New Tracks for the Panana Canal.

• Author: Luxner, Larry
• Position: Panama Canal railway - Brief Article

LAST SUMMER luxury trains began whisking passengers in style between the Atlantic and Pacific oceans, along a forty-seven-mile track that roughly parallels the Panama Canal.

David L. Starling, president of the Panama Canal Railway Company, says passenger service was inaugurated last July, with freight service between the Atlantic port of Balboa and the Pacific port of Manzanillo to begin by September.

The innovative project is a three-way venture led by Kansas City Southern Railway and Chicago-based Mi-Jack Products; each of those partners has a 40 percent stake in the project. The International Finance Corp., an arm of the World Bank, owns the remaining 20 percent.

Starling says the $75 million venture represents the first serious investment since the railroad, which was originally built in 1855--at the height of the California gold rush--was more or less abandoned in the late 1980s. Things began looking up in 1995, when the Endara government privatized Panama's two leading ports.

"For the new service, we're using the same track bed [as the original railway], except in one area where we eliminated three miles of railroad by building two miles of new track," says Staffing, adding that the Panama Canal Railway Company is currently renovating an existing building in Balboa to serve as its Pacific terminal. On the Atlantic side, it's building a completely new terminal, located about five minutes away from the Colon 2000 cruise-ship terminal.

"We will pay the government a royalty on our gross revenues," says Starling, declining to specify what that percentage is. He predicted that the railroad will begin turning a profit by the end of its second year in operation. "We never attempted to get government subsidies. We think it'll be successful as a private enterprise."

The fifty-one-year-old executive, noting that freight will account for 80...