Port of Savannah Ranks No. 4 on North American Index; Accounts for Fifth-Largest Volume
Los Angeles – May 3, 2016 – 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.
Adding to already robust volumes – the fifth-largest in 2014 – substantial short-term growth pushed Savannah’s port infrastructure score up to second in North America. With TEU growth of 11.7 percent in 2015, the Port of Savannah was the fastest growing port in the U.S. and has become a priority choice for logistics operators due to its proximity to the Atlanta market. Several major international retailers have integrates the port into their logistics operations.
The Port of Savannah is well positioned to benefit significantly from the Panama Canal expansion, and it has made a number of investments to ensure its continued growth. In September 2015, the long-awaited dredging of the 38-mile stretch of the Savannah River that leads to the harbor began. The Savannah Harbor Expansion Project (SHEP) will deepen the Savannah River Shipping Channel to a depth of 47 feet from its current 42 feet. The economic benefits of the $700 million project are expected be substantial, with larger post-Panamax vessels able to call on the harbor with fewer tidal delays.
“Savannah and the Georgia Ports Authority continue to offer an efficient and innovative gateway for trade into the Southeast and beyond,” said Blaine Kelley, senior vice president in CBRE’s Global Supply Chain Practice. “Coupled with the dominance of Atlanta as a cost-competitive logistics cluster and distribution point, we expect volume for retail, automotive, and consumer goods to be very strong and to benefit the entire region. The SHEP expansion provides the needed channel depth for larger vessels but is only part of the story. Investment in intermodal infrastructure and the Jimmy Deloach extension offer an accelerated ramp to move the products inland to the key population centers”
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.
Download the full report here.
*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.
