Union Pacific in Perfect Position to Ride 'Nearshoring' Wave

With investments in intermodal terminal capacity and the development of industrial parks and premium cross-border services, Union Pacific is in a great position to capture the growth and provide fast, quality export/import service to our customers.

“We have an unmatched product today that offers our customers in Mexico access to all six major gateways on the southern border, giving them numerous options to move their products and raw materials across North America,” said Kenny Rocker, executive vice president – Marketing and Sales for Union Pacific.

Rocker said Union Pacific began seeing signs of the nearshoring trend during the waning days of the pandemic, as companies began to re-examine their supply chain and review their global options.

Nearshoring is a business strategy that involves companies shifting their manufacturing and production operations closer to their main markets, allowing them to reduce transportation costs and deliver their products quicker to customers. Specifically, over the past few years, some companies have begun shifting production from China to Mexico.

The trend has led to an unprecedented business boom in Mexico, with $42 billion worth of foreign investments in the country announced during the first six months of 2023, including a new electric vehicle plant and new steel complex, said Beto Vargas, vice president – Marketing and Sales in Mexico.

The three main industries that are investing in Mexico are automotive, aerospace and appliance, said Vargas.

“We’re excited about the growth potential, and we are confident that we have the network capacity and a quality service product to connect shippers in Mexico to U.S. and Canadian markets,” said Vargas.

Two of the service products that Union Pacific is especially excited about are the company’s Eagle and Falcon premium services, which offer the fastest end-to-end North American route from Canada to Mexico.

The Falcon Premium product was announced earlier this year and is a unique partnership between three North American companies: Canadian National, Union Pacific and Grupo Mexico Transportes.

Falcon offers multiple benefits for wholesale intermodal providers including all-rail service across two borders and connections to the three countries within the 2020 United States-Mexico-Canada Trade Agreement.

In 2022, Union Pacific invested $600 million in capital investments to support growth, with similar levels of investment expected this year.

Key investments include:

• Increased systemwide terminal capacity by 10% since 2021,
• Development of Prime Pointe Industrial Park near the Dallas/Fort Worth area and our Dallas Intermodal Terminal,
• Opened Twin Cities Intermodal Terminal in 2021 in Minnesota as a pop up and, later expanded, allowing our customers additional reach in the Upper Midwest markets and intermodal service between Twin Cities and Los Angeles and Seattle,
• Opened Inland Empire Intermodal Terminal in 2021 as a pop up and, later expanded, providing customers in the largest warehouse district in California access to Chicago markets,
• Invested in technology that allows truck drivers to gain fast access through our intermodal gates, along with an UPGo app that tells them exactly where to go to pick up and/or drop off their loads.
• Over the next few years, Union Pacific is adding over one million lift capability to our intermodal terminal ramps.