Mexico joins the nation’s largest distribution pipeline

Implications: We see from the article that over 40 % of the nation’s imports by cargo ship flow through the adjacent Long Beach and Los Angeles ports which lie smack in the middle of the Los Angeles Metroplex. Moreover, the traffic at the ports will double in the next dozen or so years. The container port proposed 150 miles south or so south in Mexico will alleviate only a portion of this demand and is a massive undertaking.

Analysis:

The contrast between the development of Mexico with its 50 million population and huge area and the United States is more noticeable now than it has ever been. We get spoiled when we land at LAX and find 100 years of infrastructure in place and cooking. The components of the system are antiquated now and California has not invested in facilities since Pat Brown was Governor many moons ago, but, as the article points out, it’s the best we’ve got in this country.

Mexico, on the other hand, has very little development other than for tourism on its coasts and no infrastructure in place. The topography along the border which will be spanned by land transportation elements is not as severe as much of California, but road and rail constructors face elevation changes before hitting the border. Tunnels and direction changes will increase costs here. The area is arid and power sources are non-existent, but this issue is not the problem it was in the past, I believe. The border system is a further cost.

The time seems right for not only this port but others like it in the Sea of Cortez which can share the infrastructure cost. The Alameda Corridor services the California ports with its limited rail expansion possibilities. Alameda is an urban arterial instead of the multi-lane thoroughfare you might expect. Warehousing stretches from the South Bay area of Los Angeles 50 miles east into San Bernardino serviced by freeways which were built 50 years ago and choked daily with commuter traffic. Now Phoenix is getting Amazon and Macy’s and others and Las Vegas has a warehouse inventory too. There doesn’t appear to be a wholesale solution in California or Oregon to solve port demand on a mass basis and Washington probably isn’t going to permit Puget Sound to be the place nor is Washington as generally well located as Mexico in my opinion.

It’ll be interesting to see if the domestic and offshore development community will respond now to this challenge. This development relates to the Aerotropolis concept which is underway in the U.S., throughout Asia and in Brazil plus others. Maybe Dubai or Ross Perot, Aerotropolis developers, will energize this market. This is a definable future market which is difficult to develop and capital intensive and may have the possibility of great rewards by 2020.