Construction of new warehouses is slowing as developers grapple with rising interest rates and declining leasing activity, potentially prolonging an ongoing shortfall in logistics space.
U.S. industrial construction starts fell 24% in the fourth quarter of 2022 compared with the same period a year earlier, according to data from real-estate analysis firm CoStar Group Inc. Developers began building about 137 million square feet of new warehouse space, the lowest amount of new space to start construction in a quarter since the beginning of the Covid-19 pandemic.
Adrian Ponsen, national director of U.S. industrial market analytics at CoStar, said the average time it takes large industrial projects to complete construction is about 13 months, so current decisions on whether to break ground on developments will have an impact next year.
Even with a stronger-than-expected 2.9% fourth quarter increase in gross domestic product, two of the nation’s most prominent freight transportation economists say the threat of a recession will persist this year.
Bob Costello, American Trucking Associations’ chief economist, and Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said, however, that the economy continues to perform at a strong level.
“It’s a unique time right now for the macroeconomy,” Costello told Transport Topics in the publication’s Newsmakers interview. “I still think that the most likely path for the economy is a recession, a mild recession in the first half of the year and what’s called a so-called soft landing is not out of the question. I don’t think that’s the most likely path. I think we could have a mild recession, but it should be rather short and rather shallow for the overall economy.”
Many of the constraints to supply that caused headaches in 2021 and into 2022 have eased, for reasons good and bad. (Good: Capacity rebounded. Bad: Demand slumped.)
But shortages haven’t disappeared completely. Specific circumstances — from geopolitical and environmental turmoil to localized demand surges and more — are leading to stockouts of some goods.
“The macro conditions around Ukraine, climate [and] China are not changing significantly,” Simon Geale, EVP of procurement at the consultancy Proxima, said. “They’re all dragging on.”
https://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.png00Point Global Logisticshttps://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.pngPoint Global Logistics2023-02-03 15:57:232023-02-03 15:57:35Weekly News Update – 2/3/23
Despite a significant slowdown in the second half of 2022, two major West Coast ports approached the record-setting pace they had in 2021.
Port of Los Angeles officials said the facility still finished as the nation’s busiest container port for the 23rd consecutive year, processing 9,911,158 20-foot-equivalent units, down nearly 7.2% from 2021’s 10,677,609.
For December the port processed 728,871 containers, down 7.3% to 786,588 year-over-year.
“We started 2022 at that same frenetic pace with 109 vessels in our queue, yet we ended with a disappointing 20% decline that began last August,” Executive Director Gene Seroka said during his annual State of the Port address.
For nearly five years now, consumer goods industries that rely heavily on Chinese imports for low-cost sourcing have been waging a campaign against the Section 301 tariffs.
In the years since the Trump administration raised concerns about a modern trade war, China’s share of imports to the U.S. have fallen in those consumer goods categories covered in the report. Once again, it’s difficult to parse out the effects from tariffs from those arguably much larger impacts from supply chain risks and costs relating to the pandemic and China’s internal response to it.
From 2017 to 2022, China’s share of total apparel imports has fallen from 34% to 22%, according to the study, which was released by the American Apparel & Footwear Association (AAFA), the Footwear Retailers & Distributors of America (FDRA), the National Retail Federation (NRF), the Retail Industry Leaders Association (RILA), and the United States Fashion Industry Association (USFIA). China’s share of 301 tariff-specific apparel imports fell from 92% to 88%.
Long-stalled West Coast port labor talks are showing no signs of progress, according to people familiar with the negotiations, extending uncertainty for U.S. retailers who rely on the coast to import goods from Asia.
Shipping industry and Biden administration officials had hoped the talks, which began in May, would conclude last fall. But, people familiar with the negotiations say the parties haven’t made progress since the summer on regional issues that are delaying discussion of major contract provisions, including wages and automation.
One person familiar with the talks said there was a growing sense of frustration in the maritime industry. ”Everyone would like to see this conclude so there’s no more uncertainty in the market and we can move on,” the person said.
