The recent tender for a new vehicle terminal at the Mexican port of Lázaro Cárdenas has been declared deserted by the port authority after neither of the two remaining bidders was prepared to commit to a firm timetable for the second phase development of the facility.
Of the initial nine companies indicating an interest in the project, several dropped out citing a combination of the current economic downturn, an inability to secure finance and the decline in the Mexican auto market.
This latter factor is clearly reflected in current port traffic. Mexico’s seven main ports reported a 7% drop last year, handling 853,766 units. The first four months of 2009 have seen a further 48.8% decline. The two leading facilities, at Veracuz and Lázaro Cárdenas, have respectively recorded falls of 40% and 70%.
Clearly, any investor would have to question the future size of the Mexican market before parting with their cash.
Brazilian ports, in contrast, are doing much better. In 2008, leading port Santos (pictured) handled 420,000 units, with both auto terminals seeing a rise in traffic. By 2012, it will have capacity in place to handle 700,000 units. But how confident is the industry that this will be taken up?
Some 49 companies bought documents relating to the recent tender for the port’s Vehicles Export Terminal (VTE), but in the event only two bid. The incumbent operator, a subsidiary of adjacent container terminal Santos Brasil, was awarded the 25-year concession, having entered a bid of R$114.3m ($58.8m). Box terminal rival, Libra Terminais, clearly not convinced that a fair fight was in the offing, offered just R$20m.
By the sixth year of its concession, VTE must handle 300,000 units, which compares to the 114,928 units it handled last year. While on the face of it the increase doesn’t look that demanding, the reality might be somewhat different.
The port’s longest established operator, Deicmar, which reported a 4% rise in traffic last year, handling 171,000 units, plans to expand its own short-term capacity by 100,000 units. In addition, a third new vehicles terminal is under construction at Embraport, where Coimex will have the capability to handle up to 100,000 units. VTE will clearly have a fight on its hands not only to retain existing traffic, but also to grow the port’s overall auto market.