Baja port 'Punta Colonet' plan making gains

FREIGHT: Mexico has opened bidding on project that would siphon business from Long Beach, L.A.
By Kris Hanson, Staff writer
Article Launched: 10/13/2008 01:00:00 AM PDT


LONG BEACH - Nearly a year after announcing an ambitious plan to tap into the booming flow of trade between the U.S. West Coast and Asia, Mexican authorities have renewed a push to build a massive container port in Baja California.

The $5 billion project, proposed for a natural deep-water harbor near the small west coast fishing village of Punta Colonet about 275 miles south of Los Angeles, may one day compete with Long Beach and Los Angeles for a share of containerized freight.

In August, the Mexican government opened bidding for private development of port terminals and docks, and completed land-use and right-of-way negotiations with landowners in the area. They've also surveyed rail routes leading to the U.S. Southwest, and have organized a consortium of legal experts to help swiftly navigate trade, property and customs regulations.

Then, on Oct. 7, Mexico's Consul General in Los Angeles, Juan Marcos Gutierrez, participated in a panel discussion with port officials from Long Beach and Los Angeles to discuss the effort, and will be meeting with top West Coast port officials again this week at a retreat in Manzanillo, Mexico.

"This is the most ambitious infrastructure project of our time," Gutierrez said during the forum at Cal State Dominguez Hills. "It's something that's needed not only for Mexico, but for the regional economy."

Mexico believes that a port in Colonet would create up to 58,000 permanent jobs in Mexico, help upgrade the country's railway system and would, in turn, provide a cheaper, more efficient freight movement system for U.S. consumers and retailers.

It's expected that more than 95 percent of goods shipped to a Colonet port would be bound for the U.S. market via railway and through border crossings in Yuma, Arizona and El Paso, Texas.

Union Pacific, which controls an existing rail link along the Southwestern U.S. border, has been in talks with Mexico to participate in the project, but no deals have yet been signed.

As for marine terminal development and operation, at least one major international developer has expressed interest. Hutchinson Port Holdings, based in Hong Kong, is believed to be the project's most likely developer, but has yet to commit. Hutchinson could not be reached for comment, but Mexico is offering a 45-year terminal management concession to the highest bidder.

The Punta Colonet project, in the works for more than two years, seeks to capitalize on the estimated 30 million freight containers sent from Asia to North America annually - about 75 percent of which goes through ports in California, Washington and Oregon.

Port would serve U.S. market

Mexico's goal is to capture about 6 million containers annually at Punta Colonet, then ship them via rail to points within the U.S. Very little of the cargo would be destined for Mexico's domestic market, which is served primarily by ports in Manzanillo and Lazaro Cardenas.

The Baja port is the latest challenge to Long Beach-Los Angeles' longtime role as America's busiest and most lucrative seaport. The twin ports currently handle more than $350 billion worth of cargo annually, a figure representing about 30 percent of the nation's maritime trade worth.

Competition grows
The ports are already being challenged by a new container port in Prince Rupert, British Columbia, expansions in Tacoma, Washington and Oakland, California and a modernized Hampton Roads in southeast Virginia. In addition, the expansion of the Panama Canal - now under way - allows passage for larger container ships from Asia to ports in the Gulf.

But there remain cost and time-prohibitive barriers for sending Asia-originated freight through the Panama Canal. It takes an average 21 days to ship cargo from China to the U.S. East Coast, but only 12 to the West Coast. With high energy costs, the extra nine days at sea makes much such trade prohibitive.

By building an alternative western port and offering cheaper labor and less costly tariffs, Mexico hopes to lure shippers whose goods would have passed through California or the Panama Canal and destined for the American Midwest.

"The market we're (trying for) is east of the Rockies," said Gutierrez. "It's a share of that 45 percent or so of freight that (Long Beach-Los Angeles) carry that is headed inland."

Professor Kaye Bragg, a Cal State Dominguez Hills economics professor, said the Punta Colonet proposal only makes sense if projections of growth are on the mark. Based on 20-year trends, economists expect the volume of containerized goods between Asia and Long Beach-Los Angeles to surpass 36 million 24-equivalent containers, or TEUs, by 2020.

Therefore, if Punta Colonet siphons six million TEUs from Long Beach-Los Angeles, it represents only a share of future growth, and not a chunk of current volume - potentially making competition less hostile and more collaborative.

Don Snyder, the Long Beach port's trade relations director, said that although labor costs and regulatory pressures will likely be less in Mexico, developers will need to recoup their investment costs, which may drive up transportation and dockage prices to levels comparable in Southern California.

"Someone's going to have to amortize the cost of building that rail track, building those terminals, building the infrastructure," Snyder said. "When you add those costs in, plus the transportation costs of using U.S. rail inside the States, is there a great savings?"

Long Beach Harbor Commissioner Mario Cordero, who visits Mexico this week to discuss regional trade, says projects like Punta Colonet represent the competitive realities of global trade.

"Everybody is developing megaports ... you see it in Asia, Europe, South America," Cordero said. "People are looking for their share. The difference this time is we have a big project being developed next door."

Snyder sees it as a stimulus to continue improving local port facilities and transportation links.

"Competition is a good thing because it keeps everyone sharp," Snyder said. "Our goal is to have the most efficient supply chain and be a leader in terms of helping introduce technologies that save fuel, pollute less and make the most economic sense for our customers."

