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Train derailment creates latest supply chain hiccup for US-Mexico grain exports
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Train derailment creates latest supply chain hiccup for US-Mexico grain exports
Oct 17, 2024 12:24 PM

CHICAGO/MEXICO CITY, Oct 14 (Reuters) - Mexican rail

consortium Ferromex and U.S. railroad company Union Pacific Corp ( UNP )

said they have stopped issuing permits for some grain rail

shipments moving through Eagle Pass, Texas, after a recent train

derailment in Mexico closed the track.

The halt is a temporary measure until rail traffic gets

cleared after the track reopened, Ferromex told Reuters in a

statement Monday, adding that total volume of grain movement

between Union Pacific ( UNP ) and Ferromex will not be affected.

The disruption marks the latest in a string of grain freight

rail backlogs at the border, particularly at El Paso and Eagle

Pass, that have snarled agricultural supply chains between the

U.S. and the top importer of its corn. It comes as U.S. farmers

are harvesting massive corn and soybean crops.

Ferromex (FXE), which operates the largest railway in

Mexico, notified Union Pacific ( UNP ) about the derailment in Mexico on

Saturday, according to Union Pacific ( UNP ). FXE told Reuters the track

was closed up to 15 hours.

Union Pacific ( UNP ) said it and Ferromex decided together to

temporarily halt issuing permits for the active FXE embargos,

given the high volume of agricultural freight and expected

increased demand as the U.S. harvest is underway.

"This suspension is effective immediately and will remain in

effect until the current train lineup is cleared and trains are

able to launch upon release," Union Pacific ( UNP ) said in a statement

to customers Saturday.

While Mexico is the top U.S. corn export market, it's also

become a key outlet this year for agricultural exporters looking

to offset sluggish buying from China, a top commodity buyer.

But rail capacity cannot keep up with the demand, said Juan

Carlos Anaya, General Director of the Agricultural Markets

Consulting Group.

"The infrastructure cannot be built overnight, nor can the

machines, and that is causing this problem of having efficient

logistics between the United States and Mexico," Anaya said.

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