WEBVTT 00:00.000 --> 00:04.799 The Panama C made a lot of headlines after Trump's controversial statement on it 00:05.140 --> 00:13.759 Has anyone ever heard of the Panama C? Because we're being ripped off at the Panama C like we're being ripped off everywhere else 00:14.259 --> 00:19.960 Later, the Panama C Authority denied free passage for U.S. vessels and worsened the conflict 00:20.199 --> 00:24.039 just for a short period. But while the world was focused on this fight 00:24.220 --> 00:28.519 no one's talking about the plans already underway to break the Panama C's monopoly 00:28.519 --> 00:34.780 and China's secret involvement. The legendary Panama C is an 82-kilometer or 51-mile 00:34.780 --> 00:38.640 man-made waterway and is one of the most important trade routes in the world 00:39.140 --> 00:43.620 It links the Pacific and Atlantic Oceans, handling 5% of global trade 00:43.839 --> 00:48.500 which adds up to a massive $270 billion worth of cargo every year 00:48.920 --> 00:57.059 But that's old news now, because the Panama C's in trouble, and Mexico's already preparing its rival. The nightmare of Panama 00:57.059 --> 01:02.519 the Interoceanic Corridor. For the past few years, a severe drought has been sinking the 01:02.519 --> 01:08.140 c's water levels, and the impact is massive. Recent reports say vessel traffic has dropped by 01:08.140 --> 01:15.299 around 29%, and some sources claim global trade through the c fell nearly 32% in 2023-24 01:15.299 --> 01:21.259 compared to 2022. While the Panama C is struggling to survive, Mexico is preparing its 01:21.259 --> 01:27.399 rival. Technically, it's an old rival, but now it's making a huge comeback in a brand new form 01:27.859 --> 01:32.819 This project is the 188-mile interoceanic corridor in the isthmus of Tuantepec 01:33.240 --> 01:38.619 Mexico's ambitious project that's getting a $7.5 billion investment from the Mexican government 01:39.560 --> 01:43.599 But the question is, why is the Panama C so important for the world 01:44.200 --> 01:48.520 Why can the interoceanic corridor become its biggest rival? And most importantly 01:48.520 --> 01:53.820 why is Trump so angry about the Panama C's dominance? And where does China come into the 01:53.820 --> 01:57.719 picture? But before we begin, please take a second to help us by simply clicking on the 01:57.719 --> 02:01.520 like button below. It helps us out a ton with the algorithm. Thank you 02:01.820 --> 02:05.880 Now let's have a look at the map, and you'll see that the Isthmus of Panama connects North 02:05.880 --> 02:10.720 and South America. Here, Isthmus simply means a narrow piece of land with water on each side 02:10.720 --> 02:15.580 that joins two larger pieces of land. But the problem here is that there's no natural waterway 02:15.580 --> 02:20.700 between them to link the Atlantic and Pacific Oceans. Before the Panama C existed, traders 02:20.700 --> 02:25.820 and travelers had only one option, sailing all the way around the southern tip of South America 02:26.160 --> 02:32.320 known as Cape Horn. This route was not just long but also dangerous and added weeks or even months 02:32.320 --> 02:37.440 to their journey. For example, imagine a cargo ship traveling from Spain to California without 02:37.440 --> 02:42.820 the Panama C. The ship would have to cross the entire South Atlantic Ocean, rounding Cape Horn 02:42.820 --> 02:49.239 at the tip of South America to reach California. They have to cover approximately 31,500 kilometers 02:49.579 --> 02:54.379 and it takes a minimum of 35 to 40 days to complete the journey. With fuel consumption 02:54.379 --> 03:00.459 costing $30,000 to $35,000 per day, the total fuel cost for the ship would range between $1.2 03:00.459 --> 03:06.920 million and $1.4 million. On top of that, the extended travel time not only increases costs 03:07.060 --> 03:11.819 but also risks damaging the products due to the prolonged journey. This added time and cost would 03:11.819 --> 03:16.480 make the goods more expensive for consumers. And even if you overcome all these challenges 03:16.819 --> 03:22.400 the waters of Cape Horn won't be kind enough to let you pass. Why? Extreme weather conditions like 03:22.400 --> 03:27.019 strong winds, large waves, and treacherous currents in Cape Horn make it a difficult area 03:27.019 --> 03:32.019 for ships to navigate. In fact, it's often referred to as the most dangerous sailing area 03:32.019 --> 03:37.340 globally. But with the Panama C, ships could cross it in just 8 to 10 hours and complete their 03:37.340 --> 03:43.720 entire journey in 15-20 days. So a ship traveling from Spain to California via the Panama C 03:43.720 --> 03:56.260 would spend $450,000-$700,000 on fuel, which is between approximately 40-70% cheaper. The traders back then understood this, and to cut down on time, cost, and risk 03:56.360 --> 04:00.860 started looking for a shortcut, a way to connect the two oceans without having to sail around an 04:00.860 --> 04:07.080 entire continent. And that's how the idea of the Panama C was born. In 1850, the US and 04:07.080 --> 04:11.460 Britain signed the Clayton-Bulwer Treaty, basically agreeing not to fight over a c 04:11.460 --> 04:16.300 in Central America. The plan was to build it through Nicaragua, but it never got past the 04:16.300 --> 04:22.300 planning stage. Then came the French, led by Ferdinand de Lesseps, the mastermind behind the 04:22.300 --> 04:28.580 Suez C in Egypt. In 1880, they started digging through Panama, which was then part of Colombia 04:29.420 --> 04:34.740 But nature turned out to be brutal. Malaria, yellow fever, and terrible weather conditions 04:34.740 --> 04:42.500 killed around 20,000 workers. After nine years, the project went bankrupt. By 1901, the U.S. had 04:42.500 --> 04:47.300 its eyes on Panama. The Hay-Poncefoot Treaty scrapped the old agreement with Britain, giving 04:47.300 --> 04:52.360 the U.S. full control over building and managing the c. After some serious debate, the U.S 04:52.360 --> 04:59.199 approved Panama as the c's location on June 19th, 1902. But it had a problem, as Panama was 04:59.199 --> 05:04.900 still under Colombian control. So the U.S. tried to negotiate. In 1903, Colombia's representative 05:04.900 --> 05:10.939 in Washington, Tomas Heran, made a deal with U.S. Secretary of State John Hay. The U.S. Senate 05:10.939 --> 05:16.900 approved it in March, but Colombia's government rejected it in August. But there was no way the 05:16.900 --> 05:21.759 U.S. would stay silent on the Panama C, because they very well knew how critical this 05:21.759 --> 05:26.879 would become once it gets operational. The U.S. decided to take action. Then President Theodore 05:26.879 --> 05:32.100 Roosevelt wasn't about to take no for an answer. Panama had been ruled by Colombia, but the 05:32.100 --> 05:37.340 Colombian government was reeling from a bloody civil war, so the Roosevelt administration saw 05:37.340 --> 05:42.100 an opportunity. The U.S. offered to support Panama's independence in exchange for the right 05:42.100 --> 05:47.040 to build and control the Panama C in the U.S.-controlled zone, so U.S. warships were sent 05:47.040 --> 05:51.760 to Panama City on the Pacific and Cologne on the Atlantic, preventing Colombian troops from 05:51.760 --> 05:56.660 interfering. The thick Darien jungle also made it difficult for Colombian forces to advance 05:56.880 --> 06:07.000 So, on November 3rd, 1903, with US support, Panama declared independence. A few weeks later, on November 18th, 1903, the new Panamanian government signed the 06:07.000 --> 06:11.900 Hay Bono Verilla Treaty, giving the US a 10-mile-wide strip of land for the c 06:12.620 --> 06:18.880 In return, Panama got a one-time payment of $10 million and an annual fee of $250,000 06:18.880 --> 06:23.080 Although the deal was finally signed, no one could have imagined the thousands of innocent 06:23.080 --> 06:29.139 lives this ruthless c would cost. You see, digging the Panama C was actually insanely difficult 06:29.560 --> 06:35.740 Workers had to use dynamite, drills, and steam-powered shovels to remove over 200 million cubic meters of earth 06:35.939 --> 06:40.580 This is so huge that it's almost twice the height of the Empire State Building if stacked up 06:40.759 --> 06:45.180 Basically, they didn't just dig a c, they built a man-made mountain 06:45.400 --> 06:53.620 And if that wasn't enough, workers faced brutal conditions. 