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OECD: Mexican rail privatization has significantly improved rail sector

The performance of the Mexican freight rail industry has shown continuous improvement since the creation of the current industry structure in 1995. A peer review of the country’s railway freight commissioned by the Mexican government and released by ITF, notes that quality of management, technical quality of railway infrastructure and rolling-stock, capital and labour productivity, traffic levels and market shares have all improved markedly. The report calls this “a transformation in industry prospects that hardly seemed possible prior to the reforms” of 1995.

Traffic has since doubled and the modal share of rail freight increased by more than a third. Mexico’s railways now carry more freight than any railway in the European Union apart from Germany, and more than those of France, Spain, Italy and Austria combined and as much general freight as Brazil. Mexico’s main rail freight concessions are the most productive freight railways (if the mining sector is excluded) in Latin America.

To build on this success, the review recommends that regulatory institutions and capacity be strengthened to address pricing and capacity issues associated with trackage rights. More systematic data should be captured to allow the regulator to make determinations on these in an informed and objective way as regards risks, costs and benefits. This also applies to system structure and potential access and tariff regulation.

ITF Head of Research Stephen Perkins and Economist Aimée Aguilar Jaber presented the review to the Trade and Industry Development Committee of the Senate of Mexico on 19 February and at a Senate hearing with stakeholders on 5 March. The report was produced in close collaboration with the Ministry of Transport.

Link to report http://www.internationaltransportforum.org/jtrc/peer-review/mexico-freight-rail.pdf

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