LOMBARD, Ill. — Mexico’s port of Lazaro Cardenas will become a significant option in addressing congestion at U.S. West Coast ports and a “necessary” addition to the intermodal supply chain under the Canadian Pacific-Kansas City Southern merger, CP CEO Keith Creel contends.
Creel and KCS CEO Patrick Ottensmeyer, appearing jointly at the Midwest Association of Rail Shippers Winter 2022 meeting, took the case for the merger directly to those who will use its services on Wednesday, explaining why they believe the union will benefit individual market segments.
In addressing intermodal traffic, Creel made the case that Lazaro Cardenas could become the new Prince Rupert, British Columbia — the Canadian port that has become a key part of Canadian National’s international intermodal strategy.
“Some would suggest LA to Chicago is a better route,” Creel said. “it’s shorter, and why would ships want to go to Lazaro? I would suggest that it’s necessary. I would suggest that there’s so much business pointed at LA/Long Beach, and there’s so much business pointed at West Coast U.S. ports — to handle tomorrow’s growth, much less today’s needs, it’s not enough.”
Creel said the Mexican port’s disadvantage in terms of sailing times could be offset with ships “with a full ship of goods to discharge at Lazaro,” rather than making intermediate stops. In that case, he said, the additional sailing time would be just three days, 16 days as opposed to 13 to LA.
And that, he said, would be quickly offset by more quickly moving goods through the Mexican port.
“It doesn’t do any good if your goods are floating in the ocean, looking at LA, hoping you can get discharged,” he said. “Today, the on-dock dwell exceeds a week. Ten days? Eighteen days? …. It’s so random. Just to get to the dock is two or three weeks, and then another 8-9-10 days to get onto the railcar. … Compare that to Lazaro. You’re talking two, two and a half days.
“So you’ve got a three-day disadvantage sailing that gets overcome right out of the gate by two days’ dock dwell versus eight or nine days.” While noting the rail distance to Chicago from the Mexican port is about 420 additional miles, or about 15 additional hours, he said the overall time through LA/Long Beach is “what, three weeks? Four weeks? Five weeks? Versus an alternative that’s 13 [days] plus two plus five. It’s compelling.”
The Lazaro Cardenas situation is just one example of what Creel says “is going to allow you to create and open up new opportunities and business markets that simply don’t exist today.”
“If we can create truck-like reliable service, and our transit times are competitive … I think that’s pretty compelling,” Creel says. “ … It’s going to create a seamless service experience for a customer where there’s going to be one railroad where the buck stops. We’re going to be accountable, cradle to grave, origin to destination.”
I think that this can help and always be used as a flex option. Needs to be addressed and as a contingency plan. So all the players as mentioned need to get on the same page and get this set and implemented.
His comments about the time it takes to move a container through LA/LB are only relevant to the current situation. Normal operations do not take weeks, containers can and do move through the LA/LB ports in less than a week, even in the same 2 to 3 days he’s talking about for Cardenas. It’s happened before, it’ll get back to that level of service again.
Not only that, LA/LB ports along with California is doubling down on adding on port, on dock rail access. California FY22 budget includes even more money for the ports. The capital expenditures have been huge and only getting more cash going to electrification & automation the coming years.
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Throw in the recent Trains article on BNSF closing one of the last single track sections through Kansas of the Transcon on the land side end of things and the Corps approving the next channel deepening to +60’on the water site of things and you still have a powerhouse of a port network that can service the biggest ships in the world and rail network built to move a lot of containers unmatched on the West Coast of North America.
I see CP’s three mile long container ships on what’s mostly a single track railroad, though it’s double iron where I live. At some point, something’s got to give on how many trains that long can work their way to southern Mexico.
The situation at the Ports of LA/LB won’t get any better until all the players get together to solve the problems, or the Federal Government decides to take dictatorial powers and command the necessary actions. It is unlikely to happen any time soon.
I see the short term benefit, but eventually LA/Long Beach will catch up.
What they are not mentioning is their line periodically gets shutdown due to unrelated labor protests. The protestors have blocked the tracks for two to three weeks at a time. Is CPKC going to install a 7′ high electric fence along its R/W in southern Mexico?
Yep, or the fact that CPKS is still utterly reliant on UP dispatching and capacity constraints through a big stretch of Texas. A rail line that they don’t own and only have access with literally no control over its destiny. That is huge and is truly the weak link in my mind.
Absolutely. Winding their way from Corpus through Houston to Beaumont they are at the mercy of Uncle Pete. They need to break out the big bucks either to buy that trackage or build some of their own.
The UP won’t mess with CPKC for two reasons, one currently goes by the initials KCSdeM, and the other is the International Bridge Co. both are owned by KCS and will pass to CPKC. Mess with CPKC and your Mexican traffic will experience delays.