40 degrees Celsius temperatures, rock slides, heat stroke, and deadly tropical diseases 06:53.620 --> 07:04.588 All of this nearly killed 6 workers during construction but it still had the biggest technical issue the elevation The highest point of the c was 30 meters above sea level 07:04.748 --> 07:08.548 so engineers had to create a system of locks and gates to raise and lower ships 07:08.788 --> 07:13.848 allowing them to climb up and back down again. And this was actually an engineering marvel 07:13.848 --> 07:19.948 The c cost the U.S. $375 million, which is about $12 billion today 07:20.588 --> 07:25.948 After 10 years of construction, the Panama C officially finally opened in August 1914 07:26.508 --> 07:32.588 and SS Ancon became the first ship to cross the c. Despite all the challenges, dangers, and sacrifices 07:32.948 --> 07:40.008 the c became one of the most important trade routes in the world. For nearly a century, the U.S. controlled and operated the Panama C 07:40.408 --> 07:45.988 But on December 31st, 1999, that changed because Panama officially took over 07:46.348 --> 07:53.088 This was all part of a 1977 treaty signed between the U.S. President Jimmy Carter and Panamanian leader Omar Torrios 07:53.668 --> 07:58.228 Under this treaty, the U.S. agreed to hand over control of the c by the year 2000 07:59.008 --> 08:02.748 However, the deal still allows the U.S. to help maintain and operate the c 08:02.748 --> 08:07.048 The c is open to ships from any country, and while the U.S. has influence 08:07.228 --> 08:14.708 the treaty does not give it the right to take back ownership of the c. The newly elected U.S. President Donald Trump thinks it was a big mistake 08:14.708 --> 08:20.448 During his inaugural speech, US President Donald Trump openly criticized the handover of the Panama C 08:20.728 --> 08:25.528 He even went further and called the c's transfer a foolish gift to Panama and said 08:25.788 --> 08:29.948 We've been treated very badly from this foolish gift that should have never been made 08:30.108 --> 08:35.408 He added that Panama's promise to us has been broken. But what was he exactly concerned about 08:35.708 --> 08:42.328 Actually, Trump was frustrated about two things. Firstly, the US military doesn't get free access to the Panama C 08:42.328 --> 08:47.588 and even the US commercial ships, like any other ship, need to pay huge fees to pass through it 08:47.788 --> 08:51.728 The second, and more concerning, was China's growing influence over the c 08:51.988 --> 08:56.828 He claimed that China is operating the Panama C, and we didn't give it to China 08:56.988 --> 09:06.308 We gave it to Panama, and we're taking it back. Now, although there's no public evidence that the Chinese government directly controls the Panama C or its military operations 09:06.688 --> 09:16.628 Chinese companies have built a strong presence in the region. From October 2023 to September 2024, China accounted for 21.4% of all cargo passing through 09:16.628 --> 09:21.768 the c, making it the second-largest user after the US. Beyond just trade, China's been 09:21.768 --> 09:25.988 strategically investing in infrastructure near the c. When it comes to ports and terminals 09:26.208 --> 09:30.788 two of the five ports near the Panama C, Balboa on the Pacific side and Cristobal on the 09:30.788 --> 09:36.588 Atlantic side, have been operated by Hutchison Port Holdings since 1997. Hutchison is a subsidiary 09:36.588 --> 09:41.868 of Hong Kong-based C.K. Hutchison Holdings, founded by billionaire Li Ka-shing. The company 09:41.868 --> 09:47.968 runs port operations in 24 countries, including the UK. Although Hutchison is not state-owned by 09:47.968 --> 09:52.568 China, some in Washington have raised concerns over Beijing's potential influence over the company 09:53.308 --> 09:58.248 Chinese companies, both private and state-owned, have also invested billions of dollars into Panama 09:58.468 --> 10:03.548 It's funding a cruise terminal, a bridge over the c, and a planned railway backed by a Chinese 10:03.548 --> 10:08.328 grants, but the concerning ones was the Panama-Cologne Container Port Project by the Landbridge 10:08.328 --> 10:12.608 Group, a Chinese investment firm, to build a container terminal in Panama's Cologne 10:12.808 --> 10:16.628 The most concerning fact about this project is that the Landbridge had close links with 10:16.628 --> 10:23.928 both the CCP and the People's Liberation Army. According to Andrew Thomas, a professor at the University of