The Panama Canal Expansion and Impact on Industrial Real Estate                         Presented by :         Curtis Spen...
The Panama Canal:    Impact on Industrial         Real Estate       Curtis Spencer, President         IMS WORLDWIDE INC.  ...
Supply Chain Trends• Slow Steaming• Environmental Concerns• Costs – Door to Door today• Labor Issues – EC looks like WC!• ...
Shanghai to North American Ports:               Slow Steaming Effects –                     2000 & 2011                   ...
Shanghai to North American Ports:               Slow Steaming Effects –2000 & 2011                   Pricing as of October...
Shanghai to North American Ports:               Slow Steaming Effects –2000 & 2011                     Fuel Surcharges-Wor...
“The Earth is Round”           New Routes to the New World!                                          Narvik, NorwayPrince ...
9                       8                                                U.S. Key Port                       7            ...
East Coast Ports: Current Channel            Depth, Ship Capacity              Miami              NY/NJSource: VPA
East Coast-West Coast TEU                    Cost Line Equilibrium- Sept. 2010                               Megapolitans ...
East Coast Perspective
EC Ports will Grow because:• Increasing Eastern Europe/Indian Trade- Via the  Suez. “Watch out for Pirates!”• Increasing S...
WC Ports will Grow because:• Increasing Asian China Trade (GDP lowered to 9%  Growth Rate)• Increasing SE Asia Trade, non-...
Panama Canal Bottom Line• BALANCE – In Market Share after 2014 will be  the answer. Approx. 52%-48% today, 50%-50%  after ...
Recession 2? Are we heading there?• I personally don’t think so, but….• Slow Growth – Yes• GDP Growth 1.2% this year, 1.5%...
How do we fix it?• Flat Tax – No Deductions – 17%. <$50,000, no tax• No estate tax or cap gains tax.• SS tax and Medicare ...
Bottom Line for Industrial RE?• Stay in the Markets where the PEOPLE ARE!• Invest where they PEOPLE ARE GOING TO BE!• 10 a...
POPULATION REACH BY MARKET.                                 Chicago: 80M                                                  ...
Population Forecast 2005                                                for 25 years                                      ...
Population Forecast 2011-                                           After the Recession                                   ...
Invest   Re-Develop   Develop   Operate
Globalization, Labor Arbitrage and Supply Chain Costs        Define the Modern Business Process Model                     ...
Logistics Cost                                    SuppliesPercent of Total                      2%                        ...
Imports                           Suez Canal                                                         Panama Canal    % of ...
THE FUTURE OF INDUSTRIAL REAL ESTATE                WILL BE SHAPED BY:• Infrastructure/Multimodal Connectivity• Climate Ch...
Carson Estate Trust• Private REIT• Incorporated in 1914• Developer/Acquirer of Warehouse/Logistics  Style Buildings• Focus...
Macro Trends That Will    Affect the Flow of Goods•   Relative World Labor Rates•   Value of the Dollar•   Cost of Transpo...
China Versus Mexico                      Manufacturing                                          China              MexicoC...
U.S. Population & Consumption                                       West Coast        Gulf & East CoastPopulation         ...
Q&A
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711
Upcoming SlideShare
Loading in...5
×

The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711

385

Published on

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
385
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
20
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

The Panama Canal Expansion and Impact on Industrial Real Estate (Curtis Spencer) - ULI fall meeting - 102711

