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US cotton exports to benefit from Panama Canal plan

US cotton exports may grow by two per cent due to an expansion of the Panama Canal set to be complete by April 2015. Transit time to China from the East Coast through the Panama Canal will be 7 to 8 days longer than the intermodal route. But once the canal can accommodate bigger ships, all-water shipping from the East Coast will be much cheaper than the intermodal option. The expansion will reduce maritime costs for shipments from the Gulf and South Atlantic ports to China by 28 per cent.

The United States would gain in cotton exports mostly at the expense of India and Brazil. Most other cotton-producing countries would experience a modest gain in business. Even so, the deepening of the canal will redistribute wealth among the states as well, increasing cotton exports from Atlantic and US Gulf ports at the expense of Pacific Coast ports.

Historically, the top three destinations for cotton exports are China, Turkey, and Mexico. The top three ports of cotton exports from the US are Long Beach/Los Angeles, Savannah and Houston. Exports from Savannah are growing, with much of the cotton going to Asia.

A 28 per cent reduction in costs would double exports from Savannah and New Orleans and result in a 57 per cent increase in exports from Houston. These gains would come at the expense of exports from Los Angeles and Long Beach, which would see their traffic drop by 70 per cent.

 
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