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Engagement does not necessarily translate to actual business , though .
UP hosted a forum in Monterrey earlier this year to encourage intermodal marketing companies ( IMCs ) to open operations in Mexico . Even IMCs established in Mexico have dealt with delays in customs clearance this year at terminals owned by Mexican state railroad Ferromex , making it harder to compete with trucking .
“ Mexico is not a super easy place to do business , and if you ’ ve never done business there before , there is a bit of a learning curve on how to do it , so we want to help make it less complicated ,” Linden said . “ The question for Mexico is that there is a bunch of cargo going north , but not much balance southbound . How can we get more shippers to send freight into Mexico ? Getting freight southbound is an inhibitor to growth .”
Similar to the outbound ocean trade from the US to Asia , most containers going from the US to Mexico have nothing inside .
Jonathan Wahba , senior vice president of marketing and sales for Canadian Pacific Kansas City ( CPKC ) is less focused on market share than on growth within his control .
“ In our legacy Canadian business , we launch four trains per night every night from Toronto to western Canada , and I see no reason we can ’ t do the same between Mexico and the US ,” Wahba said at Inland24 . “ By the end of the decade , my goal is multiple daily trains in both directions .”
Currently , the Mexico Midwest Express train from San Luis Potosi to Chicago is the only CPKC daily train originating in Mexico . CPKC hopes to launch a Mexico-to-Southeast train before the end of the year , but it ’ s not clear whether it would be a daily train or only a few days per week .
Railroads haul just 300,000 loads across the US-Mexico border each year , compared with more than 7 million trucks . Shutterstock . com
Looking farther south
CPKC ’ s second bridge in Laredo , opening this December , could be key to increasing volume . Today , a single bridge handles northbound and southbound trains in alternating time blocks , but a second bridge will enable simultaneous traffic in both directions .
Expanding into new markets will also be necessary to shift market share .
UP has seen organic growth since October 2023 when it launched a Mexico – Southeast US service connecting in Memphis . CPKC and CSX anticipate launching their joint Mexico – Southeast US service before the end of the year .
To take share in that corridor , railroads will have to address competitive truck pricing that is often on par or cheaper than intermodal .
Other areas in Mexico can be fertile ground to gain share against the trucking industry .
Despite the present downturn , auto manufactures in the Southeast US are opening factories in Mexico , so rail operators must target markets deeper into the country beyond northern Mexico .
CPKC ’ s Mexico Midwest Express originates in San Luis Potosí , but new clients could justify further expansion south to Toluca , an hour outside Mexico City . The Falcon Premium launches from Silao and is only just making inroads toward Mexico City , where demand is rising .
“ Mexico City ’ s terminal in Pantaco has historically handled mostly international cargo , but we ’ ve now designated a section for domestic ,” Linden said . “ This has sparked interest from shippers eager to explore new rail options .”
Railroads must expand business south of Monterrey to capture market share because the relatively short truck transit to the border creates stiff competition between the two modes in northern Mexico .
CPKC ’ s Mexico Midwest Express originates in San Luis Potosí in central Mexico , but if it can generate new customers with Schneider in Mexico City , then new service can be launched in Toluca , about an hour outside Mexico City .
The Falcon Premium originates trains in Silao , but it hasn ’ t gotten a major foothold yet into Mexico City .
“ There has been a tremendous amount of discussion and conversation around Mexico City and how to move freight out of the city ,” Linden said . “ We have a lot of people coming to us with opportunities in Mexico City asking about options with Union Pacific .”
A partnership between Hub Group and Transportes Easo , which owns a terminal in Mexico City and uses company drivers rather than owner-operators , gives the two intermodal providers an opportunity to compete with truck .
“ Our partnership is uniquely positioned to move equipment northbound , southbound , as well as intra-Mexico which allows for better management of capacity ,” said Diego Anchustegui , chief marketing officer of Easo and president of the Mexico Intermodal Association . “ We offer an intermodal heavyweight option that allows us to move freight more efficiently to the US , allowing us to better compete with truck .”
email : ari . ashe @ spglobal . com www . joc . com November 18 , 2024 | Journal of Commerce 13