The Panama Canal is being expanded; the $5b construction of larger locks is due to be completed in 2014. As the Financial Times describes, that’s expected to shake up the east coast shipping scene.

Scenes like the one at Baltimore are being played out all along the east and gulf coasts ahead of what promises to be the biggest shake-up in US distribution since the advent of shipping containers 50 years ago.

Ports, terminal operators, rail companies and state governments are jostling to win the new traffic they expect to be generated by the bigger ships. Billions of dollars are being spent to build new quays, deepen channels and expand rail tunnels. Consumers, manufacturers and retailers in the US mid-west and inland eastern cities could all benefit.

Containers heading to these areas will have the option of going via east-coast ports then heading west on trains. Their traditional route has been eastward from California, where larger ships free of Panama Canal restrictions already dock.

Here’s James Feyrer on the closing of the Suez Canal. Feyrer is also working on a paper titled “The Opening of the Panama Canal as a Natural Experiment in Trade”.

[HT for FT to Seb]