In the search for new intermodal volume, the north-south market across the US-Mexico border has been a tantalizing objective for years. With the signing of NAFTA and, more recently, the United States-Mexico-Canada Agreement (USMCA), the flow of goods in this relatively long-haul market would appear ripe for intermodal participation. But the data indicates the market remains in its infancy.

The US Bureau of Transportation Statistics (BTS) compiles statistics on trucks and trains coming into the US from Mexico (but not the other way). In 2019, some 4.77 million loaded “truck containers” came north across the border, according to BTS, which is part of the Department of Transportation. These truck containers could be everything from a dry van trailer to a reefer to a flatbed or tank truck. Northbound truck crossings increased over 21 percent from 2015 to 2019.

The Intermodal Association of North America (IANA) began tracking northbound intermodal revenue movements from Mexico in 2014. In 2015, the first complete year of data, 175,000 revenue movements were made via intermodal from Mexico across the border into the US. Obviously, intermodal was a small slice of the pie — 3.6 percent of total northbound crossings; but in fairness, a much higher percentage of intermodal-eligible dry van and reefer crossings.

There was also a good chunk of traffic from origins near the border that crossed via highway before getting on the rail within the US. But intermodal share of that market was most likely lower than the general North American share. Setting share issues aside, what was the trend? In 2019, intermodal northbound revenue moves were 168,000. In other words, while the overall market was growing over 20 percent, intermodal cross-border activity declined 4 percent.

In 2020 cross-border traffic took a hit, but intermodal fared better than the trucking sector. Northbound loaded truck crossings declined 11.7 percent from 2019 while northbound intermodal revenue moves slipped a relatively tame 3.6 percent. But even so, intermodal ended 2020 with northbound volume down 7.6 percent from 2015, while the trucking sector performed better with a 7.1 percent increase in truck moves.

While the BTS doesn’t track southbound truck crossings, IANA does track the southbound intermodal activity, and the news isn’t good here, either. In 2015, 170,000 southbound intermodal revenue moves crossed the border. This means that in 2015 from an intermodal perspective, the market was relatively balanced. There were 1.08 northbound revenue moves per each southbound. This fits well with the general understanding of the Mexico/US market, which is overbalanced northbound. More goods are flowing into the US from Mexico than vice-versa.

However, since 2015, the imbalance in the intermodal cross-border market has steadily deteriorated. The number of southbound revenue moves crossing the border on rail has declined every year. In 2019, only 120,000 southbound loads crossed the border, a decline of 29 percent from just four years prior. Imbalance had increased to 1.4 northbound revenue moves for each southbound. The situation deteriorated further in 2020 with an additional southbound decline of 11 percent, resulting in a 1.72 northbound overbalance. This likely understates the problem because even if a privately owned container is empty, it still generates revenue for the rail carrier and hence is not distinguishable from a private load.

‘Unique’ factors of Mexico-US cross-border market

The Mexico-US cross-border market has some unique characteristics versus other intermodal markets. For one, it is almost 100 percent domestic container. While there has been discussion in the past regarding the ability of Mexico’s West Coast ports to act as a safety valve for Southern California for volume moving into Texas, in reality this volume is negligible. During 2020, less than 800 ISO boxes were moved across the border on rail under revenue. This is less than two boxes each way per working day. Trailer-on-flatcar (TOFC) volume was even lower — less than 90 trailers in all. So this story is a domestic container story.

Another unusual aspect is the dominance of the rail-owned domestic container in this market. Rail-owned units accounted for 63 percent of the cross-border revenue moves in 2020, as compared with just 28 percent for the overall North American intermodal network. A third feature is heavy dependence on the automotive component sector for southbound volume, with parts flowing from the United States into Mexican assembly plants.

While the cross-border data paints a somewhat bleak picture, the intermodal reality may be a bit better. Units may be moving intermodal for the US portion of the journey, but traveling within Mexico and across the border on rubber tires. The data suggests that this is a minor factor at best. While cross-border volume declined 14 percent in the four years leading to 2019, volume moving between the Midwest and South Central (i.e. Texas) regions was down by a slightly lower amount, at 11 percent.

To look at the brighter side, what all this means is that this market represents an ongoing intermodal growth opportunity. The highway distance from Chicago to Mexico City is 2,100 miles, very similar to the distance from Chicago to Los Angeles. This certainly should be within the intermodal sweet spot from an economic perspective. If the intermodal service proposition, in terms of both speed and reliability, can be improved, the prospect for growth remains a good one.