US - Mexico

Topic moved from North America by bevans on 14 Jun 2016 10:53
  Tonymercury Sir Nigel Gresley

Location: Botany NSW
The Brownsville [Texas]-Matamoros [Tamaulipas] West Rail Relocation Project has been in the news, announcing the December 17 groundbreaking of the most recent phase, which when completed will relocate the international rail interchange some distance west of the two cities.

Proposals for this event have been in the works since at least 1975 (see the published document Brownsville-Matamoros Railroad Relocation Demonstration Project, prepared for The Brownsville Navigation District, 1975).

In brief, the tracks affected are, in Brownsville:

Union Pacific's St. Louis, Brownsville & Mexico (Missouri Pacific) "B Line" built in 1904 and extending north from Brownsville (milepost B-0.0 at the downtown terminal station), eventually to the Houston area.

Union Pacific's remaining length of the Southern Pacific Brownsville Branch, built 1927 by San Antonio & Ar ansas Pass Railway (later Galveston Houston & Henderson, later Texas & New Orleans). End of track at Brownsville station was milepost 205.2, measured from Skidmore via Alice and Edinburg.

The Brownsville Belt Line, constructed by St. Louis, Brownsville & Mexico (Missouri Pacific), that diverged east from the B Line at milepost 1.2, twisted around north of downtown, crossing several SP yard tracks, then seguing onto the alignment of the old Port Isabel & Rio Grande Valley Railway for a few hundred yards before diverging at about milepost 2.5 (from the switch on the B Line), and extending about 11 miles to Southmost, but in 1957 abandoned south of the junction with the Port line described below.

From the Belt Line, at about milepost 2.5 of the Belt Line, the Brownsville Port line was constructed (or converted) in 1936, also on the alignment of the Port Isabel & Rio Grande Valley Railway (which had been built to Port Isabel in 1871 by the Rio Grande Railroad). About 7.5 miles to the northeast, off the B Line, (continuing the Belt Line's mileposts), the line entered the Port of Brownsville (Brownsville Navigation District), and was operated by St Louis, Brownsville & Mexico (Missouri Pacific) until taken over by Brownsville & Rio Grande International Railroad in February 1984.

Brownsville & Matamoros Bridge Company (owned by jointly by St. Louis, Brownsville & Mexico or its sucessors, with Ferrocarriles Nacionales de Mexico) constructed in 1910, about two miles of track to connect its owners yards on opposite sides of the river.

In Matamoros, the line of Ferrocarril Nacional Mexicano was constructed 1883, became Ferrocarriles Nacionales de Mexico "Linea F" from Monterrey in 1908, reaching Matamoros at kilometer F-329.8 from the geographical northwest, roughly paralleling the Rio Bravo. Now operated by Kansas City Southern de Mexico.

The first phase of the project was to build an overpass on Highway 48 over the Port lead track, near the entrance to Port of Brownsville, in 1993.

The second phase, and the first to modify any railroad routing, was constructed in the late 1990s. Starting at milepost 197.8 on the ex-SP Brownsville Branch, new track was laid extending east, southeast and south about 6.5 miles to connect with the existing Port lead near the Port entrance, including a four track yard just north of the Port. Milepost designations are measured from the (unbuilt at the time) junction switch on UP's B Line near Olmito on the westward continuation of the new tr ack: milepost 3.2 to the Port line at 9.3. Sometime between February 2000 amd February 2002, the seven miles of the Brownsville Branch south of Milepost 197.8 to Brownsville were lifted, but removal of yard tracks at Brownsville had been going on gradually for several years already.

Phase three, commencing about 2001 to completion in June 2003, was the remaining 3.2 miles of new line, east from milepost 7.8 on the UP B Line, to the west end of Phase 2. Wye tracks are at the connections with both the B Line and Brownsville Branch, and an eight track, almost 4000 feet long yard lies about midway along the Phase three distance. The former freight yard along the southwest edge of downtown Brownsville was removed, apparently in late 2003, but a single track to and over the B&M Bridge remains. About the same time, or possibly even earlier, the Brownsville Belt Line was taken up west of Arthur Street (milepost 2.3, approximately).

The latest undertaking is to connect Olmito to a new international rail bridge "between River Bend and San Pedro" and thence to Linea F west of Matamoros. Rather generalized published maps [see source 3 below] show new track running about 3 miles west-northwest, turning sharply southward about 4 miles to the site of the new bridge, then in Mexico about 6.5 miles (10.2 kilometers) south or southwest to approximately Estacion Sandoval, kilometer F-311, where there is to be a wye, and a new yard along the 6 kilometers between Sandoval and the Carretera 2 crossing. Most of the new rig ht-of-way, in both Texas and Tamaulipas, is currently farm fields.

Probably, when this is completed circa 2012, the remaining 8 miles of the UP B Line south of Olmito, the B&M Bridge, and several hundred meters of track in Matamoros, including the current station and freight yard, will be abandoned. It will be necessary to retain Linea F west (railroad south) of kilometer F-328 (site of the existing engine terminal) to serve several industrial customers in the western part of Matamoros.

Suggested reading (partial list of sources for the above text):

December 22, 2010

Saludos, Todd Minsk

Sponsored advertisement

  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed
Editor's note: This is the third in an occasional series examining U.S.-Mexico trade and the economy along the Texas-Mexico border.

As the United States and Mexico edge toward a new cross-border trucking arrangement, the volume of U.S.-Mexico freight passing through Texas is setting records as U.S. economic activity recovers from the severe 2007-09 recession.

Texas leads the nation in freight volumes with Mexico and has for at least 15 years. Even during the height of the recession, when freight volumes dipped overall, Texas still ranked first. In August 2010, Texas became the first state to record more than $10 billion in surface trade with Mexico in one month.

U.S.-Mexico freight volumes bounced nicely in 2010, but they would have rebounded even stronger if the violence from warring drug cartels and organized crime gangs on Mexico's side of the border was not happening, border trade advocates say.

Nelson Balido, president of the San Antonio-based Border Trade Alliance, estimated that U.S.-Mexico trade volumes might have been 5 to 10 percent higher in 2010 were it not for the drug cartel violence in Mexico.

"But it wasn't as big an issue last year as it was the year before," Balido said. "Violence is a factor, scaring off folks that don't understand the border and those who are thinking about investing in Mexico."

U.S.-Mexico truck trade also will face a boost with the new cross-border trucking truce that would put the U.S. in compliance with the North American Free Trade Agreement for the first time since it was enacted in 1994.

The U.S.-Mexico truce over cross-border trucking should spur the U.S. economy further, because Mexico says it will back away from its trade sanctions against about 100 U.S. products, giving U.S. companies making those products the opportunity to win back their Mexican markets and perhaps expand employment.

As truck, rail and pipeline freight continues to flow more freely between the two countries, Texas will be in the middle of it all.

Surpassing $100 billion
Manufactured components, raw materials or finished goods that cross the U.S.-Mexico border almost always are hauled by truck.

In 2010, Texas led all states in surface trade with Mexico, comprised of trucking, rail and pipelines. Texas also was the first state with more than $100 billion in surface trade with Mexico in a calendar year.

In all, Texas-Mexico surface trade totaled some $114.5 billion worth of goods, up 33.07 percent from $86 billion in 2009, according to the U.S. Bureau of Transportation Statistics. California was a distant second in 2010 with Mexico surface trade at $47.6 billion.

The percent increase for Texas-Mexico surface trade was higher than the U.S.-Mexico increase of 27.6 percent in 2010 over the previous year.

Of the $320.26 billion in 2010 surface trade between the U.S. and Mexico, 81 percent traveled by truck.

Of the top U.S. ports, Laredo ranks No. 1 in North American trade volumes in all modes, including ship and air, crossing 13.2 percent in 2010, according to the U.S. Department of Transportation.

Detroit was second with 12.2 percent. Six Texas ports rank among the top 17 U.S. ports for North American trade. After Laredo, they are, in order, El Paso (No. 5), Hidalgo (No. 7), Houston (No. 10), Eagle Pass (No. 12) and Brownsville (No. 17).

The higher freight volumes in 2010 were due to a recovering U.S. economy, observers said.

"Manufacturing was stepping up last year," Balido said. "The U.S. economy is still on pins and needles, but it's a good indicator that people are buying and consuming more."

