Over a half-billion dollars in rail freight stuck at Texas border

Major railroads Union-Pacific and BNSF, a subsidiary of Berkshire Hathaway, are urging the reopening of El Paso and Eagle Pass crossings so their freight can pass. Since the closure of these key Texas border crossings earlier this week in a battle over illegal immigration and a surge of migrants, almost half a billion dollars in trade has been halted.

Union Pacific says $200 million worth of trade moves in and out of these crossings a day. The U.S. Customs and Border Protection announced rail operations would be halted at El Paso and Eagle Pass, Texas beginning Monday in light of the surge of migrants crossing the border. Collectively both railroads operate 24 trains daily at these crossings.

BNSF told CNBC it was still working on an estimate of the economic impact amid a fluid situation.

These two border crossings represent 45% of Union Pacific’s cross-border business. Union Pacific has said for every day that the border is closed, the company is forced to embargo customers’ goods on more than 60 trains, or nearly 4,500 rail cars, with an equivalent of goods being held in Mexico. It is also a labor issue for the rail, with employees unable to work and no timeline available for when they may be able to return to the job, Union-Pacific said. BNSF also cited issues for employees who provide daily service on trains that cross the border, as well as what it described as significant downstream impacts on employees across its freight system, with affected trains typically traveling throughout a 32,500-mile network.

According to Bureau of Transportation Statistics data, El Paso and Eagle Pass accounted for $33.95 billion, or 35.8%, of all cross-border rail traffic from November 2022-October 2023.

Government officials tell CNBC the closure is a safety and security issue for the migrants, citing cases of dismemberment, death and unaccompanied children riding the rails. Numbers provided range from 500 to 1,000 at a time, and the migrants pose a significant challenge to CBP and the safety of the migrants.

Both railroads refute these numbers.

“Very few migrants cross into the U.S. on trains,” Union Pacific said in a statement. “During this massive surge, only five people have attempted to come into the U.S. on Union Pacific trains in the last five weeks.”

The company said Union Pacific Police and its employees work in partnership with U.S. Customs and Border Protection to ensure all trains are screened.

In a statement to CNBC, a spokesman for BNSF said, “Through our efforts, we have experienced very few people attempting to cross the border on trains at both ports of entry.”

Both BNSF and Union Pacific say they have security and technology such as X-rays to detect illicit cargo and people.

The closures have sparked an outcry from the grain and chemical industries that use the rail to move their product.

Neil Bradley, executive vice president and chief policy officer, for the U.S. Chamber of Commerce, has said while the crisis at the border must be addressed, halting the legal movement of commerce will do nothing to secure the border.

“Shutting down rail traffic through Eagle Pass and El Paso will inflict significant economic harm not only upon American businesses, but also the farmers, factory workers, and millions of other law-abiding Americans whose jobs depend on the efficient movement of goods,” Bradley said. “We urge the administration to reverse course and reopen the rail passages.”

Key products that move through these crossings include agricultural products, automotive parts, finished vehicles, chemicals, consumer goods, and more.

For the agricultural sector in particular, at risk is up to nearly two-thirds of all U.S. agricultural exports to Mexico, which move via rail. According to an agricultural trade group representing many U.S. growers which urged the government to end the border closures, Mexico was the second-largest export market in 2022 with $28.5 billion in sales, and each day the crossings are closed results in an estimated one million bushels of grain exports lost. 

“Each additional day of closures results in rail carriers having to idle trains or reroute them in illogical ways to try and serve customers, all of which adds friction within the supply chain. We are aware of grain trains sitting at origin in at least six states that are unable to move, and we expect this number to grow,” the group wrote in a letter to Alejandro Mayorkas, the Secretary of the Department of Homeland Security, on Wednesday.

There is one interconnected North American rail network, rather than separate U.S. and Mexican rail networks, according to the Association of American Railroads. “Every day the border remains closed unleashes a cascade of delay across operations on both sides of the border, impacting customers and ultimately consumers,” AAR president and CEO Ian Jefferies said in a statement. “The urgency of reopening these crossings and restoring rail service between the two nations cannot be overstated.”