of rail traffic, from unit grain trains to intermodal to general freight. The focus on improving

cargo handling efficiency is welcome, but it is too early to tell if this concept will be successful.9


Maintenance and Repair Facilities

 Maintenance facilities need upgrading and expansion. This is due both to low investment

rates in these facilities and in rolling stock --- older rolling stock tends to require more

maintenance. The average age of FNM's 1,700 locomotives is 13 years. Less than 40 percent

are under 10 years old and 26 percent are over 20 years old. Reflecting the poor maintenance

situation, FNM frequently delivers rail cars that are in very poor condition. For example, at

the Port of Veracruz, 20 to 25 percent of boxcars delivered by FNM are refused due to severe

problems, such as large holes in roofs or walls.

 Updating and expanding maintenance and repair facilities is particularly crucial in view

of the changing mix of rail traffic. FNM needs to develop the facilities and expertise to

maintain intermodal equipment and, if it is to participate significantly in perishables haulage,

refrigerated equipment. Anticipating movements of mechanically refrigerated railcars into

central Mexico, Union Pacific has initiated a program to train FNM personnel in the repair,

maintenance, and monitoring of this equipment.


PRIVATIZATION

 Private investment appears to be the surest and quickest way to upgrade the Mexican

Railways. Article 28 of the Mexican Constitution of 1917, defines railroads as part of the

"strategic sector," and as such, are the exclusive domain of the state. However, the

Constitution has been amended over 400 times, so should not be viewed as an immutable