1. The Panama Canal Expansion and
Impact on Industrial Real Estate
Presented by :
Curtis Spencer, President IMS Worldwide Inc.
Jim Curtis, Managing Partner Bristol Group
Jim Flynn, President The Carson Companies
Moderated by:
Ed Schreyer, Executive Managing Director Industrial Services CBRE

2. The Panama Canal:
Impact on Industrial
Real Estate
Curtis Spencer, President
IMS WORLDWIDE INC.
Member of the 9th and 10th
COAC committee
2

3. Supply Chain Trends
• Slow Steaming
• Environmental Concerns
• Costs – Door to Door today
• Labor Issues – EC looks like WC!
• Panama Canal Expansion – 2014
• Suez Canal – Pirates?
• Recession 2?

4. Shanghai to North American Ports:
Slow Steaming Effects –
2000 & 2011
36 36
17
35
17
34
Source: ShipmentLink.com (Evergreen) Sailing Schedules
From China, it takes about 2 weeks to bring cargo to the west coast and
about 4 weeks to bring it in on the east coast. (2000)

5. Shanghai to North American Ports:
Slow Steaming Effects –2000 & 2011
Pricing as of October 2011
$1,200
$3,100
36 36
17
35
$3,034
17
$1,533 $2,950
34
Source: ShipmentLink.com (Evergreen) Sailing Schedules
From China, it takes about 2 weeks to bring cargo to the west coast and
about 4 weeks to bring it in on the east coast. (2000)

6. Shanghai to North American Ports:
Slow Steaming Effects –2000 & 2011
Fuel Surcharges-Worse!
+ $867
+ $712 $1,200
$3,100
36 36
17
35
$3,034
17
$1,533 $2,950
34
Source: ShipmentLink.com (Evergreen) Sailing Schedules
From China, it takes about 2 weeks to bring cargo to the west coast and
about 4 weeks to bring it in on the east coast. (2000)

7. “The Earth is Round”
New Routes to the New World!
Narvik, Norway
Prince Rupert, Canada Vostochny, Russia
Sydney NS
New York Rotterdam, Netherlands North China
Norfolk
Los Angeles Savannah
Hong Kong, China
Punto Colonet HOUSTON Bombay
Lazaro Cardenas
Singapore
NEW Routes for Imports into the USA

8. 9
8 U.S. Key Port
7 Growth
6 2005 - 2011
Millions of TEUs
5
LA LB
NY/NJ Savannah
4
Oakland Houston
Hampton Roads Seattle
3
Tacoma Charleston
2
* 2011 TEUs annualized
based on actual current
1 TEU volumes
-
2005 2006 2007 2008 2009 2010 2011

22. East Coast Ports: Current Channel
Depth, Ship Capacity
Miami
NY/NJ
Source: VPA

23. East Coast-West Coast TEU
Cost Line Equilibrium- Sept. 2010
Megapolitans
Cascadia +38%
Equilibrium
Atlantic
Line Q2 2011 Seaboard
Great Lakes Horseshoe +12%
+10%
z
Norcal
+35%
Southland
+35%
I-35 Corridor I-85 Corridor
+40% +35%
Valley of the
Sun +81% Southern
Florida +52%
Gulf Coast Belt
+31%
Sources: Population, employment, and real estate growth forecasts by Robert Lang
and Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of
Global Insight; Business 2.0, November 2005

24. East Coast Perspective

25. EC Ports will Grow because:
• Increasing Eastern Europe/Indian Trade- Via the
Suez. “Watch out for Pirates!”
• Increasing S. American (Brazil, Chile, etc)
• GDP Growth
• Proximity to Major Markets
• Small increase in Asia-US trade through Panama
and Suez routings.

26. WC Ports will Grow because:
• Increasing Asian China Trade (GDP lowered to 9%
Growth Rate)
• Increasing SE Asia Trade, non-China
• GDP Growth
• Proximity to quicker/cheaper Intermodal
Routings that can penetrate to within 250 miles
of East Coast.
• Small decrease in market share of China-based-
US trade through Panama and Suez routings.

27. Panama Canal Bottom Line
• BALANCE – In Market Share after 2014 will be
the answer. Approx. 52%-48% today, 50%-50%
after 2014.
• IF- Ocean Carriers re-work pricing after Panama
Canal Expansion- lowering prices by 30% for all
water, compared to LA/LB + Intermodal, AND the
RRs do not drop correspondingly—you could see
10%-20% Market Share drop from WC to EC.
• Likelihood of this happening? 1 in 10.

28. Recession 2? Are we heading there?
• I personally don’t think so, but….
• Slow Growth – Yes
• GDP Growth 1.2% this year, 1.5% next
• Gridlock in DC? YES!
• But, no Obama-care implementation
• No change in deficit.
• “Kick the can down the road” is the song! We all
know it, so start singing!

