Dive Brief:
- Some of the largest rail operators in the U.S., Mexico and Canada have teamed to create a cross-border intermodal service competitive with the newly-formed Canadian Pacific Kansas City, or CPKC.
- Union Pacific, Canadian National and Ferromex owner Grupo México Transportes said Monday they will leverage parts of their networks to create a new service spanning from Canada to Mexico with a connection in Chicago.
- The service, called Falcon Premium, is meant to support shipments of automotive parts, food and temperature-controlled freight. It comes a little more than a week after Canadian Pacific and Kansas City Southern officially combined into CPKC, the first transnational railway connecting major markets across North America.
Dive Insight:
The combination of CPKC involved two of the smallest Class I railroads by revenue — a new-cross border service involving better-funded competitors is likely to spark a fierce fight for market share.
Tracy Robinson, president and CEO of Canadian National, said on an earnings call Monday that the new partnership “creates the most direct route and the fastest transit times between Canada and Mexico.”
“It will provide our intermodal customers with the efficiency of bigger payloads and most importantly, the ability to accelerate the shift of truck business to rail,” she said.
The Falcon Premium service will combine Ferromex’s route between Silao, Guanajuato, and Eagle Pass, Texas; Union Pacific's route from Texas to Chicago; and Canadian National's route connecting Chicago to all points in Canada via a bypass in Chicago.
Linking up with Union Pacific and Ferromex will also give Canadian National access to the Mexico market following its failed attempt to acquire Kansas City Southern. Railroads have looked to expand cross-border service to take advantage of an expected surge in North American trade under the U.S.-Mexico-Canada Agreement.
Canadian National executives said it expects strategic advatanges with its new partnership, including “the shortest routes and fastest service to all of its key markets,” said Chief Marketing Officer Doug MacDonald.
“It doesn't matter what my competition does,” MacDonald said. “We have a great product with this and we think we're actually going to have the fastest service.”
Correction: This story was updated to clarify Grupo México Transportes' relationship to Ferromex.
