Prepared By:
Curtis D. Spencer, President
IMS Worldwide, Inc.
Agenda
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How Trade Impacts Real Estate
Manufacturing Trends
Logistics and Transportation Trends
Panama Canal Update
Shifts in E-commerce Fulfillment Centers
Impact on Industrial Real Estate
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How Trade
Impacts
Real Estate
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SLIDE FROM 2010, SHOWING THE CONNECTION BETWEEN GDP AND TRADE
Notice 2x to 3x Trade Volumes to GDP relationship exists “+ or –”
Real Exports to U.S. in TEUs
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2013 Total TEU Growth YTD
2013 YTD
TEU
Volume
% Growth
over Same
Period 2012
2012 TEU
Volume
LA/LB (Dec)
14,599,155
3.26%
14,123,376
NY/NJ (Oct)
4,611,969
-0.9%
5,529,211
Savannah (Nov)
2,798,699
-5.7%
2,966,221
Oakland (Dec)
2,346,528
0.1%
2,344,424
Houston (Nov)
1,799,669
2.1%
1,922,479
Hampton Roads (Dec)
2,223,532
5.3%
2,105,887
Seattle (Nov)
1,470,890
-16.5%
1,869,492
Tacoma (Nov)
1,717,303
16.6%
1,711,133
Charleston (Nov)
1,477,264
6.2%
1,514,585
Port of Entry
Source: Individual Port Websites
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Panama Canal
 Canal operating at capacity today
 Limited ship-sizes that can operate, 110 feet wide max,
going to 185 ft wide!
 $1.7 Billion cost override and vendor dispute
 G6 and G3 Carriers have already rerouted all they will to
Suez – New P3 alliance will shift more freight to Suez
 Completion date moving back into mid-late 2015
 Main “shift” will not be in West Coast, vs. East Coast,
Asia-traffic market share, but in 1 ship carrying 12,000
TEUs vs. 3 ships carrying 3500 TEUs each!
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Brand New Panama Canal Locks
Panama Canal Bottom Line
 BALANCE – In Asia Import Market Share after 2014 will
be the answer. Approx. 52%-48% today, 50%-50%
after 2014.
 Could be a non-event as many Carriers have already
re-positioned routes through the Suez, to utilize larger
ships for East Coast and Europe.
 Could be some re-routing of pricing and trans-shipping
with Panama as Hub, vs. Miami today.
 COSTS ARE WHAT MOVES SHIPPERS!
 PS The China-Nicaragua canal may be smoke and
mirrors!?
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Shanghai to North American Ports:
Slow Steaming Effects –
2000 & 2014
36
17
35
17
34
ShipmentLink.com
(Evergreen)
From China, it takes about 2Source:
weeks
to bring cargo
to theSailing
westSchedules
coast and about 4 weeks to bring it in on the east coast. (2000)
36
Shanghai to North American Ports: Slow Steaming
Effects –2000 & 2014
Pricing as of January 10, 2014
$1,200
$3,217
$800
36
17
17
$1,866
35
$3,125
34
ShipmentLink.com
Sailing Schedules
From China, it takes about 2Source:
weeks
to bring cargo(Evergreen)
to the west
coast and about 4 weeks to bring it in on the east coast. (2000)
36
Manufacturing Grows in the USA
 New US-Domestic manufacturing that is made
competitive by new resources
 Natural Gas-new technologies unlocking new sources of
product which provides lower cost feed stocks for
plastics-PE and PP specifically but PVC as well, now US
is competitive with the worlds producer
 New production capacity announced in North America,
9 billion ponds of new production through 2018, some
will be on line as early as 2015
 Not all about “re-shoring” but about new industry and
manufacturing
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U.S. Competitive Position
 From 2005 to 2012, US went from being the one of
the highest cost producers of ethylene (a plastics
building block) to one of the lowest cost globally
 $7 billion in new investments in production of
thermoplastics resin capacity, these investments will
add 25% capacity in production
 40% of US’s increasing production will have to be
exported, historically 20% was exported
 Shipping these volumes will require new export
gateways, new ports and new export lanes and NEW
REAL ESTATE!!
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Mexico Exports to US have
Outperformed Asia Since 2009
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Mexico vs. China Wage Rate
Since 2003, wages in Mexico have risen only
25 percent compared to 218 percent in China.
