NAFTA Rail Ties - Global Trade Magazine
  February 10th, 2016 | Written by

NAFTA Rail Ties

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  • #NAFTA #Rail Ties: Examining Cross-Border Rail Options With America's Neighbors

Cross-border trade between the United States and its closest neighbors and largest trading partners, Mexico and Canada, continues to grow, and cross-border intermodal services offer shippers more options in getting their products to these countries. Transportation economics justify considering rail as an alternative to cross-border truck moves.

“The railroads seamlessly move containerized equipment between borders,” says Bryan Foe, vice president of Intermodal at C.H. Robinson. “Freight moving more than 1,000 miles from many U.S. points to major Canadian or Mexican metropolitans can be serviced via rail.”

Two-way, U.S.-Canada intermodal traffic increased by 38.5 percent between 2003 and 2013. The southbound leg, where there is more capacity, increased by 353 percent during that same period.
Cross border rail trade with Mexico reached 1 million rail carloads in 2014. “Typical southbound trade includes grains, plastics, chemicals and auto parts,” says Iker de Luisa, director general of the Asociación Mexicana de Ferrocarriles (AMF). “Northbound trains transport autos, home appliances, beer and floor tiles.”

U.S. railroads connecting to Mexico include the Union Pacific, Burlington Northern Santa Fe and the Kansas City Southern. Mexican railroads with cross-border operations are Ferromex and Kansas City Southern de Mexico. A short line railroad, Tijuana-Tecate, also operates cross border on a small scale.

Shippers should keep in mind the tradeoff between speed and cost that is inherent in the truck-versus-intermodal choice. “In many cases, intermodal rail transit is expected to be one to three calendar days slower than over-the-road transportation,” says Foe. “The longer the haul, the wider the gap gets between truckload and intermodal transit expectations, yet those same longer hauls are often where the biggest cost savings can be obtained.”

Rail carriers are increasingly offering trans-border service in which shipments move on the railroads in both the U.S. and Canada/Mexico, clearing customs in the interior of the destination country. Rail carriers have been investing in facilities that promote those services.

The CSX Transportation-served Valleyfield terminal, 40 miles outside of Montreal, provides shippers additional capacity when shipping freight between the U.S. and Eastern Canada. Opened in late 2014, Valleyfield delivers intermodal access to Canadian distribution and consumption markets.

Valleyfield provides on-site border clearance capabilities, facilitated by a 10,000-square-foot, secure container processing facility and access to the Canadian government’s VACIS truck scanning system. This machine is brought on site as required and is capable of more than 25 scans per hour of an entire vehicle to clear freight into Canada.

“The Valleyfield intermodal terminal provides shippers an alternative capacity solution when shipping freight between the U.S. and Eastern Canada,” says Wesley Ann Barton, director of Marketing at CSX Transportation Intermodal. “Shippers converting freight from the highway to intermodal rail are able to secure additional capacity and lower transportation costs thanks to the expansive market reach of the CSXT Intermodal network.”

The Canadian National Railway, in partnership with Kansas City Southern de Mexico (KCSM), also provides trans-border services that allow intermodal shipments to cross into Mexico prior to being inspected. The new inspection points are located in Mexico City at KCSM’s Puerta Mexico Intermodal Terminal and Terminal Ferroviaria de Valle de Mexico’s (TFVM) Pantaco Intermodal Terminal.

Canadian Pacific’s alliances and experience offer timely and cost-effective transportation solutions between Canada, the U.S. and Mexico, according to Anthony Chavez, the company’s sales director. “Online tracking and in-bond service take the guesswork out of cross-border shipments,” he says. In-bond shipping allows cargo to clear customs after crossing the border.

CSXT Intermodal service between the eastern United States and Mexico is available via a service called Streamline Passport, a door to door solution for shippers to more than 100 Mexican locations. Passport rates include all border fees, fuel surcharge and container per diem charges in Mexico. CSXT Intermodal ensures that all customs requirements are met when shipping cross-border freight.

U.S. and Mexican customs agencies are working jointly to expedite the movement of cross-border freight by implementing a paperless rail e-manifest process. “It is likely that it will be finished on both sides of the Mexico-U.S. border by 2017,” says de Luisa.

U.S.-Mexico and even Canada-Mexico railroad trade is strong and growing, he adds. “Railroads in Canada, the U.S., and Mexico have the same standards for infrastructure and other operational specifications such as mechanical standards and the use of radio spectrum,” de Luisa says. “It is an integrated network.”