Panama Canal Widening to Hit California Port Revenue

Texas stands to take a bite out of California’s lucrative port business according to the Wall Street Journal.

The widening of the Panama Canal, due for completion in early 2016, will divert a significant portion of the lucrative container shipments that currently pass through the Port of Los Angeles and other West Coast ports. The canal’s widening will allow much larger container ships to transit the canal and deliver their goods to the Port of Houston and other ports along the Gulf and East Coasts.

The WSJ reports:

Because of cheaper per-unit shipping costs, as much as 25% of West-bound cargo from Asia could shift to the south and northeast, according to a report by brokerage firm JLL.

The Port of Houston is expanding its warehouse space in anticipation of the increased traffic along with Gulf and East Coast ports.

The cost of shipping through the Port of Los Angeles increased substantially several years ago when then Los Angeles Mayor Villaraigosa pushed through regulations requiring the replacement of 16,000 diesel trucks to accommodate stringent new low particulate matter diesel engine regulations.

Former Obama Chair of the Council of Environmental Quality, Nancy Sutley, led the effort to implement the new rules as the Mayor’s head of energy and the environment. The impact of the rules reverberates to this day as an issue in a truck driver strike at the LA Port.

Truck drivers are protesting the lower wages they receive as a result of the higher cost of the low particulate trucks and have been on strike for the past several days.

The basis for those environmental regulations has been covered previously at AT which showed how flawed the science was.

Truckers had to purchase brand new trucks to meet the new standards while selling perfectly good trucks in other states such as Texas. We now have the likelihood that container cargo will once again be hauled by those same trucks but now in Texas rather than California with another hit to the California economy. Texas Governor Rick Perry must be beaming.

Texas stands to take a bite out of California’s lucrative port business according to the Wall Street Journal.

The widening of the Panama Canal, due for completion in early 2016, will divert a significant portion of the lucrative container shipments that currently pass through the Port of Los Angeles and other West Coast ports. The canal’s widening will allow much larger container ships to transit the canal and deliver their goods to the Port of Houston and other ports along the Gulf and East Coasts.

The WSJ reports:

Because of cheaper per-unit shipping costs, as much as 25% of West-bound cargo from Asia could shift to the south and northeast, according to a report by brokerage firm JLL.

The Port of Houston is expanding its warehouse space in anticipation of the increased traffic along with Gulf and East Coast ports.

The cost of shipping through the Port of Los Angeles increased substantially several years ago when then Los Angeles Mayor Villaraigosa pushed through regulations requiring the replacement of 16,000 diesel trucks to accommodate stringent new low particulate matter diesel engine regulations.

Former Obama Chair of the Council of Environmental Quality, Nancy Sutley, led the effort to implement the new rules as the Mayor’s head of energy and the environment. The impact of the rules reverberates to this day as an issue in a truck driver strike at the LA Port.

Truck drivers are protesting the lower wages they receive as a result of the higher cost of the low particulate trucks and have been on strike for the past several days.

The basis for those environmental regulations has been covered previously at AT which showed how flawed the science was.

Truckers had to purchase brand new trucks to meet the new standards while selling perfectly good trucks in other states such as Texas. We now have the likelihood that container cargo will once again be hauled by those same trucks but now in Texas rather than California with another hit to the California economy. Texas Governor Rick Perry must be beaming.