1. NORTH AMERICAN PORT ANALYSIS | PAPER PAPER | APRIL 2013
COLLIERS INTERNATIONAL | WHITE WHITE
COLLIERS 1H 2013 APRIL 2013
North American Port Analysis
NORTH AMERICAN
PORT AWARDS:
› “MAKING THE GRADE” CAPEX OR CAPSIZE
Tops in CapEx Spending K.C. CONWAY Chief Economist | USA
THE PORTS OF LOS ANGELES AND LONG BEACH
› “GET ‘ER DONE”
Disaster Recovery Tested
NEW YORK AND VIRGINIA PORT AUTHORITIES
› “WELCOME TO THE
POST-PANAMAX CLUB”
Membership now at 7
PORT OF BALTIMORE
› “GROW, GROW, GROW YOUR PORT $$$$$$$$$$$$$$$$$$
QUICKLY INTO THE P-PMX ERA”
Fastest Growing North American Port
$$$$$$$$$$$$$$$$$$
PORT OF VIRGINIA $$$$$$$$$$$$$$$$$$
› THE “INCREDIBLE BULK” PORT
Recognizing America’s “Fourth Coast”
PORT OF DULUTH-SUPERIOR, MN
› BEST LOGISTICS Port and inland distribution markets that invest CapEx in their transportation infrastructure
Cutting-edge Technology Drives Growth will capture the economic opportunities from changing global trade patterns and evolving
GEORGIA PORT AUTHORITY AND GEORGIA e-commerce. Those that don’t invest the needed CapEx risk capsizing their economies.
CENTER OF INNOVATION FOR LOGISTICS
America needs $3.6 trillion in funding for infrastructure by 2020 to remain competitive
› NORTH AMERICA’S MOST (ASCE 2013 Infrastructure Report Card).
EFFICIENT CONTAINER PORT
Port Automation at Its Best
PORT OF CHARLESTON, SC
Key Takeaways
› “ABOVE-IT-ALL” › America’s infrastructure received a D+ grade from the American Society of Civil
Leading Air Cargo Port Engineers (ASCE). Although ports and rail earned a C, America’s infrastructure is only
MEMPHIS AIR CARGO PORT as healthy as its weakest link: inland waterways, roads and airports.
› “FLORIDA’S BEST-KEPT SECRET” › The balance of influence in trade is shifting from Asia to Latin America, and from West
…but for how long? Coast to Gulf/East Coast ports. Expanding U.S. trade with Latin America, Russia and India
PORT EVERGLADES
offset impact of Eurozone recession and China’s slowing GDP.
› “GONE WITH THE GRAIN”
› Latin America is the next big growth opportunity, in the early stages of a growth economy.
Wheat and Grain Exports
PORTS OF PORTLAND AND SEATTLE
Demand for U.S. goods is growing: Walmart’s Q4 2012 net sales growth in LATAM was
greater than in Asia—a first.
Learn more on pages 12-16
› Globally, foreign investors are recognizing the value to be unlocked in North American
port cities. In the latest 2012 Association of Foreign Investment in Real Estate (AFIRE)
report released January 2013, three of the top 5 global cities for investment were American
port cities (NY, San Francisco and Houston).
› The Great Lakes region is an overlooked “Fourth Coast” and the undisputed
leader in bulk cargo trade. Great Lakes ports account for 28% of U.S. GDP, processing
240 million tons of cargo annually.
P. 1
2. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
› Air cargo’s role in global trade will be defined by the tug-of-war between
energy/infrastructure costs and e-commerce growth in the first post-Panamax decade
(2015 – 2025). Air cargo is expanding primarily in the Middle East, Africa, and Asia Pacific,
where underdeveloped infrastructure makes air freight the primary option. In North
America, only a handful of North American air cargo centers will survive, as overall volume
declines and e-commerce becomes the primary driver.
WORLD FREIGHT TRENDS
International Domestic Totals
10
8
6
% Change (tonnage)
5
2
0
2
-4
-6
-8
-10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2012
› Intermodal transportation activity was at an all-time high in 2012, and is the next
transportation growth segment in the post-Panamax era. Intermodal capacity differentiates
top-tier inland distribution MSAs (Atlanta, Memphis, Louisville, Columbus, Indianapolis,
Dallas, Kansas City and Denver) from ancillary MSAs (Orlando, Birmingham, Charlotte,
Las Vegas and California’s Central Valley).
› Impact on industrial real estate will be different, with development and investment activity
directionally pointed at port markets, inland distribution markets with dominant intermodal
facilities, and a handful of dominant air cargo markets.
› More container cargo will migrate to rail, due to new hours-worked rules and other
regulations impacting the trucking industry. Rail speed, reliability and cost now rival
movement of goods by truck. And, environmental and traffic congestion challenges will
enhance the movement of cargo traffic to rail.
› Port labor strife is a bubbling global concern for port authorities, shippers, manufacturers
and retailers. The risk of port labor disruption is not just an East or West Coast issue in the
U.S., but a global issue. The same port labor issues from the most recent East Coast
threatened port strike are at play in Brazil and in parts of Europe.
Read more at breakbulk.com.
P. 2
3. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
TOP 10 STATES FOR FTZ ACTIVITY THE ECONOMY, GDP GROWTH AND PORT ACTIVITY
CY 2012 | IMPORTS Since the release of Colliers’ previous North American Ports Outlook report, port and
1 Texas intermodal activity have sprung forward despite a fall in GDP over the winter. Historically,
2 Louisiana when GDP decreases from, say 3.1% to 0.1% (as was the case in 2H 2012), we see
3 California contraction in port, intermodal and industrial activity. Why didn’t that happen in Spring 2013?
4 Illinois Due to a combination of factors, including:
5 Pennsylvania • Retailers remaking supply chains: Distribution and manufacturing activity normally
6 Kentucky fueled by consumer spending is instead being driven by retailers investing capital in
7 New Jersey supply chain improvements: new distribution centers, logistics and IT to expand their
8 Mississippi consumer base globally via e-commerce—instead of opening new stores during a
9 Ohio period of high unemployment and anemic job growth. Distribution and logistics center
10 South Carolina construction is up nearly 300% over a year ago; Georgia, Tennessee and Indiana are
the leading states, with new construction for the likes of Amazon, FedEx, Home Depot,
TOP 10 STATES FOR FTZ ACTIVITY
CY 2012 | EXPORTS Lowes, Rubbermaid, Volkswagen and Whirlpool.
