The port of Savannah in the state of Georgia is the fastest growing and fourth-busiest container terminal in the U.S., handling over 4 million TEUs in 2017. The congressional delegation of Georgia recently pushed a $100 million budget for expansion efforts at the port, following which President Trump has pledged $49 million for the dredging efforts at the harbor.
But away from the sea and on the highways leading to the port, the frequently occurring traffic bottlenecks is a situation that is slowly gaining notoriety amongst the Savannah residents. Traffic on the highways have been steadily growing along with the increase in the capacity handled at the port, and as the Savannah port aims to hit 10 million TEUs by 2028, the potential increase in drayage volume across the region cannot be ignored.
It is crucial to understand the strain that could be added to the interstate 95 once the dredging efforts are completed. With a deeper port at Savannah, larger ships would come in to dock at the harbor, leading to a surge in the number of containers being offloaded all at once. This forces a massive influx of drayage trucks which queue up for hours at a stretch on the highway, waiting for a pick up at the port.
As the port is bringing in consistently high volumes of shipment to the shore, demand for drivers is now remarkably high. With unemployment hitting record lows in the country, coupled with excessive restrictions imposed by the ELD mandate, it is no surprise that drivers are demanding higher wages for hauling loads.
“The drivers are demanding more money because there are higher demand and lower unemployment levels. A lot of these drivers can go work in a factory and can be home every night. Or they could work in construction and make more money than they would while driving a truck,” said Nick Barnett, Specialized Freight & Projects Director at Steam Logistics. “So the big challenge now is to see where the market corrects itself. I think a lot of it will correct itself with the inland rail hub at northern Georgia coming in. You are not going to have the long haul driving from Savannah to north Georgia. Instead, they can stay more local and just drive to Atlanta.”
Barnett’s envisioning of the rail hub inland ‘port’ of Murray County easing up rates at the Savannah port is likely, as this scenario has a precedent with the port of Charleston. When the port opened up their carrier terminal, they saw an increase in local drivers coming over to haul freight, as the carrier terminal allowed the containers to move over the rail up into Spartanburg.
But there are testing times ahead, as demand for drivers has univocally been high across the country, but supply has rather been limited. Another reason for concern towards the future is how the existing infrastructure could handle the explosion in drayage. Port congestion is a parameter that has had alarming consequences to ports on the West Coast, like the ports of Long Beach and Los Angeles. In some ways, the congestion at the port of Long Beach in California, played a role in businesses moving their distribution centers into the South East.
Every year during the month of December, port congestion at Long Beach reach epic proportions forcing thousands of trucks to wait out on the highways, weeks on end. Businesses get hit badly, with them running out of stock to sell during Christmas – as their products are stuck at the shore, unable to move inland due to the congestion at the port.
So, the logical outlook would be for ports to not keep increasing their capacity, as it seems to be the number one cause of port congestion. But then again, not increasing capacity at a port would let its neighboring ports to eat into its tonnage share – leading to a vicious paradox. Businesses moved its warehouses near Long Beach initially, because of its ability to handle massive capacity. But they also moved out to the South East because the West Coast ports were blighted with traffic congestion, unavailability of trucks, port union strikes, and higher labor wages.
Now the port of Charleston in Georgia is also feeling the heat from the port of Savannah, as Savannah is rapidly increasing its capacity while Charleston is not. But, port competition is like a tide and an ebb – if the drayage gets tough around a port, businesses would go around looking out for better options.
The construction of an inland rail hub at Murray County in northern Georgia connecting directly to the Savannah port is a testament to this. CSX Transportation has already started work, which once completed is touted to take 50,000 containers off the highway every year – tangibly reducing the strain on the highways leading to the Savannah port.
Moving containers by rail not only reduces traffic bottlenecks, but also reduces the struggle of shippers in finding carriers for hauling their load. “In Chicago, we are being told that the truckers are booked until April or end of March, and we found this out even before March arrived. In Charleston, for instance, capacity is about a week and a half to two weeks, and Savannah is on average, about a week,” said Kristina Calhoun, International Logistics Coordinator at Steam Logistics. “A year ago, we were able to send a work order to a trucker one or two days before, and we would have availability, but it is not the case anymore this year.”
The ELD mandate has also played its part in creating an artificial tightness in finding truckers. Demand for truckers is also getting higher in the South East because of the colossal warehouses that are mushrooming all around north Georgia – distribution centers of Amazon and Walmart, to name a few.
The existing scenario is ripe for railroad companies to exploit the driver and road congestion situation. “The Savannah on-site rail terminal makes sure there is no local drayage. They can go from local vessel to rail car, by bypassing Atlanta and be in northern Georgia in 48 hours, with containers on chassis ready to roll for delivery,” said Barnett.
There are several variables that can dictate the continued growth of the Savannah port, and it is too early to connect all the dots as there is a lot of speculation in play. But what can be deduced now is that the inland port at Murray County is going to see considerable patronization from businesses that are frustrated with road congestion and the unavailability, or rather the high ceiling rates of drayage truckers.
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.
