Could AMLO’s constitutional reforms affect Mexico's freight rail ops?

The constitutional reforms presented by President Andrés Manuel López Obrador, which include a proposal to prioritize passenger rail over freight rail services, will likely affect national cargo transportation, lawyers believe, although that claim is rejected by the Mexican rail association (AMF).

The package of reforms submitted by AMLO on February 5 include an amendment to article 28 to include the following paragraph: 

“Private entities that have concessions to provide freight rail transportation services may obtain concessions to offer passenger rail transportation services. In any case, passenger transportation shall be prioritized under the terms of the applicable legislation,” according to the document published in the parliamentary gazette.

According to analysts, this could affect rail services, potentially disrupting the operations of both freight and passenger lines. 

“The current rail network is insufficient to coordinate and support both freight and passenger services, and making passenger transportation a priority will undoubtedly affect the economic activity of the industries that use that system as the main means to move their goods,” Juan Miguel Martínez, a partner at local law firm Ibarra del Paso & Gallego, told BNamericas. 

The law firm specializing in civil, commercial and administrative proceedings recommends revamping and expanding the rail network before carrying out the reform. 

“If it doesn’t do that, we’ll have two problems in the near future: delays and an insufficient network to transport goods, as well as slow passenger transportation services,” Martínez said.

Meanwhile, Mariano Calderón, a lawyer at the firm Santamarina + Steta, told BNamericas that the move could threaten current freight concessions by “limiting their lifespan, by not renewing them if they don’t promote passenger transportation, which could undermine the rights obtained by freight concessionaires and cause competitiveness issues by granting concessions to public companies.”

He also suggested that the government’s efforts to elevate this issue to the constitutional level are a misstep. 

The reform “is simply intended to establish it in the constitution to give it greater importance, more visibility, but from my point of view that’s a mistake regarding the legal technique,” he said. “The constitution should deal with general and basic principles, essential rights, the way in which the government and the state are structured, not these kinds of details that are already included in other laws.”

Meanwhile, the AMF believes that the reform package not only does not threaten freight transportation and would also not be a radical change, as the government had stated that passenger services would be prioritized in a presidential decree published on November 20. 

“We don’t see that it would affect [freight transportation]. We have experience of operating passenger trains on routes where freight is transported in both Canada and the United States, and we can do the same here. However, there should be adaptations to the infrastructure to incorporate passenger trains,” AMF president Óscar del Cueto told local media on Friday morning.