How the Panama canal expansion will affect US truckers

Source: Dredging Today
Source: Dredging Today
If you haven’t heard, the Panama Canal is being expanded by a huge amount. Currently, ships with capacities of 4,800 20’ containers (TEU’s) can fit through the canal. However, the ships that will be able to travel the canal after the expansion is complete will be over twice the size with capacities over 12,000 TEU. This is scheduled to happen by 2015. Newspapers for the logistics industry are constantly talking about this topic, but they are not talking about how this will impact truck drivers and freight traffic.

What happens now

Currently, goods coming from Asia make the trip in a container to California, or other West coast ports, and are often unloaded into warehouses close to the port (think of Ontario, California). Then, when the store shelves in Peoria, IL run low, an order is generated and a shipment is made, either by truck or intermodally to the store in the mid-west or east.

What is going to happen

Truthfully, no one truly knows, but it is likely that the containers carrying goods from Asia will begin to land in East Coast and Gulf ports like the Port of Baltimore, the Port of Virginia at Norfolk, Port of Houston, and within a few years Charleston, Philadelphia and others. These are the ports will be able to accept the larger, post-panamax ships.

How truckers might be affected

There are a few ways that truckers might be affected by these changes:

  1. There will be less freight going from California east. This might drive rates into California up, and rates coming out of California down.
  2. There will be more business for draymen at East Coast and Gulf ports. This will almost definitely happen.
  3. Trips from places like Chicago, Kansas City and Dallas going eastbound from freight terminals and distribution centers will be reduced. Instead these trips will be made from warehouses closer to the east coast and gulf ports and move westbound / northbound.

A potential benefit for American Companies and Truckers

There may be some real benefits for American manufacturers located close to East coast and gulf ports. This is speculation, but consider that right now, a lot of empty containers are being shipped from LA/Long Beach to Asia. These containers go back to Asia empty because there are not enough exports from the US. But if these containers were emptying on the East coast and Gulf, there may be an advantage for US manufacturers to take advantage of cheap freight rates to Asia. This is because US manufacturers are generally located in the east and mid-west, where the empty containers will be in the future. There are many factors that influence exports, but an increase in manufacturing activity and exports would also increase truck movements in the Eastern half of the country.