Akron who has studied the 10:23.928 --> 10:28.608 c, said that the bids to operate these ports faced little competition and mentioned 10:28.608 --> 10:33.388 that the US at the time didn't really care about these ports and Hutchison faced no 10:33.388 --> 10:39.848 objection. Panama's location makes it strategically crucial for both the US and China. Over the past 10:39.848 --> 10:45.488 decade, Beijing has worked to expand its influence in the country and across Latin America. A big 10:45.488 --> 10:50.968 moment came in 2017 when a huge diplomatic shift occurred when Panama decided to cut ties with 10:50.968 --> 10:58.088 Taiwan and recognize China instead. This was a huge turning point for Latin America, showing just how 10:58.088 --> 11:03.948 much influence China was gaining in the region. This move was a major win for Chinese diplomacy 11:04.388 --> 11:09.008 signaling a big shift in alliances across the region. By securing Panama's support 11:09.228 --> 11:14.128 China strengthened its foothold in Latin America, expanding its influence over a strategically 11:14.128 --> 11:19.648 important part of the world. Months later, Panama became the first Latin America country to join 11:19.648 --> 11:25.128 China's Belt and Road Initiative, a trillion-dollar global infrastructure project. Following Panama's 11:25.128 --> 11:30.088 lead, several other countries in Latin America like the Dominican Republic, El Salvador, Nicaragua 11:30.188 --> 11:35.988 and Honduras also cut ties with Taiwan and shifted their support to Beijing. China even decided to go 11:35.988 --> 11:41.288 beyond business and diplomacy and decided to invest in Panama's culture and media. The first 11:41.288 --> 11:46.408 Confucius Institute in Panama for Chinese Language and Culture Education was opened in 2017 11:47.068 --> 11:56.348 Additionally, Chinese companies have been sponsoring media training programs for Panamanian journalists. The same Latin America that has long been considered the US's sphere of influence 11:56.348 --> 12:01.388 is now seeing a major shift as China makes serious inroads economically, diplomatically 12:01.568 --> 12:06.128 and culturally. And with the Panama C playing a crucial role in global trade 12:06.388 --> 12:12.488 Beijing's rising presence won't go unnoticed in Washington. However, in a December 2024 statement 12:12.748 --> 12:18.168 Panama's President Molino cleared that China does not own the Panama C, and every square meter 12:18.168 --> 12:23.248 of the Panama C and the surrounding area belongs to Panama and will continue belonging 12:23.248 --> 12:27.448 to Panama. But why is the Panama C so important for the US 12:28.148 --> 12:33.048 The Panama C is crucial for the US as it handles 40% of its container trade, cutting 12:33.048 --> 12:40.148 shipping time and costs. It's also vital for energy exports and military mobility, allowing quick naval movement between 12:40.148 --> 12:46.808 the Atlantic and Pacific. Additionally, the US monitors it closely to maintain influence and counter China's growing 12:46.808 --> 12:59.368 presence in the region. And as President Donald Trump's statement reignited the controversy, even Panama's President Jose Raul Molino jumped in and quickly rejected Trump's claims about the Panama C and said 12:59.368 --> 13:09.488 On behalf of the Republic of Panama and its people, I must reject in a comprehensive manner the words outlined by President Donald Trump regarding Panama and its c in his inaugural speech 13:10.248 --> 13:16.028 He also made it very clear that there is no presence of any nation in the world that interferes with our administration 13:16.708 --> 13:26.608 But between this geopolitical controversy, there's something more scary for Panama, something that could end its monopoly, and that is the Mexico Interoceanic Corridor Railway 13:26.608 --> 13:34.208 The Interoceanic Corridor of the Isthmus of Tuantopec, or CIIT, is a railway project located in the Isthmus of Tuantopec 13:34.508 --> 13:38.968 a narrow strip of land in southern Mexico that connects the state of Oaxaca and Veracruz 13:39.288 --> 13:43.628 And, just like the Panama C, it connects the Pacific Ocean to the Atlantic Ocean 13:43.628 --> 13:49.188 The main feature of the CIIT is the Railway of the Isthmus of Tehuantepec, or FIT 13:49.188 --> 14:06.037 