1 Texas • Shift in global trade patterns: Although Europe is both the United States’ and China’s
2 Louisiana largest trading partner, with a GDP in excess of $13 trillion (second only to the U.S.
3 South Carolina and nearly double that of China’s $7.3 trillion economy), the U.S. has experienced net
4 Mississippi growth in global trade despite an ongoing European recession and a slowing GDP in
5 Florida China. The offset for the U.S. has come from expanded trade to Latin America, India
6 Alabama and Russia.
7 Puerto Rico Latin America is the next big growth opportunity, and can be for the East and Gulf
8 Louisiana Coasts what Asia is for California. Much like the United States in the 1950s, Latin
9 Indiana American countries are in the early stages of a growth economy with a newly
10 California developed middle class. They are looking for the American lifestyle and products
ranging from apparel and autos to electronics and media. The demand for American
goods is growing so rapidly that Walmart revealed in its Q4 2012 earnings that, for the
first time, the net sales growth in Latin America surpassed that of Asia. With a full two
years to go until completion of the Panama Canal locks expansion project, two Gulf
Coast states (Texas and Louisiana) have already surpassed California in both import
and export Foreign Trade Zone (FTZ) activity. And, California has fallen to tenth place
in FTZ export activity, having been displaced by Texas and five Southeastern port
states (LA, SC, FL, AL & MS).
• Energy and agriculture: The U.S. and North America in aggregate have become net
exporters of carbon-based energy; and agriculture exports—especially wheat—are
growing at near double-digit rates. This global demand is fueling capital spending to
expand or upgrade coal transload facilities (Port of Norfolk), construct new intermodal
container transfer facilities (Port of Mobile), and develop liquefied natural gas (LNG)
Port of VA/Norfolk Southern Coal Transload Facility distribution plants (Delaware River Port Authority, Florida and Texas ports).
Source: Steve Earley | The Virginian-Pilot
P. 3
4. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
• Rebirth of automobile manufacturing: Auto assembly in the U.S. has soared from
less than 10 million units just a couple of years ago to more than 16 million units in
2012. Japan is struggling to repower its economy following the Sendai Earthquake,
and Germany’s manufacturers face a currency disadvantage versus the U.S.. Further
the U.S. offers a low cost of energy, and a highly skilled labor force. As a result,
Volkswagen has expanded manufacturing to Chattanooga, TN, BMW and Mercedes
have ramped up manufacturing in AL and SC, and all Japanese auto brands are
accelerating assembly activity in states from TX to TN. Intermodal rail traffic from auto
assembly is up double digits between the inland factories and ports, and auto exports
to Latin America are at all-time highs. Auto manufacturing is the most visible part of
an overall trend in onshoring of manufacturing operations, which includes aircraft and
furniture, etc.
Taken together, these factors underscore the importance of monitoring GDP among the top
twenty global economies. We can easily do so, thanks to the assistance of Trading Economics
Read more at tradingeconomics.com. The following table shows that the top 20 global economies
do not necessarily have the fastest-growing GDPs. So which economies do; and how is North
American trade geared to these growth economies?
GDP GROWTH OF 20 LARGEST GLOBAL ECONOMIES VS.
20 COUNTRIES WITH FASTEST GROWING GDP
COUNTRY GDP MILLION COUNTRY GDP YOY GDP QOQ
(USD) (%) (%)
1 United States 15,094 1 Thailand 18.90 3.60
2 Euro Area 13,076 2 Ethiopia 10.70
3 China 7,298 3 China 7.90 2.00
4 Japan 5,867 4 Nigeria 6.99 6.99
5 Germany 3,571 5 Philippines 6.80 1.50
6 France 2,773 6 Bangladesh 6.30 6.30
7 Brazil 2,477 7 Indonesia 6.10 -1.45
8 United Kingdom 2,432 8 Vietnam 5.44 5.44
9 Italy 2,194 9 India 4.50 1.30
10 Russia 1,858 10 Pakistan 3.67 3.67
11 India 1,848 11 Iran 3.40
12 Canada 1,736 12 Mexico 3.20 0.80
13 Spain 1,491 13 Russia 2.90 0.60
14 Australia 1,372 14 Egypt 2.20 2.20
15 Mexico 1,155 15 United States 1.60 0.10
16 South Korea 1,014 16 Turkey 1.60 0.20
17 Indonesia 847 17 Brazil 1.40 0.60
18 Netherlands 836 18 Japan 0.50 0.00
19 Turkey 773 19 Germany 0.10 -0.60
20 Switzerland 636 20 Euro Area -0.90 -0.60
P. 4
5. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
While the United States has the largest GDP of all global economies Where will funding for America’s port and freight transportation
in terms of absolute U.S. dollars, it’s YOY GDP over the past four needs come from?
quarters ranks only 15th among the world’s economies—and isn’t According to the American Association of Port Authorities’ mid-2012
even in the top 5 for the 20 largest global economies. However, U.S. survey of its 82 member ports, less than 10 percent of the $500
port, intermodal and trade activity is growing due to our expanding billion annual shortfall quantified by ASCE can be met by public and
trade with Latin American countries (such as Mexico with a +3.2% private funding available to the nation’s port authorities. In other
GDP), Russia (especially important to the ports in the Great Lakes words, the remaining $450 billion annual shortfall must be provided
region), Vietnam, and Africa (5%–7% GDP growth. The key takeaway by Congress and federal funding sources. In 1986, the Harbor
is that global GDP growth is decelerating in Europe and Asia, but Maintenance Fee, a 0.04 percent tax on the value of waterborne cargo
accelerating in Latin America, Canada, and Russia. This shift in (increased to 0.12 percent in 1990), was established to address this
GDP growth is redefining which North American ports and inland funding, but over the past two decades Congress has diverted more
distribution centers will likely experience the most activity in the first than half the annual collections, depleting the Harbor Maintenance
post-Panamax decade, as the Gulf coast, Southeast Atlantic coast, Trust Fund by billions of dollars. Congresswoman Janice Hahn (CA,
and Great Lakes ports that are strategically positioned to benefit. 44th District) and Congressman Ted Poe (TX, 2nd District) are the
leading advocates to reform the Harbor Maintenance Trust and restrict
INFRASTRUCTURE SPENDING AND PORT CAPEX Congress’ use of this revenue. For now, manufacturing, retail and
Colliers’ 2011 and 2012 North American Port Outlook reports shipping industries are aligning their private facilities investments with
focused initially on the expansion of the Panama Canal lock system those ports that are spending the CapEx to remain competitive and
and U.S. ports’ preparations to receive the larger Post-Panamax connected to inland consumer, production, and materials markets; and
vessels in 2015. It’s now appropriate to focus on the infrastructure these markets are retaining and adding jobs to their local economies.
