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Long Term Lease To Mexico

This page was last updated on February 1, 2014.

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(This article is an edited and expanded version of the original text used as part of the book Union Pacific - 1990 by George Cockle and Paul Withers (Withers Publishing Co., 1991, ISBN 0-9618503-0-0)

Union Pacific, and predecessor Missouri Pacific, had an agreement to provide locomotives as part of a pool used to operate cross-border trains between the United States and Mexico since the late 1970s. This agreement was first with NdeM (Nacionales de Mexico) and since the merger of all of Mexico's railroads on 27 August 1987, with NdeM as a component of National Railways of Mexico (FNM, Ferrocarriles Nacionales de Mexico). In late 1978 the pool required only three MP SD40s, but by early 1981 the pool had grown to include 18 MP SD40s. In December 1981 MP and NdeM began a run-through train between Chicago and Mexico City. In October 1984, after the UP/MP/WP merger, UP and NdeM began operating true international service between Chicago and Mexico City, crossing the border at Laredo/Nuevo Laredo.

In June 1987, in part to support the three-year old international service, UP leased 25 units to NdeM on a an "indefinite" long term lease that in fact lasted two years. Included in the lease were 18 former CRI&P GP40s, along with seven former MP 3000 class SD40s. All were returned and subsequently retired by UP in August 1989. Some of the GP40s were lettered for Union Pacific but the majority were lettered for Missouri Pacific, as a remnant of a time when MP leased almost 90 units from UP following the December 1982 merger of the two roads. NdeM was to be responsible for minor maintenance on the units. To help in the training of NdeM mechanical personnel, 20 NdeM mechanics were sent to the UP training center in Salt Lake City, Utah, to prepare for the maintenance on these 25 UP owned locomotives. The road numbers of the MP SD40s in the 1987 lease are not known, but the ex CRI&P GP40s included in the lease to Mexico were MP 600, MP 603, MP 605, MP 608, MP 611, MP 616, MP 622, MP 631, MP 632, MP 633, MP 635, UP 636, MP 637, MP 639, UP 640, MP 642, UP 643, and MP 645. MP 603 and MP 637 were returned to UP for maintenance and were found to unrepairable. They were retired in October 1988 and sold. MP 645 was included in the lease after the retirement of MP 603 and MP 637.

During early September 1989, UP agreed to furnish 46 UP-owned units to NdeM to support the projected increase in US/Mexico rail traffic, including the start up of double-stack container train service within six months. As of September 10th, 36 of the agreed on 46 units were in shop being prepared for the lease and the other 10 units were en route from other parts of the system. The first unit arrived in Mexico on September 14th. By September 19th NdeM had rejected 14 of the first 27 units that UP had offered, while accepting another 13 units. The rejected units were repaired and the lease (a horsepower-hour agreement) went into full effect. UP was responsible to keep the units running (most of the maintenance was done at Fort Worth), so the actual number of units in service in Mexico varied because there were usually several units either in the shop or en route to the shop at any one time for preventative maintenance and repairs.

On November 1, 1989, the lease agreement was increased from 46 units to 96 units. The additional 50 locomotives came from a group of UP SD40s that had been retired in June through September 1989 and which were in storage at various points around the UP system, with most of them being at Nampa, Idaho, and North Platte, Nebraska. These 50 units were removed from storage and put through the shops in Fort Worth, Texas, and North Little Rock, Arkansas, to bring them up to operational standards and began arriving in Mexico by mid-November. The new, international double stack service began on 20 March 1990 and by then there were 104 units under lease to Mexico. The leased units were placed into service on NdeM's lines south from the border crossings at Eagles Pass, Laredo, and Brownsville, Texas, and the ex-UP and ex-MP SD40s served as road power on most of the mainline freight trains along those lines between the border crossings and Mexico City. The MP ex-CRI&P and ex MKT GP40s were popular on NdeM's secondary passenger trains.

Of the 63 SD40s in the UP 3000-3122 number series that had been in long term storage in either Nampa, Idaho, and North Platte, Nebraska, at least 32 had been run through the shops in Salt Lake City, Utah, and prepared for long term storage. These 32 units had been sent to Nampa, Idaho, and were all there in storage by mid-September. When the number of units on lease to Mexico was increased to 96 in November 1989, these units were removed from storage and returned to service.

