CALGARY, Alberta — Canadian Pacific Kansas City (NYSE: CP) and the Lanco Group/Mi-Jack have sold the Panama Canal Railway to APM Terminals, a global terminal operator and an independent division of A.P. Moller-Maersk (XCSE: MAERSKa).
The 47.6-mile railway provides ocean-to-ocean freight and passenger services along the Panama Canal and has been a 50/50 joint venture between CPKC subsidiary Kansas City Southern and Lanco Group/Mi-Jack since its formation in 1998.
“We are pleased to have completed this transaction with APM Terminals, a part of A.P. Moller-Maersk, a key strategic partner of CPKC’s and major customer of the Panama Canal Railway Co.,” CPKC CEO Keith Creel said in a statement Wednesday. “The sale of this non-core asset creates value for our shareholders and reflects our commitment to optimize our assets as we focus on growing our core North American rail business through our unrivaled three-nation network connecting Canada, the United States and Mexico.”
Last year the railway posted $36 million in earnings before interest, taxes, depreciation and amortization on revenue of $77 million. In a typical year, the railway handles 300,000 containers.
In late 2023 and early 2024, the railway picked up 20% more business due to low water levels in the canal. Panama imposed drought-related draft limitations on ships passing through the canal. To lighten their loads, shipping lines diverted some containers to the railway. Most of this traffic was from shipping lines that did not regularly use the railway.
The Panama Canal Railway’s regular customers rely on Panama’s ports, the canal and the railway as a distribution and logistics hub. The railway handles regional trans-shipments to cover Central and South American and Caribbean markets.
Lanco/Mi-Jack CEO Mike Lanigan said he’s confident that the Panama Canal Railway’s container business will continue to grow under APM ownership.
“PCRC represents an attractive infrastructure investment in the region aligned to our core services of intermodal container movement,” APM Terminals CEO Keith Svendsen said. “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.”
The purchase price was not disclosed.
The Panama Railroad opened on Jan. 28, 1855, when the first train ran from the Atlantic Ocean across the Isthmus of Panama to the Pacific Ocean. The construction of the Panama Canal prompted relocation of much of the railroad in 1912.
The railroad lost its transcontinental traffic to the canal when it opened in 1914. The completion of a highway across the isthmus in 1943 took away the railway’s remaining local traffic.
The Panamanian government acquired the railway as part of the 1977 treaty that would eventually see the canal turned over to Panama. The railway further declined under government ownership.
After winning the concession, KCS and Mi-Jack invested $80 million to revitalize the railroad. Its locomotives and passenger equipment wear the historic KCS Southern Belle livery.
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