linkages to the ports that enable raw materials and finished goods Port cities unwilling or unable to spend on port infrastructure risk
to move between the ports and inland markets or manufacturing capsizing their economies.
centers. Unfortunately, the nation’s most respected professional and
governmental engineering entities are warning us that infrastructure Who are the CapEx leaders? Here are the top five ports in North
spending on our port linkages are woefully inadequate—to the tune America for port-centric CapEx in 2013 (i.e., spending at least $100
of approximately $500 billion per year between now and 2020. million during CY 2013 on post-Panamax readiness, terminal upgrades
or expansions, and rail or cargo loading facility enhancements):
Last summer, the U.S. Army Corps of Engineers report to Congress
on North American ports’ post-Panamax readiness ranked the U.S. NORTH AMERICAN PORTS LEADING IN CAPEX SPENDING
23rd globally in infrastructure competitiveness. Now, the American TOP 5 SPENDING AT LEAST $100 MILLION IN 2013
Society of Civil Engineers (ASCE) has released its once-every-4-years RANK PORT 2013 BUDGETED CAPEX
2013 report card on infrastructure, Read more at infrastructurereportcard.org. Los Angeles &
1 $1.0 billion (30% LA & 70% LB). Approximately half just
giving the U.S. an overall grade of D+; D means “in poor condition.” Long Beach on port terminal and rail projects.
While ports and rail managed a C, our infrastructure in the intermodal 2 New York $345 million Allocation from $3.0 billion budget just to
the port and not airports and World Trade Center construction
age is only as strong as its weakest link; key infrastructure links to our
ports (inland waterways, bridges and roads) received even worse 3 Houston $220 million
grades. The price tag to bring America’s infrastructure back to a B,
4 Charleston, SC $157 million
or “acceptable” grade? $3.6 trillion.
Georgia Ports–
5 $100 million
Savannah
Compounding this infrastructure funding shortfall is our fiscal crisis
at both a federal and state level. When vital freight transportation states Note 1: The state of Florida has budgeted $288 million among its 15 ports, but
detailed allocations by port/project were not available.
like Illinois and California are fiscally wrecked, and existing U.S. debt
Note 2: The above top five rankings will vary annually and reflect only 2013
to annual GDP ratio exceeds 100%, the question arises: budgeted CapEx vs. an average annual figure beyond 2013.
P. 5
6. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
33.5 m (110’)
Who will be ready by 2015 to Ranking CapEx for North America’s ports is more an art than a science, because budgeting,
294.1 m (965’)
receive the Fifth Generation appropriation, and actual funding of projects is different for each port authority and state. The
ocean shipping container vessels assets under jurisdiction also vary widely, complicating apples-to-apples comparison. For
32.3 m (106’)
capable of transporting up to example, the Port Authority of New York has a $3.0 billion budget—more than $2.0 billion of
304.8 m (1,000’)
12,500 containers? And which which is allocated to the rebuilding of the World Trade Center, upgrading passenger airports
North American ports are leaders at LaGuardia and Kennedy airports, and repair of non-port related transportation tunnels.
12.8 m (42’)
in twenty-foot equivalent ocean Therefore, only the $346 million of New York’s $3.0 billion budget (39.5’) is allocated to port
draft 12.4 m that
container transportation in 2013? terminals and related projects has been used for this CapEx comparison.
The following tables on page 7 Because the annual appropriations process and timing of project spending varies
reveal that: considerably from the stated budget (thanks to the political process or events like
55 m (180’)
› 7 North American ports hurricanes), ports such as Seattle or Mobile could just as easily be among the top five
are currently post-Panamax in 2014’s budget rankings. 366 m (1,200’)
ready—6 U.S. and 1 Canadian
(Port Prince Rupert) But we do know that five of America’s ten busiest container ports are spending heavily on
49 m (160’)
port infrastructure in 2013 to remain globally competitive. Norfolk, Seattle, and Miami have
› 11 ports are on track to be already spent in excess of $100 million in CapEx from 2010–2012, m (1,400’)appropriated
427 or have
post-Panamax ready by 2015 project funding after 2013 that will likely place them among in top five in 2014, as ports like
when the expanded Panama Canal Charleston and Savannah conclude their upgrade projects. As a result of the budgeted 2013
locks open. 18.3 m (60’)
CapEx spending by CA, NY, TX, SC, GA and FL port authorities and state legislatures, Colliers
draft
› Only the ports of New York, recognizes each as “Making the Grade” for port CapEx spending—led by (50’) ports of Los
15.2 m
the
Seattle and Portland experienced Angeles and Long Beach, which get an A.
less TEU container traffic in 2012
than in 2011. New York’s decrease
was attributable to Hurricane
Sandy (some cargo was re-routed 2nd Generation
3rd Generation 4th Generation
5th Generation
1971-1990 1990-2000
to Virginia). However, Portland’s 1970-1980
1st Generation
and Seattle’s declines were due Pre-1970
to port labor strife (Portland) and
Sea
increasing competition (Seattle) Level
10’
from nearby Port Prince Rupert 20’ <9m 10 m 11.6-12.8 m
30’ 12.8-14 m > 14 m
port authorities and state 40’
50’
legislatures in CA, NY, TX, SC,
GA and FL, along Canada’s
West/Pacific Coast.
