When Mexican trucks began crossing the border last month, it was the latest sign that the ports of Long Beach and Los Angeles are facing a competitive threat that’s getting serious.
How so? Well, Mexican trucks with Mexican drivers are now crossing the border and delivering their goods across the continental United States. The new truck rules are part of a one-year pilot program, but since the program is under the North American Free Trade Agreement, the new rules have a decent chance of becoming permanent.
Add to that the fact that Mexico plans to build a megaport only 150 miles south of San Diego, and you’ve got a looming and serious competitive threat. Granted, that megaport may be years away from opening, but the day is coming.
So what does this mean if you’re a shipper? Someday you’ll be able to unload cargo containers in the Mexican megaport that will be cheaper and less cumbersome than unloading containers in the local ports. And perhaps you can load the containers onto Mexican trucks and have them driven across the border and delivered in the United States by Mexican drivers. Now I admit I haven’t done much research here, but I’m going to take a guess and say that Mexican trucks and Mexican drivers will be much cheaper than American trucks driven by American drivers. You think?
In short, Mexico appears to be getting in position to do to L.A.’s ports what it did to manufacturing assembly plants. That is, maquiladorize them without much more than a gracias.
As the Business Journal reported last week, local officials have signed a memorandum of understanding with Mexican authorities. They want to grab containers that land in Mexico but are destined for the United States and trans-ship them on smaller vessels that will sail up the coast to the local ports, and vice versa. That way, the local ports can handle at least some of the containers that would go through Mexican ports. That step seems to indicate that at least some Angelenos recognize the competitive threat looming in Mexico.
The real problem will be getting more local folks to stop thinking like port monopolists. The local ports which handle more than 40 percent of all shipping containers that land in the United States are taken as a given hereabouts. We seem to say, in effect, “Go ahead. Raise costs on the shippers. They can’t go anywhere.”
As an obvious example, take the longstanding focus on cleaning up the air at the ports by replacing old trucks and forcing ships to use electricity instead of running their fume-spewing engines when they’re docked. That goal is fine and good who wants dirty air? but there seems to be little concern about how much all that will cost the companies in the transportation industries. A few weeks ago the Business Journal published a story about a local company that has devised a cheap way to supply docked ships with electricity, but the locals don’t like it because, well, they kind of like their old plan. Never mind that it’ll cost ships up to 10 times more money than the new, cheap alternative.
The focus needs to be on cleaning up the air and driving down costs. That’s because companies choose to do business where costs are lower and regulatory hassles are fewer. And for shippers, that choice may well be south of the border in a few years.
Charles Crumpley is editor of the Business Journal. He can be reached at
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