Report: SC a big factor in 2015 East Coast ports’ gain on West Coast

Labor disputes likely only accelerated a trend spurred by Panama Canal expansion, expert says.

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Following a year of labor disputes and the construction of a new inland port facility in Greer, South Carolina, a new report found that the East Coast took in a higher percentage of North America’s ship cargo than the year before.

Authorities in the Greenville region tout the construction of a new inland port at Greer as a significant part the East Coast gains, pointing to increased manufacturing. Experts, such as David Egan, head of Industrial & Logistics Research for the Americas at CBRE, the company that published the report, point to growth at BMW’s nearby plant as a big part of the seaborne shipping growth.

The Charleston Observer reported in 2014 that BMW would invest roughly $1 billion in expanding the plant in Greer throughout 2016, in order to boost production of its X-series vehicles.

Egan noted, however, that the growth of the East Coast ports over the last year was not entirely unexpected. Many companies, he said, have begun to prepare for this month’s opening of an expanded Panama Canal, which he said led analysts to predict a shift in the East-Coast-versus-West-Coast balance of shipping volume.

“The general conventional wisdom was that it would be a pretty significant impact,” Egan told Palmetto Business Daily. “The 55-percent-West-Coast, 45-percent-East-Coast balance would shift and get closer to 50-50 — that’s the thesis that most people had.”

According to the report, the percentage of cargo moving through West Coast ports was only 52 percent of North America’s overall volume last year. This was down almost two percentage points from the previous year, and was five percentage points lower than in 2010.

Though the move was largely part of an anticipated trend following the announcement of the canal expansion project in 2007, Egan said it seemed to be accelerated by labor disputes at ports on the West Coast.

“No one knew (the labor dispute) was going to happen in 2014, 2015,” he said. “So when it did happen, the discretionary cargo, the cargo that doesn’t have to go to the West Coast, started going to the East a little sooner than we thought it would.”

For now, the Canal is likely to only affect that discretionary cargo. With those disputes now largely resolved, Egan said the shift of balance would likely continue toward the estimates, albeit more slowly. Part of the issue, he said, is that West Coast ports take in cargo from Asia, and is still the most cost effective delivery solution for markets west of the Mississippi River. Roughly 40 percent of West Coast ports’ cargo, in the past, has fallen in that “discretionary” category — a larger percentage than the East Coast.

“Of the cargo that comes in to L.A….something like 60 percent stays in the west — that is, it lands in L.A. and doesn’t really go that far away.” Egan said. “If you’re coming into the East Coast, for the most part, you’re not going to Savannah and then sending it to Las Vegas.”

He said that every port has it’s niche, and both the Panama Canal Expansion and the growth of manufacturing are sure to impact the region, but the report is focused globally.

“We’ve talked a lot lately about Greenville being a really interesting industrial region...the growth of that auto sector is a signficant driver to what’s going on,” Egan said. “There’s reason to believe that there could be continued growth in the manufacturing sector of the Southeastern United States, but I would say that growth is unrelated to what’s going on in the larger worldwide port model.”

The low cost of overland shipping, Egan said, has kept the West Coast competitive with the East. He said the annual reports don’t attempt to look much further than the next year, and that it was anyone’s guess what could happen in the next five or 10 years. But any change would likely be a slow one.

“You don’t change your supply chain just by flipping a switch,” he said.

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