Photo credit: 230/365: 08/18/2013. Union Pacific X-18 by peddhapati
Mexico is becoming the darling of the world’s manufacturing industry; along with highly skilled, experienced workers who are famed for their solid work ethic, Mexico has access to cheap energy thanks to its own natural resources and shale gas and oil that are imported through new and projected pipelines from the United States. Due to the Spanish-speaking country’s geographical location as well, companies that manufacture everything from computers to automobiles are rushing in order to access all of the markets that are available in the Americas from Alaska to the southernmost part of Argentina.
In order to keep the goods flowing and manufacturing at optimized levels, railroad transportation is quickly expanding in Mexico and the United States, with north-south corridors seeing improvements and significant expansions extending from manufacturing bases in Mexico to markets, ports and road hubs in the United States.
Kansas City Southern (KCS), a Missouri-based railroad has recently made what is called an aggressive push into the cross-border intermodal market, having invested a total of $300 million in upgrades to its intermodal network in order to get Mexican goods moving. The move not only will strengthen this railroad’s position as a major player in one of the world’s busiest commerce corridors; it might also change the way freight is handled. Partnering up with Canadian Pacific Railway, KCS operates over a vast territory, going from Minneapolis to the Pacific coast port of Lázaro Cárdenas.
What makes KCS a little bit different and a better good transportation option that other companies is the fact that it doesn’t need to interchange traffic at the U.S.- Mexico border and is the only railroad company from the United States that doesn’t have to.
Intermodal shipping, or the shifting of containers in which goods are placed from trucks to trains or trains to ports, is the major area where growth is booming at near exponential rates. In the past five years alone, cross-border truck and train freight has gone up an astounding 35 per cent, and is expected to grow as trade between the United States and Mexico increases to record levels. The value of goods expected to flow through the border via railroads and trucking networks will most likely exceed $360 billion.
One of the industries that are relying on improved rail and road infrastructure is Mexico’s automobile sector. While the sector is currently experiencing double-digit growth in production, it is still expected to leap by another 40 percent in the next 18 months. Currently, Asian and European manufacturers that are in Mexico are hoping to acquire space close to the Mexican towns and cities KCS services at present.
Right now, Mexico is a hot market for U.S. investors and companies. Summing up the situation in Mexico is Dahlman Rose analyst Jason Seidl, who says: “Anybody with an opportunity to position themselves in this marketplace and chooses not to will probably regret it sometime in the next five to 10 years because cross-border market growth is going to outstrip probably any growth in any other (intermodal) transportation.”