International News: New Terminal Could Mean More Competition For West Coast Ports

[Full original story HERE]

A Danish shipping terminal operating company has won the right to build a new deepwater container terminal at the Mexican port of Lazaro Cardenas. That new $900 million facility on Mexico’s Pacific coast will bring new competition to American West Coast ports for business feeding imported goods to the Midwest and South.

APM Terminals, a division of Denmark's A.P. Moller-Maersk Group, is scheduled to complete the first phase of the four-berth terminal in 2015. That Mexican port is connected to the U.S. by a branch of the Kansas City Southern Railroad.

Like the relatively new container terminal facility at Prince Rupert in British Columbia, the Mexican port will have a built-in economic advantage over West Coast ports in the U.S. in that containers imported through those foreign ports aren't subject to the U.S. harbor maintenance tax.

The ports of Tacoma and Seattle and several others are lobbying for Congress to rewrite the tax so that containers landed in Mexico and Canada will have to pay the same tax when they are imported into the U.S. Shipping lines argue that since they don't use U.S. harbors to import those containers, they should be exempt from the tax. The proceeds from that tax are used for maintenance dredging of U.S. harbors. The tax is based on the value of the goods being imported.

The Mexican port also will enjoy a labor cost advantage over U.S. ports where Longshore Union members have won handsome compensation for their work. Lazaro Cardenas is expected to divert cargo now being imported through the Southern California ports of Long Beach and Los Angeles. If those ports lose cargo to the Mexican competition, they may increase competitive pressures on other U.S. West Coast ports for the remaining cargo.

The new Mexican port isn't the only threat to U.S. West Coast container business. Panama is expanding the capacity of the Panama Canal. That project is due for completion in 2014. That capacity increase is likely to divert more cargo to East Coast and Gulf Coast ports.

Full original story HERE.