Interoceanic Corridor: Alternative Amid Panama Canal Drought

The Panama Canal is dealing with several setbacks and delays due to a severe drought. These challenges have prompted the extension of restrictions until September, leaving numerous vessels stranded and causing disruptions in maritime trade. The situation has caught the attention of President Andrés Manuel López Obrador, who envisions an opportunity to position the Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) as an alternative trade route.

The Panama Canal Authority (ACP) recently issued a notice detailing extending its restrictions, specifically Booking Condition 3 for the Panamax Locks until Sep. 2. Furthermore, scheduled maintenance on the sidewall culvert of the West Laned of Gatun Locks will temporarily take the locks out of service until Sep. 1. These measures are in response to a water shortage caused by the ongoing El Niño climate phenomenon. According to a report from the Wall Street Journal, over 200 vessels have been left stranded, leading to substantial delays. Some ships have experienced backlogs of more than 20 days.

According to Georgia Tech, the Panama Canal is a cornerstone of global maritime trade, with about 5% of the world's maritime trade passing through its waters. The restrictions mentioned a transit capacity adjustment with an average of 32 vessels transiting the canal daily, using Panamax and Neopanamax locks.

In light of these challenges, President López Obrador highlights CIIT as a potential solution. He envisions this project as a catalyst for international trade, fostering increased efficiency, shorter shipping times and reduced dependence on a single transit point as it will help communication between the Pacific and Atlantic oceans.

The CIIT project entails the construction of a 303km railway connecting key ports, highways and airports. The corridor will also feature a gas pipeline and an optic fiber network. CIIT will host ten industrial parks, a rehabilitated train, two ports and two airports, as well as urban developments in the ten development poles, which will impact 79 municipalities, 33 in Veracruz and 46 in Oaxaca, wrote Juan Pablo Guzmán Cobián, Former Minister of Economy of Oaxaca, in MBN.

Eduardo Romero, Coordinator for Industrial Sector Development and Strategy, Interoceanic Corridor, stated last year that the project would be able to move 1.4 million containers a year, which will cross the country in only 6 hours, meaning the corridor would be cheaper and faster than the Panama Canal. However, even if it is positioned to boost Mexico's logistic capabilities similarly to Panama, the real estate consultancy agency Softec says its benefits may only become tangible in the long term since the project needs around a decade to mature completely.