Chapter 3: Observations and Lessons

The scan provided panel members with a broad perspective on the many challenges and opportunities represented by the Latin American market. It would be impossible in the limited space available in this report to present all of the implications of what the panel discovered during this visit. The following are the most important observations that surfaced during this visit.

Observations

The economic downturn in the global economy has created or aggravated existing economic and infrastructure challenges in Latin American countries. Not unexpectedly, many of the Latin American countries visited still suffer from the economic downturn of the past decade, a situation exacerbated by the economic recession in the United States after the September 11, 2001, terrorist attacks. Several countries, such as Argentina, have faced such problems over a longer time period. The level of difficulty is so severe that for the first time, Latin America as a whole posted declining values of GDP per capita in consecutive years. Given the strong economic relationship with the United States, it seems likely that until the U.S. economy rebounds, the Latin American economy will continue to have serious problems. Several countries are looking to the FTAA as a way of promoting faster economic growth, but the economic vitality of such a trade market will likely by linked to the state of the U.S. economy.

One consequence of the economic downturn is that many concession arrangements-particularly those for highways and railroads-that depend on tolls or fees have experienced financial losses. Concessions are used for operation of new toll roads, road maintenance, airport management, and railroad and port terminal operations. In the absence of national dedicated revenue sources for transportation purposes, which few of the countries visited have, investment in transportation infrastructure has slowed considerably. Indeed, simple maintenance of existing infrastructure has been hurt by declining revenues. The only concession arrangements that appear to be financially stable are those in ports, but even some terminal operators are looking for better terms than those negotiated during better economic times.

Some countries view trade from a global perspective, while others focus on regional trade. A country's perspective on international trade depends on its geographic location, the attractiveness of its products and natural resources, and the degree to which national governments adopt policies that encourage investment in trade industries and services. Every country in the world participates in international trade, but some position themselves better than others. During this scan, it became clear that Chile, Uruguay, Panama, and Mexico have much more of a trade focus than others for good reasons. Mexico's proximity to the United States has strongly encouraged the trade sector in the Mexican economy, and trade is now the country's dominant industry. Panama's position astride the major east-west sea lanes makes its focus on trade an obvious strategy. Neither Chile nor Uruguay, on the other hand, has natural trade advantages. In some ways, they both view trade as a survival strategy. Both are relatively small countries, far away from major trade flows. Both have well-developed industries, but (except for Chile's copper industry) neither are uniquely positioned to trade with the world.

What makes both Chile and Uruguay interesting from a trade perspective is that both have adopted fairly aggressive trade policies to provide some competitive advantage to their home ports. Uruguay is sandwiched between Brazil and Argentina and depends on trade with these two countries for survival. The government has adopted a liberal approach to free trade zones and private concessions to position the Port of Montevideo as a gateway to southeastern South America. In similar ways, Chile's government has actively sought trading partnerships with other countries, the most recent being a free trade agreement with the United States, to strengthen its economy and position in the global market. In both countries, port investments have played a key role in the national trade strategy.

Chile, Panama, and Brazil view NAFTA from a strategic perspective. Chile and Panama are interested in increased trade, while Brazil is concerned about a trade pact that could be dominated by the United States.

Ports are major centers of international trade for Latin American countries.
This observation is not surprising, given the geographic and topographic challenges facing Latin America and the historical evolution of national development in port cities. Unlike NAFTA countries, much of the international trade of Latin American countries occurs by sea. Internal road and rail systems are not well developed, and rough terrain makes it difficult and expensive to make improvements. The ability of Latin American countries to participate in trade, in particular in the increased trade expected to result from an FTAA, will depend on the relative productivity of their ports and internal distribution transportation systems. Over the past 10 years, significant investments have occurred in all the ports visited during this scan. Some ports, such as Freeport, San Antonio, and Manzanillo, have modern equipment and information systems that suggest they will compete effectively. Plans for future investment exist everywhere.

