Main Routing Alternatives between the Pacific and Atlantic

Main Routing Alternatives between the Pacific and Atlantic

At the macro level, due to the world’s geography, there are two intercontinental connectivity alternatives: those linking Asia and Europe and those linking the Pacific and Atlantic Oceans. The Panama Canal is obviously the shortest operational route between the Atlantic and Pacific oceans. After close to one century of existence, the Panama Canal, which emerged as the most suitable alternative to build a transoceanic canal, is itself facing its own alternatives that are existing (that are currently competing) or potential (that could eventually compete), maritime or overland-based.

The maritime alternatives are those involving a continuous maritime segment. The Magellan Route circumnavigating South America imposes a substantial detour but offers the opportunity to pick up or drop off cargo along the way (e.g. Brazil, Argentina, Chile). The Northwest Passage, along with other Arctic routes, is the shortest route between the North Pacific and the North Atlantic but remains hazardous to navigation and does not offer any significant opportunity to pick up or drop off cargo along the way. The Suez Canal is also an alternative to Panama, particularly in light of economic growth in South and Southeast Asia. Singapore, the world’s second-largest container port, is often considered the “line of indifference” between the use of Panama or Suez routes to reach the U.S. East Coast, so any cargo transiting through Singapore has the Suez option. The Cape Route through South Africa is also offering an alternative to the increasing trade relations between Brazil and Argentina with China.

The overland alternatives are more numerous. The first and often less obvious alternative is the Panama Canal Railway, which has experienced notable growth but not necessarily as a competing route. The growing role of Panama as a transshipment hub is supported by the complementarity the railway offers in quickly repositioning containers across the isthmus. The North American landbridges composed of the Canadian, American, and Mexican landbridges are operational realities. Still, their role is not necessarily to offer an alternative to the Panama Canal but options to shippers servicing North American supply chains with a faster alternative. Their diversion effect remains limited, particularly since, in recent years, the Panama Route was able to gain some market share over the landbridge route.

Other landbridges in Central or South America are simply projects of unknown market potential, such as the Central American Landbridge through Nicaragua. Since the 16th century, the Nicaragua route was considered an alternative with interests coming and ebbing as the idea it represented to see if it could generate commercial interests. In 2013, the government of Nicaragua announced that a 50 years concession had been signed with a Hong Kong firm with the goal to develop a canal able to handle ships over 250,000 tons. Such a project would require massive infrastructure and capital investments with dubious commercial potential, and it was subsequently abandoned. The last relevant overland alternative is the Colombian land bridge, which should be considered less as an alternative to the Panama Canal than as a Colombian national strategy to improve the accessibility of its hinterland to both the Atlantic and the Pacific.