UNP - Agri groups urge reopening of key border crossings in Texas railroad operators see impact

2023-12-21 18:21:10 ET

A host of U.S. agricultural groups have urged the government to reopen two key rail crossings on the border between Texas and Mexico, with major railroad operators saying they have felt the effects of what has been the shuttering of major trade routes.

Last Sunday, the U.S. Customs and Border Protection (CPB) said that it would temporarily suspend operations at international railway crossing bridges in the cities of Eagle Pass and El Paso, in order to curb a surge of migrants crossing over the border.

"After observing a recent resurgence of smuggling organizations moving migrants through Mexico via freight trains, CBP is taking additional actions to surge personnel and address this concerning development, including in partnership with Mexican authorities," the agency said in a statement .

The border crossings in the two cities in Texas are vital for the transportation of essential items ranging from oil and energy products to automobiles and electronics. According to statistics from the Bureau of Transportation, El Paso and Eagle Pass accounted for nearly $34B, or about 36%, of all cross-border rail traffic from November 2022 to October 2023.

Union Pacific ( NYSE: UNP ) said that the two locations represented about 45% of its cross-border shipments.

"Every day the border is closed, Union Pacific ( UNP ) is forced to embargo customers’ goods on more than 60 trains, or nearly 4.5K rail cars, with an equivalent of goods being held in Mexico," a company spokesperson told Seeking Alpha in an emailed statement.

The railroad operator estimated that the overall economic impact of the border closures was more than $200M each day it dragged on.

While not disclosing a figure in terms of impact, another major U.S. railroad operator, Berkshire Hathaway's ( NYSE: BRK.A ) ( NYSE: BRK.B ) BNSF Railway, said that the continued closure was having a "significant downstream effect to employees" across its system.

"Every day of closure increases the number of trains waiting on both sides of the border, including empty trains in Mexico that are needed to deliver goods in the U.S. And the longer the delay, the longer it will take to get operations back to normal. All this adversely affects the supply chain for critical commodities, including automobiles, industrial products, and grain," a BNSF spokesperson told Seeking Alpha in an emailed statement.

Major Agricultural Groups Urge Reopening

On Wednesday, dozens of major organizations including groups such as the Agricultural Retailers Association and the National Association of State Departments of Agriculture penned a letter to Alejandro Mayorkas, the U.S. Secretary of Homeland Security.

"On behalf of the agriculture and food input supply chain, we request the immediate opening of the El Paso and Eagle Pass international rail crossings. The closure of the rail crossings is rippling back into the U.S. supply chain and having negative impacts on the U.S. economy," they said in the letter .

"While we are sympathetic to the humanitarian needs on the U.S./Mexico border, the interconnectedness of the North American supply chain means the closure of rail crossings causes backups on the rail system as far north as the U.S./Canada border and hurts our economy," the letter added.

The CPB said that the suspension of operations at the two border crossings had been done so as to redirect personnel to assist the U.S. Border Patrol with taking migrants into custody.

"Our understanding is that it is possible for CBP to operate a rail crossing with as few as five employees, and we strongly urge you to allocate CBP staff to the international rail crossings to allow products to resume flowing," the associations said.

As per Bureau of Transportation statistics, Mexico's share of overall trade with the U.S. has grown by ~81% to $547B between 2000 and 2019. Rail was used to move about $91B of trade in 2022.

More on Union Pacific, BNSF

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• BNSF, GMXT and J.B. Hunt launch new intermodal service to and from Mexico
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