Several aspects of this observation merit additional attention. Two distinct types of ports were visited during this scan. Transshipment ports, best represented by Freeport, primarily transfer containers from one vessel to another, and do not handle many exports of imports to the host country. The economic benefit to the country is linked directly to the jobs at the port, the revenues generated for the national government, and ancillary businesses connected to port operations. Import-export ports can handle transshipment traffic (and, in fact, many view this as a growth market), but primarily they provide the major means for a country to market its goods to the world. The economic impact of these ports is much more integrated with the economic activities of the country. The multiplier effect of the economic-generating benefits of hub ports is much greater than that for transshipment ports.

These different roles for ports often reflect their position in global trade flows. One of the paradigms in the trade literature is the major east-west global movement of trade that connects the developing Asian markets, North America, and Europe. Ship movements reflect the Pacific to the Atlantic (via the Panama Canal) to the Mediterranean to the Indian Ocean (via the Suez Canal) to the Pacific circumvention of the globe that represents trade flows. Some ports are situated ideally to participate as major players in this flow (e.g., Freeport and Manzanillo). These ports have increased their cargo-handling capabilities dramatically over the past five years, and anticipate major expansions over the next five years to handle postPanamax vessels. Economies of scale dictate that the largest vessels operate on the east-west sea lanes. Other ports will act as feeders to these major global ports. San Antonio, for example, will likely feed into the Panama ports for connections to the global market or connect directly with the Long Beach-Los Angeles port complex in California.

Finally, although the phenomenon varied from port to port, it was striking how port complexes are becoming logistics service providers, not simply locations where cargo is physically transferred from one mode to another. Logistics services, financial support, and, in the case of free trade zones, value-added activities occur on or near port facilities. To compete globally, such a full-service logistics concept will be an important part of business.

Land access to ports was a problem everywhere.
Because most of the ports visited are located in or near city centers, ports are often accessed through congested roads and rail lines. Because most cargo arrives by trucks (except for bulk cargo), highway congestion is a particularly serious problem. This is often exacerbated by the lack of freeway systems that provide highspeed, high-capacity movement through large metropolitan areas.

Ports have adopted interesting strategies for providing more efficient access. Every port visited operates on a 24-hour basis, seven days a week. By doing so, deliveries and pick-ups can be scheduled during off-peak hours. Two ports are looking at new access roads that would be either truck-only or at least designed with truck access in mind. Officials in every port suggested that shifting more cargo to rail would be an appropriate strategy for providing enhanced accessibility. In the case of Santos, improvements have been made to rail service, and more cargo is being served by Brazil's rail network. In many cases, however, officials noted the difficulties that often accompany efforts to encourage rail access. These include inadequate rail capacity, lack of distribution modes in the hinterland, poor track maintenance, little experience with handling containers, and no doublestack capacity for containers.

Privately operated terminals have been able to enter the market quickly, much more rapidly than in comparable situations in the United States. One of the most interesting observations from this scan was how fast some countries are able to put in place new facilities that within a short time became major influences in market share. For example, the Freeport Hutchinson terminal took little more than two years to become a fully operational port that today handles more than 1 million TEUs a year and is expected to handle twice that in two years. The Katoen Natie terminal in Montevideo took 16 months to construct and is now a major location for container movement in the Rio de la Plata basin serving Uruguay, Brazil, and Paraguay. In addition, many terminal operators are major international logistics and transportation firms with strong global trade relationships, so they are in a position to market their new facilities internationally and connect into established freight shipping networks. In some cases, these entrepreneurs have also invested in distribution systems that tie into their port facilities. For example, the Katoen Natie group has invested in river port facilities along the Rio Paraña and the Rio de la Plata to serve as feeder terminals into the major port in Montevideo.

In each case where concessions have been used to foster private investment, labor rules and relationships have been changed dramatically. Because existing labor rules were changed, new labor arrangements have been made that are much more flexible than those under government management. In most cases, the number of employees has declined, but terminal productivity has increased.

