Here's What's Ahead for US Seaports in 2023

The top US seaport continued to evolve this year as canceled sailings, stuck vessels, and reduced cargo volumes hampered shipping. But despite those (relative) setbacks, the sector is on the path for continued success in 2023, according to a new report rom Cushman & Wakefield.

The volume of loaded twenty-foot equivalent units (TEU) passing through the nine ports reviewed by Cushman increased by 9.9% year-over-year. All told, those nine markets markets ended  Q3 with an overall vacancy rate of just 2.3%, “significantly lower” than the national average of 3.7%.

“Despite low vacancy, activity was strong as 220.2 million square feet were absorbed from these markets in 2021 and 115.4 million square feet year-to-date,” the report notes. “Moreover, there were 260.2 million square feet under construction in industrial markets near these nine seaports alone.”

In addition, Cushman notes that the U.S. Department of Transportation announced more than $703 million to fund projects to improve ports through the Maritime Administration’s Port Infrastructure Development Program.

Los Angeles remained the #1 seaport in the US by loaded container volume, though volume is down year-over-year. The port encompasses 7,500 acres of land and water along 43 miles of waterfront, with 25 cargo terminals. Together with the Port of Long Beach, the Port of Los Angeles is the leading gateway for U.S. imports and exports with China, Japan, Vietnam, and Taiwan. And earlier this year, the port passed a $1.9 billion fiscal budget with capital improvement budget of $180.5 million to focus on the port’s operational strength and financial sustainability. And its real estate impact is vast: greater Los Angeles, particularly the Inland Empire, “remains one of the most desirable markets for occupiers in 2022,” according to Cushman experts.

“Headwinds, including labor contract negotiations and cargo owners bringing goods in earlier in the year to satisfy just-in-case inventory strategies, have caused cargo volume to dip in the last few months,” the report notes. “In October, volume at the busiest U.S. seaport fell to its lowest level since 2009 as shippers sent cargo to alternate trade gateways to avoid potential disruptions from ongoing West Coast port labor talks.”

In 2022, the Port of Los Angeles aggressively responded to the global supply chain headwinds, according to Cushman’s Kevin McKenna.

“The port is now operating at full efficiency, eliminating 2021 issues,” he says. “The port successfully and efficiently transferred loaded inbound containers to our Southern California warehouses to meet consumer demand. As a result, the Southern California warehouse market remains the most active market in the country and is also the most desirable for institutional investment. Demand for new warehouses is at record levels, and new construction strives to meet the intense demand. In addition, the massive shift to e-commerce is driving increased demand for industrial warehouses.”