The Peruvian Ministry of Economy and Finance stated in a declaration on May 26 that it will seek to hold high-level meetings with China and Brazil to advance the planned "bi-oceanic railway". This is the latest development in the project following the arrival of a delegation of Chinese government railway engineers in Ilhéus, Brazil, on April 16.

The bi-oceanic Railway is referred to by the Brazilian side primarily as the "Brazil-Peru Bi-oceanic Corridor". The concept has a long history, dating back at least to the 1960s during the early stages of the South American regional cooperation framework. At that time, South American countries aspired to overcome the geographical barrier posed by the Andes Mountains, yet due to limitations in funding, technology, and political conditions, the idea remained largely theoretical. Colombia once attempted to collaborate with China in 2011 on a railway project dubbed the "dry canal", which was planned to be funded by the China Development Bank and built and operated by China Railway Group. However, the project was shelved due to U.S. intervention. Substantial progress on the bi-oceanic Railway vision began on July 16, 2014, when China, Brazil, and Peru jointly issued the Statement of Cooperation on bi-oceanic Railway Connection, proposing to enhance South America's transportation infrastructure and promote interconnection between South American and Asian markets. The statement emphasized a shared commitment to unlocking the potential of connecting the Brazilian and Peruvian railway networks. On May 19, 2015, China’s National Development and Reform Commission, Brazil’s Ministry of Transport, and Peru’s Ministry of Transport signed the Memorandum of Understanding on Joint Conduction of the Basic Feasibility Studies for a Bi-oceanic Railway Connection.

The main route of the bi-oceanic railway spans approximately 6,500 kilometers. It begins at the Port of Chancay on Peru's Pacific coast, crosses the Andes Mountains at an altitude of 4,818 meters heading northeast, traverses the Amazon rainforest along the Peru-Brazil border, connects with Brazil's under-construction east-west integrated railway FICO-FIOL in Porto Velho, and ultimately reaches the Atlantic coast at the port of Ilhéus.

Currently, both Brazil and Peru have made some preliminary efforts to advance the project.

On the Brazilian side, the main focus has been on actively promoting the construction of FICO-FIOL. This railway runs from east to west, starting at the Atlantic port of Ilhéus, passing through Figueirópolis–Mara Rosa, and ultimately reaching the inland port of Porto Velho. The total length is 3,919 kilometers, with a designed annual freight capacity of 60 million tons. In November 2024, the Brazilian government announced an allocation of USD 776 million from the national budget to support the advancement of the South American integration route plan in 2025 and to attract more partners to participate. In February 2025, Brazil further unveiled a USD 17 billion railway investment plan aimed at increasing the share of rail transport in exports from the current 17.7% to 34.6% by 2035. This plan includes integration projects linking the central-western and eastern regions, specifically connecting Lucas do Rio Verde in Mato Grosso to Ilhéus in Bahia. In March of the same year, Brazil’s National Land Transport Agency (ANTT) released a new initiative to grant long-term, up to 99 years, concessions for over 10,000 kilometers of idle railway lines, with the goal of encouraging private and international investment and achieving the strategic objective of reconnecting Brazil by rail.

On the Peruvian side, the construction of the Port of Chancay, which will be connected to the railway, has been completed. In January 2019, China’s COSCO Shipping invested USD 225 million to acquire a 60% stake in the port. In June 2021, Peru’s National Port Authority granted COSCO Shipping a 30-year exclusive operating concession. In November 2024, Phase I of the Port of Chancay was completed and officially began operations. However, the railway construction is still in the preliminary research stage. In March 2025, Peru’s Ministry of Transport and Communications (MTC) announced the launch of pre-investment studies for the Trans-Andean railway project. The studies include route surveys, station planning, mapping, and cost estimation. This railway will cross the Andes Mountains and reach the Amazon rainforest region, with a total length of approximately 900 kilometers. Once completed, it will be the longest railway trunk line in Peru. The project is expected to require over USD 14 billion in investment and is planned to be developed under a public-private partnership (PPP) model.

Despite the efforts made by China, Brazil, and Peru to advance the construction of the railway, the fact remains that progress has been slow.

According to a report by Brazilian media Gazeta de Povo on May 13, connecting the Atlantic and Pacific Oceans by rail is a massive undertaking. Within Brazil alone, the project involves more than 4,000 kilometers of track, of which less than 15% is currently ready. The design primarily relies on the FIOL-FICO routes. As planned, these two lines currently connect Ilhéus to Lucas do Rio Verde in the state of Mato Grosso. However, from Lucas do Rio Verde to Acre on the Peruvian border, there is no actual project in place, only a conceptual plan. This unbuilt stretch represents nearly half of the Brazilian segment of the Bi-oceanic Corridor and is where the Workers’ Party government hopes to attract Chinese investment.

The FIOL and FICO segments that form part of the bi-Oceanic corridor are mainly divided into three sections. FIOL 1, stretching 537 kilometers from Ilhéus to Caetité in the state of Bahia, has already been completed. FIOL 2, which runs 485 kilometers from Caetité to Barreiras, also in Bahia, is currently under construction. FIOL 3, covering 838 kilometers from Barreiras to Mara Rosa in the state of Goiás, is still in the project research phase.

The slow progress of the bi-oceanic railway construction is mainly due to a range of complex challenges, including cross-border coordination, funding, geographical conditions, environmental protection, social impact, and geopolitical factors.

