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CA Labor Strife Drives Eastern Port Growth

The Panama Canal expansion may have been mired in delays, but East and Gulf Coast ports have enjoyed healthy growth largely due to the West Coast ports’ labor strife and worsening congestion.

That observation is bolstered by the second annual North American Seaports and Logistics Index produced by the commercial real estate giant CBRE Group.

However, southern California ports still maintain a strong role, CBRE admits.

The Port of Long Beach snared the top spot on the index from the neighboring Port of Los Angeles – due mostly to the arrival of a new Asian shipping line in Long Beach – but most ports on the rise in the top 10 are located on the East and Gulf Coast.

“The industry premonition that 2015 was the year of the East Coast was born out in the overall stats and in the way our rankings turned out,” says David Egan, CBRE’s head of industrial & logistics research in the Americas.

“It demonstrated that the benefit to the East Coast from the turmoil on the West Coast is real and quantifiable,” he points out.

The renewed momentum for eastern ports can be attributed, at least in part, to shippers shifting cargo east in response labor turmoil in recent years at the primary West Coast ports, CBRE says. Cargo traffic at western ports had slowed months before the longshoreman union and port management battle over a new multiyear collective bargaining agreement was finally resolved in March 2015.

The labor disruption on the West Coast contributed to the climb of two East Coast ports and one Gulf Coast port in the rankings, according to CBRE. The Port of New York and New Jersey climbed one spot to No. 2 overall, the Port of Savannah ascended two spots to No. 4 and the Port of Houston leaped five spots to come in at No. 5.

On the West Coast, the Port of Los Angeles, which posted an uncharacteristically slow year, fell two spots to No. 3, and the Ports of Seattle and Tacoma fell two spots to No. 6, CBRE notes. The Port of Oakland, which was hit last year by the closure of its Ports of America Outer Harbor Terminal, tumbled five spots to No. 10.

Overall, the major East and Gulf Coast ports accounted for nearly all of North America’s gain last year in cargo volume, whittling away at the West Coast’s traditional dominance,” CBRE says.

West Coast ports still managed to account for 52% of all TEU volume last year in North America, but that was down from 54% in 2014 and 57% in 2010.

“Companies today are facing monumental supply chain pressures due to changing consumer behavior and a need to balance cost and service while keeping their business safe from interruption,” says Adam Mullen, supply chain leader in CBRE’s Industrial & Logistics division, the Americas.

“Recent shifts in port volumes as companies strain to determine their best global shipping routes underscore that global commerce is in a race – an arms race of sorts – to build better, even more efficient supply chains,” he adds.

CBRE shares the view that by itself the Panama Canal expansion will not shift significant amounts of freight away from the West Coast because most of what would switch already has done so.

“However, due to the numerous, persistent pressures faced by shippers, retailers and suppliers, it is likely those companies will continue to weigh such decisions over the next several years,” CBRE observes.

Savannah Sees Warehouse Growth

A perfect example of this trend is the Port of Savannah, not one of the powerhouse ports on the CBRE index but one that is experiencing enormous growth in warehouse operations and facilities.

Industrial space is being added to meet booming demand, with more than 1.7 million square feet of warehousing recently completed and more than 1.9 million square feet under construction, along with a 2,700-acre industrial park in the works.

David Sink, a principal in the Savannah office of Colliers International, predicts continued strong demand for sites and warehouse space.

“We are likely to see more announcements and we are very likely to see some more speculative construction based on the interest we have seen from development companies,” he says.

One of these projects was expansion of Nordic Cold Storage’s facility by 200,000 square feet., which opened on April 15.

“Savannah handles 40% of all frozen poultry sent overseas, more than any other port in the U.S.,” says Georgia Ports Authority incoming executive director Griff Lynch. “Nordic’s announcement, along with on-terminal improvements, positions Savannah to continue serving as the export gateway for refrigerated cargo in the U.S. Southeast.”

NIOSH Seeking Robot Safety Info

The National Institute for Occupational Safety and Health seeks input to assess the potential risks of what it calls “robot workers” and to help it develop guidance to promote safe interactions between people and robots.

In his April 28 “Workers Memorial Day” speech, NIOSH Director Dr. John Howard noted that while industrial robots have been around since the 1970s, a fresh approach is needed to confront the safety challenges posed by new types of personal and professional robots entering the workplace alongside human workers.

“As the workplace changes, safety in the workplace must evolve, too,” he said. “Emerging technologies such as exoskeletons and robots are being used to assist workers in completing tasks and reduce the strain on their musculoskeletal system.”

Howard added, “Before emerging technologies such as exoskeletons are adopted widely in the workplace, they should be evaluated for both potential benefits and risks.”

A White Paper published by the institute late last year outlined some of the issues it is seeking public comment about, including participation in the development of international safety standards.

Among them are workplace safety standards for maintenance, operation and interaction of robots with humans, including redundant safety measures that also would cover use of professional, personal service and collaborative (managerial) robots.

Proactive approaches for establishing risk profiles of robotic workplaces also should be developed, according to the NIOSH researchers. “These measures, and others suggested by experts, should be examined now before millions of potentially unsafe robots enter the 21st century workplace.”

Chemical Data Shows More Positive Growth

The Chemical Activity Barometer expanded 0.6% in April following a revised 0.1% increase in March and 0.2% decline in February, measured on a three-month moving average (3MMA).

Created by the American Chemistry Council and considered a leading economic indicator, the CAB remained up 1.8% over the same time last year, a marked deceleration of activity from one year ago when the barometer logged a 2.7% year-over-year gain from 2014.

On an unadjusted basis the CAB jumped 1.4%, following a solid 0.8% gain in March, ACC said.

The CAB consists of four primary components covering a variety of indicators: production; equity prices; product prices; and inventories.

In April, production-related indicators were positive, with improvement in plastic resins used in packaging, and trends in construction-related resins, pigments and related performance chemistry that suggest a housing recovery.

Equity prices rebounded significantly in April, joined by a firming in product prices, the council reported. Inventories and other downstream indicators also were positive.

In a separate report, the U.S. Chemical Production Regional Index continued to expand, rising by 0.3% in March following a revised 0.1% gain in February and a 0.4% gain in January, as measured on a 3MMA basis. All regions posted growth in March.

Also measured on a 3MMA basis, chemical production in different segments was mixed. There were gains in the production output trend of adhesives, fertilizers, coatings, pesticides, organic chemicals, and consumer products, ACC noted.

However, these gains were offset by declines in the output trend in inorganic chemicals, synthetic rubber, manufactured fibers and industrial gases.

Compared to March 2015, ACC said U.S. chemical production was ahead by 1.5% on a year-over-year basis, a moderating trend. Chemical production remained ahead of year ago levels in all regions.

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