Private terminal operators have been the major initiators of the use of ITS technologies in Latin America.
Intelligent transportation systems (ITS) technologies are in limited use in Latin America for toll collection and tracking trucks through global positioning systems (GPS). Few examples exist of regional ITS applications aimed at regional traffic management. Ports are the only places where officials expressed interest in applying ITS in a more systematic way. Figure 10 shows how a terminal operator is using information technology in the Port of San Antonio to monitor the flow of cargo through its terminal operations. Many port officials believe that increased security procedures in surveillance and interception of suspected materials will rely heavily on ITS-type technologies. They expect that investment in such approaches will become necessary in the near future.

National strategic transportation policies that link transportation investment to economic or trade policies are not apparent. Transportation investment is a critical factor in a nation's success in international trade. Ports, airports, roads, pipelines, and telecommunications are necessary preconditions for participating in global trade, so one would assume that a national transportation policy would articulate how transportation links to this economic sector. This is not the case in Latin America (which is an observation that, in many ways, could be applied to the United States as well). Each mode is viewed independently, and no multimodal perspective on future transportation system development appears to exist. In the case of Argentina, it was unclear from the scanning team's meetings with officials where national transportation policy is even formulated. With rapid turnover in the presidency, the responsibility for transportation has changed regularly. No country appears to have a close relationship between its customs agency and other federal transportation agencies. As many meeting participants noted, little communication exists between such agencies, given the number of problems that occur at the borders.

None of the nations visited has a dedicated revenue source for transportation investment, and they face difficulty building transportation infrastructure without providing some guarantee to potential concession partners. Any revenues collected from gas taxes or fees go to the general fund to be apportioned as part of the political process. Most officials believe the amount of investment coming back to transportation from this transportation revenue source is much less than is contributed.

In addition, many officials complained that little data is available on the performance of the transportation system. In the United States and Canada, for example, transportation statistics are collected by national agencies. Such a process is spotty in Latin America.

To the extent that some systems-level perspective is provided in planning and decisionmaking, it takes the form of corridor planning. Corridor planning appears to be one of the few approaches used to examine the intricacies of transportation flows in a nation. Brazil has used logistics corridors to investigate trade flows for certain commodities (e.g., soy) from farm to port. Mexico has looked at intermodal corridors from the perspectives of NAFTA trade and improved access to Central America. The Mexican-led Plan Puebla-Panamá is an effort to use transportation investment in key corridors running through Central America to enhance the quality of life of the people in this region.

The characteristics of corridor planning vary from one context to the next. It can have a commodity or market orientation as in the above example of soy. Alternatively, the context might orient toward trade routes. A representative of the Katoen Natie group showed Figure 11, for example, to the scanning team to illustrate that the port terminal in Montevideo is located in a major corridor for trade between Brazil and Chile. In addition, because of the importance of concessions for providing intercity transportation, corridor studies have been undertaken to determine the economic feasibility of tolled facilities serving that corridor. Finally, Mercosur has identified several transportation corridors that provide Mercosur-wide transportation capabilities important for intra-Mercosur movements. Several corridors have received investment to upgrade facilities and improve operations.

Use of river transportation as a feeder to ports is developing.
South America has extensive river systems, of which three are the most important: the Amazon, Rio de la Plata and Orinoco Rivers. The Amazon, the thirdlongest river in the world, covers a surface basin in excess of 5.8 million square kilometers. The navigable portions of the Amazon and its tributaries provide an extensive inland water distribution system used primarily for transporting materials to develop the land of the basin. The Rio de la Plata River system includes the Rio de la Plata, the Paraña, Paraguay, and Uruguay Rivers. More than 100 inland ports are found in this river system, handling a total volume of 110 million metric tons per year. Of this amount, about 30 percent relates to grains and 20 percent to general cargo, including 1.4 million TEUs. The Orinoco River, which flows through Venezuela and Colombia, primarily transports natural resources such as iron, aluminum, bauxite, and petroleum.

