Mexico’s authorities is reviving a railway between the Gulf of Mexico and the Pacific Ocean that had been in decline for greater than a century, in a daring bid to steal container visitors away from the Panama Canal.
The mission seeks to capitalise on multinationals’ want to be nearer to the US and the canal’s durations of low water ranges because the area suffers more and more frequent droughts. For populist president Andrés Manuel López Obrador, it kinds a part of a gambit to attract funding to the poorer south — albeit one which trade figures are sceptical can succeed.
The $2.8bn Tehuantepec isthmus hall will characteristic a 308km railway between renovated ports at Salina Cruz in Oaxaca state and Coatzacoalcos in Veracruz, and industrial parks shut to move hubs, together with airports, alongside the route. Trains have already traversed the route on check runs forward of its opening in December.
Mexico’s authorities is bullish about prospects for the rail crossing, which is able to supply proximity to the US and a transit time of 6.5 hours excluding loading time — lower than the eight to 10 hours it takes on the 80km canal.
“Mexico proper now is without doubt one of the most tasty international locations, among the many prime 5 most tasty on the planet,” economic system minister Raquel Buenrostro mentioned in an interview. “There’s no means that this doesn’t develop.”
However consultants mentioned it might take years to construct sufficient infrastructure and create the underlying industries to woo world logistics gamers, if that proves potential in any respect. And the added price, time and insecurity in unloading containers on to a practice with a fraction of a ship’s capability, then again on to a vessel at Coatzacoalcos on the Gulf of Mexico, make it a troublesome promote, mentioned logistics trade figures.

Worldwide shipping firms, freight teams and port terminal operators are but to indicate curiosity within the route, they mentioned, whereas the primary spherical of commercial parks is ready to draw primarily Mexican funding, in line with the federal government. The hall’s success would hinge on creating sustainable industries within the south of the nation, they added.
“The day that our prospects have determined to spend money on manufacturing, that might drive demand probably that might be fascinating for us,” mentioned Lars Østergaard Nielsen, head of Americas buyer supply at AP Møller-Maersk, the world’s second-largest container delivery group.
If extra manufacturing got here south, the interoceanic hall “might be very helpful”, Nielsen mentioned, including that with out that development there could be “much less demand” for the rail hyperlink.
Mexico had spent some 50bn pesos on the mission, Buenrostro mentioned, together with on upgrading the railway, shopping for land for industrial parks and buying equipment and new rolling inventory. Twelve primarily Mexican firms participated within the industrial park auctions, with 30 bids throughout 5 websites.

Constructing might start subsequent yr and create 10,000 direct jobs, she mentioned, including: “We’re very assured that these . . . parks will develop robotically.”
One of many worst droughts on document has hit the Panama Canal, which depends on big freshwater volumes for its operation, this yr. Its operators have restricted weight on crossings and for the primary time lowered what number of ships can cross every day to 31, from a mean of 36.
Common ready occasions for bigger tankers carrying liquefied pure gasoline north by way of the canal rose as excessive as 20 days in August, up from a low of eight days throughout the identical month in 2022, in line with delivery company Norton Lilly. Common container visitors, which Mexico is attempting to draw, has been much less affected as a result of its slots are booked additional prematurely.
Mexico’s authorities thinks the issues on the canal, which made $4.65bn in income final yr, current a possibility.

In its preliminary part, the single-track rail line will run passenger and cargo trains concurrently. The six cargo trains are able to shifting 260 TEUs — or 20-foot equal items, a measure of cargo capability — on two journeys every a day, in line with a authorities presentation.
That provides a most annual capability of 1.14mn TEUs, which falls nicely in need of the ten.9mn TEUs carried on container ships by way of the Panama Canal in 2022, in line with information supplier MDS Transmodal.
“A practice isn’t the identical as a ship. You must think about the proportions. However given the adjustments we’re seeing with local weather change it’s an actual and more and more vital various,” Buenrostro mentioned of the Tehuantepec railway.
A September presentation projected that 304,688 TEUs would transfer by way of the Isthmus hall in 2028 and 1.3mn TEUs by 2036.
The canal’s director Ricaurte Vásquez Morales mentioned the Mexican mission might be a aggressive risk had been the canal to actually run out of water — however that was impossible.

“Positively the Mexican resolution might be a possible risk to the Panamanian operation,” he mentioned at a current information convention, including {that a} substitute route would solely be wanted “if we had been in a state of affairs the place there isn’t any water in any respect, and we don’t anticipate that”.
To mitigate the issues, Panama already presents street and rail transport throughout its isthmus, he mentioned. The canal authority has additionally mentioned a brand new reservoir mission to supply recent water.
López Obrador’s imaginative and prescient for the isthmus area is a part of an formidable resurrection of the nation’s passenger railways, which principally fell into disuse in the course of the twentieth century. The Tehuantepec line, constructed by a British engineering agency for the federal government of dictator Porfirio Diaz, was inaugurated in 1907 however Mexico’s revolution and the opening of the Panama Canal seven years later devastated enterprise.
The isthmus railway will ultimately connect with López Obrador’s $30bn Mayan Train loop across the south, aimed toward vacationers, and an $18bn new oil refinery as he seeks to unfold wealth by way of authorities mega-projects. He has handed the operation of most of his tasks to the nation’s armed forces, with the Tehuantepec hall run by the navy.
In Could, the marines seized one portion of the road that was below a concession with Grupo Mexico to assist construct out its community, in a sign obtained badly by non-public buyers. In the identical week, superior talks on Grupo Mexico’s acquisition of Citigroup’s Mexican unit Banamex collapsed.
Assembly the visitors targets shall be arduous with out ports able to effectively dealing with ever-larger ships, with smaller vessels incurring rising prices and creating extra air pollution per container. One maritime port trade consultant mentioned the greater than $400mn required to construct port capability offered too many dangers: “It’s a really excessive funding . . . and not using a market.”
Buenrostro mentioned the enlargement of ports at both finish of the rail route was producing curiosity from logistics operators, which had been ready to see which industries arrange alongside the hall.
“They’re arriving naturally,” she mentioned. “Proper now, we’re gathering the weather to hyperlink provide and demand and entice the logistics which might be actually probably the most environment friendly for the realm.”
However Christian Sur, government vice-president of ocean freight at Distinctive Logistics, mentioned: “The query is at all times the identical. When there’s an alternate routing obtainable, they [importers] will say, ‘is it dependable? I don’t need to be the primary one to make use of it’.”