RAILROAD REVIVAL.

U.S. investors bet $80 million on double-stack trains across the isthmus.

THE NEW OWNERS OF THE PANAma canal Railway Company have a fine sense of history. Their logo, a red shield, harks back to the glory days of the first transcontinental railroad, built in 1855. They have preserved several original cranes and locomotives alongside the tracks. Most of all, they guard the memory of the runaway success of the line that took men heading from New York to California for the gold rush. "In its day, Panama railway stock was the most valuable on the New York Stock Exchange," says Thomas Kenna, marketing director of the Panama Railway Co.

Kansas City Southern Railway and MiJack Products, the U.S. companies behind the US$80 million revival of the railway, will be happy if a bit of that success rubs off. They are dealing in a new kind of commodity, the 20-foot or 40-foot container boxes that carry an ever greater share of world trade.

The railroad, which will double-stack containers on its freight cars, will have a capacity to shuttle 550,000 20-foot equivalent units (TEUs) across the isthmus each year. "The railway has a great selling point: the cargo gets there before the ship," says Neil McColl, project manager of shipping and port company Maritime Transport. In moving containers faster than a canal transit, he sees the railway as a dry canal.

The track runs alongside the canal for almost all its 47 miles and is intended to provide flexibility to shippers, but Kenna insists, "The railway will complement the canal, not compete with it."

Draft and line of sight restrictions mean Panamax ships, the biggest that can pass through the canal, have to transit with 200 fewer containers than the maximum. Those containers will wind up on the back of railroad cars, says Kenna. "Shippers will now be able to bring cargo through that they had to leave behind," he says. "Some of this is happening by road already but the railway offers a safer, more secure and reliable service."

Hans Stig Moller, general manager of Maersk Panama, adds that the shipping line will also use rail to solve another big headache, empty containers stuck at the wrong port.

The single-track railway will run from the port of Balboa near Panama City on the Pacific to Manzanillo near Colon on the Atlantic, allowing carriers to move cargo across the isthmus in around three hours. There will be three trains on the rails at a time and up to 10 trains in each direction every 24 hours. The company will lay another track if needed. Prices for the cargo service, expected to begin in June, have yet to be set.

Concrete ties. The companies running the railway are experienced. Kansas City runs the so-called Nafta railway that has a network from Canada to Mexico. MiJack is a leading manufacturer of cargo handling equipment and operator of rail yards. The International Finance Corp., the private investment arm of the World Bank, also has a small equity stake.

The company was awarded a 50-year investment and operating concession in 1998. It has imported 250,000 tons of ballast from Nova Scotia, Canada to ensure good drainage during Panama's tropical storms, 150,000 tons of concrete ties that will survive the hot and humid conditions and 11,000 tons of 130'-pound continuously welded rail.

Unlike the old days, the railroad will not be a big employer. It will only need about 50 people because of its computerized signaling and automated guidance systems. The railway will also carry passengers.

"You don't make any money on passenger services but we were asked to do that as a service to the country," says Kenna. "The funny thing is that the railway here brings back bad memories because the service was so poor. On the old passenger railway the driver stopped the train and someone got out and waved a flag to stop the traffic. We have to tell people that this one does not stop."

All 17 crossing points will be automated.

Passengers will experience what is famed as one of the most stunning railway journeys in the world, complete with a bar, movable seats and wood paneling. Services were scheduled to start in April, with 200 business passengers traveling daily from Panama City to Colon and back. The cost, $550 for a monthly season ticket, is not cheap, but it's certainly better than the $50 in gold demanded by the railway in 1855.