PORT OF SAN FRANCISCO MARITIME CARGO AND WAREHOUSE MARKET ANALYSIS January 5, 2009 FINAL REPORT Prepared for: Port of San Francisco Prepared by: CBRE Consulting, Inc. Martin Associates EXECUTIVE SUMMARY ...................................................................................................................... 1 I. INTRODUCTION............................................................................................................................ 3 II. ASSESSEMENT OF EXISTING MARKETS............................................................................ 4 1 HISTORIC MARINE CARGO ACTIVITY AT WEST COAST PORTS............................................ 4 2 ASSESSMENT OF COMPETING BAY AREA PORTS ................................................................... 6 2.1 Port of Redwood City ........................................................................................................................ 6 2.2 Port of Richmond .............................................................................................................................. 7 2.3 Port of Stockton ................................................................................................................................ 7 2.4 Port of Sacramento........................................................................................................................... 8 2.5 Port of Benicia................................................................................................................................... 8 3 NORTHERN CALIFORNIA MARKET OVERVIEW.......................................................................... 9 3.1 Northern California Container Market Overview.............................................................................. 9 3.2 Northern California General Cargo Market Overview .................................................................... 10 3.3 Northern California Log and Lumber Market Overview.................................................................. 11 3.4 Northern California Auto and Truck Market Overview................................................................... 11 3.5 Northern California Bulk Cargo Market Overview .......................................................................... 12 3.6 Northern California Cargo Summary .............................................................................................. 13 III. PORT OF SAN FRANCISCO EXISTING CARGO MARKETS............................................ 15 1 MARKET OVERVIEW........................................................................................................................ 15 2 CONTAINERS..................................................................................................................................... 17 2.1 Existing Situation ............................................................................................................................ 17 2.2 Container Market Outlook.............................................................................................................. 19 3 STEEL .................................................................................................................................................. 20 3.1 Existing Situation ............................................................................................................................ 20 3.2 Competitive Factors Affecting Port Selection ................................................................................. 22 3.3 Steel Market Outlook...................................................................................................................... 24 4 FOREST PRODUCTS ....................................................................................................................... 25 4.1 Existing Situation ............................................................................................................................ 25 4.2 Competitive Factors Influencing Port Routings............................................................................... 27 4.3 Breakbulk Forest Products Outlook ................................................................................................ 28 5 PROJECT CARGO............................................................................................................................. 29 6 BULK MARKETS ................................................................................................................................29 6.1 Existing Situation ............................................................................................................................ 29 6.2 Competitive Factors Affecting Growth ........................................................................................... 31 6.3 Bulk Market Outlook....................................................................................................................... 31 7 EXISTING CARGO MARKET FORECASTS .................................................................................. 32 8 CURRENT INDUSTRIAL AND WAREHOUSE ACTIVITY AT BAY AREA PORTS................... 33 8.1 Introduction .................................................................................................................................... 34 8.2 Market Snapshot ............................................................................................................................ 35 8.3 Market Trends ................................................................................................................................ 36 8.4 Key City Trends................................................................................................................................ 39 8.5 Refrigerated Warehouse Space ...................................................................................................... 40 8.6 Bay Area Warehouse Market Conclusions...................................................................................... 40 9 FOREIGN TRADE ZONE OPERATIONS........................................................................................ 41 IV. POTENTIAL NEW CARGO MARKET OPPORTUNITIES ................................................... 42 1 AUTOS ................................................................................................................................................. 42 1.1 Existing Situation ............................................................................................................................ 42 1.2 Competitive Factors Influencing Port Selection .............................................................................. 43 1.3 Port of San Francisco’s Potential Opportunity................................................................................ 44 2 BREAKBULK AND CONTAINERIZED FRUIT................................................................................ 45 2.1 Existing Situation ............................................................................................................................ 45 2.2 Competitive Issues Influencing Port Selection ................................................................................ 47 2.3 Port of San Francisco Opportunity.................................................................................................. 49 3 WIND ENERGY PROJECT CARGO................................................................................................ 51 3.1 Existing Situation ............................................................................................................................ 51 3.2 Competitive Factors Influencing Port Selection .............................................................................. 52 3.3 Port of San Francisco Opportunity.................................................................................................. 52 4 OTHER BULK CARGOES................................................................................................................. 55 5 OTHER MARITIME OPPORTUNITIES ........................................................................................... 55 5.1 Layberthing..................................................................................................................................... 55 5.2 Potential for an Airfreight Ferry Service ......................................................................................... 57 V. IMPLICATIONS........................................................................................................................ 58 1 EXISTING MARKETS ........................................................................................................................ 58 2 POTENTIAL NEW CARGO OPPORTUNITIES.............................................................................. 59 3 FOCUS OF MARKETING EFFORTS............................................................................................... 60 VI. APPENDIX A............................................................................................................................ 62 EXECUTIVE SUMMARY The Port of San Francisco retained CBRE Consulting, Inc. and Martin Associates to update a 2001 market assessment entitled “Maritime Cargo and Industrial Land Use Study.” Since 2001, the Port of San Francisco’s primary and most stable cargo business has been in imported bulk aggregates. The Port’s 2001 strategic decision to pursue import bulk aggregates and concrete batch operations has proven to be a great success.