which includes the 308 or 191 Z railroad This railroad connects the port of Coatzicolcos and Veracruz to the port of Salina Cruz in Oaxaca But what exactly is this interoceanic corridor and how is it a threat to the Panama 14:06.037 --> 14:11.617 C? Surprisingly, the interoceanic corridor isn't a new project, and it actually dates back 14:11.617 --> 14:16.657 to the 20th century. The interoceanic corridor was first established by the Spanish in the early 14:16.657 --> 14:22.357 1800s to ship products to Spain from both the Philippines and Mexico, which were colonies at 14:22.357 --> 14:27.457 the time. But the man who took this vision further was José de la Cruz Porfirio Diaz Mori 14:27.857 --> 14:33.977 In 1884, Porfirio Diaz rose to power as president of Mexico. Hailing from Oaxaca on Mexico's 14:33.977 --> 14:38.137 southern coast, he set out to build a railway connecting Oaxaca to Veracruz in the north 14:38.137 --> 14:41.697 His goal was to create a direct link between the Atlantic and the Pacific 14:42.157 --> 14:51.417 tackling the same challenges the Panama C would later address. Most people have never heard of it, but in January 1907, this new railway known as the 14:51.417 --> 14:57.077 Tren Interoceanico officially opened its doors with the help of British entrepreneur Lord Cowdery 14:57.977 --> 15:06.397 In fact, this was seven whole years before the Panama C. And guess what? Global traders started using the railway right away 15:07.057 --> 15:12.577 Over the next few years, hundreds of thousands of tons of cargo were successfully moved along the passage 15:12.577 --> 15:17.717 Mexico started to thrive economically as it played a vital role in international trade 15:18.057 --> 15:27.117 But this success was short-lived. In 1914, when the Panama C opened, the amount of cargo traveling along the Mexican railway dropped by a third 15:27.857 --> 15:36.217 A year later, it had dropped by almost 80%. This was despite the fact that the train line through Mexico was actually faster than the Panama C 15:36.937 --> 15:40.937 It was closer to America, saving a few days for anyone who wanted to use it 15:41.717 --> 15:47.917 But still, most shipping companies decided to stop using the tren interoceanico and switch to the c instead 15:48.917 --> 15:56.497 Why? When the Interoceanic Railway was competing with the Panama C, Mexico was in the midst of civil wars due to the Mexican Revolution 15:56.917 --> 16:05.077 which started in 1910 and lasted until 1920. Because of the armed conflicts, it became too risky for shipping companies to pass their cargo through the railway 16:05.337 --> 16:11.557 with high chances of damage and robbery. Additionally, most of the shipping companies using this corridor were American-based 16:11.557 --> 16:15.277 and they preferred to support an American project as opposed to a Mexican rival 16:15.277 --> 16:22.617 The biggest drawback of the Mexican Corridor was that companies had to load and unload their cargo onto the railway to transport it from one port to another 16:23.017 --> 16:29.037 While on the other hand, with the Panama C, ships could sail directly through without the need to unload and reload their cargo 16:29.397 --> 16:33.937 This saved both time and money, making it the go-to route for global trade 16:34.317 --> 16:40.297 With an average of 14,000 ships passing through every year, the Panama C plays a critical role in global trade 16:40.837 --> 16:46.877 With an average of 14,000 ships passing through every year, the Panama C plays a critical role in global trade 16:47.177 --> 16:51.617 But the ships, loaded with billions of tons of goods, pay a toll to use the c 16:51.857 --> 16:58.657 For larger vessels, the cost can reach half a million US dollars. The expense is well worth it as it saves them from having to travel 16:58.657 --> 17:02.797 thousands of extra miles across the Strait of Magellan at the southern tip of South America 17:03.217 --> 17:09.677 Since its opening, the Panama C has revolutionized global trade, making it faster and more efficient than ever before 17:09.677 --> 17:20.677 But shockingly, some people are calling the Panama C a scam. You see, even though the Panama C was more efficient, cheaper, and easier to use than the Interoceanic Railway Corridor in recent years 17:20.917 --> 17:27.997 the Panama