A Man, a Plan, a Canal Railway

Editor’s Note: Tom Kenna, President of the Panama Canal Railway Company (PCRC), recently gave former Kansas City Southern President and CEO Mike Haverty and his wife Marlys a tour of PCRC headquarters. Mike (Railway Age’s 2001 Railroader of the Year) and Marlys were photographed with a locomotive named in his honor in 2002, and recently repainted. He recently wrote to me about his experience with creating PCRC around the same time as privatization of Mexico’s railway system was under way. — William C. Vantuono

“In March 1994 I came to Panama when I was running Haverty Corp, a transportation investment company. Mi-Jack Products was an investor in Haverty Corp. They wanted me to go to Buenos Aires, Argentina where they had partnered in a port operation to see if construction of an intermodal terminal was feasible (it was not). They also insisted that I stop in Panama where they had another minor investment to evaluate the railroad originally constructed in 1855 across the Isthmus. Mi-Jack understood that it was soon to be privatized, and Haverty Corp should bid on it. President Jimmy Carter had turned the railroad that was operated by the U.S. government in the Canal Zone over to the Panamanian government in 1978. When I arrived in March 1994, it was in such bad shape that had it been in the U.S. the FRA would have shut it down.

“While I was skeptical of operating a 50-mile railroad that could never compete with the Canal, after seeing all of the containers being transferred on the Atlantic side near the second largest free trade zone in the world at the time, I came up with an idea. The railroad could operate like a conveyer belt and transfer unloaded containers across the Isthmus that were to be reloaded to ships going up or down either coastline and save passage through the Canal. When I got home, I drew up a plan to rebuild and operate the railroad. Haverty Corp submitted a plan to the Panamanian government to get the concession that was being considered. Before we got a reply, I was recruited to run Kansas City Southern.

“Shortly after I went to KCS, Mike Lanigan of Mi-Jack called and asked if we could resubmit the concession proposal under a partnership of Mi-Jack and KCS. I responded positively and we resubmitted the plan I had written up,but now under the name of both companies, Mi-Jack and KCS. It took almost two years, but we were awarded the concession in 1997.

“One problem was that the Panamanian government awarded only the right-of-way with no property for intermodal facilities, maintenance facilities, headquarter offices, etc. Therefore, we spent another couple of years negotiating with the Panamanian government to get the land we needed. We hired Dave Starling to run PCRC and started construction in 1999. The railroad was completed and opened in a dedication ceremony with the president of Panama in 2001.

“Because people didn’t understand where the Panama Railroad operated, I had the name changed to the Panama Canal Railway Company (PCRC) so they could better understand that it paralleled the Canal. We painted the locomotives and passenger equipment in the KCS Southern Belle scheme. I had a logo made up that used the old Panama Railroad shield but the KCS red background color and white lettering. I also demanded that the rebuild be done with 100% concrete ties, 136-pound welded rail and granite ballast to minimize capital investment for decades to come. Train speeds are 60 mph for both freight and passenger.

Marlys and I had a wonderful trip to Panama to celebrate my birthday. It really brought back memories. We were treated like royalty by Tom, his wife Lottie and Tom’s PCRC team. They definitely rolled out the red carpet.”