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FinanceSouthwest Airlines ships jet fuel by barge via Panama Canal to LA for first time
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Southwest Airlines, for the first time, chartered a barge to transport 12.6 million gallons of jet fuel from Houston to Los Angeles via the Panama Canal, arriving May 28, 2026. The move was a response to volatile fuel markets and supply concerns exacerbated by the U.S.-Iran conflict and subsequent shipping disruptions in the Strait of Hormuz. The shipment utilized a Jones Act waiver granted by President Trump in March. Southwest reported fuel expenses rose nearly $900 million in Q2 2026. The West Coast, heavily reliant on imports, faced particularly high prices. Airlines have scaled back capacity growth and raised fares, with executives expecting higher prices to persist. United Airlines also noted significant fuel cost increases, impacting earnings.
Source report
A Southwest Airlines Boeing 737 airplane lands at Los Angeles International Airport after arriving from Chicago on March 7, 2026. Kevin Carter | Getty Images
Southwest Airlines sent a barge carrying 12.6 million gallons of jet fuel from Texas to Los Angeles this spring, marking the first time the Dallas-based carrier has used a ship to transport fuel to the West Coast amid supply worries and soaring prices.
Key Details
- Shipment: The barge departed from Houston, transited the Panama Canal, and arrived in Los Angeles on May 28 with approximately 12.6 million gallons of jet fuel.
- Context: Southwest used 564 million gallons of jet fuel in the last quarter, meaning the shipment represented roughly a week's supply for the West Coast.
- Rationale: CFO Tom Doxey told CNBC the move was made "when supply was most constricted ... when it was most at risk."
Fuel Market Volatility
Jet fuel prices have been highly volatile this year, particularly following U.S. and Israeli strikes on Iran in February. The West Coast is significantly more reliant on fuel imports than other parts of the country.
Southwest reported Thursday that its fuel expenses rose nearly $900 million in the second quarter compared to the same period last year.
Jones Act Waiver
The airline used a waiver of the Jones Act — a 1920 law requiring shipments between U.S. ports to be carried on U.S.-flagged vessels. President Donald Trump waived that requirement in March as fuel prices surged following the start of the Iran war and subsequent disruptions in the Strait of Hormuz.
Broader Industry Impact
- United Airlines reported that jet fuel increased $575 million in the third quarter alone, representing a $1.12 hit to adjusted earnings. The carrier said it is using the latest available fuel prices for quarterly estimates due to ongoing volatility.
- Fuel hedging: U.S. airlines have largely abandoned fuel hedges over the past decade, as domestic supply was abundant and prices remained stable.
- Capacity and fares: Carriers have scaled back capacity growth plans, helping to boost fares. Airline executives said this month that demand remains strong despite higher ticket prices, which they expect to persist.
Supply Concerns Ease
Worries about fuel supplies intensified earlier this year as countries restricted exports amid fears of shortages. A Southwest spokesman said those concerns have since eased, though prices rose again this month as tensions with Iran reignited.
Jet fuel remains airlines' largest expense after labor costs.
Source
US Top News and AnalysisWestern
Part of this Story
Southwest Airlines Ships Jet Fuel by Barge from Texas to LA for First Time Amid Supply Fears