Cargo theft, particularly from freight trains, continues to be a significant threat to supply chains in Mexico. The scale of goods moving through Mexico’s freight railway system makes it hard for supply chain security personnel to track everything with precision, with tracks crossing through extremely isolated areas such as the Sonora dessert in the north or densely populated areas such Puebla or Toluca in the center of the country. Train robberies are a thriving business in Mexico and just about any type of cargo, from electric appliances and auto parts to grains, chemicals, and cement, is at risk. It is a phenomenon that not only affects cargo and infrastructure but also the wellbeing of drivers and security personnel. Past studies have estimated that cargo worth hundreds of millions of dollars is lost annually in Mexico in train hijackings and robberies.
Theft operations have also become more complex in recent years. In the past, thieves usually identified areas where freight trains either stop or slow down to jump on, pop open doors or trailers, and throw products off. In the last few months, however, Mexico has seen an increasing number of choreographed train robberies that often start with robbers damaging tracks or holding up trains with rocks, and involve small armies of people who descend on the derailed cars in waves to carry off the loot.
Train robberies in Mexico have reached alarming levels in 2018. From January to September 2018, Mexico’s Railway Transport Regulatory Agency (ARTF) reported a total of 2,115 train robberies, which represents a 148 percent increase compared to the 850 robberies recorded during the same period in 2017 (see Figure 1). In other words, the frequency of robberies increased from 22 a week to 54 a week in the space of a year. The regulatory agency also reported that the five states with the most robberies are Puebla (358), Guanajuato (181), Jalisco (178), Coahuila (177), and Sonora (158).
One industry that has been particularly affected by the surge of train robberies in Mexico is the chemicals industry. In Tlaxcala, Puebla and Veracruz, stealing gasoline and diesel from pipelines has not been enough for organized bands of huachicoleros (fuel thieves) who have turned their eyes to cargo theft from trains as an opportunity to expand their tentacles to other underground markets. Products such as pesticides, ethylene, polyvinyl chloride, polyethylene, and other polymers are routinely targeted by these criminal organizations, especially along the Mexico City-Puebla-Veracruz route, the Mexico City-Saltillo route, and the Mexiquense Beltway.
Polyethylene, a thermoplastic polymer heavily used in the production of consumer products, is by far the most targeted chemical product in Mexico. In 2017, the Etileno XXI Petrochemical Complex in Coatzacoalcos, Veracruz, alone reported losses of USD 2.5 million (EUR 2.2 million) due to polyethylene theft. This year, there have a number of train robberies targeting polyethylene shipments (see Figure 2). The most noticeable thefts occurred in February 2 and May 5, with 148 tons of polyethylene, worth approximately USD 195,000 (EUR 170,000), stolen in the town of Apizaco and 236 tons of polyethylene, worth approximately USD 311,000 (EUR 274,000), stolen in Tamariz, respectively.
This extensive criminal activity is supported by an underground market ready to receive and sell polyethylene to consumers. The towns of Tezuapan and San Antonio la Soledad in the state of Puebla have been identified as two of the main points of sale for stolen chemicals in the country. Reports indicate that in these towns, stolen polyethylene is sold at around USD 0.80 (EUR 0.72) per kilo, well below its market value of USD 1.48 (EUR 1.31) per kilo.
Security concerns in Mexico, especially for rail transportation, are not going away anytime soon. Shippers and carriers likewise are waiting to see if the country’s incoming administration is prepared to take steps to stop the increasing rail cargo thefts. In the meantime, supply chain managers with interests in Mexico must continue collaborating with other members of the value chain, both upstream and downstream, and make use of technology that provide visibility on evolving supply chain security risks. Moreover, railroad carriers must be constantly evaluated and monitored to determine if they are exposed to a higher than normal risk, while companies must continuously assess their shipping routes to find the best way to eliminate or mitigate those risks.