The further improvement of navigable rivers and their use for accessing seaports is likely to be an important investment for many South American countries. Not only is river transportation often more economical, but inland water distribution systems also can provide access directly to seaports without having to use overburdened inland surface transportation systems. For undeveloped areas of South America, such as the inland parts of Brazil and Paraguay, efficient use of river transportation could allow even more rapid development of mineral and agricultural (especially soy) resource industries. With direct access to the ports in Argentina, Uruguay, and southern Brazil, such commodities will have much-improved connections to the world market. With an expansion of the Panama Canal, these products could compete more effectively in the Asian market.

National officials and port and terminal operators are concerned about security, especially anticipated additional costs and their impact on competitiveness.
Everywhere the scanning team went, new security measures and procedures that could be imposed on international freight was a major topic of conversation. Although new security measures generally were assumed after the events of September 11, 2001, port operators in particular are concerned about how new surveillance and monitoring procedures would be paid for. Additional costs, which they assume will be significant, could greatly hurt the competitiveness of some ports. Some expectation exists that the private terminal operators would incur the cost of any new equipment and labor necessary to move freight through the terminal. It was interesting to note that no port could point to any significant changes in security resulting from the terrorist attacks in the United States. Everyone appeared to be waiting for requirements expected to be adopted internationally to provide better security in freight movement.

Three countries, and two ports in particular, view themselves as becoming security gateways to the U.S. market. Chile, Mexico, and Uruguay consider heightened security at their ports a way of distinguishing themselves from other competitors. Port officials in Montevideo and San Antonio believe security could easily become a niche market for their ports.

Figure 11. Corridor perspective in South America.

Mercosur faces serious economic and transportation-related problems.
Economic problems exist in the Mercosur countries, especially Argentina. It is not likely that these problems will be solved soon, so a common market in southern South America may take longer than expected to achieve. Border-crossing issues were raised in every country visited, especially in Mercosur countries. Lack of coordination among border agencies has continued to cause what some consider inordinate delays at the border. Although infrastructure development is a top priority with Mercosur and national officials, dependence on concessions for providing new infrastructure has greatly constrained investment in new roads and railroads. Indeed, existing concessions arrangements, in light of economic problems, have limited maintenance of infrastructure.

Mercosur is reaching out to other trading partners to develop more global trade partnerships. It recently formed an agreement with the Andean Community countries to develop more consistent trade policies. Mercosur officials continue to seek new relationships with Europe and Asia. With the size of the market represented by Mercosur countries, they individually and as a trade block will be important markets for global trade, but when this will happen in a significant way is uncertain.

Critical trade-related transportation facilities are extremely congested and vulnerable to disruption. Given the state of the transportation networks in most Latin American countries, it is not surprising that critical trade-related transportation facilities are vulnerable to disruption. In two cases, the scanning team saw truck accidents that caused significant delays on the only highway serving a major port and a major NAFTA trade route to the United States. With ports located in center cities, highway access is often congested for much of the day. Poor condition of the railroads and underutilization of river and coastal water transportation for trade movement result in unreliable and often unsafe road conditions. Some ports and countries are trying to mitigate these problems by expanding operations to 24 hours a day to spread peak demand, expanding roads, or developing inland water distribution systems.
Lack of redundancy in transportation networks leads to a high potential for significant disruption if something happens to a critical link in the network. This can occur unexpectedly, such as an accident or terrorist attack, or repeatedly over time, such as congestion. Increased trade flows from an FTAA will most likely stretch the capability of many Latin American countries' transportation networks to provide reliable and economic service.

