Establishing Mexico’s Regulatory Agency for Rail Transport
Mexico’s highly efficient freight railways are operated by privately owned concessions. These were designed to create competition between vertically integrated railways in key markets through parallel tracks, alternate routes and through rights to use each other’s tracks on specific sections of the network. Overall the system has worked well but a deficit in regulatory capacity has proved an obstacle to settling disputes over the use of trackage rights and access conditions for certain shippers. The Railway Law was amended in January 2015 to address this shortcoming through measures that include establishment of a new Agency for the Regulation of Rail Transport.
The key to the success of the new Agency will be its capacity in terms of economic expertise to make judgements on issues of access to rail services. To be robust to legal challenge the decisions of the Agency will need to be well-argued in economic terms and effectively communicated to provide all parties concerned, including the courts, with confidence that judgements are sound. The Agency will need resourcing sufficient to this task. To assist in building the regulatory capacity needed, the International Transport Forum and the Ministry of Transport and Communications organized a consultation for Mexican regulators with the key rail regulatory institutions in Canada and the United States of America to review the practice of regulation and resources allocated to it in these jurisdictions.
The report summarises the findings of the consultation. This report is part of the International Transport Forum’s Case-Specific Policy Analysis series. These are topical studies on specific issues carried out by the ITF in agreement with local institutions.
- Any reform of the rail concessioning system must preserve the current high level of performance.
- Accept price discrimination to ensure efficiency, with the regulatory agency to adjudicate what prices are reasonable.
- Focus regulation on cases where effective competition does not already exist.
- Collect adequate financial and operating data on the rail companies as the basis for effective regulatory decisions.
- Consider cutting the cost of regulation by including an arbitration mechanism in any further regulatory reform.
- Consider inter-switching rules in any further regulatory reform.
- Interchange traffic rights should not be expected to be used for shippers to specify routes.
- Resource the new regulator with sufficient expertise to convince the courts that its decisions are sound.