panama canal

The new Panama Canal is opening soon and will cause an ‘evolution’ in a vital US industry

In June a $5.25 billion effort to expand the canal will reach its long-delayed conclusion, allowing ships more than 2 1/2 times the size of the current limit to pass through the waterway.

The increased capacity could have profound effects on the US transportation industry, as the cost of shipping from Asia to ports in the eastern US would drop significantly. Simply put, bigger ships are more economically efficient and have lower per-unit costs.

Larger ships and lower costs meant importers traditionally chose to bring in goods from Asia at West Coast ports and then to the eastern US by rail.

But if the canal’s increased capacity lowers shipping costs to the East Coast by enough, it could mean a sizable loss of freight volume over time for western American railroads, Nerijus Poskus, an expert on international shipping at the booking company Flexport, told Business Insider.

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Source: Business Insider

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