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Borderlands: Texas lawmakers criticize effort to restrict energy sales to Mexico

About 69% of U.S. natural gas exports went to Mexico and 31% went to Canada during 2020. Liquefied natural gas is exported from the U.S. to other countries using pipelines, trucks, rail, or marine vessels. (Photo: Jim Allen/FreightWaves)

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Texas lawmakers criticize effort to restrict energy sales to Mexico; US blocks tomato imports from Mexican farm; Nuvocargo boosts team with hires from Uber, McKinsey; and Hutchison Port Holdings breaks container delivery record at Mexican port.

Texas lawmakers criticize effort to restrict energy sales to Mexico

A bipartisan group of Texas lawmakers has united in opposition to Mexico’s newly proposed energy policies, which they labeled an attempt to limit competition in the country’s electrical power sector.

In a letter to Ken Salazar, U.S. ambassador to Mexico, 20 U.S. representatives and the two U.S. senators from Texas criticized changes proposed by Mexican President Andrés Manuel López Obrador that could restrict the market share of private power companies (several of which are Texas-based) and favor Mexico’s state-owned utility company.

“We urge you to engage directly with senior Mexican government officials to ensure that American energy firms are able to export goods fairly and can continue to drive private investment and job growth throughout the region,” the letter stated.

It was signed by U.S. Sens. John Cornyn and Ted Cruz, as well as U.S. Reps. Henry Cuellar and Michael McCaul, among others. They said Mexico’s new energy policies could “discriminate against American energy producers.”

“We are focused on ensuring full implementation of the United States-Mexico-Canada Agreement (USMCA) and are concerned with recent actions taken by the Mexican Administration to favor state owned enterprises and push out American investment. These actions violate the spirit and letter of the USMCA and need to be addressed,” the letter sent on Tuesday stated.

López Obrador sent a bill to the Mexican legislature Oct. 1 that would cancel most permits awarded to private companies for electricity generation.

The bill would give the state-owned power utility Comision Federal de Electricidad (CFE) about 54% of the electricity producing market. The CFE currently holds about 38% of the market.

López Obrador’s reform would also get rid of two independent regulators in Mexico: the National Hydrocarbons Commission and the Energy Regulatory Commission.

López Obrador said the aim is to boost the Mexican government’s control of the electricity market and reverse business-friendly energy legislation enacted by previous Mexican administrations as far back as 1992.

About 69% of U.S. natural gas exports went to Mexico and 31% went to Canada during 2020, according to the U.S. Energy Information Administration.

Mexico relies heavily on energy exports from the U.S. to power its energy grids — especially natural gas. More than 60% of the electricity produced in the country is generated with natural gas imported from Texas, according to Mexico’s Federal Electricity Commission.

Companies that export processed natural gas to Mexico include Houston-based Stabilis Energy Inc. and Houston-based Cheniere Energy Inc.

U.S. natural gas exports to Mexico established a new monthly record in June, surpassing 7 billion cubic feet per day in June, according to the U.S. Energy Department.

One of the emerging markets for U.S. exports of natural gas is Mexico’s vehicle fuels market. Trade officials said more passenger cars, taxis, buses and tractor-trailers are using natural gas to power their vehicles.

“In Mexico, natural gas is an economic, ecological and safe vehicle fuel alternative,” Andrés Bayona, president of the Natural Gas Vehicle Association of Mexico (AMGNV), told FreightWaves.

AMGNV and other associations have been pressing the Mexican government to provide more infrastructure and allow more permits for the construction of LNG fueling stations across the country. 

Liquefied natural gas (LNG) accounts for about 500 million cubic feet of natural gas exports per day.

Bayona said more people and companies are turning to LNG to power their vehicles. There are currently 91 natural gas fueling stations in Mexico, with plans to add as many as 61 more by the end of 2022.

“With this growth we can see that natural gas fuel in Mexico has doubled in just two years and we can conclude that our sector presents an important investment opportunity in our country,” Bayona said.

López Obrador’s bill to reform the country’s energy sector is currently in the Mexican legislature, which could vote on the proposals by Dec. 11.

US blocks tomato imports from Mexican farm

U.S. Customs and Border Protection (CBP) said it will bar imports of fresh tomatoes produced by a Mexican tomato grower following accusations regarding forced labor.

CBP issued a Withhold Release Order Thursday against the company based on what it said was “information that reasonably indicates the use of forced labor against its workers.”

CBP investigators found evidence of deception, withholding of wages, debt bondage, and other abusive working and living conditions at Agropecuarios Tom S.A. de C.V.-Horticola S.A de C.V., and its subsidiaries.

The company is based in San Luis Potosí, Mexico. The farm has more than 600 employees.

Nuvocargo boosts team with hires from Uber, McKinsey

Nuvocargo recently announced three new hires: Josefina Blanco, legal and compliance lead; Luis Garcia, head of carrier relations; and Claudio Gonzalez, head of strategy and chief of staff. 

New York-based Nuvocargo is a digital logistics platform for cross-border trade between the U.S. and Mexico.

Deepak Chhugani, founder and CEO of Nuvocargo, said the company has more than doubled in size since last year.

“I’m excited that we are creating jobs in both the U.S. and Mexico and modernizing this hugely outdated industry with our digital platform,” Chhugani said.

Blanco will be based out of the company’s office in Mexico City. Blanco has spent more than 10 years working for various law firms, where her practice focused on cross-border financing, banking regulation, and M&A transactions.

Garcia will also be based in Mexico City. Garcia most recently served as the head of national operations and marketplace at Uber Mexico.

Gonzalez will be based in Nuvocargo’s New York office. Before Nuvocargo, Gonzalez was an investigative reporter at Mexicanos Contra la Corrupción y la Impunidad, and also worked as a business analyst at McKinsey.

Hutchison Port breaks container delivery record at the Port of Lázaro Cárdenas

Hutchison Ports recently set a record for container deliveries during a single shift at the Port of Lázaro Cárdenas on Mexico’s Pacific Coast.

Hutchison employees managed to move 704 boxes in a single eight-hour shift on Oct. 14 at Specialized Container Terminal I at the port, according to a release

The terminal on average loads about 350 to 400 boxes per shift to trucks at the port.

“This kind of achievement is fundamental for the development and competitiveness offered by the Port of Lázaro Cárdenas, constituting an axis of economic growth in the Mexican Pacific, as well as the importance of having a state-of-the-art infrastructure to promote global trade,” port officials said in a statement. 

Hong Kong-based Hutchison Ports operates six terminals at four seaports and one inland port in Mexico, serving 20,000 customers. The company operates ports in 26 countries around the world.

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact [email protected]