The priority of the agency that regulates rail transportation is not its autonomy from the SCT; nor is it encouraging that new companies can use the already concessioned roads; But it does want the train to move more cargo and, to do so, it will push the two large concessionaires, Kansas City Southern and Ferromex, to increase their interconnection points and be more commercially aggressive in their dispute over cargo versus truck trailers.

“In the last [...] years, the railway began to gain ground on motor transport [...] Now, that dynamic is stagnant. Mechanisms must be found to resume it,” says Alejandro Álvarez Reyes, head of the Rail Transport Regulatory Agency (ARTF), who acknowledges pending interconnection and that the issue is being addressed with the concessionaires.

Regarding the many assaults on trains, he says that verification operations have multiplied and that the Gendarmerie will act on the market for stolen products. The ARTF's contact with the railway industry is carried out through the Mexican Railway Association (AMF), with bimonthly meetings, as well as meetings with each concessionaire.

Álvarez affirms that, since the beginning of this administration, the agency has been in permanent contact with user associations, Canacero, Canacem, the National Association of Private Transport, Caintra, etc. He began his career at Ferromex, collaborated at the Mexico Sustainable Transportation Center and at Ideurban Consultores. He is a civil engineer from UNAM and a master's degree in Railway Engineering from the University of Illinois at Urbana-Champaign, United States.

What is your assessment of the agency's work in relation to railway companies? Since the sector was restructured, between 1995 and 1997, there have been positive aspects, but [there are] also things to improve. In the last eight or 10 years, the railway began to gain ground on motor transport; however, we see with concern that this dynamic is now stagnant. Mechanisms must be found to resume it.

As for insecurity, it has worsened in recent years. Even so, there are many benefits to rail transport, such as savings in road maintenance. The rail [sector] should be more aggressive in going after a slice of the land market. There are goods that will always be from the railway and others that will always be from motor transport; and, in that intermediate strip, the railway can do more.

What are the priorities of this government to introduce changes in rail transport?

We have been concerned with strengthening the capacities of the agency itself, such as improving both the information we collect and what we generate. And bet that the staff is better trained. In many areas of government, some services had been outsourced. Our vision is to do things as in-house as possible.

Since you're talking about the agency, are you considering its operational autonomy? That it no longer depends on the SCT, as recommended by the OECD?

In the short term, we don't [think about it]. We are not autonomous in this government.

Doesn't that lessen their ability to deal with powerful dealers?

No. There is an important space for action. The most recent change to the regulatory framework was in 2015-2016. It hasn't even been 100% tested. We know there are pending.

We have made security a top priority. When it comes to external security, we have to promote, with the corresponding instances, that public security conditions are resolved. On operational security, we have much better tools through verification and supervision.

Our program is 700 verifications in the year and 10 intensive verification operations. In the previous administration, fewer verifications were made. The approach we have taken there is to do smarter work, because we have fewer resources. That implies having better information, focusing on critical points, and so on.

Do dealerships already provide the agency with timely and sufficient information to make diagnoses of safety and other issues?

The exchange of information has improved significantly. We even worked [on] the proposal to expand the indicators; expand the National System of Railway Indicators. Today, [this system] has 10. What we are looking for is to expand them to a much larger number. We resort to international references to determine which are the relevant data on which an indicator is necessary.

One of the concerns of users is that there were few indicators.

Can you give me an example of the additional indicators you are interested in?

Accidents were reported associated with ton-kilometre-routes, which describe the total traffic volume, including loaded and empty [cars]; but the most correct and reliable way [to report] is by train-kilometre, because it gives you, as is, the degree of exposure you have.

What has been the response from dealers about providing additional indicators? Are there implementation dates?

The response has been positive. I don't know if we have it down to date level, because, in fact, with the two main [concessionaires] the meetings in which the proposal was discussed in detail took place a couple of weeks ago and last week [this interview was conducted the 20 of September].

In this sector there are competition problems, companies that want to enter to provide transportation services on concessioned tracks, but the current concessionaires do not accept that third parties be authorized to use their tracks. Is the railway system collapsed, as some say? ?