P. 6
7. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
Updated Port TEU rankings and post-Panamax readiness:
NORTH AMERICAN POST-PANAMAX PORT NORTH AMERICAN PORT TEU
READINESS UPDATE CONTAINER VOLUME UPDATE
TEU 2012 2011
PORT COAST P-PMX STATUS P-PMX UPDATE PORT
RANK TEUs TEUs
New York Eastern U.S. In Process Bayonne Bridge being raised 1 14,200,000 13,900,000 LA/Long Beach
Philadelphia Eastern U.S. Not before 2015 Dredging Delaware River to 45 feet 2 5,100,000 5,500,000 New York
Baltimore Eastern U.S. P-PMX Ready Joined P-PMX Club in 2013 3 3,000,000 2,900,000 Savannah, GA
Norfolk VA Eastern U.S. P-PMX Ready First East Coast port to be P-PMX 4 2,350,000 2,300,000 Oakland
Charleston, SC Eastern U.S. In Process Dredging + developing new inland port 5 2,100,000 1,850,000 Norfolk, VA
Savannah, GA Eastern U.S. Not before 2015 Study completed/Dredging to 47 feet 6 1,925,000 1,865,000 Houston
Jacksonville, FL Eastern U.S. Not before 2015 Dredging and bridge height hurdles 7 1,870,000 2,000,000 Seattle, WA
Port Everglades Eastern U.S. Not before 2015 Dredging application in process 8 1,435,000 1,385,000 Charleston, SC
Miami Eastern U.S. In Process New Super P-PMX cranes ordered 9 930,000 910,000 Port Everglades
Tampa Gulf Coast Not before 2015 No plans to dredge or raise Skyway Br 10 925,000 915,000 Miami
Mobile, AL Gulf Coast P-PMX Ready Deepest port on Gulf @ >60 feet 11 920,000 900,000 Jacksonville, FL
New Orleans Gulf Coast Not before 2015 No plans or funding to upgrade further 12 680,000 630,000 Baltimore
Houston Gulf Coast In Process Dredging and upgrading cranes 13 565,000 410,000 Prince Rupert
LA/Long Beach West Coast P-PMX Ready Despite being P-PMX, #1 in CapEx 14 295,000 290,000 Philadelphia
Oakland West Coast P-PMX Ready 15 200,000 165,000 Mobile, AL
Portland West Coast Not before 2015 Port Slowdown in 2012 - port labor 16 185,000 200,000 Portland
Seattle, WA West Coast P-PMX Ready Increasing competition with Port Rupert N/A - A cruise & bulk cargo port Tampa
Prince Rupert Canada/Pacific P-PMX Ready Fastest-growing Pacific Coast port N/A - A cruise & bulk cargo port New Orleans
P-PMX ready ports: 7
36,680,000 Annual TEUs
Top 16 N.Am Port TEU volume
P-PMX ready ports by 2015: 11
P. 7
8. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
AMERICA’S FOURTH COAST: THE GREAT LAKES
TOP 20 GREAT LAKES PORTS BY TONNAGE
PORT NAME TOTAL
Duluth, MN- Superior, WI 45,341,808
Chicago, IL 22,659,554
Indiana Harbor, IN 15,380,630
Two Harbors, MN 13,432,959
Detroit, MI 12,836,319
Toledo, OH 10,954,686
Cleveland, OH 10,637,330
Gary, IN 9,030,152
The more than 200 ports and harbors of the Great Lakes account for 28% of U.S. GDP
Marquette/Presque Isle, MI 8,807,609
Eight U.S. states border the five respective lakes (Huron, Ontario,
Michigan, Erie and Superior, or “HOMES”) and are home to the bulk St. Clair, MI 7,880,383
cargo that fuels American industry, from energy that powers our
Ashtabula, OH 6,905,941
nation, to iron ore for our auto and heavy equipment industries, to
lumber, aggregates and cement for our construction industries, to Stoneport, MI 6,625,427
wheat and potash for our agricultural and food processing industries.
The Great Lakes region and its ports are as important to the U.S. and Silver Bay, MN 6,603,511
global economy in terms of dry-bulk cargo as the Gulf Coast is for oil,
Escanaba, MI 6,339,642
natural gas and seafood.
Burns Harbor, IN 6,283,154
The Great Lakes region’s 117 federally recognized harbors and
Calcite, MI 5,833,596
85 active freight-handling ports account for 28% of U.S. GDP and
process an astonishing 240 million tons of cargo annually. Because Port Inland, MI 5,705,843
the Great Lakes ports move more bulk than containerized cargo, an
apples-to-apples ranking comparison with the East, Gulf and West Conneaut, OH 4,654,172
coast container ports isn’t possible. But in terms of tonnage, the
Milwaukee, WI 3,240,169
Great Lakes region is the “Incredible Bulk” of North American cargo
ports. The leader of this trade is not Chicago, Detroit, Cleveland, Alpena, MI 3,098,860
Milwaukee or Buffalo, but Duluth, Minnesota. This table details the
figures that make Port Duluth-Superior the undisputed “Incredible Source: USACE, “U.S. Waterways Data: Port and Waterway Facilities,” Feb. 2010
Bulk” cargo port.
