,328 TEU Total Cargo in 1988 = 135,714 TEU Total Cargo in 1999 = 469,808 TEU Total Cargo in 1999 = 838,523 TEU

Note: RAAG = Rate of Annual Average Growth. TEU = Twenty Equivalent Unit. Source: Coordinación General de Puertos y Marina Mercante, Secretaria de Comunicaciones y Transportes

Container Cargo in the Main Mexican Ports by Coast, 1988-2000

Percentage Market Share and Rate of Annual Average Growth

Table No. 1 CONTAINER CARGO IN THE MEXICAN MAIN PORTS BY COAST, 1988-2000 Percentage Market Share and Annual Average Growth Rate

PACIFIC COAST 1988 2000 RAAG GULF COAST 1988 2000 RAAG % % % % % % Ensenada 0.0 5.7

• Altamira

14.0 21.8 20.7 Guaymas 21.6

• Tampico

19.6 5.9 5.3 Mazatlán 2.5 3.6 19.4 Tuxpan 17.3 0.0

• Manzanillo

27.0 89.3 27.8 Veracruz 44.4 64.4 20.0 Lázaro Cárdenas 28.0 0.2

• 24.7

Coatzacoalcos 4.1 0.0

• Acapulco

2.2

• Progreso

0.4 7.1 48.8 Salina Cruz 18.5 1.2

• 8.2

Others 0.2 0.8

• Others

0.2

• Total

100.0 100.0 15.7 Total 100.0 100.0 16.4 Total Cargo in 1988 = 81,328 TEU Total Cargo in 1988 = 135,714 TEU Total Cargo in 1999 = 469,808 TEU Total Cargo in 1999 = 838,523 TEU

Note: RAAG = Rate of Annual Average Growth. TEU = Twenty Equivalent Unit. Source: Coordinación General de Puertos y Marina Mercante, Secretaria de Comunicaciones y Transportes

Container Cargo in the Main Mexican Ports by Coast, 1988-2000

Percentage Market Share and Rate of Annual Average Growth

Tons per Day of Grain Handled in Three Mexican Ports, 1995 and 1999

5000 10000 15000 20000 25000 30000 1995 1999 Vera Cruz Progreso Manzanillo

Index of Ship Handling Rates by Cargo Type1

0.5 1 1.5 2 2.5 3 3.5 4 1990 1994 1999 YEAR INDEX 1990=1

Output of specialised container terminal (containers per ship- hour) Output of non- specialised container terminal (containers per ship-hour) Output of semi- mechanised agricultural cargo (tons per ship-hour) Output of mechanized agricultural cargo (tons per ship-hour) Output of bulks (tons per ship-hour) Source: Coordinació n General de Puertos y M arina M ercante. Secretaria de Comunicaciones y Transportes.

FIGURE 1 IMPACT ON PORT RESTRUCTURING IN VERACRUZ

Impact of Port Restructuring in Vera Cruz

México-México: Relationships and Coordination Problems

Relationship: High Medium Coordination Problems

Shipper Carriers Transfer Transport SCT (DOT) SAGARPA (DOA) SECODAM (GSA)

Customs Agent Customs

Shippers Carriers Transfer Transport SCT SAGARPA SECODAM

Customs Agent Customs Mex Mex. Mex Mex.

• Concentration of demand in peak hours
• Absence of Customs agent in selecting cargo

inspections

• Incomplete information for customs

management

• Minimal input from Customs agents in the

location, design and construction of installations

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Relationship: High Medium Coordination Problems

Shipper Carriers Transfer Transport SCT (DOT) SAGARPA (DOA) SECODAM (GSA)

Customs Agent Customs

Shippers Carriers Transfer Transport SCT SAGARPA SECODAM

Custom Agent Customs Mex Mex. Mex Mex.

• Limited hours of inspection for agricultural

products

• Changes in law that reduced to one the number
• f installations constructed for the inspection of

meat

México-México: Relationships and Coordination Problems

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Shippers

Customs Agent

Carriers DOT EPA FDA USDA INS Customs GSA

Shippers Carriers Customs Agent

DOT EPA FDA USDA INS

Customs

GSA

U.S U.S.A. U.S U.S.A.

• Lack of coordination in planning efforts
• Design of port of entry gateways impede the

movement of trucks

• More dedicated truck lanes are required

Relationship: High Medium Coordination Problems

US-US: Relationships and Coordination Problems

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Shippers

Customs Agent

Carriers DOT EPA FDA USDA INS Customs GSA

Shippers Carriers Customs Agent

DOT EPA FDA USDA INS

Customs

GSA

U.S U.S.A. U.S U.S.A.