When [the railway] was privatized, the infrastructure and equipment were in very poor condition, and, [as] the scheme was established, it has meant an investment of the order of 8,000 million dollars [mdd]. Thus, we went from the State heavily subsidizing a state-owned company, to this scheme where the government has stopped investing those resources. That part is positive.

But, yes, indeed, there are pending issues in the interconnection, and we are addressing it with the concessionaires. Even part of the dialogue with them is that today the conditions are not the same as in 1995-1997. The example I use is the automotive industry: in the last decade, it has experienced very important growth and the railways have played a key role in that.

It's a complex issue, but, yes, the 25% share that rail has in land transportation has been stagnant in recent years. Part of the effort goes through improving interconnection conditions.

Will you accept input from more dealers?

We can talk about combining two visions. The Mexican system is largely inspired by the Canadian and US systems. The open network system, like the European one, is different. Its fundamental difference is that, although it allows the entry of more actors, it has many limitations; it is open on paper.

Since most European countries came from having a dominant national company, even with an open system the national company remains the dominant one. In addition, these countries have imposed a division between operation and infrastructure, according to which the administrator of the latter can sell space-time and slots to anyone.

How can the network grow under the vertical model we have in Mexico?

The railway network in our country has very good coverage. There is practically no city that does not have accesses. Three states do not have a railway: Baja California, Quintana Roo and Guerrero. But, geographic coverage is not the same as reaching the nerve centers; It may even be that some important points of demand have arisen after the network has been laid.

These were created for the purpose of the network. The railway is so old that, in some way, it played a fundamental role in territorially designing the country. Rather, the cities grew thanks [to the railway], and that is an issue, because the urban-railway coexistence was an issue that was not addressed, and now it turns out that the railway, which, in some way, facilitated and allowed the development of many cities, it is a nuisance.

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So, is the network enough?

In very general terms, yes. It is important to advance in bypasses; there are proposals to shorten [routes]; in some places, the city has grown in such a way that it is very difficult to figure out [the route]; and there are very special cases, like Monterrey, where the industry is highly centralized.

To what do you attribute the complaints from those who move grain, auto parts, steel, and organizations like Caintra, who say they are not being given the service they need?

In terms of coverage, it's settled: the largest industrial hubs and ports have access to rail, with some exceptions for large ports that do not. [The complaints] are local and have to do with interconnection. The points where the two main dealers, Kansas City Southern and Ferromax, meet is where you have to put the magnifying glass a bit and resolve issues, on that scale.

You can have a good network, but with uneven or non-existent dealer service.

Is it possible that there is better service where there is a higher volume of business?

Yes, it could be. Precisely, it is part of the legal framework, which establishes the conditions in which there can be interconnection via an agreement between concessionaires and based on the rights that originally exist in the concession titles, or if the Federal Competition Commission [Cofe-ce] finds that there are no conditions of effective competition, in which case the ARTF determines how this interconnection should occur.

If the network is sufficient and the service is adequate, what is missing for the railway to increase its participation in the land movement of cargo, as the secretary Javier Jiménez Espriú has expressed?

The secretary commissioned the agency to carry out a far-sighted study of the Mexican rail system, 50 years from now. We have just presented you with a preview. We do it in conjunction with the General Directorate of Railway Development and the Undersecretary of Transportation.

The original idea comes from the fact that, in terms of bypasses and passenger transport, we diagnosed that all these projects have been developed in isolation: from point A to point B [this is the case of the bypasses of Matamoros, Manzanillo, Celaya ]. What we want is to resume those projects; some already have the cost-benefit analysis. We want to recover them and integrate them into a single overview and a more in-depth diagnosis of what the network really lacks: seeing [route] shortenings, establishing priority mechanisms.

Other motivations of the study is the cargo service and all the opportunities that we still see for it. In cargo, the railway system is developed, it is mature; On the other hand, in terms of passengers we only have the Suburbano and the México-Toluca... in work, the little that there is of the tourist trains, and that is all. There is so much to do.

How are you going to increase from 26% to 45% the participation of the railroad in the land cargo that moves in the country?

