Southwest Airlines ships jet fuel to Los Angeles via barge for first time amid supply fears

A Southwest Airlines Boeing 737 airplane lands at Los Angeles International Airport after arriving from Chicago on March 7, 2026. Kevin Carter | Getty Images

Key Highlights

• Southwest Airlines sent a barge carrying 12.6 million gallons of jet fuel through the Panama Canal to Los Angeles this spring to mitigate potential fuel shortages.
• Rising fuel costs this year have significantly impacted airline earnings.
• Carriers have raised fares, and executives expect higher prices to persist through the year.

Fuel Market Volatility Drives Unprecedented Move

Southwest Airlines Chief Financial Officer Tom Doxey told CNBC that the airline hired a ship this spring to transport jet fuel from Texas to California, where prices are significantly higher and supply concerns had escalated. It marked a first for the Dallas-based carrier.

"It brought like a week's supply to the West Coast at a time when supply was most constricted ... when it was most at risk," Doxey said.

The vessel departed from Houston, transited the Panama Canal, and arrived in Los Angeles on May 28 carrying approximately 12.6 million gallons of jet fuel. For context, Southwest consumed 564 million gallons of jet fuel in the last quarter.

West Coast Reliance on Imports

The West Coast depends more heavily on fuel imports than other U.S. regions. Jet fuel prices spiked and have remained volatile since the U.S. and Israel struck Iran in February.

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 Enabled the Shipment

To facilitate the shipment to California, Southwest utilized a waiver of the Jones Act — a 1920 law requiring cargo transported between U.S. ports to be carried on U.S.-flagged ships. President Donald Trump waived that requirement in March as fuel prices surged following the onset of the Iran war and subsequent shipping disruptions in the Strait of Hormuz, a critical maritime chokepoint.

Supply worries intensified as countries restricted exports earlier this year amid fears of running low on fuel. Those concerns have since eased, according to a Southwest spokesperson.

Broader Industry Impact

Jet fuel represents airlines' largest expense after labor. Prices moderated in late spring and early summer but rose again as tensions with Iran reignited this month.

Last week, United Airlines — the largest U.S. carrier by international flights — said it is using the most current fuel prices for its quarterly estimates due to extreme volatility. In its July 15 report, United noted that jet fuel costs increased by $575 million in the third quarter alone, reducing adjusted earnings per share by $1.12.

Shift Away from Fuel Hedging

U.S. airlines have largely abandoned fuel hedging — locking in costs through futures contracts — over the past decade as domestic supply abundance kept prices stable.

In response to current volatility, carriers have scaled back capacity growth plans, which is also helping to boost fares. Airline executives said this month that demand remains strong despite higher ticket prices, which they expect to remain elevated.

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