Relationship: High Medium Coordination Problems

• Lack of coordination in procedures for

jointly using installations

US-US: Relationships and Coordination Problems

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Binational Relationships and Problems

• f Coordination

Shipper Carrier Customs Agent DOT EPA FDA USDA INS USCS GSA Shippers Carriers SCT SAGARPA SECODAM Customs Agent U.S. U.S. Mex Mex. .

• No formal communication between Customs to extend

hours of operation

• No long-term plan for binational customs procedures
• Frequent personnel changes makes coordination difficult
• Delays in adopting binational strategies for incorporating

new technologies, compatible requirements for data collection and sharing of data

Customs

Transfer Transport

Relationship: High Medium Coordination Problems

Source: Reyes Juarez de Angel, Systems Analysis of Binational Coordination at Border Crossings, Presentation at Scan Meeting, Dec. 2002.

Highway Corridors in the Plan Puebla Panamá

Arriaga Puebla Coatzacoalcos Ocozocoautla Tapachula C d . H i d a l g

• Peñas Blancas

Tecún Uman

E s c u i n t l a

Hachadura La Libertad San Luis Chetumal Palmar Sur Santiago PANAMÁ David Puerto Quepos Punta Arenas MANAGUA Chinandega Leon BELMOPAN

Oxaca

SAN JOSÉ Colón

• Cd. GUATEMALA

Puerto Cortés

Tampico Tuxpan Villa Hermosa

San Pedro Sula La Unión Flores Puerto Limon Sixaola Jícaro Galan El Amatillo TEGUCIGALPA Masaya Nandaime SAN SALVADOR El Espino

Pacific Corridor Atlantic Corridor Major Connectors Ports Private

Trans-Pacific Multimodal Security System (TPMSS)

Showcase application of technology and institutional innovation that enhances the efficiency of Mexico’s logistics system Intent is to make Mexican ports and rail system the major entry points and logistics servers for cargo entering the U.S…..with major security provisions along the way

Singapore

Singapore

Initial security screening will occur at shipper’s

• rigin or at transshipment

in Singapore Singapore will then send advance notification to Mexican and U.S. Customs with “pre-clearance” information

Manzanillo Lázaro Cárdenas

When containers arrive, they proceed through X-ray or gamma ray arc, but will not clear Mexican

• Customs. Suspicious containers will be removed

from “in-bond” regimen.

Cargo will be transported to border on double stack unit trains that will be tracked by a GPS system and monitored by ITS during entire journey

X-RAY X-RAY U.S. CUSTOMS

When the train reaches the U.S. border, the containers will pass through another X-ray or gamma ray arc, and will clear U.S. Customs through the electronic manifesting system. Suspicious containers will be inspected.

Cargo will then travel non-stop on Kansas City Southern or Union Pacific trains, tracked by GPS, to inland trade processing centers. Customs inspections would occur at these

• centers. Cargo would

then be sent to final destination

Trial runs: Lázarus Cárdenas to Laredo Manzanillo Nissan Demonstration

Mexican authorities expedited process by holding joint inspections and changing operating hours Port and rail service was made more efficient through service operational improvements Total time for transport to arrive at consignee— 4 days…..much faster than the “best case” scenario.

Lessons Learned for NAFTA

• Understanding the motivation of logistics

decisions and local implications is a critical point of departure for national or multinational efforts at fostering trade

Before

North America Asia Europe

Today’s Challenge

North America Asia Europe

• Emergence of Panama as an hemispheric

logistics center; government and private sector understand connection between infrastructure, telecommunications, and trade policy, thus…

• Developments in Panama will significantly

change international shipping patterns in the US and possibly all of NAFTA….there will be more pressure on Gulf Coast States, and more opportunities for joint US/Mexico infrastructure development

• Even with recent economic problems, trade

between Latin America and NAFTA (esp. the U.S.) is expected to grow significantly, however…

• The LATTS forecasts, which indicate a

tripling of trade from Latin America, should be re-examined at a commodity-specific level, recognizing the changes in the Mexican economy that are currently underway (e.g., losing maquiladora plants to Asia )

• Within the context of global East-West

container movements in the western hemisphere and the need for transshipment locations in the Caribbean and/or along the Gulf/Atlantic coast, the major players currently in the transshipment business consider Cuba as the potential threat/opportunity

• Private companies, with concessions from

governments, have been able to very quickly establish a substantial market presence in hemispheric trade

• Ship and cargo security requirements are a

major concern of national and port officials; primarily from a cost, and thus competitiveness, perspective

• Very little evidence of integrated national

policies concerning trade and transportation system performance; disconnect between private sector investment and the role of government

• Heavy reliance on privatization for transport

infrastructure, during times of economic stress and with no stable transportation funding source, has led to significant problems

• Increasing port effectiveness was an

important issue in the ports visited, including 24-hour operations and preferential treatment for trucks

• The Latin American experience illustrates

the importance of having a national transportation policy that reflects the needs of trade flows and the global positioning of the NAFTA market.

