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NEW YORK CITY-The battle of America’s two coasts is beginning to make some serious waves. For the first time since World War II, the East Coast surpassed the West in container traffic growth, according to a new report, “North American Port Analysis: Preparing For the First Post-Panamax Decade" from Colliers International.

Upon completion in 2015, the expansion of the Panama Canal will accommodate vessels capable of carrying up to 12,500 containers will alter global trade routes, and is already promoting the advancement of the science of logistics. According to the report, Eastern ports saw traffic grow by 5.5% in Q1 2012 over the same quarter in 2011, as compared with 3% in the western ports. 

By 2015, Baltimore, Miami, New York and Norfolk will all be ready to handle larger ships, bigger cranes and deeper channel depth—and Eastern traffic growth will accelerate further after the expansion, says K.C. Conway, executive managing director of market analytics at Colliers and the author of the study.

“The East Coast is really stepping up,” he tells GlobeSt.com, noting that the remaining piece of the puzzle – New York and New Jersey – has fallen into place. On July 18^th, the Port Authority of New York & New Jersey, the bi-state agency that oversees the region’s ports, bridges, tunnels and five airports, expedited the $1 billion raising of the roadway of the Bayonne Bridge by six months and got placed on President Obama’s list of projects for accelerated review.

The port of New York and New Jersey handles 30% of all goods shipped to the East Coast, and in 2011, it handled more cargo containers than its closest competitors – Savannah, Norfolk and Baltimore – combined. But now, the Bayonne Bridge will have enough clearance by fall 2015 to handle the larger volume.

“It gives recognition for getting amazing things done in a New York minute,” Conway says. “That’s how far behind they were, and they were playing a dangerous game of chicken, because the New York/New Jersey are already the most impacted by what’s going on in Europe. They have the most European trade, so obviously they are starting to slowdown and impact them. They couldn’t really gamble without being post-Panamax ready. It is really good news for New York.”

Further south, the expansion will impact more than just shipping companies: Retail supply chairs, manufacturers and commodity traders will each feel the effects of new access to eastern ports, according to the report. Growth in East and Gulf Coast port traffic will also be fueled by new manufacturing operations from Airbus (Mobile), Boeing (Charleston) and Caterpillar (Athens, Georgia), and a new commitment from Disney to exclusively use the port of Jacksonville for all imports bound to the Magic Kingdom.

But as China’s economic growth slows and American manufacturing grows in the right-to-work states of the Southeast, Midwest and Gulf Coast, risks remain, including port competition, environmental inaction, labor strikes, slowing global GDP and state budget crisises.

For example, while cities like Norfolk are post-Panamax ready at the present time, Conway says the state of Virginia is looking at outsourcing the operations of the entire port to two companies, Texas-based Cargile and RREEF, Deutsche Bank’s real estate arm, based on a need to increase efficiency and cut costs for taxpayers. “They are saying that this is a pretty capital intensive thing, and we can increase cost efficiencies to be more competitive because more cargo traffic will come to our ports,” he says. “These new bigger ships cost more and there are going to be higher fees to cross through the Panama Canal, so shippers need to find other cost efficiencies and they are looking for them at the ports.”

But as the East Coast ramps up its ports, development and investment sales of warehouse and distribution facilities are quietly on the rise. But Conway says some of the older product is not equipped to handle heavier, larger post-Panamax materials. “When you get into these bigger, older established markets, the buildings are older with low ceiling heights,” he says. “The old ships brought in about 3,000 containers. These would bring over 12,000 containers at once, so you need bigger facilities that can process real quickly, and that can mean bigger more modern distribution centers that can have conveyer systems to move the stuff more frequently. That means you need to have 30 or 36 foot clear ceiling heights, thicker concrete floors and all these things.”

Conway says developers are moving inland and building new distribution centers where building costs are cheaper and land is more readily available, but adaptive re-use is also at play. “There could be some rich development opportunities and it could mean that this older stuff could be brought back to the highest and best use,” he adds.

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