  1. 1. The Panama Canal Expansion and Impact on Industrial Real Estate Presented by : Curtis Spencer, President IMS Worldwide Inc. Jim Curtis, Managing Partner Bristol Group Jim Flynn, President The Carson Companies Moderated by:Ed Schreyer, Executive Managing Director Industrial Services CBRE
  2. 2. The Panama Canal: Impact on Industrial Real Estate Curtis Spencer, President IMS WORLDWIDE INC. Member of the 9th and 10th COAC committee2
  3. 3. Supply Chain Trends• Slow Steaming• Environmental Concerns• Costs – Door to Door today• Labor Issues – EC looks like WC!• Panama Canal Expansion – 2014• Suez Canal – Pirates?• Recession 2?
  4. 4. Shanghai to North American Ports: Slow Steaming Effects – 2000 & 2011 36 36 17 35 17 34 Source: ShipmentLink.com (Evergreen) Sailing SchedulesFrom China, it takes about 2 weeks to bring cargo to the west coast andabout 4 weeks to bring it in on the east coast. (2000)
  5. 5. Shanghai to North American Ports: Slow Steaming Effects –2000 & 2011 Pricing as of October 2011 $1,200 $3,100 36 36 17 35 $3,034 17 $1,533 $2,950 34 Source: ShipmentLink.com (Evergreen) Sailing SchedulesFrom China, it takes about 2 weeks to bring cargo to the west coast andabout 4 weeks to bring it in on the east coast. (2000)
  6. 6. Shanghai to North American Ports: Slow Steaming Effects –2000 & 2011 Fuel Surcharges-Worse! + $867 + $712 $1,200 $3,100 36 36 17 35 $3,034 17 $1,533 $2,950 34 Source: ShipmentLink.com (Evergreen) Sailing SchedulesFrom China, it takes about 2 weeks to bring cargo to the west coast andabout 4 weeks to bring it in on the east coast. (2000)
  7. 7. “The Earth is Round” New Routes to the New World! Narvik, NorwayPrince Rupert, Canada Vostochny, Russia Sydney NS New York Rotterdam, Netherlands North China Norfolk Los Angeles Savannah Hong Kong, China Punto Colonet HOUSTON Bombay Lazaro Cardenas Singapore NEW Routes for Imports into the USA
  8. 8. 9 8 U.S. Key Port 7 Growth 6 2005 - 2011Millions of TEUs 5 LA LB NY/NJ Savannah 4 Oakland Houston Hampton Roads Seattle 3 Tacoma Charleston 2 * 2011 TEUs annualized based on actual current 1 TEU volumes - 2005 2006 2007 2008 2009 2010 2011
  9. 9. East Coast Ports: Current Channel Depth, Ship Capacity Miami NY/NJSource: VPA
  10. 10. East Coast-West Coast TEU Cost Line Equilibrium- Sept. 2010 Megapolitans Cascadia +38% Equilibrium Atlantic Line Q2 2011 Seaboard Great Lakes Horseshoe +12% +10% z Norcal +35% Southland +35% I-35 Corridor I-85 Corridor +40% +35% Valley of the Sun +81% Southern Florida +52% Gulf Coast Belt +31%Sources: Population, employment, and real estate growth forecasts by Robert Langand Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of Global Insight; Business 2.0, November 2005
  11. 11. East Coast Perspective
  12. 12. EC Ports will Grow because:• Increasing Eastern Europe/Indian Trade- Via the Suez. “Watch out for Pirates!”• Increasing S. American (Brazil, Chile, etc)• GDP Growth• Proximity to Major Markets• Small increase in Asia-US trade through Panama and Suez routings.
  13. 13. WC Ports will Grow because:• Increasing Asian China Trade (GDP lowered to 9% Growth Rate)• Increasing SE Asia Trade, non-China• GDP Growth• Proximity to quicker/cheaper Intermodal Routings that can penetrate to within 250 miles of East Coast.• Small decrease in market share of China-based- US trade through Panama and Suez routings.
  14. 14. Panama Canal Bottom Line• BALANCE – In Market Share after 2014 will be the answer. Approx. 52%-48% today, 50%-50% after 2014.• IF- Ocean Carriers re-work pricing after Panama Canal Expansion- lowering prices by 30% for all water, compared to LA/LB + Intermodal, AND the RRs do not drop correspondingly—you could see 10%-20% Market Share drop from WC to EC.• Likelihood of this happening? 1 in 10.
  15. 15. Recession 2? Are we heading there?• I personally don’t think so, but….• Slow Growth – Yes• GDP Growth 1.2% this year, 1.5% next• Gridlock in DC? YES!• But, no Obama-care implementation• No change in deficit.• “Kick the can down the road” is the song! We all know it, so start singing!
