Veracruz Mexico - The proposed US$29 billion merger between Canadian Pacific (CP) and Kansas City Southern (KCS) aims to capitalize on an expected increase in the flow of trade among the U.S., Canada, and Mexico.
 
The merger would create the first company with a rail network spanning all three countries and enhance the facilitation of the movement of goods across the three nations.
 
"The new competition we will inject into the North American transportation market cannot happen soon enough, as the new United States-Mexico-Canada Agreement (USMCA) trade agreement among these three countries makes the efficient integration of the continent's supply chains more important than ever before," Keith Creel, CP president and CEO, said in a statement announcing the proposed merger.
 
The proposed CP-KCS merger comes against the backdrop of Kansas City Southern's $167 million investment in Mexico last year.
 
Kansas City Southern de Mexico (KCSM), their Mexican operations, include railways serving northeastern and central Mexico as well as key port cities including Veracruz, Tampico, and Lazaro Cardenas.
 
One of KCS' major projects was the completion of part of a 12.11 mile double-track line that connects Mexico's port of Veracruz on the Gulf of Mexico.
 
KCSM ran the first revenue train over the new double-track access into the expanded Port of Veracruz in February, company spokeswoman Doniele Carlson told Freight Waves.
 
"This new rail infrastructure is anticipated to make the port more competitive and productive for imports from the U.S., South America, and Europe. The project was completed in coordination with the Integral Port Administration of Veracruz to improve rail and ship asset utilization, efficiency, and connectivity. Before the bypass, KCSM did not have direct access into the Port of Veracruz," Carlson said.
 
The 12.11 mile rail connection starts at KCSM's Santa Fe connection point in the state of Veracruz, which is already covered by the company's rail network, and extends to the expanded Port of Veracruz.
 
The Mexican government invested over US$19 million to build two new terminals at the Port of Veracruz last year.
 
Veracruz is a key strategic point for trade on Mexico's east coast as well as the largest seaport located near Mexico City.
 
"KCSM's new rail connection is part of a large expansion carried out by the Veracruz port authority, including the construction of new intermodal, refined products, grain, automotive, and general merchandise terminals. Direct access into the new terminal complex will allow KCSM to grow its business between central Mexico and the historically important port of Veracruz," Carlson said.
 
Carlson said KCS will continue to focus on more capacity projects during 2021, including beginning construction on a second international rail bridge at the Laredo, Texas-Nuevo Laredo, Mexico, border crossing.
 
After dipping in late February from the winter storm, Laredo outbound domestic intermodal volume have risen above year-ago levels.
 
KCS' route through Laredo connects to Mexico City as well as the ports Veracruz, Tampico, and Lazaro Cardenas.
 
"Today, KCS processes an average of 26 trains in a 24 hour period. Adding the second bridge will enable the Laredo gateway to accommodate 65 to 80 trains per day. KCS continues working with relevant government entities on permitting while doing preliminary design work toward a second cross-border bridge at Laredo," Carlson said.
 
Noi Mahoney.