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10/15/2021 | News release | Distributed by Public on 10/15/2021 11:32

Ships use Long Beach to bypass Mexico rail protest

Companies trying to move goods to, from and within Mexico are diverting some ships to California to then move product by truck as a rail blockade prevents them from using a key Pacific coast port in Michoacan state.

Protests over teachers' salaries have blocked US railroad Kansas City Southern's (KCS) rail line in and out of the Lazaro Cardenas port for over 70 consecutive days and over 90 days total this year.

That has led companies to look for alternate routes within Mexico, including transporting goods by truck in and out of Lazaro Cardenas port, or using the Manzanillo port.

But in some cases, ships have detoured to the US port of Long Beach, California, said Felipe de Javier Pena, head of the transportation committee for Mexico's confederation of industrial chambers (Concamin).

"We are going backwards in Mexico," Pena said.

Sending vessels to Long Beach is difficult as that port is already congested because of global supply chain disruptions and the route increases costs, a director at a northern Mexico auto parts company said.

But firms have been forced to send goods to Long Beach anyway because there are not enough trucks in Mexico to carry all the cargo that cannot pass by rail.

"The only way to get out of there is by truck, but there are not enough trucks," said a director at a steel company in Mexico.

Additionally, part of the Manzanillo port is under construction, making it difficult to rely on as an alternate.

"There are operative problems there," Pena said.

The activities most affected by the blockade include auto exports and the import of raw materials, Peña said.

Steel companies in northern Mexico get some of their raw materials from Michoacan state, so the rail blockade also stems this flow, the steel director said.

Ships being diverted to Long Beach include charter vessels carrying goods for retailers such as Walmart and Costco, the auto parts director said. They also include raw materials and intermediary goods or parts used in manufacturing plants in Mexico.

Mexican President Andres Manuel Lopez Obrador last month called on the protesters to talk with the federal government, but so far no resolution has been reached.

"There is dialogue," Peña said. "We know they are trying to negotiate."

The blockade had caused $3.84bn in corporate losses as of late September, according to the Caintra chamber.

By Jens Erik Gould