ANGELENOS DIDN'T GET to cast a vote in Panama's referendum Sunday, but it could have a major effect on what is arguably the region's most important industry. And no, we don't mean Hollywood; L.A.'s port complex is the largest in the nation, and world trade routes might be on the verge of a significant switch.
Panamanians overwhelmingly supported a $5.2-billion initiative to expand the Panama Canal, which will make it easier for shippers to get goods from Asia to ports on the East Coast — and thus bypass the ports of Los Angeles and Long Beach. Panama is looking to expand the canal because it isn't deep enough or wide enough to handle a new generation of super-sized cargo ships. Such vessels either have to unload on the West Coast or transfer cargo to smaller ships for the run through the canal to the East Coast.
There's no way to know how the Panamanian vote will affect port traffic here, but it could complicate local efforts to clean the air. The ports are in the process of implementing tough measures to clamp down on air pollution from cargo ships, trains and trucks. These measures are popular among residents whose health is being damaged by the toxic substances emanating from the ports, but not among shippers and retailers. They typically respond by threatening to take their business elsewhere, but that hasn't been a serious problem because the local ports don't really have much competition. An expanded canal could make those threats more credible.
Nonetheless, many port officials are unconcerned about Sunday's referendum. First, one of the port's main challenges is growth; if trade from Asia continues to grow at expected rates, it will eventually overwhelm the West Coast ports, and the Port of L.A. is expected to reach capacity between 2020 and 2025. Further, about 60% of the cargo unloaded in California stays in the state, so it would make little sense to ship it elsewhere. And it will take about eight years to complete the Panama Canal project, by which time the local environmental measures will have been implemented and competing ports may have taken many of the same steps.
There's a chance that Panama's gain could be L.A.'s loss. More likely, though, it's a case in which that cliche about rising tides lifting all boats actually applies.