KCS to upgrade two Mexico-US tracks to meet demand

KCS to upgrade two Mexico-US tracks to meet demand

 

Kansas City Southern said this year it will begin a three- to four-year project to rehabilitate a line between Monterrey, Mexico, and Matamoros, near Brownsville, Texas, to upgrade rail and ties. Photo credit: Shutterstock.

Kansas City Southern is upgrading a key cross-border track in Mexico and a line heavily used by the country’s growing auto manufacturing industry as the railroad’s cargo volumes grow — a volume rise that features a 16 percent increase in goods crossing the US-Mexico border.

The railroad said this year it will begin a three- to four-year project to rehabilitate a line between Monterrey, Mexico, and Matamoros, near Brownsville, Texas, to upgrade rail and ties. The work will expand the rail volume on the currently “low traffic density” line, and will “help us maintain balance at Laredo, improve rail safety and security through the region,” the railroad said.

The upgrade to the line is “driven by the long-term outlook for refined product exports to Mexico,” and will make it a “viable gateway for refined producers and other cross border shipments,” executive vice president/COO Jeffrey M Songer said.

The railroad, which runs the Mexican operations through its subsidiary Kansas City Southern de México, outlined the projects in an earnings call on Jan. 19 in which the company reported a 16 percent increase in the number of carloads that crossed the border in the fourth quarter compared with the same period in 2016. Overall, carload volumes in the fourth quarter increased 5 percent compared with the prior year, which the company said was a fourth-quarter record increase for KCS.

“We expect solid growth in intermodal with continued focus on conversion of the cross border freight currently moving by truck,” Songer said.

President/CEO Patrick J Ottensmeyer said that while the shortage of drivers in the United States has boosted the volume of some railroads, KCS’s cross border volumes have been held down by the “very cheap trucking” down in Mexico. As a result, “we don't see nearly the benefit that you would see on some of the other railroads that have much longer haul in their intermodal space,” he said, adding that nevertheless “we are seeing much more of our customer base looking to build towards intermodal.”

The company also is rerouting a section of track at the Celaya Bypass, at the junction of a north-south route that leads to the Port of Lázaro Cárdenas and an east-west route into Mexico City, which is heavily used by the country’s growing auto industry.

The work will reroute the line out of the city of Celaya, away from a slow, frequently congested section of track through the city center, “increasing fluidity, capacity, and security in one of the fastest-growing regions of our network,” the railroad said.

The company expects “solid growth out of our Lázaro Cárdenas port facility,” where volumes in and out of the port grew by 8 percent in the fourth quarter compared with the same period in 2016, the company said.

Contact Hugh R. Morley at Hugh.Morley@ihsmarkit.com and follow him on Twitter: @HughRMorley_JOC.