What do Warren Buffet, the Panama Canal, and products from Asia to Wal-Mart have in common?The Wall Street 
But in 2014, Panama will rock the world of logistics with the opening of its new “fat lane”– a game changer that creates a threat to western ports and railroads. It takes about 18 days to make the ship and train journey from Asia to West Coast and then across the country. The all-water route through the canal takes 22 days. But the ship-to-rail route costs 10-25% more.
With the expanded Panama Canal, the Wal-Marts and Targets of the world are planning to ship more product to East Coast ports on huge ships that can carry 12,000 standard 20-foot containers–3 times the current capacity. This avoids labor strife in the past decade that clogged West Coast ports, and helps diversify logistics systems. It has also triggered a raft of upgrades at East Coast ports to accommodate the bigger vessels.
The reaction from western ports: Our speed of delivery and superior facilities will stem any loss of business. Many customers don’t want time-sensitive inventory sitting on ships traversing all-water routes. If your goods are stuck in the supply chain, they’re not passing the cash register. Besides, future ships (already being ordered) will carry 18,000 containers, which will not fit through the expanded canal.
But the Journal concludes that the expansion will be good for all ports. It will facilitate rising trade with Latin American for commodities, create round-the-world service by larger ships, and make the US logistics system more competitive globally.
Discussion questions:
1. How does the expansion impact East Coast retailers?
2. What are the OM advantages of the wider canal?