The Opportunity

As remote and as isolated as this port with a two lane bridge and no rail connection may be, it currently manages to maintain international trade in both directions across the border with Mexico. As of April of 2018, trade for the year totaled $73.67 million and trade for all of 2017 was $210.66 million. The trade is fairly balanced, with exports representing $38.9M and imports representing $34.7M, through April.

As expected, 100% of the exports were to Mexico, but imports were split with Mexico at $34.7M, Canada at $27.5K, China at $5.7K and Germany at $3.6K. The top 5 exports were Tractors ($4.6M), Horses ($3.3M), Self-propelled Construction Machinery ($3M), Harvesting Machinery ($2.9M), and Motor Vehicles for Transporting People ($2.7). The top 5 imports were Live Cattle ($10.1M), Prefabricated buildings ($6.8M), Motor Vehicle Parts ($4.9M), Misc. Iron and Steel Articles ($2.9M) and Misc. Aluminum Articles ($2.6M).

With greatly expanded access for commerce between Mexico and the U.S. through this area, there are a number of industries that could benefit from strategic access to both the rail and road ports of entry.

Trade Numbers

 

Railroad

Perhaps the most logical commercial use for the property would be as support to rail operations, either as a customs clearing area or perhaps a train station. As a customs clearing facility or freight forwarding facility, the property presents the ability to connect rail based operations to highway based operations at a critical point. Alternatively, there has been some discussion of rebuilding the train station at Ojinaga, but it might make more sense for the station to be in the U.S., providing better access for the tourism trade south of the border.

Ojinaga Station

 

Petroleum

Pemex began the exploration process for shale gas production in Chihuahua and elsewhere as of 2010, and with the recent constitutional reforms in Mexico that ended Pemex’s 75-year monopoly, foreign companies have begun to invest in gas and oil exploration and production in Mexico, as well. As of February of 2014 Pemex had drilled 29 wells in Chihuahua and officials have claimed that more than 18 trillion cubic meters of gas were found in initial exploration. Studies undertaken on the potential of fracking in the region took in $230 million in investments and are expected to be published early in 2015. Cesar Duarte, Governor of Chihuahua, supports fracking and claims that the money it brings in will help support economic and social development in the state.

Since Texas Pacifico’s main business is hauling frac sand in the Permian Basin, it seems logical that their interest in repairing the bridge at Presidio is in anticipation of hauling frac sand into Mexico as the Chihuahua Shale play begins to develop. Further, there will be a need for drilling and production equipment in the area and the route through Presidio is the shortest route from the Permian into Northern Mexico.

The subject property could serve as a holding / inspection area for frac sand crossing by rail, or as a clearing area for oilfield equipment and parts headed to Mexico. Alternatively, many of the larger service companies would benefit from having a staging area on the border to facilitate operations between Midland and Chihuahua.

Mexico Shales

 

Tourism

As previously mentioned, one of the most popular trips in Mexico is the ride on the railroad on El Chepe from Chihuahua to Topolobampo through the Cañon del Cobre. Currently, tourists from the U.S. must travel to Chihuahua City in order to make the trip.

The reestablishment of the line from Ojinaga to Chihuahua presents an opportunity to support tourism in Northern Mexico from Presidio, affording security and convenience to tourists. This base could also support highway based tourism from both sides of the border. Nearby attractions on the U.S. side are: The Big Bend National Park, River Canoeing in Santa Elena Canyon, Minimalist Art Exhibits in Marfa, the Marfa Lights, and McDonalds Observatory at Fort Davis. On the Mexico side, there is Chihuahua, with its museums and cathedrals, Creel with nearby Basaseachic Falls, and Los Mochis / Topolobampo on the Pacific Coast.

With beautiful mountain vistas in every direction, the property could support safe and secure hotel and parking accommodations and transportation to facilitate tourist activities on both sides of the border with convenient access to customs and immigration facilities.

El Chepe Website

 

Maquilla Activity

Because of the lack of infrastructure to support transportation, the Presidio – Ojinaga area was bypassed by the development of maquiladoras that are so prevalent in other areas along the border in Texas. Currently, that may be a blessing in that the area will not likely suffer the consequences of the recent political policy regarding NAFTA. Now that situation has been largely resolved, there exists newfound potential to develop those activities in this area where current income levels remain quite low on both sides of the border, and land prices are quite competitive in comparison with the larger border cities.

Import / Export Activity

The old fishing village of Topolobampo is now a modern seaport that was inaugurated in 1991 in order to consolidate the commercial expectations of Mexico’s northeast region. It has an ideal infrastructure for handling containers and receiving large ships, allowing it product exchange with Japan, Korea, Taiwan, Singapore, Hong Kong, Australia, Canada, New Zealand, and Central and South America. Its privileged position in the Pacific Rim makes it an ideal port for commercial exchange with Asian markets. Its importance was the reason for the construction of the railroad in the first place, and reestablishment of the line directly connects the mid-continent region of the United States to a Pacific port, without having to go through California. Conversely, Topolobampo will have renewed access to U.S. markets for its abundant fishing and seafood industry.

Chihuahua has a huge agricultural economy and the Port of Ojinaga-Presidio is vital because it’s a principal entry point for Mexican beef used by the U.S. fast food industry. It produces 60% of the cotton in Mexico and has substantial produce operations growing cantaloupe, onions, peaches, nuts, apples and various other food crops. Just recently, an additional 40,000 acres has been placed into production as farmland near Ojinaga. Facilities to handle quarantine and inspection operations, as well as customs clearance, are in demand as recent problems in those operations on the Mexico side have substantially delayed imports. In addition, this port more directly connects the substantial brewing industry in Chihuahua with major markets in Texas, affording substantial savings in transportation costs in the future.

The automotive industry is growing in Chihuahua. Ford has an engine manufacturing plant there that could benefit by having a direct transportation route to its assembly plants in Claycomo, MO and Louisville, KY. Toyota recently completed a $1.2B plant in Chihuahua to manufacture Corollas that will be able to go directly to markets in Midland and Dallas and beyond.

The aerospace industry is setting a footprint south of the border as well. One example is Beechcraft, who has opened two facilities in Chihuahua to make sheet metal parts and electrical assemblies that supply operations at its major facilities in Wichita, KS.  Another is the plant established in the city by Labinal, Inc., a world leader in the field of electrical wiring solutions for the aerospace and defense markets, with a home office and major facility in Denton, TX.

Opportunities for development of the subject property abound and will expand rapidly as the ongoing transportation upgrades are completed in the near future and commerce begins to flow at an accelerated pace.