The Panama Canal is the most strategic facility Latin America for NAFTA.
The Panama Canal has been an important waterway since it first opened in 1914. With much of world's trade occurring via maritime transport, however, it has become even more critical to the economies of Latin America, the United States, and Canada. Although the land bridge across the United States can compete for many types of commodities, the canal still handles much of the trade coming to and exported from U.S. ports. Efficient operation of the canal is an important element for successful trade in the Latin American market.

Although today's trade markets are strongly influenced by the savings in travel time the canal offers, the shipping industry has developed faster, bigger ships to handle future freight movement. How the Panama Canal Authority responds to these challenges will influence future trade prospects. If larger vessels are able to transit the canal (see Figure 12), greater economies of scale will be realized for the movement of certain types of commodities. Agricultural products from South America, for example, could be much more competitive than they are today if they are transported on postPanamax ships. Future plans for expanding the canal bear watching.

Panama is rapidly becoming a major logistics service support and transshipment point for Latin America.
Both government policies and business plans jointly reinforce Panama's plans to become a major hemispheric center for logistics. The Panama Canal, major transshipment centers, free trade zones, liberal tax laws, and strategic position on the east-west global sea lanes provide Panama with world-class advantages. The Multimodal Center for the Americas is a good example of how Panamanian business views the future. Fast and reliable multimodal transportation and value-added commercial activities in a free trade zone provide an appealing business environment.

The European Union and China are investing heavily in Latin America.
Chinese and European companies are investing in businesses and infrastructure in Latin America. Business and government officials believe this is happening not only because of the large consumer market, but also to gain entrée into a potential FTAA. Goods and services provided by companies within the FTAA boundaries will presumably benefit from the low tariffs and fees associated with open borders. Similar goods and services coming from overseas will not have similar advantages.

Mexico is investing in port facilities and transportation corridors to develop integrated intermodal service opportunities that could compete with U.S. services.
Mexico has successfully adopted a national program for privatizing port operations. This program has produced substantial new investment in port facilities and, to some degree, in supporting transportation infrastructure. Because Mexico's economy is so dependent on trade, such a focus is not surprising. In some cases, this infrastructure investment will complement that found in the United States. Improvements at the border or improved rail service will provide more efficient movements into and out of the United States. In some cases (e.g., the port of Ensenada), improvements to the port and rail service connecting to the U.S. border would provide direct competition to the Los AngelesLong Beach port complex in California.

Additional gateways into the United States also represent transportation redundancy for the U.S. market. During the West Coast port strike, goods were diverted to Mexican ports and then transported to the border primarily in trucks.

Mexico's economy is slowly changing.
Many U.S. manufacturing and industrial processes, now based on global supply and logistics chains, rely on production processes in Mexico. Products and materials move across the border in large amounts, creating transportation demands in both countries. As noted earlier, the maquiladora industry is a major player in border industries and in resulting transportation demands. To be competitive, much of this industry relies on low- cost labor, but other countries now offer lower labor rates than Mexico for certain types of industries. Figure 9, for example, shows that for the first time, the number of maquiladora firms has declined. The textile industry is a good example of the impact of this phenomenon on the United States. The textile industry, which originally moved from the southeastern United States to Mexico, is now moving from Mexico to Honduras and Asia. The United States, which remained part of the process by growing cotton and transporting it to the finishing plants in Mexico, developed transportation services to support this interchange. Such transportation flows between the United States and Mexico clearly will change over time to reflect a new economic reality.

In addition to changing labor costs, many Mexican officials believe it is to their country's benefit to encourage development of higher value-added products in the Mexican economy, which means higherwage jobs. By increasing workers' take-home pay, the Mexican economy can develop a much more vibrant domestic consumer market and raise the living standard. The government appears to have a policy of placing greater emphasis on high-level manufacturing and finished products. This change could have important implications to the U.S. economy and to demands on the transportation system.

