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After investing US$167mn in its Mexican network last year, railway operator Kansas City Southern (KCS) will keep focusing on capacity projects this year.
One of these projects includes a second international rail bridge at the Laredo-Nuevo Laredo gateway, in the Texas-Tamaulipas border area, Kansas City Southern México (KCSM) CEO Oscar del Cueto said during a webinar hosted by Industry Exchange on Wednesday.
He was appointed CEO in August, following the retirement of Jose Guillermo Zozaya.
“We already have the permits from the government of the United States and we are now in the process of starting in Mexico,” he said.
Del Cueto said the communications and transportations ministry (SCT) has greenlit the project, but the company continues some permitting processes. The next step is completing the project layout so the ministry can approve it.
In the latest quarterly report in October, KCS COO Jeffrey Songer said the company had already begun works on the preliminary design, scheduling and cost modeling for the project.
KCS will release the 4Q20 results report on Friday.
While the cost for the project has not been determined yet, del Cueto told daily Milenio in August that the project was part of the US$127mn investment plan presented by KCS at the beginning of 2020.
“Laredo is the most important point for interchange that we have in between the US and Mexico. Based on that, we’re creating this capacity,” he said.
The CEO also said KCSM completed its part of the 19.5km double-track rail line that will help connect the new port of Veracruz, in Veracruz state. One line will be built by the US company, while the other was assigned to rail operator Ferrosur.
The company should have access to this new rail line by the end of January, he said.
The rail connection starts at the Santa Fe connection point, which KCSM’s rail network already covered, and extends to Nuevo Puerto de Veracruz.
Last year, the government relinquished its rights-of-way between the two points so KCSM and Ferrosur could start works. This is the first double-track rail line that is operated by two concessionaires.
Overall, the new connection enables mobility from Veracruz to Mexico City, del Cueto said.
Other capacity projects involve transportation demand for liquefied petroleum gas (LPG), which the company expects to grow.
“We are having some improvements in the velocity and the capacity in some areas such as Saltillo and the Ramos Arizpe [Coahuila state] that we are investing in this year and others in capacity projects that are mainly focusing on those projects that are bringing more LPGs to Mexico,” he said.
Yet, more demand forecasts are necessary to determine future investments.
“We don’t have customers providing a good forecast for us to determine investment in some areas … It is important for us to receive in advance some of the projections, the outlook, the forecast ... to help us invest in the right areas and right projects,” del Cueto said.
Asked whether the energy regulations imposed by President Andrés Manuel López Obrador have pushed KCSM to rethink its investment plans, the CEO said the company plans to remain in Mexico even after the current government leaves office.
“We are going to be here for a long period of the year, it is not going to be just this administration, we are going to stay here, we are investing here in Mexico and we are going to continue doing so,” he said.
“There are a lot of opportunities that we see south of the Bajío region, we can have some access to that market. It is a market that is growing and we see the port of Veracruz, with the new access, as an opportunity to continue growing too. Also, the area of Altamira and Tampico [in Tamaulipas],” del Cueto said.
Most of KCSM’s 4,000km-plus rail network spans from the northeast to the Valley of Mexico and central east, connecting 15 states.
The company received a 50-year concession from the government in 1997, with the option of a 50-year extension.
KCSM claims to operate the shortest rail route to the US.
This article first appeared on www.bnamericas.com
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