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September 17 2018

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16 The Journal of Commerce | September 17 2018 www.joc.com International Maritime IMPORTERS FROM MEXICO are turning to ocean services connecting to Florida ports to serve Central Florida and the Southeast, avoiding the risks of higher costs, longer transits, and sharper delays from conventional land routes across the US-Mexico border. Port Tampa Bay says cargo volume on two routes started two years ago have skyrocketed — by 232 percent in 2017 and a 90 percent increase predicted this year — in large part serving the Central Florida consumer market. And the port is looking to leverage that business to encourage shippers to consider moving cargo into Atlanta, South Carolina, and even the Northeast from the port. PortMiami began investigating ways to increase Mexican business five years ago, but progress really picked up when Grupo Mexico Transportes purchased Florida East Coast Railway from Fortress Invest- ment Group in 2017. Eric Olafson, PortMiami's director of global trade and business devel- opment, used an example of moving a container from Central Mexico to Atlanta to explain how ports can be attractive. "If we do it all trucking, it would take six days and $6,000," he said. "If you go to the coast and send it from either Veracruz or Tampico to Miami and then up to Atlanta, it would be four days and the cost all in would be $3,500 to $4,000. So not only do you save time, but you also save money." Sea also offers a simpler move, the ports say. Cross-border freight by land, while a thriving business, is also one that involves multiple trucks, stopping points, extensive paperwork, and a third-party logistics company to handle the cumbersome process. So far, the two ports only see small cargo volumes on the route. Tampa Bay's cargo from Mexico totaled 8,554 TEU, and Miami's totaled fewer than 10,000. About two-thirds of the cross-border traffic between the US and Mexico goes by truck, about 13 percent by sea, and about the same by rail, said Raul Alfonso, Port Tampa Bay's executive vice president and chief commercial officer. But the combination of difficul- ties in moving by land has prompted some shippers to look for alternative routes, Jose Minarro, senior vice president, Mexico customs, for Transplace, told the JOC Mexico Trade Forum in August. "We hear customers more and more trying to diversify, trying not to put all their eggs in one basket," he said. "So, we've seen tremendous growth in intermodal versus pure truck in the last five years," and it could include sea and air, he said. Still, convincing shippers and truckers to try a new route isn't easy, said Craig Mygatt, CEO of SeaLand, a Maersk Line affiliate that mainly serves the US and Latin America. One challenge is to overcome the "cultural aspect" that shippers stick to their existing routes. Another is that trucking cargo across the border offers shippers more flexibility than does sea, he said. "So, if you get to Laredo, you can sell your avocados over to Florida, or you can sell them to New York, or Chicago, or Los Angeles," he said. "And you can look at the pricing of the avocado in those different mar- kets, and divert cargo that normally would have run to Philadelphia and say, 'OK, the LA market is strong right now, let's shift and de-van, sell our avocados to LA.' " The difficulty of matching that flexibility was one of the factors Port of Philadelphia officials cited for the discontinuance of the port's SeaLand service from Altamira and Veracruz in the spring of 2017, about a year into its operation. Strong freight demand and higher trucking rates within the US mean fewer trucks are available this year for northbound loads at the US-Mex- ico border. Shippers are tradition- ally hit hard in the spring and early summer, the peak produce shipping season from Mexico, when the imbal- ance in northbound and southbound shipments between the United States and Mexico creates a shortage of trucks and containers. It's been worse this year, with an imbalance rising to about three northbound trucks to one southbound truck. When it's moved by land across the US-Mexico border, freight is typically consolidated at its starting point in Mexico and placed on a truck that is dropped and hooked to a cross-border Mexican trucking company. Meanwhile, Mexican and US customs brokers send paperwork to respective governments. On arrival at a crossing point, the Mexican truck drops the freight, which is then hooked up to a US truck, because most carriers are unable to meet the requirements to operate in both countries. Sidestepping the border US Southeast importers of goods from Mexico turn to water route By Ari Ashe and Hugh R. Morley "We've seen tremendous growth in intermodal versus pure truck in the last five years," and it could include sea and air. Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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