Conventionally, Central American countries had a poor level of connectivity internally (within countries and through the region) and with the global economy. The expansion of the Panama Canal and growing trade in Latin America has incited the consideration of several dry canal projects linking the Pacific Ocean to the Caribbean Sea (Atlantic). Such projects usually involve the setting of a high capacity rail connection between two ports, or at least of a highway corridor, and economic development (logistics) zones favoring the exploitation of national comparative advantages.
Dry canals can be built quickly (in less than 5 years), as opposed to the construction of a transoceanic canal that can take 10 to 15 years. Every Central American country with access to both the Caribbean and the Pacific has set dry canals projects in various phase of planning or development, including Colombia and Mexico:
- Isthmus of Tehuantepec. It represents the shortest distance between the Gulf of Mexico and the Pacific Ocean with a width of about 200 km. This route served as a dry canal from 1907, but the option was abandoned shortly after the opening of the Panama Canal. However, the rail route between the ports of Coatzacoalcos (Gulf of Mexico) and Salina Cruz (Pacific) is still operational (operated by Ferrosur) and the dry canal option could be reopened as a logistics corridor.
- Guatemala. A 372 kilometers double-track rail project, including a highway, linking two greenfield ports on the Atlantic and Caribbean coasts. These ports are expected to be able to accommodate ships above 8,000 TEUs. The holding company, Corredor Interoceanico de Guatemala, is responsible for the project, with most of the infrastructure set on a Build, Operate, Transfer (BOT) scheme.
- Honduras. A dry canal project to connect Amapala island in the Pacific with Puerto Castilla, a container port on the Caribbean, 280 km apart. There is also a proposed sub-branch of the corridor in El Salvador, connecting the port of La Union.
- Nicaragua. The concept of a dry canal was spearheaded by Nicaragua in the 1990s, but it failed to gain enough support. The Nicaragua Interoceanic Canal Company (CINN), funded by private interests, was set in 2001 to develop the option of the dry canal. However, in 2012 the Nicaraguan government moved in the direction of the construction of an interoceanic canal. This project later stalled as it became clear it was commercially non-viable.
- Costa Rica. The project aims at developing more effective road connections between the Caribbean and Pacific coasts of Costa Rica, particularly towards the Limon Moin facility, which is being expanded. This project thus does not portray itself as an alternative to the Panama Canal, but as a strategy to improve the mobility of national imports and exports.
- Panama Canal Railway. The only operational dry canal, which was reopened in 2001 and accounts for an annual volume exceeding 350,000 TEUs. The dry canal offers an opportunity to reposition containers between container ports on the Caribbean and Pacific sides of the Canal.
- Colombia. Involves a 220 km rail link connecting two greenfield ports on Colombia’s Pacific and Atlantic coasts. Its proximity to the Panama Canal makes the transoceanic option a difficult value proposition. In this case, a rail corridor more effectively connecting the ports of Cartagena and Buenaventura would be more relevant to the commercial interests of Colombia.
It is also being argued that Central America would gain more through the construction of an effective regional highway system linking the countries than through competing transoceanic dry canal projects.