Mexico’s government is reviving a railway between the Gulf of Mexico and the Pacific Ocean to divert traffic away from the Panama Canal.
The construction of the Tehuantepec isthmus corridor aims to capitalize on Panama Canal’s low water levels as the region suffers increasingly frequent droughts. The lack of rainfall has caused water levels in the canal to drop, making it difficult for ships to navigate through the locks. This has led to delays in shipping schedules and increased costs for businesses relying on the canal for trade.
As a result, efforts are being made to explore alternative solutions such as water conservation measures and exploring other shipping routes to mitigate the impact of the drought on global shipping.
Seizing this opportunity, Mexico has spent around 50bn pesos on the project, including upgrading the railway, buying land for industrial parks, and acquiring machinery and new rolling stock, Financial Times reports.
According to the Financial Times, the rail crossing offers proximity to the US and a transit time of 6.5 hours excluding loading time, less than the eight to 10 hours it takes on the 80km canal.
However, experts say it could take years to build enough infrastructure and create the underlying industries to woo global logistics players.