Although the scan's focus was freight movement, it was striking to see the number of infrastructure improvements and high expectations for passenger cruise ships.
Every port visited either had new facilities for passenger cruise ships, or plans to build such facilities in the near future. Port managers and local officials clearly prize the economic benefits of having such ships dock in a port. The passenger cruise industry is expected to show impressive growth over the next decade. Whether every port expanding its facilities to accommodate this growth will actually benefit from cruise visits remains to be seen. One implication of larger numbers of cruises will be the security challenge of monitoring tourists as they enter the United States and protecting them on the high seas.

Lessons for North America

The following lessons for the context of NAFTA and the United States result from this scan.

1. The global market and logistics chain respond to many influences, only some of which relate to infrastructure owned and operated by public agencies. Understanding the motivation of logistics decisions and their local implications are critical points of departure for a national or multinational effort on fostering and preparing for trade. Panel members heard from both shippers and government officials about the need for a global systems perspective in understanding trade flows. The countries that adopt this vision-Chile, Panama, Brazil, and, to a lesser degree, Uruguay-will be more successful than those that do not.
2. Perhaps the most significant observation from this scan is the changing nature of Panama as an emerging hemispheric logistics center, based on its location as a major maritime crossroads. In the short time since Panama Canal ownership was transferred to the Panamanians in 1997, Panama has built new major container terminals and created new free trade zones as inducements to foreign investors. From information gathered during this scan, it appears likely that Panama will be even more influential in global trade flows serving NAFTA countries. It is unclear what impact proposed improvements to the canal to allow bigger ships to pass will have on NAFTA countries, in particular the United States. Such a development might create the demand for more transshipment ports outside U.S. territory to provide feeder services to the United States, the need for increased capacity at U.S. ports, or a shifting in market characteristics that will hurt NAFTA interests (e.g., making Brazilian agricultural products more competitive with NAFTA products in the Asian market). More attention should be given to this issue.
3. Major players in the transshipment business consider Cuba a potential threat or opportunity within the context of global east-west container movements and the need for transshipment locations in the Caribbean or along the Gulf-Atlantic Coast. Havana and other Cuban ports are located ideally to provide such service and have excellent port potential. Although it is unclear what will happen with a change in administration, it is possible that Cuba will be a major gateway to the Caribbean in several decades.
4. Levels and patterns of trade are directly related to patterns of economic growth, production, and consumption. The recent economic downturn has affected global trade, and it is unclear what the immediate future holds. Over the long term, the LATTS forecasts, which indicate a tripling of Latin American trade, should be reexamined at a commodity-specific level, particularly because of changes under way in the Mexican economy (e.g., losing maquiladora plants to Asia). In addition, real potential appears to exist for enhanced Gulf of Mexico and Pacific Coast maritime services into the United States for certain commodities.
5. Because government policies on planning, environmental, and investment requirements differ in the countries visited than in NAFTA countries, private entrepreneurs have been able to establish a substantial market presence in hemispheric trade quickly. NAFTA countries need to understand that the time needed to respond to market opportunities will most likely be much less than that allowed by government rules and regulations. As the global market expands and becomes more dynamic (i.e., more time sensitive to changing market demands), the response time for providing needed infrastructure could become a serious constraint to NAFTA countries. This suggests a need for better, continual, and more strategic efforts to understand global trade patterns and the shifting context of economic centers to produce, consume, and handle commodities. This need exists at the NAFTA, national, State, metropolitan, and port levels (where trade movement is an important part of transportation system performance).
6. One of the most important concerns identified by freight shippers, port operators, and national transport officials during this scan was the level of effort and funding required to provide security for maritime freight movement to satisfy international mandates. Specific mandates have yet to be determined, so much of this concern relates to worst-case scenarios that assume the most extensive types of security procedures. The panel's perception is that many of the ports visited do not have the level of security that would likely satisfy new requirements. Working with Latin American countries and ports in developing acceptable procedures and approaches for secure freight movement could be an important task for NAFTA countries. Of some interest was the suggestion by several port and country officials that private terminal operators most likely will be responsible for providing the required security, and that having an approved security gateway into the NAFTA market could become a major competitive advantage to some countries.
