More railway lines needed in Panama and Central America

By Franklin Castrellón

In 1996, the Kansas City Southern Railroad, the operator of the Panama railroad, acquired in conjunction with Transportes Marítimos Mexicanos, the railroad that today connects the industrial centers of Mexico, the United States and Canada

In 1996, the Kansas City Southern Railroad, the operator of the Panama railroad, acquired in conjunction with Transportes Marítimos Mexicanos, the railroad that today connects the industrial centers of Mexico, the United States and Canada.

Representatives of the Central American Commission on Maritime Transport (COCATRAM) will meet in Panama from Tuesday, June 16 to Friday, June 19 to define joint actions towards the development of a competitive regional logistics platform, to stimulate trade between the countries of the Mesoamerica Project (PM).

Created in 2008 under the name of the Puebla-Panama Plan, the Mesoamerican project involves ten countries – Mexico, Guatemala, Belize, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, the Dominican Republic and Colombia. It seeks to enhance cooperation between member countries to promote interconnectivity projects, infrastructure and social development.

The twenty-seventh meeting of the Central American Port group (REPICA) convened by COCATRAM, will try and identify functional actions to complement shipping.

For the logistics platform to support shipping work, infrastructure, efficient airports and a dry canal will be needed, said José Dopeso, COCATRAM director of Maritime and Port Affairs, who announced the Panama meeting at a press conference.

Addressing the REPICA 2015 meeting, Tomas Avila, Panama Maritime Authority (AMP) secretary general, expressed support for “complementary formulas” to maritime transport that avoid cargo movement by road because “studies say that land cargo in Central America moves at an average speed of 18 kilometers per hour.” This is without taking into account the occasional road closures due to social problems.

Costly delays can be incurred due to poor road condition and crime, factors that limit truck movement to daytime hours, in addition to numerous border crossings with divergent Customs regulations.

The cost of transportation by truck is more expensive than other options, such as rail. A railway can transport thousands of containers per journey, as compared to articulated trucks that can only carry up to two containers.

Transport experts consulted by The Bulletin agreed that rail is the practical way forward and that member countries of the PM should build a rail network from Panama to Mexico. In fact, since 1996, the Kansas City Southern Railroad, the operator of the Panama railroad, acquired in conjunction with Transportes Marítimos Mexicanos, the railroad that today joins the industrial centers of Mexico, the United States and Canada.

This system provides a highly efficient service in support of much of the trade generated by the North American Free Trade Agreement (NAFTA).

Besides the Mexican rail system that connects to the mini land bridge system of the United States, in Brazil and Peru there are coordinated efforts and financial support from China, to implement an ambitious transcontinental railroad linking the productive areas on the Atlantic and Pacific coasts of South America.

Transhipment ports of Central America

Transhipment ports of Central America. (Source: Atlas Caribbean)

Two complementary options

The Mesoamerica Project has identified two complementary solutions to meet the growing trade resulting from the the expanded Canal:

  1. The modernization of the maritime transport system; and
  2. An international rail system. To study the viability of the rail component, at the end of 2008, the IDB provided a contract to a consulting firm to perform the feasibility study.

The study analyzed the rehabilitation of railways in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica, “considering the domestic and regional passenger and cargo demand,” and the definition of the Mesoamerican rail corridor linking Mexico with Central America and Panama.

The Mesoamerica ProjectPanama currently has a modern railway operated since 1998 by the Panama Canal Railway Company, a subsidiary of Kansas City Southern, with branches to the Port of Balboa, on the Pacific side, and to the ports of Cristobal, Manzanillo International Terminal (MIT) and Colon Container Terminal (CCT) on the Atlantic side. The only transshipment port on the banks of the Canal that does not have this service is PSA Panama International Terminal, operated by the Port Authority of Singapore.

In 2005 the investment firm, Shaw Group (NYSE SHAW) released its proposed construction of a 2,575 kilometers railway, operated by a private concessionaire, that would join the Panama Railroad with the countries of Central America, Mexico, the United States and Canada. The cost of the project, known as FERISTSA, was then estimated at about $3 billion. The group claimed to have advanced discussions with several rail operators in the United States.

It is hoped that 2015 will see REPICA resume the rail issue, with plans to modernize the regional port system so that it can adapt to the new challenges the expanded Canal represents.

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