Cargo owners and shipping lines in the US are stripping and paring their transport costs from port to distribution point and customer, just as the debate rages over the community and environmental effects of greater concentration of transport and distribution hubs next to ports.<\/p>\n
The result is that planners are trying to balance the pressure to achieve savings with immediate results against longer-term achievements benefiting everyone.<\/p>\n
Logistics developers have plenty to worry about: new technology, last mile, e-commerce click and buy trends, an growing stream of different types of goods, and public pressure. Another concern is the new trend of setting up inland ports, which is making way for the new concept of linking distribution points with dedicated cargo airports, long considered anathema to traditional logistics specialists.<\/p>\n
\u201cInland ports are the future,\u201d says Walter Kemmsies, chief economist for Jones Lang LaSalle. \u201cRetailers are facing splintered consumers, with millennials buying online and old patterns of consumer behaviour changing radically. The merchants have to rework their systems.\u201d<\/p>\n
Port-centric still favoured<\/strong><\/p>\n For the moment the pendulum continues to swing to more development of logistics-related centres as close as possible to ports. Empty space is very low and rents are climbing. \u201cWith demand exceeding new supply\u201d in the US, according to commercial property consultants and developers CBRE, in the first quarter of 2018 \u201cnet asking rents increased 1.9% in the first quarter to $7.01 per square foot \u2014the highest level since CBRE began tracking the metric in 1989. Rents increased 5.9% year-over-year, well above the average 12-month growth of 3.8% during this cycle (dating back to fourth quarter 2011 when rents resumed growth).\u201d<\/p>\n New facilities are being built both to cope with demand and for speculative purposes. Cushman & Wakefield\u2019s analysis of the first quarter says that new construction is at a record high with 23m square metres being developed, 920,000 square metres more than in the fourth quarter of 2017.<\/p>\n Logistics needs are the biggest force behind the demand, with the Inland Empire in Southern California (dedicated almost totally to serving Long Beach\/Los Angeles) accounting for the most at 26m square feet, followed by Dallas\/Fort Worth at 20 million square feet. Logistics analysts say that, in turn, e-commerce is playing a bigger role.<\/p>\n Newmark Knight Frank says that Amazon took up 185,000 square metres and parcel delivery service UPS took up 278,000 square metres of demand in the Inland Empire.<\/p>\n Marc Wulfraat, president of Canada-based MWVPL commercial property developers in Canada and the US, says: \u201cOverall I would say that some companies are increasingly establishing warehouses close to US ports, particularly if there is a high volume of imports that are being brought in.\u201d He points to two trends.<\/p>\n The first trend is that large retailers such as Amazon, Target, and Walmart are bringing their imported merchandise into import distribution centres which act as holding tanks for inventory. In turn these buildings replenish regional distribution centres that in turn service stores or consumers.<\/p>\n \u201cThese facilities tend to be quite large and they act as a buffer between the countries of origin and the regional distribution centre network so that merchandise can be imported sooner than when it is needed in the store. This strategy is in place to ensure that retailers secure inventory well ahead of the peak demand in November\/December so that the regional distribution centres are not flooded with inventory ahead of when it is needed.\u201d<\/p>\n Secondly, companies that import bulky or heavy products, for example, floor tiles, are positioning their regional warehouse at key port locations to minimise inbound freight expense from the port to the distribution centre. From there they will rail or truck the goods to the stores\/customers. \u201cThis mainly applies to commodities that are very expensive to ship due to high weight or cube,\u201d says Mr Wulfraat.<\/p>\n Truck driver shortage<\/strong><\/p>\n Mark Levy, who heads JLL\u2019s US Ports, Airports and Global Infrastructure Practice, says that decision makers must take note of more factors than just financial cost and the benefit of siting a warehouse or distribution centre. \u201cFederal authorities are now strictly regulating truck drivers\u2019 hours of service with the introduction of Electronic Logging Devices \u2013 so more attention will have to be paid to making sure that drivers are available.<\/p>\n \u201cThe huge and growing importance of last mile delivery is making logistics players focus even more intently on reducing costs in a sector with thin margins.\u201d<\/p>\n Another complicating factor, says Mr Levy, is that distribution centres, particularly on the US East Coast, are in urban concentrations where they have to service other types of clients, not just ports. This makes efficient distribution more difficult and means that even more truck drivers need to be available.