Developers behind the newly approved Laredo Gateway Industrial Railway in South Texas say the project is designed to expand freight movement at the nation’s busiest U.S.-Mexico trade gateway by giving shippers a new option to move cargo between trucks and rail without leaving the region.
Following authorization from the U.S. Surface Transportation Board, Kraus Development and Ironhorse Resources plan to begin construction of the 2.6-mile short-line railroad within Gateway International Rail Park in Laredo, Texas, later this year.
The companies expect rail service to begin about a year after construction starts, creating what they describe as Laredo’s first modern short line rail-served industrial park.
“We just received the STB authorization,” Ben Escarcega, partner at Kraus Development, told FreightWaves. “Breaking ground and construction will begin three to six months from now. And then the first train service should be available in about a year.”
The STB approved construction and operation of the approximately 13,707-foot rail line on June 17, authorizing the new common-carrier railroad to connect Gateway International Rail Park directly to Union Pacific’s Laredo Subdivision.
Ironhorse Resources will operate the short-line railroad, while Kraus Development continues development of the surrounding industrial park.
The STB board’s authorization was the culmination of a 15-month process, with the agency’s office of environmental analysis first completing a comprehensive review before sending LGIR,s application to the board for their final decision, Escarcega noted.
The railway will serve approximately 1,900 rail-served acres within Kraus Development’s 3,314-acre Gateway Industrial Park at the intersection of Interstate 35 and State Highway 255 north of Laredo.
Rail complements trucking, not replaces it
Laredo’s two border bridges — the World Trade and Colombia-Solidarity bridges — process between 14,000 and 18,000 commercial trucks every day, serving as the busiest inland port in the U.S.
In April, Laredo handled $33.35 billion in trade, a 21% increase from a year earlier. The border crossing accounted for nearly 39% of all U.S.-Mexico trade by value in April.
While Laredo has long been synonymous with truck freight, Escarcega said the new railroad is intended to provide supply chains with another transportation option rather than compete with trucking.
“We’re looking to provide a new platform, which is a completely new service, which is a complement to the supply chains of the cross-border shippers,” Escarcega said.
The project combines rail-served warehouses, cross-docks, manufacturing sites and truck-to-rail transloading facilities in one location. Developers envision the park handling finished vehicles, consumer goods, aggregates, steel, paper products, fuels and other bulk commodities.
According to Vidal Cantu, vice president of business development and acquisitions at Kraus Development, the vision is to build a true multimodal logistics hub.
“Our goal is to build a multimodal park in an area that has high-quality infrastructure, both highway and rail, to just provide as many efficiencies to the market as possible,” Cantu told FreightWaves.
Developers say the park’s location offers direct access to Union Pacific’s network through Ironhorse Resources while also providing efficient truck access via Interstate 35, State Highway 255 and the nearby Colombia Solidarity Bridge.
Laredo’s two border bridges — the World Trade and Colombia-Solidarity bridges — process between 14,000 and 18,000 commercial trucks every single day. (Photo: Jim Allen/FreightWaves)
Building supply-chain resiliency
Escarcega said one word repeatedly surfaced during conversations with manufacturers and logistics executives: resiliency.
“This is a key word which we feel like we are contributing to the marketplace, and its resiliency in their supply chains,” Escarcega said.
He pointed to Mexico’s growing automotive sector as one example.
Automakers often rely on rail to move finished vehicles into the U.S., but railcar shortages or network disruptions can delay shipments. Gateway International Rail Park would provide an alternative by allowing vehicles to be trucked across the border to Laredo before being loaded onto railcars, according to Escarcega.
“We are giving an alternative, creative solution,” Escarcega said. “If there’s a problem on the rail … they have this solution built up with us where they can truck up across Colombia Bridge … and get on the rail from Laredo, Texas.”
Cantu emphasized that trucks will continue to dominate cross-border freight movements, with rail serving as an additional option for shippers.
“Most of the product that’s going to move through Laredo is still going to move through trucks,” Cantu said. “We are here to provide another alternative option or complement to your existing supply chain.”
Room to grow
Escarcega estimates the rail operation will initially have capacity for more than 12,000 railcars annually.
As a single railcar can carry four to five times the freight of a standard 53-foot trailer, Escarcega said the operation could eventually represent the equivalent of roughly 62,000 truckloads annually while still accounting for only a small fraction of the millions of trucks that cross through Laredo each year.
The industrial park is expected to include more than 40 rail-served and non-rail-served development sites capable of accommodating warehouses, manufacturing facilities, finished vehicle distribution centers and transloading operations.
Cantu emphasized ownership of the land gives them flexibility to customize projects for prospective tenants while allowing room for future expansion.
“We want to be an incubator for new business and then we want to support existing business that’s there in Laredo,” Cantu said.
Construction is expected to begin within three to six months, with the first rail service anticipated about a year later.
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