Gustavo Torres
gustavotorres@remax.net
1-866-588-2252
www.remax-baja.com

Flow to river channel to drop; irrigation uses seen

By Sandra Dibble
UNION-TRIBUNE STAFF WRITER

September 26, 2008

TIJUANA – It sits on a hillside miles from San Diego, rising above tightly packed colonias in Tijuana's fast-growing eastern end. Despite its distance from the border, the new Monte de Los Olivos sewage treatment plant has been drawing applause in California.
Expected to begin operation within a month, the $9 million plant will at full capacity treat the waste of some 265,000 residents to a tertiary level, clean enough for irrigation. Together with a smaller but similar plant, La Morita, set to open this year, Monte de Los Olivos will dramatically decrease the flow of untreated sewage down the Tijuana River channel that leads to the border.

The operation of the two plants also will relieve Tijuana's main sewage treatment plant, the over-burdened Punta Bandera facility south of Playas de Tijuana. By the middle of next year, officials hope the operation of the new plants will largely eliminate the coastal discharges of untreated sewage at Punta Bandera.

“This project puts Baja California at the vanguard of sewage treatment in Mexico,” Baja California Gov. José Guadalupe Osuna Millán told a crowd of more than 300 gathered for yesterday's inauguration ceremony at Monte de los Olivos.

The plant's opening marks the first step in an ambitious state-led reclamation project for Tijuana that will take years to develop. The city's 1.4 million residents look to piped-in water from the Colorado River to meet more than 90 percent of their water needs, and the state has been hard-pressed to expand the region's supply.

By using treated water for irrigation and industry, the state hopes to save the Colorado River water for residential and commercial purposes. But before they can proceed, they need to build a network of pipes to deliver the reclaimed water, and find enough users.

No one disputes that the plants at Monte de los Olivos and La Morita, which will treat sewage in the Tijuana River watershed, represent a major step forward for the city. Financing for the two plants, along with a third scheduled to open next year in southern Tijuana, is through a low-interest loan from the Japanese government and Mexico's federal government. The builder is a Mexico City-based company named Fypasa.

Initially, only 10 percent of Monte de los Olivos' output capacity will be used for reclamation, said Hernando Duran, head of the state public service commission in Tijuana, known as CESPT. The state is setting up a system that will pipe any of the unused treated effluent for discharge into the Pacific Ocean south of Punta Bandera.
“While the system is designed, it's not fully ready,” Romo said. “Overall, it's a very good sign, but people should not expect results by tomorrow.”

Within four years, Duran said the hope is to be using at least three-fourths of Monte de los Olivos' capacity in reclamation projects. Beyond that, the state is also studying the possibility of piping some of the reclaimed water to a point above Tijuana's RodrNguez Dam, allowing it to filter through into the reservoir.

“They deserve a huge amount of credit for what they've done,” said Bart Christensen, senior engineer with California's State Water Resources Control Board, and his agency's border coordinator. “They have the same goals as San Diego, but they don't have the resources San Diego has. They have to be really creative to get their infrastructure implemented in Tijuana. This really demonstrates Mexico's commitment to addressing their own waste water infrastructure needs.”

Despite progress, Tijuana's sewage flow continues to exceed the city's treatment capacity. Cross-border sewage spills have for decades been a contentious issue, as incidents in the Tijuana River basin are likely to be felt across the border in the Tijuana River estuary in Imperial Beach. Though dry weather flows have largely been eliminated, cross-border sewage flows during wet weather continue to shut down South Bay beaches.

Monte de los Olivos “is a critical facility that's necessary to meet Tijuana's waste water treatment needs today and in the future,” said Su Cox, an environmental engineer with the U.S. Environmental Protection Agency, which has been working closely with CESPT on a plan to connect an additional 34,000 residents in eastern Tijuana to the sewer system.

“The thing that's great about this is that it addresses environmental health and public health needs on both sides of the border.”

Highlights
Cost: The $9 million Monte de los Olivos plant will treat sewage from about 265,000 residents in eastern Tijuana.

Irrigation: The plant launches a major reuse project for Tijuana, and officials are installing pipes to distribute the water to green areas. Most of the flow will initially be discharged into the ocean.

Coastal discharge: The plant provides relief for the overburdened coastal Punta Bandera plant. Together with future La Morita plant and new sewage collection projects, the coastal discharge of untreated sewage from the Punta Bandera plant is near an end.

Cross-border: Cross-border sewage flows in wet weather will continue, but the concentration of sewage in those flows is expected to decrease.

Other projects: A third sewage treatment plant in southern Tijuana, a desalination plant in Ensenada that will produce 5.7 million gallons of water a day, and expansion of the Colorado River aqueduct.

www.bajainvestment.com

BAJA CALIFORNIA, POTENCIA DE ENERGÍAS RENOVABLES

Inversiones por un monto de 4 mil 900 millones de dólares se esperan recibir a mediano plazo en el corredor Mexicali-Tijuana mediante la ejecución proyectos de energías alternativas, informó el secretario de Desarrollo Económico del Estado, José Posada Gallego. Con lo cual, dijo, Baja California se colocaría como una potencia en la producción de aparatos para generar energías renovables.
El funcionario estatal indicó que la Entidad tiene un crecimiento en demanda energética al año de poco más de 100 megawatts, por lo que se ha fijado como meta obtener 20 por ciento de su energía de fuentes renovables.

En reciente gira de promoción realizada en España, lograron contactar a cinco empresas proveedoras de insumos de la industria de energías alternas. El secretario de la Sedeco dijo que la empresa española Abengoa, la cual aplica soluciones innovadoras para el desarrollo sostenible en los sectores de infraestructura, medio ambiente y energía, expertos en la gestión de agua, anunció la apertura de una oficina en Baja California para Octubre del 2008 en el área de investigación y desarrollo de tecnología de manejo de agua. Por lo que, Posada Gallego aseguró que el Estado sigue siendo muy competitivo en cuanto a la atracción de nuevas inversiones en las áreas de la aeroespacial, aeronáutica, energías renovables, tecnologías de la información y electrónica.