In light of Presidents Trump and Peña Nieto’s conference call yesterday, José Zozaya, President of Kansas City Southern Mexico (KSCM) and Former President of the American Chamber Mexico spoke to Mexico Infrastructure & Sustainability Review about the ways NAFTA facilitates the efficient railway network between both countries and his expectations for NAFTA 2.0.
Q: How can the renegotiation of NAFTA hinder KCSM activity and to what extent can the railway industry expect a redesign of the border crossings between Mexico and the US?
A: NAFTA has grown so significantly in commercial matters that the treaty needed to be modernized. We think that this renegotiation process will be very beneficial for all the actors involved, regardless of the name that the agreements will have in the end. We do not expect a redesign of the border crossings between Mexico and the US, as we do not find it necessary. The existing crossings are appropriate and suit the railway demands. We have voiced our opinion regarding the need to facilitate customs procedures at the border so the crossing of legal merchandise will be faster and easier. For example, pre-clearance promotes a prior revision that works as a sample of the freight that needs to be inspected. In my opinion, everything that facilitates international trade is an adequate provision for NAFTA.
Q: How is KCSM helping unlock railway transportation potential in Mexico and what impact has it achieved in the economic development of the country?
A: KCSM currently has 4,251km of railway in Mexico. We are committed to further upgrading our rail network through an annual investment in its modernization; this in order to have a more competitive and efficient railway system. In 2018 we have planned to invest US$165 million, but the total outlay may end up being higher. We believe that we are achieving our efficiency goal as our key actions attest to our progress. For example, we collaborated with the Mexican and US authorities to establish an inspection booth at the border, which has helped to establish a more efficient train crossing in the area. We are also working on international crew matters to avoid having our trains stopped at the border. We are also making a considerable investment in our rail yard in Nuevo Laredo, building the biggest rail infrastructure that we have in the country. We expect this project to help us speed up train movements on the northern and southern crossings, increasing our efficiency and competitivity. Our outlay is also focused on new equipment and locomotives. All of these actions may seem independent but they pursue the objective of making our trains more efficient and competitive. We move around 40 percent of the total rail freight in the country. While we do not expect to increase this percentage, the volumes moved keep growing.
The energy sector has also grown considerably. Railway transportation is now perceived as the rolling pipeline as services become more efficient and safer. KCSM’s rail network interlinks with the key points for energy development in Mexico and the US, connecting from Texas to the center of Mexico. We have had an important demand for gasoline transport, from the Mexican Gulf to the Bajio region. We participated in the fuels terminal in San Luis Potosi, which speeds up the storage and availability of fuels.
Q: What transport projects would you prioritize for the next administration and why?
A: I believe that infrastructure projects are simply fundamental to the country’s logistics with the view to making Mexico a global logistics hub. There is the need to improve existing infrastructure, including roads, rails and ports. I believe that the country has a very good rail system as the KCSM lines are integrated with the US and Canada. As we speak, many trains are crossing both borders, enabling North America to be integrated as a logistics block.
I expect to see an ever more connected and competitive network in the future. This railway efficiency has brought important investments to Mexico, such as the network that serves the automotive industry. We must strive to improve this efficiency through strategic actions. For example, I think security is a relevant issue to deal with. KCSM has been closely working on improving railway transportation security with several authorities, such as the Mexican Army and the Federal Police. We have contributed a great deal financially to control and monitoring equipment for our trains, to better monitor the products we move. We think that it is key to take more preemptive actions instead of reactive ones.
This is an exclusive preview of the 2019 edition of Mexico Infrastructure & Sustainability Review. If you want to get all the information, plus other relevant insights regarding this industry, pre-order your copy of Mexico Infrastructure & Sustainability Review 2019 or access the digital copy of the 2018 edition.