BNSF Railway will apply for a concession to operate in Mexico

An automatic rack train with BNSF power meets Kansas City Southern locomotives in Robstown, Texas. BNSF could apply for running rights from Robstown to Laredo, Texas, to give it a gateway to operate in Mexico. (Bill Stephens)

WASHINGTON — Is Mexico City’s BNSF a possibility?

BNSF Railway, in a regulatory filing Thursday regarding the proposed Canadian Pacific-Kansas City Southern merger, said it may apply for track rights on Kansas City Southern to reach the Mexican border at Laredo, Texas.

The bombshell was concealed in a footnote: BNSF will seek a concession from the Mexican government to provide service south of the border.

“The imposition of BNSF’s airway tolls between Robstown, Tex. and Laredo, Tex. would only take effect if and when BNSF obtains the right to directly serve shippers in Mexico through a concession with the Mexican government “, reads the footnote from BNSF.

BNSF currently interchanges with KCS in Robstown, which it reaches via running rights on Union Pacific.

KCS, through its Mexico City subsidiary KCS, has a concession to operate track in Mexico through 2047. But the concession is due for review in 2027, creating a potential opening for BNSF to seek track rights that would competition at KCS in Mexico City.

Mexican regulators have flirted with bolstering rail-to-rail competition in Mexico in recent years, but have failed to act on various proposals that primarily dealt with rail access in southern Mexico where KCS does not operate.

The CP-KCS merger quickly received the required regulatory approval from Mexican authorities in November.

The BNSF bet would require three dominoes to fall in its favor. The US Surface Transportation Board is expected to approve the CP-KCS merger and agree to grant running rights to BNSF as a condition of the merger. And then BNSF would have to persuade Mexican regulators that it could effectively compete with Canadian Pacific Kansas City in Mexico.

Industry watchers say that if this scenario were to play out, it would strengthen BNSF’s access to Mexico, limit CPKC’s projected growth and make BNSF a more effective competitor to Union Pacific, which currently manages 70% traffic crossing the US-Mexico border. .

Observers attribute BNSF Mexico’s strategy to its chief legal officer, Roger Nober, who was chairman of the STB from 2002 to 2006.

BNSF is the odd one out on the Mexican border. It relies on KCS to reach KCS from Mexico City, has tracking rights on UP to reach Ferromex at Eagle Pass, Texas, gateway, and has its own route to the El Paso border crossing, where it connects with Ferromex.

Representatives for BNSF did not immediately respond to an email seeking comment. CP declined to comment.

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