The speed bumps
U.S.-Mexico trade volumes could have been more. A cross-border trucking dispute along with ongoing drug cartel and organized crime violence in Mexico were barriers.

In 2009, Mexico imposed prohibitive tariffs on $2.4 billion worth of goods imported into Mexico from the United States because Congress defunded a pilot cross-border trucking program that had started in 2007, a dozen years after drivers in both countries were supposed to begin making international deliveries under NAFTA.

Mexico revised and expanded the list in 2010, but negotiations were revived in March 2011 between the U.S. and Mexican governments to begin a permanent cross-border trucking program.

But on April 8, the U.S. Department of Transportation proposed a three-year program that would give Mexican carriers permanent operating authority to make U.S. deliveries after 18 months of inspections. Provisional authorities could start at any time since the 30-day comment period on the three-year program expired in early May.

Fighting the violence
Mexico has agreed to back away from its sanctions as part of the new program.

Unfortunately, no such truce seems near in the drug war that continues to ravage the border region.

To counter threats of violence, trucking companies are using more technology to protect freight. Mexican shippers are placing more integrated camera monitors, global positioning systems and sensors, including devices that can detect container tampering, Balido said.

"Violence is not directed at the maquiladoras," or twin plants, Balido said. "The supply chains have gotten smarter in the way they combat these acts. The drug cartels have moved to other ways of smuggling drugs. We're starting to win the fight, and not just with the U.S. economy."

Robert Barnett, partner at Cacheaux, Cavazos & Newton, a San Antonio-based law firm with U.S. and Mexican offices, said Mexico's security problems affect mainly the flow of new foreign industrial investments in Mexico.

"The security concerns have no significant effect on the surface trade we are talking about," he said.
  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed
6/1/2011 10:00:00 AM    North American Trade

BTS: Surface transportation-moved freight among NAFTA partners reached record value in March
In March, the value of cargo moved by surface transportation modes between the United States and Canada and Mexico climbed 15.6 percent year over year to $80.8 billion — the highest value since data collection began in 1994, besting the previous record set in April 2008 by 8.8 percent (not adjusted for inflation), according to the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS).

The value of U.S. trade moved by surface transportation modes — including rail, truck, pipeline, mail and Foreign Trade Zones — soared 58.3 percent compared with March 2009. Freight value jumped 21.5 percent vs. February’s total. Railed imports between the NAFTA nations increased 8.3 percent to $8.4 billion and railed exports rose 12.5 percent to $4.8 billion.

U.S.–Canada surface transportation trade value in March increased 15.7 percent year over year to $48.7 billion. Railed imports climbed 12.8 percent to $5 billion and railed exports rose 3.2 percent to $2.6 billion.

U.S.–Mexico surface transportation trade value in March shot up 15.3 percent year over year to $32.1 billion — the first month on record that U.S.–Mexico trade value exceeded $30 billion, according to BTS. Railed imports declined 0.3 percent to $2.6 billion, but railed exports ballooned 26.9 percent to $2.1 billion.
  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed
A group of U.S.-Mexico border residents is asking the U.S. Justice Department to look into whether the BNSF Railway did anything improper to influence a massive railway project in Juárez in violation of the U.S. Foreign Corrupt Practices Act.

"We have petitioned the U.S. Department of Justice to consider opening an investigation of Burlington Northern Santa Fe Railway and its corporate family under the federal Foreign Corrupt Practices Act," said El Paso businessman Javier Ortiz, a spokesman for the group.

Ortiz, who did not specify any alleged improper acts, said he represents a group that filed the petition on Monday. He said the group includes people from Juárez, El Paso and Southern New Mexico who are concerned about environmental and safety issues.

"The group is opposed to the Mexican federal government paying for cross-border trains to continue traveling through the urban spread of Juárez and El Paso because of the traffic safety problems they create and due to the dangerous chemicals that trains transport through the cities," Ortiz said in a telephone interview.

"Our suspicion grew from the BNSF's continued and sustained insistence for five bridges and overpasses to be built in Ciudad Juárez in order to continue the international rail cargo exchanges between Mexico and the United States in the downtown areas of Juárez and El Paso, and in contradiction of Mexican President Felipe Calderón's directive to construct a rail bypass from



the south of Juárez to the San Jeronimo-Santa Teresa, N.M., border," Ortiz said.
Mexican federal officials have said that the rail bypass also will connect Juárez to the east at the planned Guadalupe-Tornillo border crossing.

Concerning the petition, "The department declines comment," said Alisa Finelli, a Justice Department spokeswoman in Washington, D.C.

Joseph Faust, spokesman for BNSF in Fort Worth, said, "BNSF Railway has not seen the petition in question and has no comment on its merit."

The group also sent a copy of the petition to Berkshire Hathaway, BNSF's parent company. No one at Berkshire was available for comment.

Calderón announced plans for the railway project in July 2007. For the past four years, the BNSF, in coordination with Ferromex, has actively promoted the construction of the overpasses and underpasses in Juárez.

Juárez officials said they approved five overpasses and underpasses to make rail crossings safer for residents. Construction on the first bridge is supposed to begin next month.

The trains currently cross over the "black bridge," which is near the BNSF rail yard in South El Paso.

Ortiz's group said in a news release that the Mexican Ministry of Communications and Transportation, which oversees railroads in Mexico, has an office in the state of Chihuahua that has worked with the BNSF to push the overpasses and underpasses at the cost of delaying the rail bypass.

BNSF representatives have told the Mexican press and New Mexico officials that the company supports the rail bypass as a project for the future.

"I believe the BNSF is seeking to delay the rail bypass because of what it might cost them to extend their railway on the U.S. side of the border to connect to New Mexico," Ortiz said. "Mexican officials said it would cost $80 (million) to $100 million to build the bypass on the Mexican side. We've seen estimates attributed to BNSF that an extension for the bypass on the U.S. side might cost the U.S. railway $500 million, although we think it can be done for the same or close to the same price as Mexico."

Last week, El Paso city Rep. Beto O'Rourke organized a meeting at City Hall to discuss how train traffic will affect neighborhoods in South El Paso during the construction of the rail bridges in Juárez.
  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed
The project to construct five railroad bridges in the center of Juárez hit another snag last week.

Miguel Almanza Alvarez, a Juárez resident, petitioned a Mexican federal court for an "amparo" to halt to the work on the bridges. An amparo is similar to an injunction.

Construction had started on one such bridge at Avenida Francisco Villa in the downtown.

Almanza's petition is aimed at the international or cross-border train traffic between Juárez and El Paso. In his court document, he argues there is no need to build the five bridges because Mexican President Felipe Calderón already approved the proposal to build a rail bypass that trains could use to cross the border at San Jeronimo-Santa Teresa or at Guadalupe-Tornillo.

"The bridges alter my safety, the safety of my family and the safety of the general public," according to the document filed by Almanza, who alleges that trains transporting toxic chemicals through the city's densely populated center endangers the public.

These same trains cross into Downtown El Paso, where a high concentration of people live and work.

One of the highly toxic substances that regularly cross the border is hydrofluoric acid, which is produced at the Solvay plant at the south end of Juárez.

U.S. environmental officials have said that a spill from a tank containing this acid could cause death or serious injury to thousands of people. A bypass would serve to take the trains to less-populated parts of the two border



Last month, Javier Ortiz, an El Paso businessman, asked the U.S. Department of Justice to investigate whether anything irregular occurred under the Foreign Corrupt Practices Act that prompted railroad companies like Ferromex and BNSF Railway to go along with the Juárez inner-city bridges' proposal.

Mexican magnate Carlos Slim owns part of Ferromex, while Warren Buffett's Berkshire Hathaway owns the BNSF Railway.

Department of Justice officials in Washington, D.C., will not comment on the status of Ortiz's request, and the Mexican federal court has asked Mexican officials to explain their actions. Final actions on both are pending.

"Public funds are being wasted on bridges that will be obsolete once the rail bypass is constructed," Ortiz said.

Earlier last week, Chihuahua state officials announced that $125 million has been allocated for the rail bypass and that construction could begin by next year.

In addition to that, $417,000 was approved for a study of the project.

Calderón included the rail bypass in his list of infrastructure priorities.
  Tonymercury Sir Nigel Gresley

Location: Botany NSW
A consultant will immediately begin a study to determine the best location for a railroad crossing linking the United States to a potential Mexico port through Yuma County.