29. How do we fix it?
• Flat Tax – No Deductions – 17%. <$50,000, no tax
• No estate tax or cap gains tax.
• SS tax and Medicare tax without a ceiling.
• Move SS benefits to 69 in 2025 – plenty of $$
• GDP Growth would jump by 2% to reach 3.2% this year,
3.5% next!
• Free the Commerce Department by eliminating CVD and
AD on any raw material and component for import into
the USA. Would add 1-2 Million Jobs! And $500 Billion
in Exports.

30. Bottom Line for Industrial RE?
• Stay in the Markets where the PEOPLE ARE!
• Invest where they PEOPLE ARE GOING TO BE!
• 10 and 20 year Demographics are changing.
• Northeast did not sustain the “hit” that everyone
predicted, because of the Recession.
• Florida and PHX actually stayed the same over the past 5
years!
• Look for where the demographic trends are likely to
emerge in 10 year segments and plan accordingly.

31. POPULATION REACH BY MARKET.
Chicago: 80M
NY/NJ: 120M
Atlanta: 60M
LA/LB: 40M
Dallas: 45M

32. Population Forecast 2005
for 25 years
Megapolitans
Cascadia +38%
Atlantic
Seaboard
Great Lakes Horseshoe +12%
+10%
z
Norcal
+35%
Southland
+35%
I-35 Corridor I-85 Corridor
+40% +35%
Valley of the
Sun +81% Southern
Florida +52%
Gulf Coast Belt
+31%
Sources: Population, employment, and real estate growth forecasts by Robert Lang
and Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of
Global Insight; Business 2.0, November 2005

33. Population Forecast 2011-
After the Recession
Megapolitans
Cascadia +31%
Atlantic
Seaboard
Great Lakes Horseshoe +18%
+18%
z
Norcal
+30%
Southland
+30%
I-35 Corridor I-85 Corridor
+40% +40%
Valley of the
Sun +60% Southern
Florida +42%
Gulf Coast Belt
+45%
Sources: Population, employment, and real estate growth forecasts by Robert Lang
and Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of
Global Insight; Business 2.0, November 2005

34. Invest Re-Develop Develop Operate

35. Globalization, Labor Arbitrage and Supply Chain Costs
Define the Modern Business Process Model
Drive supply chain
• Labor Arbitrage decisions
• Transportation/Energy Costs
• Manufacturing Redundancy
• Population Centers

36. Logistics Cost
Supplies
Percent of Total 2%
Admin 3% Other Warehouse 1%
Rent 4%
Customer
Service 8%
Transportation
Labor 50%
10%
Inventory
22%
Source: Establish Inc. / Herbert Davis Company

38. Imports
Suez Canal Panama Canal
% of US
imports in 6% of Asian imports 19% of Asian imports
2006
75% of Asian Imports go via the Pacific to California
Average
Navigation
Time from 21.1 days 21.6 days
China to US
East Coast Transit via California: 18.3 days-- 12.3 days sailing, 6 days rail
Approximate #
of ships
passing 18,000 15,000
through in
2008
Share of
10% 5%
Seaborn Trade
Source: USDA Report, Impact of Panama Cana Expansion on the US Intermodal System, January 2010

40. THE FUTURE OF INDUSTRIAL REAL ESTATE
WILL BE SHAPED BY:
• Infrastructure/Multimodal Connectivity
• Climate Change/Environmental Considerations
• Energy/Transportation Costs
• Users’ preoccupation with reliability and supply redundancy
• Population Centers and/or Transloading Centers
• Whether Manufacturing Centers shift to other areas
(Insourcing, Mexico, China, Vietnam, Indonesia - ?)

41. Carson Estate Trust
• Private REIT
• Incorporated in 1914
• Developer/Acquirer of Warehouse/Logistics
Style Buildings
• Focused on Southern California and
Houston, Texas
• 11 million square feet

42. Macro Trends That Will
Affect the Flow of Goods
• Relative World Labor Rates
• Value of the Dollar
• Cost of Transportation
• Cost of Raw Materials

43. China Versus Mexico
Manufacturing
China Mexico
Currency vs. U.S. $ (last 5 years) +20% -19%
Shipping to U.S. 3-4 Weeks 1-2 Days
Duties Up to 23% None or Very Low
Intellectual Property Weak Enforcement Protected
Fully Burden Labor Rates $1.00-$1.50/hr. $2.50-$3.00/hr.
Projected Trend: Manufacturing slowly moves back to North America.
Demand for Panama Canal could decline.

44. U.S. Population & Consumption
West Coast Gulf & East Coast
Population 46% 54%
Total Retail Sales 54% 46%
Loaded Inbound TEU’s 56.6% 43.4%
Conclusion: Regions most economically serviced by water, already serviced.
Only small increase in traffic through the Panama Canal may result.
Source: Grubb & Ellis, Port Websites

45. Q&A