China Promoting South American Transcontinental Railway Project as Panama Canal Alternative
Since Sec. of State Rubio reminded Panama of its treaty obligations, BlackRock purchased Hong Kong’s canal ports and its traffic has surged.
When I last reported on the Panama Canal, the nation had launched an audit of the Panama Ports Company.
In the early days of President Donald Trump’s second term, Secretary of State Marco Rubio was clear about the terms of the treaty we have with Panama. The agreement includes the right to defend the critical waterway between the Pacific and Atlantic oceans from any threat that might interfere with its continuation of neutral service.
Within a month of this reminder, Hong Kong’s CK Hutchison Holdings sold its Panama ports to an investment group led by U.S. asset management firm BlackRock.
The two ports are the Panama Canal’s largest and – according to the Panama Maritime Authority – accounted for 39 percent of the cargo that passed through the canal in 2024.
In recent months, the ports had become a source of tension between the United States, Panama, and China after U.S. President Donald Trump alleged that they represented China’s control of the Panama Canal.
The BlackRock-TiL consortium, which will buy the ports from CK Hutchison subsidiary Hutchison Port Holdings, is made up of BlackRock and Terminal Invesment Limited (TiL), which is owned by MSC, the world’s largest container company. The deal, worth USD 22.8 billion (EUR 20.4 billion), will give BlackRock-TiL a 90 percent controlling stake of Hutchison’s Panama facilities, as well as an 80 percent controlling stake in a further 43 global ports currently controlled by Hutchison.
Now China is angling to create a South American Transcontinental Railway as an alternative to the Panama Canal. China recently signed an agreement with Brazil for a feasibility study to connect Brazil’s Atlantic Ocean coast to Peru’s Pacific Ocean port of Chancay.
The memorandum of understanding was signed between Infra S.A., the Brazilian state-owned company linked to the Ministry of Transport, and the China Railway Economic and Planning Research Institute, part of China State Railway Group.
The plan outlines a railway of about 4,500 kilometres (roughly 2,800 miles), running from Ilhéus in the northern Brazilian state of Bahia to Rio Branco in the northwestern state of Acre, before crossing the Andes towards the Peruvian coast.
Some estimates put the cost of proposed project at upwards of US$70 billion.
If built, the corridor could shorten shipping times to Asia by as much as 12 days compared with current Atlantic routes that pass through the Panama Canal. For now, however, the agreement is only for technical, environmental and economic studies, expected to last for up to five years.
Brazil and China to study South American transcontinental railway project | South China Morning Post https://t.co/luLlftBM6Q
— Paul Triolo (@pstAsiatech) July 10, 2025
I can’t wait to see the response of the eco-activists to this development, should plans for a railway through Brazilian rainforests go forward.
Can't wait to see the response of eco-activists and climate cultists to these plans! https://t.co/2gikTAGTNM
— Leslie Eastman ☥ (@Mutnodjmet) July 11, 2025
In fact, they were sounding alarms as early as 2015, in the early days of this idea being broached by China. The Council of Hemispheric Affairs, for example, noted that what was promised and what was delivered on other projects were quite different.
The railroad will likely provide short-term profits, which are slim in comparison to the long-term social and environmental repercussions. Throughout the hemisphere, human rights and environmental activists have raised their voices in opposition, warning of the danger in accelerating construction with trivial, lackluster consideration for the social and environmental implications of this project.
These concerns are warranted given the social and environmental impact of previous projects of equal magnitude, such as the Trans-Amazonian Highway, the Belo Monte Dam, the Carajás Mine Project, and the “Devil’s Railway.” Each of these projects had detrimental effects: societal (i.e. exposure of isolated Amazonian communities and human rights violations), as well as environmental (i.e. deforestation, pollution, and overdevelopment of delicate biospheres). It should be noted that these projects were not as economically sound as previously estimated.
I would bet this is just another example of Chinese Debt Trap Diplomacy.
