Wednesday, May 16, 2012

Geography is not everything: What will Mayor Salinas push now?

Everything may not be as rosy as Mayor wants shippers to believe

For the last few years, Mayor Salinas, along with staff and the beloved Laredo seedy council, has constantly been strongly pushing the notion that Laredo will always be the number one port of entry because of geography.

As it turns out, this is simply not true.  The San Antonio Express News is reporting the behind-the-scenes goings out at HEB's headquarters in regards to shipping routes. Apparently, HEB chose to use the "Mayor's route" : Asia - Lazaro Cardenas port in Mexico - Laredo - IH35North. Lo and behold, it was successful.......for a while.

As the following account relates, not long after initiating the use of this route, HEB found that rising rates quickly made the "Mayor's route" more expensive than the previously-used route of Asia-Los Angeles- Interior US. So, naturally, they said "adios" to Lazaro Cardenas/Laredo.

From The San Antonio Express News

In 2006, H-E-B bravely tried an experiment. The company quietly imported a shipment from Asia through a new trade corridor in Mexico. Few people knew, however, what H-E-B thought of the experiment and if it followed up.

For food and nonfood merchandise from Asia, H-E-B largely had relied on shipping lines arriving at Long Beach, Calif.'s huge port, and then on trucks to bring the freight to Texas.

About seven years ago, a new trade corridor was promoted by the Mexican Pacific port at Lázaro Cárdenas, in the state of Michoacán and Kansas City Southern de México.

The idea was for ships to deliver some H-E-B-bound Asian goods to Mexico's Pacific port instead of California. From Lázaro Cárdenas, the cargo would be loaded for Kansas City Southern's Mexico rail service north to Laredo. From Laredo, trucks would take the goods to H-E-B distribution centers in Texas, including San Antonio.

The experiment worked to H-E-B's benefit, said Mark Lewis, H-E-B chain director of domestic and international inbound logistics. At the time, Lewis joked, he didn't know “Michoacán from a mocha latte.”
H-E-B used the Lázaro Cárdenas corridor for “several years” for a portion of its Asian trade and then stopped.


“The rates changed,” Lewis said. It turned out that Asian trade flowing into the Lázaro Cárdenas port increased so much for delivery to Mexico City and Puebla that the shipping rates on ocean container ships increased. That removed H-E-B's cost advantage over using Long Beach, Lewis said.
H-E-B now uses Long Beach for most of its Asian trade and a smaller portion travels through the Panama Canal before arriving in Texas. H-E-B doesn't want to rely entirely on one shipper or one route, so it imports with several shippers to reduce risk, Lewis said.

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