News / Purchase of Panama railway 'a significant opportunity' for ambitious APMT

Panama Canal Railway (CNW Group/CPKC)

Maersk’s port arm, APM Terminals, has bought the Panama Canal Railway Company (PCRC), which runs rail freight services along the 74km between the country’s Pacific and Atlantic coasts.

“The PCRC represents an attractive infrastructure investment in the region aligned to our core services of intermodal container movement,” said APM Terminals CEO Keith Svendsen.

“The company is highly regarded for its operational excellence and will provide a significant opportunity for us to offer a broader range of services to the global shipping customers we serve,” he added.

The acquisition follows a concerted push by Maersk towards a more rounded logistics offering.

At an event last week to mark the launch of Maersk’s latest dual-fuel vessel, the Adrian Maersk, the company’s North Europe MD, Ole Trumpfheller, said he believed Maersk was now best understood as an integrator rather than a carrier, but he admitted it was “not quite DHL yet”.

To achieve that, the company has stressed the importance of owning and controlling assets, and given the reliance Maersk had on PCRC during last year’s drought, this deal can only help it achieve that aim.

PCRC was a 50:50 partnership between Canadian Pacific Kansas City Railroad and the local Lanco Group/Mi-Jack joint-venture. Last year it generated revenue of $77m and an ebitda of $36m.

An APM Terminals spokesman told The Loadstar that the existing management team would remain in place: “PCRC will retain its brand, leadership, and operational structure, ensuring fair access to all users. You can expect business as usual at PCRC, with no major changes to our operations.”

APMT sister company Maersk Line is already a well-known PCRC customer. Early last year, when Panama was suffering a disastrous drought that halved the daily transit capacity of the canal, The Loadstar reported how Maersk employed the PRCR as a link on its Oceania-Americas OC1 service, which hitherto had used the canal.

Instead, Maersk’s OC1 vessels unloaded their boxes at Balboa, which were then railed across to Cristobal for onward shipping to North America.

At the time, The Loadstar reported that PCRC’s container capacity was around 2m teu a year – equivalent to 2,740 teu a day – given its ability to double-stack boxes.

“We are pleased to have completed this transaction with APM Terminals, a part of AP Møller-Maersk, a key strategic partner of CPKC’s and major customer of the PCRC,” said CPKC president and CEO Keith Creel.

“The sale of this non-core asset creates value for our shareholders and reflects our commitment to optimise our assets as we focus on growing our core North American rail business through our unrivalled three-nation network connecting Canada, the US and Mexico.”

Lanco Group/Mi-Jack CEO Mike Lanigan added: “Keith Creel and his group have been a pleasure to work with and I wish to congratulate APM Terminals on the purchase of the Panama Canal Railway. As we all know, Panama is a major transportation hub, and I am quite confident the container business will continue to grow.”

The deal came against a backdrop of increasingly fractious supply chains in Panama. The government has been under intense pressure from the Trump administration to reduce Chinese influence, while the president himself has repeatedly made vague threats of “taking the canal back”.

Additionally, the subsequent sale of Hutchison-owned Panama Ports Company, which operates the ports of Balboa and Cristobal – adjacent to PCRC’s Pacific and Atlantic termini, respectively – to the BlackRock-TiL/MSC consortium remains under scrutiny by Chinese authorities.