November 26, 2011 On the Rail

Volume 14 | Issue 3

The largest railroad terminal in Mexico, Ferrocarril y Terminal del Valle de Mexico (Ferrovalle) serves three main railroads.

Ferrocarril y Terminal del Valle de México, S.A. de C.V. (Ferrovalle) focuses on moving goods – overseeing the movement of more than 60 million ton of cargo each year. The railroad terminal receives merchandise from companies around the world and sends the goods to destinations in the Mexico City region and beyond.

“Transporting goods through the railroad system is efficient and safe, and it connects goods to practically the whole country through the main railroad lines,” says Ferrovalle’s Chief Executive Officer Isaac Franklin Unkind. “Previously, it was often thought that railroad movement was an activity restricted to specific sectors of certain industries. However, with the use of container cars, any type of merchandise that fits on a truck can now be transported in a container. This provides a safe, competitive option for many companies.”

Ferrovalle is the largest railroad terminal in Mexico. Each year, it moves a wide range of merchandise including grains, lumber, flooring, paper products, toys, fabric, clothing, shoes, cosmetics, spirits, electrical equipment and electronics. It also handles raw materials, food products, sporting goods, automotive parts, hardware, furniture, household goods and new vehicles, among other items.

Due to its size and capacity levels – and its location in the center of the country – Ferrovalle is Mexico’s leading railroad terminal. Currently, more than 800 workers carry out operations at this Mexico City-based enterprise.

RAILROAD TIES
Ferrovalle began operations in 1998, a time when the Mexican federal government underwent a process of privatizing the nation’s railroads. As a result of this movement, the three main railways – Kansas City Southern de Mexico, Ferromex, and Ferrosur – and the government perceived the need to form a company that would provide services necessary to support railroad companies in the center of the country, all with strong ties to Mexico City.

For its clients, Ferrovalle offers three main services. Its industrial service involves delivering cargo to the Valle de Mexico area. Many trains come in with products that have a final destination in the capital’s metropolitan area. After trains arrive and deposit cargo at the terminal, Ferrovalle oversees the shipment to the specific clients. The company’s 31 locomotives accomplish this service.

The second main service involves the interchanging of freight cars. Some trains come in with freight cars and with a different destination than the Valle de Mexico region. In such cases, the company transports the freight cars to their final destination. To carry out this service, it has a well-developed classification system known as the “Hump.” As Unkind points out, this system is unique in Latin America. Many railroads in the United States employ this type of classification system, but Ferrovalle is the only company in its region that offers such a system.

The third service offered involves a specialized container terminal called Ferrovale Intermodal. It’s a robust service that moved as many as 250,000 containers in 2010. It’s the third largest service of its kind in the country, notes Unkind. Shipments come in bearing containers that have sailed across the ocean, and Ferrovalle oversees the changing of transportation mode from containers to trucks. Containers arrive from ports such as Lazaro Cardenas and Manzanillo in the Pacific and Vera Cruz on Mexico’s Gulf Coast. Containers for this intermodal transport operation also arrive from the United States and Canada via railroad.

ONGOING GROWTH
In the last several years, the company has experienced significant growth. From 2009 to 2010, Ferrovalle’s container movement increased 39 percent. This trend continues, as a figure comparison between the first quarter of 2010 and the first of 2011 revealed a 51-percent increase in container movement between the two periods. In the overall handling of cargo, the company witnessed a seven-percent increase during that same period.

Much of this growth is attributable to an ongoing trend: More companies seek to leverage the advantages of railroad service, as Unkind points out. “Many companies that traditionally didn’t use the service now see it as a viable option to move their merchandise.”

Reasons for the switch, he explains, are available service, higher efficiency levels and the low cost that railroads in Mexico offer – not to mention security. “Rail transportation is a very safe way to move goods,” adds Unkind. “It’s quite difficult to vandalize or rob a container.”

Indeed, that feature has attracted even more clients to the company, including those who move fuel throughout the country.

Another reason for growth lies in the advancement of Mexico and its position in international supply chains. “We’ve watched Mexico grow into an important logistical platform, and the area that we cover – Mexico City – keeps on growing,” says Unkind. “As a result, we’ve taken some territorial reserves that we have under the concession the government has given us and are using them to expand.”

Also, this year, Ferrovalle is adding on to its Intermodal terminal. By developing the substantial hectares it holds, the company is looking to increase capacity levels from the current 400,000 containers to between 550,000 and 600,000. In doing so, company officials expect to be ready for predicted upcoming growth.

ONLINE TRACKING
To keep up with technology and ongoing trends, Ferrovalle is very involved in the areas of technology and information. Its workers design and develop systems used by the company. One of its recent advances involves a logistical system that allows the company to send updates to clients in real time, via the Internet. Movements are captured and sent online, where clients can see exactly where their shipments are and at what time. “This electronic system eliminates the paperwork of tracking the cargo movements,” says Unkind. “The movements are automatically updated to the system, and clients, especially those with headquarters in other countries, can easily track the cargo movements.”

Companies expect the growth trend to continue for Ferrovalle. “This year we’re hoping to move around 340,000 containers,” underscores Unkind.

This adds to the company’s levels of service.

“If we didn’t have 340,000 containers coming through our terminals, we wouldn’t be able to offer this type of efficiency or even be able to move that much,” he adds. “Due to the large cargo supplies, we’re able to offer these services.”

In the years to come, Ferrovalle expects to continue offering its services to even more clients, to meet their shipping needs.

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