26 April 2016

[260416.EN.BIZ] E-commerce, Lower East Coast Rates, Inland Ports Offer Opportunities

THE logistics industry can expect increasing demand with e-commerce growth and greater use of inland ports that enhance the attraction of US east coast seaports, which will also benefit from lower all-water rates, according to industrial real estate expert Curtis Spencer.

Mr Spencer, president of Houston-based IMS Worldwide, told the recent Georgia Logistics Summit in Atlanta, that "e-commerce is driving logistics batty" because of the smaller shipments size, reported the American Journal of Transportation.

But Mr Spencer said that burgeoning e-commerce should offer opportunities as retailers increasingly rely upon third-party logistics providers.

Mr Spencer also believes that inland ports will take on a greater role in supply chains.

And, citing the decreasing differential between all-water ocean rates from Asia to the US east coast versus the west coast, a factor which should soon combine with opening of an expanded Panama Canal, Mr Spencer said he sees bigger volumes coming into the nation via Savannah and other east coast gateways.

The two primary "knocks" against importing directly to the east coast traditionally have been longer transit times and cost differentials that exceed inland intermodal move expenses, he said.

He said shippers can adjust for transit times and now the cost difference hurdle seems to have been lowered. "All-water to the east coast has always been US$2,000 more than to the west coast," Mr Spencer said. "Now the price difference has gone down to $1,000 and has held for six months."

Noting that ocean carrier contract rates to take effect May 1 appear as though they will uphold the spot rate drops for Asia-to-US east coast shipments, Spencer said: "I see this is going to be a game-changer pretty soon."

Source : HKSG.

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