Logistics Management ran an article today entitled, “Ocean cargo/global logistics: U.S. Seaports compete for declining inbound vessel calls“.  The first line of the story reads, 

Shipping analysts are saying that the days of “mega” U.S. seaports may be behind us, as more marginal ocean cargo gateways capture share.

I think that announcing the death of the US “mega” seaport may not only be premature, but dead wrong.  Certainly, there will be changes in the shipping patterns to the US.  We see this every day through service changes, new partnerships and slot sharing agreements.  However, I believe what you are seeing is not a shift away from “mega” ports, but a shift towards new “mega” ports.  

Let’s be clear, the US doesn’t have too many “mega” ports to begin with.  Basically, it’s LA and Long Beach right now.  The trend that Moreland Advisors is seeing, and the trend that our clients our seeing is a shift away from the West Coast ports to East Coast ports.  Some recent analysis indicates that up to 25% of the business that currently calls on the West Coast will transfer to the East Coast in the next 8-10 years.  The enlarged Panama Canal, new Suez services, as well as the improved capacities and intermodal capabilities have helped to drive this paradigm shift.  Also, don’t forget that 75% of the US population lives on the Eastern side of the US.  It’s pretty basic, if you have the option, put the goods as close to the people as possible.

Our contention is not that the “mega” port is dying, but that it is moving.  We expect to see 1, maybe 2, East Coast hubs emerge from the fray.  Economically, it just makes sense to use bigger ships and call on fewer ports.  Why pay multiple port and harbor pilot fees, and incur the additional time delays, if you don’t have to?  This becomes especially critical when you consider that many of the US ports are tidally constrained and shippers are facing the prospect of steaming to a new port only to have to wait until high tide to unload (or low tide to get under bridges).  We are in an era where efficiencies and cost cutting is critical and we believe that benefits the new hub, or “mega” ports, not the smaller niche ports.

Despite the economic woes in the National economy, Virginia is still landing soem big deals.  From REBusinessOnline:

RAYTHEON CORP. SIGNS 600,000-SQUARE-FOOT LEASE 
DULLES, VA. — Waltham, Mass.-based Raytheon Corp. has signed a 10-year, 600,000-square-foot lease with AOL for space in the company’s Pacific Corporate Park. Raytheon will fully occupy three buildings and lease half of a fourth building in the park, located on Pacific Boulevard in Dulles. The transaction involves a capital investment of $37.5 million and will create 100 jobs. Cathy Delcoco, Vicki Salamon and Terry Reiley of CB Richard Ellis’ McLean, Va., office and Rob Faktorow of the firm’s Washington, D.C., office represented AOL. Jones Lang LaSalle represented the tenant. 
     Raytheon had been looking to consolidate some of its Northern Virginia offices and plans on housing the company’s technical services company and intelligence and information systems unit in the property. The company will move into the buildings in three phases starting in 2010. The majority of the move will be completed in early 2011, with full occupancy expected by the end of the first quarter of 2011. “For the size of the lease, it moved quickly,” Delcoco says. “Both parties were motivated to close the transaction. Raytheon had some leases expiring and were contemplating a consolidation of several locations, and AOL had excess space due to rightsizing their Virginia campus.”
     This transaction represents a substantial commitment to the area in a time when most companies are in a holding pattern. “The lease is significant as it keeps a large user in Northern Virginia and gives a breath of fresh air to the commercial real estate market,” Delcoco says. “In today’s environment, the constant news is the difficulty in the capital markets and the lack of activity in the commercial real estate market. This is a positive commitment to the region.”

HEWLETT PACKARD RENEWS 800,000-SQUARE-FOOT LEASE IN VIRGINIA
SANDSTON, VA. — Hewlett Packard Co. has signed a lease renewal for 800,000 square feet of warehouse space in White Oak I Technology Park. The property is located at 7001 Technology Blvd. in Sandston. HP uses the property as a distribution center. N. Dean Meyer of Thalhimer’s Richmond, Va., office brokered the transaction.  

150,000-SQUARE-FOOT LEASE SIGNED IN VIRGINIA
DOSWELL, VA. — Diamond Hill Plywood Co. has signed a 150,000-square-foot lease for space in a Doswell warehouse. Terms of the lease were not released. The property is located at 17320 Washington Highway. Stephanie Sanker and Clay Culbreth of GVA Advantis’ Norfolk, Va., office represented Diamond Hill.

In a down market it’s great to be able to announce any new business at all.  It is tremendous to be able to announce a lot of new business, some of which you stole from a competitor!  That’s exactly what the Port of Virginia did today when they announced that China Shipping and two new CKYH alliance services will begin calling on Norfolk International Terminals in the next few months.  

The most exciting news comes is that one of the CKYH services, the NATCO-4, will have Norfolk as its first stop from Asia.  This means that customers shipping goods via this services will be able to receive their containers via Virginia before other ports.  First Call services are a big deal for ports and Virginia hopes that they can leverage the NATCO-4 success into more First Call services.  The full port rotation for the NATCO-4 service is Shanghai, Chiwan, Yantian, Hong Kong, Virginia and New York and will utilize eight vessels each with a 3,850 TEU capacity.  With the change in the service, CKYH dropped Savannah from the NATCO-4 rotation.

Virginia is also being added to the NATCO-5 service.  The full port rotation for that service is Pusan, Shanghai, Ningbo, Yantian, Xiamen, Savannah, Virginia and New York and will utilize eight vessels each with a 3,300 TEU capacity.

Finally, after bypassing Virginia over one year ago, China Shipping is adding Virginia back into their weekly AAE-1 service.  The full port rotation for the AAE-1 service will be Shanghai, Hong Kong, Yantian, Miami, Savannah, Virginia and New York.  This service will use smaller vessels, each of which are approximately 3,000 TEUs.

All told, the new services represent about 150 new ship calls to the Port of Virginia.  That’s great news in any economic environment.