LOS ANGELES—“Seaports are the weakest link. They haven't been able to adjust quickly enough to support big ships,” Bill Mongelluzzo, senior editor at Journal of Commerce, said on the "Connecting the Links: Supply Chain Strategies for Success" panel on the first day of the NAIOP's I.CON event in Long Beach. (NAIOP is a GlobeSt.com Thought Leader.) The comment came as part of a discussion lead by panel moderator Craig Meyer, president of the logistics and industrial services group, Americas, at JLL, and with speakers Lange Allen, executive director of US industrial and logistics development at USAA Real Estate Co., and Noel Hacegaba, CIO of the Port of Long Beach, about the challenges facing the industrial sector.

Hacegaba agreed with Mongelluzzo that the seaports and congestion were a major issue, explaining that it was a problem that affected the whole supply chain. The two noted that the congestion at the ports has increased the turn time for drivers by double the standard time, a problem that has lead to a driver shortage and that has dramatically cut into drivers' profit margins. “Drivers need two-to-three turns a day to break even and four turns to make a profit,” said Hacegaba. “At the height of congestion, they only make one turn a day.”

According to the panelists, the Seattle and Los Angeles/Long Beach ports move as much as 65% of its imports through the rest of the country, making them very dependent on the rail systems. For this reason, Hacegaba said, “You have to look beyond the dock to the supply chain for success.”

East Coast ports, on the other hand are smaller and shallower because they were only built to serve their local communities. As a result, these ports can't handle the large ships or the large volumes that the West Coast ports can handle. However, Mongelluzzo recommends that real estate investors look to those areas—like New Jersey and the Charleston ports—for investment opportunities because they are “inland ports that can support the supply chain.” Allen agreed that his company was investing in those markets, and added Baltimore to the list as well.

Of course, the panelists also touched upon the recent port slowdown that happened earlier this year, and finally came to an end this month when a new labor agreement was signed. Mongelluzzo said that the slowdown could absolutely have been avoided and “that it was all about greed.” As a result of the extended negotiations, the ports could suffer long term. “The ports are going to pay and have already experienced significant diversion. Who knows how much it will stick,” he said.