Rail Connectivity Increases, Rail Cargo Rebound PendingBy Pedro Alcalá | Fri, 08/07/2020 - 17:14
While the results of the upcoming US Presidential Election might recontextualize the commercial relationship between the Mexico and its neighbor to the north, the fact is that COVID-19 has highlighted the enormous need that will continue to exist for further cross border traffic between the two countries, regardless of political circumstances. This is illustrated by a recent preliminary approval received by major rail player Kansas City Southern from US President Donald Trump. KCS is an important participant in both countries’ rail cargo sectors, which include connectivity from the US to major Mexican ports such as the Altamira Port, whose API Director General Juan Manuel Latapi Diaz considers KCS as one of its two rail connectivity partners along with Ferromex (to read the rest of our interview with Latapi Diaz, click here).
The preliminary permit in question was granted to KCS for the construction of an additional adjacent parallel segment to the cross border rail bridge that connects Laredo, Texas with Nuevo Laredo, Tamaulipas. According to a report on this bridge from T21, a statement from KCS refers to the bridge as “part of the network of essential infrastructure that will facilitate the movement and exchange of goods and materials across the border, which will only continue to increase thanks to the USMCA.” It is possible that the political alignment between the presidential support for the project and the company’s acknowledgement of the USMCA’s importance are not coincidental. Either way, there are still a lot more permits both Mexican and American to be obtained before the project can initiate. Nevertheless, the project’s planning and engineering design are already underway. This expansion will bring much-needed capacity to a bridge that, while currently operating at 80 percent capacity, is already responsible for 56.5 percent of all US-Mexico rail exchange, transporting over 12 billion dollars of goods and materials from January to May of 2020. The only other significant piece of cross border rail infrastructure is the rail bridge that connects Brownsville, Texas with Matamoros, Tamaulipas, which is also operated by KCS and, at the time of its 2015 inauguration, the first rail infrastructure project of its kind since the times of Porfirio Díaz.
The future promise represented by this project does contrast to some degree with the current state of Mexico’s rail cargo sector. Another report from T21 shows that the first semester of 2020 was not an easy one for Mexican rail cargo traffic due to the impact of COVID-19. The country’s major rail cargo routes saw decreases of 20 to 30 percent in transported volumes during this time when compared to last year’s figures for the same period. However, it was in fact the lines operated by KCS and Ferromex that presented the smallest decreases, that of 3.1 and 1.2 percent respectively.