Rail Backlogs Disrupt U.S.-Mexico Export Trade

By P.J. Huffstutter
CHICAGO (Reuters) – Rail backlogs are disrupting export trade between the United States and Mexico, affecting agricultural supply chains as the fall harvest begins, according to agriculture groups on Friday.

A potential strike at East and Gulf Coast ports, that may start on Tuesday, could worsen the situation, as highlighted in a letter sent to the White House by nearly 200 agriculture groups.

Mexico, the top export market for U.S. corn, has been a vital outlet for agricultural exporters this year looking to offset slow purchases from China, a major commodity buyer. U.S. agricultural product imports by Mexico rose 27% in the first seven months of 2024 compared to the previous year, government data revealed. However, rail capacity is struggling to meet this demand, stated Mike Seyfert, President of the National Grain and Feed Association.

Union Pacific Corp (NYSE:UNP) and the Berkshire Hathaway-owned BNSF Railway have ceased issuing permits for grain shuttle trains to Mexico due to congestion and increasing backlogs of freight trains, as per Union Pacific’s website and the U.S. Department of Agriculture.

Ferromex, the Mexican railway that partners with BNSF and Union Pacific, has also halted permits for grain trains at border crossings in Eagle Pass and El Paso, Texas, according to USDA reports.

Union Pacific indicated that it is working to streamline crossings and alleviate border congestion. BNSF and Ferromex have not provided comments on the matter.

This situation has forced some grain sellers to seek new buyers for their crops and has made it difficult to return empty rail cars from Mexico for future shipments, Seyfert pointed out.

“When you’re trying to make space for what is predicted to be a large corn crop and a large soy crop, the last thing you need is to try to find new business if you can’t deliver to your customer,” said Seyfert.