EDITORIAL

Home

Railroad activity has become a competitive means for shipping merchandise in North America. Rail transport offers the possibility of inter-modal transportation throughout the NAFTA region. Mexico revitalized its railroad system through a privatization process that has attracted new investors into the sector. Privatization started in 1995 when the Mexican government amended the Constitution to allow private investment in railroads, and Congress passed the new Railway Service Regulatory Law, which establishes procedures for granting concessions and permits for private participation and foreign direct investment.

The Mexican railroad system network was divided into three main regions: Northeast, Pacific-North, and Southeast.

In June 1997 the 50-year concession for the Northeast Region, which connects Mexico and the U.S. at the Laredo-Nuevo Laredo border crossing, was awarded to Transportación Ferroviaria Mexicana (TFM), a joint venture between Mexico's Transportación Marítima Mexicana (TMM) and U.S. Kansas City Southern Industries (KCSI). Southbound, the Northeast railroad reaches the manufacturing centers of Monterrey, Guadalajara, and Mexico City, and connects to the port of Lázaro Cárdenas in the Pacific coast, and with the ports of Altamira and Veracruz in the Gulf of Mexico. Northbound, the Northeast system interconnects with the Kansas City Southern Railway, the Gateway Western Railway, the Texas Mexican Railway, as well as with the Canadian National and the Illinois Central Railway.

Although land transportation continues to be the dominant mode for shipping Mexican exports to the U.S., railroad is gradually and steadily gaining ground. Between 1994 and 1999, freight load by train through Laredo -the most important U.S. port of entry for load freight- almost tripled, and by 1999 the Northeast railroad accounted for 22 percent of total U.S.-Mexico freight shipped through Laredo. Today, the Northeast railroad accounts for almost 20 percent of Mexico's rail system and transports 40 percent of total Mexican rail cargo.

The privatization of Mexico's Northeast railroad has benefited the transportation system in North America, which is playing an increasingly important role in the thriving U.S.-Mexico trade relationship. A more efficient rail transportation system has allowed firms to carry out with their just-in-time deliveries. Since September 1999, the U.S. DOT Surface Transportation Board has allowed TFM to participate in the international transportation of motor vehicles and autoparts for such customers as General Motors, Volkswagen, DaimlerChrysler, and Ford.

As infrastructure in Mexico continues to grow, rail transport will become an even more attractive method for delivering goods across the NAFTA region.

SOURCE:  NAFTAWORKS