Canada-Mexico Rail Trade Jumps Sixfold as Companies Build Routes Around U.S. Trade Turmoil

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A freight corridor that barely registered as a major Canada–Mexico business a few years ago is becoming a much more important piece of North America’s supply chain. Canadian Pacific Kansas City says revenue from its Canada–Mexico “land bridge” business has climbed from roughly C$100 million around the time its combined railway was created to more than C$600 million, with management now pointing toward C$1 billion.

That sixfold increase is not the same as saying all Canada–Mexico rail trade has grown sixfold. Official transportation data show a more modest—but still substantial—rise in overall rail volumes. What has changed dramatically is the commercial reach of a single railway capable of moving freight between the two countries on one network. As U.S.-Canada trade tensions intensify, that capability is giving companies another way to diversify customers and supply chains, even though the trains themselves still cross U.S. territory.

What the Sixfold Increase Actually Measures

The striking C$100-million-to-C$600-million comparison came into sharper focus on September 17, when CPKC executives discussed the railway’s cross-border growth at Morgan Stanley’s annual Laguna Conference. Management described the Canada–Mexico land-bridge business as one of the unexpected strengths of the combined company. CPKC chief executive Keith Creel said the railroad had been doing roughly C$100 million in that business when the network came together and is now above C$600 million. Executives said they see a path toward C$1 billion as more customers use the corridor and additional facilities come online.

That is a revenue measure for CPKC rather than a national measure of every tonne of freight travelling between Canada and Mexico. Transport Canada provides an important reality check. Its 2025 transportation report recorded approximately 3 million tonnes of rail traffic to and from Mexico, up about 25% from the previous year. By comparison, Canadian rail traffic linked to the United States totalled roughly 106 million tonnes. Mexico therefore remains a relatively small rail market, but the direction of travel is notable: Mexican traffic was rising while U.S.-linked Canadian rail volume fell 9.5% in 2025.

A Merger Created a Rail Corridor That Did Not Exist Before

The structural change behind the growth dates to April 2023, when Canadian Pacific and Kansas City Southern combined to form Canadian Pacific Kansas City. The merger created the first single-line railway connecting Canada, the United States and Mexico. CPKC today operates approximately 20,000 route miles stretching from Canadian industrial and agricultural centres through the U.S. Midwest and south into major Mexican manufacturing regions and ports.

That matters because railway handoffs can add time, complexity and uncertainty. Before the merger, a Canadian shipment destined for deep inside Mexico could require commercial arrangements involving more than one railway. CPKC can now keep freight within one operating network for much of the journey. The company quickly built products around that advantage, particularly the Mexico Midwest Express, which links Chicago and Kansas City with Texas, Monterrey and San Luis Potosí. The service was designed to compete not simply with rival railroads but with long-haul trucking. For manufacturers or food producers evaluating where to sell their next load, that kind of predictable north-south connection can make Mexico feel considerably closer than it did when the railway systems were separate.

Intermodal Freight and Food Are Driving the Expansion

Containers are one of the clearest areas where CPKC has tried to turn its geographic footprint into a commercial advantage. The Mexico Midwest Express began operating in 2023 with dedicated daily trains between the U.S. Midwest and Mexico. CPKC said the original schedule offered a 98-hour transit between Chicago and San Luis Potosí, alongside service to Laredo and Monterrey. The railway also signed multi-year agreements with trucking and logistics companies including Schneider and Knight-Swift to feed freight into the north-south intermodal corridor.

Food logistics have become another significant piece of the strategy. CPKC added 1,000 refrigerated 53-foot containers shortly after launching MMX, more than doubling its refrigerated intermodal fleet at the time. The equipment is designed to move products such as fresh and frozen produce northward and beef, chicken, pork and other goods toward southern markets. CPKC also partnered with cold-storage operator Americold on a Kansas City facility positioned directly on the railway network. Management said in September 2026 that the business is expanding beyond temperature-sensitive proteins and vegetables into products including dry food and consumer goods, widening the range of freight that can use the same corridor.

Mexico Is Becoming a More Important Canadian Trade Market

Rail growth is occurring within a much larger expansion of Canada–Mexico commerce. Global Affairs Canada says two-way merchandise trade reached C$62.4 billion in 2025, making Mexico Canada’s third-largest single-country merchandise trading partner after the United States and China. Canadian merchandise exports to Mexico were worth C$8.9 billion, led by products including automotive parts, canola, meat and wheat. Imports from Mexico reached C$53.5 billion, with motor vehicles, data-processing equipment and fresh fruits and vegetables among the largest categories.

