Houston Port to Benefit as Companies Shift Away From Overreliance on China

HOUSTON – (Realty News Report) – Houston’s economy and Port Houston should benefit as U.S. supply chains shift away from an overreliance on China for manufacturing and goods to include additional Asian and European markets, according to a CBRE report.

In response to both recent trade wars and COVID-19, many companies will establish new national distribution models in the U.S. that will particularly benefit regions such as Houston and the Southeast, according to CBRE’s international trade report. (The report was written and  released prior to an order by the  U.S. State Department – issued Tuesday, July 22 –  demanding the closure of the Chinese Consulate in Houston at 3417 Montrose Blvd.)

China is expected to remain a key trade partner for the U.S..  However, amid recent disruptions of supply chains, many companies will adopt a more diversified “China Plus One” strategy — an increasingly common strategy for manufacturers who have the bulk of their Asian operations in China, but want to reduce dependency on the manufacturing giant, in large part to limit the impacts of tariffs.

The Port of Houston, the dominant global center of the Gulf region, will benefit from population growth, which is projected to climb in future decades.

The state of Texas, with more than 29 million people, the second most populated and fastest growing state. Companies will ship goods, whether from east Asia through the Pacific and Panama Canal, or from the western hemisphere by way of the Atlantic to keep robust inventories in the Texas region.

“For companies shipping into the Port of Houston it’s about reaching a significant, growing population and at the same time cutting back on truck and rail transportation costs from the east and west coast,” said Michael Valleskey, associate research director for CBRE. “Houston has a prime trading location, with the ability to efficiently reach all directions on the globe.  It also has significant logistics capacity, available land, and lower asking rents. These fundamentals, along with access to a growing population will help drive Port growth and capitalize on select shifts in supply chains.”

Shipping activity at the Port of Houston has been muted in recent months due the economic downturn. But long-term planning anticipates significant growth as e-commerce expands. The Port of Houston is focused on a major initiative called Project 11, a public-private effort to widen and deepen the Houston Ship Channel, the nation’s busiest waterway.

Earlier this year, the U.S. Army Corps of Engineers completed  a four-year, $10 million study in partnership with Port Houston to identify needed Houston Ship Channel improvements and determine its economic value to the nation.

The CBRE report said China Plus One trend toward sourcing diversity has already started, as China-to-U.S. exports decreased 12.7 percent in 2019, and total trade between the countries was down $100 billion year-over-year. Countries that have benefited from this shift include Taiwan and Vietnam, the fastest-growing trade partners with the U.S. Total trade between the U.S. and the Southeast Asian nations increased in 2019 by $18.7 billion and $9.1 billion, respectively. Countries outside of Asia, such as Europe’s Belgium, the Netherlands and France, have seen increased activity as well.

July 22, 2020 Realty News Report Copyright 2020

Photo: Port of Houston Authority

File: Houston Port to Benefit . File (2) Houston Port to Benefit as Firms Move to China Plus One

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