There are ongoing actions by the Secretariat; for example, apply the regulations for motor transport in terms of weights and dimensions. Although it is an important difference that we have, for example, with the United States (because the weight allowed there is much lighter), we will start because what is established by law is complied with. The double trailer is regulated by NOM 012; the challenge is to comply, because overweight motor transport is unfair competition for the railway.

Another way is to [address the challenge] as a sector: to fight the market for trucking. This implies improving collaboration [among railway companies], call it interconnection. Finally, the railway companies, by law, freely set their rates, and that is where you can also push them to give more attractive rates and attract more volume.

How does it benefit them?

If interconnection conditions improve, this allows them [to have] more efficient movements, shorter routes and what everyone wants: to pay lower rates.

How will you increase passenger service? Will they know until they finish the study or do they already have a more immediate plan?

There are some priority projects of this administration. The Mayan Train is planned as a mixed service. Another project is planned for the metropolitan area of ​​Monterrey, when the bypass is completed. The idea is to take advantage of existing infrastructure and that has the right of way in this corridor that goes from the municipality of García to the airport, and allow a coexistence of a passenger service with the existing cargo service.

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There will be sections of double track and, in some more critical areas, triple track, with sophisticated signaling and control. That is the premise and what we have discussed with the dealer. The law provides that concessions can be granted to [move] passengers superimposed on concessions to [move] cargo. It generates an income for them by right of way. Finally, they are the concessionaires of the infrastructure.

Would this scheme be repeated elsewhere?

The idea is that it does happen again, that we replicate the case in other cities.

In terms of setting rates, can the agency intervene? Rates, as established by law, are freely set by the concessionaires. This works with a discount scheme: it starts from the maximum rate and, depending on the user, a scheme is established. The possibility of establishing rates is only triggered if Cofece finds that there are no conditions of competition.

Are there conditions of competition?

Recently, Cofece has carried out two investigations in this regard. One, in which the approach encompassed the entire network; It was a very complex challenge and, finally, they issued a preliminary opinion, which was not later confirmed by the plenary session. An investigation of a more specific case is now underway, of certain routes, type of [petrochemical] products and certain areas with origin and destination in the south of Veracruz.

Do these passenger projects imply investments for the concessionaires?

In principle, no. Concessionaires claim that to increase the load, you have to make the trains move faster. For that, bypasses, security and a series of measures that imply investments are needed, with which, they say, the government must contribute.

We are exploring schemes to balance public and private investment. Finally, all the infrastructure belongs to the State; it is only licensed. For a more specific case, [and it is what] we have promoted, is the creation of a trust, which is provided for in the recent reform to the law, to support safety at level crossings.

The mechanism consists of establishing, in each state, security committees that discuss in detail which cruise ships are going to be intervened. We are weeks away from establishing committees in Jalisco, Veracruz and Coahuila. As regulators, on some issues we have to be on different sides with the concessionaires, but, on the issue of security, we have worked hand in hand.

How much is that fund?

70 million pesos [mdp].

Who provides the resources? They are federal resources. The fund is quadripartite. The idea is that the Federation puts 25%; the state and municipality involved, 25% each; and the dealer, the other 25%.

Public insecurity is an alarming issue. Things happen that leave authority in a very bad light. Are there new strategic lines to deal with this problem?

We have regular meetings with the Gendarmerie division, which is in the process of being integrated into the National Guard. In the quarterly report, we decided to refine the information on the municipalities to give public security authorities better tools on where to intervene. It would be better if dealers didn't have to invest so many resources in additional security, because it represents a significant cost for them since 2014 or 2015, which [was when] it started to become a serious problem.

The strategy of the Gendarmerie consists of also attacking the market. They told us about a case: They had identified that car wheels had been stolen from a container, for a significant volume; They followed the lead and found that [the thieves] melted the rims and formed blocks of the metal. Thus, those products were difficult to detect.

But the manufacturer gave them the detailed chemical composition of the aluminum… and [they saw that] it matched that of the blocks. It's about [applying] more technique and intelligence. They have taken many actions to, for example, discourage the purchase of track components from scrap dealers.

This is a very serious case: if they steal pieces of track, the train will most likely derail.