P. 8
9. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
Six Great Lakes ports (Duluth-Superior, Chicago, Detroit, Toledo, The critical question for Congress with respect to the Harbor
Cleveland and Gary) transport approximately half the bulk cargo that Maintenance Tax debate underway is:
moves across the Great Lakes annually. In other words, six of the
85 active commercial cargo ports along the Great Lakes handle Where is the fair share of CapEx for port maintenance, repairs,
50 percent of the bulk cargo. Port Duluth-Superior handles and upgrades for the six Great Lakes ports that account for more
approximately 20 percent of the Great Lakes bulk cargo; Chicago is than 25% of U.S. GDP?
second, moving nearly 10 percent of the bulk cargo. The This becomes an even more urgent question in light of the “D”
iron-ore-dependent auto manufacturing MI, IN and OH port cities of grade given by the ACSE to U.S. inland waterways and levees,
Detroit, Toledo, Cleveland and Gary, IN, collectively handle another and their importance not only to the Great Lakes region, but also to
20 percent. industry in the heartland and Southern U.S. This was highlighted in
February 2013 by the U.S. Department of Transportation Maritime
The region’s port infrastructure is the most capital-intensive of all Administration’s most comprehensive study of the Great Lakes
North American coastal areas, due to weather extremes, coastline transportation system since World War II, Status of the U.S.-Flag
erosion mitigation infrastructure and breakwaters (offshore structures Great Lakes. Read more at marad.dot.gov.
engineered to protect commercial ports and harbors from erosion
due to excessive wave action that not even the West/Pacific coast The key graphic from this report is a map of the marine highway
encounters), as well as the Soo Locks system (which links the lakes to corridors, below. The strategic importance of North America’s inland
the Atlantic Ocean via the St. Lawrence River). Great Lakes ports waterways has never been made so clear via a single map or graphic.
are heavily dependent on their share of the Harbor Maintenance Tax, Note also the vital cities where the primary rivers converge, such as
and the region is at far greater risk from revenue shortfall than any St. Louis, Missouri.
other in North America, because it lacks the population density and
economic diversity to offset the loss of port infrastructure revenue
from other means. Unfortunately, Congress is slow to realize that its M-5
(AK) M-84
M-90
reallocation of tax revenue from port-generated activity threatens to
M-5 M-87
capsize the economies of eight Great-Lakes-bordering-states, and M-90
M-71-75
undermine America’s rebounding auto, steel, construction and M-75
agricultural industries, which account for more than three-quarters M-580 M-55 M-90 M-95
M-70 M-70 M-64
of U.S. trade activity.
M-40
M-5
M-65
Elevation 601 ft M-55
M-95
Elev 577 ft M-49
Elev 572 ft Elev 152 ft MH
Corridor
Elev 569 ft
Iroquois M-10 MH
Niagara Dam Connector
Falls
Beauharnois Dam M-A1 MH
Crossing
St. Clair Elev 243 ft Elev 69 ft M-2
River Detroit
River Elev 20 ft Elev 0 ft
Lake
St. Clair Lake St. Lawrence Map of Marine Highway Corridors
St. Francis River Atlantic
Lake Huron Ocean US DOT Marine Admin 2013 report on Great Lakes Water Transportation
depth 750 ft
Lake Ontario
Lake Michigan
depth 923 ft
depth 802 ft To learn more, watch “Economic Revival in the Heartland,”
Lake Superior
depth 1,333 ft Lake Superior a discussion on reconnecting river city economies to their
depth 1,333 ft infrastructure, hosted by the St. Louis Federal Reserve District
Bank, and sponsored by Colliers and the St. Louis Urban Land
Institute. View video at youtube.com/ColliersSTL
View of Soo Locks connecting the Lakes to the Atlantic
P. 9
10. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
AIR CARGO – LANDING OR TAKING OFF? INTERMODAL–THE 21ST CENTURY DEFINITION IS
Air cargo’s role in global trade during the first post-Panamax decade Industrial Now Turns Especially to Rail to Move Ocean
is caught in a tug-of-war between energy/infrastructure costs and Distribution Across Land
e-commerce growth. According to the latest YE 2012 Airports
Council International World Freight Trends report, air cargo is What is intermodalism, and what does it have to do with the ports?
expanding primarily in the Middle East (+4.2% YOY growth), Africa Intermodalism is quite simply a system whereby standard-sized
(+2.1% YOY), and Asia Pacific (+0.5% YOY) where port, rail and road cargo containers are moved seamlessly between different modes
infrastructure is inadequately developed, and air freight is often the of transport. As stated in Colliers’ August 2012 North American
only option. In Europe, North America and Latin America—where Ports Outlook, intermodalism has advanced from the equivalent
energy costs are high and more affordable port and rail options exist of the ice age to the space age, and is the next transportation
to move cargo—air freight volume is declining (-3.0% YOY in Europe; growth segment in the post-Panamax era. No longer can a shipping
-0.2% in North America; and -0.2% in Latin America). E-commerce company, manufacturer, or retailer think of modes of transportation
is the growth engine in North American air cargo; due to the logistics in isolation. Rail, road, air and water are all interconnected and
of e-commerce, only a handful of North American air cargo centers integral parts of the global supply chain. Volatile energy prices,
will survive. congestion at key inland intermodal points, and the need to fill
emptied containers returning to port (or “match-back”) are part
of intermodalism.
MEMPHIS NOW #1 IN AIR GLOBAL CARGO
According to Airports Council International, in
February, Memphis overtook Hong Kong and Intermodal transportation reached an all-time high last year:
Shanghai to top the list of Asian, European and Intermodal container volumes ended 2012 with 13.1 million moves,
North American air cargo markets, as measured surpassing the previous year by 5.9 percent and the previous
by metric tons of air cargo handled annually. With its BNSF
intermodal facility, Colliers recognizes Memphis as the top North benchmark year of 2007 by 9.8 percent, according to the Intermodal
American market for e-commerce. Association of North America’s Intermodal Market Trends & Statistics
report. And, intermodal carload traffic in Q1 2013 is up over 200,000
carloads from Q1 2012.
Memphis is currently the global leader in volume and takeoffs,
and the 3.2 million metric tonnes it handles annually keep it in a This intermodal growth holds tremendous economic and real estate
week-to-week race with Hong Kong for the top spot overall. In the development potential—and the proof is in new development activity.
U.S., the top five air cargo markets are Memphis (FedEx), Anchorage, Since the previous Colliers North American Ports Outlook in August
Louisville (UPS), Miami, and Indianapolis. Chicago, Dallas, Los Angeles, 2012, more than a dozen states have completed or commenced
NY/NJ and Atlanta make the top-ten domestic ranking, and are in the construction on new or expansion intermodal projects to more
top 30 globally. Other than Seattle, Denver, Phoenix, and maybe one efficiently link ports to inland distribution and manufacturing centers.
other Midwestern airport to service the Great Lakes region (likely Fueling this growth and development is a combination of:
Minneapolis or St. Louis), there is not much room for air cargo
• Retailers remaking their supply chains by relocating primary
growth in North America.
distribution and logistics centers to Tennessee (Memphis),
Indiana (Indianapolis), Georgia, Florida, South Carolina
(Greenville/Greer), Texas, Arizona (Phoenix), Michigan and
right-to-work states; and
• Expansion of manufacturing activity, from autos and
appliances to electronics and medical devices.
