US-Mexico Rail Delays Impact Farm Sector Ahead of Potential Ports Strike, According to Reuters

By P.J. Huffstutter

CHICAGO (Reuters) – Rail backlogs are causing significant disruptions in export trade between the United States and Mexico, complicating agricultural supply chains just as the fall harvest begins, according to agriculture groups on Friday.

A potential strike at East and Gulf Coast ports that could commence on Tuesday might further aggravate these issues, as indicated by nearly 200 agriculture organizations in a letter sent to the White House.

Mexico stands as the leading destination for U.S. corn exports and has emerged as a vital market for agricultural exporters this year, striving to offset weak demand from China, a major buyer of commodities.

Data reveals that Mexico’s imports of U.S. agricultural products surged by 27% in the first seven months of 2024 compared to the previous year. However, the National Grain and Feed Association President Mike Seyfert noted that rail capacity is struggling to meet this heightened demand.

Union Pacific Corp and BNSF Railway, owned by Berkshire Hathaway, have halted the issuance of permits for grain shuttle trains bound for Mexico due to congestion and an increasing backlog of loaded trains. This information has been confirmed by both Union Pacific and the U.S. Department of Agriculture.

Ferromex, the Mexican railroad that partners with BNSF and Union Pacific, has also restricted permits for grain trains at border crossings in Eagle Pass and El Paso, Texas, as reported by the USDA.

Union Pacific stated that it is actively working to streamline border crossings and alleviate congestion. BNSF and Ferromex were not available for comment.

The challenging circumstances have prompted some grain sellers to urgently seek new buyers for their products while grappling with the difficulty of retrieving empty rail cars from Mexico for future shipments, Seyfert explained.

"When trying to accommodate what is expected to be a large corn and soy crop, the last thing you want is the added pressure of finding new business when you can’t deliver to your existing customers," Seyfert remarked.