burden of providing equipment, other than locomotive power, U.S. railroads have demanded

expedited service both to satisfy their customers and to recover their equipment. Moreover,

U.S. shippers and carriers increasingly are demanding that equipment control and load tracking

come up to U.S. standards.

 FNM continues to lag the U.S. and Canada in terms of communications, equipment

control, and yard operations. These shortfalls are aggravated by and, arguably, primarily due

to managerial deficiencies. However, the physical system needs modernization of its tracking

systems, expansion and creation of modern intermodal and grain terminals. For example, there

are sixteen7 intermodal terminals in Mexico. However, several do not have lift capabilities and

are limited to 'circus' or ramp loading of trailers on flatcars (e.g., Topolobampo). Moreover,

there.are only three terminals in Mexico capable of handling stack trains (Mexico City, Torreon,

and Hermosillo). The Mexico City yard, Pentaco, is not well designed, already at capacity,

and has no room to expand.

 Significant improvements are being made in these areas. For example, Union Pacific

recently sold FNM its Transportation Control System. This is being installed throughout the

system and the process is essentially complete along the three main U.S.-to-Mexico City lines.

Also, PBI is developing a satellite tracking system for its equipment, scheduled for completion

in late 1993. FNM has greatly improved turnaround time for U.S. equipment. In 1980, over

42,000 U.S. cars, on average, were in Mexico, compared to an average of 7,000 cars today.8

In addition, several large rail terminals, known as Ferropuertos. are under consideration and two

have been completed (Ferropuerto Bajio north of Mexico City and Ferropuerto Laguna near

Monterrey). The Ferropuertos are envisioned as large, integrated terminals to handle all types