Ports on East Coast, Gulf Coast outgain West Coast peers in second-annual CBRE Seaports Index

The balance of seaborne-cargo delivery in the U.S. shifted further east in the last year, resulting in East and Gulf Coast seaports making gains against their West Coast counterparts in CBRE Group, Inc.’s second-annual North American Seaports and Logistics Index.

Charleston has been among the nation’s fastest-growing ports each year since the beginning of the recession. The port did experience a drop in terms of growth, falling behind Savannah and New York, but the development of an inland port in Greer, South Carolina, enables Charleston to achieve higher export TEU levels than comparable southeastern ports. With TEU growth of 10.1 percent in 2015, the Port of Charleston was the third-fastest growing port in the U.S.

Markets such as Greenville find themselves along the supply chain corridors of ports such as Charleston, creating a demand for additional warehouse space in Greenville. Connected to the rapidly growing and top-10-ranked Port of Charleston via the South Carolina Inland Port, the Greenville market is within two hours of both Atlanta and Charlotte, the two hub cities of the Southeast, and is within 500 miles of 100 million people. As such, Greenville is experiencing a transformation to a key distribution location and is one of the fastest growing industrial markets in the nation.

As Charleston’s overall economy becomes more robust with the addition of more automotive and aerospace manufacturing, the port will remain a key factor for the state’s growth.

“Charleston has continued to be one of the leading ports in North American cargo growth. What is also of great importance are the gains in non-containerized cargos, as they are running approximately 32 percent above expectations so far this year,” said CBRE Senior Vice President Robert Barrineau.

“The resins industry continues to attract users and third party logistics providers and Charleston provides an excellent point where rail and seaport meet to service the export market. Approximately 1.2 million square feet of spec space has been developed over the last 12 months and demand continues to grow. Modern distribution space needs can be met in several locations adding to the balance of the market.”

Meanwhile, the Port of Long Beach snared the top spot from its Southern California neighbor, the Port of Los Angeles, due mostly to the arrival of a new Asian shipping line in Long Beach. However, most of those on the rise in the top 10 are East and Gulf Coast seaports.

“Companies today are facing monumental supply chain pressures due to changing consumer behavior and a need to balance cost and service while keeping their business safe from interruption,” said Adam Mullen, Occupier and Supply Chain Leader in CBRE’s Industrial & Logistics division, the Americas. “Recent shifts in port volumes as companies strain to determine their best global shipping routes underscore that global commerce is in a race – an arms race of sorts – to build better, even more efficient supply chains.”

The renewed momentum for eastern ports can be attributed, at least in part, to shippers shifting cargo east in response to last year’s labor trouble at primary West Coast ports. Cargo traffic at western ports was slowed for months before the longshoreman unions and port management came to a resolution in March 2015.

The West Coast labor disruption indirectly contributed to two East Coast ports and one Gulf Coast port climbing in the CBRE rankings, with the Port of New York and New Jersey climbing one spot to No. 2 overall, the Port of Savannah ascending two spots to No. 4 and the Port of Houston leaping five spots to No. 5.

Meanwhile, on the West Coast, the Port of Los Angeles, which posted an uncharacteristically slow year, fell two spots to No. 3, and the Ports of Seattle and Tacoma fell two spots to No. 6. The Port of Oakland, hindered last year by the closure of its Ports of America Outer Harbor Terminal, tumbled five spots to No. 10.

Overall, the major East and Gulf Coast ports accounted for nearly all of North America’s gain last year in cargo volume, whittling away at the West Coast’s traditional dominance. West Coast ports accounted for 52 percent of all TEU (twenty-foot equivalent units) volume last year in North America, down from 54 percent in 2014 and 57 percent in 2010.

“The industry premonition that 2015 was the year of the East Coast was born out in the overall stats and in the way our rankings turned out,” said David Egan, CBRE’s Head of Industrial & Logistics Research in the Americas. “It demonstrated that the benefit to the East Coast from the turmoil on the West Coast is real and quantifiable.”

That continued eastward shift means that the June 2016 opening of the widened Panama Canal, which will allow substantially larger ships a faster route from the Pacific to East Coast ports, likely won’t register as large an impact on cargo destinations as previously thought. Much of the cargo that could be transferred from West Coast delivery to East Coast delivery without substantial extra cost was shifted in recent years.

In addition, the cost savings of big ships passing through Panama to get to East Coast ports rather than navigating around South America aren’t significant enough to spur an accelerated shift to East Coast ports. However, due to the numerous, persistent pressures faced by shippers, retailers and suppliers, it is likely those companies will continue to weigh such decisions over the next several years.

CBRE’s North American Seaports and Logistics Index takes into account both port infrastructure capabilities, such as total TEU volume, and the fundamentals of the industrial real estate market surrounding each port. The former receives slightly greater weighting. For example, the Port of New York and New Jersey ranks No. 1 in terms of port infrastructure but it weighs in at No. 6 for real-estate fundamentals. That amounts to an overall ranking of No. 2.

*TEU volumes were sourced from the port authorities for each port.

 

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.