With drought at the Panama Canal and conflicts in the Red Sea and other global shipping lanes disrupting trade, officials in Mexico predict a golden opportunity for the country’s $2.8 billion Isthmus of Tehuantepec’s Interoceanic Corridor (CIIT) project.
The initiative is converting the isthmus in southern Mexico, which represents the shortest distance between the Gulf of Mexico and the Pacific Ocean in the country, into a 188-mile rail corridor that could handle up to 1.4 million twenty-foot equivalent units annually by 2033.
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While Mexican authorities are bullish on the CIIT’s prospects, global logistics operators said they are skeptical it could ever replace or even compete with the Panama Canal, which handles about 14,000 vessels and 8 million TEUs annually.
“The challenge really is that the Panama Canal is about 50 miles long, and the railroad to get from the Pacific to the Gulf is around 200 miles, so it’s a much longer track,” Pawan Joshi, executive vice president of products and strategy at e2open, told FreightWaves. “Another challenge — how many containers can [the railroad] move? It’s also about the ports on either end, whether they’re able to unload those containers; do they have the appropriate infrastructure?”
I don't think this project has to replace the Panama Canal. Drought is forcing the Panama Canal Authority to reduce the number of passages allowed each day to preserve water in Gatun Lake....
I don't think this project has to replace the Panama Canal. Drought is forcing the Panama Canal Authority to reduce the number of passages allowed each day to preserve water in Gatun Lake. Creating other options, even if they may be slower or more expensive, will let businesses decide what is the right option for their cargo. Diversifying away from single points of failure for global supply chains is always welcome in my eyes.
Talking about shipping channels “competing” with each other always seemed a bit strange to me. Like maybe in terms of raw volume I can see why someone might be skeptical that it could “compete”....
Talking about shipping channels “competing” with each other always seemed a bit strange to me. Like maybe in terms of raw volume I can see why someone might be skeptical that it could “compete”. But there would obviously be particular geographic markets where this railroad would be unquestionably more economical, even when the Panama Canal is at peak capacity. And of course there’s the fact that they’re literally talking about building this because the Panama Canal is especially vulnerable to natural changes in weather patterns.
Some history from Wikipedia: They are competing, alternative routes. Competition on price and speed isn't a bad thing from a shipping company's point of view. It's good to have alternatives.
[U]sage of the Railway began to plummet in 1914, when the Panama Canal was officially opened. Due to the profits made out of the shipment of products from New York to Honolulu or any other port in the Pacific, American businesses found it much more convenient to not let that business fall into the hands of the English or the Mexican government, thus they quickly started to go through Panama instead, driving away the Railway's main source of profit. In that year, the cargo of the Railway fell by a third, and in the following year by 77%. In addition, a few years earlier, in 1910, Mexico became engulfed in its largest civil war in history, the Mexican Revolution. Railways across the country started to be used almost exclusively for war [...]
They are competing, alternative routes. Competition on price and speed isn't a bad thing from a shipping company's point of view. It's good to have alternatives.
Sorry if it’s not clear, but to reiterate, I understand the concept of trading routes competing on volume, but that wasn’t really the point of my comment. Which is that even a trade route which...
Sorry if it’s not clear, but to reiterate, I understand the concept of trading routes competing on volume, but that wasn’t really the point of my comment. Which is that even a trade route which isn’t universally better than another is still gonna be better some of the time for some of the people and as long as you have enough of those to support the route, then it doesn’t really matter if you can’t compete on volume.
This is really interesting. Track length doesn't seem like a cause for concern. Ports can load and unload multiple vessels. I can't think of any hard limiters on throughput. I imagine potential...
This is really interesting.
Track length doesn't seem like a cause for concern. Ports can load and unload multiple vessels. I can't think of any hard limiters on throughput.
I imagine potential for ships at either end to make more frequent and consistent routes, which iirc is a key metric in shipping.
I mean in the end it's just engineering - theoretically. Practically, of course, the limiter is cost. To load/unload multiple container vessels simultaneously, you need to build out the ports on...
I can't think of any hard limiters on throughput.
I mean in the end it's just engineering - theoretically.
Practically, of course, the limiter is cost. To load/unload multiple container vessels simultaneously, you need to build out the ports on both ends. To do it quickly, you need to upgrade the existing infrastructure. Once the existing train track is maxed out, you need to put down 200 miles of new track.
And you need to do all of that at a cost that rivals just waiting in line for a few days in front of the Panama Canal in the few weeks/months every couple of years when Panama suffers from drought. Which, if I understand correctly, is an El Nino event, which means it happens on a 7 year cyle.
Not quite what I was getting at. I am under the impression - perhaps incorrect - that the Panama Canal cannot be expanded without service interruption. If the overland route is cost effective...
Not quite what I was getting at. I am under the impression - perhaps incorrect - that the Panama Canal cannot be expanded without service interruption.
If the overland route is cost effective enough to implement at all, I imagine it would expand until expansion is no longer cost effective.
