Kansas City, Mo. Shipping American cars and electronics to Mexico may become much cheaper and faster early next year when the first Mexican customs facility in the United States opens in the heart of the Midwest.
It may be nearly 1,000 miles to the border from Kansas City, but this industrial hub will soon start building an inland port that would whisk thousands of trucks through export inspections and shoot them back out onto the North American Free Trade Agreement corridor, where they can roll through the border without further delays.
The $3 million center, which would be the first foreign customs office inside the United States, will likely be approved by the U.S. and Mexican governments by year's end and is scheduled to open next May, said Chris Gutierrez, president of Kansas City SmartPort Inc., a nonprofit organization promoting the project. Planners say manufacturing industries in the upper Midwest and Canada would be the first to benefit from the new customs operation, which they believe could expand to handle cargo from across the country.
Mexican government officials confirmed the two countries had agreed on the overall proposal, though both nations said finer points of the agreement were still being negotiated by customs officials - including security concerns and the legal standing of Mexican customs officials working in the United States.
After a visit to Kansas City in May, U.S. Customs and Border Protection Commissioner Robert C. Bonner said the pilot proposal was "bold and imaginative" and could transform Kansas City into a "major new trade link" that would fit well with new border security initiatives to pre-approve cargo.
"We've always had the railroad and the river and the airlines and the roads, but this will open up tremendous new business opportunities for Kansas City," said Kansas City councilwoman Bonnie Sue Cooper, who said she proposed the idea to the Mexican Finance Minister Francisco Gil Diaz last year.
In the 1940s, Kansas City - at the intersection of two major interstate highways along the Missouri River - was one of the country's largest rail distribution centers. Now plans are to fill a gravel lot that once held cattle with a big-box building that will process long lines of big rigs packed with goods for export to Mexico. Providing the containers stay electronically sealed once they're inspected, the trucks will be free to cross the border and avoid further inspections, resulting in efficiencies and cost savings.
"Kansas City is the geographical heart of the United States and of the entire NAFTA region," said Everardo Suarez, Mexican consul general in Kansas City.
Once the agreement is completed, Kansas City will essentially function like a Mexican port. The transition to the global economy comes just in time: since the city's stockyards and airline industry declined, it has been struggling to rebuild itself as a leader in global logistics.
"I think this project would go a long way to transform trucking," said Chaz Jones, a research analyst with Morgan Keegan, a Memphis investment bank. "Truckers typically get paid per mile. The more time cargo spends moving on the road, the more revenue it generates for a carrier."
In recent months, delays at the hurricane-damaged port of New Orleans and bottlenecks at Long Beach and Los Angeles have caused companies to look for alternative trade routes. Wal-Mart Stores Inc. is one of several companies now moving freight through Mexico as an alternative to using West Coast ports.
Because so much trade between NAFTA partners is carried by truck, Midwestern cities with good transportation infrastructure stand to capture some of that trade flow. In August 2005, trucks carried 64 percent of imports from Canada and Mexico and 80 percent of U.S. exports to those countries, according to the Bureau of Transportation Statistics.
San Antonio also has invested significant efforts to develop a competing inland port. But Kansas City officials hope the customs facility will give the city a leg up, especially once the project's second phase, which will allow rail cars to clear Mexican customs as well, is completed. Kansas City Southern owns two Mexican train lines which means they can send freight from the Midwest directly to the Mexican port of Lazaro Cardenas, where car manufacturer Mazda Motor Corp. has begun shipping vehicles from Japan to Kansas City.
"There might not be enough volume to open a rail facility today, but we certainly expect that will increase in the next few years," said Warren Erdman, a vice president at Kansas City Southern. "We have great interest in the proposal."