P. 10
11. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
For these reasons, the demand driver for industrial real estate for
2013–2015 is the restructuring of the North American supply chain.
Industrial real estate development and investment activity in 2013 is
directionally pointed toward port markets, inland distribution markets
with dominant intermodal facilities (e.g., Atlanta, Memphis, Dallas,
Denver, Los Angeles and Philadelphia), and a handful of dominant air
cargo markets, such as Memphis and Louisville. Colliers has identified
five differentiating trends that will dictate where industrial real estate
will be most in demand:
Differentiating trends are:
• Port markets matter more if they...
Finally, trucking and river barge traffic are diminishing in their • …are post-Panamax ready;
importance as a means of moving both container and bulk cargo. • …occupy a commodity or product niche, such as coal
The volatility in diesel costs and water levels make both modes of (Norfolk, VA), grain (Seattle, Portland, Prince Rupert),
transportation expensive and less reliable compared to rail. And, autos (Baltimore, Savannah, Charleston, Jacksonville,
new work-hours rules for truckers will only compound the trucking Seattle), poultry or pharmacy (Savannah); or
industry’s shortage of drivers and profit margin challenges. Funding
for inland waterways and environmental air quality regulations • …are aligned with the national intermodal rail system;
also impact the future of both river barge and over-the-road cargo that is, physically connected to one of the seven Class-1
transport. River barge and trucking companies need to view North American railroads. Tampa, Jacksonville, Charleston,
themselves as part of a relay race in the movement of freight, Savannah, Philadelphia, Mobile, and New Orleans are
rather than as a single-carrier-dominated mode of transportation. examples along the East and Gulf coasts.
Intermodal truly is “Industry Now Turning Especially to Rail to Move • Intermodal and logistics differentiate top-tier inland
Ocean Distribution Across Land.” distribution MSAs (e.g., Atlanta, Memphis, Louisville,
Columbus, Indianapolis, Dallas, Kansas City and Denver)
THE INDUSTRIAL R.E. IMPACT IS GOING TO BE DIFFERENT from those that will be ancillary to the national supply chain
The 21st century’s industrial renaissance is unlike the industrial (e.g., Orlando, Birmingham, Charlotte, Las Vegas and
boom periods in the 20th century that resulted in the construction California’s Central Valley).
of factories employing thousands of laborers. The modern • Inland waterways are diminishing in importance as a means of
manufacturing returning to the U.S. today requires the integration moving bulk cargo, due to the inefficiency and unreliability of this
of sophisticated logistics to reduce transportation, warehousing, and mode of transportation owing to unpredictable drought or flood.
handling costs, as well as the time it takes to deliver materials Congress’ failure to fund inland waterway infrastructure only
and finished goods to end consumers. Supply chains are being compounds the challenges to river barge freight.
redesigned to eliminate choke-points and inefficiencies.
• Changes to environmental and labor regulations are driving
cargo away from trucking and toward rail.
Manufacturers and retailers are intensely focused on developing the
most efficient path for goods and materials to move across the globe • Air cargo facilities are vital to e-commerce. In 3–5 years,
via ocean and land. Rising energy costs, logistics technology, and there will be at most a half-dozen dominant U.S. air cargo
changing trade routes due to the Panama Canal expansion are all markets. Candidates include Memphis, Louisville, Columbus,
changing where industrial real estate is most in demand. Miami, New York, Los Angeles, Seattle and Denver. Because
P. 11
12. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
of the costs involved, air cargo in the U.S. will follow the same hub-and-spoke model
adopted by passenger air carriers to maximize traffic. If your airport lacks a port
partnership (e.g., Columbus with Virginia, Atlanta with Savannah), it won’t be a
dominant air cargo market in five years. MSAs such as St. Louis should consider a
port partnership with the likes of Mobile, AL, to revitalize their freight transportation
industry. In markets like St. Louis, where the rail and river elements already exist,
development of air cargo may make sense and have material economic implications.
Memphis and Louisville, KY, are case studies in developing a globally dominant air
cargo port.
These influences are already appearing in the industrial warehouse data, with the Panama
Canal expansion still two years away. According to Colliers Q4 2012 North American
Industrial Outlook. Read more at colliers.com. The presence of intermodal rail operations is the
common denominator in the most active industrial markets. Thirty percent of Q4 North
American net absorption occurred in just five MSAs: Chicago (7.0 MSF), Detroit (4.7
MSF), Los Angeles – Inland Empire (4.4 MSF), Dallas/Ft. Worth (3.2 MSF), and Memphis
(2.9 MSF). All five markets are home to the nation’s busiest intermodal rail operations,
except of Chicago. Los Angeles, Dallas, Memphis (FedEx and BNSF intermodal facility),
Philadelphia (new intermodal facility online in 2H 2012), Louisville, KY (UPS), and Atlanta
all ranked in the top ten with respect to net absorption in Q4. Thirteen of the 15 U.S.
warehouse markets with the lowest vacancy rates are top-20 North American port or
top-ten inland distribution markets, with intermodal rail connecting to one or more of the
seven Class-1 North American railroads.
