What to do for an encore?
GPA director keeps focus on growth and dredging efforts at Savannah.
By Chris Dupin
The Port of Savannah soared into prominence in the container shipping business back in 1984, when Malcom McLean, then head of United States Lines, made the Georgia seaport, along with New York, one of the two “load centers” for his new “round the world” service operated with a dozen 4,246-TEU “Econships,” vessels designed with short smokestacks so they could slip beneath the old Talmadge Memorial Bridge, since replaced in 1991 by a new bridge with 185-foot air draft.
McLean’s pioneering effort at a slow-speed container service did not fare well, but Savannah’s growth has been nothing short of meteoric. Between 1987 and 2007, the Georgia Ports Authority’s Garden City Terminal saw container volumes grow at an average of 10 percent. Though volumes in Savannah, as at other ports, were hurt in 2009, the port resumed its upward trajectory and, since 1995 when it handled 424,054 TEUs, volumes have grown sevenfold to 2,982,471 TEUs in 2012.
It’s a tough act to follow, but Curtis Foltz, executive director of the Georgia Ports Authority, said there’s still potential for growth.
“The days of annual double-digit growth — it’s unreasonable to expect that will continue in perpetuity, but we still think there is room for marginal growth and market share shift to the Southeast,” he said.
About 40 to 45 percent of the U.S. population is in the U.S. Southeast, he said, but only about a quarter of the nation’s cargo moves through the region’s ports.
“You never expect 100 percent of the business to move through there, but there are opportunities for increased market share,” Foltz said.
“There are always going to be commodity groups and customer desires to move goods through other ports,” he said, perhaps because of a need for speed or a shipper wants to mitigate risk by using multiple ports.
Because of Savannah’s success in recent decades “you never stop doing what you have been doing, but you always need to search for better ways to serve your customers,” he said.
Asked whether the port’s biggest competitor is nearby Charleston or Jacksonville, Foltz said, “I think it is Los Angeles and Long Beach, quite candidly.
“If you look out over the next decade at where our growth will come from, it is business that today is moving through West Coast ports or future growth that could be moving through the West Coast,” he said.
But Foltz said most U.S. retailers have made the commitment to come to the East Coast, employing a “four corners” strategy where they have distribution centers in the Pacific Northwest, Southern California, Southeast, and Northeast.
A key project for the port is the Savannah Harbor Expansion Project, which will deepen the main channel to its Garden City Container Terminal to 47 feet “mean lower low water.”
The Army Corps of Engineers approved and recommended the project to Congress and the White House in October 2012, and Foltz said the president’s budget for fiscal 2014 will dictate how much federal money is available for the project, which will cost $652 million, including about $275 million for environmental mitigation.
Georgia, as local sponsor of the project, is responsible for $262 million and has already appropriated about $181 million. Gov. Nathan Deal has included an additional $50 million in the state’s fiscal 2014 budget so that it will have $231 million going into the coming fiscal year.
Foltz said some of that money is being drawn down already in preparation for the project, and he expects the Corps to begin awarding dredging contracts in the second half of this year. Construction will last about three years, while some environmental mitigation work will take a decade or more.
“We want as much money as the Corps needs to keep the project moving on its timeline,” he said, recognizing insufficient federal dollars could cause delays.
The Garden City Terminal still has room to grow. While volumes are approaching 3 million TEUs, Foltz said the terminal could eventually handle as many as 6.5 million TEUs. The port strives to have about 20 percent surplus capacity at all times in case of a surge in demand.
Garden City is served by both Norfolk Southern and CSX railroads. GPA seeks to increase the share of cargo moving in and out of the terminal by rail from 20 percent to 25-26 percent over the next decade. The port is working with the railroads to put together more service routes and improve the velocity of train movements through the state to make it more attractive for environmental and congestion reasons.
As the expanded Panama Canal opens and larger ships come into use, Foltz said Savannah’s “inland reach” will be extended and the port will be able to compete with cargo that today moves through Southern California.
The port also has room to grow on Hutchison Island, which it acquired three years ago. Down river from the Garden City Terminal, and reached by a bridge from South Carolina, he said this is a green field site with 6,000 linear feet on the Savannah River. It’s still unknown if it will be used for container or breakbulk activity, or if the terminal will be operated by the state or a private company.
Virginia is currently mulling privatization of its terminals — might this happen in Savannah?
Foltz noted discussions about privatization of terminals have been going on for about a decade, and said each state has “different dynamics at play, different opinions and support for their ports.”
Georgia has “been approached multiple times by parties about investing in the port and our state has consistently taken the position that they are pleased with the way they are run today and they really don’t have any interest in transferring of that control to an outside third party,” he said. “We continue to see the port as a huge economic development advantage and want to maintain that flexibility for future growth of our state.”