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KCSM Service update - 2/27/23

February 27, 2023

Dear Customers,

In December 2022, we sent a communication related to the service challenges we were facing in Mexico specifically related to unexpected increased volume in already congested areas, among others.    
    
In our December communication we outlined corrective actions. We would like to elaborate on the status of these steps:

  •  We are aligning with the Union and our Labor Relations to increase the availability of resources including using supplemental local crews to serve the vital SLP area.  These discussions are ongoing.  
  • New crews are being on-boarded with plans to deploy to key areas.  
    Update:  Addressing both of the above, aggressive hiring and promotion plans for crew resources in Mexico began in early January with a focus on the key congested areas of Monterrey/Leal, San Luis Potosi, and CDMX / Queretaro/Escobedo. The duration of the training, certification, and qualification program is 17 weeks in length so it is anticipated we will see the benefits of this action in additional crews in 2Q23. 

Additionally, we continue to negotiate with the Union at both the national and local/regional levels for improved work rules and terms that will benefit our customers including securing extra crews for peak traffic periods. Discussions are ongoing and will resume in earnest this week.

  • We have increased the availability of locomotive power within the KCSM network.  
    Update:  We have increased the number of locomotives on the KCSM network by approximately 50 locomotives since Jan 1, 2023.
  • We are closely working with Ferrocarril y Terminal del Valle de Mexico (Ferrovalle) to coordinate efforts to reduce congestion in the area.
    Update:  In an effort to assist with congestion on the interchange with Ferrovalle, we have relocated our south division superintendent to Ferrovalle from Veracruz for this priority.  He has been supported by several C-level and Operations executive visits since January 1, 2023.  Additionally, we have increased the frequency of planning calls and KCSM participation and are focused on reviewing key performance metrics, extended planning, and improved collaboration.
  • We have deployed management personnel in the affected areas.  
    Update:  We have been rotating top talent to key locations in Mexico and have added Superintendent level positions in San Luis Potosi. We continue with training with a focus on frontline supervisor development.   

    Additional updates:  We have updated train schedules to ensure Monterrey has sufficient train capacity to move traffic south more frequently as well as to reduce interchanges to improve fluidity.  We increased service frequency in key lanes and similar changes are being planned in other lanes.  And, last but not least, we have established a “war room” engagement where key members of cross-functional teams are focused on process improvement for the key areas.  

    We continue to work aggressively to resolve the situation and are optimistic that improvements will be notable in the coming weeks.  

    You have our commitment that improving the service will remain a top priority until normal operations resume and service returns to expected levels. We will continue to provide updates to you on our efforts and resolutions.  

    Should you have any questions on our corrective action efforts or your shipments specifically, please do not hesitate to contact our Customer Solutions Center in Mexico or in the United States who would be happy to help you. 

    We greatly appreciate your patience, help and cooperation. Thank you for being a valued KCS customer.