U.S.--MEXICO TRADE : Borderline Transit Systems : Mexico’s Antiquated Railroads Are a Challenge

The railroad crossing that created this town on the Mexican plains a century ago has always given it aspirations a bit more cosmopolitan than those of neighboring farm communities.

The Chinese Bank was the town’s first financial institution. Presbyterians built the first church in Torreon--which also has the only mosque in this predominantly Catholic country.

Today, because of the railroad and a $48-million international investment to modernize it, Torreon expects to become an integral part of the U.S.-Mexico border transportation system, even though the town is 480 miles southeast of El Paso.

A five-partner joint venture that includes San Francisco-based Southern Pacific Lines plans to turn this town into Mexico’s first inland port, the initial link in a network that will process 5 million tons of grain, 1 million tons of minerals and 1 million tons of other merchandise every year. The investment for the entire network is estimated at $180 million.

Each of the four proposed rail ports will have a team of Mexican customs inspectors. That will permit goods to be shipped from the United States in sealed containers and inspected on arrival at the inland port, relieving congestion at the border.

Such a system is essential to handle the increase in grain shipments prompted by the loosening of Mexican import laws, even without a North American free trade agreement, the partners believe.

Free trade--and the increased commerce it will bring--will make the need only more acute.

“The point of this project is to solve the logistical transportation problems between the United States--as well as Canada--and Mexico,” said Ricardo Santibanez, chairman of Ferropuertos, the joint venture building the rail ports.

The answer to those problems, according to Ferropuertos and other transportation ventures, is to get long-distance cargo off trucks and onto trains.

But that is a tall order.

Mexican railways move less than 10% of the country’s cargo. Rail’s market share dropped by half over the last decade even as total cargo shipments rose 20%.

No wonder. While railroads are nominally a cheaper form of transportation, businesses in Mexico shun them because they are unreliable and inefficient. A carload of freight from Chicago may arrive in Mexico City in four days. Or it may take three weeks.

In addition, once a boxcar is unloaded, it can dally indefinitely on its way back across the border. Equipment shortages in Mexico make empty cars tempting targets for desperate shippers, who use them without permission.

Nor are these new problems.

Nearly every Mexican administration for the last 40 years has proposed some sort of rail modernization plan. But in truth, the government has done little to improve rail service since the revolution that overthrew dictator Porfirio Diaz in 1910.

Diaz left the country with more than 11,000 miles of track, including the two lines that cross in Torreon, and a spur that is crucial to the Ferropuertos project. The entire rail system is owned by the government.

These days, Mexican railroad tracks total but 15,000 miles--most without electric signals and only a fraction of them in good enough shape to carry the 120-ton load of a modern hopper car loaded with grain or minerals.

Besides the condition of the tracks, the government-owned rail system has only half as many locomotives as it needs. And half of those don’t work.

Just boosting the railroads’ hauling capacity 15% will cost $2 billion. President Carlos Salinas de Gortari wants to hit that mark by the time he leaves office in 1996. Unlike previous administrations’ plans, however, his relies heavily on private-sector investment:

* Companies that need locomotives or boxcars to move their freight either can buy them or pay for fixing ones sitting in repair yards. The firms will be entitled to exclusive use of the equipment and discounts until their investments are returned.

* Private firms will also be allowed to operate trains that carry a single product between two points.

* The government is getting out of the rail-car manufacturing business. In April, it sold Concarril, its car builder, to the Montreal-based conglomerate Bombardier for $68 million.

* Government-owned rail freight and storage stations have also been shut down, making way for modern, private investors, such as Ferropuertos.

Here in Torreon, the rail port received its first load of grain Friday. The grain is dumped in a huge pit, then pushed on belts up to eight temperature-controlled silos.

In nine hours, an entire 90-car train can be unloaded, pulled to the old spur, returned to the main track and sent on its way back to the United States intact. Meanwhile, the grain drops through chutes into short-haul railroad cars or trucks for distribution.

Unloading takes 10 times as long at the government-owned freight station across town.

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