TOP 10 U.S. INDUSTRIAL MARKETS | ABSORPTION
Q4 2012 CY 2012
MSA MSA
(MSF) (MSF)
1 Chicago 7.006 Chicago 13.438
(Intermodal) (Intermodal)
2 Detroit 4.685 Dallas/Ft. Worth 9.728
(Auto + Housing) (Intermodal)
3 Los Angeles–Inland Empire 4.405 Detroit 9.169
(Intermodal) (Auto-recovery)
4 Dallas/ Ft. Worth 3.223 Los Angeles–Inland Empire 8.470
(Intermodal) (Intermodal)
5 Memphis 2.905 Los Angeles–Coastal 8.375
(Intermodal) (Port)
6 Philadelphia 2.900 Atlanta 7,400
(Port + Intermodal) (Intermodal)
7 Phoenix 2.519 Houston 6.245
(Housing) (Port)
8 Los Angeles 2.235 Phoenix 5.137
(Port) (Housing Recovery)
9 Louisville 2.227 Columbus 4.916
(Air Cargo) (Air Cargo)
10 Richmond 2.223 Seattle 3.916
(Port) (Port)
P. 12
13. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
Colliers 1H 2013 North American Port Awards:
Colliers’ 1H 2013 North American Port Awards recognize CapEx spending, disaster preparedness, port efficiency,
excellence in logistics, cargo and container growth, and less-well-known port markets:
“MAKING THE GRADE” “WELCOME TO THE POST-PANAMAX CLUB”
Tops in CapEx Spending Membership now at 7
PORTS OF LOS ANGELES AND LONG BEACH PORT OF BALTIMORE
This is a new Colliers Port award, and correlates with this Since Colliers’ Summer 2012 North American Ports Analysis
report’s theme, CapEx or Capsize. Of all the freight transportation report, a second East Coast port has joined the post-Panamax
infrastructure elements evaluated by the American Society of Civil club: Baltimore is now capable of receiving container vessels
Engineers (ASCE), only ports and rail received a 2013 grade better transporting up to 12,500 TEUs, providing both overflow relief
than poor (D) or failing (F). State, port authority, and private and competition to the port of New York. Baltimore is also likely
industry CapEx spending in these two vital segments earned a to become an increasingly important port for auto imports and
mediocre (C) grade. And among the North American ports, exports that are primarily processed via New York or Southeastern
L.A. and Long Beach are spending the most in 2013. Four other ports, such as Brunswick, GA, Charleston, SC, and Jacksonville, FL.
North American ports earned a passing grade for 2013 CapEx While the East coast has yet to match the Post-Panamax readiness
spending of at least $100 million on infrastructure projects. of the West coast, the addition of a second P-PMX port prior to
See the full list of CapEx leaders on page 5 of this report. 2015 is noteworthy. When the later additions of New York,
Charleston and Miami join the Post-Panamax Club by 2015, the
“GET ‘ER DONE” East Coast and West Coast will have parity at five -Panamax-ready
Disaster Recovery Tested ports each. For an overview of North American post-Panamax
NEW YORK AND VIRGINIA PORT AUTHORITIES
readiness, see page 7 of this report.
The 1H 2013 “Get ‘er Done” award, a legacy Colliers Port
“GROW, GROW, GROW YOUR PORT
Award, recognizes the New York Port Authority’s responsiveness
QUICKLY INTO THE P-PMX ERA”
in reopening following Superstorm Sandy, and the collaboration
Fastest-Growing North American Port
between New York and Virginia in re-routing vital cargo and PORT OF VIRGINIA
container ships before, during and after the storm. The port of
New York was operational within days of this record-setting The Port of Virginia is not content to rest on its laurels as the East
storm, and the Port of Virginia demonstrated the importance of Coast’s original 50-foot deep post-Panamax port: It’s now focused
collaboration and redundancy in receiving and processing affected on growth. In 2012, the Port of Virginia earned an A+ grade in this
containership cargo during the storm. Sandy also brought to light effort, and was the fastest- growing container port on the East
how vital the American Logistics Aid Network (ALAN) is to Coast. In 2012, the port handled 2,100,000 TEUs, the second-best
America’s supply-chain. ALAN helped millions of Northeasterners year in its history, behind 2007. The Port of Virginia registered
during the storm, by engaging industry to support of relief growth in the last eleven months of 2012:
organizations and, communities, making supply-chain-related
• Containers: 2,100,000 TEUs, up 9.8%
donation needs visible to the logistics industry, and establishing
• General Cargo Tonnage: 17,513,093, up 12.1%
an efficient process for providing needed goods and services
• Total Rail Containers: 385,804, up 16.8 %
through its Web portal.
• Barge Containers: 8,009, up 82.5%
Read more at alanaid.org.
• Ship Calls: 1,963, up 7.4%
• Vehicle Units: 40,031, up 28.5%
continued on page 14
P. 13
14. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
Ironically, as this report was going to press, Virginia Port Authority BEST LOGISTICS
interim director Rodney Oliver had this to say on the release of the Cutting-edge Technology Drives
above statistics: Growth
GEORGIA PORT AUTHORITY AND GEORGIA
CENTER OF INNOVATION FOR LOGISTICS
“This is not the type of thing we’ll get an award for,
but it shows that our effort to market the deepest
The ports of Los Angeles and Long Beach have long histories as
shipping channels on the East Coast, an expanding rail
pioneers in logistics, processing the most container units in North
network, the modern container terminals that we own
America. But in the coming post-Panamax era, the West Coast
and operate and a commitment to customer service
could take a cue from the shallowest North American port, which
and continual improvement is drawing attention—and
has grown to become one of the five busiest: the Port of Savannah,
business—to Virginia.“
GA. Due in large part to logistics and cutting-edge technology, the
Georgia Center of Innovation for Logistics has put the Port of
Mr. Oliver and the “Get ‘er Done” professionals at the
Savannah into the global spotlight for more than just pulp and
Port of Virginia can be proud that their efforts are indeed
poultry: high-value cargo such as pharmaceuticals and autos. The
award-winning. Colliers recognizes your hard work!
Port of Savannah and other Georgia ports have grown dynamically
over the past decade due to their understanding of logistics and
THE “INCREDIBLE BULK” PORT
Recognizing America’s “Fourth Coast” their coordination with rail, air, and truck cargo. Even the president
PORT OF DULUTH-SUPERIOR, MN and Congress have recognized the Georgia Center of Innovation for
Logistics as best-in-class, consulting the Center’s Executive
This is a another new Colliers Port Award, that recognizes the Director Page Siplon for advice on enhancing port operations
importance of the Great Lakes region and its ports. The Great and increasing global trade through supply chain and logistics
Lakes region’s 117 federally recognized harbors and 85 active technology. Given the excellent port options along the East and
freight-handling ports account for 28% of the US GDP and process Gulf coasts, if you’re drawing the likes of Toyota, you’re doing
an astonishing 240 million tons of cargo annually. Because the something right. And that something is logistics.
