Latin America Trade
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Opening the Midwest to Asian trade via Mexico
By Gene Linn, AJOTIn the last few years, Kansas City and Mexican officials have “talked the talk” concerning a new trade route from Asia through Mexico to Kansas City. Now they are beginning to “walk the walk.”
Talk about setting up a new route to bypass congested US West Coast ports emerged in dozens of official and unofficial meetings in Kansas City and Mexico. It culminated in March with the signing of a cooperative agreement between Kansas City and the Western Mexican port city of Lazaro Cardenas.
“In terms of opening the Midwest to Asian trade through Mexican ports, this agreement signifies substantial completion of the extensive efforts devoted to establishing the political, economic and cultural foundation enabling this trade route to work,” Alfred Figuly, president of the Greater Kansas City Foreign Trade Zone, said shortly before the formal signing of the pact. “It also marks the beginning of the implementation phase.”
Kansas City had already signed a similar agreement with the much larger Mexican Pacific port of Manzanillo, but the Lazaro Cardenas pact is the key to the proposed trade route.
The Lazaro Cardenas signing was, “exciting and historic,” according to Chris Gutierrez, president of non-profit trade-promotion group Kansas City SmartPort. He recently told the AJOT that a lot of containers already pass from Asia’s prolific exporters through Manzanillo, but generally do not go to Kansas City. “All traffic though Lazaro Cardenas can go to Kansas City on Kansas City Southern trains,” he said.
According to Mexican law, he said, all in-bond trade must move through the country by rail. Kansas City Southern’s acquisition on April 1 of its Mexican partner, TFM, S.A. de C.V. (TFM), puts it in an excellent position to provide this service, Gutierrez said. The Kansas City carrier already controlled the Texas-based line, The Texas Mexican Railway Company, known as TexMex. Southern’s chairman and chief executive officer Michael Haverty said in a news release, “TFM, Southern Railway and (TexMex) will now operate under common overall leadership, creating a seamless transportation system that spans the heart of North America.” Southern states that common ownership will enhance investment in cross-border infrastructure, training and cargo tracing and tracking systems.
As for Lazaro Cardenas, Gutierrez said that giant Hong Kong-based port developer Hutchison Port Holdings plans to expand the Mexican port’s throughput from a negligible 45,000 teus in 2004 to two million in the near future.
That kind of potential for exponential expansion makes the proposed trade route attractive, compared with US West Coast lanes, which suffered significant delays last year. “Asia-US trade will grow substantially every year,” Gutierrez said. “Long Beach and Los Angeles can’t handle the extra traffic. They have no room to double or triple their capacity.”
The dynamism of US-Asia container trade is reflected in a projection by APL Limited stating that 2004’s explosive 14.5% rise will be followed by healthy annual expansion of about nine percent for the next three years.
Kansas City officials assert that once increasing numbers of containers arrive from Lazaro Cardenas, they will go through Customs and take advantage of the city’s position as a distribution hub. “We have three interstate highways going through Kansas City, railway lines, air cargo facilities, ample warehouse space and logistics staff,” Gutierrez said.
Already, US Customs clears more than $9 billion a year in imports in Kansas City. The city has plans to build former Air Force base Richards-Gebaur into an intermodal transit and cargo center. Negotiations are underway to open a groundbreaking Mexican Customs inspection office for cargo going from Kansas City to Mexico.
To get the drive to set up the new trade route on its feet, the Kansas City-Lazaro Cardenas agreement called for the two cities to launch a marketing campaign and to promote in-bond transfers between their respective foreign trade zone
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