Investment ties are also deepening. Canadian direct investment in Mexico reached C$66 billion in 2025, making the country Canada’s eighth-largest destination for direct investment. The relationship remains heavily imbalanced toward Canadian imports from Mexico, but it is no longer a peripheral trade channel. Since CUSMA came into force, Canadian government figures show Canada–Mexico goods and services trade rising 56.6% between 2019 and 2025. For Canadian exporters looking for additional customers, that expanding commercial base creates more opportunity for railways to move grain, food products, industrial inputs and manufactured goods south instead of relying overwhelmingly on east-west or Canada-U.S. trade flows.

New Infrastructure Is Removing Expensive Border Bottlenecks

A railway connecting three countries is only useful if border crossings can handle the additional traffic. CPKC has invested heavily at Laredo, Texas, and Nuevo Laredo, Tamaulipas, the key rail gateway into Mexico. A second span of the Patrick J. Ottensmeyer International Railway Bridge was completed in late 2024. CPKC says the US$100-million project more than doubled its freight capacity at the border, giving northbound and southbound trains significantly more room through one of North America’s busiest trade corridors.

The railway is also trying to move inspections away from the border itself. In September 2026, CPKC announced a new process developed with Mexico’s National Service of Agri-Food Health, Safety and Quality at its Puerta México terminal in Toluca. Eligible agricultural and animal-based shipments can complete final inspection and certification at the inland terminal rather than stopping for the same process at traditional inspection points in Nuevo Laredo. CPKC said participating freight includes shipments originating in both the U.S. Midwest and Canada. For products vulnerable to spoilage or missed delivery windows, eliminating even one unpredictable border stop can materially change the economics of choosing rail.

The Trains Do Not Bypass America—The Trade Strategy Does

The geography requires an important distinction. A train moving from Canada to Mexico on CPKC does not physically go around the United States. The railway runs directly through it. What companies can reduce is dependence on the United States as the final customer. Canadian grain, food or industrial products can cross American territory while ultimately being sold into Mexican markets, just as Mexican products can travel north toward Canadian consumers without being destined for U.S. buyers.

That distinction has become increasingly relevant as Canada and the United States move through their most serious trade confrontation in years. Washington imposed new tariffs of up to 50% on C$27.6 billion of Canadian goods in August 2026. Canada responded with matching counter-tariffs covering C$27.6 billion of U.S. imports beginning September 8, with targeted sectors including steel, dairy, agricultural equipment, appliances, pulp and paper, plastics and electronics. Most North American commerce is still governed by CUSMA, and the agreement remains in force. But tariff uncertainty changes corporate planning. A Canadian company may not abandon the U.S. market, yet an established Mexico route gives it another destination when political or tariff risk makes excessive dependence on one buyer uncomfortable.

Canada and Mexico Are Building a Broader Relationship Around the Rail Link

The rail expansion is also happening alongside a deliberate effort by Ottawa and Mexico City to deepen bilateral ties. Canada and Mexico elevated their relationship to a Comprehensive Strategic Partnership in 2025 and adopted a three-year action plan covering areas such as agribusiness, energy, mining, trade, investment, innovation and maritime connectivity. A Canadian trade mission to Mexico in February 2026 included more than 240 business organizations and over 370 delegates, with officials highlighting 23 announcements, partnerships and commercial agreements.

Those initiatives do not replace the much larger economic relationship both countries have with the United States. They do, however, create more opportunities for firms to build relationships that would have been overlooked when North American business strategies were overwhelmingly organized around access to U.S. customers. Rail infrastructure can reinforce that shift because logistics often determines whether a new commercial relationship is practical. A Mexican buyer may be attractive on paper, but the opportunity becomes more meaningful when regular intermodal trains, cold-storage capacity, border infrastructure and inland inspection facilities are already in place to serve it.

The C$1-Billion Goal Is Ambitious, but the Base Is Still Small

CPKC executives believe the Canada–Mexico land-bridge business can eventually reach C$1 billion in annual revenue, driven by additional intermodal traffic, grain, cold-chain products and new facilities under development in Mexico. Management said the growth is coming from both deeper business with existing customers and entirely new customers. The railroad has also been expanding capacity beyond the border itself, including north-south track improvements and facilities designed to support heavier traffic as demand develops.

The numbers nevertheless show why the trend should be described as diversification rather than replacement. Mexico accounted for about 3 million tonnes of Canadian rail traffic in 2025 compared with 106 million tonnes tied to the United States. Canada and the U.S. still exchange vastly more goods and services than Canada and Mexico, and CPKC’s Canada–Mexico trains must continue operating through American territory and U.S. border systems. The more meaningful development is optionality. A corridor that was once comparatively minor is becoming commercially large enough for exporters, manufacturers and logistics companies to build around. In an era when tariffs can change quickly, that additional route to market is becoming valuable in its own right.

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