C has been facing a severe crisis due to prolonged drought, driven by climate change and the recurring El Nino phenomenon 17:28.837 --> 17:36.277 El Nino is basically a natural weather phenomenon that occurs every 2 to 7 years, affecting weather patterns and ocean currents in the Pacific Ocean 17:36.277 --> 17:43.077 So it brings warmer and drier conditions to Central America, making it even harder to maintain the water levels needed for the c 17:43.517 --> 17:50.997 If we look at the impact of climate change on the c, the average rainfall in the c's watershed has decreased by about 20% in the last two decades 17:51.397 --> 17:55.237 At the same time, the average temperature has risen by around 0.5 degrees Celsius 17:55.797 --> 18:03.837 These changes have led to reduced water levels in Gatun Lake, which is a key water source for the c, and increased evaporation rates from the lakes and locks 18:03.837 --> 18:09.377 Due to the drought, the Panama C Authority, or ACP, was forced to reduce the maximum draft 18:09.377 --> 18:18.457 and limit the number of daily transit slots available for ships. Panama C Authority reported a 29% drop in vessel transits during fiscal year 2024 18:18.997 --> 18:27.357 The biggest declines were in LNG and dry bulk transits. LNG transits fell by 66% and dry bulk transit dropped by 107% 18:27.357 --> 18:33.017 percent. Despite these challenges, the Panama C still managed to generate a net income of 18:33.017 --> 18:41.737 3.45 billion in 2024, which is a 9.5% increase from 2023. But how is this actually possible 18:42.497 --> 18:46.677 This is where some people say that Panama C authorities have been artificially lowering 18:46.677 --> 18:52.237 supply to increase shipping fees to make more profits, because it wasn't actually much drier 18:52.237 --> 18:57.057 than previous droughts. You see, after limiting the daily transit slots, the Panama C Authority 18:57.057 --> 19:01.837 increased fees, knowing that companies had no other shorter route connecting the Pacific and 19:01.837 --> 19:06.477 Atlantic. As a result, businesses were left with no choice but to pay the higher tolls to move 19:06.477 --> 19:11.297 their cargo efficiently. The base transit tolls at the Panama C have been rising and are now 19:11.297 --> 19:16.457 comparable to those at the Suez C. However, Panama's costs can be significantly higher for 19:16.457 --> 19:21.717 vessel operators who must compete in auctions to secure a transit slot. In fact, the Panama C 19:21.717 --> 19:26.617 utilizes an auction system to sell around one-third of the slots, which often results in 19:26.617 --> 19:32.037 significantly higher prices compared to standard booking fees, particularly when demand is high or 19:32.037 --> 19:36.697 during periods of limited availability due to factors like drought conditions. For example 19:36.957 --> 19:40.977 the operator of a medium-range tanker traveling through the c with cargo would pay around 19:40.977 --> 19:50.997 $279,764.87 in transit fees. Meanwhile, a fully loaded Very Large Gas Carrier, or VLGC 19:50.997 --> 19:59.917 would face a whopping charge of $505,268.24, and that too without additional reservation costs 20:00.057 --> 20:05.537 according to ACP estimates. In fact, the fees literally peaked when c slots had been 20:05.537 --> 20:11.957 auctioned as high as nearly $4 million in 2023. Because it's the only dominant shipping route in 20:11.957 --> 20:18.577 the region, ships have no other choice, but it finally got a reality check in 2018. For decades 20:18.577 --> 20:24.137 the interoceanic corridor was way too expensive to maintain, eventually falling into disrepair 20:24.397 --> 20:29.817 It stayed that way for nearly a century, until an ambitious new president came into power in Mexico 20:30.377 --> 20:37.117 In 2018, President Andres Manuel López Obrador unveiled plans to revive Mexico's old railway 20:37.117 --> 20:43.797 and establish a new interoceanic corridor, CIIT, or Interoceanic Corridor of the Isthmus of 20:43.797 --> 20:52.037 to Wantopec, a modern alternative to the Panama C. A few months later, the project was officially announced, featuring three main rail lines 20:52.037 --> 21:04.425 namely Line Z Line F and Line K Construction kicked off in June 2020 starting with removing overgrown vegetation replacing old tracks