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Rail News Home Kansas City Southern

June 2020

Rail News: Kansas City Southern

From the Editor: USMCA provides a moment of clarity


In conversations and in this space during these COVID-19 months, I’ve used the word clarity a lot. I’ve used it because people keep using it with me. As in: "We’re still waiting for some clarity before we can start talking about what we think the post-pandemic landscape might look like." As in: "If I had more clarity when it comes to the extent of COVID’s economic consequences, I’d feel better about talking with you about how I think this industry will recover — and when."

Good news: Officials at Kansas City Southern and other freight railroads now see at least a bit of clarity on the horizon in the form of the United States-Mexico-Canada Agreement (USMCA), which will enter into force July 1. The USMCA, which replaces the 25-year-old North American Free Trade Agreement, "will deliver more jobs, provide stronger labor protections and expand market access, creating new opportunities for American workers, farmers and ranchers," KCS President and Chief Executive Officer Pat Ottensmeyer told Managing Editor Jeff Stagl in this month’s cover story. "We will have clarity now with trade between the U.S., Mexico and Canada, and with less risks."

The new trade pact is crucial for KCS and its Kansas City Southern de Mexico (KCSM) subsidiary. KCSM operates the shortest rail route between Mexico City and major crossborder point Laredo, Texas, and in Mexico serves most of the major auto plants and transports plenty of refined petroleum products. The clarity USMCA provides also should help drive long-term investments by the entire freight-rail industry, as Association of American Railroads President and CEO Ian Jefferies told Stagl.

Pandemic taking a toll on transit

On the passenger side of the rail aisle, there’s been clarity of a different sort. Witness the New York City Transit subway system, which is facing a financial crisis likely to have a lasting impact on a city at the epicenter of the U.S. coronavirus outbreak, as Senior Associate Editor Julie Sneider reports.

As of May 4, ridership was down 92 percent on the subways, governed by the Metropolitan Transportation Authority (MTA). Ridership also was way down on the other systems MTA governs, including Metro-North Railroad (95 percent) and the Long Island Rail Road (97 percent). The MTA expects fare and toll revenue losses of $4.7 billion to nearly $6 billion this year, with more losses anticipated in 2021, Sneider reports.

Meanwhile, a recent Centers for Disease Control and Prevention recommendation encourages people to commute to work by driving or using ride-hailing services instead of riding on public transit systems as cities emerge from restrictions due to the pandemic.

The MTA system is now "cleaner and safer than it has been in history," with crews cleaning and disinfecting the system around the clock, MTA Chairman and CEO Patrick Foye said in a press release.

"Everyone who rides the MTA is required to wear a mask…" he said. "We will continue to take every possible action to protect public health and safety, and the federal government telling people not to ride mass transit sets us back decades."

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