All of the 119 units designated for the Mexico lease came from a group of 121 locomotives that were part of a larger group of 189 locomotives which were retired by UP between June and September 1989, because of a projected downturn in traffic levels. After the lease was in full operation, the question of Union Pacific maintaining and leasing locomotives that had been formally retired came to light. So on November 15, 1989, UP reinstated the 121 previously retired units, with 119 units becoming available for service in Mexico; the remaining 2 units, UP 3106 and 3109, were found to be unserviceable and were retired in February and March 1990, respectively.

For bookkeeping and computer tracking purposes, in November 1989, 22 units operating in Mexico were redesignated; UP units became UPM units, and MP units became MPM units; the added "M" suffix denoting Mexico. In December 1989 another 74 units operating in Mexico were redesignated; more UP units became UPM units, more MP units became MPM units, and the ten MKT GP40s became MKM units. In March 1990 an additional 23 UP units were redesignated as UPM units, bringing the total number of "M" suffixed units up to the total of 119 units that had been reinstated in November 1989.

Almost immediately after the initial months of the Mexico lease, some units began failing because of their age (all were at least 18 years old, and the MKT GP40s were all 23 years old), and the level of usage that the locomotives received while in Mexico. In February and March 1990, nine units were removed from the lease pool and retired, along with UP 3106 and 3109 which had both been reinstated from retirement but weren't in good enough shape to join the pool in the first place. As the locomotives failed, or were found to be unrepairable by UP's own shop forces, they were removed from the lease pool and either stored or retired. By the end of 1990 there were 82 units in the lease pool, with 75 units actually in service in Mexico and seven units en route either to or from maintenance on UP. Of the remaining 37 units from the original 119 units, 19 were back on UP in storage and the other 18 units had been retired.

As the Mexican railway system began receiving its new GE Super 7 series locomotives, the need for the leased UP was reduced. In late October and early November 1990, the original pool of 119 units was reduced to a pool of 101 units as 18 units were returned to UP and stored in serviceable condition. These 18 units had an "X" added to their designation (UPM became UPMX; MPM became MPMX; and MKM became MKMX) to keep them separate, but still part of the Mexico lease fleet, and most were stored at Fort Worth, Texas, with others joining them in late 1990 and throughout 1991. These excess serviceable units were called upon as more of the operational Mexican lease pool units became unserviceable and were retired. As each unit was returned to service, its suffix designation was changed back from "MX" to "M". By the end of October 1991, 16 of the units had returned to service, taking the place of retired locomotives.

As already mentioned, FNM's locomotive purchases allowed the lease pool of UP, MP, and MKT locomotives to slowly diminish. As of 1 February 1991, the lease pool had been reduced to just 72 units, with only 16 units actually working in Mexico, and the other 56 units stored serviceable. The balance between in-service, stored, and retired units continued to change during 1991, and by mid-1992 there were only seven units in service in Mexico. All the others were stored, awaiting disposition, or actually retired, with many already sold.

At the height of the lease there were 119 units involved in the Mexico lease pool. This total included 10 former MKT GP40s, 17 former CRI&P GP40s, 19 former MP SD40s still in the MP 3000 class, 12 former MP SD40s in the UP 4000 class, and finally, 61 UP SD40s from the 3000-3122 class.

Short of access to a daily status report, the above story best relates the constantly changing picture of the Mexico lease fleet, between September 1989 and early August 1992. Right from the first, Union Pacific considered all 119 units to be fully retired from its own active fleet of locomotives, so whatever usage that they could get out of them, and still fulfill their obligations to FNM, would satisfy all interested parties. At times, even though units were shown as being in Mexico, they could very easily be sitting unused somewhere in Texas. This in addition to the units that were already retired, and/or stored serviceable. The units were moved around as required and after the first couple months, the record keeping for these already retired locomotives units became very confused.

The following comes from Keepin' On Track, A Newsletter From The Locomotive Maintenance, Planning & Technology Section of Maintenance Operations, Union Pacific Railroad, Volume 4, Number 1, October 1992:

The Locomotive Maintenance Department's interaction with the FNM Railroad is continuing to evolve into more of a partnership as opposed to what started out in September 1989 as simply a lease of our retired, older technology locomotives.

