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November 16, 2016 12:00 PM, EST

BNSF, Kansas City Southern Launching Service From Chicago to Mexico

BNSF Railway/Kansas City Southern
Map by BNSF Railway/Kansas City Southern

BNSF Railway Co. and Kansas City Southern will begin service from Chicago to Dallas and Mexico on Dec. 1, providing cross-border intermodal service five days a week.

The route will offer shippers an alternative to cross-border trucking from Toluca, San Luis Potosí or Monterrey, Mexico ,to the United States. Customers also can connect to and from Los Angeles, San Bernardino and Stockton, California, and Seattle and Portland, Oregon, the companies announced.

“We are excited to be partnering with KCS to offer our customers a new, efficient and reliable way to access some of Mexico’s largest metropolitan markets,” said Katie Farmer, group vice president of BNSF Consumer Products. “These new services leverage our strong intermodal product and KCS’ expertise south of the border to enhance customers’ supply chain efficiency into and out of Mexico.”

“The Kansas City Southern Railway Co. in the U.S. and Kansas City Southern de México are proud to partner with BNSF... to compete more effectively in the market and provide enhanced supply chain logistics to the customer,” said Erik Hansen, KCS vice president of intermodal.

Photo by BNSF Railway/Kansas City Southern

The companies touted that the service would provide “truck-like” intermodal transit times, when compared with motor carriers. They pointed out that unlike truck shipments, intermodal rail shipments won’t have to stop at the border for customs clearance. Instead, shipments travel in-bond, clearing customs at Mexico origins and destinations, they said.

BNSF and Kansas City Southern enter the U.S.-Mexico market during a difficult time for cross-border intermodal business.

The Intermodal Association of North America recently reported that third-quarter activity in Mexico dropped 11.5% year-over-year to 150,486 containers, although it only represents 4% of the market share.

“Mexico was the outlier, with the largest overall improvement in domestic volume —16.7%, but also showed the biggest decline in international containers — 21.1% and trailers — 94.6%,” the report stated.

However, it also found that traffic between the Midwest and Mexico increased year-over-year to 34,521 containers from 26,951 year-over-year for the third quarter.

The Mexican economy has struggled in 2016, and Standard & Poor’s downgraded the country’s debt outlook from stable to negative because of low revenue. The peso has hit record lows, and the Banco de México has raised borrowing rates multiple times this year.