• Americas

Florida Ports – Investment and the Potential Upside

Container_ShipFlorida surpassed New York as the third largest state by population, and is the main anchor for the fast-growing Southeast region. Florida’s geographic location positions it to be a major player in the global distribution network, both as a consumer market and major exporter with strong linkages throughout the region.

The state of Florida is projected to spend approximately $3.5 billion over the next five years on capital improvements and upgrades to its 15 seaports across the state. Most of this money will go to the state’s five busiest seaports, including Jacksonville, Everglades, Canaveral, Tampa and Miami. Improvements, like harbor and channel deepening, are being made to position Florida as a major gateway for international trade. The Port of Miami’s $205 million dredging project is expected to be completed this summer. Miami’s new 50-foot depths will mean the port will be able to accommodate new ultra-large container ships when they begin transiting the expanded Panama Canal in 2016. Once completed, the Port of Miami will be the only major logistics hub south of Virginia capable of handling fully laden post-Panamax vessels which will be a major draw to importers.

Waterborne_Trade

International trade in Florida was valued at more than $160 billion in 2014, supporting 700,000 direct, indirect, induced and related jobs and accounted for 13% of Florida’s GDP. Trade from Central/South American and Caribbean markets dominate inbound and outbound movement at Florida ports, while imports and exports to and from Northern Europe and Asia underutilize Florida ports.

Overall, 70 percent of export containers originating in Florida move through Florida ports with the remaining 30 percent going to ports like those in Houston, Savannah and Charleston. For imports, less than 60 percent of inbound containers move through Florida ports. However, the Port of Miami has made a play for cargo from West Coast ports after the latter’s recent labor problems, and has gained at least one service from its efforts. Imports through Miami jumped 21 percent year-over-year in the first six months of 2015, with the lion’s share of new imports coming from China.

Floridas_Imports_Exports
*Data Source: US Census Bureau, 2014. Total waterborne trade value is $86.8 billion.

There is a sizeable opportunity to gain import and export cargo from overseas markets and re-route it through Florida ports. In fact, compared to other ports in the U.S., Florida ports have underperformed and lost market share since 2000. Containerized cargo at ports in Florida grew on average 1.6% annually over the past 15 years while the total U.S. container trade has grown on average 3.0% annually over the same period. Florida’s share of the U.S. container market has actually fallen from 8.3% to less than 7.0% today. Although Miami has made considerable gains in the container business this year, the Florida port still faces a steep battle to increase its stake in the Asian imports market. The Port of New York-New Jersey still dominates the Asia-East Coast market, handling 37 percent of the trade’s cargo. Savannah controls 29 percent; Virginia, 12 percent; and Charleston 4 percent.

How can Florida positioning itself for the future?

  • Distribution Centers (DCs) – Florida’s ability to be the first inbound and last outbound port-of-call for import and export shipments will facilitate the growth of DCs. With demand for inbound consumer goods increasing in the state and Florida-produced exports rising, the creation of more DCs in-state can capitalize of the existing freight distribution system to expand service to the global import and export market.
  • Vessel Size and Port Capacity – Florida, like other Atlantic and Gulf ports, is challenged by the ever increasing size and weight of container ships which require channel depths of 47 to 50 feet under a full load. Only 7 percent of the existing container fleet requires such a depth, but over half of all new container ships on order and being built will require it. Port Miami is deepening its harbor to 50 feet, while JAXPORT and Port Everglades are about to deepen their channels by 47 and 48 feet, respectively.
  • Expanded Carrier Alliances – Besides improvements to the physical infrastructure of the ports, Florida is also moving to create a better regulatory environment for the logistics industry. Florida is in the forefront of finding ways to improve the competitive position of U.S. exports and imports, with advances being made in managing security issues, the flow of trade, the safety of food and medical products, and other regulatory functions. By making it easier for companies to move goods in and out of the state, Florida will highlight the cost advantages of using its ports and inspire confidence in its supply-chain logistics.

International trade grows faster than the international economy. Florida wants to capture a larger piece of trade by upgrading connectivity efficencies and improving the reliability of its seaports to meet future global demand. Infrastructure and regulatory improvements, as well as expansion by Florida companies to move more goods through local ports, will have significant positive economic impacts. Every increase in goods through the ports creates more jobs, adds revenue to the state. and increases local and state taxes. Florida’s investment in its ports makes sense not only for today but for the future.

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