MEXICAN RAIL CUTS RATES UNDER COMPETITION PROGRAM

MEXICAN RAIL CUTS RATES UNDER COMPETITION PROGRAM

Ferrocarriles Nacionales de Mexico (FNM), Mexico's state-owned railroad, will reduce its rates by 10 percent as part of a national competitiveness initiative, railroad officials said.

The railroad this month began informing shippers of the new rates, which were ordered as part of the Salinas administration's competitiveness program.The Pacto para la Estabilidad, la Competitivadad y el Empleo, or PECE, is designed to create stability and employment through greater competitiveness. As part of the PECE effort, state-owned enterprises like the railroad and Pemex oil company were forced to trim rates.

Although the rate for rail traffic is expected to drop by 10 percent, the figure is actually just an average reduction, said Miguel Tirado Rasso, a spokesman for FNM in Mexico City.

The actual decrease in rail traffic rates is anywhere between 5 percent and 12 percent, he said, and will be determined after weighing the ratio between costs to move product and revenue generated by commodity.

Representatives of U.S. railroads in Mexico City said they were not clear how the rate decrease would be factored into the bill for shippers. Most U.S. railroads offering service to Mexico are trying to create one-bill service, and it's not clear how their efforts might be affected by the rate cut.

Shippers that use the state-owned railroad welcomed the news of a rate decrease, complaining that railroad rates are too high, particularly when compared with truck service.

"Compared to railroad rates in the United States, they are almost double in cost per mile," a shipper based in Mexico City said of FNM's rates. "FNM is telling customers they are willing to be competitive (price wise), but we don't see that much happening."

Despite shipper complaints, FNM officials said the railroad this year has already moved about 95 percent of the freight volume projected for 1994. Mr. Tirado estimated that FNM will move 52 million tons of freight in 1993.