The Panama Canal Railway (PCR, Spanish: Ferrocarril de Panamá) is a railway line linking the Atlantic Ocean to the Pacific Ocean in Central America. Opened in 1855, the route today stretches 47.6 miles (76.6 km) across the Isthmus of Panama from Colón (Atlantic) to Balboa (Pacific, near Panama City).
The construction of the railroad, under difficult physical conditions and with the day's limited technology, was hailed as an international engineering achievement—one that cost US$8 million and the lives of an estimated 5,000 to 10,000 workers. The railway was vital to the early 1900s construction of the Panama Canal, and its route was altered to accommodate the creation of the canal's Gatun Lake. After World War II, the railroad's importance declined and much of it fell into a state of neglect. It was reopened in 2001 after a three-year effort to rebuild it to haul intermodal traffic.
The original line was built by the United States and the principal incentive was the vast increase in passenger and freight traffic from the Eastern United States to California following the 1849 California Gold Rush. The United States Congress had provided subsidies to companies to operate mail and passenger steamships on the coasts, and supported some funds for construction of the railroad, which began in 1850; the first revenue train ran over the full length on January 28, 1855. Referred to as an inter-oceanic railroad when it opened, it was later also described by some as representing a "transcontinental" railroad, despite traversing only the narrow isthmus connecting the North and South American continents. For a time the Panama Railroad also owned and operated ocean-going ships that provided mail and passenger service to a few major US East Coast and West Coast cities, respectively.
Known as the Panama Railroad Company when founded in the 19th century, today it is operated as Panama Canal Railway Company (reporting mark: PCRC). From 1998 to 2025, it was jointly owned by then Kansas City Southern, now Canadian Pacific Kansas City, and Mi-Jack Products and leased to the government of Panama. On April 2, 2025, Canadian Pacific Kansas City and Mi-Jack Products sold the railway to APM Terminals, which is owned by Maersk. Limited passenger service is offered mainly for tourists and cruise ship passengers, operating as an approximately three-hour round trip between Panama City and Colón.
History of earlier isthmus crossings and plans
The Spanish improved what they called the Camino Real (royal road), and later the Las Cruces trail, built and maintained for transportation of cargo and passengers across the Isthmus of Panama. These were the main routes across the isthmus for more than three centuries. By the 19th century businessmen thought it was time to develop a cheaper, safer, and faster alternative. Railroad technology had developed in the early 19th century. Given the cost and difficulty of constructing a canal with the available technology, a railway seemed the ideal solution.
President Bolívar of La Gran Colombia (Venezuela, Ecuador, Panama, Colombia) commissioned a study into the possibility of building a railway from Chagres (on the Chagres River) to the town of Panama City. This study was carried out between 1827 and 1829, just as locomotives were being invented. Previously railroads used horses for motive power. The report stated that such a railway might be possible. However, the idea was shelved.
In 1836, United States President Andrew Jackson commissioned a study of proposed routes for inter-oceanic communication in order to protect the interests of Americans traveling between the oceans and those living in the developing Oregon Country of the Pacific Northwest. The United States acquired a franchise for a trans-Isthmian railroad; however, the scheme was disrupted by the economic downturn after the business panic of 1837, and came to nothing.
In 1838 a French company was given a concession for the construction of a road, rail, or canal route across the isthmus. An initial engineering study recommended a sea-level canal from Bahía Limón to the bay of Boca del Monte, 12 miles (19 km) west of Panama City. The proposed project collapsed for lack of technology and funding needed.
In the 1840s, the United States again turned its attention to securing a safe, reliable, and speedy link between the Atlantic and Pacific oceans. In 1846, the United States signed a treaty with Colombia (then the Republic of New Granada) by which the United States guaranteed Colombian sovereignty over Panama and was authorized to build a railroad or canal at the Panamanian isthmus, guaranteeing its open transit. Several developments would presage the movement of American settlers to and from the West Coast, including the 1846 acquisition of Alta California and, in 1848, the acquisition of the Oregon Territory and the discovery of gold in California. (No transcontinental railroad across the North American continent would be completed until 1869.)
In 1847, the east–west transit across the isthmus was by native dugout canoe (and later by modified lifeboats) up the often dangerous Chagres River. Travelers had to go overland by mules for the final 20 miles (32 km) over the old Spanish trails. The trails had fallen into serious disrepair after some 50 years of little or no maintenance; the 120 inches (3 m) of rain each year in the April–December rainy season also made the trails hard to maintain. A transit from the Atlantic to the Pacific or vice versa would usually take four to eight days by dugout canoe and mule. The transit was fraught with dangers, and travelers were subject to contracting tropical diseases along the way.
William H. Aspinwall, the man who had won the bid for the building and operating the Pacific mail steamships, conceived a plan to construct a railway across the isthmus. He and his partners created a company registered in New York, the Panama Railroad Company, raised $1,000,000 from the sale of stock, and hired companies to conduct engineering and route studies. Their venture happened to be well-timed, as the discovery of gold in California in January 1848 created a rush of emigrants wanting to cross the Isthmus of Panama to go to California.
The first steamship used on the Pacific run was the $200,000 three-mast, dual-paddle steamer SS California. It was 203 feet (62 m) in length, 33.5 feet (10.2 m) in beam, and 20 feet (6.1 m) deep, with a draft of 14 feet (4.3 m), and grossed 1,057 tons. When it sailed around the Cape Horn of South America, it was the first steamship on the west coast of South and North America. When it stopped at Panama City on January 17, 1849, it was besieged by about 700 desperate gold seekers. Eventually, it departed Panama City for California on January 31, 1849, with almost 400 passengers, and entered San Francisco Bay, a distance of about 3,500 miles (5,600 km), on February 28, 1849 – 145 days after leaving New York. In San Francisco nearly all its crew except the captain deserted to seek their fortunes in the city and the gold fields. The ship was stranded for about four months until the company could buy a new supply of coal and hire a new – and much more expensive – crew.
The route between California and Panama was soon frequently traveled, as it provided one of the fastest links between San Francisco, California, and the East Coast cities, about 40 days' transit in total. Nearly all the gold that was shipped out of California went by the fast Panama route. Several new and larger paddle steamers were soon plying this new route.
In January 1849, Aspinwall hired Colonel George W. Hughes to lead a survey party and pick a proposed Panama Railroad roadbed to Panama City. The eventual survey turned out to be full of errors, omissions, and optimistic forecasts, which made it of little use. In April 1849, William Henry Aspinwall was chosen head of the Panama Railroad company, which was incorporated in the State of New York and initially raised $1,000,000 in capital.