BNSF, Kansas City Southern to launch cross-border intermodal runs

BNSF Railway Co. (BNSF) and Kansas City Southern Railway Co. (KCS) said yesterday they will launch an intermodal service starting Dec. 1 linking points in the U.S. and Mexico, a move that will dramatically expand BNSF's cross-border intermodal offerings.

The northbound legs will use KCS trains to move freight in 53-foot containers from Toluca, San Luis Potosí, or Monterrey, Mexico, to an interchange point in Robstown, Texas, a suburb of Corpus Christi. There, the boxes will move on BNSF equipment to Chicago and Dallas/Fort Worth, and along other points on BNSF's 32,500-mile network. Southbound BNSF trains will originate in Chicago or Dallas/Fort Worth and interchange with Kansas City-based KCS in Robstown for the moves across the border to the same three Mexican cities. Southbound trains will also make a stop in Laredo, Texas, for freight terminating there. However, Laredo will not serve as an interchange point.

The railroads said the service, which will operate five days a week, will offer transit times comparable to those of a solo driver operating in the same markets. Truck service generally provides faster and more direct routings, but at higher rates than intermodal.

For Fort Worth-based BNSF, the KCS partnership adds three important consumer and industrial regions to its cross-border portfolio, according to Amy Casas, a BNSF spokeswoman. Currently, BNSF's only cross-border intermodal service is into Silao, located in the state of Guanajuato in west-central Mexico. BNSF launched the service in 2014 with Mexican railroad Ferromex.

The new service also provides shippers in the Midwest and western U.S. with an alternative to the Union Pacific Railroad (UP), BNSF's chief rival, which has a large footprint in Mexico. UP and BNSF both operate west of the Mississippi, and UP also has a cross-border relationship with Ferromex.

"BNSF doesn't have the same access to the border that UP does, so it makes sense for them to team up with KCS," said Larry Gross, head of the intermodal practice at consultancy FTR. KCS was unavailable to comment.

Because of the relatively close proximity between U.S. and Mexican markets, trucks have long been the dominant cross-border shipping mode. Trucks carried 71 percent of the value of all U.S.-Mexico freight in August, according to the most recent data from the Bureau of Transportation Statistics (BTS), a part of the Department of Transportation. Rail handled 14.1 percent of the total value, according to BTS data.

Supporters of cross-border intermodal service maintain that it will take trucks off the road and alleviate the massive truck congestion at border crossings as drivers wait to clear customs. Containers moving by rail are often shipped "in-bond" to interior locations. This means intermodal users avoid the delays caused by detailed customs inspections, where truck operators must unload their cargo and have it examined before the goods are reloaded and the vehicles allowed to proceed.

Rail executives are optimistic that broader awareness of intermodal's benefits will lead to a diversion from the highways. In mid-2014, KCS estimated that 3 million truckloads per year had the potential for conversion to its intermodal services.

The BNSF-KCS link-up "should result in better intermodal service that gives shippers a higher-quality intermodal alternative to cross-border truckload," said John G. Larkin, lead transport analyst for Stifel Financial Corp., an investment firm.