Mexico’s Railroad to Rival Panama Canal

Mexico’s government is reviving a railway between the Gulf of Mexico and the Pacific Ocean that has been declining for over a century. The goal is to take container traffic away from the Panama Canal. Mexico’s government is bullish about the prospects for the rail crossing, which will offer proximity to the US and cut transit times.

Panamanian Drought Has Effected Crossings

In 2023, one of the worst droughts on record affected the Panama Canal, which relies on fresh water. Its operators restricted the weight of crossings and reduced the number of ships that could pass through each day to 31, down from 36.

Mexico’s Infrastructure is Lacking, but Changes May Come

That said, the railroad's capacity will be nowhere near the volume of container ships that pass through the canal—only about 1%. Therefore, the impact on the Panama Canal will be limited. Nevertheless, depending on cost, the railroad could be a viable alternative.

Mexico's infrastructure is currently not in place to unload and load containers from and onto the ships on either end of the journey. In addition, international shipping companies, freight groups, and port terminal operators have yet to show interest in the new route. In conclusion, how the alternative container route will pan out over the next few years remains to be seen.