Shipping companies are steering cargo toward the United States and away from Mexico’s Pacific ports due to rail blockades that are making the country an unfavorable destination to transport goods, says railway operator Kansas City Southern de México (KCSM).
The CNTE teachers union has repeatedly blocked railways near the interior city of Uruapan, Michoacán, since July 18, demanding a fortnight of their salary which they say has not been paid by state authorities. Protesters have obstructed the main route from Lázaro Cárdenas port to the rest of the country.
The first blockade affected 11 trains in 48 hours then an indefinite blockade began on July 31. So far this year, KCS has counted 14 blockades lasting a total of 30 days in the state.
KCSM president Óscar del Cueto said blockades have damaged the country’s image for shippers. “Much of the commerce that arrived at Lázaro Cárdenas is being diverted to other ports, ports that are not in our country. There is a bad image. The message that these blockades sends does not favor investment or job creation,” he said.
Del Cueto added that much of the cargo had been diverted to ports in Long Beach and Los Angeles. The company’s investment plans have also been affected.
The KCSM president announced that only a small portion of the US $118 million destined to be inverted in Mexico will go to Michoacán, and that new projects in the state would be canceled. “The image and perception for new investments has been damaged … For growth projects we have nothing for Michoacán this year,” del Cueto said.
By Saturday, the most recent blockade had affected 16 trains and 95,554 tonnes of cargo were stranded near Uruapan.
The economic impact of the halted railways is estimated at 50 million pesos (about US $2.5 million) according to data from a state industrial group. However, del Cueto said the knock-on effects to industrial centers around the country could make the economic effects two to three times worse.
The blockades have obstructed the movement of goods such as steel, grain, auto parts and vehicles, goods for basic consumption, and fuel, directly affecting the state energy company Pemex.
However, del Cueto announced the company would continue to invest in other parts of the country. “There is growth in several sectors and other states such as San Luis Potosí, Nuevo León and Tamaulipas, where our network has greater demand.”
Although particularly acute in Michoacán, the problem is felt nationwide: in 2020, there were blockades on railroad tracks in some parts of the country for 200 days, mainly in Chihuahua, Sonora and Michoacán.