Increased US-Mexico rail traffic creates opportunities and new revenues for companies in both countries.
Because of the more than doubling in the volume of its US-Mexico rail traffic in the twenty years that have elapsed since the signing of the NAFTA in 1994, BSNF Railway has struck up a partnership with Mexico’s Ferromex to launch its Chicago to Guanajuato, Mexico service during the second quarter of this year. The five day a week service enables shippers to move their goods by rail to a main terminal located in Guanajuato, Mexico, or move products in the reverse directions. In addition to shipping to Guanajuato, upon arrival, goods can be subsequently shipped by truck to major Mexican manufacturing centers located in Queretaro, Leon, Aguascalientes and other South Central Mexico locations that are the home of major automotive OEMs. US-Mexico rail service coming north from these areas consists largely of Mexican assembled passenger vehicles that are shipped to the United States for consumption in the US market.
BSNF made the decision to partner with Ferromex to provide this service due the sizeable increase in the value of trade that has transpired over the last two decades. Just this year, for example US-Mexico rail commerce increased 6.6% during the period January-June 2014, when compared to the same six months for the prior year. The value of US-Mexico rail trade through June of the present year totaled US $21.1 billion. In addition to component parts for the assembly of passenger vehicles being shipped points south, and finished autos moved northbound, other commodities that have seen a volume increase being shipped by US-Mexico rail include agricultural products and steel.
While BSNF Railway ships with its partner Ferromex to Mexico’s South Central Bajio region, It is also engages in crossborder intermodal transportation activities in the El Paso and Ciudad Juarez area. Items that are shipped by BSNF to El Paso are unloaded from rail cars, moved across the border by truck and delivered to many of the maquiladoras that operate in Mexico’s border industrial center.
BSNF Railway is not the only US line to have struck a deal with Ferromex in recent times. The Union Pacific Railroad commenced a partnership with Mexico’s national rail company to provide intermodal service to industry from Chicago to Monterrey, Mexico’s major northern industrial center. In addition to its Chicago-Monterrey connection, Union Pacific recently opened a new $400 million dollar intermodal facility at New Mexico’s commercial border crossing with Mexico at Santa Teresa.
BSNF Railway and Union Pacific, along with their Mexican partner, is not the only companies that are benefiting from increased US-Mexico rail commerce. The Kansas City Southern Railroad, which is the foremost player in the crossborder intermodal shipping business, made significant inroads into the interior of country through its purchase of Mexico’s Transportacion Ferroviaria Mexicana. Upon the acquisiton of the company KCS renamed the carrier Kansas City Southern de Mexico.
The original source article for this post can be found at the Journal of Commerce.