What would be the benefits of diversifying the economy and strengthening logistics and sea freight industries?
Today, we have an inverse relation with our coasts, relative to other countries, with most of our economic production being inland and only about 20% alongside our 11,000km of coastlines and 117 sea ports. Our ultimate objective is to reverse this. We are developing an investment platform and roadmap completely independent from public funding. Mexico needs to ensure sustainable and reliable investment in the industry over time that is unrelated to government changes. To secure optimal operations and high productivity alongside the supply chain in many industries, every stakeholder in the process needs to be involved in improving the sector. As of 2019, there are 800 world-class companies currently operating that have invested over MXN150 billion, representing 80% of the overall investment into ports in Mexico. The sector has grown steadily around 4-5% on a yearly basis and has continually attracted the largest companies that want to seize on Mexico's special location.
Why is CGPMM prioritizing the Veracruz Port, Progreso Port, and the expansion of the Cuyutlán Lagoon as its key projects?
They are the ones with most potential to influence reliability on inland transportation. The costs for land freight continue to increase, and the operational risks are extremely high. In 2019, the government invested over MXN20 billion in only maintaining current roads, and security issues are ongoing. We need to develop infrastructure that would serve as viable alternatives or primary ways of moving cargo in, out, and within the Mexican territory. We are working alongside main inland operators to create “sea roads" or routes that would serve as main replacements for today's most troublesome inland routes. We recently signed an agreement with the Private Haulers Association, of which companies like FEMSA and Walmart are members, to jointly develop these projects. The operators will see massive savings in reduction of robberies, maintenance to their units, size, and gas that will, in turn, be translated into setting reasonable fares for sea freight. Under this agreement, we will integrate every stakeholder, unify cargo for efficiency, and prepare logistics for the mixed sea-land routes. All but two of our ports were conceived for commercial use rather than industrial. We needed to select three ports of major significance that were completely maxed out so that our investment would make the highest-possible impact.
How are you expecting the introduction of privately-operated ports to influence the industry?
We have transformed and brought together 16 individual regional ports into an integrated intermodal coastal ports system. The idea is to combine cargo efforts under one route that would unify international cargo and allow a single port to carry out exports to main global markets directly, rather than consolidating cargo in different ports, with cargo even going to the US before it is shipped to Asia alongside other cargo. We can increase the output of a single port hundredfold to attract main shipping lines to create direct routes to and from our single point of consolidation in Mexico. Our plan is to strengthen the infrastructure in such a way that would encourage the private sector to carry out new projects, invest in new businesses, or grow existing ones, thus generating a self-sustaining sector in which private investment is not only welcome but also necessary for the industry's survival. We also want to attract regional investment by getting communities, local companies, or regionally based companies to participate in projects enabled by us through foundations. For example, in the Altamira Port, we invested MXN400 million in dredging the port and incentivizing improved FERROMEX logistic services. This effort is to then going to enable Ternium, a steel manufacturer, to invest around USD25 billion in opening its industrial activity, giving them easier access to its raw materials imported from Brazil through Altamira.