Wednesday, August 29, 2012
Tuesday, August 28, 2012
The United States-Mexico Chamber of Commerce, Congressman Silvestre Reyes, and the Congressional Border Caucus will be holding the 16th Annual Border Issues Conference in Washington, DC. The dates of this event are September 19 and 20.
Members of congress, business leader, and representatives from both nations will be leading the discussions. For more information, see the following website:
Thursday, August 23, 2012
Shippers Report Tightening Truck Capacity in Mexico
William B. Cassidy, Senior Editor | Aug 23, 2012 2:00PM GMT
The Journal of Commerce Online - News Story
Peak season could mean fewer available trailers for U.S.-bound freight, logistics operator warns
U.S. shippers importing goods from Mexico say they are looking for new transportation options as truckload capacity along the border gets tighter.
"We’ve had to diversify to get sustainable capacity,” said Sonney Jones, division director of transportation in Dallas for flooring manufacturer Dal-Tile.
“That’s meant using more rail boxcars in some shorter lanes," such as Monterrey, Mexico to Dallas, "as a replacement for intermodal or truck capacity,” Jones said.
The peak shipping season could further squeeze available truck capacity, said Troy Ryley, director of transportation and distribution at Transplace Mexico.
As more goods are shipped directly from China to Mexico, fewer shipments are routed through U.S. ports, which means fewer trucks heading south to Mexico.
“That dynamic creates a significant issue for shippers,” Ryley said, “especially as there’s going to be a real push soon in retail as the peak shipping season hits.
The value of goods shipped by truck across the U.S.-Mexican border hit an all-time high in May, increasing 17.1 percent year-over-year to $29.1 billion.
Analysis: Mexico faces test of commitment to opening oil industry
Wed, Aug 22 2012
By David Alire Garcia
MEXICO CITY (Reuters) - Mexico's commitment to opening up its oil industry to private investment faces a key test with the next round of contracts to be offered by state-run monopoly Pemex.
Mexico is the world's No. 7 oil producer but production has fallen sharply in recent years. In a bid to shake up an industry under state control since 1938, the government has allowed private companies to operate -- but not own -- seven oil fields scattered around the country.
The experiment stumbled when Pemex PEMX.UL failed to award two offshore oil fields to private operators in June auctions, rejecting all bids for one field as too expensive and receiving no bids at all for another.
Those failures have cast a shadow over the upcoming third round of private service contracts set for next month, designed to lure much-needed private investment and spur production in the massive Chicontepec basin, home to Mexico's largest certified hydrocarbon reserve.
Proven reserves at Chicontepec totaled 650 million barrels as of the beginning of this year, according to Pemex data.
"A lot of Pemex's future depends on this type of incentivized contract," said Luis Labardini, partner with Mexico City-based energy consultancy Marcos and Associates. "If Pemex proves that these contracts are successful, it can prove that it can be the only operator in Mexico."
Foreign interest in Mexico's oil patch, long seen as a mature region with limited potential, has expanded in the past two years as drillers reckon that it could become the next player in the shale energy boom, with untapped reserves along its U.S. border.
Mexico's incoming president, Enrique Pena Nieto, has ambitious plans to open the energy sector even further to private investment, but the problems with the recent auctions have led analysts to question Pemex's commitment to private-public partnerships, let alone their expansion.
Under the private contracting scheme, launched last August after reforms passed by Mexico's Congress in 2008, companies win the right to extract oil from mature fields and are paid a set fee per barrel as an incentive, but the crude belongs to Pemex.
The scheme was designed to lure both domestic and foreign private investment.
Mexico's overall production remains stuck at 2.5 million barrels per day (bpd) and if Pemex cannot find new discoveries to replace a 25 percent drop in production since 2004, it risks becoming a net importer of crude within a decade.
At the June 19 auction, Pemex said it was prepared to pay a maximum $7.25 per barrel for oil from the Arenque oil field, in shallow waters off the northern state of Tamaulipas and including 100 million barrels of proven, probable and possible (3P) reserves. Pemex's trademark Maya crude sells for $100 or more per barrel.
But it found no bidders at or even near that price of $7.25 per barrel and the auction was declared null. At the same time, the smaller Atun field, off the coast of Veracruz, attracted no bidders at all.
"I really don't know what Pemex was thinking," said Luis Puig, commercial director for Saipem, one of the oil service firms that bid on Arenque.
PRICE TAG QUERIED
Puig and others noted the maximum bid price set for Arenque was about 20 percent lower than the prices set for four onshore blocks that were successfully auctioned at the same time.
"Offshore fields require a lot more investment" and should have triggered a higher bid ceiling from Pemex, Puig said.
The scheme is designed to increase production at a set of mostly aging onshore and offshore oil fields, where many if not most of the wells Pemex drilled in the past are no longer functioning.
At Arenque, for example, 51 wells have been drilled, but only 17 are currently operating and they produce just 5,600 barrels per day (bpd). The block's other wells are either shut-in, or plugged and abandoned.
Pemex has said it will directly award the Arenque block later this month, adjusting both its size and price tag, but no further details have been announced.
Pemex brushed off the recent wobbles, saying companies were turned off by the risk associated with the two offshore blocks as well as questions over the size and profitability of the fields, although it acknowledged bidders saw the contract for Arenque as under-priced.
In July, Pemex CEO Juan Jose Suarez Coppel said the company is tweaking the process to make the contracts more attractive. "We are working to clarify the risks," he said.
