Why is the Port of Los Angeles becoming more important to the overseas commerce of the United States, all while the Panama Canal has become less important? There are some positives and negatives to this situation.
In recent years, the Panama Canal has become less important, and critical, as a passageway to ship goods from one place to another. At the same time, the Port of Los Angeles has increased in its importance concerning trade and commerce overseas. So, why are these things so? What has caused this to take place? We can sum it up with three different reasons for why this has taken place.
The most important reason, in a nutshell, the Port of Los Angeles has become increasingly important in the realm of commerce overseas is because of the increasing amount of trade we do with the nations of the Pacific Rim, including Japan, South Korea, China, and Singapore, most of whom have grown substantially in the realm of economics over the last several decades, particularly China. Japan’s economy grew quickly in the decades following World War II, and by the late 1970’s and early 1980’s was trading heavily with us, which they have done ever since. This includes their automobiles, computers, electronics, robotics, as well as some high-quality heavy machinery. China, since the 1980’s, has had a most favored trading status with the United States, and this has helped her economy grow rapidly, so that she produces many goods that are brought to the U.S. to be sold – she may be the world’s next economic and military superpower. South Korea and Singapore also have strong economies and do a lot of trade with the U.S. As the Asian nations along the Pacific Rim have grown economically, the need for ports along our Pacific coast becomes increasingly important. This includes primarily the Port of Los Angeles, as well as the Ports of San Francisco, Seattle, and Tacoma.
At the same time, in the last fifty years, we have built the world’s best highway system, known as the Eisenhower Interstate Superhighway System. Because of this, from a cost-benefit analysis, it becomes cheaper to ship goods across the country through tractor-trailers on these roadways than to ship them by sea through the Panama Canal to the other side. Because of this, there has been less need for the use of the Panama Canal since goods bound for the U.S. from Europe can come to a port on the Atlantic side of the country, and ship those goods by our interstate roadways westward across the country; while goods bound for the U.S. from Asia can come to port on our Pacific side, such as the Port of Los Angeles, and ship those goods eastward on our interstate roadways to other parts of the country.
There is one other factor at work here. Goods shipped from Europe to the Pacific Rim nations in eastern Asia have the option of sending their goods either through the Mediterranean Sea and the Indian Ocean via the Suez Canal, or sending their goods across the Atlantic and Pacific Oceans via the Panama Canal. From another cost-benefit analysis, it may increasingly be better to send their goods on the eastward route through the Suez Canal, than on the westward route through the Panama Canal. This means less business for the Panama Canal from that standpoint also.
There are probably other reasons for why the Port of Los Angeles has become increasingly important, whereas the Panama Canal has become less important, but the three reasons listed above are the most important.
