Dive Brief:

• Mining, transportation and development conglomerate Grupo Mexico last week purchased the Florida East Coast Railroad (FEC) from Fortress Holdings Group for $2.1 billion, pending customary approval, the Florida Times Union reported.
• The FEC, which began in 1895 and contributed to the expansion of Florida, operates 351 miles of track along the East Coast of the state. Though the sole rail service provider to South Florida ports, it also offers connections to CSX and Norfolk Southern in Jacksonville. 
• FEC transports 550,000 freight loads per year. With its easy access to other railroads, FEC can reach 70% of the United States in 1 to 4 days.

Dive Insight:

The company's purchase of FEC well suits the interests of Grupo Mexico, both for increasing its holdings and for expanding its supply chain's network.

In 2015, mines from the Grupo Mexico subsidiary Southern Copper Corp exported $862,500 worth of minerals into the United States. FEC is known to specialize in mineral transport in Florida, and its access to Florida ports makes it an ideal partner for Grupo Mexico's exports. The company also has various construction and refinery subsidiaries, which could further benefit from access to Florida's ports.

FEC's access to CSX and Norfolk Southern also offers Grupo Mexico U.S. East Coast coverage for transporting its materials, while Union Pacific covers every part of the U.S. but the East Coast. Within the company's diversified holdings is also a 26% share in the Union Pacific (UP) railroad, the lone railroad serving each of the six U.S./Mexico gateways. The company owns Ferromex (FXE), which connects directly with Union Pacific. 

In short, the company's purchase of FEC will help it take further control of its supply chain by owning the company that can provide further access to the U.S. East Coast.