As global trade begins to rebound, U.S. ports are looking to expand capacity to meet the anticipated demand and are focusing on capital development to meet the infrastructure need, according to a recent study by Jones Lang LaSalle.
"Between 2007 and 2009, the nation's top 13 ports witnessed an 18.5% decline in total volume as both domestic and foreign consumption waned," notes John Carver, head of the Ports Airports and Global Infrastructure group at Jones Lang LaSalle. "Fortunately, transpacific U.S. bound trade from Asia started to recover in the second half of 2009 and has started to show a positive impact on West Coast ports, with traffic up 14.8% year-over-year.”
The study includes the Jones Lang LaSalle Port Index, which rates U.S. ports on the performance of the ports themselves and their impact to the surrounding real estate economy. Ports are scored on their land value-to-lease rate ratio, local vacancy rates, labor costs, on or near dock service by railroads as well as planned infrastructure investment.
The report examines the real estate landscape around international seaports and airports and says that port operators in greater China and the Middle East went on a global buying spree in 2006-2007 to gain control of global shipping routes and direct access to raw materials. It was foreign direct investment regulations in the U.S. that prevented the same influx of capital into U.S. ports from foreign investors. Instead, many U.S. ports have leaned on private domestic investment and public-private partnerships.
"Asking rents declined by an average 7.1%, with the largest losses in the markets surrounding the ports of Los Angeles, Long Beach and Charleston," says Craig Meyer, managing director and head of Jones Lang LaSalle's Americas Industrial Services team.
However, U.S. ports are in anticipation of the expansion of the Panama Canal, the long-term rise in cargo and freight traffic, and in order to compete with foreign ports attempting to move ahead with infrastructure investments, concession agreements and capital improvement plans that will help capture or increase market share.