Carlos Morales, Pemex's director of exploration and production, told Reuters the company faces a delicate balance when it calculates the prices it is willing to pay firms to develop oil fields as part of the contracting scheme.
"We can't leave money on the table," he said. "We also can't set very low prices... because we may be left without any offers, just like what happened with Arenque."
Morales adds that developing deposits offshore is not always more costly than onshore, depending on the type of crude, the permeability of the rock, and amount of reserves.
Still, Pemex can count on added scrutiny over its upcoming third round of contracts. Morales says the oil fields up for grabs will be tendered sometime in September. Pemex's June auction, however, was originally planned several months earlier.
Morales says the third round of contracts will cover six blocks, each around 200 square km in size, within the onshore Chicontepec basin, home to 40 percent of Mexico's crude reserves.
The specific design of the blocks in the geologically complicated basin, the amount of investment needed, and the corresponding bid prices have not yet been set.
Miriam Grunstein, an energy researcher with Mexico's CIDE institute, says the failure to auction off Arenque calls into question Pemex's very commitment to expanded private sector involvement.
"The next government may want an opening," said Grunstein, "but Pemex loves being a monopoly."
Whether or not broader energy reform is achieved by Pena Nieto, the existing private contracting model represents a limited tool reserved for low-risk fields that already tout significant output, according to John Padilla, oil analyst with energy consulting firm IPD Latin America.
"Anything that's more complicated than plain vanilla mature fields is going to be very difficult under the current version of the model," he said.
He adds that applying the contracting model to Chicontepec or even riskier deep water deposits in the Gulf of Mexico is out of reach for lack of sufficient existing production to offset the large infrastructure investment needed to tap more crude.
The entire Chicontepec basin currently produces on average about 70,000 bpd and is struggling to boost output to the 100,000 bpd Pemex is aiming for by the end of this year. Company executives have said production could reach 300,000 bpd by 2018, aided by additional investment and technological expertise from private contractors.
But the contractors' ability to significantly boost output at Chicontepec will depend on the incentives Pemex offers.
"Anything that is going to require a lot of up-front capital expenditures that then have to be recovered over time, as will be the case with deepwater and other more complicated assets, just isn't going to fly at the maximum fee per barrel levels Pemex has included in the two bid rounds to date," said Padilla.
Constitutional reforms supported by Pena Nieto - among others, allowing partial foreign ownership of reserves - would entice additional private investment to develop energy riches, but would also upset many who view Pemex as a near-sacred symbol of Mexican independence.
At present, the private service contracts represent the only ongoing option capable of significantly boosting investment.
But lately, the model seems better at generating criticism from analysts like CIDE's Grunstein.
"If the model is not functional for mature fields (like Arenque), forget Chicontepec or deep waters," she said.
(Reporting by David Alire Garcia; Editing by Kieran Murray and Sofina Mirza-Reid)
Wednesday, August 22, 2012
Congratulations to Mr. Eric Miranda on passing the rigorous "Certified Transportation Broker" (CTB) exam and obtaining this important certification.
For the past few months, Mr. Miranda has spent many evening and weekend hours preparing for the CTB exam. The course of study covered brokerage, ethic, contracts, pricing, legal and regulatory requirements, along with business and transportation management.
The program and exam are administered by the Transportation Intermediaries Association (TIA). Mr. Miranda took this exam on July 21.
Eric is not only a CTB, but he is the first member of the Bill Hay International family to obtain this certification. That distinction has given him a new goal: Eric plans on mentoring his coworkers so they too can have this specialized training and develop more tools to succeed in our industry, better assist our clients, and help BHI grow. With a role model like Eric, look to see more CTBs at BHI!
For information on the TIA and the CTB certification, click here: http://www.tianet.org/
Well done Eric, we are all very proud of you!
Tuesday, August 21, 2012
U.S. growers, shippers hope for good report on Mexican trucks
Transportation officials anticipate an audit report on the trucking pilot program with Mexico within a month, and U.S. produce professionals are a bit anxious, fearing a negative report could lead to another round of retaliatory tariffs.
Mark Powers, vice president of international trade and transportation for the Northwest Horticultural Council, Yakima, Wash., said the apple, pear and cherry industry in the Northwest paid tens of millions of dollars during the three years that Mexico imposed 20% tariffs.
“We want to see the pilot program be successful,” Powers said. “We also hope if Mexican (trucking) firms show they are not really interested … that their government will take that into consideration when looking at potential tariffs.”
The North American Free Trade Act requires the U.S. to allow cross-border trucking, but opposition by U.S. trucking unions and trade organizations kept the Mexican trucks out for more than a decade after the act went into effect in 1994. The opponents cited safety concerns with Mexican trucking equipment and drivers.
Despite lobbying efforts and some congressional roadblocks, the pilot program finally gained approval from President Obama and his Mexican counterpart Felipe Calderon in July 2011. The first Mexican truck came into the U.S. in October 2011.
However, as of Aug. 17, only six Mexican carriers — each with one truck approved for the program — are participating in the pilot program.
Four other carriers are nearing approval, having passed DOT inspections. Another 10 Mexican carriers have applications pending with the DOT.
One requirement built into the pilot program is that the DOT be able to document the safety of the Mexican trucks and drivers with “statistically valid” data. Powers said that could be a difficult task because of the low participation numbers.
Officials on the DOT’s Inspector General’s staff do not have a specific release date for the audit report, but spokesman David Wonnenberg said the original late summer deadline announced in October 2011 is still the target.