In addition to currently leasing 55 locomotives to the FNM, Pervis Miller now leads a QIT which includes individuals from the FNM's locomotive repair facility at Monterrey. The team has effectively resolved various leasing, material and maintenance issues in the short time it has been in existence. Also, the FNM solicited UP to bid on a proposal to provide consulting expertise at their locomotive repair facility at San Luis Potosi, Mexico.

Unfortunately, as negotiations were being finalized and Mardy Tegtmann was packing his bags for a 10-month assignment, the FNM shifted strategy and decided to push forward with its strategy to privatize. The good news is that privatization by the FNM could open up other significant opportunities for the UP.

In regard to lease activity, we have two groups of units operating in Mexico. The first group of 35 consists of approximately 30 SD40s and five GP40s which have been in use in Mexico since 1989. The lease on these units expires in September, 1992. In addition to providing a continuing stream of income to the UP on locomotive assets that were retired due to age and marginal performance, a bigger benefit has been the relationship established with the FNM and the effect on keeping border operations fluid.

The second group of 20 SD40s locomotives on lease for six months starting in late July poses more of a risk for UP, but has fostered a better partnership relationship. The FNM negotiated an availability guarantee and thoroughly inspected and tested the units prior to acceptance. The QIT has helped smooth the startup of this agreement. Upon the expiration of this lease in January 1993, these 18 to 20 year-old units will be returned and scheduled into the 1993 life extension rebuild program.

Locomotives Leased To Mexico

Ex MKT GP40s

Road
Number
First
Retired
Date
Reinstated
Date
To MKM
Date
Stored
Date
Retired
MKT 170 28 Aug 1989 15 Nov 1989 6 Dec 1989   29 May 1992
MKT 171 28 Aug 1989 15 Nov 1989 7 Dec 1989   15 May 1990
MKT 172 28 Aug 1989 15 Nov 1989 11 Dec 1989   5 Jun 1991
MKT 173 28 Aug 1989 15 Nov 1989 18 Dec 1989 25 Jan 1991  
MKT 174 28 Aug 1989 15 Nov 1989 6 Dec 1989   29 May 1992
MKT 177 28 Aug 1989 15 Nov 1989 6 Dec 1989    
MKT 178 28 Aug 1989 15 Nov 1989 12 Dec 1989   23 Oct 1991
MKT 179 28 Aug 1989 15 Nov 1989 18 Dec 1989   5 Jun 1991
MKT 180 28 Aug 1989 15 Nov 1989 13 Dec 1989    
MKT 181 28 Aug 1989 15 Nov 1989 18 Dec 1989    

Ex MP GP40s (ex CRI&P)

Road
Number
First
Retired
Date
Reinstated
Date
To MPM
Date
Stored
Date
Retired
MP 600 28 Aug 1989 15 Nov 1989 18 Dec 1989   5 Jun 1991
MP 605 28 Aug 1989 15 Nov 1989 2 Dec 1989   23 Oct 1991
MP 608 28 Aug 1989 15 Nov 1989 6 Dec 1989 26 Feb 1991  
MP 611 28 Aug 1989 15 Nov 1989 5 Dec 1989   5 Jun 1991
MP 616 28 Aug 1989 15 Nov 1989 18 Dec 1989   6 Feb 1990
MP 622 28 Aug 1989 15 Nov 1989 5 Dec 1989 23 May 1990  
MP 631 28 Aug 1989 15 Nov 1989 18 Dec 1989 26 Jan 1991  
MP 632 28 Aug 1989 15 Nov 1989 18 Dec 1989 16 Mar 1990 29 May 1992
MP 633 28 Aug 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
MP 635 28 Aug 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 636 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
MP 639 28 Aug 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 640 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
MP 642 28 Aug 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 643 28 Aug 1989 15 Nov 1989 19 Dec 1989   21 Aug 1991
MP 645 28 Aug 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 647 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991

Note: MPM 645 to UPM 645, 25 January 1990.

