Mexico’s technologically advanced shipping terminal

Mexico’s technologically advanced shipping terminal

Latin America’s most technologically advanced shipping terminal opened in April at Lázaro Cárdenas with a ceremony attended by heads of state and shipping industry royalty, according to the Wall Street Journal.

But the ambitious project faces an uncertain future as U.S. President Donald Trump weighs new trade barriers.

Major importers such as Wal-Mart Stores Inc., Samsung Electronics Co. and Target Corp. see Lázaro Cárdenas as a key link between Asia’s factories and Mexico’s growing middle class. They also hope to use the port as a backdoor to the U.S., bypassing congested West Coast ports via the “NAFTA Railway,” a network of tracks operated by Kansas City Southern that can shuttle goods as far north as Memphis.

APM Terminals, a unit of the world’s biggest shipping company, A.P. Moller-Maersk , spent five years and $568 million on the new terminal. APM hopes to spend up to $900 million to expand capacity at the terminal to rival the Port of New York and New Jersey by the end of the next decade.

But President Trump has threatened to penalize manufacturers that move operations to Mexico and wants to renegotiate the North American Free Trade Agreement. Republicans in Congress have floated a “border-adjusted tax” that would raise the cost of imports.

Any of these measures could deal a blow to U.S.-Mexico trade. Mexico’s imports have grown more than 30% since 2010 and container volumes are up 60% in the past three years at Lázaro Cárdenas’ older facilities.

“The port is a microcosm of global trade flows. [And] it’s very exposed to the auto industry,” said Christopher Rogers, a research analyst with trade data firm Panjiva.

The new terminal features towering 300-foot-tall ship-to-shore cranes that can span the largest container ships currently plying routes between Asia to North America. The cranes can pluck two containers at a time from ships, then deposit them in piles. Robotic stacking cranes that run on electricity—rather than the usual diesel—use artificial intelligence to arrange the piles in the most time- and cost-efficient order. Such semi-automated systems are common at port terminals in the Netherlands and Singapore, but have never been used in Latin America.

The facility is expected to employ about 550 people—or 250 fewer than a similar-size terminal without automation—which makes for fewer accidents and lowers container handling costs by 20%.

“I’ve never seen a terminal this technologically advanced. It’s much safer, much more dynamic, much more mechanized,” said Miguel Ángel Dominguez, a supervisor for cargo operations at the terminal. (Source: The Wall Street Journal)

Articles are chosen for summary in this Market Intelligence blog based on newsworthiness in conjunction with The Infinite Loop themes. Any opinions and views expressed in the articles are generally those of the underlying author from the source listed, are not necessarily current as of the date of this blog, may change as market or other conditions change, and may differ from views expressed by Ivy Investment Management Company and its associates or affiliates. Actual investments or investment decisions made by Ivy Investment Management Company and its affiliates will not necessarily reflect the views expressed in the articles. These articles are distributed for educational purposes only and are not investment advice or a recommendation to purchase, sell or hold any specific security mentioned in the article or to engage in any investment strategy. Investment decisions should always be made based on each investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Securities discussed may not be suitable for all investors.