Mexican industrial firms have urged the government of President Andres Manuel Lopez Obrador to end rail blockades that are delaying shipments of fuel, steel and other goods through the Pacific coast port of Lazaro Cardenas. Teacher protests have blocked the rail line of Kansas City Southern's (KCS) Mexican affiliate in and out of the port for 50 days so far this year. Felipe de Javier Pena, head of the transportation committee for Mexico's confederation of industrial chambers (Concamin), spoke about the issue with Argus.
What is the impact of the blockades?
It hinders the flow of goods. Containers are stuck at the port or on the ships that are waiting to dock at the port. Companies have to pay late fees, and containers cannot leave the port. Rail is the best way to get goods from the port of Lazaro Cardenas to Mexico City or the north of the country.
Have companies been using other routes?
Yes, they are starting to take other routes. The ships waiting outside the port can also be diverted to other Mexican Pacific ports, to US ports, or they even go through the Panama Canal to get to the Gulf of Mexico. This is extremely costly and inefficient. The sectors most affected are steel, cement, auto parts.
What about moving the goods by truck?
One train is the equivalent of 305 containers. If we had to do it all by highway, we would need 305 trucks per train. It is practically impossible and too expensive to substitute all the train cargo with trucks because of the distance. In reality what will happen is it takes a lot of time — days, weeks and even months — to return to normal and move the delayed cargo out of the port.
What other impacts does the blockade have?
Unfortunately, this type of blockade has an exponential impact. Each train that stops running will cause companies to look for other routes, and the highways become saturated. It also causes a lack of supplies in different areas of the country. Factories in the Mexico City area, for example, need to try to get supplies from the Gulf of Mexico instead. There could be technical shutdowns of factories.
Why is the blockade happening?
The teachers are demanding their salaries be paid. This is very legitimate, but the blockade is not the way to make their case. Last weekend, the debt owed to the teachers was paid off and they lifted the blockade. But after that, there was more debt and so they put the blockade back.
Were the bottlenecks relieved last weekend?
The rail line was opened up for 52 hours, and many trains that had been blocked were able to circulate. Now, we have eight trains stopped. The fuel oil trains that were stuck before moved out, but now there are more.
What is the status now of the fuel oil shipments?
Fuel oil comes from the Tula refinery and [normally] is exported through the port. [Now] it cannot get out of the port. Currently, there are two trains with fuel oil destined for northern Mexico that are stopped at Lazaro Cardenas.
Can the blockade affect international agreements?
It causes higher costs, changes in logistics, and supplies that cannot arrive. That affects factories and causes them to violate contracts with customers abroad. With [the US-Mexico-Canada trade agreement (USMCA)], we have to have continuity. We cannot say we are breaking contracts because the train lines were blocked.
Are steel companies in northern Mexico affected by this?
Yes, of course. There is production of minerals in the [Michoacan] region that have to go up to the north of the country. The KCS route moves raw materials from mines all the way to steel companies in Monterrey. Also, there are auto exports that leave the port in important quantities.
Do you have an estimate of the total cost of the blockade?
We do not have it quantified. It is extremely high.
Has there been a response from the president or the government?
We are in contact with interior and public security ministries and they are working on this. The concession holder and cargo transporter (KCS) has filed two legal complaints. It is very clear that the law is being violated. There are eight people physically detained.
It has been a month. Why is it still going on?
That is a good question. We are in the middle of a problem we are not part of. This needs to be resolved as soon as possible. This does not just affect the trains or industries, but all Mexicans.
