Uruguay Unveils Game-Changing Rail Strategy to Revolutionise Freight and Passenger Transport: Know More About it

Published on November 16, 2025

Uruguay is making bold moves to modernise its railway system and strengthen its transportation infrastructure. With a robust plan for rail development, the country is focusing on enhancing freight transport, improving regional passenger services, and making crucial upgrades to ensure long-term sustainability. This article dives deep into Uruguay’s railway strategy, the critical projects underway, and the ambitious investments planned to boost the country’s economy.

Uruguay’s Vision for the Future of Railways

The government of Uruguay has made significant strides in refining its national railway masterplan. This strategic approach is designed to turn the country’s railway infrastructure into a modern, efficient system that can meet both freight and passenger needs. The plan aims to reduce bottlenecks, improve connectivity, and provide faster, safer, and more reliable transportation services. With the country’s focus on enhancing economic growth and regional development, the rail network plays a crucial role.

The Ministry of Transport and Public Works (MOTP) is at the helm of this transformation. Led by Transport Minister Lucía Etcheverry, the government is investing heavily in its railway system. A $200 million investment through 2029 is earmarked to revitalise key routes, enhance safety systems, and introduce modern technology to ensure smooth operations. Though the national masterplan is still under finalisation, the government has already identified several priority projects that are critical to the success of the strategy.

Key Projects on the Horizon

Uruguay’s railway transformation is not just a vision—it’s already taking shape. The country is focusing on a series of key upgrades that will modernise freight corridors and regional passenger services. These projects are designed to address current issues and improve the efficiency of the rail network.

1. The Río Negro Railway Bridge: The Crucial Bottleneck

One of the most urgent projects in Uruguay’s railway plan is the Río Negro railway bridge. This bridge is identified as a major bottleneck in the system, restricting the flow of freight and slowing down travel times. The bridge is part of the flagship Central Railway project but was overlooked in the initial plans. Transport officials have now placed it at the top of the priority list.

The Río Negro bridge is vital for connecting northern Uruguay with the capital, Montevideo. The railway corridor that runs from Montevideo to Paso de los Toros is one of the most critical freight routes in the country. If the bridge is not upgraded, it could limit the capacity of this route, hampering the transportation of goods, and ultimately impacting the economy. As Uruguay looks to recover and expand its rail freight market, the Rio Negro bridge represents a critical hurdle that must be addressed immediately.

2. New Connections for Energy Security

Another key project in the works is a new railway connection linking the Central Railway to the state-owned La Teja refinery. This short industrial spur will provide more efficient transportation for fuel storage in Durazno, enhancing Uruguay’s energy security. This railway connection is essential because it allows heavier flows of fuel to be transported by rail rather than road, ensuring a safer and more reliable supply chain for the energy sector.

3. Heavy Maintenance and Upgrades Between Paso de los Toros and Rivera

The government is also prioritising heavy maintenance on the Paso de los Toros to Rivera railway corridor. While this section underwent significant rehabilitation in 2019, it has faced deferred upkeep since 2021. This is causing concerns that the track could soon return to the poor condition that initially triggered the upgrade.

This section is crucial because it not only carries freight from northern Uruguay but also hosts passenger services between Tacuarembó and Rivera. If this corridor declines in quality, it will negatively affect both cargo transport and local commuters. According to Waverley Tejera, head of Uruguay’s national rail directorate, the decline of this corridor is a looming problem that must be tackled before it becomes more costly and difficult to fix.

4. Reopening the Peñarol to José Pedro Varela Line

Uruguay’s rail network also includes plans to reopen the 290-kilometre line between Peñarol in Montevideo and José Pedro Varela. This line, which was closed in 2012 when passenger services stopped, is expected to be a vital route for agricultural exports, especially rice, which accounts for over 60% of the country’s rice production.

Shippers have long called for a rail alternative to long-haul trucking, and the reopening of this line could provide a second option for exporters to reach Montevideo. By doing so, it will help reduce the dependence on road transport, thereby alleviating congestion and improving the efficiency of the transport network. This project also has the potential to ease the strain on the existing road network by shifting some of the bulk traffic to the rail system.

5. Southern Rail Connection to the Port of Montevideo

Another significant project is the development of a new southern rail connection to the Port of Montevideo. As one of Uruguay’s primary gateways for container and bulk cargo, the port plays an essential role in the country’s trade and economic growth. However, last-mile congestion and long transfer times have been ongoing issues.

The southern rail connection will help address these problems by improving access to the port, easing congestion, and reducing transfer times. This project is expected to maintain the competitiveness of the Port of Montevideo as a regional hub for cargo, ensuring that Uruguay continues to attract international shipping and trade.

6. Technological Upgrades for Safety and Reliability

The Ministry of Transport and Public Works is also focusing on upgrading the technology used throughout the rail network. This includes implementing modern signalling systems and automated level-crossing protection. These advancements will improve the safety and reliability of rail services.

With the introduction of modern train control systems, it will be easier to run more trains on the same tracks, optimising the use of the infrastructure. These technological upgrades are not just about increasing efficiency—they are also about reducing the risk of accidents and incidents that could hinder the progress made by the other upgrades and investments.

The Role of Regional Cooperation

Uruguay’s rail strategy is not limited to domestic upgrades; it also involves cross-border cooperation with neighbouring countries, Argentina and Brazil. The government is working with both nations to make regional rail traffic more viable. Stronger rail links between these countries would provide Uruguay’s exporters with better access to international markets, opening up more trade opportunities.

In the long term, regional cooperation could lead to further improvements to the rail network, with additional investments needed to enhance cross-border connections. The growing demand for efficient transportation in the region presents a unique opportunity for Uruguay to solidify its position as a key player in South American trade and logistics.

Financial Support for Rail Development

The $200 million earmarked by the Ministry of Transport and Public Works is a significant investment in the future of Uruguay’s railway system. This funding will be used to finance a range of projects, including rehabilitation, new connections, and safety upgrades. The ministry is committed to using these funds effectively to ensure that the railway system is capable of meeting the country’s transport demands.

While this amount may seem substantial, it is a necessary investment to prevent more costly repairs and upgrades in the future. As Waverley Tejera noted, the government cannot afford to wait for the perfect plan when bottlenecks are already affecting the railway’s ability to function efficiently. The priority is to act now and address the most urgent issues before they escalate.

A Long-Term Vision for the Railway System

The goal of Uruguay’s rail strategy is clear: to create a railway system that meets the current and future demands of both freight and passenger services. This includes not just addressing current bottlenecks and inefficiencies but also planning for future growth.

The railway network in Uruguay is vital for the country’s economic development. The transport of goods, particularly agricultural products, is a significant contributor to the economy. By improving the rail network, Uruguay can increase the efficiency of its logistics, reduce transportation costs, and enhance its global competitiveness.

Uruguay’s railway strategy is a forward-thinking approach to modernising the country’s infrastructure. With a focus on critical upgrades, new connections, and regional cooperation, Uruguay is poised to transform its railway system into a more efficient and reliable mode of transportation. The $200 million investment is just the beginning of what promises to be a long-term commitment to strengthening the rail network, supporting economic growth, and improving the quality of life for Uruguay’s citizens. As the government continues to refine its masterplan, the country’s railways will play a central role in shaping Uruguay’s future.