One of the core obstacles is the geopolitical competition and political disagreements among the countries involved. Brazil and Peru have long-standing disputes over the route selection, with Brazilian states fiercely competing to have the railway pass through their territories. For example, the state of Mato Grosso do Sul proposed an alternative route to divert the line through Bolivia, resulting in repeated adjustments to the original plan. Peru, on the other hand, has sought to reduce construction costs by including Bolivia in the project, estimating that going through Bolivia would lower costs from USD 35 billion, if borne by Peru alone, to USD 13.5 billion. However, Bolivia eventually withdrew due to financial constraints and concerns about being bypassed in the routing, further complicating coordination efforts. In addition, frequent changes in government have disrupted policy continuity. For instance, changes in Brazil’s administration have led to multiple shifts in project planning. On the international front, the United States has expressed deep concern over China’s growing influence in South America. At one point, it even threatened to restrict Chinese ships from passing through the Panama Canal and attempted to interfere in the project through diplomatic channels.

The massive funding gap and financing risks constitute another major challenge. The project's total investment is estimated at USD 80 billion, far exceeding the fiscal capacity of both Brazil and Peru. Although China has provided partial financing, such as 45% of the USD 30 billion in the form of RMB bonds, relying on a single funding source carries risks, and economic fluctuations in Latin American countries may affect their repayment ability. At the same time, the project's profitability remains uncertain and would require long-term government subsidies. Moreover, as a mere transit corridor, Peru may not gain sufficient economic returns, further weakening its motivation to participate.

Geographic and engineering challenges are equally severe. The railway must cross the Andes Mountains at an altitude of 4,818 meters, requiring the construction of high-altitude tunnels and the implementation of earthquake early warning technology. When passing through the Amazon rainforest, specially designed cement piles are needed to reinforce the roadbed, along with ecological bridges to protect animal migration. However, opposition from environmental organizations and indigenous groups may still lead to construction delays. In addition, Peru uses the standard gauge of 1,435 mm, while Brazil uses a broader gauge of 1,600 mm. This difference in track gauge must be addressed through segmented construction or hub conversions, which could reduce transportation efficiency.

Environmental issues and social tensions are deeply intertwined. Although the planning phase has avoided habitats of rare flora and fauna, the construction process may still lead to deforestation, soil erosion, and other ecological matters, triggering pressure from international environmental organizations. Land acquisition and relocation of communities along the route may also spark protests. For example, indigenous groups are concerned about the impact on their traditional way of life. This calls for careful lessons to be drawn from China's past experience with the Myitsone Dam project in Myanmar, to avoid repeating the same mistakes. The dam site was a significant historical and sacred location for the Kachin ethnic group, and the project faced opposition from the Kachin Independence Organization and local villagers from the outset. The organization repeatedly wrote to relevant Chinese government departments and Myanmar authorities to protest the dam's construction, but both Chinese and Myanmar sides failed to take these concerns seriously at the time, missing the opportunity to win their support. Furthermore, the Chinese government and involved enterprises did not conduct thorough assessments of Myanmar’s internal ethnic tensions, the country’s democratization trend, or the potential risks behind shifts in its political landscape. As a result, project reports and recommendations were superficial and imprecise, greatly overestimating the project's positive impacts while underestimating its negative consequences. The local society’s and ecosystem’s capacity to bear the project's effects was largely overlooked.

All in all, the deeper layers of these challenges lies in the triple barriers that emerging economies must overcome when reshaping the global logistics landscape: they must resolve the paradox between “infrastructure investment ahead of demand” and the “limited economic capacity of the region”, balance the value conflict between technological rationality and ecological preservation, and carve out a development path that ensures both economic viability and security amid great-power strategic competition. Moreover, the cautionary tale of the Myitsone Dam underscores the importance of not neglecting the coordination of diverse interests when navigating between project planning and real-world livelihoods, ecological red lines, and political contestation.

ANBOUND is currently researching this issue and basically holds the view that the construction of the bi-oceanic railway is neither a technical problem nor a market issue, but rather a major matter of geopolitical strategy. For China, the railway should be approached with caution rather than urgency. A slow and deliberate pace allows for clearer understanding of potential problems and flaws, thereby preserving greater geopolitical maneuvering space. On the other hand, a hasty decision could result in China being in a passive position that would constrain itself. Therefore, the design of risk-averse geopolitical solutions will become the central focus of the future development of the bi-oceanic railway. This issue cannot be resolved solely through political commitments from South American countries; it must be also supported by more comprehensive institutional design and safeguards.

Final analysis conclusion:

The construction of the "bi-oceanic railway" is a massive undertaking. Although China, Brazil, and Peru have already made some efforts in the project, progress remains slow. The challenges involved are not merely technical or market-related, but rather center on complex geopolitical strategy. For China, the construction of the railway should proceed cautiously rather than hastily. A gradual approach helps identify and address potential problems and flaws, thereby preserving greater geopolitical flexibility. A rushed decision could lead to a passive situation that is difficult to extricate from. Therefore, the design of risk-mitigation strategies for geopolitical challenges will become a core issue in future development in this regard. This issue cannot be resolved solely through political commitments from South American countries; instead, it must be supported by more comprehensive institutional frameworks and safeguard mechanisms.

_____________

He Yan is a researcher at ANBOUND, an independent think tank.