Breaking Into the Mexico Energy Market

Rail, Truck or Pipeline – Which Is Best?

Original | TR_MER

Thanks to Mexico’s recent energy reform initiatives, new business opportunities are rapidly emerging across all segments of the oil and gas supply chain – at offshore locations, shale plays and mature oil fields.

While exciting, expanding your business into Mexico can be a big undertaking – and let’s face it, pretty intimidating. To make it a little easier, in this article, we take a close look at your options for shipping oil and gas across the border.

Big Opportunities, Big Decisions: Shipping In and Out of Mexico

Finding the best shipping solution and logistics partner to move your freight across the border can be one of the first big challenges you encounter as you begin to break into the Mexico energy market. But this step doesn’t have to be daunting if you know what to look for – like these key ingredients for choosing the best shipping option for your business.

1. Flexibility

Medium | MER Truck

Depending on what, where and how much you are shipping, you will need a transportation solution that can adapt and grow with you as you build your business in Mexico. 

As you set out to establish your business in Mexico, there is a good chance you may try shipping to and from different locations until you get it right. While you are in that experimental phase, rail may be your best bet. Offering support and flexibility to help build your business, rail is like a “rolling pipeline,” allowing you to move large amounts of freight to a variety of places and to adapt as market dynamics evolve.

Truck has its pros and cons, too. While unable to carry as much freight at one time, trucks do have the flexibility to reach even the most remote locations within Mexico.

When you ship via pipeline, you are bound to the same route each and every time, and you may encounter delays or bottlenecks caused by limited pipeline capacity and long construction time lines. Currently, government regulations are also playing a significant role in limiting pipeline capacity – another important component to watch as the oil and gas markets in Mexico continue to evolve. 

Pro Tip: Combine Modes to Improve Efficiency
If you’re having trouble deciding between rail, truck and pipeline, transloading can help you take advantage of the benefits of each. When products are transloaded, they’re moved from trucks to rail cars, or vice versa, allowing you to combine the economic advantages of rail for long distances with the flexibility of over-the-road trucking for short distances. Combining pipeline and truck is also an option, so if it makes sense for your business to employ multiple modes, don’t be afraid to ask your shipping partners to work with you on a customized solution.

2. Transit Time

If you are new to shipping to and from Mexico, understanding the Customs process can be overwhelming, and the time it takes to cross the border and reach the final destination can be fairly quick or not-so-quick, depending on which mode you choose.

Don’t overlook shipping by rail for faster border crossing. We are talking minutes via train, rather than sitting at the border for hours – or even days – when you ship by truck. Plus, railroads typically have a team of experts to help you through the process and can even help you get clearance ahead of time.

Once you clear Customs, which can take longer than other modes, transit times in Mexico are comparable for both rail and truck.

Shipping across the border via pipeline is quick and seamless, but total transit time from origin to destination can take significantly longer than truck or train. It is estimated that rail is approximately three to four times faster than pipeline.

3. Volume

Medium | Pipeline

Depending on the size of your shipment and the distance it is traveling, you may get more bang for your buck with the shipping mode you use.

As you know, trucks can only move a small amount at a time. In fact, a single tank trailer only holds about 9,000 gallons or 200 barrels, a little under a third of a rail car. So, if you plan to ship smaller quantities less often, trucks might make the most sense.

If you are shipping a large amount of freight on a regular basis, rail might offer the best value. One train can carry as much freight as approximately 300 trucks. And if you are looking at it from a fuel cost perspective, you can move one ton of freight 465 miles on a single gallon of diesel fuel by train, which is about three to four times more fuel efficient than trucks.

If you are shipping mass quantities of oil and gas to meet the ever-growing demands of the Mexican economy, shipping via pipeline may be the way to go. And in most cases, it is the least expensive.

4. Safety

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Just like shipping in the U.S., it is important to understand the potential safety risks of the mode you choose to move your freight. 

Rail & Pipeline
While all shipment options pose some safety risks, when it comes to shipping large amounts long distances, rail and pipeline are generally safer than truck. Pipelines and railways typically travel through less-populated areas, reducing the risk to human life.

While both modes have lower risks to people in highly populated areas, rail gets the edge in terms of both the safety of people and the product. That’s because pipeline fuel theft is on the rise in Mexico, and is becoming a serious financial and safety concern. Illegal taps drilled into state-owned pipelines can cause leaks, pressure loss and even fires. What's more, current safety concerns have caused the Mexican government to take action and temporarily close some pipelines in an effort to battle theft problems. 

Trucks travel on major highways through cities and towns – areas where there is a greater risk for fatalities or injuries.

New Territory, New Opportunities

No matter how you slice it, there is no doubt Mexico’s energy reform has the potential to open the door to many new opportunities for your business. Whether rail, truck or pipeline, if you consider the flexibility, transit time, value and safety of each shipping mode, you will be better equipped to make smart decisions and take your business to new territory – in this case, Mexico.

Original | MER Infographic

Have Questions?

Learn more about Mexico shipping solutions or get in touch and we'll be happy to answer whatever questions you may have.

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