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.
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.
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.
Image by perplexity.ai
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