If you think back in history, the US was founded on the east coast for it was a short trip between Europe and the US. At the time the major European countries of Spain, England and France had divided up the country as part of their territory of influence. Eventually, the US broke away and the center of attraction was east of the Appalachian Mountains. After a while the settlers moved further inland for “free” land and greater opportunities. The US expanded with the purchase of land from France or the waters than drained into the Mississippi River, that left the west. The land moved from Spain to Mexico and with battles including in Texas, eventually the US took the west over. When gold was discovered in California, a rush of people felt gold fever and started to move to California. The way to go was wagon train (with others in a wagon pulled by oxen or horses) or take a steamship around the tip of South America and go up the coast to arrive in California. With most trips, people wanted a short cut and Panama was the logical method, although the trip was not all by water. There were rivers and lakes that were semi connected, but not for normal tourists. Eventually the US and Panama decided to build a canal. It would be one of the world’s greatest engineering feats and some of the processes are still used today. The Canal would need 2 locks to lift the boats up to the new lake which was formed and 2 locks to come down to the ocean. If you are interested there are interesting videos on You Tube about the engineering.

In an article by Nathan Vanderklippe of the Globe and Mail, the Canal has recently been upgraded at a cost of $5.2 billion. No other trade route brings more goods through the canal than goods transported from Asia to eastern US. In 2018, 37% pf the containerized goods arriving in the US came from China. In 2022, the number fell to 30%. The countries which made inroads to China’s dominance are Vietnam, India and Thailand according to London based Clarkson Research Services Ltd.

Goods sailing from the China to the US tend to come by the Pacific Ocean and through the Panama Canal. Ships from India and Southeast Asia tend to use the Suez Canal on their way to Europe and then to the US.

The expansion of the Panama Canal was to allow bigger ships to use the Canal, before the expansion container ships could carry 5,000 containers, now it is up 14,000 containers. Those larger ships use the bigger canals and pay a larger fee, which results in nearly 50% of the canal’s revenues come from a minority of ships.

Linking to dividend paying stocks, in all industry there are changes, most come about slowly as competition and alternatives follow infrastructure changes. For example in the shipping world, the rise of the super container ship rose to ports and canals investing in infrastructure to ensure the large ships could use the ports and canals. It took times, but if the canal had not invested, the ships would have landed at ports in California and Mexico to unload the containers. However when the Canal invested in the infrastructure to allow the large ships, the revenues followed. This is similar to many industries a minority of users generates the excess fees to make the company profitable to pay you a dividend. Do you know how diversified your company investments are?

There are more questions than answers, till the next time – to raising questions.