If you’ve watched the news, Ford Motor Company has cancelled its plans to built a new automotive plant in Mexico. The move is being hailed as a job-saving venture that will bring 700 jobs to Michigan.
Of course, American jobs staying in America is a good thing, but there has been some unexpected fallout from the decision. Notably, the tanking stock price of Kansas City Southern, a freight moving company that specializes in rail transportation.
Kansas City Southern was one of the main transportation beneficiaries of Ford’s new Mexico plant. They would have been one of the main freight movers to move cars out of the new Mexico plant. Ford is also planning opening up several other plants, but they represent smaller portions of growth than the Mexico plant.
How this affects U.S. car transport by rail
Right now, Kansas City Southern is one of the main rail freight haulers in the United States. They handle far more than just cars, too. From minerals to agricultural products, appliances and food products, to even energy and military shipments, KSU handles a lot of freight. And while their car transport division won’t see as much growth, it will likely affect customers in the U.S.
Car transport by rail isn’t all that popular nowadays – overland car transportation services are usually done via truck. Trucks are much more versatile and can get to a number of places the railroads don’t go.
U.S. car transport by rail has been in decline over the past few decades, but it’s not out of the game yet. The loss of the new Mexico plant, however, may be a big blow.
Right now, rail haulers are still a go-to for manufacturers to get their vehicles from the production line to the showroom floor. They’re not used near as much for private auto transport services, though it does make up a small portion of the industry. That said, car transport by rail prices across the Midwest may go up.
Not only that, but it could also decrease availability. This is a bit more of a stretch, admittedly, but the butterfly effect is very real in situations like this. There’s no telling how Kansas City Southern is going to be affected financially by this decision. Right now, it’s only future earnings that have been affected, not current earnings. In other words, they didn’t lose current business, so they haven’t been hurt financially…yet.
Only time will tell.
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