Panama-Costa Rica railway poised for transformative regional logistics

Published: 2025-06-10 17:55:07 ET ACM

Published on 06/10/2025 at 17:55

Panama’s plan to break ground in January 2026 on a 475-km railway linking Panama City with Paso Canoas on the Costa Rican border could reshape Central American trade dynamics, La Nación reported.

Analysts estimate the infrastructure will command an investment of $4.1–5 bn and include 14 passenger and freight stations. Passenger services are expected to reach 180 km per hour, cutting travel time to around three hours, while freight transit may drop from 36 to nine hours.

Panamanian authorities, supported by US-based AECOM, are finalising technical and environmental assessments. They confirm the Panama‑to‑Penonomé segment is mapped, with the Penonomé-David-Paso Canoas stretch to be finalised by September 2025. The project will require at least 70 bridges, including one over the Panama Canal.

Costa Rica’s Instituto Costarricense de Ferrocarriles (Incofer), led by Álvaro Bermúdez, is conducting pre‑feasibility demand and cost studies ahead of any bilateral participation. Bermúdez is stressing the necessity of sufficient cargo volumes – specifically container throughput – to ensure the route’s commercial viability. President Rodrigo Chaves has described the proposal as “profitable and interesting”.

From an economic perspective, the railway addresses inefficiencies in cross-border freight and passenger transport. If containerised shipments reach critical mass, this could reduce logistics and inventory costs, stimulate regional manufacturing and distribution hubs, and foster greater tourism in southern Costa Rica. Risks include financing, rights‑of‑way acquisition and environmental compliance, yet the backing of AECOM and binational cooperation appear to mitigate execution risk.