Lesson 1: Introduction to Mexico's Railroad System (Part 1)

México's Railroad System, a Brief and General Introduction


For the past three decades since it joined the GATT agreement back in 1986, México as a country has continuously pursued economic, educational, political, social, and energy reforms aimed to insert México at the top of the emerging market group of nations that have been gaining relevance in a more-than-ever competitive world. These reforms included the shift from government ownership and operation of key goods and service companies, to granting concessions to private enterprises.

In the country export-oriented economy, more than 90% of Mexican international trade takes place under free trade agreements (FTAs) with more than 40 countries, including the European Union, Japan, Israel, and much of Central and South America. The most influential FTA is the North American Free Trade Agreement (NAFTA), which came into effect in 1994, and was signed in 1992 by the governments of the United States, Canada, and Mexico. In the first 15 years of this century, trade with Mexico's two northern partners accounted for almost 90% of its exports and 55% of its imports (source: Mexico. The World Factbook. CIA.) As we all know, NAFTA has now evolved to the USMCA (or TMEC in México) treaty that is scheduled to substitute the old agreement this next July 2020.

México's railroad system was mostly built back in the 1890s, by then-President and dictator Porfirio Díaz. The system covers most of the industrial cities and major ports, and it was government-owned and operated until 1996 under the original name “Ferrocarriles Nacionales de México” (FNM).

Through the 1970s and up until the 1990s, FNM, as managed by the government bureaucracy, did not offer a reliable and cost-efficient service for either shippers (both domestic and international) or receiving customers, causing the country to be less competitive in an increasingly demanding market.

In 1995, the Mexican government announced that the FNM would be privatized and divided into four main systems. As part of the restructuring for privatization, FNM suspended passenger rail service in 1997.

Map 2