You also now need two ships and two crews to finish the shipping route. Edit- Not to say this is or isn't a good idea. Just another cost to consider in comparison. In general should such a thing...
You also now need two ships and two crews to finish the shipping route.
Edit-
Not to say this is or isn't a good idea. Just another cost to consider in comparison. In general should such a thing catch on it'll probably be kept in check by the costs of what it would take for one ship to do the journey, but at least getting started it's going to likely cost more as you must have more equipment and people involved, even if one group frees up earlier than the other, there's some upfront cost that's lost until all of this gets figured out.
This project had been discussed before on other sites. I remember some comments saying the unloading can be a benefit since it gives an opportunity to route more directly, e.g. Ship leaves from a...
This project had been discussed before on other sites. I remember some comments saying the unloading can be a benefit since it gives an opportunity to route more directly, e.g. Ship leaves from a Chinese port with cargo for US East Coast, France and Africa. The unload in Mexico gives a an opportunity to transfer to ships with more direct routes to those locations.
Two ships and two crews isn't the bad part. Two ships making half distance routes equals the same cargo moved and personnel costs as one ship making hre full distance route. The main issue i see...
Two ships and two crews isn't the bad part. Two ships making half distance routes equals the same cargo moved and personnel costs as one ship making hre full distance route.
The main issue i see is that loading and unloading cargo ships is extremely time consuming and labor intensive. It's a mutli day process that requires you paying lots of longshoreman to operate cranes, attach them to containers, secure them to railcars, safety people for the whole process, the support staff for those longshoreman, places for them to live and so on. In comparison, a cargo ship underway only has a crew of around 20. Fuel is your biggest cost. It's way cheaper to sail than to do lots of transitions between modes. So unless the panama canal is super, super expensive, or delays are extremely bad, its hard to see how transitioning from sea to rail back to sea would be competitive.
I think this ignores overhead. Telling one group of people and one piece of equipment to "go here" has less than doing the same for two. They are small costs in the scheme of things, but not...
Two ships and two crews isn't the bad part. Two ships making half distance routes equals the same cargo moved and personnel costs as one ship making hre full distance route.
I think this ignores overhead. Telling one group of people and one piece of equipment to "go here" has less than doing the same for two.
They are small costs in the scheme of things, but not insignificant, and especially won't be when this is all getting figured out.
Tried to find a white paper or feasibility study on the initiative, just to get a sense of the numbers involved but only found the Invester PowerPoint and an infographic. Overall it seems like one...
Tried to find a white paper or feasibility study on the initiative, just to get a sense of the numbers involved but only found the Invester PowerPoint and an infographic. Overall it seems like one of those ambitious megaprojects thats more than a vanity showcase (see anything funded by the Saudi).
But like the article says, it'd be interesting if they can get the numbers right. It's a short enough trip by land that a container could be off one ship and on another in the same day. It'll take about 3-5 days to pack or unpack a ship which is about the same as the waiting time for the canal in normal times. But can two ports and a rail line match or beat the service rate of up to half a million 20ft containers a day. That doesn't even begin to take into account security, labor, local politics and the canal adapting to the chages.
I'm just curious where that bottom line value comes from for the freight companies, especially after all the tax breaks and incentives expire. Throughput, reliability, cost? They make a good case for flexibility where the eastern Mexico port could be a hub for distribution across all of eastern America's, west Africa and Europe but is that enough? On the one side, you're waiting of a boat and a big piece of infrastructure. On the other side: it's 2 boats, several handovers and a lot of time where you are not in control of your containers.
Wikipedia says Port Salina Cruz is a very busy port but it has no natural harbor. These freight ships are going to have to be aware and allow for big Pacific storms, but I would imagine that that...
Wikipedia says Port Salina Cruz is a very busy port but it has no natural harbor.
These freight ships are going to have to be aware and allow for big Pacific storms, but I would imagine that that can be managed with modern radar and satellite technology.
The Panama Canal is at risk. This seems like a good investment by Mexico
Even if it weren't at risk I'd say this is a good thing. Two lines prevent bottlenecking like we saw at the Suez, introduces competition between Mexico and Panama (cheaper transit, cheaper...
Even if it weren't at risk I'd say this is a good thing. Two lines prevent bottlenecking like we saw at the Suez, introduces competition between Mexico and Panama (cheaper transit, cheaper goods?), shorter lines for ships in the Atlantic and Pacific, more weather resilience, and as a whole there's probably a bunch you can do well by train that a ship can't.
I'm happy to see articles about Mexico that don't lead with death, gang capture and it being a failed state. This is good news.
From the article:
...
I don't think this project has to replace the Panama Canal. Drought is forcing the Panama Canal Authority to reduce the number of passages allowed each day to preserve water in Gatun Lake. Creating other options, even if they may be slower or more expensive, will let businesses decide what is the right option for their cargo. Diversifying away from single points of failure for global supply chains is always welcome in my eyes.
