Bill Mongelluzzo | Jun 23, 2011 9:59AM EDT
East and Gulf Coast ports, predicting they will increase their share of the U.S.-Asia trade when the Panama Canal expansion is complete in three years, made a big pitch to industrial real estate developers meeting in Long Beach on Wednesday.
The Port of Los Angeles countered by defending its turf, with a port representative assuring warehouse and distribution center builders that infrastructure development at West Coast ports will keep any loss of market share after 2014 to a minimum.
Executives from the Virginia ports, Houston and Los Angeles agreed that encouraging development of distribution warehouses and transloading facilities goes hand-in-hand with expanding marine terminals and transportation infrastructure.
“With big ships you need big terminals, rail connectivity and deep channels, but you also need the right cargo base near the port,” said John Moseley, general manager of trade development at the Port of Houston Authority. Moseley addressed the Industrial Conference for Commercial Real Estate.
West Coast ports, which control about 70 percent of U.S. imports from Asia, are expected to lose some market share when the Panama Canal is enlarged to handle ships capable of carrying more than 11,000 20-foot equivalent units.
The main advantage of East and Gulf Coast ports is that they are close to the major U.S. population centers. About 66 percent of the population and 75 percent of the consumption base is in the eastern half of the country, said Curtis Spencer, president of industrial park consulting firm IMS Worldwide in Houston.
For East and Gulf Coast ports, the main task is to deepen access channels to 50 feet to accommodate 8,000-TEU vessels and greater and to develop intermodal double-stack rail capacity.
The Virginia ports have an early advantage because the channel depth is already 50 feet, and could go to 55 feet, said Kevin Burwell, director of business analysis and strategy. And Norfolk Southern Railway has completed its Heartland Corridor to the Ohio Valley and Chicago, and CSX will complete its National Gateway intermodal corridor by 2014 and Norfolk is within a day’s truck drive of two-thirds of the U.S. population, Burwell said.
Houston, which already has a thriving industrial real estate industry, is doubling the capacity of the port with its Bayport development, and is counting on rail connections to the Midwest to expand its hinterland, Moseley said.
Los Angeles and Long Beach, which handle about 40 percent of U.S. imports from Asia, boast the largest concentration of marine terminals, vessel and intermodal rail services and distribution warehouses of any U.S. port complex, said Jim MacLellan, director of trade development in Los Angeles. The Southern California ports are engaged in a 10-year, $7 billion capital expansion program. “Capacity is not a problem,” MacLellan said.
Factors over which ports have no control will play a big role in determining market share in the years ahead, Spencer noted. The eastern ports could be hurt by slow-steaming among carriers, which has lengthened the transit time from Shanghai to 35 or 36 days from 28. A yet-to-be determined increase in Panama Canal fees to pay for the $5.2 billion project also would add cost to the all-water services.
West Coast ports, meanwhile, will become even more dependent upon cost-competitive intermodal rail rates to markets in the East and Midwest, MacLellan said.
Contact Bill Mongelluzzo at bmongelluzzo@joc.com.
