Mexico’s rail capabilities have evolved significantly over the past decade, as Carlos Godinez, Intermodal Director, Mexico at Transplace, discussed in a recent episode of Talking Logistics. “It’s been a 180 degree change,” in terms of infrastructure and service improvements, with approximately $5 billion in investments made since 1997. The change is most evident for cross-border intermodal shipments between the United States and Mexico:
In the past, an intermodal train originating in Chicago, for example, used to stop at the border [before crossing into Mexico]. Just imagine a train hauling anywhere from 100 to 250 containers or “piggy backs,” with each of those containers representing a different importer and broker. So, a lot of coordination was required to have pedimentos [customs entry forms] completed for every one of those containers, which was a very inefficient process.
Today, these trains are documented at the origin ramp [in the U.S.] and they are coming bonded and pre-cleared, so they do not have to stop at the border, which eliminates [all the paperwork and customs activity] that happened at Laredo, which was like the Bermuda Triangle…The trains are coming through Laredo and connecting with either Ferromex or Kansas City Southern de México (KCSM) — the connection process takes about a couple of hours — and then it takes 1-2 days for the trains to reach the interior ramps in the country.
So, significant changes have occurred from a transit time perspective and in the levels of service and ramp options now available in Mexico.
How do service levels and security compare to the United States? “First, you have to differentiate between general cargo and intermodal trains,” said Carlos. “For intermodal, we’re generally seeing better than 90 percent on-time performance.” He added that depending on the season, delays can occur, which was happening at Laredo at that time because KCSM has only one track there. But investments are ongoing to expand capacity and alleviate chokepoints.
Regarding security, “it is certainly a concern and challenge for both sides. The U.S. railroads and the Mexican railroads work together on security because you can solve the problem on one side and then you have an issue on the other side. So there is ongoing collaboration and communication between the railroads to share intelligence about what is happening and where. Security is a constant focus and priority for the railroads.”
The auto industry has been the predominant user of intermodal in Mexico for the past twenty years, but as Carlos describes in the clip below, companies in other industries, such as home appliances and paper, are expanding their use of intermodal, with CPG and Retail presenting the greatest growth opportunities in the years ahead.
To wrap up, Carlos provided some great advice to companies that are looking to leverage rail for the first time in Mexico, including the need to have a Mexican broker partner at the final destination to complete customs clearance, which is a challenge for some companies because their processes and brokers are set up to do customs clearance only at the border.
I encourage you to watch the rest of my conversation with Carlos for additional insights on this topic. Then post a comment and share your perspective!
