From the pages of Images Retail (May 2009)

Chain of command
By Michael Bergdahl

Wal-Mart is a supply chain driven company obsessed with lowering costs. The widening of panama canal is just another opportunity to lower costs to protect their razor-thin profit margins. Since the cost of container shipping is about to come down again, suppliers and manufacturers for companies such as wal-mart are already planning for the future.

Recently I spoke at a business conference in Panama City, Panama about the Best Practices of the World’s largest company… Wal-Mart. While I was there, I decided to visit the Panama Canal. It was just a short drive from the Hotel El Panama to the Miraflores Locks where I had lunch at the café, overlooking the canal. The view was both spectacular, and surreal, as I watched the heavily laden container ships slowly moving from the Pacific Ocean towards the Atlantic.

I learned that by 2015 Panama plans to widen the canal allowing the passage of even larger container ships. Currently the biggest ships that can navigate the canal and locks carry up to 4,000 containers. After the widening is complete, ships carrying more than 11,000 containers will be able to make the trip.

For some reason, as I watched the container ships passing through the Panama Canal, I thought about the impact that widening the canal would have on the way Wal-Mart (and its competitors) ships freight into the United States, and for that matter, around the world. At the present time, most of its containers filled with products bound for American consumers enter the USA through the Port of Los Angeles/Long Beach. With its history of labour problems and strikes, it’s hard to believe the Long Beach, California port still maintains a monopoly on container shipments entering into the United States. It is estimated that 2/3 of the container shipments entering the USA from China and Asia pass through the Long Beach Terminal. In the past, dock worker strikes at Long Beach have crippled manufacturers and retailers around the world. I have heard that during the last strike, container ships were lined up across the Pacific Ocean, all the way up the Yangtze River in China, parked and waiting for the strike to end. That’s all about to change. As a result of widening the Panama Canal those bigger container ships will now be able to bypass west coast ports such as Seattle, Portland, and Los Angeles in favor of more business friendly ports, in “right to work” states like: Texas, Louisiana, Mississippi and Alabama. Overnight, Houston, Texas will become the “New Long Beach!” If you think about it from a rail and trucking standpoint, Houston’s centre of the country location will significantly reduce the amount of diesel fuel consumption, while simultaneously reducing the time required for delivery of containers to customers. Shipments into a business friendly state like Texas will also insure the “product pipeline” is always open and flowing. It’s a big win for manufacturers, suppliers, retailers, and consumers alike as productivity will go up and costs will come down for moving containers from ship, to rail, to road through Gulf Coast Ports! You can bet the big international shippers from the USA, and around the world, are already gearing up to take advantage of that southern supply chain hospitality!...

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