7. The Latin American experience illustrates the importance of having a national transportation policy that reflects the needs of trade flows and the global positioning of the NAFTA market. None of the countries visited has a comprehensive, systems-oriented national transportation policy. Little integration or coordination is evident among investment programs for different modal systems. Accordingly, the response to increased trade volumes with the NAFTA market most likely would be in the hands of private shippers and port terminal operators.
8. Public budget and financing mechanisms for funding freight projects were not found in many of the countries visited. Latin American countries have relied on concessions to private companies to provide the necessary port access and port terminal infrastructure. In several countries, the national government has no dedicated transportation funding source for public investment. In the case of port terminal operations, concessions have been used to turn over to private operation those aspects of logistics services that a private business is best able to provide. Private concessions for port terminal operations have largely been successful in the countries visited, but economic challenges facing the region and heavy reliance on investment returns for privately funded infrastructure for roads and railroads are holding the necessary provision and maintenance of infrastructure captive to the confines of a weak market. This model of finance holds important lessons for investment strategies that rely too heavily on private provision of transportation.
9. Increasing NAFTA connections to Latin America will likely focus a great deal of attention on alternative financing schemes for providing the infrastructure necessary to handle increasing trade volumes. Providing hemispheric exchanges and consensus-building activities on innovative financing strategies could be an important part of a NAFTA-driven effort to develop necessary trade-related infrastructure. European and Asian investment in Latin America has occurred at significant levels in the past five years, and much of it has focused on transportation infrastructure.
10. Mercosur faces significant challenges in providing a stable trade market. Economic challenges in Mercosur countries, uncertainty about a new government in Brazil, and problems with standardizing procedures at Mercosur borders have slowed progress in achieving major productivity gains that should occur with a trading block. The Mercosur countries are focusing much of their attention internally, with a major emphasis on protecting production and commodity groups, rather than growing trade through an open-boundaries strategy like the European Union. A major development worth watching is the prospective alliance between Mercosur and the Andean Pact countries. If Mercosur can find a way to make internal transportation more efficient and promote trade growth, it may become a much larger player in global trade. It appears that many significant issues must be resolved for this to happen in the short term.
11. Increasing port access is an important issue in the ports visited. The use of port terminal concessions has been successful in providing needed investment in dockside operations. For historical reasons, however, many ports are located in central areas of large cities, and they face significant congestion in port access. With limited investment resources available, governments have used concessions for access projects, with limited success. Most ports visited operate 24 hours a day, seven days a week, to handle rising congestion and provide better customer service. The Port of Santos is considering a truck-only road that would provide better internal circulation to the port, Latin America's largest. Both concepts are worthy of investigation in NAFTA countries.
12. The Mexican-U.S. border remains a critical barrier to improving NAFTA trade. Delays are caused by the inspection procedures used by numerous government agencies, inadequate physical infrastructure at border crossings, lack of data sharing among governmental agencies, and incompatible vehicle technology. Enhanced logistics, which Mexican government and private sector officials view as a key to economic prosperity in the global economy, will depend on fixing border problems. Improvements are being made at Mexican ports and in inland transportation corridors to provide better service to the U.S. border. Such improvements need to be augmented with new ways of expediting trade across the border in an efficient, security-conscious manner. Improving gateways, borders, and international trade corridors through coordinated planning, investment, and technology deployment can improve trade transport efficiency and security.
13. Although not the focus of this scan, it is important to note that every port visited had plans for, was constructing, or had just opened cruise ship terminals. The cruise ship business is something that every port expects to benefit from. This raises interesting questions about the economics of such a large and expansive investment in this industry. Also, if the level of maritime tourism reaches the desired levels, security for onboard passengers and entrance into U.S. waters will become a concern.