Top North American Ports Volume Drops by 20%

Sizeable Drop in Q1 Container Volumes

Most U.S. ports had year-over-year declines in container volume, led by Los Angeles (-31.5%) and Long Beach (-30%), This is not a surprise as many shippers relied on East and South Coast ports in early 2022 to avoid West Coast port backups.

Houston was the only port with a year-over-year increase in Q1 container volume (3.4%). Both Houston and the Port of Savannah have greatly benefited from shippers turning to alternative routes for cargo distribution to avoid supply chain disruptions.

Record-high container volume in 2022 was the result of strong consumer demand. But as consumer sentiment wanes this year, demand is beginning to normalize. The ports of Los Angeles, Long Beach and New York/New Jersey all have lower container volumes from a year ago, which are nearing pre-pandemic levels.

Figure 1: Q1 TEU Volume Comparisons

Source: Various Port Authorities, CBRE Research, Q1 2023.

U.S. Seaport, Inland Port & Non-Port Market Comparisons

Industrial vacancy rates rose across all three port types in Q1, with the inland ports recording the biggest increase by 60 basis points (bps) to 4.2%. The overall vacancy rate for seaport markets rose by 30 bps to 3.0%, while the rate for non-port markets increased by 40 bps to 3.3%.

Seaport markets with the lowest vacancy rates were Savannah (0.6%), Charleston (0.7%), Los Angeles (1.3%) and Portland (2.3%).

Non-port markets had the most combined Q1 net absorption totaling 35.2 million sq. ft. The Pennsylvania I-78/81 Corridor posted the highest amount at 7.1 million sq. ft.

Source: CBRE Research, Q1 2023.

SPOTLIGHT: Port of Los Angeles

• Los Angeles has ranked as the nation's No. 1 container port for the past 23 years and is the busiest seaport in the Western Hemisphere.
• The port spans 7,500 acres along 43 miles of shoreline and has a main channel depth of 53 feet that accommodates the largest container ships.
• San Pedro Bay provide access to both the Port of Los Angeles and the Port of Long Beach. The two combined are the world’s fifth busiest port complex.
• The top containerized imports at both the ports of Los Angeles and Long Beach include furniture, auto parts, apparel, plastics, footwear and electronics.
• Collective bargaining negotiations between West Coast port authorities and their dock-workers have continued since the previous labor contract expired last year. Despite no agreement yet, the Port of LA remains open, though it has been subject to occasional work slowdowns and other delays.

History
The Port of Los Angeles was founded in 1907 to serve the city’s growing population. The port became a center of international trade with the opening of the Panama Canal in 1914. During World War II, it facilitated the building and repair of U.S. Navy vessels. In the late 1950s, cargo containers replaced crates and pallets, providing more efficient cargo-handling operations.

Sustainability
Protecting the environment by using new tech-nologies and upgrading facilities is one of the port's top priorities. In 2006, both the Port of Los Angeles and the Port of Long Beach enacted the San Pedro Bay Ports Clean Air Action Plan to dramatically improve air quality in and around the ports.

A Look Ahead
The Port of Los Angeles plans to completely have zero-emission cargo-handling equipment on all docks by 2030 and zero-emission heavy-duty truck traffic by 2035. Overall demand for industrial real estate is expected to remain positive with new developments coming to market. The Inland Empire is on track for 33 million sq. ft. of net absorption this year.

Figure 2: TEU Container Activity, Q1 2023

Source: Various Port Authorities, CBRE Research, Q1 2023.