and installing brand new infrastructure Of the three planned 21:04.425 --> 21:09.585 railway lines, Line Z is the crucial route that will directly connect Atlantic and Pacific Oceans 21:10.305 --> 21:16.825 Spanning approximately 227 kilometers or 141 miles, this railway currently operates one trip 21:16.825 --> 21:21.985 per day, completing the journey in about seven hours, with eight station stops along the way 21:21.985 --> 21:30.165 For passengers, the train has an initial capacity of 400 people, offering seating across tourist, executive, and managerial categories 21:30.745 --> 21:39.205 In the future, the Mexican government has ambitious goals for the corridor. By 2028, the project is expected to transport 300,000 containers annually 21:39.645 --> 21:45.125 positioning the interoceanic corridor as a competitive alternative to traditional maritime routes like the Panama C 21:45.125 --> 21:53.965 The entire railway system, including all three lines, Z, F, A, and K, is projected to span over 1,000 kilometers or 621 miles 21:54.405 --> 21:59.185 significantly enhancing Mexico's logistics network and boosting its role in global trade 21:59.285 --> 22:04.005 To boost economic activity, the government's also developing industrial parks along the railway route 22:04.105 --> 22:13.005 President López Obrador took decisive action to ensure the project's success. In 2023, he deployed the army to seize a privately owned section of Old Railway 22:13.005 --> 22:20.685 ensuring that the project wouldn't stall due to corporate resistance. The ports, railways, and related terminal infrastructure of the interoceanic corridor 22:20.685 --> 22:26.325 are managed by Faro Corral del Istmo de Tuan-tepec, a state-owned enterprise under the Mexican Navy 22:27.065 --> 22:31.585 On November 10, 2023, naval forces temporarily occupied part of the railway 22:31.585 --> 22:36.065 that was operated under a concession by Faro Sur, a subsidiary of Grupo Mexico 22:36.885 --> 22:45.445 This dispute was later resolved when the government in Grupo Mexico agreed to transfer 127 kilometers or 79 miles of railway lines to the Navy 22:46.085 --> 22:58.265 The affected routes include El Chapo, Coatzicolcos-Coatzicolcos, Bidia-Saguas, and Jabueras-Midatitlan. In exchange, the government granted Ferrocer a free eight-year extension for its railway concession 22:58.265 --> 23:06.665 linking the Isthmus of Tuantepec to the port of Veracruz. The company was compensated, but only after the government secured full control of the railway 23:07.325 --> 23:13.765 The primary objective of the CIIT project is to offer a more efficient and cost-effective alternative to the Panama C 23:14.085 --> 23:18.465 Beyond trade, the interoceanic corridor is also designed to combat poverty in Mexico 23:19.285 --> 23:23.545 Running through the states of Veracruz and Oaxaca, both of which have high poverty rates 23:23.685 --> 23:33.665 the project is expected to attract investment and improve local infrastructure. The railway will have 10 stops across these two states, with ports on both the Atlantic and Pacific coasts 23:33.665 --> 23:40.005 The Mexican government has invested $6 billion, with an additional $2 billion coming from private investors 23:40.505 --> 23:48.285 However, not everyone supports the project. Several indigenous communities in Oaxaca have protested, raising concerns about deforestation 23:48.605 --> 23:58.545 habitat destruction, and environmental damage caused by the corridor's development. In some areas, families have even been forcibly relocated, making the project a source of controversy 23:59.105 --> 24:06.085 Tensions escalated when some protesters, allegedly armed with machetes, clashed with construction workers, leading to brief arrests 24:06.405 --> 24:10.245 Despite the backlash, many believe that the benefits will outweigh the negatives 24:10.645 --> 24:20.285 Experts estimate that the CIIT could create 500,000 jobs for locals and attract $50 billion in international investment, transforming the entire region 24:20.285 --> 24:24.545 And this economic transformation is exactly what Lopez Obrador was betting on 24:25.305 --> 24:34.445 By August 2023, Line Z was officially completed. In September, the former Mexican president himself rode the first passenger train along the full route 24:34.665 --> 24:39.825 It was a journey taking under nine hours, officially making it faster than crossing the Panama C 24:39.825 --> 24:47.145 By December 2023, passenger trains began operating, carrying locals between Mexico's Atlantic and Pacific coasts 24:47.145 --> 24:54.085 and the remaining two lines are set for completion by the end of 2024. But before the CIIT can handle international cargo 24:54.405 --> 25:01.225 Mexico still needs to upgrade the ports at both ends of the railway. One of the biggest projects underway is the construction of a massive breakwater 25:01.225 --> 25:04.965 at Salina Cruzport built from hundreds of thousands of tons of rock 25:04.965 --> 25:10.345 to protect cargo ships from harsh storms and waves. Work on the breakwater is still ongoing 25:10.965 --> 25:16.265 but once complete, Mexico's interoceanic corridor could become a serious competitor to the Panama C 25:16.265 --> 25:23.085 And as we discussed earlier, China has gained significant influence over the Panama C through its private ventures in recent decades 25:23.345 --> 25:29.405 However, the U.S. remains the c's largest user. And this is where things could go bad for the Panama C 25:29.845 --> 25:34.425 You see, 40% of U.S. container traffic passes through the Panama C each year 25:35.045 --> 25:44.765 This makes the U.S. a key player in the c's revenue stream. But if the U.S. decides to divert a significant amount of container traffic to Mexico's Interoceanic Railway Corridor 25:44.765 --> 25:50.065 the U.S. could save a lot of money. However, the impact on Panama's economy could be severe 25:50.305 --> 25:54.745 Panama's c revenue could drop sharply and would result in a massive reduction in traffic 25:55.105 --> 26:05.025 In fact, it could significantly impact Panama's GDP. According to reports, c revenue contributes around 4% of the country's total GDP and even more to government 26:05.025 --> 26:10.885 finances. So, a major loss in revenue would destabilize Panama's economy. So, once the 26:10.885 --> 26:16.265 project is ready, everything is set to be good for the US and Mexico, right? Well, actually 26:16.545 --> 26:22.225 the situation isn't entirely one-sided. While Mexico's interoceanic railway offers a compelling 26:22.225 --> 26:27.545 alternative, it also comes with its own set of challenges. Unlike the seamless transit of the 26:27.545 --> 26:32.705 Panama C, the railway requires cargo to be unloaded at one port, transported by train 26:32.845 --> 26:38.185 and then reloaded onto ships at the other end. This additional handling increased costs, time 26:38.185 --> 26:43.285 and logistical complexities. On top of that, security concerns along the railway route 26:43.465 --> 26:47.985 potential delays, and infrastructure limitations could also deter some companies from making the 26:47.985 --> 26:53.225 switch. Also, when it comes to the U.S. Navy, the railway doesn't help the U.S. Navy to go from the 26:53.225 --> 26:57.945 Atlantic to the Pacific. So, although it's helpful for Panama to have competition instead of a 26:57.945 --> 27:03.125 monopoly, ensuring its fees stay competitive, in the end, some may find the railway's shorter 27:03.125 --> 27:07.485 transit time and geopolitical advantages appealing, while others might stick with the 27:07.485 --> 27:13.525 Panama C for its simplicity and reliability. In fact, we might also see a new c or even a 27:13.525 --> 27:17.525 new railway built between the Atlantic and Pacific by other countries in Latin America 27:18.245 --> 27:23.965 In 2013, a Chinese company called HKND made a deal with the Nicaraguan government. They were 27:23.965 --> 27:28.085 given a 50-year right to build a new c linking the Atlantic and Pacific Oceans 27:28.085 --> 27:33.725 with an option to extend for another 50 years. The goal was to create a whole new trade route 27:33.725 --> 27:39.245 But things didn't go as planned. After some initial excitement, the project never took off 27:39.245 --> 27:45.005 In 2015, the Chinese stock market crashed and the whole thing fell apart. By 2018 27:45.005 --> 27:50.765 HKND had shut down its office in Hong Kong. But as of now, only the interoceanic corridor 27:50.765 --> 27:57.485 seems like a strong contender to dethrone the Panama C. But whether it can truly do so is something only time will tell