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U.S. Ports - Preparing for Global Demand

A thriving container-shipping industry means increased logistical challenges for major American seaports.

Aug/Sep 06
(page 2 of 2)
The Southeast
Port diversification continues to push container traffic to alternative East Coast Ports, such as Charleston and Savannah. These ports rank among the top 10 container ports in the United States. This year alone, Charleston is expanding its bulk warehouse space by 1.3 million square feet. Additionally, the port offers several land sites consisting of at least 50 acres, which are ideal for future development of distribution facilities. The main Charleston port operations lie along the Cooper River and offer modern container-handling equipment and facilities. The port is seeking to add three new berths and a 280-acre marine terminal at the former Charleston Naval Base.

The Port of Savannah is the first major container terminal for ships utilizing the Panama Canal for Eastern Seaboard access from Asia. As a gateway to the huge "inland port" of Atlanta, the Port of Savannah offers plenty of land for expansion. Target Corporation is scheduled to complete a 2.1 million-square-foot warehouse next year at the Savannah River International Trade Park, approximately four miles from the Garden City Terminal. Target will be joining Home Depot, Wal-Mart, and Pier 1 Imports, all of which have chosen Savannah as a strategic location for future growth.

Competition for port-adjacent property will be provided by the six Class I railroads currently operating in the United States. Intermodal terminals have been one of the fastest-growing segments of the railroad system, serving both the trucking and shipping industries. The railroads help to relieve pressure on the nation's highways, which reduces transit times and overall inventory costs.

The railroads have been beneficiaries of the record-high import volumes. Combined, they hauled more freight in 2005 than ever before. While speed and service levels have been widely reported problems as the railroads operate at near capacity, rail companies are attacking these issues with an aggressive capital spending program of approximately $8 billion. The railroads' ability to increase capacity and improve service levels, combined with near-dock intermodal facilities and inland ports, will greatly assist the existing constraints on the overall transportation network.

Carriers and shippers are all concerned about inland transportation costs, which can account for up to 50 percent of the overall cost to move product from a factory in Asia to a store shelf in the United States. Thus, many ports are actively pursuing rail expansion and improvement programs that will help speed the flow of containers through the struggling U.S. transportation system.

With supply-chain issues and their effect on the bottom line reaching the executive suite, the metrics for corporate America may not be how much per square foot, but rather how much can be saved by being more logistically efficient within the supply chain. Speed to market pressures have not abated.

Brian Knowles and Timothy P. O'Rourke are members of the Logistics Practice Group for The Staubach Company, a market-leading global real estate advisory firm. Mr. Knowles works out of the company's Murray Hill, New Jersey, office; Mr. O'Rourke is located in Los Angeles. Both can be reached via the company's website at

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