UP SD40s

Road
Number
First
Retired
Date
Reinstated
Date
To UPM
Date
Stored
Date
Retired
UP 3001 28 Aug 1989 15 Nov 1989 19 Dec 1989   9 Mar 1990
UP 3003 19 Sep 1989 15 Nov 1989 22 Nov 1989   9 Mar 1990
UP 3004 28 Aug 1989 15 Nov 1989 19 Dec 1989   21 Aug 1991
UP 3005 28 Aug 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3006 28 Aug 1989 15 Nov 1989 22 Nov 1989 5 Oct 1991  
UP 3007 28 Aug 1989 15 Nov 1989 4 Dec 1989   23 Oct 1991
UP 3008 28 Jul 1989 15 Nov 1989 4 Dec 1989 2 Mar 1991  
UP 3009 28 Aug 1989 15 Nov 1989 22 Nov 1989   9 Mar 1990
UP 3012 28 Jul 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3014 28 Aug 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3015 23 Jun 1989 15 Nov 1989 22 Nov 1989 21 Jan 1991  
UP 3027 28 Aug 1989 15 Nov 1989 1 Dec 1989   5 Jun 1991
UP 3028 28 Aug 1989 15 Nov 1989 18 Dec 1989 4 Feb 1991  
UP 3030 28 Aug 1989 15 Nov 1989 22 Nov 1989   9 Mar 1990
UP 3031 28 Aug 1989 15 Nov 1989 22 Nov 1989   15 May 1990
UP 3032 17 Jul 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3042 23 Jun 1989 15 Nov 1989 22 Nov 1989 22 Jan 1991  
UP 3043 17 Jul 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 3044 17 Jul 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 3045 28 Aug 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3056 28 Aug 1989 15 Nov 1989 18 Dec 1989   15 May 1990
UP 3057 28 Jul 1989 15 Nov 1989 18 Dec 1989   5 Jun 1991
UP 3060 23 Jun 1989 15 Nov 1989 18 Dec 1989 7 Jun 1990  
UP 3063 28 Aug 1989 15 Nov 1989 18 Dec 1989   23 Oct 1991
UP 3066 28 Aug 1989 15 Nov 1989 18 Dec 1989 19 Apr 1991  
UP 3069 28 Aug 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3070 28 Aug 1989 15 Nov 1989 22 Nov 1989   29 May 1992
UP 3076 28 Jul 1989 15 Nov 1989 5 Dec 1989 3 Jun 1990  
UP 3077 28 Jul 1989 15 Nov 1989 22 Nov 1989   9 Mar 1990
UP 3079 28 Jul 1989 15 Nov 1989 19 Dec 1989 1 Oct 1991  
UP 3080 28 Jul 1989 15 Nov 1989 19 Dec 1989 1 Oct 1991 29 May 1992
UP 3082 23 Jun 1989 15 Nov 1989 1 Dec 1989   9 Mar 1990
UP 3083 28 Aug 1989 15 Nov 1989 19 Dec 1989 1 Oct 1991  
UP 3085 28 Aug 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3086 28 Aug 1989 15 Nov 1989 29 Nov 1989   29 May 1992
UP 3087 28 Aug 1989 15 Nov 1989 22 Nov 1989 1 Oct 1991  
UP 3088 28 Aug 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
UP 3089 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
UP 3090 28 Aug 1989 15 Nov 1989 22 Mar 1990   19 Apr 1990
UP 3091 28 Aug 1989 15 Nov 1989 6 Mar 1990    
UP 3093 28 Aug 1989 15 Nov 1989 7 Mar 1990    
UP 3096 28 Aug 1989 15 Nov 1989 22 Mar 1990 17 Jan 1991  
UP 3097 28 Aug 1989 15 Nov 1989 15 Mar 1990   23 Oct 1991
UP 3098 28 Aug 1989 15 Nov 1989 5 Mar 1990 23 Jan 1991  
UP 3099 28 Aug 1989 15 Nov 1989 14 Mar 1990    
UP 3101 28 Aug 1989 15 Nov 1989 14 Mar 1990   23 Oct 1991
UP 3103 28 Aug 1989 15 Nov 1989 7 Mar 1990   5 Jun 1991
UP 3105 28 Aug 1989 15 Nov 1989 9 Mar 1990 6 Jul 1991  
UP 3106 28 Aug 1989 15 Nov 1989     6 Feb 1990
UP 3108 28 Aug 1989 15 Nov 1989 8 Mar 1990   23 Oct 1991
UP 3109 28 Aug 1989 15 Nov 1989     9 Mar 1990
UP 3110 28 Aug 1989 15 Nov 1989 15 Mar 1990   15 May 1990
UP 3111 19 Sep 1989 15 Nov 1989 21 Mar 1990   23 Oct 1991
UP 3112 28 Aug 1989 15 Nov 1989 22 Mar 1990   23 Oct 1991
UP 3113 28 Aug 1989 15 Nov 1989 14 Mar 1990   15 May 1990
UP 3115 28 Aug 1989 15 Nov 1989 20 Mar 1990    
UP 3116 28 Aug 1989 15 Nov 1989 20 Mar 1990   23 Oct 1991
UP 3117 28 Aug 1989 15 Nov 1989 13 Mar 1990   23 Oct 1991
UP 3118 25 Oct 1989   22 Mar 1990   5 Jun 1991
UP 3120 28 Aug 1989 15 Nov 1989 15 Mar 1990 16 Jul 1991  
UP 3121 28 Aug 1989 15 Nov 1989 20 Mar 1990   23 Oct 1991
UP 3122 28 Aug 1989 15 Nov 1989 16 Mar 1990   23 Oct 1991