<\/p>\n Mr Kemmsies notes that with container dwell times on the US East Coast at seven days compared with only three days for the US West Coast, there is much more urgency for the US East Coast to improve distribution efficiency.<\/p>\n While the biggest ports are the focus of most of the activity and attention, others have been quick to seize the opportunity to offer near-port facilities. Two of the most notable have been Oakland and Seattle\/Tacoma.<\/p>\n CenterPoint Properties is building a 440,000 square-foot complex at Oakland at a former army base.<\/p>\n More than 4m square feet of warehousing is being built within Tacoma\u2019s port industrial area, where Avenue 55 has partnered with the Port of Tacoma on Portside 55, a 424,000-square-foot warehouse. Near Seattle\u2019s main business district, Prologis is developing a 50,000 square metre warehouse which has multiple levels \u2013 a new concept in the US.<\/p>\n Says Mr Levy: \u201cWarehousing is evolving into multiple storeys in New York. But while it seems a simple solution for adding space, costs are very high (about $2,500-$6,000 a square metre to build) and developers need to consider that very carefully.\u201d<\/p>\n JLL is involved in a 78,000 square metre multi-storey distribution centre in the Bronx, the first on the US East Coast.<\/p>\n One thing that the e-commerce juggernaut has exposed is a vulnerability in US logistics complexes\u2014old buildings that are outdated for modern commerce. New developments such as that at Oakland are being built with taller facilities and thicker floors, so that goods can be stacked higher and easily moved by automated equipment.<\/p>\n Mr Kemmsies says that a full 13,000 teu vessel completely unloaded needs 8m square metres of warehousing space available \u2013 at a time when such vessels are relatively new to the US. Equally essential for the distribution network to become more efficient is improvements in rail speeds: the average speed of a goods train in the US is less than 40 kilometres an hour.<\/p>\n<\/p>\n MOVING AWAY FROM THE WATER <\/strong><\/p>\n Inland ports could be one step beyond warehousing developments in the US. In Washington State, the small cargo depot of Quincy has launched a campaign to become an inland port, using an idle container handling facility that has been unused for the last three years. Storage capacity is about 1,500 containers and chassis and there are also 24 multi-phase refrigeration unit plugs. Discussions are being held with agricultural and industrial merchants.<\/p>\n South Carolina is banking heavily on inland ports. Dillon opened in April and is planned to handle an estimated 45,000 container movements from truck to rail in its first year. The established inland port of Greer handled 103,000 rail moves in 2017, a 20% increase over 2016.<\/p>\n The neighbouring state of Georgia plans to build a third inland port to join Cordele and Chatsworth. Chatsworth will officially open in the second half of 2018 and has an annual capacity of 50,000 containers, expected to double by 2028. No details have been provided of exactly where the third site will be.<\/p>\n Utah is positioning itself as an excellent site for an inland port at Salt Lake City, reviving a proposal that has been around for 40 years. The difference is that this time the governor has signed a state bill that gives the go ahead for the project, while a state-governed inland port authority has also been formed.<\/p>\n A significant feature of the project is the inclusion of a dedicated cargo airport for domestic traffic. \u201cThe inclusion of airports is another step in the evolution of inland ports,\u201d says an official associated with the project.<\/p>\n A combined business\/industrial park and logistics centre, incorporating a cargo airport, is being considered for the Mid-California International Trade District (south of Silicon Valley).<\/p>\n","protected":false},"excerpt":{"rendered":" Martin Rushmere looks at the options to get cargo out quicker to customers.<\/p>\n","protected":false},"author":8,"featured_media":203,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[26],"tags":[],"sponsor":[],"class_list":["post-202","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-container-cargo-handling"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/posts\/202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/comments?post=202"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/posts\/202\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/media\/203"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/media?parent=202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/categories?post=202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/tags?post=202"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/sponsor?post=202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}