Tariffs, Trade and Trends: A Midyear Port Market Analysis
Key Takeaways
Import volumes are healthy—but why are many port industrial markets softening?
While import volumes have stayed elevated in 2024 and 2025, many port industrial markets have experienced slowing or negative absorption over the past two years. Despite resilient U.S. consumer demand amid persistent inflation, many retail and wholesale industrial occupiers have shifted post-pandemic inventory strategies from “just in case” to “just in time.” This shift has reduced the need for large warehouses near major ports, as more goods are now shipped directly via rail to inland distribution markets like Dallas and Chicago. Additionally, softness in port markets such as Los Angeles and the Inland Empire can be attributed to the sharp rental rate increases in 2022 and 2023, which priced out some tenants and pushed them to more affordable markets like Phoenix and Las Vegas. For example, while Los Angeles prices have declined 21% over the past two years, asking rents remain 46% higher than in the first quarter of 2020.
Historically, industrial markets near key U.S. ports have recorded strong net absorption annually, accounting for 21% of the nationwide absorption from 2019 through 2024. However, in the first half of this year, that share has dropped to 2.2%, despite representing 24% of total national inventory. Houston and Savannah have bucked the trend, recording healthy year-to-date (YTD) net absorption of 4.0 msf and 1.6 msf, respectively. The Inland Empire, while posting vacancy levels not seen since 2011, has still reported positive absorption, though well below historical averages. Construction deliveries are outpacing absorption in markets like Inland Empire, with 5.4 msf of new deliveries added in H1 2025. However, supply-side relief is on the horizon, as the national pipeline has declined 41% since the end of 2023, with port-proximate markets posting a 47% drop.
Most port industrial markets have recorded rent growth of more than 40% since 2020, with some surpassing 80% over the past five years. However, over the past two years, major port proximate markets like the Inland Empire and Los Angeles have seen rents fall by 26% and 21%, respectively, as landlords adjust to elevated vacancy levels and tempered demand. Looking ahead, all port industrial markets are expected to yield healthy rent growth through 2029. Key markets such as Savannah, Miami, New Jersey and Houston are expected to achieve five-year asking rent rate increases from 12% to 22% through 2029, with industrial markets projected to reaccelerate starting in 2027. Most West Coast markets will likely see more modest five-year growth, largely due to weaker near-term growth.
Import volumes have been choppy since the start of 2025
As shippers rushed to bring goods into the U.S. ahead of new tariffs, import totals at the 10 key U.S. ports were robust through April, outpacing the previous year’s first four months by 9.5%. However, with new tariff rates in effect, volumes have declined significantly. May’s 1.9 million TEUs marked the lowest monthly total since March 2024. While June saw a modest increase (+18,351 TEUs), volumes remained below the recent 18-month average of 2.1 million TEUs. Following the May 12th announcement of a 90-day pause on reciprocal tariffs with China, imports from China climbed slightly in June (+0.4% versus May) but remained well below 2024 levels. The increase was most notable at West Coast ports, while Chinese imports at East and Gulf ports declined. Meanwhile, imports from other countries surged in June, with notable increases from Indonesia (+17%), Thailand (+8.6%) and Vietnam (+7.7%) as shippers shifted sourcing to Southeast Asia.
Driven by strong volumes earlier in the year, nine of the 10 key ports posted YTD import volume gains. Overall, volumes were 3.5% ahead of last year’s pace. led by significant growth at the Ports of Long Beach (+9.6%) and Savannah (+5.2%). Only the Port of Virginia reported a YOY decline (-7.9%).
The Ports of Los Angeles and Long Beach handled the most cargo in the first half of 2025, accounting for 38.7% of total TEUs. However, this share has fallen from 39.6% in 2024, partly due to reduced Chinese imports. Meanwhile, the Ports of New York/New Jersey, Savannah and Houston gained market share, increasing by 30, 40 and 50 bps, respectively, thanks to their more diverse base of trade partner countries. By coast, the East and Gulf coasts handled 51.7% of TEU volumes in 2025, up from 50.4% in 2024, as the decline in Chinese imports has largely affected Southern California ports.
