In another sign of growing interest in alternatives to the congested U.S.-Mexico land border, the Port of Galveston and a transport venture-development company plan to launch a rail-barge service early this year.

The port is working with International Trade and Transport Ltd. of Arlington, Texas, to bring back the rail-barge trade between the two countries.Significantly, the managing director of ITT, James S. Owens, had run a rail-barge service to Mexico, which ended when Burlington Northern Railroad merged with Atchison, Topeka & Santa Fe Railway.

''I think the fundamentals of that business really haven't changed that much. What's enhanced it is, there is quite a bit of stress on the transport infrastructure right now,'' said Mr. Owens. ''We feel there are some real niche markets.''

Rail barge is as it sounds. Rail cars are rolled onto barges that have tracks affixed and then rolled off onto tracks at their destination.

Once seen as promising, rail-barge options got little attention after January 1995, when a botched peso devaluation forced the Mexican government to do what it said it would not do, and it began privatizing Ferrocarriles Nacionales de Mexico, Mexico's state railroad.


However, late last year, Illinois Central announced it was working with port officials in Mobile, Ala., to launch a rail-barge service in the first half of this year to Coatzacoalcos, in the southern Mexican state of Veracruz.

An existing rail barge terminal is already in place at Coatzacoalcos, where Burlington Northern and its Mexican partner Protexa had operated a service from Galveston for roughly 18 months before its was shut down as part of the Santa Fe merger.

The Illinois Central and Mexican partners are the favorite to win the final concession of the FNM's main-line system. The southern concession is expected to be awarded around May, after which time ITT and the Port of Galveston hope to begin their service.

The Mobile-Illinois Central plan targets chemicals as the chief commodity in the service. Coatzacoalcos and nearby Minatitlan are main petrochemical and refining centers for state oil company Petroleos Mexicanos. The Galveston-ITT service will target chemicals, but not necessarily as the anchor.


Mr. Owens suggested that he did not expect to compete head-on with Illinois Central. ''Illinois Central's market focus is on the eastern United States. The system from Galveston is a north-south type system for the Midwest, south Texas and Louisiana,'' he said.

''We don't see ourselves as necessarily competing directly, because we see a geographic difference on where the business is going to flow.''

Also, the ITT service - initially planned for twice a week with barges of varying sizes - may actually target two or three ports. Study is under way for potential calls to Veracruz, Mexico's busiest port, and to Progeso, on the Yucatan peninsula.

The Mexican government has in recent years touted the Yucatan as an area for new manufacturing centers, and the Port of Tampa in Florida has been working on vessel service to Veracruz and Progreso.

The original rail barge service from Galveston by the Burlington Northern focused almost exclusively on grain movements, a move that many industry executives, in retrospect, say may have doomed the service.

Just before the planned merger with the Santa Fe pulled the plug on the joint venture, BN began broadening its cargo base and met with success. The infrastructure remained in place, and Mr. Owens, who presided over the start of BN's service to Coatzacoalcos, said the transportation picture is now different in Mexico.


For one, the FNM has been privatized on the two main north-south lines and rates have shot up by about 42 percent on the busiest line, running from Laredo, Texas, to Mexico City, said Mr. Owens.

Higher rail rates from the border, quicker customs clearance at ports and tighter cargo security should make rail-barge service a more attractive option for certain shippers.

According to Ron Surovik, Galveston's port director: ''One of the big issues is the privatization of the railroads and the ports. They have changed 'doing business in Mexico' considerably,'' he said.

Galveston hopes to see increases in such liquid bulk movements as plastics, chemicals and fertilizers, as well as a varied cargo mix that includes project traffic, he said.

ITT is already receiving calls for such potential cargo moves as urea exports in hopper cars, and is studying such strong export commodities as beer.

''People would not believe how much beer flows from Mexico to Chicago,'' joked Mr. Owens.