JLL offers a fresh perspective on the current state of global ocean freight shipping: part III
The ongoing pandemic has created chaos for retailers and manufacturers trying to keep up with supply and demand, analysts maintain with Chicago-based commercial real estate broker JLL
Lee Allen, managing director, JLL Port and Global Infrastructure, observes that in recent months a number of ships have been diverted from LA / LB to Oakland and Seattle. An even greater number of ad hoc container ship crossings, known as loaders, have made their way to the east coast of the United States, particularly Savannah.
“Two of the largest ocean carriers, Maersk and Mediterranean Shipping, have announced new services from North Vietnam and China to the east coast of the United States via the Panama Canal calling at Savannah, Charleston and New York,” he said. “Ports are taking all kinds of measures to improve the flow of freight at their gate of entry. These operational changes have helped, but it is not enough. “
According to Allen, the normal flow of goods and equipment (containers and railcars) has been severely disrupted but is expected to stabilize as consumers return to “normal” shopping habits as the pandemic lessens its grip. As immunization rates increase, consumer spending on goods will slow down and shift to services (travel and leisure), and manufacturers are expected to experience fewer labor issues, which will help them increase their capacity to production, but we expect less volatility and more “normal” supply and demand trends in Q4 2021 or Q1 2022.
But what are the implications for industrial real estate?
Allen argues that retailers can be expected to spread the risks associated with port overcrowding using a “four corners” strategy (using a mix of port gateways) that will increase the demand for industrial real estate in the city. almost all port markets, but mostly in New York / NJ, Savannah, Charleston and Seattle-Tacoma-Vancouver.
“Houston has started to gain traction as retailers begin to realize that a ‘five corners’ strategy is an even better way to mitigate supply chain risk,” says Allen.
There is a continued trend towards east coast ports (via the Suez Canal) as well as increased demand and use around inland port logistics parks.
“We expect the Savannah and Charleston industrial real estate markets to double in size over the next ten years in response to supply chain realignments and volume growth at East Coast ports,” said Allen.
In short, the “shipping crisis” as we experience it today could become the new normal – retailers and other importers will continue to mitigate supply risks by diversifying their ports of entry into the United States. experienced over the past decade.
“The Port of Savannah expects the industrial market to add 75 million square feet of business with Charleston expanding by 50 million square feet,” Allen notes. “Given these factors, it is imperative to view this shift in international shipping as an opportunity to invest in port real estate.”
Ports will continue to experience volume growth, so there will continue to be demand for developable land near ports on all coasts as well, which has been the case.
“Overall, we expect this shipping crisis to stabilize over time as the pandemic decreases in criticality and the economy grows,” Allen concludes.
About the Author
Patrick Burnson, Editor-in-Chief Mr. Burnson is a widely published writer and editor specializing in international trade, global logistics and supply chain management. He is based in San Francisco, where he provides a Pacific perspective on industry trends and forecasts. He can be reached at his downtown office: [email protected]