The study will also determine whether it should be built at all and the economic benefits of such a rail line. But one official questioned the timeliness of the study, pointing out that the decision will be made long before the study ends.

The Yuma Metropolitan Planning Organization expects the study to take 12 months to complete at a cost not to exceed $250,000.

YMPO is the lead local agency working with Union Pacific to find an acceptable route for a proposed railroad crossing through the county, linking the United States to a planned new deep-water port at Punta Colonet along the Gulf of Mexico.

Such a railway would possibly carry exported goods into Mexico and imported goods across the United States.

Yuma Mayor Al Krieger noted that several mayors had already “come down to talk about the rail,” with more mayors planning to become involved.

“The consensus is there is no time. We have three to four months to come up with a plan.” In that case, there would be “no use” for the study as “the decision will be made without our data.”

“It will be over by the time this is over halfway,” Krieger said.

Charlene FitzGerald, YMPO executive director, conceded the organization is behind schedule but noted it is using this process so the public can be involved.

Krieger asked if the study could be arranged so YMPO could provide some data.

FitzGerald said rearranging the study tracks is possible, but “we don't want to rush … the public doesn't take well to that.”

Yuma County Supervisor Greg Ferguson thought the debate was moot. “The Mexican government said it ain't happening. I've been in a meeting with the Mexican government. Word was, it's dead, it ain't happening.”

Nevertheless, the board voted unanimously to award the contract to Parsons at this month's meeting.

Staff recommended Parsons because the firm “shined in the efforts we are looking for,” FitzGerald said.

YMPO received six proposals for the Yuma County Rail Corridor Study. After Yuma County, Marine Corps Air Station Yuma, city of Yuma, San Luis and YMPO ranked the proposals, the YMPO executive board chose the top-ranked Parson Brinkerhoff, a global consulting firm with offices in Tempe and Tucson.

The study will take into consideration the opinion of stakeholders, including the Border Patrol and Customs and Border Protection, as well as other factors, such as the environment and economic benefits.

“CBP and BP don't want it too far away from their facilities,” FitzGerald said. “And then there is pristine agricultural land.”

The firm will analyze potential economic opportunities as well, such as a switching yard, a transloading station or a short line connecting Union Pacific to Mexico to accommodate an export/import facility, all of which could create jobs.

After the meeting, FitzGerald said it's important for the local community to provide input. “If a crossing is built by the Mexican government, where would it cross into the United States, California or Arizona? In 2006, they looked at Yuma as a desired crossing.

“If someone else identifies the corridor, it's not good for the community. It's better for us to do the corridor analysis with public input than Maricopa and Pinal counties telling us where the corridor should be.”

The community could also choose not to have a railway link through the county, she added.
  Tonymercury Sir Nigel Gresley

Location: Botany NSW

Union Pacific looks to Mexico as US coal demand falls: officials

Washington (Platts)--19Apr2012/350 pm EDT/1950 GMT

As domestic US coal volumes continue to shrink, Union Pacific executives said Thursday they are closely watching terminal developments in Longview, Washington, and even exploring the potential of exporting coal through the Port of Guaymas in northwest Mexico.

Union Pacific's energy volumes dropped 8.0% in the first quarter year-on-year to 495,000 carloads as more utilities switched from Powder River Basin coal to natural gas. CFO Rob Knight said energy volume percentage would likely drop "in the low-to-mid-teens" during the second quarter.

Revenue on the energy side still increased 4.5% to $995 million, driven by fuel surcharges and pricing gains.


The savior for Union Pacific's coal volumes, aside from a possible hot summer, is exports to Asia. Union Pacific CEO Jack Koraleski said during Thursday's earnings call for financial analysts that the railroad would benefit most from the Millennium Bulk Terminals project in Longview, a $600 million terminal capable of exporting 44 million mt/year.

But the US Environmental Protection Agency's recent inquiry into the Morrow Pacific coal export project in Oregon is making Union Pacific wary of possible environmental restrictions as Millennium seeks a permit.

"The one in Longview is really important to us," said Koraleski, filling in for CEO Jim Young, who is on medical leave for pancreatic cancer treatment. "We're still moving quite a bit of export coal through Houston. Everything is still in play with these terminals. The new, added challenge is what happens with the EPA review."

Union Pacific said it is working with Mexican railroad Ferromex on possibly moving coal through the Port of Guaymas, about 240 miles from the US border.

"This is all being driven by inquiries for coal from Asia," said Eric Butler, Union Pacific executive vice president for marketing and sales. "We've seen a higher level of interest for export coal out of Mexican ports. They do not seem to have the same permitting process that we have had in the Pacific Northwest ports."
  Tonymercury Sir Nigel Gresley

Location: Botany NSW

Strategic Minerals raises £3.125 million for final payment for Cobre rail upgrade

Friday, May 04, 2012 by Giles Gwinnett

Iron ore specialists Strategic Minerals (LON:SML) has raised £3.125 million via a placing for the final payment for rail upgrade work at its New Mexico site.
The cash will also be used to develop further near-term revenue generating projects, it said.
Although, it is later than previously anticipated, completion of the rail link to the Cobre project is now "imminent", which will allow increased shipments of magnetite from the site.
The placing sees around 39 million shares issued at 8 pence a share and institutions and high net worth individuals took part.
There is also an attaching warrant allowing bearers to buy one share at 12 pence per share, exercisable on or before April 30 2014.Strategic Minerals shares closed yesterday at 8 pence each.
The firm's chairman Steven Sanders said he was delighted at the successful placing, particularly the interest shown by new institutional investors.
"When operating at full capacity, the company will be able to ship up to 70,000 tonnes per month from this location which is ideally positioned within the major U.S market. 
"The board is further encouraged by the multiple, profitable end markets in addition to the underlying iron ore market that we are able to serve from our first magnetite stockpile."
Shipments from Cobre continue to be made by truck for the time being.
As previously reported, the company is spending around US$3.5 million to rehabilitate the rail spur to allow material to be transported the 900 kilometres to the Port of Guaymas in Mexico, where it will be loaded for export to China.
In February this year, it said it had earned its first revenue from Cobre with shipments totalling 1,200 tonnes of magnetite iron ore made to an agricultural business and concrete manufacturer, both in the US.
The ore can be used to improve the speed and efficiency of ammonia in the fertiliser process and is added to produce heavy or strengthened concrete.

  Tonymercury Sir Nigel Gresley

Location: Botany NSW

 Railroad operating company Kansas City Southern said on Friday shipments of coal, farm products and chemicals were weaker than expected a month ago, but kept its full-year profit forecast unchanged, saying shipments should pick up once the railroad moves past temporary factors.

"We had a much more positive outlook 30 days ago," Chief Financial Officer Michael Upchurch told the Bank of America Merrill Lynch global transportation conference in Boston.

Second-quarter energy linehaul revenue, including coal, is now expected to be down by single-digit percentages, compared with earlier expectations of double-digit growth, the company said.

Second-quarter linehaul revenue, which excludes fuel surcharges and other items, is expected to be down in the agriculture and mineral category as well as in chemicals and petroleum.

A mild winter caused an increase in stockpiles of coal, cutting demand for replenishment. One large utility customer pushed back shipments. Coal represented 14 percent of Kansas City Southern's revenue in 2011 -- a smaller share than at the larger railroads.

Kansas City Southern expects all categories to show positive sales gains for the year and the company reaffirmed its full-year forecast.


Separately, Kansas City Southern expects strong long-term growth from "near-sourcing," the movement of manufacturing plants to Mexico from Asia.

More customers prefer a shorter supply chain and lower transport costs, and see a diminishing advantage to manufacturing in China. Wage differences between China and Mexico have narrowed, Upchurch said.

Companies including Dupont and Co, Siemens AG, Wal-Mart Stores Inc, and Caterpillar Inc are expanding in Mexico, with most plants near KSU rail lines and many of the vehicles destined for the U.S. market.

Its vehicle customers in Mexico include Chrysler, Ford Motor Co, General Motors Co, Nissan Motor Co Ltd and Volkswagen AG.

The company expects to carry additional auto shipments as Honda, Mazda Motor Corp, Nissan and Audi open plants in the next two years.

"The level of activity is extremely high," Upchurch said. "We'll see more of that traffic coming into the KCS network."

Auto production in Mexico is expected to reach 3.48 million vehicles in 2015, up more than 1 million from 2011, with the vast majority destined for export, according to an analysis by Wallenius & Wilhelmsen Logistics.

