Panama Canal Railway
The Panama Railway also operated a significant shipping line, connecting its service with New York and San Francisco. It ran a Central American line of steamships linking Nicaragua, Costa Rica, San Salvador, and Guatemala to Panama City. The shipping service was greatly expanded when canal construction began. Ships included the SS "Salvador", SS "Guatemala", SS "Cristobel", and , which became the first of the ships to cross the completed canal in 1914.
In 1904 the United States took over the license to build and operate the canal. The choice to use locks and an artificial lake (Gatun) meant that the old railway route from 1855 had to be changed because it followed the Chagres River valley, which would be flooded by the lake. Also, the railway would be extended and altered continuously for the building process. The stock of the Panama Railway Company, vital in canal construction, was entirely controlled by the United States Secretary of War.
5 ft and 1520 mm gauge railways
The Panama Railway, first constructed in ca. 1850, was built in gauge. During canal construction (1904–1914), this same gauge was chosen for both construction traffic, canal operating services along the quays, and the newly routed commercial cross-isthmus railway. In 2000 the gauge for the commercial parallel railway was changed to to use standard gauge equipment. The original gauge was chosen under the influence of the pre-conversion southern United States railway companies. Nowadays, the electric manoeuvering locomotives along the locks ("mules") still use the gauge that was laid during canal construction.