Great Lakes ports move more bulk than containerized cargo, an
apples-to-apples ranking comparison with the East, Gulf and West Visit the Center’s website to learn what Colliers International and so
Coast container ports isn’t possible. But in terms of tonnage, the many global companies see in logistics at the port of Savannah. Don’t
Great Lakes region is the “Incredible Bulk” of North American miss the latest Logistics Market Snapshot—the only one of its kind
among North American Ports. Read more at georgialogistics.com.
And the leader in the Great Lakes? Not Chicago, Detroit or
Cleveland—but Duluth, Minnesota. LOGISTICS MARKET SNAPSHOT | MARCH 2013
MULTIMODAL:
See page 8 of this report to learn more about America’s “Fourth Coast,”
Dow Jones Down Jones Transportation index rose 3.9% during the month of Feb.
and why Port Duluth-Superior is the undisputed “Incredible Bulk” Transportation Index
(Stock performance of twenty large, well-known U.S. companies in the
transportation industry, average of Feb 10-March 10.
cargo port. NASDAQ NASDAQ Transportation Index decreased 1% in February. (Averaged
share weights of NASDAQ-listed companies classified as transportation
Transportation Index companies, average of Feb 10-Mar 10)
DOT Freight The USDOT’s freight transportation services rose 1.2% in Jan 2013. The
Transportation Index index’s reading of 111.3 was up 1.3% from Jan 2012. (Source: U.S. Dot)
The February shipments index rose 5.6% over the previous month and
rose 0.5% year-over-year. The February expenditures index increased
1.8% for the month, and decreased 1% year-over-year. (Source:
Cass Freight Index Cass Information Systems | Cassinfo.com) (Based upon transportation
dollars and shipments of Cass clients comprised of over 400 shipping
companies)
In January, the U.S. imported about $228.8 billion of cargo. January
Import Volumes U.S. imports have increased 1.8% in terms of value from Dec, and fell
0.9% year-over-year. (Source: U.S. Census)
continued on page 15
P. 14
15. NORTH AMERICAN PORT ANALYSIS | WHITE PAPER | APRIL 2013
NORTH AMERICA’S MOST EFFICIENT North American market for e-commerce and “Above all others”
CONTAINER PORT as North America’s leading air cargo port. Nike’s recent decision
Port Automation at Its Best to move a key distribution center to Memphis was based due to
PORT OF CHARLESTON, SC
the city’s air cargo and BNSF intermodal advantages. The other
top 10 North American air cargo markets include Anchorage,
This award is a new addition to Colliers’ semi-annual Port
Louisville (UPS), Miami, Indianapolis. Chicago, Dallas,
Analysis report, and comes on the heels of a year of strife and
Los Angeles, NY/NJ and Atlanta.
fear of job loss from port automation. A strike was eventually
averted, as—to their credit—the International Longshoremen’s “FLORIDA’S BEST-KEPT SECRET“
Association (ILA) and the United States Maritime Alliance (USMX) …but for how long?
both realized in 2012 that East Coast port job growth is possible PORT EVERGLADES
with the implementation of automation technology. The shining
example of port automation and efficiency is being provided by the Florida has more commercial ports (15) than any other state in
Port of Charleston. With a reported average of 43 crane moves per the U.S., and there’s much confusion over port TEU activity
hour (the metric used for this award), Charleston now boasts the because many of the state’s ports overlap U.S. Customs Districts.
most efficient port in North America. While West Coast ports have Port Everglades is probably the least understood Florida port,
now surpassed an average of 30 crane moves per hour, they’re and certainly its best kept secret. Because it shares a Customs
spending the most in CapEx to upgrade to more than 40 crane District with Miami, some of its container traffic is ascribed to
moves per hour. the Port of Miami. With the aid of both U.S. Customs and Port
Everglades authorities, Colliers has learned that Port Everglades
Refer to the Journal of Commerce’s Fall 2012 feature on global actually handled more TEUs in 2012 than any other Florida port:
port productivity: Port Productivity’s New Gold Standard. approaching 1.0 million annual TEUs. Port Everglades is now
Read more at jocdigital.com. among North America’s ten busiest container ports, and is rapidly
growing its Latin American trade. Although it has yet to process
“ABOVE IT ALL” an application to dredge its port depth to post-Panamax levels,
Leading Air Cargo Port
it’s capable of more container traffic growth. At the beginning of
MEMPHIS AIR CARGO PORT
2013, the Florida Ports Council produced its inaugural State of
Florida Ports report, profiling every Florida seaport, with economic
This award recognizes the evolution of the post-Panamax story
impact information and status updates for major projects and
inland, and the importance of e-commerce to the supply chain
accomplishments. The report also describes the strides that
and ports. Not all modes of freight transportation will be as
Florida’s seaports have made due to the strategic investments
dominant as they once were in the first post-Panamax decade
and regulatory relief supported by Governor Rick Scott and
(2015–2025)—river barges and air cargo, for example. Air cargo’s
the Florida legislature, and the preparations to capture future
role in global trade during the first post-Panamax decade is a
international and domestic business for Florida. Port Everglades
tug-of-war between energy/infrastructure costs and e-commerce
is acknowledged, too:
growth. E-commerce is the growth engine in North American air
cargo and it’s made Memphis the king of air cargo, globally.
“Port Everglades will soon be able to serve vast
volumes of rail traffic thanks in part to the 30-year
According to Airports Council International, in February 2013
lease with the Florida East Coast Railway LLC (FEC)
Memphis overtook Hong Kong and Shanghai to top the list of
to build and operate the port intermodal container
Asian, European and North American air cargo markets, as
transfer facility (ICTF).”
measured by metric tons of air cargo handled annually. With its
BNSF intermodal facility, Colliers recognizes Memphis as the top
continued on page 16
P. 15
