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US Transport Industry Profits From Mexico Trade Boom

10 January, 2013

Reuters reports that rail and trucking companies in the U.S. are now making large investments in Mexico to cash in on the booming trade that is taking place here. 

As the fourth largest publicly traded railroad,Kansas City Southern is leading this trend and has increased the number of trains crossing the border daily from six to ten over the last three years alone. The railroad hauls a wide variety of commodities, including everything from automobiles to chemicals, helping to dramatically increase the amount of freight traffic between Mexico real estate and the U.S.

“Over the past five years,Kansas City Southern has spent about $300 million to lay roughly 90 miles of new track in Texas, buy and update terminals in Mexico and make other network updates,” writes Reuters. “The railroad company now generates one-quarter of its revenue moving parts and finished goods across the border.”

Also of note, as the largest railroad company in the U.S. Union Pacific now owns a 26 percent stake in major Mexican railway Ferromex. Along with CSX Corp. and Norfolk Southern Corp.,Union Pacific has also partnered with Kansas City Southern, transporting cars to new locations. As a result of their partnership and increased trade with Mexico, both Kansas City Southern and Union Pacific have reported larger increases in cross-border shipments than any other areas.

“Two areas that are ‘just exploding’ are transporting automobiles into the United States and intermodal shipping – moving goods in containers that are shifted from truck to train or train to ship,” William Galligan, who is vice president of investor relations at Kansas City Southern, told Reuters. 

The company took full ownership of a formerly Mexican railway in 2005 that is now known as Kansas City Southern de Mexico, which has become the first intermodal network between Mexico and the U.S. Furthermore, according to the U.S. Federal Government, total cross-border freight by train and truck has grown by almost 35 percent over the last five years, hitting more than $352 billion in 2011, up from $308 billion in 2010. 

“The Mexican automobile industry’s double-digit production and export growth has boosted transportation needs,” writes Reuters. “Kansas City Southern expects Mexico’s vehicle output to leap 30 percent to 40 percent by 2015.”

Topics: Industry United States