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Increased demand has exposed cracks in China’s logistics infrastructure, but it’s hoping its new ‘five-year plan’ for the sector may be enough to stop an expected exodus of western multinationals.
The General Office of the State Council last month announced its first long-term plan for modernising China’s logistics system, with a focus on improving efficiency resilience and safety.
Although it is a five-year plan, according to state news agency Xinhua: “By 2025, a modern logistics system featuring supply/demand adaptation with internal and external connectivity will basically be in place.
Hyundai Heavy Industries recently commissioned South Korea’s first large next-generation electric propulsion ship which incorporates smart technology. The unique vessel is dual-powered with the ability to operate either fully from its battery or an LNG-fueled engine or a hybrid mode with the battery supplementing the engines. The vessel will operate as a demonstration ship and undertake tourist voyages from the city of Ulsan along the Korean coast.
Construction on the 1,400 gross ton vessel began in October 2021 at the Hyundai Mipo Shipyard. Named Ulsan Taehwa, the vessel features an electric propulsion system developed by Korean Shipbuilding & Marine Engineering that includes an energy storage system that enables selective operation of the DC Grid-based LNG and marine diesel oil power plant.
U.S. ocean imports closed 2022 extending a monthslong slide closer to prepandemic levels, according to a new report, leaving the shipping sector bracing for deeper declines in container volumes this year.
American ports handled 1,929,032 inbound containers in December, measured in 20-foot equivalent units, or TEUs, down 1.3% from November, according to a report released Tuesday by Descartes Datamyne, a trade intelligence database owned by supply-chain software company Descartes Systems Group Inc. December marked the lowest level for seaborne imports since June 2020, just before a pandemic-driven rush to restock depleted inventories triggered a surge in imports.
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Weekly News Update – 2/3/23
/by Point Global LogisticsSlowing Warehouse Construction Could Extend Squeeze on Space, Experts Say
Construction of new warehouses is slowing as developers grapple with rising interest rates and declining leasing activity, potentially prolonging an ongoing shortfall in logistics space.
U.S. industrial construction starts fell 24% in the fourth quarter of 2022 compared with the same period a year earlier, according to data from real-estate analysis firm CoStar Group Inc. Developers began building about 137 million square feet of new warehouse space, the lowest amount of new space to start construction in a quarter since the beginning of the Covid-19 pandemic.
Adrian Ponsen, national director of U.S. industrial market analytics at CoStar, said the average time it takes large industrial projects to complete construction is about 13 months, so current decisions on whether to break ground on developments will have an impact next year.
Economy Still Shows Signs of Slow, Steady Growth
Even with a stronger-than-expected 2.9% fourth quarter increase in gross domestic product, two of the nation’s most prominent freight transportation economists say the threat of a recession will persist this year.
Bob Costello, American Trucking Associations’ chief economist, and Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said, however, that the economy continues to perform at a strong level.
“It’s a unique time right now for the macroeconomy,” Costello told Transport Topics in the publication’s Newsmakers interview. “I still think that the most likely path for the economy is a recession, a mild recession in the first half of the year and what’s called a so-called soft landing is not out of the question. I don’t think that’s the most likely path. I think we could have a mild recession, but it should be rather short and rather shallow for the overall economy.”
Shortages 2023: 4 goods facing tight supplies this year
Many of the constraints to supply that caused headaches in 2021 and into 2022 have eased, for reasons good and bad. (Good: Capacity rebounded. Bad: Demand slumped.)
But shortages haven’t disappeared completely. Specific circumstances — from geopolitical and environmental turmoil to localized demand surges and more — are leading to stockouts of some goods.
“The macro conditions around Ukraine, climate [and] China are not changing significantly,” Simon Geale, EVP of procurement at the consultancy Proxima, said. “They’re all dragging on.”
Point Global Weekly Update – 1-27-23
/by Point Global LogisticsPorts Post Strong Volume for 2022 Despite December Drop-Off
Despite a significant slowdown in the second half of 2022, two major West Coast ports approached the record-setting pace they had in 2021.
