A project to create an alternative freight route to the Panama Canal by connecting Asia and the US East Coast through a rail line joining Mexican ports on the Pacific and Gulf coasts is advancing, according to a report released by Mexico’s president.
Construction on a container terminal at the Port of Salina Cruz on the Pacific Coast is about three-quarters completed, while work on the Port of Coatzacoalcos on the Gulf Coast has also moved ahead, the report from President Andrés Manuel López Obrador (AMLO) stated. Upgrades on the rail line between the two ports have also begun, the report, released Friday, said.
The work is part of a project heavily backed by AMLO to boost the economy along the rail route, which links the two coasts on either side of what is known as the Isthmus of Tehuantepec. The idea, which would potentially provide a route to compete with the Panama Canal, has been discussed in various forms for more than two decades, and is generally considered a long-shot proposal. One reason is the investment needed, which one plan discussed in 2017 put at $1 billion, to cover the cost of improvements at both ports, and an upgrade of the rail line, to create a high-volume, efficient route.
The isthmus crosses the narrowest part of Mexico, which — at about 200 miles wide — is far shorter than a sea trip between the two oceans via the Panama Canal. Francisco J. Espinosa Teja, a Mexico-based logistics industry consultant, told the conference of the Mexican Association of Intermodal Transport (AMTI) in 2017 that the link could cut the time to get cargo from coast to coast from seven days through the Panama Canal to four, with costs reduced by less gas consumption. However, the route would also require additional loading and unloading to get cargo on and off the ships and onto a train.
Salina Cruz is the smallest port on Mexico’s Pacific Coast, handling 1,149 loaded TEU in the first seven months of the year, an increase of 58 percent over the same period in 2018, according to figures from the Secretariat of Communications and Transportation (SCT), which oversees Mexican ports. Coatzacoalcos, Mexico’s fifth-largest port on the Gulf Coast, handled 6,041 loaded TEU in the seven-month period, down 22.3 percent from the same period in 2018, the figures show. All Mexican ports together handled 2.88 million loaded TEU in the first seven months of 2019, a 2.8 percent increase over the same period in 2018.
AMLO, who took office last December, outlined the status of the project as part of his First Report of the Government, a 944-page documentation of his administration’s progress in a broad range of projects.
Aside from the improvements at the two ports, the administration has also begun work on a $32 million project to upgrade eight miles of rail track across the isthmus, the report said, adding the project was set to go out to bid last month. A solicitation document from March on the Salina Cruz website stated the SCT was looking for bidders to build and operate a container terminal in the port and at Coatzacoalcos.
The government is also working on a $15 million project to modernize a section of the Chiapas-Mayab rail line, which links to the isthmus rail line, AMLO’s report said.