However, Vargas observes two factors that have to be considered in order for Mexico to be more competitive. On the one hand, it maintains that companies that intend to establish themselves in the country must carefully evaluate their location in order to have access to an efficient transport infrastructure, such as ports, highways and railways, especially in the context of only to export to the United States, but also to obtain raw materials to produce, which also, on many occasions, have to be imported.
But there is an even bigger challenge. The manager observes that, in some products, the use of the railway is weak, although industries such as the automobile, electrical appliances, construction and energy are frequent users. “I believe that one of the great tasks that we have in the railway industry in Mexico is to have greater penetration in markets, especially those that are highly exporters of consumer goods. Approximately seven million trucks cross the border between Mexico and the United States, 70% are concentrated in Laredo, and our penetration is just under 4%,” he explains.
Vargas attributes it to a predilection for the use of road transport in the face of a relatively young period of maturation of the intermodal railway sector, coupled with other factors, such as disparate rules in the terminals and the discredit that the train has had derived from robberies, vandalism and blockades. , although he emphasizes that these are problems that have been diminishing.
Last April, CPKC announced the creation of the T-MEC Train, derived from the merger between Canadian Pacific and Kansas City Southern. This means that, unlike UP and GMXT, which carry out border transfers, CPKC locomotives and crew can circulate both in Mexico and in the United States and Canada, which translates into greater efficiency for cargo transportation.
From Vargas’ point of view, this, more than fierce competition, since he also works with CPKC, represents greater competitiveness at the country level. And it’s not like UP and GMXT have sat idly by either, as they recently launched a new service called Falcon Premium, from Canadian National, also covering all three countries.
Although cargo transfers in this network persist, the three companies seek to compete with faster times by eliminating the use of trucks that, prior to the design of the Falcon Premium, had to be used for cargo exchange in Chicago bound for Canada, coupled with maximization of shipment weights.
Vargas emphasizes that the real competition is with auto transport. “There will be a natural competition between the two networks [ferroviarias], that’s final. The task that we have in this industry is that this 4% participation in the cross-border, raise it to 8, to 10, the percentage that you tell me ”, he specifies.
Regardless of the fact that the use of intermodal rail represents a reduction of between 5 and 15% in costs compared to trucks, for Vargas, there is another element that should further boost the use of trains: the environment. “When you convert a load from the highway to Union Pacific, that particular load, or that user, is not emitting 75% of carbon particles, greenhouse gases into the atmosphere. How do we achieve this? Well, also modernizing our fleet of locomotives ”, he explains.
For now, UP has invested 100 million dollars in tests to use electric locomotives, but the general investment program consists of 1,000 million dollars in the modernization of its locomotives and thereby reduce their polluting emissions in a couple of years.