Port of Los Angeles officials said the facility still finished as the nation’s busiest container port for the 23rd consecutive year, processing 9,911,158 20-foot-equivalent units, down nearly 7.2% from 2021’s 10,677,609.
For December the port processed 728,871 containers, down 7.3% to 786,588 year-over-year.
“We started 2022 at that same frenetic pace with 109 vessels in our queue, yet we ended with a disappointing 20% decline that began last August,” Executive Director Gene Seroka said during his annual State of the Port address.
Industry study tracks China tariffs’ added costs to importers and consumers
For nearly five years now, consumer goods industries that rely heavily on Chinese imports for low-cost sourcing have been waging a campaign against the Section 301 tariffs.
In the years since the Trump administration raised concerns about a modern trade war, China’s share of imports to the U.S. have fallen in those consumer goods categories covered in the report. Once again, it’s difficult to parse out the effects from tariffs from those arguably much larger impacts from supply chain risks and costs relating to the pandemic and China’s internal response to it.
From 2017 to 2022, China’s share of total apparel imports has fallen from 34% to 22%, according to the study, which was released by the American Apparel & Footwear Association (AAFA), the Footwear Retailers & Distributors of America (FDRA), the National Retail Federation (NRF), the Retail Industry Leaders Association (RILA), and the United States Fashion Industry Association (USFIA). China’s share of 301 tariff-specific apparel imports fell from 92% to 88%.
West Coast Port Labor Contract Talks Remain in Limbo
Long-stalled West Coast port labor talks are showing no signs of progress, according to people familiar with the negotiations, extending uncertainty for U.S. retailers who rely on the coast to import goods from Asia.
Shipping industry and Biden administration officials had hoped the talks, which began in May, would conclude last fall. But, people familiar with the negotiations say the parties haven’t made progress since the summer on regional issues that are delaying discussion of major contract provisions, including wages and automation.
One person familiar with the talks said there was a growing sense of frustration in the maritime industry. ”Everyone would like to see this conclude so there’s no more uncertainty in the market and we can move on,” the person said.
Point Global Weekly Update 1-20-23
/by Point Global LogisticsNew ‘five-year plan’ to revive China as a modern logistics giant
Increased demand has exposed cracks in China’s logistics infrastructure, but it’s hoping its new ‘five-year plan’ for the sector may be enough to stop an expected exodus of western multinationals.
The General Office of the State Council last month announced its first long-term plan for modernising China’s logistics system, with a focus on improving efficiency resilience and safety.
Although it is a five-year plan, according to state news agency Xinhua: “By 2025, a modern logistics system featuring supply/demand adaptation with internal and external connectivity will basically be in place.
South Korea’s First Smart, Electric Ship Begins Service
Hyundai Heavy Industries recently commissioned South Korea’s first large next-generation electric propulsion ship which incorporates smart technology. The unique vessel is dual-powered with the ability to operate either fully from its battery or an LNG-fueled engine or a hybrid mode with the battery supplementing the engines. The vessel will operate as a demonstration ship and undertake tourist voyages from the city of Ulsan along the Korean coast.
Construction on the 1,400 gross ton vessel began in October 2021 at the Hyundai Mipo Shipyard. Named Ulsan Taehwa, the vessel features an electric propulsion system developed by Korean Shipbuilding & Marine Engineering that includes an energy storage system that enables selective operation of the DC Grid-based LNG and marine diesel oil power plant.
U.S. Container Imports Tumbled Close to Prepandemic Levels in December
U.S. ocean imports closed 2022 extending a monthslong slide closer to prepandemic levels, according to a new report, leaving the shipping sector bracing for deeper declines in container volumes this year.
American ports handled 1,929,032 inbound containers in December, measured in 20-foot equivalent units, or TEUs, down 1.3% from November, according to a report released Tuesday by Descartes Datamyne, a trade intelligence database owned by supply-chain software company Descartes Systems Group Inc. December marked the lowest level for seaborne imports since June 2020, just before a pandemic-driven rush to restock depleted inventories triggered a surge in imports.