MEXICO'S RAIL PRIVATIZATION: IMPLICATIONS FOR MODAL COMPETITION IN NORTH AMERICAN GRAIN TRADE

Mexico's notoriously antiquated, inefficient state-run railroad has been revamped since privatization in 1997. New investment in rolling stock and infrastructure has been crucial to transforming the decaying Ferrocarriles Nacionales de Mexico (Mexican National Railway) into a faster, more reliable, and high quality system. Progress in the Mexican rail sector has caused grain exporters in Canada and the U.S. to reassess their logistics options. Overland routes have advantages in quality and speed, but face stiff competition from ocean shipping in the Mexican grain market. Privatization and capital improvements at ports have countered the growing market share of overland grain shipments observed in the early 1990s. This paper provides a review of Mexico's rail privatization, examines trends in grain trade between Mexico and its 2 NAFTA partners, and assesses modal competition between rail, ocean shipping, and trucking in bulk grain transportation.