Once the expansion is complete in early 2016, a wider canal will give shippers the option to bypass ports and their more expensive overland supply routes to go directly to ports in New York, Baltimore, Norfolk, Miami and around the East Coast. Because of cheaper per-unit costs, as much as 25 percent of West-bound cargo from Asia could move to the South and Northeast, according to a report by brokerage firm JLL.
After Panama approved plans to modernize the 100-year-old canal to allow for bigger ships that carry 2.5 times as much container cargo in 2006, the expansion threatened to disrupt the West Coast’s grasp on trade with Northeast Asia. More than 70 percent of United States container traffic from Asia passes through Pacific ports today, according to the Wall Street Journal. As much as a third of those containers travel through Los Angeles and Long Beach by truck and train to consumers in the eastern half of the country.
This expansion has led to a soar in investments in industrial real estate on the East Coast, specifically near the ports expected to be able to accommodate bigger ships, called post-Panamax vessels. Brokers warn that developers could over-anticipate the need for new warehouse space and negate the benefits of increased demand. There is more than 12 million square feet of new industrial space under construction at eastern and southern ports expected to handle post-Panamex vessels, according to Cassidy Turley. The ports of Houston, Charleston, S.C., Savannah, Ga., Miami and the Port of Everglades in Fort Lauderdale are expected to be ready by 2016, where new warehouse space is under construction.