  16. 16. How do we fix it?• Flat Tax – No Deductions – 17%. <$50,000, no tax• No estate tax or cap gains tax.• SS tax and Medicare tax without a ceiling.• Move SS benefits to 69 in 2025 – plenty of $$• GDP Growth would jump by 2% to reach 3.2% this year, 3.5% next!• Free the Commerce Department by eliminating CVD and AD on any raw material and component for import into the USA. Would add 1-2 Million Jobs! And $500 Billion in Exports.
  17. 17. Bottom Line for Industrial RE?• Stay in the Markets where the PEOPLE ARE!• Invest where they PEOPLE ARE GOING TO BE!• 10 and 20 year Demographics are changing.• Northeast did not sustain the “hit” that everyone predicted, because of the Recession.• Florida and PHX actually stayed the same over the past 5 years!• Look for where the demographic trends are likely to emerge in 10 year segments and plan accordingly.
  18. 18. POPULATION REACH BY MARKET. Chicago: 80M NY/NJ: 120M Atlanta: 60MLA/LB: 40M Dallas: 45M
  19. 19. Population Forecast 2005 for 25 years Megapolitans Cascadia +38% Atlantic Seaboard Great Lakes Horseshoe +12% +10% z Norcal +35% Southland +35% I-35 Corridor I-85 Corridor +40% +35% Valley of the Sun +81% Southern Florida +52% Gulf Coast Belt +31%Sources: Population, employment, and real estate growth forecasts by Robert Langand Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of Global Insight; Business 2.0, November 2005
  20. 20. Population Forecast 2011- After the Recession Megapolitans Cascadia +31% Atlantic Seaboard Great Lakes Horseshoe +18% +18% z Norcal +30% Southland +30% I-35 Corridor I-85 Corridor +40% +40% Valley of the Sun +60% Southern Florida +42% Gulf Coast Belt +45%Sources: Population, employment, and real estate growth forecasts by Robert Langand Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of Global Insight; Business 2.0, November 2005
  21. 21. Invest Re-Develop Develop Operate
  22. 22. Globalization, Labor Arbitrage and Supply Chain Costs Define the Modern Business Process Model Drive supply chain• Labor Arbitrage decisions• Transportation/Energy Costs• Manufacturing Redundancy• Population Centers
  23. 23. Logistics Cost SuppliesPercent of Total 2% Admin 3% Other Warehouse 1% Rent 4% Customer Service 8% Transportation Labor 50% 10% Inventory 22% Source: Establish Inc. / Herbert Davis Company
  24. 24. Imports Suez Canal Panama Canal % of US imports in 6% of Asian imports 19% of Asian imports 2006 75% of Asian Imports go via the Pacific to California Average Navigation Time from 21.1 days 21.6 days China to US East Coast Transit via California: 18.3 days-- 12.3 days sailing, 6 days rail Approximate # of ships passing 18,000 15,000 through in 2008 Share of 10% 5% Seaborn Trade Source: USDA Report, Impact of Panama Cana Expansion on the US Intermodal System, January 2010
  25. 25. THE FUTURE OF INDUSTRIAL REAL ESTATE WILL BE SHAPED BY:• Infrastructure/Multimodal Connectivity• Climate Change/Environmental Considerations• Energy/Transportation Costs• Users’ preoccupation with reliability and supply redundancy• Population Centers and/or Transloading Centers• Whether Manufacturing Centers shift to other areas (Insourcing, Mexico, China, Vietnam, Indonesia - ?)
  26. 26. Carson Estate Trust• Private REIT• Incorporated in 1914• Developer/Acquirer of Warehouse/Logistics Style Buildings• Focused on Southern California and Houston, Texas• 11 million square feet
  27. 27. Macro Trends That Will Affect the Flow of Goods• Relative World Labor Rates• Value of the Dollar• Cost of Transportation• Cost of Raw Materials
  28. 28. China Versus Mexico Manufacturing China MexicoCurrency vs. U.S. $ (last 5 years) +20% -19%Shipping to U.S. 3-4 Weeks 1-2 DaysDuties Up to 23% None or Very LowIntellectual Property Weak Enforcement ProtectedFully Burden Labor Rates $1.00-$1.50/hr. $2.50-$3.00/hr.Projected Trend: Manufacturing slowly moves back to North America.Demand for Panama Canal could decline.
  29. 29. U.S. Population & Consumption West Coast Gulf & East CoastPopulation 46% 54%Total Retail Sales 54% 46%Loaded Inbound TEU’s 56.6% 43.4% Conclusion: Regions most economically serviced by water, already serviced. Only small increase in traffic through the Panama Canal may result.Source: Grubb & Ellis, Port Websites
  30. 30. Q&A
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×