Through all its fits and starts, perhaps no other North American intermodal service has been discounted quite like short-sea shipping has. Yet one must look only to CG Railway, the 10-year-old cross-gulf rail-ferry subsidiary of International Shipholding, for proof that, given the right model and product mix, short-sea shipping is anything but unviable.
Operating two double-decked rail-ferry vessels customized to carry railcars full of forest products, chemicals, agriculture products and metals and steel, CG Railway’s weekly service sails 900 miles by sea between Mobile, Ala., and Coatzacoalcos, Mexico. The land connection would cover 1,400 miles.
Each ship, the Banda Sea and the Bali Sea, can accommodate up to 115 60-foot railcars, including tank cars, boxcars, hoppers, gondolas and flatbed cars. All cargo moves under railroad waybills. “We view ourselves as a railroad that uses marine assets as our locomotives,” said Kevin Wild, CG Railway’s senior vice president.
With 2011 volumes that grew 20 percent year-over-year to 18,000 railcars, CG Railway is exploring opportunities to expand its Mexican trade. It plans to build a refrigerated warehouse by year-end in the Port of Coatzacoalcos, on Mexico’s Gulf Coast 200 miles south of Veracruz, so it can begin to carry refrigerated railcars hauling U.S. frozen meat and chicken exports from Alabama to Mexico and transport Mexican produce on the northbound backhaul leg.
CG Railway also is considering expanding its rail-ferry service to ports farther north along Mexico’s Gulf Coast. “We think there are opportunities with the growth in Mexico and near-sourcing of auto production from Japan that is moving into the northern part of Mexico,” Wild said. “Everything that comes with that is an offshoot, so there is growth of steel and auto parts. There is also growth of aerospace north of Mexico City and chemicals in the Altamira area. That makes us feel comfortable to look at expansion in Mexico.”
CG Railway currently targets the market from Mexico City south, and says it isn’t seeing a lot of near-sourcing yet. Wild said the growth of the U.S.-Mexico trade is creating new opportunities for the company to serve U.S. shippers east of the Mississippi River, where it can offer a pricing advantage over railcars shipped by land on traditional rail routes.
“We service a number of accounts that prior to our service were not doing business in both directions, because they couldn’t compete,” Wild said. “Before our service, someone who produces widgets in Alabama couldn’t compete with someone producing widgets in Texas, but now the Alabama producer has a direct shot into Mexico, so they can source and buy products in southern Mexico and also sell with a much more completive (transport) system.”
CG Railway’s transport niche is limited to the North American Free Trade Agreement partners, which share the same track gauge, and Cuba, which is obviously not yet a market for expansion. Shippers relying on containers can use CG Railway’s transload facilities in Mobile and Coatzacoalcos for transport by rail or truck inland.
International Shipholding launched the service in 2001 after Mexico privatized its railroads and sold to private investors the railroad south of Mexico City, which had no direct connection to the U.S. “That’s when we decided to create the direct service by sea,” Wild said, “and that’s worked.”