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News Article

USMCA Rail Corridor Will Connect Mexico With Canada

By Paloma Duran | Mon, 10/19/2020 - 17:13

Mexican company Caxxor Group is planning the development of one of the most important logistic and infrastructure projects following USMCA. The project proposal is a transcontinental rail corridor that will connect a terminal in Winnipeg, Canada, to a shipyard at the Port of Mazatlan, Mexico.

The port is expected to handle more than 8 million containers annually, making this project the largest  in Latin America. The corridor will pass through important industrial regions like Sinaloa, Durango, Nuevo Leon, Chicago, Illinois, Dallas, Texas and Tulsa.

Caxxor Group Director, Carlos Ortiz, told Milenio that the new terminals will handle containers, vehicles, bulk commodities and oil products for imports and exports.

The automotive industry, in particular, will be the most benefitted through a direct connection between the US and Mexico’s manufacturing hubs. Additionally, it is expected that the terminal in Mazatlan will attract greater energy investment to the states of Texas and Louisiana.

The main difference between this new corridor and others, such as the Panama corridor, is that the project is not only aiming to transport products but also to engage in light manufacturing and assembly .

Caxxor Group announced an initial investment of US$3.3 billion to construct the rail corridor. According to Ortiz, it has not been determined who will be the operator and builder. Nevertheless, there are already more than 100 companies that are interested in participating in the project.

In addition, the director has declared that all the investment is private and that there have been significant developments regarding government permits, which will allow companies to begin the project in 2021. 

According to Caxxor Group, the project is expected to be completed in the next five years. Investment will be US$600 million for the construction of 87km of railroad that will cross the Sierra Madre Occidental mountain range and will provide access to 7,115 km of railways. US$1 billion will also destined to the construction of  industrial parks, US $300 million will be allocated to the new Mazatlan shipyard and US$400 million to Winnipeg’s logistic center. 

President López Obrador has expressed his enthusiasm and confidence regarding the USMCA agreement, stating that it will allow greater investment in Mexico. Nevertheless, despite the new project and possible new investments, many players have doubts about Mexico’s recent government policies.

Recently, US ambassador to Mexico Christopher Landau at an online conference held by the Concamin business chamber declared that it was not a good time to invest in Mexico. Moreover, the US State Department reported in September that investors have experienced regulatory changes, as well as a weak fiscal response to the pandemic, among other developments that have created uncertainty. Even so, the pandemic has also brought the opportunity to lift the Mexican economy by strengthening key logistics assets, especially the ones related to public services, says Ortiz.

 

The data used in this article was sourced from:  
Mexico News Daily, Freight Waves, Milenio, Expansión, U.S. Department of State
Photo by:   @almesura
Paloma Duran Paloma Duran Junior Journalist and Industry Analyst