Cross-border revenue currently accounts for about one-quarter of total company sales.

Kansas City Southern shares slipped 0.6 percent at $65.04 in early trading on the New York Stock Exchange.

  Tonymercury Sir Nigel Gresley

Location: Botany NSW

Rio Tinto (ASX:RIO) has commenced export of premium hard coking coal from its Benga Mine in the Moatize Basin in Mozambique. 

The first shipment of 34,000 tonnes left the Port of Beira today, bound for an Indian steel mill.

The Moatize Basin is revered as one of the most prospective coking coal regions in the world.

Rio Tinto has been aiming to become a significant supplier of hard coking coal to the seaborne market from Mozambique.

The Company is looking to work with the Government of Mozambique to secure the development of comprehensive infrastructure for efficient transport of coal from mine to port, which is a priority for the further development of the region.

The Benga Mine, located in the Moatize Basin of Tete in the north of Mozambique, is operated by Rio Tinto and is a joint venture between Rio Tinto (65 per cent) and Tata Steel Limited (35 per cent)
  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed
NEW YORK: U.S. rail and trucking companies are making big investments on both sides of the border with Mexico to capitalize on booming trade between the two countries.Every day, about 10 Kansas City Southern trains hauling everything from cars to chemicals crisscross the border between Mexico and the United States at Laredo, Texas, up from about six just three years ago.

The fourth-largest U.S. public railroad is leading the charge to take advantage of the swelling freight between the countries as manufacturing booms south of the border because of the rising costs of goods from China and other overseas exporters. Over the past five years, Kansas City Southern has spent about $300 million to lay roughly 90 miles of new track in Texas, buy and update terminals in Mexico and make other network upgrades.

The rail company now generates one-quarter of its revenue moving parts and finished goods across the border.  Union Pacific Corp, the No. 1 U.S. railroad company, owns a 26 percent stake in Mexican railway company  Ferromex. Like its rivals CSX Corp and Norfolk Southern Corp , Union Pacific partners with Kansas City Southern to haul carloads in the United States to locations not served by the railroad.

As the U.S. economy creaks along, the growing business with Mexico is a cause for cheer. Both Kansas City Southern and Union Pacific are reporting much bigger increases in cross-border shipments than in overall volume. Two areas that are "just exploding" are transporting automobiles into the United States and intermodal shipping moving goods in containers that are shifted from truck to train or train to ship, said William Galligan, vice president of investor relations at Kansas City Southern.

The Kansas City, Missouri-based company, which took full ownership in 2005 of a Mexican railroad now known as Kansas City Southern de Mexico, has built the first intermodal network between the countries. The company, which started investing in the Mexican rail company a decade earlier, said it was betting the North American Free Trade Agreement would significantly alter shipping.

U.S. government data show total cross-border freight by train and truck between the countries has surged nearly 35 percent in the past five years. At $291 billion through September, the volume of goods crossing the border this year is set to top the $352 billion of 2011 and $308 billion in 2010. The Mexican automobile industry's double-digit production and export growth heightens transportation needs. Kansas City Southern expects Mexico's vehicle output to leap 30 to 40 percent by 2015, citing Wallenius Wilhelmsen Logistics data.
  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed

(Reuters) - U.S. rail and trucking companies are making big investments on both sides of the border with Mexico to capitalize on booming trade between the two countries.

Every day, about 10 Kansas City Southern (KSU.N) trains crisscross the border at Laredo, Texas, hauling everything from cars to chemicals - up from about six trains just three years ago.

The fourth-largest U.S. publicly traded railroad is leading the charge to take advantage of the swelling freight traffic between the countries as manufacturing booms south of the border because of the rising costs of goods from China and other exporters.

Over the past five years, Kansas City Southern has spent about $300 million to lay roughly 90 miles of new track in Texas, buy and update terminals in Mexico and make other network upgrades. The railroad company now generates one-quarter of its revenue moving parts and finished goods across the border.

Union Pacific Corp (UNP.N), the No. 1 U.S. railroad company, owns a 26 percent stake in Mexican railway company Ferromex.

Like rivals CSX Corp (CSX.N) and Norfolk Southern Corp (NSC.N), Union Pacific is partnering with Kansas City Southern to haul carloads in the United States to locations not served by the railroad.

As the U.S. economy creaks along, the growing business with Mexico is a cause for cheer: Both Kansas City Southern and Union Pacific are reporting much bigger increases in cross-border shipments than in overall volume.

Two areas that are "just exploding" are transporting automobiles into the United States and intermodal shipping - moving goods in containers that are shifted from truck to train or train to ship - said William Galligan, vice president of investor relations at Kansas City Southern.

The Kansas City, Missouri-based company, which took full ownership of a Mexican railroad now known as Kansas City Southern de Mexico in 2005, has built the first intermodal network between the countries.

Kansas City Southern, which started investing in the Mexican rail company a decade earlier, was betting the North American Free Trade Agreement would significantly alter shipping.

Total cross-border freight by train and truck has surged nearly 35 percent in the past five years, according to U.S. government data.

At $291 billion through September, the volume of goods crossing the border this year is set to top $352 billion in 2011 and $308 billion in 2010.

The Mexican automobile industry's double-digit production and export growth has boosted transportation needs.

Kansas City Southern expects Mexico's vehicle output to leap 30 percent to 40 percent by 2015, citing Wallenius Wilhelmsen Logistics data.

The company, which already serves nine auto plants in Mexico, said Honda Motor Co Ltd (7267.T), Mazda Motor Corp (7261.T), Nissan Motor Co Ltd (7201.T) and Audi AG (NSUG.DE) will open plants there in the next two years. Five steel plants are also opening.

Galligan said Kansas City Southern was in talks with Asian and European manufacturers looking for space near the locations it serves in Mexico.


Along with the boom in business come dangers. Companies with operations in Mexico must deal with the ongoing drug war. Kansas City Southern posts guards on trains in high-risk areas and scans cargo as trains cross the border.

But most of the problems are on the roads. The Mexican Council on Northeast Foreign Trade, a private trade association, said 85 percent of illegal goods sent from Mexico to the United States were found in trucks.

A federal police officer who requested anonymity said it was a very big problem with life-and-death consequences. "Truckers in Tamaulipas state and Monterrey are often threatened with death if they don't transport what they're told to transport, drugs above all," the police official said.

Trains and trucks compete, but they have also partnered to keep up with demand.

"We don't have containers, we don't have intermodal customers. So we approached J.B. Hunt (JBHT.O), Schneider and Swift Transportation (SWFT.N), to name three big ones, and convinced them that this was a real huge opportunity," said Galligan.

Swift runs 700 trucks south of the U.S. border and plans to add up to 100 next year, Chief Operating Officer Richard Stocking said in mid-November.

"Mexico has increasingly been advantaged over Asia," said Foster Finley, co-head of the transportation practice at consultancy AlixPartners.

"China's real wage rates and cost of raw materials, overhead, the exchange rate, the freight costs - in ocean, inclusive of peak season surcharges and time on the water - have risen faster than the equivalent costs in Mexico," Finley said.

Kansas City Southern's cross-border volume jumped 21 percent in the first nine months of 2012, compared with a 6 percent rise in overall volume and generated about one-quarter of its $1.67 billion in revenue.

Union Pacific's cross-border carloads rose 6 percent in the first nine months, far outpacing its 1 percent overall volume rise, said Chief Financial Officer Rob Knight. Last year, Mexican volumes grew 9 percent, triple the total rise.

While railroad companies report results by business segment not region, Knight said its Mexican business netted about $1.5 billion of the $15.6 billion in revenue through September, on pace to top last year's $1.8 billion.

"Mexico represents roughly 10 percent of our total book and growing," up from 8.5 percent in 2007, Knight said.


A number of ventures that broaden the footprint of U.S. transport in Mexico have surfaced recently.

Celadon Group Inc's (CGI.N) Trucking Services unit took over equipment and drivers from USA Dry Van, and FedEx Corp (FDX.N) added two service centers in Mexico.

U.S. Xpress Enterprises said it would buy 90 percent of Xpress Internacional and has formed a joint venture with Logisti-K in Mexico.

Logistics company Pacer International Inc (PACR.O) has a multiyear agreement to manage and provide transport for Union Pacific, as well as container and chassis management in Mexico.

