Sunday, September 20, 2009

Mexican Rail Freight Operators Look to Bury the Hatchet

Impediment to greater rail use may soon be resolved
Shipping News Feature

MEXICO – A twelve year feud between Mexican rail operators Ferromex and Kansas City Southern de Mexico (KCSM) could be about to be resolved amicably. If final details can be agreed then it opens the potential for a new-era in the country’s freight industry.

In an interview yesterday Rogelio Velez, CEO of Ferromex, said that: “As long as nothing bad happens, there is going to be an agreement.”

The dispute dates from 1997 when the Mexican government sold off its rail lines to the two companies. Since then both have accused the other of charging too high a rate for access to their respective lines. The row is considered one of the prime reasons why only 15% of Mexican freight is carried by rail, a sharp contrast to the United States 40%.

In addition to benefiting the Mexican economy an agreement between the two operators will also free up million of dollars in fees that both companies have refused to pay since the privatization.