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This past year seems to have been a turning point for the global economy and world trade, says a new report from Savills.
2022 was very likely the peak for U.S. ports, too, according to the Savills 2023 Ports Report. Although activity fell late in the year, container volume at the nine busiest U.S. ports hit a record 49.9 million TEUs for the year, or 16.8 percent above 2019.
The report highlights three “megatrends” and three key forecasts for U.S. ports.
The three megatrends are:
- As shippers try to avoid delays and labor disputes, West Coast ports continue to lose market share
- Port congestion overall has eased since last year but has worsened at East Coast ports
- Although port-region logistics markets are cooling off, vacancies remain low and therefore a challenge for occupiers
Similarly, there are three key things to look for this year.
- As the global economy slows, container volumes will decrease in 2023
- This lower demand will probably ease port congestion and loosen labor markets
- Warehouse occupiers are likely to regain some leverage as vacancies rise and rents stabilize
Among the report’s observations, one of the ironies is that while West Coast ports have been losing market share—in part because of congestion—to East Coast ports, the latter have seen growing congestion despite their rapid expansion.
READ ALSO: Industrial Sector to Maintain Winning Streak in 2023
Overall, East Coast and Gulf Coast ports now have a combined market share of 51.8 percent, up from 44.5 percent in 2016.
Closer examination
Besides in-depth looks at nine major U.S. ports (Charleston, S.C., Houston, Long Beach, Calif., Los Angeles, New York/New Jersey, Seattle/Tacoma, Wash., Oakland, Calif., Savannah, Ga., and Virginia), Savills offers details on the capital improvement projects at these ports. The impressive dollar figures demonstrate the levels of commitment that port authorities need to keep their facilities competitive.
Take the Port of Savannah, which has seen its annual TEU volume rise 28.1 percent since 2019, to 5.9 million in 2022, which made the port the fourth-busiest in the U.S.
That growth wasn’t cheap. Savills tallies $1.3 billion in recent and ongoing capital investments, including deepening the outer harbor for 18.5 miles out into the Atlantic and a project that will double the port’s rail lift capacity.
But there has been a big payoff. The report notes that over the past five years, Savannah’s industrial footprint has nearly doubled, with 19.4 million square feet having been delivered in just the last two years.
“Vacancy in port-adjacent submarkets in Savannah is near zero, pushing future development and tenants to outer submarkets along I-95 and I-16,” the report notes.
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