AAR and Class I members tell Congress to pass USMCA sooner than later

The topic of the United States-Mexico-Canada Agreement (USMCA), or the new NAFTA, has not seen as much attention as other key Washington, D.C.-based developments of late, such as infrastructure, for example.

But USMCA, while still having not been formally signed into law, fully has the attention of the freight railroad sector, to be sure. And that was presented in a very detailed letter sent to the Members of the United States Congress from the Association of American Railroads (AAR) and its undersigned Class I freight railroad members: BNSF Railway, CSX, Norfolk Southern Union Pacific, CN, CO, and Kansas City Southern.

The key these of this message to Congress was blunt and clear: approve the United-States-Mexico-Canada Agreement (USMCA) expeditiously to provide market certainty, stimulate further investment, and enhance the standard of living in all three countries.

Given the cross-border activity that all the Class Is are involved in, it must be hard for Congress to not heed this call, right? Well, given the interminable state of political dysfunction in Washington, D.C. these days, maybe not so much.

The letter pulled no punches in explaining the need for this deal to be signed soon, in that freight railroads were fully behind efforts to modernize NAFTA and that USMCA not only brings this relationship into the 21st century, but it also is comprised of provisions tied to e-commerce and digital trade, which are a key driver of intermodal rail shipments (which have been leading carload shipments for a while now, as per AAR data).

Taking that another step further, in a separate but related, direction, the letter said, “rail movements associated with North American free trade include countless commodities and every region of the country. This includes imports and exports of automotive products between factories in dozens of U.S. states, Canada and Mexico and nearly $43 billion worth of agricultural goods.”

But, wait, there is more, as the letter also pointed out that based on conservative estimates, international trade accounts for at least 35% of U.S. freight rail revenue ($26.4 billion out of $75.1 billion); 27% of U.S. rail tonnage (511 million tons out of 1.88 billion); and 42% of the carloads and intermodal units (13.4 million units out of 32.2 million).

In a word, those figures are simply staggering and continue to ring the bell for action to be taken sooner and not later. But without even a basic semblance of bipartisanship visible to anyone paying attention, it is very hard to put a timeline on when actual action will be taken.

The letter to Congress concluded by driving home the point that freight railroads and, by extension, its shipper customers, require certainty that enable them to continue making the needed investments required to support and “grow seamless commerce” between the U.S. and two of its largest trading partners, Mexico and Canada, saying to Congress: “We strongly urge you to support this modernized trade agreement and support the USMCA to harness the full potential of the North American trading relationship.”

It is hard to say it much more clearer than that. Let’s just hope Congress is listening and up to the task of making USMCA a reality.