LONDON—Panama’s $5 billion investment to expand its century-old canal is paying off as shipping lines send more U.S.-bound cargoes through the passage instead of the Suez Canal.

Ships nearly three times as large as the ones crossing before the expanded locks opened in June of 2016 are bringing tens of millions of additional dollars in tolls and a trading boom to U.S. East Coast ports, allaying some fears that investments to cater to the bigger vessels wouldn’t see enough returns.

Since the start of the year, transiting tonnage at the Panama Canal has increased by nearly 23%, canal executives say. Last week marked the 2,000th transit of a ship that wouldn’t have fit through the old locks.

“It’s an unprecedented increase and demand is driven by the expanded East Coast and U.S. Gulf ports that have been preparing for the new locks,” said Manuel Benitez, the Panama Canal Authority’s deputy administrator.

The widened waterway means importers as far inland as Tennessee could find it cheaper to bring in Asian goods to ports like New York, Savannah, Ga., and Charleston, S.C., rather than move them by rail and truck from West Coast ports, which handle about two-thirds of Asia-to-Americas trade.