Redrawing Trade Winds

Prevailing winds move west to east, and so do most containers crossing North America. For the last two decades, that reality has created a vast and vibrant network of ocean, road and rail operations stretching across the Pacific Ocean and pushing goods across the continent to U.S. consumers.

When the Panama Canal Authority early this month took steps to begin major parts of a $5.25 billion construction plan, their ambitions were nothing short of changing the direction of those trade winds.

In announcing bids to build locks on Panama’s Atlantic and Pacific coasts March 3, the authority set in motion an effort to meet the changing economics of ocean shipping and to shift supply chains that have built Southern California’s ports into behemoths of trade.

The project to add a third set of locks by 2014, the 100th anniversary of the opening of the Panama Canal, will allow the canal to handle ships with nominal capacities of up to 13,000 TEUs, more than double the approximately 5,000 TEUs that’s now considered Panamax.

The canal authority said this month it was evaluating bids by three international consortia to build the new locks, which at an estimated $2.73 billion will be the largest component of the expansion project. Bids also have been received for expansion of the canal’s water-retention basin. A request for proposals was issued in January for dredging of the canal’s Atlantic entrance.

The first shovels could hit the ground by the end of this year, and their impact will reverberate most loudly in Southern California, where the ports of Los Angeles and Long Beach have thrived as the fastest gateway for goods moving from Asia across North America.

Although their reputation has suffered from congestion and labor problems in recent years, Los Angeles and Long Beach still handle more than two-thirds of Asian import containers.

Intermodal rail connections are part of a sprawling infrastructure, dotted with distribution centers, drayage connections and highway hauls that flow from the ports. Projects along the Pacific coast of Canada and Mexico aim to get piece of the action, and carriers are building up inland connections to match those operations.

The Southern California ports already have lost market share to Gulf and East Coast ports, and major shippers including Wal-Mart and Target have added distribution centers far from the traditional West Coast gateway.