José Zozaya
President
Kansas City Southern de México (KCSM)
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View from the Top

Taking the Express Train to International Economic Development

Fri, 09/01/2017 - 14:15

Q: What areas of opportunity are there in railway infrastructure in Mexico?

A: Investment in train infrastructure has risen but city rail beltways, border crossings in the north and some switchyards are areas of opportunity. Border crossings like BrownsvilleMatamoros and Laredo-Nuevo Laredo require better rail infrastructure and logistics for trains to cross the border efficiently. KCSM is building a double track, stretching from the Sanchez Switchyard to the Nuevo Laredo International Bridge to create a safe corridor. KCSM also works with organizations on both sides of the border to improve this bridge’s capacity by employing crews with dual nationalities so that the train does not need to stop in the middle of the bridge as it currently does for a crew change.

In the Bajio region, developing a major rail bypass in Celaya is an important area of opportunity for achieving more time-efficient railway transportation. Celaya experiences plenty of train traffic because the local automotive industry requires high numbers of trains for logistics purposes and because both Ferromex and KCSM operate in this city. This traffic forces trains to move slowly, which puts convoys at risk of being vandalized.

Q: How can KCSM expand the Mexican railway network when the network belongs to the government?

A: Freight railways operate under a concession scheme granted to train companies, which have the responsibility and obligation to invest in the railway network's maintenance and improvement along with equipment to keep the system in motion. However, railways as well as adjacent and underlying land belong to the government, so any railway expansion must be submitted to public tenders. Expanding the railway network through new routes is not in KCSM’s hands but we can and do build longer sidetracks to enable several trains to cross a region in less time. The company will continue investing in Mexico. We have committed US$156 million for 2017 and have agreed a joint venture with Watco and WTC Industrial for a large fuel-storage facility in San Luis Potosi. If KCSM reaches an agreement with the Ministry of Communications and Transport, we will participate in the train bypass in Celaya.

Q: What is the percentage breakdown of the railway freight KCSM moves?

A: Railway freight accounts for about 27 percent of the total national freight transported. KCSM moves about 40 percent of railway-transported freight, 17 percent of which belongs to the automotive sector. Other important products KCSM transports are grains and fuels.

Expanding the share of railway freight in Mexico is difficult because, unlike the US and Canada, Mexican topography is more rugged, making train operations costlier. Railway companies may eventually move up to 35 percent of the total national transported freight but such growth takes a long time. As production volumes in the automotive and agriculture industries grow, so will the use of railway freight in those industries. KCSM would like to move as much merchandise as our capacity allows and we can provide services to all industries moving products in containers

Q: What should be done during the next Mexican presidential term to achieve a world-class logistics hub?

A: Efficient logistics infrastructure is more than creating and maintaining the physical infrastructure of ports and airports. Useful legal and regulatory infrastructure is needed to enable logistics companies to transport merchandise swiftly so the capacity of a port or airport is increased. Providing certainty to transportation through legal means increases a port or airport’s capacity beyond its physical capacity. Also, improving road and railway infrastructure will help Mexico increase its transportation abilities. Mexico is beginning to strategically place logistics centers through the creation of Special Economic Zones (ZEEs) situated in areas that have the required infrastructure to promote trade. All these actions will make the country a world-class logistics hub.