Celadon is sticking with trucking, calling a revenue-sharing rail tie-up "not viable" because its trucks are more economical for moving freight near the border.

"If you're going to take things from Southern Mexico then it may make more sense," said Paul Will, Celadon's president and chief operating officer.

Whether companies go it alone or form partnerships, experts say Mexico is a top market for U.S. companies.

"Anybody with an opportunity to position themselves in this marketplace and chooses not to will probably regret it sometime in the next five to 10 years because cross-border market growth is going to outstrip probably any growth in any other (intermodal) transportation," said Dahlman Rose analyst Jason Seidl.

  wanderer53 Sir Nigel Gresley

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Another automotive manufacturer recently began importing finished vehicles through the Port of L?zaro C?rdenas, Mexico, marking the start of a new series of vehicle shipments planned for 2013, Kansas City Southern officials said in an item posted on the "KCS News" web page.

Kansas City Southern de M?xico S.A. de C.V.
will move the vehicles from the port to one of its intermodal facilities in central Mexico and onto various distributors.

"With rail service to and from the port, [we're] helping shippers bypass more congested West Coast ports with a direct route to the population center of Mexico City and a shorter route to Houston," KCS officials said. "More and more shippers are attracted to L?zaro C?rdenas because of the state-of-the-art port facility, deep water, ability to handle the newest and largest generation of container vessels, and extensive acreage for expansion and development."

The port is the fastest-growing container port in Mexico and the United States, according to KCS. Automotive shipments and overall traffic growth at the port are among the Class I's fastest-growing business segments.

"[Our] long-term, sustainable growth outlook is very good, particularly once … four new auto plants being built in Mexico open in early 2014," KCS officials said.

  wanderer53 Sir Nigel Gresley

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U.S. Rail Imports from Mexico Up 18.2% in January
30 March 2013

Imports by rail from Mexico into the U.S. showed a large increase in January 2013, jumping over 18% to USD 2.57 billion from USD 2.17 billion in January 2012.
Despite the year-over-year gain, imports dropped 17.2% or USD 532 million from the month before. Since November, the value of rail imports in this trade lane has dropped by 24% or USD 809 million. In 2012, the value of rail imports from Mexico to the U.S. rose by over 14% from 2011.
The value of U.S. imports by truck from Mexico in January 2013 inched up 0.7% to USD 14.39 billion year-over-year and rose 9.8% or USD 1.28 billion from the level seen in December 2012. The value of imports by truck in this lane was up almost 9% year-over-year in 2012.
The value of rail exports to Mexico fell 7.6% in January from the year before to USD 2.09 billion, although it did rise 2.6% or USD 54 million from the level seen in December 2012. The value of exports by rail grew 11% year-over-year in 2012.
  wanderer53 Sir Nigel Gresley

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Kansas City Southern Director of Asset Management Wayne Winkle and Senior Manager of Mechanical Maintenance Ryan Clark recently traveled to Hamilton, Ontario, to inspect the first batch of 200 bi-level rack and flat cars to be manufactured for the Class I by National Steel Car Ltd.

The new cars will be used to protect loadings of finished vehicles in Mexico and help meet automotive demand, railroad officials said in an item posted on the "KCS News" web page.

Each car is designed to haul 10 to 12 large finished vehicles, such as sport utility vehicles, trucks and vans. All 200 cars are slated for delivery to the TTX reload pool by June, KCS officials said.
  wanderer53 Sir Nigel Gresley

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Pacific Imperial Railroad Inc. (PIR) recently achieved several milestones in its efforts to revitalize the Desert Line from Imperial County, Calif., to Mexico-based manufacturing sites.

The latest milestone was a $500,000 lease payment to the San Diego Metropolitan Transit System (MTS) for freight railroad rights on the 69.9-mile line between Plaster City, Calif., and the Mexican border at Tecate.

"We are encouraged by the progress this group has made to transform a historic rail line into a viable economic engine for the region," said MTS Chief Executive Officer Paul Jablonski in a press release.

Since MTS' board approved the Desert Line operating agreement with PIR in December 2012, PIR has submitted a proprietary business plan and reconstruction plan. The lease payment was submitted on June 11.

PIR now will proceed with its reconstruction plan, which calls for assessing the condition of 57 bridges and performing necessary repairs, PIR officials said.

Major steps planned for the next six months include the completion of initial repairs on the line and testing of trains. When completed, the line will provide a link for finished products moving between the United States and Mexico, PIR officials said.
  wanderer53 Sir Nigel Gresley

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US Imports through Rail from Mexico persist to Climb
10 September 2013 US

According to data from the U.S. Bureau of Transportation Statistics, U.S. cross-border imports from Mexico through rail jumped 10.8 % in June 2013. U.S. imports by rail from Mexico totaled USD 3.7 billion in June, climbing 10.8% year-over-year.
U.S. rail import value from Mexico also improved 6.5% from the level reported for May. In the first 6 months of 2013, the value of U.S. rail imports from Mexico soared 13.6% from the same period in 2012.
The value of U.S. imports by truck from Mexico in June 2013 declined by 3.2% year-over-year to USD 15.1 billion, from USD 15.6 billion in June 2012. U.S. import value also drop 8.5% from May's level. U.S. imports by truck in this lane were down 0.9 percent year-over-year in the first half of 2013.
U.S. exports by rail to Mexico dipped 2.1% year-over-year to USD 2.2 billion; exports were also down 7.9% month-to-month. Through June, U.S. exports via rail to Mexico were down 1.6% in value terms year-over-year.
The value of U.S. exports by truck to Mexico improved 3.0% year-over-year, but slid 7.9% month-to-month to USD 12.1 billion in June. Truck exports have experienced 3 consecutive months of year-over-year rises, although June’s rate was the most decelerated. For January to June, the value of exports by truck was up 5.2% year-over-year.
  wanderer53 Sir Nigel Gresley

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Rising costs for truckers in Mexico will drive more U.S.-bound freight from highways to rail networks, fueling strong intermodal growth, a Kansas City Southern Railway executive told the JOC Inland Distribution Conference.
  wanderer53 Sir Nigel Gresley

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Pacific Imperial Railroad is moving forward with plans to provide freight rail services to the Tijuana-Tecate region of Baja California by naming Charles M. Patterson as Chief Commercial Officer.
Patterson has 25 years of railroad experience in operations, sales and marketing roles with Class 1 railroads CSX and CN and with short line railroads Great Lakes Transportation and RailAmerica, where he was Senior Vice-President and Chief Commercial Officer. Patterson is a graduate of Davidson College and the University of Virginia’s Colgate Darden Graduate School of Business Administration. “I am delighted to be part of the Pacific Imperial Railroad team, and I look forward to joining their efforts to develop safe and cost effective rail service for the customers in northern Baja California," said Patterson.
Ernie Dahlman, CEO of Pacific Imperial Railroad stated, “I am very excited to have Charlie here to represent the advantages of this railroad with our client base of more than 700 manufacturing facilities in northwest Mexico.”
PIR President David Rohal added, “Charlie brings a wealth of experience and we are very pleased to have a Chief Commercial Officer with his background and skills.”
In December 2012, Pacific Imperial Railroad (PIR) signed a long-term lease with San Diego and Arizona Eastern Railway Company (SD&AE) and the San Diego Metropolitan Transit System (MTS). This lease allows PIR to operate the Desert Line between the U.S. – Mexico border crossing at Division, CA and the Union Pacific Railroad (UP) at Plaster City, CA. PIR has contracted with J. L. Patterson & Associates, Inc. to conduct a comprehensive engineering study of the line as part of a significant investment to restore train operations on the line. The Desert Line was last active in 2008. Pacific Imperial Railroad’s efforts will enhance rail service to the dense manufacturing clusters south of the border and connect them with their US customers and suppliers.
  wanderer53 Sir Nigel Gresley

