The dwindling of the Panama Canal boosts rival trade routes
problems are geopolitical, those in Panama are climatic. The lakes that feed the canal are drying up, thanks to annual droughts that may be worsening as the climate warms. The series of locks connecting the Atlantic Ocean to the Pacific via Gatun Lake are close to the point of being too shallow to let the largest container ships through.
Other Latin American governments spy opportunity. In normal times the canal carries about 5% of global maritime trade. And it is lucrative, generating $2.5bn for the Panamanian treasury in the 2022-23 financial year, about 3% of gdp.
Politicians in several other countries with both Pacific and Atlantic coastlines are either building or mulling infrastructure projects that might lure traffic and revenue away from Panama. The most viable alternatives are by land, with containers unloaded from ships onto trains or lorries at one port and carried cross-country before being reloaded onto a ship on the other side. Mexico’s Interoceanic Corridor (CIIT) is the closest to completion.
It has been discussed for decades but is finally being built as part of President Andrés Manuel López Obrador’s infrastructure plan. Its main challenge is to modernise a 300km railway that runs across southern Mexico, from the Pacific to the Atlantic coast. The ports at either end—Coatzacoalcos and Salina Cruz—are being revamped.
Most of the railway has been built; passenger services have begun. Work on the ports has not been finished, delaying the start of coast-to-coast freight travel. Mexico’s government plans to launch the CIIT’s second and third rail lines later this year.
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