CHICAGO/MEXICO CITY- Mexican rail consortium Ferromex and US railroad company Union Pacific Corp said they have stopped issuing permits for some grain rail shipments moving through Eagle Pass, Texas, after a recent train derailment in Mexico closed the track.
The halt is a temporary measure until rail traffic gets cleared after the track reopened, Ferromex told Reuters in a statement Monday, adding that total volume of grain movement between Union Pacific and Ferromex will not be affected.
The disruption marks the latest in a string of grain freight rail backlogs at the border, particularly at El Paso and Eagle Pass, that have snarled agricultural supply chains between the US and the top importer of its corn. It comes as US farmers are harvesting massive corn and soybean crops.
Ferromex (FXE), which operates the largest railway in Mexico, notified Union Pacific about the derailment in Mexico on Saturday, according to Union Pacific. FXE told Reuters the track was closed up to 15 hours.
Union Pacific said it and Ferromex decided together to temporarily halt issuing permits for the active FXE embargos, given the high volume of agricultural freight and expected increased demand as the US harvest is underway.
“This suspension is effective immediately and will remain in effect until the current train lineup is cleared and trains are able to launch upon release,” Union Pacific said in a statement to customers Saturday.
While Mexico is the top US corn export market, it’s also become a key outlet this year for agricultural exporters looking to offset sluggish buying from China, a top commodity buyer.
But rail capacity cannot keep up with the demand, said Juan Carlos Anaya, General Director of the Agricultural Markets Consulting Group.
“The infrastructure cannot be built overnight, nor can the machines, and that is causing this problem of having efficient logistics between the United States and Mexico,” Anaya said.