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[img][/img]This part of the Desert Line, which runs between Campo and Plaster City, is called Goat Canyon Trestle. It is considered to be the tallest curved wooden trestle in the world. / photo courtesy of the San A company granted a 99-year lease by the Metropolitan Transit System to run a freight line considered a key to boosting cross-border commerce is beset by management turmoil and accusations of suspicious financial transactions.
MTS says it hasn’t lost confidence in the company.
In December 2012, the transit agency awarded a lease to operate the Desert Line to the Pacific Imperial Railroad company. The 70-mile section runs from the border near Campo to Plaster City in Imperial County, with a portion dipping into Mexico.
It has long been touted as an untapped economic engine for the San Diego and Tijuana region. A functioning line would allow Mexican maquiladoras an alternative to shipping goods north through the congested truck crossing at Otay Mesa.
Getting the line functioning, and working with rail operators on the Mexican side, could create an economic boon envisioned by boosters and planners. They see imports flowing north, exports going south — perhaps even someday connecting to a deep-water port in Ensenada.
In the meantime, there has been little progress.
Four senior executives have left the company granted the 99-year lease. They include CEO Ernest Dahlman, hired in early 2013 to raise millions of dollars needed to get the line operating, and President David Rohal, a veteran railroad executive who was hired in December.
Both quit after they believed they had uncovered wrongdoing, including $1 million in payments to a Nevada company that is owned by one of the principal shareholders in Pacific Imperial. Rohal was so disturbed that he contacted the FBI with the information, according to documents obtained under the Public Records Act by U-T Watchdog.
The company’s current CEO, San Diego lawyer Donald Stoecklein, denied those allegations, saying the payments were legitimate loan repayments to the Nevada firm. He also said that the displaced managers are scheming themselves to take over the line.
On March 20, the MTS board sided with the company, saying it had confidence Pacific Imperial could succeed and get the line running.
In an interview later MTS Chief Executive Officer Paul Jablonski said the turmoil was a concern but said the lease — which has specific performance goals the company has to meet — protects the agency.
“We have a contract that has certain performance milestones to it, and we are going to judge their performance on those going forward,” Jablonski said.
Not everyone agrees. Chula Vista City Councilman Rudy Ramirez, an alternate member to the MTS board, said the current problems don’t reflect well on the agency.
“There is a public interest at stake here,” Ramirez said. “MTS has not in the past years demonstrated the ability to manage this line to its full potential.”
Management of the line is a big job.
The Mexican section of the line also needs work, and a group in Baja California announced a year ago it would invest $20 million rebuilding the line that runs from Tijuana to Tecate.
On this side of the border, a report on how much reconstruction will need to be done is due to MTS by next month from the railroad company. In the past estimates have run as little as $50 million and as much as $140 million.
The Desert Line was but by sugar magnate John Spreckels. It’s a key portion of what’s also known as “The Impossible Railroad,” a track built in 1919 that went from San Diego east that overcame daunting engineering challenges of steep gorges and twisting passes.

Speckels later sold it, and was owned for decades by the Southern Pacific Railroad. Amid falling revenues, the company unsuccessfully tried to abandon the line in the late 1970s.

The line was then purchased by MTS in 1979 as part of the formation of what is now the trolley system. For years the agency has sought someone to get the line going again, and Pacific Imperial is the latest hope.

The lease with the company requires it to pay $1 million per year to MTS or risk defaulting and losing it. It made that payment last year — the first significant hunk of revenue MTS has gotten from the line in years, Jablonski said — and the next installment of $500,000 is due by +July 1.

MTS officials acknowledged last month that the company would miss at least one deadline — making initial repairs to the line — by the end of June this year, as it previously said it could. That is partly because a larger reconstruction plan for the line is not yet finished.

Such recent problems have focused attention on some of the key figures at Pacific Imperial, including Charles McHaffie, the former CEO of Carrizo Gorge Railway, which operated the line until 2008.

He’s been named in dozens of lawsuits in state and federal court, many relating to infighting among shareholders of Carrizo Gorge Railway. He’s also been saddled with a $359,000 judgment from the IRS for not paying payroll taxes for railway employees between 2005 and 2007, federal court records show.

McHaffie said twice last week that he would comment later about Pacific Imperial, but never made himself available.

Last year, a political action committee that McHaffie funded highlighted the homosexuality of Republican mayoral candidate Carl DeMaio, and was fined by the San Diego Ethics Commission. The commission said the group, “Conservatives for Gay Rights Supporting Carl DeMaio for Mayor 2012,” didn’t disclose it was coordinating its work with Democrats and didn’t keep records required by law.

The commission levied a $7,500 fine, and McHaffie was singled out for sanction.

McHaffie has served as the public face of Pacific Imperial and was a consultant to the group, according to Stoecklein. Documents show that in January he was named to a new board of directors for the company.

It was around that time that Rohal said he became suspicious of financial transactions. In a Jan. 26 memo he wrote he had found “significant cash payments of company funds have been made under suspicious circumstances.”

A forensic accountant hired by Rohal concluded in a report that there were $1.1 million in payments made to A C Funding, a Nevada corporation with a corporate officer named Dwight Jory.

Jory is a longtime associate of McHaffie who has also been involved in numerous litigations over the years. Jory is also the largest shareholder in Pacific Imperial, and also did not respond to a request for comment.
Rohal said the payments were improper, because they appeared to show money raised from investors for the business were instead being paid to an entity controlled by the company’s largest shareholder. After investing what he said was $750,000 of his own and family’s money into Pacific Imperial, Rohal said he and Dahlman were terminated.

But Stoecklein, who served as the president of the company for most of 2013, said the duo were wrong. The payments to AC Funding were actually stock repayments, fees for consulting and loan repayments, he said in an interview.

He said AC Funding was one part of a larger investment entity that loaned Pacific Imperial $1.2 million since 2011 for what are essentially start up costs for getting the rail line operating. He also said they assisted with other tasks, like providing contacts in Mexican government and rail circles and dealing with Customs and Border Protection.

“We needed expertise so we brought in AC Funding as a consultant,” he said.

There have been other issues. Last year PIR purchased three locomotives for $450,000 but they are not suitable for use on the rail line, because they are underpowered. Stoecklein acknowledged that, but said they will be used ultimately

Jablonski said Rohal and Dahlman came to them with their allegations.

“They gave us some documents, we looked them over, and frankly we did not see anything in there you could construe of hard evidence of fraud,” he said.

For now, the company is in compliance with the lease, Jablonski said. Under the lease terms Pacific Imperial has to have limited operations going on the line by the end of 2015.

“The next six months is going to be very telling,” Jablonski said.

Stoecklein said he is bringing in a new investment backing firm to raise money, and said that the $500,000 payment due in July will be met.

Rohal is not so sure. He said the company has little money in the bank when he left.

“They couldn’t attract any of the institutional capital required for the amount of work needed to restore the line,” he said.

Others have voiced similar doubt. A member of the Smart Border Coalition, a group that advocates for a more efficient border infrastructure, sent an email to MTS officials in February.

“It is apparent that PIR will soon be in default and has been unable to garner adequate support from the binational community,” wrote Steve Williams of the San Diego real estate investment company SENTRE Partners.

Williams said in an interview he was not speaking on behalf of the coalition, and was concerned that the turmoil would lead to a “rerun” of previous failed attempts to resurrect the rail line.

“We on both sides of the border need a rail connection,” Williams said. “This is the magic moment to get this problem fixed.”

During the U-T's reporting of this story the San Diego Regional Chamber of Commerce provided an unsolicited statement from CEO Jerry Sanders. It said the future boon from reopening the railroad "is significant in terms of the companies we will be able to attract to the region.”

Sanders said MTS has a solid business plan in hand and “with MTS’s supervision, it has a great chance for success.”
  wanderer53 Sir Nigel Gresley

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The Desert Line. Built nearly a century ago, industrialist John Spreckles overcame treacherous terrain and countless calamities to open the last intercontinental railway in America. Decades of neglect allowed it to crumble and forced manufacturers to truck billions of dollars worth of product through a log-jammed border crossing.
A new effort is rolling, to bring the Desert Line back to life.
"San Diego is sitting on top of a neglected asset," said former company president David Rohal.
"I don't think this opportunity would exist, either for me or the region of San Diego, had they not pursued it so tenaciously," said Donal Stoecklein, CEO of Pacific Imperial Railroad.
The Desert Line's landlord -- the Metropolitan Transit System -- awards a 99-year lease to a new railroad company to rebuild the tracks and turn them into an international shipping line. The railroad company's owners use the lease as a calling card to attract tens of millions of investment dollars. Then, former corporate leaders make damning allegations against the owners.
"I had garnered a lot of institutional interest and individual interest in the railroad" said former company CEO Ernie Dahlman. "A lot of it kept coming to a full stop and I really didn't understand why."
"The background of the people who own the paper is terrible," said Rohal.
Could the new railroad company itself become the next calamity to doom the Desert Line?
"I think the business background of the owners and management always has an impact on raising funds, especially from institutional investors," Stoecklein said. "I don't think, in this case, it's going to be a significant issue."
San Diego's public transportation utility, now responsible to decide whether a pair of Las Vegas speculators can bring the Desert Line back to life.
  wanderer53 Sir Nigel Gresley

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Lies, lost money, and scores of lawsuits: those are the accusations against the owners of Pacific Imperial Railroad, the company that now controls the Desert Line thanks to a 99-year lease with San Diego's Metropolitan Transit System. However, the railroad's new chief responds with accusations of his own.

