Colliers International Port Analysis: CapEx or Capsize
North America's Port Cities Prepare for the First Post-Panamax Decade
SEATTLE, April 8, 2013 /PRNewswire-USNewswire/ -- Colliers International released its third North American Port Analysis report which examines evolving trade patterns resulting from the upcoming Panama Canal expansion in 2015.
The report's theme, "CapEx or Capsize," underscores the idea that cities need to spend the capital to upgrade their ports, or risk "capsizing" their economies. Report author, KC Conway, notes that America needs $3.6 trillion in funding for infrastructure by 2020 to remain competitive in light of the upcoming Panama Canal expansion.
"This is 'make-it-or-break-it' time for North America's port cities," said KC Conway, chief economist for Colliers International in the U.S. "Changing trade patterns and evolving e-commerce trends will present great economic opportunities for the cities that that invest CapEx in their transportation infrastructure. And for those cities that don't invest, they put their economies at serious risk."
The report also looks at emerging inland ports and intermodal facilities in markets such as Charleston, Indianapolis, Philadelphia and the Great Lakes, and the impact that the Panama Canal expansion and changing global trade patterns are having on industrial commercial real estate.
Colliers identifies a number of key takeaways, including:
- Poor Infrastructure. The American Society of Civil Engineers (ASCE) recently gave America's overall infrastructure a D+ grade. Although ports and rails earned a C, America's infrastructure is only as healthy as its weakest link: inland waterways, roads and airports. Further developing and capitalizing on some of these more basic, traditional modes of transportation would be beneficial to U.S. economies.
- Shift in Trade Powers. The balance of influence in trade is shifting from Asia to Latin America, and from West Coast to Gulf/East Coast ports. Expanding U.S. trade with Latin America, Russia and India offset the impact of Eurozone recession and China's slowing GDP.
- Growth in the Great Lakes. The Great Lakes region is an often overlooked "Fourth Coast." But this region is the undisputed leader in bulk cargo trade, processing roughly 240 million tons of cargo annually, and its ports accounted for 28 percent of the U.S. GDP in 2012.
- The Future of Air Cargo. Air cargo is expanding primarily in the Middle East, Africa, and Asia Pacific, where underdeveloped infrastructure makes air freight the primary option. In North America, however, only a handful of air cargo centers will survive, as overall volume declines and e-commerce becomes the primary business driver. Air cargo's role in the future of global trade will be defined by the tug-of-war between energy/infrastructure costs and e-commerce growth in the first post-Panamax decade (2015-2025).
- Intermodal on the Move. Intermodal transportation activity was at an all-time high in 2012, and is the next transportation growth segment in the post-Panamax era. Industrial real estate development in 2013 is directionally pointed toward port markets, inland distribution markets with dominant intermodal facilities, and a handful of dominant air cargo markets. Several differentiating trends will dictate where industrial real estate will be most in demand, including port markets that are post-Panamax ready, occupy a commodity or product niche, and are aligned with the national intermodal rail system.
- Rise of the Rail. More container cargo will migrate to rail due to new hours-worked rules and other regulations affecting the trucking industry. Rail speed, reliability, and cost now rival movement of goods by truck. And, environmental and traffic congestion challenges will enhance the movement of cargo traffic to rail.
In the report, Colliers also recognizes the top 10 North American ports, including:
- North America's Top Air Cargo Port: Memphis Air Cargo Port
- Fastest-Growing North American Port: Port of Virginia
- Florida's Best Kept Secret: Port Everglades – Florida's top TEU container port
- Best Logistics: GA Port Authority & the Georgia Center of Innovation for Logistics
For a full list and further analysis on the North American ports, a complete PDF version of the 13-page report is available at http://www.colliers.com/us/port-1h2013.
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SOURCE Colliers International