Report from Lázaro Cárdenas

This is a huge terminal, three shifts, 1,000 employees, the only port in Mexico that can admit the new post-Panamax ships built by Maersk and others. The harbor is 17 meters deep with two broad channels on either side of an isthmus, on which the container terminal is located. It’s an industrial port first of all, with a privatized steel plant (one of two in Mexico) and a fertilizer plant as well, plus oil operations which we didn’t get into at all. Apparently they don’t move much grain. A dam and a thermo-electric plant supply the whole thing with plenty of electricity, which is terribly expensive for normal people, we were told. There’s a “plan de usos de suelo” (ground use plan) on the website, showing what’s where.

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plano_uso_suelo

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Michoacan is a mining area, for iron ore, and everywhere around the city and port are medium sized ore-processing locations, which we were told are often Chinese owned, via Mexican strawmen. Some of it goes to the Arcelor Mittal steel plant, and the rest goes out to China. We actually saw front-loaders filling containers with raw materials, but it didn’t look like reddish like iron ore, rather black like coal, I am not sure. All around the port are rail lines with KCS de Mexico cars and locomotives on them, as well as older stock marked TFM (Transportación Ferroviaria de Mexico). Automobiles are both imported to and exported from here; you see them parked in perfect rows on endless lots, you see them coming out of triple-decker KCS cars and then you might see them going in as well. Strange how many are white.We were taken out to the container terminal by a very intelligent guy working in the department of “attention to clients” (I think it means customer relations). The company Lázaro Cárdenas Terminal Portuaria de Contenadores was bought by Hutchison Port Holdings (one of the world’s two biggest port operators) in 2003. They’ve invested $600 million so far. The current container port was finished in November 2007. Phase 2 was just added (basically, more staging areas) and phases 3 and 4 would extend the dock towards the east, adding yet more capacity. We were taken through the customs areas where some stuff is actually inspected; but if you are a “trusted enterprise” or if you opt for inspection at the point of origin, then you can just bypass this as clearly, most stuff does. We were taken directly into the technical sector where the guy showed us a new software simulation suite called FleXsim, apparently used by NASA, FedEx and many others. It takes in information such as the charateristics of the ships, the types of containers, the capacities of their machines, the demands of clients such as KCS, and it projects how long the containers will stay and what’s the most efficient way of handling them – but it’s not yet in real time and it doesn’t take in the individual container info that they guy across the office has coming into his laptop. So they aren’t yet in Star Wars but they are playing around with it.

Next we could not believe our eyes to be standing in a classical control room with maybe fifteen or twenty wide-screen computer stations and live video feeds from the docks and yards. “It’s a first-world port in a third-world country,” our guide kept saying, “the most modern port in Mexico.” They operators at their computers are essentially plotting the loading and unloading of the ships, not yet by algorithms (they say its coming) but by skill, on the basis of EDI files sent by the ships (I was drawing a blank but I now realize that’s Electronic Data Interchange) which they translate into Excel files. On the screens you see the outlines of the holds full of different colored boxes, some with numbers which indicate the ones they’ll handle (there are also vertical views showing the stacking). Not everything stays here, some things just transship, and then others are unloaded and put on trains (60%) or trucks (40%). And then of course they also plot how to load the ships. Apparently it takes a few person-hours per ship (both men and women work here). We really could not believe it when our guide said go ahead, photograph (supposedly we should never show the logo but it’s omnipresent, so that’s interesting).

Control-room_LC

So then we hopped into a van and out to the docks. Lots of huge RTG cranes like the ones we saw in Corwyth (Rubber Tire Gantry) for loading the stacked containers onto the trailers, as well as pickers for the empties. Train tracks going right up to the edge of the dock, with railcars being loaded and unloaded right in there. Simple drive-through tubular frames for the OCR scanners to identify the containers (apparently they don’t inspect the video feeds in real time for damage, as in Corwyth, but they do keep ‘em archived in case there’s a complaint later down the line). Then you get to the huge post-Panamax fixed cranes, with the operator in the cabin above and one guy on the ground (apparently no one in the boat to help him). It was hard not to be blown away by the size of the ship and the machines, the containers in the air, plus the soldiers or was it the Federal Police which caused us to hide our cameras. The ships come in all the time, but peak arrivals tend to be around Sunday, and Friday, when we went, is actually quiet.

As we moved out into the huge yard our driver was trying to accomplish some checking operation by phone and he kept saying something about how the check shouldn’t have any name on it. We were on the new staging area, totally empty and just completed – apparently they pay a tax for each of the spaces marked in yellow on the ground. Our man started opening up and explaining how they had agreements with the government and had to continue phases 3 and 4 of construction, but there wasn’t enough TEUs to warrant it. The Danish government had strong-armed the Mexicans to permit the building of a new port, which we later learned was going to be totally automatic – but where would the clients come from? There was no growth in shipping through Lázaro Cárdenas. If more clients didn’t come in, the expansion plans would have to be renegotiated with the Mexican government.

The reason was the cartels on the one hand, no one trusted the place, everyone was afraid, no one would change their usual routine to come here (even though Hutchison and KCS never paid a cent of protection money, he swore on the basis of conversations with his peers). It’s the most modern port in Mexico, he said, but no one knows about it, not even the people in the town (ironic when you consider that the security makes it impossible for anyone to know about it). But the worst thing was the competition: new terminals up the coast at Manzanillo, which is the traditional export-import site on the Pacific coast. Eventually one or more of these terminals was going to have to close. I totld him about the fictive logistics boom in Kansas City and suggested that all this was being built speculatively on the basis of exaggerated predictions developed in the boom years of 2005-07. He was very curious to hear that and totally agreed. He didn’t go so far as to say the whole thing was nuts but he did seem to think so in a way.

Later as we drove around with another guide showing us the entire port, we saw a drive-through gamma-ray scanner, of the kind the US started installing all over in the wake of 9-11. So the containers are theoretically clean when they leave the port. But the truck drivers that aren’t shaken down obviously have another option, which is to put something valuable in the container. Since they are from Michoacan, they have relatives and friends all over the US. Since the stuff in the container is quite valuable, a few people can be paid when necessary. The jeeps full of soldiers and Federales (one holding a belt-fed machine gun on a tripod) were, according to our first guide, just “theater.” Everyone agreed that things have calmed down, but nothing has changed. If the army stayed here long enough, then the cartels would have to do something, our guide said. Maybe they would even directly attack the army, he speculated. “But that’s the last thing the government wants,” I offered. “Yes,” he replied, “they have to protect the image of the port.”

We were back at the hotel, exhausted, by 2:30. Short siesta, then we decided to go out to a calm and tranquil beach. Spiced fish, beer, sunset. Peaceful and beautiful. Like old Mexico.

Beach

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