A tiny train runs along six miles of rail outside Campo, California. It's a tourist stop - the Pacific Southwest Railway Museum's featured attraction. And it may be the final resting place of a railroad to nowhere; once an engineering marvel, the vision and fortune of one of San Diego's original industrialists John Spreckles, the last piece of the last intercontinental railway built in America.

Today, ticket-buyers keep the trolleys rolling along the tracks that criss-cross San Diego, but the old Desert Line sits abandoned - an unused transportation corridor that could bring billions of dollars worth of commerce from Mexico. If only the Metropolitan Transit System that owns the tracks could find someone to rebuild the railroad.

"Ultimately, you want to be able to move 400 cars a day," said Donald Stoecklein, a securities attorney and newest CEO of Pacific Imperial Railway. "

Stoecklein is engineering an effort to bring the Desert Line back to life. He negotiated a new lease with the railway's landlord, the MTS. Now, the owners of PIR have the rights to this railway for 99 years although these two men are a far cry from the titan of industry who built it.

Charles "Chaz" McHaffie and David W. Jory are investors, speculators in real estate and stock deals, who have parallel histories of legal litigation and embattled entrepreneurial adventures. McHaffie is a Del Mar transplant who made news most recently when he raised campaign funds for former Mayor Bob Filner, but was caught and fined for misusing the money to run a smear campaign against Filner's opponent Carl DeMaio.

McHaffie has been the target of scores of lawsuits over everything, from payroll tax evasion to unpaid court judgements. His partner, Jory, is a Nevada resident who has speculated on real estate and penny stock deals, overseen the bankruptcy of at least four companies, and declared bankruptcy himself in 1994. Jory is now principal in a pink-sheet penny stock play for a company called Hemp, Inc., that supports the growing of hemp and sale of hemp products even though growing hemp is outlawed by the DEA. The two men acquired the Old Carrizo Gorge Railroad about a decade ago in a disputed take-over, then let it go bankrupt.

"They were having issues and asked me to come in and see if I couldn't help them."

Stoecklein did a lot more than help them: he saved them, salvaging pieces of the Old Carrizo Railway when it went into foreclosure, setting up a brand new corporation in Delaware, and legally separating it from the embattled failure of a railroad company.

Was the Carrizo Gorge Railroad the first generation of PIR?

"We don't like to say that because we really have nothing to do with Carrizo... I treated this as a finance transaction," continued Stoecklein, "and on December 20, 2012, obtained a 99-year lease from MTS so that we could finance it."

So there they were: a lawyer and a pair of Las Vegas speculators with the keys to the kingdom in their hands and a 99 year lease agreement with San Diego's Metropolitan Transit System that gave them the exclusive rights to the Desert Line. They went out and hired two men to run the company: a New York investment banker and an Ohio railroad man.

"One of the things that is rattling the economic growth is the fact that they have 3,000 trucks that are crossing the border a day that are experiencing delays," said Ernie Dahlmen. "A railroad that could solve that, with logistics of rail versus truck, seem incredibly appealing."

Dahlmen says he brought in nearly $6 million and David Rohal says he invested $800,000 of his own money into PIR. And they say they were on the verge of bringing in tens of millions more from Wall Street when they spotted trouble - prospective investors backing off.

"The background of the people that own the paper is terrible," said Rohal.

The two walked out of PIR and away from their investments. As Stoecklein begins the search for their replacements, as well as investors, he dismisses their complaints and defends his bosses as champions of the Desert Line Railway.

Do these facts raise concern?

"I think the business background of the owners, of management always has an impact on raising funds, especially from institutional investors. I don't think in this case that is going to be a significant issue."

"They won the majority - if not all - of those lawsuits. I think they have one pending that they filed," continued Stoecklein. "Their business acumen is such they're not worried about going up against people to create business. I've looked at the lawsuits; I don't think it's relevant in terms of moving this project forward. I think what's relevant is their tenacity. And I don't think this opportunity would exist, for either me or the region of San Diego, had they not pursued it so tenaciously."

At the end of KUSI's interview, Stoecklein reached across the table and handed over Pacific Imperial Railroad's confidential management report to its board of directors. Among other things, it's an indictment of the company's detractors. In it's 197 pages, the new PIR leadership lays out its case: the old leadership (Dahlmen and Rohal) abused their privileges, exceeded their authority, mismanaged money, and tried (and failed) a hostile take-over of the company - all while failing to meet self-imposed deadlines for bringing in investment funding. So there are the charges and counter-charges between people competing for control of the coveted Desert Line Railroad.

Whom does the man believe? Paul Jablonski, CEO of San Diego's Metropolitan Transit System, answers our questions about this latest dispute over the Desert Line, Wednesday only in The KUSI News at 6 and 10 PM.
  wanderer53 Sir Nigel Gresley

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US shuts Mexican drug smugglers' cross-border 'super tunnel'
Tijuana-San Diego tunnel sporting lights and electric railway among most sophisticated unearthed by US authorities

[color=#005689]Link to video: Drug tunnel discovered between Mexico and US
[font=arial, sans-serif]US authorities have shut a sophisticated drug smuggling tunnel recently dug under the US-Mexican border. The tunnel – said to be 2.4 miles long – linked a warehouse in Tijuana to another in [url=][color=#005689]San Diego[/color], [color=#005689]California[/color].
[font=arial, sans-serif]Derek Benner, head of Homeland Security Investigations in San Diego, said it was equipped with lights, ventilation and an electric rail system. Benner said the zigzag route suggested the builders had gone off course. The tunnel runs about 10.7m (35 feet) below the surface and is about 1.2m high and 90cm wide.[/font]
[font=arial, sans-serif]Three people were arrested and more than eight tonnes of marijuana and 147kg of cocaine seized in connection with the "super tunnel", which they said had been closed before it was used for smuggling.[/font]
[font=arial, sans-serif]The tunnel was discovered by the San Diego Tunnel Task Force. The unit, set up about five years ago, had reportedly put the warehouse on the US side under surveillance after learning about the purchase of drills and other construction equipment in August and September.[/font]
[img][/img][color=#666666][size=2]Location of the Tijuana tunnel
[/color][font=arial, sans-serif]Mexican cartels have become more dependent on tunnels, small boats and light aircraft in recent years as the fences along the 2,000-mile frontier become higher, stronger and more extensive.[/font]
[font=arial, sans-serif]"These cartels have spent years and tens of millions of dollars trying to create a secret underworld of passages so they can move large quantities of drugs," Laura Duffy, the [url=][color=#005689]United States[/color]
attorney for the San Diego region told reporters.[/font]
This particular tunnel was reportedly associated with the Sinaloa drug cartel headed by [color=#005689]Mexico[/color]'s most infamous and elusive kingpin, Joaquín 'El Chapo' Archivaldo Guzmán Loera. A similar tunnel connecting Tijuana and San Diego discovered two years ago, connected with the seizure of 32 tonnes of marijuana, was also associated with the Sinaloa cartel. US autorities say they have discovered more than 75 tunnels crossing the border since 2008, concentrated in California and Arizona.
The San Diego/Tijuana area is a popular place for tunnels because of the ease of digging through the clay-like soil of the area, as well as the existence of areas on both sides of the border filled with nondescript warehouses that help hide both construction and loading and unloading activities.
In other parts of the border, cartels have adapted underground drainage tunnels.[/font]
  wanderer53 Sir Nigel Gresley

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Conflict of interest and other financial wrongdoings continue to appear around every bend for the binational railroad meant to link factories in Mexico and the U.S. Yet, despite allegations of fraud and links to dozens of shell companies created in the state of Nevada, the Metropolitan Transit System, the owner of some portions of track, is still in support of the project.

