Shifting supply chains creating new opportunities in alternative port choices: CBRE

MARKETS near large population concentrations, as well as seaports, inland ports and major air hubs could see strong demand for industrial space, as product sourcing expands beyond long-dominant countries like mainland China, said CBRE in its latest viewpoint.

Within the Asia-Pacific region, alternative port choices include Xiamen, Qingdao, Nansha and Shekou in mainland China and Tanjung Pelepas in Malaysia according to the report's author, James Breeze, CBRE's senior director and global head of industrial and logistics research.

These Chinese ports could help alleviate congestion in gateway ports like Ningbo, Shanghai and Yantian while in the long run, ports in South-east Asia will generally see higher volume due to global manufacturers' diversification of suppliers beyond those in mainland China, said Breeze.

He added: "In the US, shifts in manufacturing to other parts of Asia or Europe could benefit East and Gulf Coast ports, especially Charleston, Savannah and Houston. In Europe, the Greek port of Piraeus and Spanish ports of Algeciras, Barcelona and Valencia are expected to attract more container volume as production is diversified," added Breeze.

Meanwhile, the "China Plus One" strategy has put emerging economies like Vietnam, Indonesia and the Philippines at the top of the lists of distributors and manufacturers.

Almost 4 in 5 (78 per cent) of respondents to CBRE's 2021 Asia Pacific Logistics Occupier Survey indicated they will increase their industrial space across the region in the next 3 years, particularly for warehouse space in high-consumption markets.

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South-east Asia and India are among the top target markets for both manufacturing and logistics occupiers, noted Breeze, adding that the fast-growing consumer bases in these areas will attract more manufacturers while serving as a cost-effective option for risk diversification.

In Vietnam specifically, more than 60 per cent of manufacturing companies in Ho Chi Minh City has resumed operation by mid-October, after mobility restrictions were gradually lifted. The country's registered foreign direct investment reached around US$22 billion in the first 3 quarters of 2021, up by 4.4 per cent from the same period a year ago; more than half of this was in the manufacturing sector.

"Improved infrastructure, a favourable foreign direct investment policy and a strong labour base will continue to attract global producers to Vietnam," said Breeze.

India, meanwhile, has seen industrial and logistics leasing activity in 2021 quadruple from a year ago. This is expected to grow further next year.