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Shippers To Benefit From Savannah If Roads Can Keep Up

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Shippers To Benefit From Savannah If Roads Can Keep Up

Expansion plans at the Port of Savannah, which include opportunities for dual rail service between Savannah and Chicago, will benefit shippers so long as the transportation infrastructure leading up to the port can handle the additional potential volumes, analysts say.

"The challenges are going to be around the port infrastructure. Getting in and out of the port," said Jason Seidl, managing director for investment firm Cowen. 

The logistical challenges apply to many of the announced port expansions in recent months and not just Savannah, Seidl said.

The Georgia Ports Authority announced on Sept. 12 that planned expansions will increase the Port of Savannah's annual capacity to 11 million twenty-foot equivalent units (TEUs) from its current annual capacity of 5.5 million TEUs. Expansion plans include a new container port on Hutchinson Island, located across the Savannah River channel, which will have an annual capacity of 2.5 million TEUs.

The ports authority also plans to expand rail infrastructure to attract new business and handle container trade crossing the Garden City Terminal. A $220 million expansion of on-terminal rail infrastructure is currently underway at the Mason Mega Rail Terminal at the Port of Savannah. Phase I one of the project will be complete in the spring of 2020, while the second phase will open later that year. The project is anticipated to double the Port of Savannah's annual rail lift capacity to 1 million containers.

Georgia Ports Authority Executive Director Griffith Lynch said that the port will be supporting dual rail service via CSX (NYSE: CSX) and Norfolk Southern (NYSE: NSC)  from the Port of Savannah to Chicago, with cargo reaching Chicago in less than three days. 

NS currently offers rail service between Savannah and Chicago seven days a week. CSX recently added direct service.

"We're now moving containers from ship to departing rail in only 24 hours – two and a half times faster than our previous schedule – which makes Savannah competitive on time, and lower on cost, compared to traditional cargo routings," Lynch said in the annual State-of-the-Port address.

A SONAR chart shows the changes in monthly volumes of non-refrigerated, loaded containers heading to Chicago from Savannah. The blue line represents 40-foot containers and the green line represents 20-foot containers. Source: SONAR

"Shippers will have two competitive Class I's to choose from as well as a truck alternative depending on the ultimate destination of the cargo," said Todd Tranausky, vice president of rail and intermodal at FTR Transportation Intelligence. "It really keeps Savannah on the cutting edge of being able to provide capacity on the east coast and be a location of choice for shippers to use." 

The expansion plans at Savannah are also an attempt to entice more business to come to the U.S. East Coast instead of going to the bustling West Coast ports of Los Angeles and Long Beach.

"It's all with the same goal in mind: to steal business from the West Coast," Seidl said, referring to the port expansions not just in Savannah, but elsewhere in the U.S. and Canada.

FreightWaves reported in June that the Port of Savannah was seeking to boost its market share of freight moving to the Midwest, including the St. Louis area, as a way of driving business away from the West Coast ports.

Administrators will need to ensure the infrastructure supporting the port can handle the extra volumes anticipated from the landside expansion and dredging to accommodate larger ships, according to experts.

A lot of these planned expansions don't take into account traffic patterns and dray operations, Seidl said.

"The roads to and from the ports rarely change," he said.

Image Sourced from Pixabay

Posted-In: Freight Freightwaves Logistics shipping Supply ChainNews Markets General

 

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