MTS CEO Paul Jablonski
MTS CEO Paul Jablonski
“[Pacific Imperial Railroad] asked us to renew the lease in order for them to raise funds and we did. And, as of this time, that lease is in good standing,” MTS CEO Paul Jablonski said at the April 15 board meeting of the San Diego and Arizona Eastern Railway, the nonprofit that manages the Desert Line.

Also at the meeting were Pacific Imperial Railway’s newest CEO, Donald Stoecklein; former president and now self-professed “consiglieri” to management, Charles McHaffie; and Daren Barone, a large shareholder who has been tasked with working with Mexican officials. Earlier in the meeting, the trio reiterated their commitment to getting the binational railroad on track and to dispel any allegations of fraud and money laundering from former management.

As was reported by the Reader, Stoecklein and McHaffie are no strangers to controversy. Dozens of lawsuits have been filed against attorney Stoecklein and businessman McHaffie.

Most recently, the duo was accused by the Neighborhood Market Association’s Mark Arabo and two of his colleagues of scamming them out of $400,000 in a deal to purchase the restaurant formerly owned by Junior Seau. But soon after entering into negotiations the investors were told the deal had fallen through but not before more than one hundred thousand dollars went missing.

When confronted, Stoecklein and McHaffie attempted to convince the investors to put their money in the “lease of a short railroad system that goes from San Diego to Yuma through cross-border agreements they have with Mexico.” Arabo and the other investors declined but not before they say McHaffie and Stoecklein had already spent $145,000. That case is now making its way through court.

Daren Barone
Daren Barone
McHaffie and Stoecklein’s colleague Daren Barone, the man in charge of working with officials in Mexico, has also been involved in his share of controversy.

In 2013, Pacific Imperial's boardmembers, including Barone, entered into an $8.5 million contract with Watkins Environmental Incorporated to perform environmental remediation and construction on the the line.

“Under the agreement,” reads a press release from Business Wire, ”Watkins will provide needed reconstruction concurrent with the inspections provided by JL Patterson and Associates, which cover 57 bridges, inspect 17 tunnels and approximately 70 miles of track, in compliance with PIR’s agreement with the San Diego Metropolitan Transit System (MTS) and PIR’s plan to commence operations in 2014.”

But the work never commenced. And, according to a receptionist at Watkins, no contract is in place.

Barone is a longtime business partner of Watkins, dating back to the early 1980s.

In 2000, the City of San Diego awarded Watkins Acquisitions, owned by Watkins and Barone, a $17 million contract with the City of San Diego for environmental remediation on the Naval Training Center. By the end of the project, a tax-court judge had ruled that the two men had failed to pay taxes and had set up a number of companies in an attempt to increase profits.

Before commencing work on the Naval Training Center, Watkins and Barone, under the guise of Watkins Contracting Inc., looked for ways to limit their exposure legally. They did so by creating several ownership companies, adding another safeguard in case of lawsuits.

The Naval Training Center job was risky.

“To secure the subcontract agreement, [Corky] McMillin Companies, the developer, and [Harper-Nielsen-Dillingham] required [Watkins Contracting Inc.] to submit a lump-sum bid. A lump-sum bid would force [Watkins] to take on the risk of unexpected costs, a risk that was prevalent in the [Naval Training Center] project….”

Despite the risks, Watkins and Barone forged ahead. But before doing so, in order to prevent creditors from other jobs from taking their profits, Watkins and Barone added another layer to the contract, this time creating the Naval Training Center joint-venture agreement. The agreement allowed Barone and Watkins to split the profits: 30 percent to Watkins Contracting Inc., and the remaining 70 percent would go to WB (Watkins Barone) Partners.

“According to Barone and Watkins, the profit split was designed to prevent the 70 percent of profits allocated to WB Partners from being exposed to the reach of [Watkins Contracting Inc.’s] creditors,” reads court documents later filed against the pair.

In 2002, Watkins and Barone, through Watkins Contracting, billed the contractors $14.1 million. At the same time, the two claimed that the joint-venture agreement was responsible for $5.8 million, resulting in a profit of $8.27 million for Barone and Watkins.

Despite the windfall, Barone and Watkins failed to claim the profits on Watkins Contracting returns, a move that a tax court did not find amusing, finding the business failed to claim $850,273 in profits and ordering them to pay a $170,054 penalty.

The ties between Barone, Watkins, and the binational railroad are much stronger.

Nevada state business records reveal Watkins and Pacific Imperial’s top executives and shareholders created a new business together. In May 2013, Watkins was named as a director of the Intercontinental Equity Group. Among his colleagues are Pacific Imperial’s new CEO and lead counsel Stoecklein, former Pacific Imperial executive and shareholder Sheila LeMire, and Dwight Jory, one of the founders of the railroad company and the largest shareholder.

Intercontinental Equity Group’s articles of incorporation include some interesting provisions.

“No contract or transaction between this corporation and any of its directors, or between this corporation or any other corporation, firm, association, or any other legal entity shall be invalidated by reason of the fact that the director of the corporation has a direct or indirect interest, pecuniary or otherwise…”

In addition, according to a share exchange agreement dated May 24, among the many shareholders of Pacific Imperial were WB Acquisitions, DJB Holdings, and GSW Holdings, the three companies that Barone and Watkins had set up for the Naval Training Center project.

I contacted MTS for comment on the apparent conflict of interest issues and am waiting for a response. Donald Stoecklein was unable to provide a comment in time for publication.
  wanderer53 Sir Nigel Gresley

Location: front left seat EE set now departed
EL PASO — When César Duarte, the governor of the Mexican state of[color=#008990]Chihuahua, announced last week that the government wanted to move the railroad tracks that pass through Ciudad Juárez out of the heart of the city, Cristina Jiménez knew that the battle had just begun.[/color]
Jiménez, a former Ciudad Juárez councilwoman, and other local residents have been trying for years to get the government and the railroads to build a bypass, arguing that the trains going through Juárez and El Paso, its sister city across the border, expose residents to several threats like dangerous freight and pedestrian fatalities.
While Jiménez considered the governor’s announcement of a bypass a good start, she remained skeptical, in part because the railroads had yet to agree to any such plan.
“We have two years in this fight,” she said, adding that words did not necessarily translate into action. Calls to Duarte’s office in Ciudad Juárez seeking more details about the rail relocation plan were not returned.
No starting date has been set for the relocation, which would — at the Mexican government’s expense — move the rail line used by the Union Pacific and Burlington Northern Santa Fe railways west to the Mexican border near Santa Teresa, N.M.  

Nate Asplund, an assistant vice president for Burlington Northern Santa Fe, said a new rail line would take almost a decade or more to build. No environmental studies had been conducted and no international permits had been secured — steps required before the tracks could be moved, he added.  
“It needs to be engineered, it needs to be funded, and it needs to be constructed,” Asplund said. Union Pacific officials said in an email that the company would be happy to join the discussion about whether or how to move the rail line. While trade specialists in El Paso are not worried that the move would hinder cross-border trade, some question whether it would be a wise use of resources for Ciudad Juárez, which is [color=#008990]trying to recover after years of bloodshed and cartel-related violence. [/color]
“All of us on both sides of the border would rejoice if the rails were on the outside of the city,” said Alan Russell, the chief executive of Tecma, an El Paso-based outsourcing company for Mexican businesses. “But realistically, and the end of the day, that’s why the cities are here.”
Russell also questioned the urgency.
“These communities need so much more,” he added.
Some El Paso business leaders say the bypass makes sense economically. To accommodate the community, rail traffic now occurs only during part of the day.
“The current rail movements that are coming through the heart of downtown Juárez and El Paso are limited to a very narrow window of operations,” said Bob Cook, the founder of Cook Strategies and the former president of the El Paso Regional Economic Development Corporation.
But he also sees advantages to upgrading current facilities.
“If it bypasses Juárez it’s going to be rail movements primarily through the interior of Mexico and I think that’s a good thing,” he said. “I think there is an advantage with keeping the rail lines in place that comes through the heart of town and enhancing their capabilities.”
Asplund agreed that a bypass would create a long-term solution to a long-running problem. But he said that if traffic was a primary complaint, it might have to be addressed another way.
Several projects, including grade separations, bridges and underpasses, are underway in Ciudad Juárez, infrastructure that Burlington Northern supports and says would ease congestion.
“This is a big deal, these are big projects, and there is no reason anyone should be faint at heart to get after them,” he said. “But we’ve expressed that a two-phased approach makes sense.”

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