Talking about shipping channels “competing” with each other always seemed a bit strange to me. Like maybe in terms of raw volume I can see why someone might be skeptical that it could “compete”. But there would obviously be particular geographic markets where this railroad would be unquestionably more economical, even when the Panama Canal is at peak capacity. And of course there’s the fact that they’re literally talking about building this because the Panama Canal is especially vulnerable to natural changes in weather patterns.
Some history from Wikipedia:
They are competing, alternative routes. Competition on price and speed isn't a bad thing from a shipping company's point of view. It's good to have alternatives.
Sorry if it’s not clear, but to reiterate, I understand the concept of trading routes competing on volume, but that wasn’t really the point of my comment. Which is that even a trade route which isn’t universally better than another is still gonna be better some of the time for some of the people and as long as you have enough of those to support the route, then it doesn’t really matter if you can’t compete on volume.
This is really interesting.
Track length doesn't seem like a cause for concern. Ports can load and unload multiple vessels. I can't think of any hard limiters on throughput.
I imagine potential for ships at either end to make more frequent and consistent routes, which iirc is a key metric in shipping.
I mean in the end it's just engineering - theoretically.
Practically, of course, the limiter is cost. To load/unload multiple container vessels simultaneously, you need to build out the ports on both ends. To do it quickly, you need to upgrade the existing infrastructure. Once the existing train track is maxed out, you need to put down 200 miles of new track.
And you need to do all of that at a cost that rivals just waiting in line for a few days in front of the Panama Canal in the few weeks/months every couple of years when Panama suffers from drought. Which, if I understand correctly, is an El Nino event, which means it happens on a 7 year cyle.
Not quite what I was getting at. I am under the impression - perhaps incorrect - that the Panama Canal cannot be expanded without service interruption.
If the overland route is cost effective enough to implement at all, I imagine it would expand until expansion is no longer cost effective.
You also now need two ships and two crews to finish the shipping route.
Edit-
Not to say this is or isn't a good idea. Just another cost to consider in comparison. In general should such a thing catch on it'll probably be kept in check by the costs of what it would take for one ship to do the journey, but at least getting started it's going to likely cost more as you must have more equipment and people involved, even if one group frees up earlier than the other, there's some upfront cost that's lost until all of this gets figured out.
This project had been discussed before on other sites. I remember some comments saying the unloading can be a benefit since it gives an opportunity to route more directly, e.g. Ship leaves from a Chinese port with cargo for US East Coast, France and Africa. The unload in Mexico gives a an opportunity to transfer to ships with more direct routes to those locations.
Two ships and two crews isn't the bad part. Two ships making half distance routes equals the same cargo moved and personnel costs as one ship making hre full distance route.
The main issue i see is that loading and unloading cargo ships is extremely time consuming and labor intensive. It's a mutli day process that requires you paying lots of longshoreman to operate cranes, attach them to containers, secure them to railcars, safety people for the whole process, the support staff for those longshoreman, places for them to live and so on. In comparison, a cargo ship underway only has a crew of around 20. Fuel is your biggest cost. It's way cheaper to sail than to do lots of transitions between modes. So unless the panama canal is super, super expensive, or delays are extremely bad, its hard to see how transitioning from sea to rail back to sea would be competitive.
I think this ignores overhead. Telling one group of people and one piece of equipment to "go here" has less than doing the same for two.
They are small costs in the scheme of things, but not insignificant, and especially won't be when this is all getting figured out.
Tried to find a white paper or feasibility study on the initiative, just to get a sense of the numbers involved but only found the Invester PowerPoint and an infographic. Overall it seems like one of those ambitious megaprojects thats more than a vanity showcase (see anything funded by the Saudi).
But like the article says, it'd be interesting if they can get the numbers right. It's a short enough trip by land that a container could be off one ship and on another in the same day. It'll take about 3-5 days to pack or unpack a ship which is about the same as the waiting time for the canal in normal times. But can two ports and a rail line match or beat the service rate of up to half a million 20ft containers a day. That doesn't even begin to take into account security, labor, local politics and the canal adapting to the chages.
I'm just curious where that bottom line value comes from for the freight companies, especially after all the tax breaks and incentives expire. Throughput, reliability, cost? They make a good case for flexibility where the eastern Mexico port could be a hub for distribution across all of eastern America's, west Africa and Europe but is that enough? On the one side, you're waiting of a boat and a big piece of infrastructure. On the other side: it's 2 boats, several handovers and a lot of time where you are not in control of your containers.
Wikipedia says Port Salina Cruz is a very busy port but it has no natural harbor.
These freight ships are going to have to be aware and allow for big Pacific storms, but I would imagine that that can be managed with modern radar and satellite technology.
The Panama Canal is at risk. This seems like a good investment by Mexico
Even if it weren't at risk I'd say this is a good thing. Two lines prevent bottlenecking like we saw at the Suez, introduces competition between Mexico and Panama (cheaper transit, cheaper goods?), shorter lines for ships in the Atlantic and Pacific, more weather resilience, and as a whole there's probably a bunch you can do well by train that a ship can't.