Shifting Port Traffic and Its Impact on Industrial

Modern logistics depends on warehouse high-tech automation, AI-enabled demand and supply monitoring and projection, and complex systems to ensure that companies and consumers get deliveries when and where they want. And yet, one major backbone in global trade is still enabled by transportation — ships that can carry almost incomprehensible amounts of volume and weight between continents. And ships mean ports.

In general, seaports are important to the entire industry. As a recent Colliers report on big-box industrial, the number of seaports available to regions is one of the major factors in driving strategic locations. A recent analysis by CoStar noted that there are record numbers of large industrial properties near major U.S. seaports.

During Covid, “you saw the influx of containers and ships going to the West Coast,” Kelsey Nastasi, manager of industrial research at JLL, told GlobeSt.com. It may have been necessary, given health issues on the East Coast and increased traffic between North America and Asia, but it raised some problems.

“A lot of these ships got backed up, which caused a lot of the chaos at the ports,” Nastasi said. That began a counter-movement with traffic moving back. “It wasn’t a huge shift at first. It was noteworthy. Everyone was getting jammed up.”

JLL has continued to see more reversion to East Coast ports. “We’re still seeing it stay in Savannah and Charleston and Florida,” Nastasi said. “There is that option and availability of land for occupiers to move there and rents are cheaper.”

“The Georgia Ports continue to experience exponential growth and port activity largely due to the efficiency of great leadership and strategic planning,” said Kim Iler-Morgan of Coldwell Banker Commercial Atlantic of GA. They include the ports of Savannah and Brunswick on the Savannah River. She said they’ve been popular because of ease of access and a “contiguous port” that “allows the ability to move freight more efficiently once it’s offloaded from the Georgia Ports and access to I-16/I-95 corridor within 6 miles.”

The shift back east is more some rebalancing than a full reversion. “LA and Long Beach ports have been the major ports. I don’t want to say they’ve lost a ton of volume,” Nastasi said. Use is still elevated over pre-pandemic levels but below heightened peak levels during the pandemic, as the East Coast has seen that elevation in demand land and availability in the West has become scarcer. The most affected port markets are Los Angeles, Long Beach, Savannah, Charleston, and Houston.

Land availability becomes a larger issue in the manufacturing aspect of industrial. “Advanced manufacturing is impacting industrial real estate,” Nastasi says. “We are seeing competition for land from them.” That’s particularly true for electric and traditional technology automobile companies. Suppliers are coming in and filing nodes around manufacturers and the manufacturers are working with 3PL to move products. The Southeast also has seen a big expansion of automotive manufacturing over a few decades, so there is already an infrastructure with a labor pool.