Maybe he didn’t want to rub it in, but Georgia Ports Authority Executive Director Curtis Foltz didn’t point the finger at West Coast ports when describing the factors that led to a record March for the Port of Savannah’s container terminal.
In his view, it wasn’t attributable only to the nine-month labor dispute that caused backlogs forcing shippers to find alternate routes for their cargo. It was a confluence of factors, including the challenge ports in Virginia and New York had in handling that displaced demand, combined with the recovery of the U.S. economy in general and the growth of manufacturing activity in the Southeast in particular.
And while a 28 percent year-on-year increase to 333,058 containers in a single month by no means constitutes a new normal, Mr. Foltz believes it could indicate a “market shift” toward the East Coast and the Savannah port, which demonstrated that it can handle even record traffic without any disruptions in service.
“We have been serving a lot of new customers because of several of the anomalies in the U.S. market disturbing supply chains this year,” he told Global Atlanta. “Those customers, we think, are extremely pleased with the service they have received and we think those customers will stay with us.”
A better indication of the port’s long-term upward trend, he said, is to look at the 15.3 percent year-on-year growth the port has seen over the first nine months of the current fiscal year. So far, the Garden City terminal has handled 2.66 million twenty-foot equivalent units, or TEUs.
“And that’s on top of a record year last year,” Mr. Foltz said.
Exports — particularly containerized commodities like chicken from North Georgia and paper and kaolin clay from the central and southern parts of the state — play a key role in the Savannah port’s popularity. Shippers appreciate the ability to pick up new cargo as they offload, since “they don’t get paid when the move air back and forth,” Mr. Foltz said.
The port’s ratio of imports to exports currently stands at about 52 to 48 percent, an anomaly at a large port in the U.S., which operates at a substantial trade deficit with the world. (The ratio for March was 58 to 42 percent in favor of imports.)
So far, Savannah has not seen adverse effects from the stronger U.S. dollar, which makes U.S. exports of price-sensitive commodities less competitive on global markets, but it’s something the ports authority is “watching very closely,” Mr. Foltz said.
The executive director was particularly enthused about the long-term potential for growth created by infrastructure projects. The port recently got the go-ahead from the federal government for the $662 million deepening of the Savannah river, which will prepare the container terminal to receive larger ships as they come fully loaded through the Panama Canal after its expansion. Now with state and federal money included, about $300 million has been committed to the deepening project. A $134 million contract for the dredging about 18 outer miles of the channel has already been awarded.
The idea is that the project will lower costs for shippers calling on Savannah through Panama, making the whole supply chain more competitive in the U.S.
“If we as a nation cannot provide those economies of scale but all of those other major economies around the world can, and we’re competing against those other international markets, we lose,” Mr. Foltz said.
Some shipping routes constrained by the Panama Canal’s current size have moved to the Suez Canal. Mr. Foltz conceded it’s a “debated and emotional topic” in the shipping world as to whether those routes will return to Panama if the expansion is completed in 2016 as expected.
He isn’t sure how it will all shake out, but a few factors look good for Georgia: the cost of shipping from Asia through the canal to the East Coast will be reduced, while the cost of shipping to the West Coast and transporting cargo across the U.S. by rail will remain unmoved, Mr. Foltz said.
“I think with an expanded Panama Canal you have those two dynamics that aren’t debatable.”