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Mar. 31, 2014

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SURFACE & DOMESTIC TRANSPORTATION www.joc.com THE JOURNAL OF COMMERCE 39 By William B. Cassidy sion holders invested 27 trillion pesos (about $2 billion) in their infrastructure, according to the OECD's International Transport Forum. The report also sided with KCSM and Grupo México in saying that allowing third parties to operate the existing networks would hamper operations and future capital spending. Rail tariffs and trucking rates have increased to a similar degree in the last three years, and mirror those seen in Canada and the U.S., the report noted. The freight tar- iffs of the three railroads also are among the lowest in Latin America, according to the report. "Tariffs nevertheless remain much lower in real terms than before the reforms, especially when subsidies to rail prior to (the 1995) reform are taken into account," the report said. "Tariff freedom inevitably involves fluctuations, and we see no evi- dence of misuse of railway market power." The OECD also praised KCSM and Grupo México's operations, pointing to the doubling of traffic since the industry was privatized. The nation's GDP expanded 56 percent in the same period. The railroads' share of the sur- face transportation market has grown from 19 percent to 25 percent since 1995. When excluding the mining sector, Mexico's two rail concession holders operate the most productive networks in Latin America, the report's authors said. "The performance of the industry has shown continuous improvement since 1995. The quality of management, technical qual- ity of railway infrastructure and rolling stock, capital and labor productivity, traffic levels and market shares have all improved markedly, a transformation in industry pros- pects that hardly seemed possible prior to the reforms," according to the report. The report doesn't address the sensitive issue of reciprocal or competitive switching. The House bill would require Mexican rail- roads to publicize the rates they charge for switching cargo from their lines to competi- tors. The Canadian government requires the country's two major freight railroads to give shippers access to each other, while the U.S. Class I railroads have fought shipper pushes to force them to switch cargo to competing lines. The repor t does recommend t hat Mexico increase the amount of pricing and capacity data it collects from carriers, point- ing toward a potential compromise between the railroads and those bent on an aggres- sive overhaul. Even if Mexico strikes the concession agreements, the railroads could have some legal recourse. Changes to the agreements could violate the Mexico Constitution and the North American Free Trade Agreement, KCS spokeswoman Doniele Carlson said. KCS declined to comment on the legal action, but Ferromex CEO Rogelio Velez in February hinted the railroad would file an injunction to stall, perhaps indefinitely, the legislation if it becomes law, Reuters reported. When such power f u l forces — a reform-bent government urged on by dis- satisfied shippers and the rail industry — are at odds, the likeliest outcome is com- promise. That's why the coming weeks of intense lobbying likely will determine whether one side walks away happier or both sides leave nonplussed. JOC Contact Mark Szakonyi at mszakonyi@joc.com and follow him on Twitter: @szakonyi_joc. GUARDING AGAINST STICKY FINGERS How to avoid the growing threat of 'cyber' cargo crime in trucking IT'S FRIDAY AFTERNOON, and freight needs to move, fast. A shipper, frantic to find a truck, hooks up with a motor carrier on a load board. They agree to terms, and a truck is dispatched for pickup. The only problem is that truck isn't from the party that accepted the load. That "company" double-brokered the shipment to a legitimate trucker. The load goes one way, the money goes another, and the motor carrier that delivers the freight winds up with nothing. Now try this scenario: A trucker shows up at the dock and takes the shipment straight to the black market. Perhaps the fact the truck driver wouldn't show his commercial driver's license when asked or that the name painted on his cab door was spelled "ABC Truking" should have tipped off someone this was a fic- titious company using a stolen carrier identity to grab a load of goods. There must be a million ways to steal a shipment, especially on a Friday, according to Keith Lewis, vice president of operations at CargoNet, a cargo crime tracking and security subsidiary of Verisk Crime Analyt- ics. Everyone else may not be working for the weekend, but cargo thieves work all weekend long. Seventy to 75 percent of all cargo thefts occur during the weekend, with Friday being prime time for cargo crime, Lewis said at this month's 40th Annual Transportation & Logistics Council Conference. In 2013, 25 percent of those thefts occurred at a warehouse or distribution Source: Bureau of Transportation Statistics, www.rita.dot.gov CROSSING THE BORDER n Year-over-year percentage change in total monthly U.S.-Mexico trade moving by rail and truck. 0% 5% 10% 15% 20% D N O S A J J M A M F JAN 2013 D ■ Rail ■ Truck

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