Research - MAY 12, 2017

Shipping volumes increase at U.S. seaports

by Loretta Clodfelter

Industrial properties are an important link in the global supply chain. Many warehouse/distribution markets are dependent on the strength of local shipping business. The health of seaports on the West and East coasts are, therefore, vital to the continued success of the industrial sector in the United States.

A new report from Colliers International, U.S. Seaport Outlook, examines U.S. seaports and their current shipping volumes. A strengthening U.S. economy should support trade volumes at ports on both coasts. In addition, the expansion of the Panama Canal, which can accommodate larger ships, has meant ports on the East Coast also need to expand to accommodate those ships. Industrial markets are seeing similar levels of demand on both sides of the country, says James Breeze, national director of industrial research at Colliers International.

“In terms of demand, we are seeing equal amounts along both coasts, with 30 percent of the total U.S. net absorption located in port markets,” says Breeze. He says there has been significant activity along the East Coast in Boston; Charleston, S.C.; Northern/Central New Jersey; Savannah, Ga.; the Shenandoah Valley; and South Florida. “Along the West Coast, some of the tightest markets in terms of vacant space are situated along the coast,” adds Breeze, including Los Angeles County (with an industrial vacancy rate of 1.2 percent), Northern California’s East Bay region (2.5 percent) and Seattle/Puget Sound (2.9 percent).

Shipping volumes at seaports include both imports and exports, though typically ports near large population centers have a much larger import ratio, including the ports of Los Angeles and Long Beach, where close to 70 percent of the total activity is from imports, notes Breeze. He adds the port of New York/New Jersey also has a significantly higher import ratio.

“The only major ports where we typically see a higher rate of exports to imports are the ports of Oakland and Houston,” says Breeze. “Oakland is a major port for agricultural exports to Asia, and Houston, of course, is a major exporter of energy-related commodities.”

One of the biggest challenges ahead for U.S. seaports is the need for ports on the East Coast to finish their expansion projects to handle larger ships crossing the Panama Canal, notes Breeze, which includes deepening harbors and making improvements to handle these larger ships. “The biggest project is the raising of the Bayonne Bridge at the port of New York/New Jersey,” he says. “It is slated to be completed this year and could have a major impact on East Coast TEU counts.”

A concern for many major ports is the recent trend of shipping consolidations, explains Breeze. The four main global shipping alliances recently consolidated into three, causing ports to worry about terminal vacancies and lower import counts.

“The first major step to counteract this was the recent alliance between the Virginia Ports and the Georgia Port Authority, through which they will jointly acquire operating systems and draft agreements with shipping carriers,” says Breeze.


This excerpt is from an article in the upcoming June issue of Institutional Real Estate Americas. For more information on this magazine or to sign up for a trial subscription, click here.

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