2011-2013
U.S. Dollar
WSJ
SOURCE: International Labour Organization, U.S. Bureau of
Labor Statistics
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19
New Types of Industrial Real Estate:
Export Centers & E-Commerce
 Export Centers match up empty-import
Containers with Export Loads.
 Where? At Inland Ports! (US RailIntermodal Terminals near large population
centers)
 E-commerce fulfillment center (like DC’s)
are going to be different, larger, more
diverse and in different markets.
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Export Center
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E-Commerce Fulfillment
2013 E-Commerce Review
• Online spending grew 22% over 2012, for the five
days following Thanksgiving to Cyber Monday
• Some retailers saw revenue on Thanksgiving Day
increase 132% over 2012
• Black Friday saw 74% in revenue per store
• Total online transactions up 46% over 2012 holiday
season
• Cyber Monday consumers spent $2.29 billion, the
biggest sales day in E-commerce history
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Originally Projected Online U.S. Retail Sales as a
Portion of Total US Retail Sales 2009-2025
In Billions of
4,000
3,500
12%
16%
18%
20%
10%
14%
22%
2015
2016
2017
2018
2019
2020
2021
3,000
2,500
6%
7%
2009
2010
7%
7%
8%
8%
2011
2012
2013
2014
26%
28%
30%
24%
2022
2023
2024
2025
2,000
1,500
1,000
500
0
Total US Retail Store Sales
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Total US Online Sales
Projected Online U.S. Retail Sales as a
Portion of Total US Retail Sales Updated 20122025
In Billions
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
25%
23%
22%
20%
18%
16%
14%
12%
11%
10%
9%
8%
8%
7%
7%
0
500
1,000
Total US Retail Store Sales
1,500
7%
6%
2,000
2,500
Total US Online Sales
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3,000
3,500
4,000
Growth in E-Commerce Platforms
More Mobile Devices!
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The Accelerated Growth of the Global Internet Population
and E-Commerce Outside the U.S. will Drive U.S.
Retailers to Engage in Cross-Border Internet Trade
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E-Commerce Key Criteria
for Site Selectors
 Avoidance of Nexus Tax (may get mitigated, but
not yet….)
 Proximity to major markets
 Inexpensive land
 UPS and FedEx Truck Hubs nearby
 Ample seasonal/surge labor pool
 Reasonable proximity/access to interstates
 Local incentives: Tax breaks—FTZ!!
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Typical Multi/Omni Channel Network
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Carters.com 1 Million Sq.Ft. FTZ Building
 Size:
 Parking:
1,061,237 SF
1,000 auto spaces
400 trailer spaces
 Highway Access: I-85 exposure
Cross-Dock
32” Clear
Height
1,000 Auto
spots!
175’ Truck
courts
Amazon TN Site
U.S. Locations
What Does All of this Mean
to the Logistics or RE Industry
 Supply chains will continue to be complex
 New manufacturing in North America is
real! Get in front of it in your locale.
 Globalization in all industries likely to
continue, but with a US component now…
 Growth in E-Commerce will lead the retail
and logistics industries to re-define “DCNETWORKS”
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Bottom Line for Industrial RE
 Key Markets will be based on Population
Growth!
 Invest where PEOPLE ARE GOING TO BE!
 10 and 20 year Demographics are changing.
 E-Com hubs are emerging: PHX, Columbus,
Atlanta, Dallas, SoCal, Louisville, PA.
 Look for where the demographic trends are
likely to emerge in 10 year segments and
plan accordingly.
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About IMS Worldwide Inc.
• IMSW has completed over 295 FTZ Projects during 45
years. We have conducted 36 Logistics/Drayage studies
for Industrial RE firms, RRs and land-owners.
• We work with Large Gateway Zones (Houston, LA, Miami,
Dallas, Chicago, PHX, El Paso and NJ)
• We work with Fortune 1000 companies: Target, The
Limited, Dell, Home Depot, Abbott Labs, TJX, Dicks
Sporting Goods, CEVA, FedEx, UPS, Yusen, NFI, Nippon
Express, etc.
• We work with the largest REITs in the USA: Prologis,
Duke, Majestic, Clarion, USAA, IIT, etc.
IMSW Overview of National FTZ
and Strategic Development
Projects 1977-2013
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Prepared By: Curtis D. Spencer, President
IMS Worldwide, Inc.