Ex MP SD40s

Road
Number
First
Retired
Date
Reinstated
Date
To MPM
Date
Stored
Date
Retired
MP 3002 19 Sep 1989 15 Nov 1989 19 Dec 1989 15 Jan 1991 29 May 1992
MP 3005 28 Jul 1989 15 Nov 1989 19 Dec 1989 13 Feb 1991  
MP 3007 28 Jul 1989 15 Nov 1989 22 Nov 1989 20 Jan 1991  
MP 3008 23 Jun 1989 15 Nov 1989 19 Dec 1989   5 Jun 1991
MP 3010 28 Aug 1989 15 Nov 1989 19 Dec 1989 3 Jan 1991  
MP 3012 28 Aug 1989 15 Nov 1989 14 Dec 1989 23 Jan 1991  
MP 3017 28 Jul 1989 15 Nov 1989 19 Dec 1989 1 Oct 1991  
MP 3018 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
MP 3019 28 Aug 1989 15 Nov 1989 19 Dec 1989   9 Mar 1990
MP 3020 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
MP 3022 17 Jul 1989 15 Nov 1989 19 Dec 1989    
MP 3023 23 Jun 1989 15 Nov 1989 19 Dec 1989    
UP 4027 28 Aug 1989 15 Nov 1989 5 Dec 1989   23 Oct 1991
MP 3028 23 Jun 1989 15 Nov 1989 22 Nov 1989   23 Oct 1991
MP 3030 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
MP 3031 28 Aug 1989 15 Nov 1989 5 Dec 1989   23 Oct 1991
MP 3032 28 Jul 1989 15 Nov 1989 18 Dec 1989   12 Aug 1991
UP 4033 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
UP 4054 28 Aug 1989 15 Nov 1989 19 Dec 1989   6 Feb 1990
UP 4056 23 Jun 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
UP 4057 23 Jun 1989 15 Nov 1989 19 Dec 1989 3 Jun 1990  
MP 3059 19 Sep 1989 15 Nov 1989 18 Dec 1989   12 Aug 1991
UP 4060 23 Jun 1989 15 Nov 1989 19 Dec 1989 20 Oct 1991  
UP 4061 28 Aug 1989 15 Nov 1989 19 Dec 1989 14 May 1990  
UP 4062 28 Aug 1989 15 Nov 1989 19 Dec 1989 18 Feb 1991  
UP 4063 28 Aug 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
MP 3064 28 Aug 1989 15 Nov 1989 22 Nov 1989 1 Oct 1991  
MP 3065 28 Aug 1989 15 Nov 1989 18 Dec 1989 18 Feb 1991  
UP 4066 17 Jul 1989 15 Nov 1989 19 Dec 1989 14 Jul 1990  
UP 4067 17 Jul 1989 15 Nov 1989 19 Dec 1989   23 Oct 1991
UP 4068 28 Aug 1989 15 Nov 1989 19 Dec 1989   19 Apr 1990

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