Education workers disrupt rail traffic in Michoacán, halting cargo movements

Education workers disrupt rail traffic in Michoacán, halting cargo movements

On Sunday, July 18, teachers of the National Coordinator of Education Workers union began halting rail traffic in the municipality of Uruapan, in the state of Michoacán, Mexico. Rail blockades began in protest of missed salary payments in the first half of the month. Rail blockades have become an increasingly common protest tactic in Mexico. In 2020, the country’s rail network experienced 200 total days of blockades due to protests.1 In the state of Michoacán alone, rail transport was halted three separate times in 2020. Continuing this trend, since the beginning of 2021, Everstream Analytics has reported a total of eight rail blockades across Mexico.

The blockade that commenced on July 18 took place in Caltzontzin, between the Ziracuaretiro and San Andrés train stations. Thousands of education workers across the state were affected by the late salary payments. The railway between the Port of Lazaro Cardenas and Morelia, Michoacan was halted from July 18 to July 22 by approximately 25 to 30 teachers.

Railway protests impact cargo between the Port of Lazaro Cardenas and Morelia, Michoacán

Railway protests have affected cargo traveling between the Port of Lazaro Cardenas and Morelia, Michoacán. Estimated losses from the blockade have reached more than 250 million MXN (USD 12.6 million; EUR 10.6 million).2 16 trains have reportedly been stranded between Michoacán and the Port of Lazaro Cardenas. At the Port of Lazaro Cardenas, 1,792 containers for import have been impeded.2 Further, 451 containers containing 1,347 automobiles and 110 automotive platforms were prevented from export.2 The disrupted trains also carried steel, fuel, and grains. Intelligence received by Everstream Analytics during the blockade indicated that one of Kansas City Southern Mexico’s main lines was blocked by protesters.

The Port of Lazaro Cardenas is vital to Mexico’s economy and is key in the movement of cargo in Mexico. 145,387 containers (TEUs) moved through the port in June of 2021, with a total of 30,716 passenger vehicles transported that same month.3 The port is situated near major production and manufacturing areas in central Mexico. When cargo transportation from the port is disrupted, there is a lack of imported supplies needed for automotive production. Port disruptions also prevent critical goods from being exported, leading to significant disruptions to the continuity of supply chains.

Rail blockades become a frequent occurrence at the Port of Lazaro Cardenas

Historically, the route of the Port of Lazaro Cardenas to Michoacán has had numerous problems with rail blockades. In 2020, teachers halted trains on this route for 59 days in the municipality of Uruapan, prompted by financial issues between the government and teachers in the region. In total, 4,665 containers were affected, carrying steel, chemicals, and automotive products.4 At the time, it was estimated that about 900 trailers would be needed per day to replace the disrupted train transport capabilities.4 Economic losses per day were estimated at 50 million pesos (USD 2.5 million; EUR 2.2 million).5

Similarly, in January 2019, a demonstration by teachers halted traffic on the same railway line for two weeks, delaying shipments of hydrocarbons and grains. Over 10,500 containers were reportedly affected from both the Port of Lazaro Cardenas and the Port of Manzanillo.6 The event led to production disruptions in the steel and automotive industries. Automotive manufacturers were also impacted as their products failed to reach the ports for export. In Jalisco, fuel shortages were reported as gasoline shipments did not reach their destinations.

Resumed protests threaten automotive and chemical industries

After the initial protests concluded without an agreement on July 22, teachers of the National Coordinator of Education Workers union restarted the blockade in the municipality of Uruapan, Michoacán on July 31. Disruptions have reached similar levels to the previous halt. 95,000 tons of cargo are reportedly halted on 16 trains.7 Sources indicate that Pemex (Petróleos Mexicanos), the automotive industry, and chemical production have been affected. Teachers are demanding salaries for the second half of July and insist that salary payments arrive on time for the rest of 2021. Sources report that teachers will be paid by August 12, although that will likely leave a debt in payments for the first half of August. If this occurs, it is likely that protests and rail blockades will continue.

Companies that utilize rail transportation from the Port of Lazaro Cardenas should prepare for potential disruptions from recurring protests leading to rail blockades. To do so, supply chain managers can consider the following actions:

  • Adopt contingency plans for future rail blockades at the port. Preparing alternate cargo transportation options, such as ground transport, can help ensure continuity of cargo passage during rail disruptions.
  • Understand the likelihood of future rail disruptions. Staying abreast of grievances filed by teachers or other groups that are likely to escalate into protests can help companies anticipate rail blockades. Using Everstream Analytics’ Intelligence Monitoring capabilities, supply chain managers can better understand when worker mobilizations are at risk of transitioning into large-scale disruptions. Utilizing the predictive abilities of risk monitoring allows companies to adapt contingency plans before disruptions lead to significant business impacts.
  • Consider alternate port arrangements to ensure business continuity. If rail disruptions at the Port of Lazaro Cardenas continue to increase in frequency and intensity, companies should consider moving operations to a nearby port. Intelligence gathered by Everstream Analytics can highlight the frequency of rail disruptions at the port and can showcase the severity of the impacts experienced during each disruption. This information can support supply chain managers in decision making around which ports are best suited for operational success.

References

1. “Van 11 Trenes Afectados Por Bloqueo A Las Vías En Michoacán”. 2021. T21.Com.Mx. Accessed 20 July. http://t21.com.mx/ferroviario/2021/07/20/van-11-trenes-afectados-bloqueo-las-vias-michoacan.

2. “Libera Ala Radical Del Magisterio Vías Del Tren En Michoacán”. 2021. El Universal. Accessed 28 July https://www.eluniversal.com.mx/estados/libera-ala-radical-del-magisterio-vias-del-tren-en-michoacan.

3. “Movimiento Portuario 2021”. 2021. Puertolazarocardenas.Com.Mx. Accessed 28 July. https://www.puertolazarocardenas.com.mx/plc25/documentos/estadisticas/estadisticas_junio_2021.pdf

4. Belmont, Jose Antonio. 2021. “Por Bloqueos En Michoacán, Diario 900 Tráileres Sustituyen A Trenes”. Accessed 20 July 2021. Www.Milenio.Com. https://www.milenio.com/estados/bloqueos-michoacan-diario-900-traileres-sustituyen-trenes.

5. “Government Admits ‘Grave Damage’ But Won’t Use Force Against Teachers”. 2021. Mexico News Daily. Accessed 20 July 2021. https://mexiconewsdaily.com/news/government-wont-use-force-against-teachers/.

6. Angulo, Sharay. 2021. “Mexico Teachers Block Railway Lines, Food Shortages Feared”. U.S. Accessed 24 July 2021. https://www.reuters.com/article/us-mexico-transport-strike/mexico-teachers-block-railway-lines-food-shortages-feared-idUSKCN1PM2LQ.

7. “Detenidas Más De 95 Mil Toneladas Por Bloqueo A Vías Del Tren En Michoacán”. 2021. Revista Tyt. Accessed August 2. https://www.tyt.com.mx/nota/detenidas-mas-de-95-mil-toneladas-por-bloqueo-a-vias-del-tren-en-michoacan.

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