Peerless: Pacific deep-water port Lazaro Cardenas gears up to become No. 1 in Mexico.

Seven kilometers from the port of Lazaro Cardenas, on Mexico's Pacific coast in Michoacan state, you'll find Alejandro Bellos modest seafood restaurant. Things have picked up here during the past few months, now that they take credit cards. "We depend a lot on the port," says Bello, who says he's reaping the benefits of recovery at the complex, which had not lived up to its potential for years. "It's bringing in a lot of people, and we have our work cut out for us."

Last year, Lazaro Cardenas, located in a city of the same name, moved 43,400 20-ton equivalent units (TEU). The port plans to add a new terminal, which could boost its container capacity in 12 years to 1.8 million TEUs. Today, all of Mexico's ports combined move 2 million TEUs annually. "This is a market that cannot grow too fast because it would mean taking cargo from other ports and rerouting them to Lazaro Cardenas, but this is just the beginning" says Armando Herrera, commercial manager at the port. "The important thing is that we make our projections based on real programs."

Lazaro Cardenas is expected to handle over the next few years cargo that would otherwise arrive at overworked U.S. ports, such as Long Beach and Los Angeles, which together move 10.2 million TEUs a year. "Our goal is not to take away containers from Mexican ports but to take part in the market that fits us, which are above all else the ports on the U.S. West Coast, due to their proximity," Herrera says.

On waters 18 meters in depth, it's the deepest port in Mexico. Depth is a key competitive advantage: It's the only port that can service a Super Panamax ship, which can hold between 10,000 and 12,000 containers. It's also well-located: Executives at Global Frut, a Michoacan packing and produce company, say it used to take 12 hours to get products to port in Manzanillo, 320 kilometers away in Colima state. Today, the company shaves off six hours in travel time by using Lazaro Cardenas, says Global Frut General Manager Mario Rivas.

There are another 16 kilometers available for pier development. The port also has 2,000 hectares of land available for companies and industries to develop trade-related projects, while 600 government-owned hectares located just off the port are ready for companies serving the shipping industry or for duty-free zones. A road connecting the port with interstate highway and railroad networks guarantee access to the U.S. border within 36 hours. These qualities were what attracted shipping giant Maersk Sealand, one of the world's largest container movers, and others such as CP Ships and Hutchinson.

In August, Maersk Sealand ceased operations at Manzanillo and moved to Lazaro Cardenas. "What brought us here was the infrastructure that the Michoacan government offered us, such as access to highways," says Maximiliano Castaneda, Maersk Sealand's operations manager. "Furthermore, this port has no dredging-related problems, and that's why we see a great future here, above all when the new terminal starts working." Currently, the company moves two large ships and a smaller one a week from Los Angeles, Balboa in Panama and Kwangyang, South Korea, but in April 2005 it hopes to double that traffic.

In 2003, the Lazaro Cardenas Integrated Port Administration aggressively undertook the tough task of bringing the port to international competitive standards. Lazaro Cardenas Batel, Michoacan's leftist governor and a grandson of a former Mexican president--the port's namesake--helped spearhead the initiative by promoting investment.

"Now, the port is our attraction, a driver of economic development, and that goes not only for here but for all of Mexico," says Jesus Melgoza, director of Michoacan's government export promotion agency. The program is designed to equip the infrastructure needed to host big shippers. In the last two years, the commission invested US$21.5 million into the project.

By diversifying the types of cargo it handles, Lazaro Cardenas has grown to become the key port for value-added goods such as automobiles and other manufactured or semi-manufactured products. In the past, it largely handled industrial cargo, including bulk commodities such as coal or oil. Industrial cargo continues to be very important, due to the volume implied by the business, but opening the port to commercial cargo makes it competitive on a global scale and, in addition, allows it to pursue domestic import-export deals for consumer goods, say port executives.

Lazaro Cardenas is the logical trade route connecting the United States and Asia, says Melgoza, based on effectiveness and efficiency tests. "It's quicker for a shipping company on the U.S. East Coast to come in through Lazaro Cardenas than it is to arrive at Long Beach and cross that country" Melgoza says. "Then, Asian merchandise bound for the central and eastern United States, Mexico and Central America can come in through this port." Lazaro Cardenas' facilities include 13 docking terminals, the equivalent of 6,000 meters on the waterfront.

Job growth. At 120,000 inhabitants, however, Lazaro Cardenas lacks many of the services the port is going to need to grow, so the state government is pushing development projects. The port employs 10,000, but in 15 years that figure could double. Mexico's position between hemispheres, according to port managers, means that it must invest in business and trade infrastructure, and let service industries follow.

Now, for instance, U.S. auto giant General Motors brings between 8,000 and 9,000 automobiles through the port annually, but by 2005 that figure is expected to jump to 30,000, and the port is negotiating with three other car makers, although executives decline to name them. Rising trade is paying off. In August, only three customs-brokerage agencies were serving the port; two months later, there were 10.

Companies in indirect industries, such as food suppliers and mechanical workshops, are beginning to pop up. Lazaro Cardenas recently awarded space to Spanish oil company RepsolYPF, which will invest $500,000 in a natural gas plant over the next three years. Belgian power company Tractebel has said it wants to build a natural gas plant, too, and it is awaiting approval from the Comision Federal de Electricidad, Mexico's state-owned power company, to build a $1.5 million generator here. Mexico faces an electricity shortage, and the government hopes to import natural gas from South America to Lazaro Cardenas in order to feed demand.

A growing supply of steady labor will meet the port's employment needs, but it also could help cut down on the number of Mexicans migrating to the United States. There are 2.5 million Michoacans in United States looking for work, more than half of the state's population, says Edgar Guillaumin," director of Michoacan's investment promotions program. "Lazaro Cardenas is going to be a first-class logistics center," he says, "a great port for Mexico."