newsworthy
KCS to make aggressive
push into U.S.-Mexican
Growth continues for
material handling
industry
intermodal market
KANSAS CITY SOUTHERN INC.
(KCS), the Kansas City, Mo.-based
railroad, is poised to significantly
expand its presence in the U.S.-Mexico intermodal market, a move
that may strengthen the railroad’s
already-bright future and also
reshape how freight gets moved in
one of the world’s most important
corridors of commerce.
KCS, the smallest in both geography and finances among the five Class
I U.S.-based railroads, differs from its peers in one other important way.
Unlike the other four, which have focused on the nation’s east-west landscape, it has built its franchise around north-south routes extending from
the upper U.S. Midwest to multiple points inside Mexico. Today, KCS
operates from the Twin Cities of Minneapolis-St. Paul—which it doesn’t
serve directly but through interline partner Canadian Pacific Railway—
to the booming Port of Lázaro Cárdenas on Mexico’s Pacific coast.
The KCS network, which encompasses about 3,500 route miles spanning 10 states, is the product of a series of alliances and acquisitions over
the past 18 years that, among other things, have made it the only U.S. railroad that doesn’t need to interchange traffic at the border.
Up to now, virtually all of KCS’s traffic has been measured in carloadings. Intermodal activity has been a non-factor because KCS’s Mexican
intermodal infrastructure was not sufficiently developed to meet burgeoning cross-border demand.
Since 2008, however, the railroad has invested about $300 million to
upgrade its intermodal network. The investments include $180 million
alone to expand 100 miles of track on a key line segment between the
Texas cities of Rosenberg and Victoria to the south, about 240 miles from
the border. Others include adding an intermodal facility in San Luis
Potosí, Mexico; upgrading intermodal capabilities at Puerta Mexico to
the east; and improving intermodal operations at Lázaro Cárdenas.
WIDE-OPEN OPPORTUNITY
Cross-border intermodal currently accounts for slightly more than 1 percent of KCS’s overall traffic mix, but the business is “growing very fast,”
Patrick Ottensmeyer, executive vice president and chief marketing officer,
told DC VELOCITY. KCS’s total intermodal revenues for the first quarter of
2012 rose 26 percent from the same period in 2011.
KCS is placing the same bet on its north-south intermodal routes that
its brethren are making on their east-west lanes: that shippers, p. 22
In an economy in which good
news is still hard to find, the
nation’s material handling sector
continues to shine.
The Material Handling Industry
of America (MHIA) reported in
mid-April that material handling
equipment orders grew by an estimated 16. 3 percent last year and
that it expects growth to continue
through this year and next.
The trade group said in a statement that its quarterly Material
Handling Equipment Manufacturing Forecast (MHEM) predicts
growth of 8 to 9 percent this year
and 12 percent in 2013. Hal
Vandiver, executive consultant for
MHIA, cited growing consumer
and investor confidence, rising
employment, growing industrial
production, and increasing factory utilization rates as factors driving the growth.
“All are favorably impacting
MHEM,” he said. “Both residen-
tial and non-residential construc-
tion will contribute greatly to pos-
itive growth through 2014.”
The forecast echoes a mid-
March report from the Conveyor
Equipment Manufacturers Associ-
ation (CEMA). At CEMA’s annual
spring meeting, the group’s statis-
tics committee forecast double-
digit growth this year following
robust growth last year.
The MHIA report indicates that
material handling equipment
shipments grew by nearly 18 percent in 2011 and should grow 9
percent this year and 11 percent
next year. Domestic demand grew
by more than 19 percent. ;
