Regulations play a fundamental role in the performance of an industry. They can facilitate – or restrict – the entry of new companies to a given market, and they can either stifle or promote innovation. While regulations are supposed to pursue a legitimate interest such as protecting consumers, workers and the environment, they may fail to achieve these objectives, and instead create unnecessary burdens on businesses and citizens. Therefore, regulations need to be reviewed and revised continually in order to ensure that they are “fit-for-purpose”.

In 1995, the government reformed Mexico’s railways by statute through the Law on the Regulation of Rail Services. This provided for the publicly run rail network to be divided into a small number of exclusive, vertically integrated private freight railway concessions. The 1995 railway reforms achieved a complete turnaround in the performance of the Mexican railway sector. GDP in rail freight transport grew on average 4.1% per year from 1995-2017, outperforming all other modes of transport.

This chapter presents the assessment and recommendations from this report. The first section contains the assessment, which is divided between findings related to rail regulation, and findings related to the governance of the Regulatory Agency of Rail Transport. For each finding, the corresponding arguments which led to the particular conclusion are developed. The second section contains the recommendations, which offer concrete proposals to address the afore-mentioned findings.

This section briefly describes the general performance of the rail sector in Mexico. It comprises an industry assessment, a spatial analysis and an international comparison. The industry review focuses on the economic performance, the product analysis and the market share assessment of the rail sector. The spatial analysis aims at identifying the main rail commercial corridors in the country, as well as their dynamics. Finally, the international analysis provides a general overview of the rail sector within the international arena.

This section starts with a brief description of the industry development since its origins. A review of the main characteristics of the current regulatory framework is then presented. In particular, the analysis focuses on the network and competition conditions, exclusivity of the concessions, tariffs schemes and other topics on economic regulation. Finally, examples of best practices regarding regulatory frameworks of the rail industry in the United States and Canada are presented.

The section briefly explains the seven OECD Best Practice Principles of the Governance of Regulators, which aim at improving the performance of regulatory agencies. For each principle under consideration, it describes the institutional arrangements and practices of the ARTF comparted with each principle.