Meanwhile, the Panama Canal has seen a noticeable uptick in traffic, while that in the Suez Canal collapses due to the conflict in the waters of the Red Sea.
The Bab al-Mandab Strait and Red Sea have transformed into war zones, forcing vessels to detour around the Cape of Good Hope—a journey adding 4,000–6,000 miles to Asia-Europe routes. This rerouting has increased transit times by 30–50%, pushing Asia-Europe container rates to $5,500 per FEU by early 2025, double typical levels.
The Suez Canal’s traffic has collapsed, with transits dipping below 100 in May 2025, while the Panama Canal’s traffic rose by 10.2% as an alternative. This shift strains global shipping capacity, reducing available vessels by 20% and intensifying competition for cargo space.
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Comments
It takes hardly a minute’s thought to realize it’s not a realistic alternative to the canal. The canal is for cutting between Atlantic and Pacific quickly and cheaply.
A transconinental railroad in South America would require unloading the ship at one port, loading it onto a train, chugging across the continenet, then loading it on another ship. You ciuld probably get around the continent by sea in the time that process would take with fewer bribes and less chance for disruption. The rails would cost more to maintain, and so on.
A railroad would only be useful for cargo starting or ending along its route, and not as a rival to the canal.
If anything I wager this is a bluff to try to bully Panama.
Just what I was going to say — and while rail transport is cheap, water transport has ALWAYS been cheaper.
Well;
You cannot dedicate the focus of the project to marine terminal services alone.
The intra-continental service is more than enough to carry the water on this.
The “fewer bribes” part is absolutely true.
mineral/land rights along the right of way I bet.
And housing and land for the Chinese nationals who will build it.
It already exists in the US.
The problem with the U.S. route is that it’s really not possible to expand the size of the ports much more, There’s also the problem that the unions really have a lock on the technology to be used. They’re not going allow automation to replace them….which caps volume.
There was a time when China and Nicaragua were in the planning stages of a canal, that project never got started either.,
Prior to that it was a US project.
A trans-continental railroad is pure common sense and had been done before. To swimming success.
There is no way I can think of to make this a bad idea.
Aside of who does it and operates it.
It’s a great way for Brazil to default on its part of the bargain and China picks up the tab with Brazilian assets.
nails it!
These theoretical replacements have been around as long as the Panama canal has existed, and actually even longer
Mexico promises a rail replacement, mañana. That idea has been around since 1907.
Nicaragua has unveiled plans for a 445-kilometer interoceanic waterway that would provide an alternative to the congested Panama canal. When the American Congress voted to approve building the Panama Canal, the Nicaraguan was their other option.
Now Brazil? Perhaps it was chosen because Brazil is a BRICS member but otherwise it makes little sense.
Gov Newsome has a lot of experience in railway construction. With his advice, the Chinese will be done and in operation quickly! Definitely by the end of this century.
Hey! Maybe we could keep him out of the presidential race by Trump nominating him to some group to ‘help’ China build that railroad? He’s already getting paid by the CCP, why not make it legit? (And get him maybe captured by some pre-civilization head-hunting tribe? Who wouldn’t want that shrunken head of hair gel on their hut’s mantel?)
China is a malign influence wherever it sticks its greasy and duplicitous head.
Hell, I hope they do pursue this. This looks like a worse and more expensive boondoggle than the high-speed train in California that they spent tens of billions of dollars on and not laid one foot of rail. The idea of running a railroad through the Amazon jungle is laughable at best
Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.
https://archive.org/details/treaty-concerning-the-permanent-neutrality-and-operation-of-the-panama-canal
cnnmslsd etc said a month back or so that china was the voice of reason..the leader
Wait until the parasite class learns how to pillage these trains like they do in California. Hello, cargo cult!
Will they name the first locomotive “The Monroe Doctrine”?
The railway route is detrimental to our environment and poses a risk to our safety.
Let’s imagine for purposes of argument that this rail line were built and operating. How would it reduce shipping times by “up to” 12 days relative to using the Panama Canal?