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Ferromex: growing importance of its agricultural segment

The agricultural segment of Ferromex, subsidiary of Grupo México, has increased its importance in recent years as a generator of income for the company.

After reaching 32.7% in 2018 and 32.8% in 2019, Ferromex’s share of the income derived from the agricultural segment increased to 34.6%, according to data from the company itself.

This is the largest of the nine segments reported by the company and was the one that increased the most percentage points in 2020 compared to 2019.

The share of the other eight segments in the company’s total revenue was as follows:

  • Automotive (10.2 percent).
  • Minerals (10.9 percent).
  • Industrial Products (9.0 percent).
  • Intermodal (7.8 percent).
  • Energy (8.0 percent).
  • Chemicals and Fertilizers (7.8 percent).
  • Metals (5.3 percent).
  • Cement (4.9 percent).

Ferromex

The company reported a decrease in 2020 compared to the previous year, since the volume of cargo transported was 50.100 million net ton-kilometers, against 51.700 million net ton-kilometers in 2019.

The cars loaded in the year totaled 1,065,796.

Likewise, the volume of cargo transported expressed in net tonnes kilometers decreased by 1,600 million, representing a decrease of 3.1% compared to the previous year.

During 2020, the Agricultural products segment had a decrease of 5.2% in ton-kilometers compared to 2019.

In general, this is mainly explained by: the agricultural products segment represented 34.6% of Ferromex’s commercial income and 42.8% of the ton-kilometers, constituting the company’s largest market segment, serving the industries of balanced food for animal consumption (poultry, pig, dairy cattle, fattening cattle and pets), production of oils and wheat and corn mills.

The main clients in the segment include: Proan, Mexican Starch, Cargill Group, ADM Group, Ragasa Industrias, Gavilon, Lala Group, Aceites, Grasas y Derivados and Trimex Group. Minerals

Minerals and automotive

During 2020, the minerals segment had a decrease in revenue of 0.5% and an increase of 1.8% in volume per (TN / KM) vs 2019.

Above all, the result was due to liquidity problems of one of the main customers in the segment (AHMSA) and various effects derived from Covid-19.

Meanwhile, the Automotive segment represented 10.2% of total revenues, being the third business unit in revenue share.

In essence, the largest customers in the segment were: Nissan Mexicana, General Motors Mexico, FCA Mexico, Ford Motor Company and Honda.

Also in 2020, the automotive segment had a drop of 18.4% in volume (rail cars), mainly due to the closure of plants for more than 2 months due to measures against Covid-19.

Despite the fall, this impact was reduced with new traffic.

Industrial products and energy

This segment accounted for 9.0% of total revenues, with a variation of 4.8% compared to the previous year.

With this, it reached a movement of 103,182 cars, transporting different products, some of the most important were: beer, paper, cardboard, glass, ceramics and groceries.

On the other hand, among the segment’s clients, the following stood out: Constellation Brands, Grupo Modelo, Trinity Industries, Gunderson, Grupo Bioppapel and Grupo Copamex.

Ferromex has a network of roads to the public, in order to serve all those customers who do not have rail infrastructure.

As in other segments, due to a sharp drop in demand in North America there were temporary closures of beer plants derived from Covid-19.

Regarding the energy segment, it represented 8.0% of revenues, with an increase of 5.0% compared to 2019.

For this business, Ferromex registered an increase in the import volumes of refined products and LP gas by the private sector.

There was also a reactivation of fuel oil movements by Pemex.

The main products in this segment are: coal, diesel, gasoline, propane gas, coke, asphalt and fuel oil.

Chemicals and Fertilizers

Here, 2020 sales represented 7.8% of Ferromex’s revenues, an increase of 9.3% compared to 2019.

The company reported an increase in market share in imports of both fertilizers and plastic resins, added to a positive effect derived from Covid-19.

Intermodal

In 2020 this segment represented 7.8% of the company’s revenues from freight.

The entire segment transported 4,681.4 million tonnes-km, with a decrease in revenue of 6.9% compared to 2019.

The volume share (cars) of the three subsegments is as follows: maritime (64%), cross-border (21%) and domestic (15%).

Intermodal’s main clients are: Mediterranean Shipping Company, Hapag Lloyd, CMA / CGM, APM Group, JB Hunt, Hub Group, XPO Logistics, V Modal and Pacer Stracktrain.

Metals: the metal products segment reached a portion of 5.3% of total revenues, with a variation of 0.8% compared to the previous year.

The segment transported 3,826.2 million tons-km, ranking fourth in the company, with an increase of 1.2% compared to 2019.

The main clients of the segment are: Ternium, Minera México, Grupo Deacero, Grupo Peñoles and Mittal Steel México

Cement and Ferromex

The segment represented 4.9% of the company’s revenues from freight in 2020, 0.8% more than in 2019, transporting 83,493 cars, 2.8% more than in 2019.

There was a contraction in the market and the closure of FIT tracks due to maintenance, offset by conversions from motor transport to rail derived from operating efficiencies.

The most important client is Cemex, continuing with Holcim/Apasco, Cementos Moctezuma, and GCC Cementos.

 

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