Everybody knows about the logistics problems the world is facing. People living on the coast close to important harbors can easily see the long lines of vessels standing there for days to deliver their loads. The problem is quite complex, because it also involves the lack of drivers in the U.S. or the U.K., among other factors.
Last week I read in the USGC weekly report that brokers have noted these logistics complications that, together with the high barge freight rates, make it more attractive to sell DDGS into the domestic or Mexican and Canadian markets than down into the Gulf to be sent somewhere else.
Even though Mexico has imported feed raw materials by rail for decades, now, all of a sudden, the country could enjoy advantages of having a railroad system that connects Canada to Mexico, all through the United States. It could not only be DDGS, but grains and oilseeds. The advantage is that no other country would use this system (I would tend to think), so that competition in this sense might not happen.
Notwithstanding, there are several situations. First, Mexico is not allowing planting of transgenic corn, so imports continue, and as a matter of fact, are increasing. Second, it looks like the railroad blockade in the state of Michoacán is over, so this will facilitate transportation (although safety problems persist in many parts of the country). And third, Canadian Pacific Railway Limited and Kansas City Southern just announced they have jointly filed an application with the Surface Transportation Board regarding the proposed transaction to create Canadian Pacific Kansas City, the only single-line railroad linking the United States, Mexico and Canada with a network of 32,000 km.
So maybe the planets are aligning. Maybe not. But I still see an advantage here for the Mexican feed and poultry industries.
There is also a plus here: railroad transportation is more sustainable.
There is a Mexican saying with more than 100 years of history that goes: "Poor Mexico, so far from God and so close to the U.S." Poor Mexico? You can take it from whatever perspective you want.
What do you think?
