Ensenada port draws attention
http://www.signonsandiego.com/news/business/20050814-9999-lz...
West Coast congestion leads to more business
By Diane Lindquist
August 14, 2005
ENSENADA ? The picturesque port at the heart of this city is gaining a surge of new cargo business with the recent deepening of the harbor and
addition of two cranes to unload cargo containers from ships.
Before Hutchison Ports Mexico, the Hong Kong-based operator of the cargo and cruise ship activities here, made the changes this spring and summer, the
port 65 miles south of San Diego was receiving one container ship a week.
As of the first of August, five vessels visit per week.
"In volume terms, the cargo's doubled in recent months," said Mike Power, executive director of Hutchinson Ports Mexico. "For us, it's very good. We
were quite limited, but now we can handle virtually anything."
To expand its cargo business, the port has taken on all types of goods, including electronic imports from Asia for area maquiladoras, Mexicali Valley
grain exports and even cattle that disembark by walking down gangplanks.
Despite handling less total volume than the Port of San Diego, Hutchison's activities are drawing big attention these days. More companies are turning
to the operator to provide relief from the congestion at the ports of Long Beach and Los Angeles. Mexican officials also are looking to Hutchison, an
offshoot of the world's largest port operator and developer, to play a role in building a megaport elsewhere in Baja California.
As part of a feasibility study conducted in cooperation with the Baja California state government, Hutchison is eyeing three sites, said Power, who
oversaw Hutchison's development of a container cargo terminal at Freeport in the Bahamas.
He declined to identify the sites. But one reportedly is Punta Colonet, the locale south of Ensenada where the Mexican government wants private
enterprises to develop a megaport to handle cargo destined for the American heartland.
Hutchison might participate in that venture along with other firms, Power said, or it might continue to concentrate on its existing cruise and cargo
operations. Besides studying the megaport project, the company is considering whether to invest more resources at the Port of Ensenada.
Business could be doubled again by building a second berth and installing additional cranes, Power said. The operation now has a berth for container
ships, four cranes and a dock for other vessels.
"We've got a lot of room for growth," he said.
Cruise ship business has also grown at Ensenada. "We had our busiest year last year," Power said.
In 2004, that facility, which is across the harbor from the container operation, received 250 calls by cruise ships with half a million passengers.
Hutchison took charge of the Port of Ensenada's cargo and cruise operations in 2001 after purchasing the operating concession from International
Container Terminal Service. The Filipino firm was the only bidder for the business when the Mexican government sold the concession in 1997 as part of
the privatization of hundreds of state-owned enterprises.
At the time, the port was considered the jewel among federal government offerings in Baja California.
Originally, Ensenada's port concessions were to be auctioned together with a concession to build and operate a rail line from Ensenada to the
U.S.-Mexico border. Government officials promised a new transportation network linked to the interiors of the United States and Mexico would be
created and expand the region's economic potential.
Bids would top tens of millions of dollars, they predicted. But companies were put off by the challenge of building the railroad and the
administrative structure of the offer. In the end, the port operations were sold separately, fetching less than $1 million from International
Container.
Little was done to build up cargo activity until Hutchison Ports Mexico took over three years ago. The company now is the largest port operator in
Mexico, with a presence in Ensenada, Lazaro Card##as and Manzanillo on the Pacific Coast and at Veracruz on the Gulf of Mexico.
The company is part of Hutchison Port Holdings, a subsidiary of the multinational conglomerate Hutchison Whampoa Ltd., which has interests in 19
countries in Asia, the Middle East, Africa, Europe and the Americas.
Worldwide, Hutchison Port Holdings operates 236 berths in 40 ports together with a number of transportation-related service companies. In 2004, the
HPH Group handled 47.8 million TEU, a shipping industry measurement equaling one 20-foot-long container.
Hutchison's Ensenada operation gained notice during the 2002 lockout at West Coast ports when numerous ships were diverted south to unload cargo.
With its two cranes, it was able to entice container ships, unlike the Port of San Diego. It focuses on bulk cargo including automobiles but does
receive 90,000 TEUs annually from Dole Fresh Fruits ? mainly bananas.
Ensenada and San Diego have a sister-port relationship, said Ron Popham, senior director of the San Diego port's maritime division.
"We're trying to create a synergy where we can help each other," he said.
The Ensenada port's ability to handle additional container traffic along with the congestion that Long Beach and Los Angeles encountered over the past
three years persuaded some of Baja California's biggest maquiladora manufacturers to divert their containerized parts deliveries to Ensenada.
"We're in a trial to see if it works out well," said Ryuichiro Ishikawa, a manager at Sharp, which makes televisions at its factory in Rosarito Beach.
That company, as well as Panasonic, began diverting five to 10 containers a month from the San Pedro complex to Ensenada.
"So far we haven't found any problems," Ishikawa said. "Since we're in Rosarito, the containers don't have to pass through Tijuana. If we receive
parts through Ensenada, we can receive them in up to six hours after they arrive at the port."
Power estimates that the port is now handling 15 percent to 20 percent of the Asian imports as well as some exports for the state's maquiladora
manufacturers. Sanyo, Sony and Samsung are also receiving imports through Ensenada, and Samsung and Thompson are exporting their finished televisions
to South America.
Dredging the harbor made it possible to process ships the size of those carrying containers loaded with maquiladora goods.
Before, the operation was limited in the size of ships it could handle because the vessels could not turn around in the harbor.
A new turning basin was dredged so that, instead of being restricted to vessels of 240 meters long, the terminal can accommodate ships up to 300
meters. Two cranes were purchased in March from the Port of Seattle and floated down the coast on a barge.
"They're relatively old, but for the size of our facility, they were appropriate, and they were available quickly," Power said. "The two cranes we had
limited us to 60 to 70 moves (of containers) an hour. With the four cranes, we've increased that to 140 moves an hour."
The port has diversified into other cargo. At the request of federal officials in Mexico, Hutchison developed a system to handle bulk grain from the
Mexicali Valley using container equipment. As a result, about 300,000 tons of food-quality grain is sent to the Mediterranean every year.
"I believe the system we use is almost unique in the world," Power said.
Other cargo include the cattle, which are imported from El Salvador and Australia, and steel and timber.
"This is a niche port," Power said. "We get involved in anything that comes along if it's feasible."
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