Home' Trinidad and Tobago Guardian : March 20th 2014 Contents BG26 | THE ECONOMIST
BUSINESS GUARDIAN www.guardian.co.tt MARCH 2014 • WEEK THREE
The depot of Kansas City
Southern de México in Nuevo
Laredo, on the border
between Texas and Mexico,
is something to behold. Red-
yellow-and-black locomotives pull in
southbound trains that stretch back more
than a mile. They carry grain and scrap
metal from the United States. Heading
north are cargos of car chassis and long
lines of containers.
Watching the trains hurtle across the
flat, scrubby terrain is awe-inspiring. They
are proof of Mexico's burgeoning commerce
with America. This is bandit country, how-
ever, one of the most violent stretches of
the border, which gives the scene an Old
The performance of KCSM, and the
other half of Mexico's freight-rail duopoly,
Ferromex, also has been awe-inspiring.
When Mexico started to privatise its freight
lines in 1995---it had given up on passenger
trains, though there are now plans to rein-
troduce them---they were slow, rickety
subsidy-burners, costing taxpayers hun-
dreds of millions of dollars a year. Since
then the amount of cargo has almost dou-
bled, and the share of land freight carried
by rail, as opposed to road, has risen from
19 per cent to 25 per cent.
Average freight charges are slightly higher
than in Canada and the United States,
which have a similar model of regional
operators owning both train and track.
According to the Organisation for Economic
Cooperation and Development, however,
their performance is generally better than
those of their Latin American peers. Instead
of needing subsidies, the companies have
made big profits; and big investments.
It therefore came as a shock when, last
month, a bill sprinted through the lower
house of the Mexican Congress, on the
first day of a new session, intended to
change the terms of the railroads' 30-year
concessions after only 17 years.
The bill's authors had President Enrique
Peña Nieto's backing. Rail bosses say that
he was talked into supporting it by steel-
makers, whose trade body, the National
Steel Chamber, is headed by a friend of
the president, Alonso Ancira. The chamber
says the rail costs of shipping steel through
Mexico are 57 per cent more than in the
United States, which it blames on a lack
The lower-house bill set out to fix that
with three new impositions on the con-
cession-holders: regulation of their rates
where necessary, a requirement to offer
smooth interchanges between their net-
works and freedom for new competitors
to use their lines, even though they would
not have to invest in their upkeep.
At first sight this fits neatly with other
trustbusting reforms by Peña's adminis-
tration, such as in telecommunications
and electricity. In these areas dominant
firms will be forced to let others connect
with their networks on reasonable terms,
to increase competition and cut prices.
Jesús Ignacio Navarro of the Federal Eco-
nomic Competition Commission argues
that, in terms of interchange or intercon-
nection, rail is "conceptually similar" to
However, in a March 5-6 public forum,
held by the upper house of Congress, to
check that the lower house had done its
homework, some competition specialists
used international examples---Britain's bun-
gled rail regulation, for example---to argue
the opposite. They said that, unlike in the
case of telephone networks, there was a
danger that too much competition could
lead to congestion of rail lines and wors-
ening standards of service. If it led to
excessively low rates, it could dampen
investment in the network and eventually
harm the industry.
As Rafael Ch of Cidac, a think tank, puts
it: "Just because rail is a network doesn't
mean that it should be treated like telecoms
Cidac and the OECD's International
Transport Forum argue that the market
could be improved through regulatory
tweaks, rather than the sweeping changes
the bill envisages. They say that, for many
types of cargo, road haulage provides effec-
tive competition. Tariff regulation should
focus almost exclusively on "captive goods"
such as minerals and grains that it can be
sent economically only by rail.
Senators hint that they will tone down
the bill, not least because drastically chang-
ing the terms of a concession partway
through would send a bad signal to foreign
investors at a time when Mexico is inviting
them to invest in its oil industry. A bit
more competition would be welcome, but
not so much that it endangers one of the
most vital arteries of North American trade.
@2014 The Economist Newspaper Ltd.
Distributed by the New York Times Syn-
Will Mexico's railways
be knocked off the rails?
In June Brazil's elites received a rude introduction
to the power of social media. Protests, many convened
via Facebook, brought millions into the streets to air
disaffection with politicians. Those same politicians
now want to harness social networks for their election
When Dilma Rousseff was elected president in 2010,
six million Brazilians used Facebook at least once a
month. As they gear up for a presidential election in
October, 83 million do. Only the United States and
India have bigger Facebook populations. One Brazilian
in ten tweets, and one in five uses Whatsapp, partly
a messaging service and partly a social network. Cyber-
space is seen as a crucial battleground for the election,
even before campaigning officially starts on July 6.
In September, shortly after the protests petered out,
Rousseff reactivated her Twitter account, dormant
since the 2010 election. She also has joined Instagram
and Vine, two image-sharing sites, and revamped her
Facebook profile. Last month Rousseff's Workers' Party
held its first workshop for activists on how best to
use social networks. It plans 13 more in the coming
The opposition is pinning even more hope on social
media, in large part because the president is likely to
dominate the traditional sort. During the campaign,
free television time is divvied up using a complex formula
which takes into account the size of electoral alliances
and tends to favour the incumbent. Despite threats by
the Workers' Party's junior partner to dump Rousseff,
and take its airtime with it, most pundits predict that
the coalition will pull through. That would leave the
president with around half of the 25-minute television
slots, with the other candidates splitting the rest.
Small wonder, then, that Rousseff's likeliest rivals
have been busy making Facebook friends. Aécio Neves,
a senator from Minas Gerais state and leader of the
centre-right Party of Brazilian Social Democracy, and
Eduardo Campos, governor of Pernambuco and head
of the centrist Brazilian Socialist Party, so far have
scored many more "likes" than the president. The
most popular of all is Marina Silva, a former environ-
ment minister and Campos' probable running mate.
All are active on other social networks, too.
They need to be. Neves and Campos in particular
are little known outside their home states. One recent
poll of voting intentions puts them at 17 per cent and
12 per cent, respectively, to Rousseff's 47 per cent.
Things could change rapidly, however. The president's
approval ratings fell sharply, from around 77 per cent
to 45 per cent, in the aftermath of the June protests.
They have recovered a bit since, but may dip again
if more protests erupt during the soccer World Cup.
At MVL, a digital consultancy in São Paulo that
works with Silva, three analysts toil away, compiling
daily reports of her Facebook likes, Twitter mentions
and so on. Relevant data are fed into a repository of
more than 1 million emails, profiles and usernames
that let Silva reach an estimated 12.5 million potential
voters, nearly a tenth of the electorate.
It helps to pick the right platform for the right audi-
"Trying to talk to everyone everywhere is a waste
of time," says Caio Costa of MVL.
In Silva's 2010 presidential bid, Orkut---now much
diminished but with 26 million users at the time---
was reserved for Silva's fellow evangelicals, Facebook
for women and disgruntled Workers' Party supporters,
and Google+ for opinion-makers. That helped propel
Silva, a rank outsider, to 19.3 percent of the vote.
Neves and Campos are hoping to repeat the trick
and then some. Youngsters are a big target. Nearly 80
per cent of Brazilians between 16, the minimal voting
age, and 25 use the Internet at least once a week, well
above the national average of 47 per cent. Nearly half
go online every day.
For the opposition to have a chance in October's
election, it has to make every screen count.
@2014 The Economist Newspaper Ltd. Distributed
by the New York Times Syndicate
hearts and likes
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