• MERCOSUR is facing significant challenges;

focusing much attention internally; in short term, will need to deal with border issues and economic growth

• Developments in Brazil may affect changes

in trade patterns to the US, but this will likely be a longer term issue

• Port access is a significant issue, both in the

U.S. and in Latin America; all ports visited

• perate 24 hours; some are considering

innovative strategies such as truck-only roads

• Scan participants talked about the poor

surface transportation system serving both their country as well as multi-national markets

• Border crossings seem to be a universal

problem; represent a disconnect between trade policy, customs, and transportation infrastructure

• The Mexico/U.S. border still remains a

critical bottleneck/barrier to improving NAFTA trade.

• Trade between NAFTA/ South America will

be maritime trade; trade between NAFTA/ Central America could be maritime or land; importance of developing maritime options for Central America trade

• Development of NAFTA transport systems can
• ffer intermodal options for trade…the Plan

Puebla Panamá and the Pan American Highway are of NAFTA interest

• Improving gateways, borders, and

international trade corridors through coordinated planning, investment, and technology deployment can improve trade transport efficiency and security

Logistics Corridors in Latin America

• Hub-and-spoke pattern of trade (e.g., with

Los Angeles/Long Beach, Panama, and Freeport as hub) has important implications to investment decision making

• Increasing NAFTA connections to Latin

America will likely focus on alternative financing strategies; hemispheric exchanges and consensus-building were desired

• Although not the focus of this scan, it is

important to note that every port visited had plans for, were constructing, or had just

• pened cruise ship terminals.
• Use of free trade zones as logistics centers and

points of distribution within a trade market an important concept---not clear what impact will be with an FTAA

173

Latin American Free Zones

Miami Iquique Panamá Uruguay La Plata Cali/Bogotá Manaus

Recommendations for Further Studies

• Further study of international trade, the

economic dynamics and the related impacts to the performance of the transportation system should be made. This, and related information, should be incorporated into professional and organizational development activities for state DOTs.

• Continued monitoring of the Latin American

market should continue given the rapid introduction into the market of new players. Institutional mechanisms should be developed to guarantee that the best available information is provided to state DOTs.

• A feasibility study of using the Gulf of

Mexico for serving NAFTA trade should be

• undertaken. What are the important

factors that would make such services successful?

• The scan team recommends that a similar

effort to this one be undertaken to understand the dynamics and potential of the Caribbean market and the role the Caribbean plays and will play in filling a “transfer” function for freight from all quadrants.

• There is a need to better understand the

different types of trade agreements, the implications of these agreements on trade, and importantly on needed transportation infrastructure….(thus) A clearer picture of the players and their roles should be developed and incorporated into the efforts of transportation agencies to engage more effectively with Latin American trade.

• Better understanding supply chain logistics

now coupled with more intense security provisions is an important point of departure for understanding likely future trade flows….(thus) The NAFTA countries should work closely with Latin American countries, port authorities, and shippers to make sure they are aware of security requirements and to coordinate responsive strategies.

• A study should be undertaken on what has

worked to date on the U.S. borders, and how these lessons could be applied elsewhere

• Private sector involvement in developing

border strategies, a so-called “business plan” for the border, should be encouraged. This initiative could be supplemented with “best practice” case studies that could be incorporated into freight professional capacity- building programs

• A study that examines the national,

regional, and local economic impacts of transshipment ports would provide important observations on the benefits and costs of such facilities

• The performance measures that can best

reflect the logistics and transportation problems of trade corridors and gateways should be identified and should be incorporated into the operations of state DOTs

• The NAFTA countries should provide

advice and support for the development of

• rganizational capabilities in Latin

American countries similar to Statistics Canada or the Bureau of Transportation Statistics

• Given the importance of the Latin

American market to the U.S., technical exchanges on topics such as finance, professional development, multimodal transportation planning would be very worthwhile