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Port of Savannah Drives Overseas Trade, Economic Growth

Photo credit: The Augusta Chronicle

The Port of Savannah – long one of Georgia’s best-kept secrets for facilitating international trade – is getting new attention as a long-overdue project to deepen its harbor access moves closer to reality.

Savannah boasts one of the busiest ports in the country, but it is also the shallowest on the East Coast. Final federal approval is expected later this year for a $652 million project that would deepen the harbor to handle larger ships. However, the project still faces political and legal challenges.

The Port of Savannah is the largest single-terminal facility in North America and has been the fastest-growing U.S. port over the past decade. It ranks as the fourth-largest container port in the United States and the fourth busiest. It is also second only to Los Angeles in exports. One of every eight U.S. export containers passed through Savannah in fiscal 2011, according to the Georgia Port Authority (GPA), which operates the port.

“With the Southeast leading all regions of the USA in population and investment growth,” GPA stated on its web site, “the Savannah area is a major location for retailers sourcing China. Savannah offers immediate access to China’s largest customers, including Wal-Mart, Target, Pier 1 Imports and Kmart-Sears.” There are more than 220 import distributions centers within five minutes to five hours of the port, GPA noted. With immediate access to two interstates (I-16 and I-95), “Chinese cargo via Savannah is connected to key inland locations such as Atlanta, Chicago, Charlotte, Dallas, Memphis, Orlando, St. Louis and points beyond.” The port’s rail and highway networks “put more than 80 percent of the U.S. population within easy reach,” GPA added.

Exports make up 53 percent of Savannah’s traffic, with China, Australia and South Korea the top three export markets. For example, in 2010, foreign exports from the Port of Savannah exceeded $24 billion. China was the top destination with $3.4 billion, followed by Australia at almost $2.9 billion and South Korea at just over $1 billion. Japan, Brazil and Italy followed, all with more than $900 million in export values. According to GPA, there are 18 sailing schedules that depart Shanghai for Savannah each week, and 76 ships call from the greater China ports for Savannah on a weekly basis.

The port is also a major economic engine for the state of Georgia, ranking second for economic development only behind Atlanta’s Hartsfield-Jackson International Airport. A recent study by the University of Georgia’s Terry College of Business found that in fiscal 2011, deepwater ports in Savannah and Brunswick accounted for 352,148 jobs – or one of every 12 positions in the state. The ports represented for $66.9 billion in sales and $32.4 billion (7.8 percent) of Georgia’s gross domestic product (GDP). 

The Port of Savannah is one of the major factors which has made Atlanta a vital logistics center for the transportation industry. The port is a four-hour drive from Atlanta, where three interstates converge (I-75, I-85 and I-20), along with several major railways and Hartsfield-Jackson Airport. The University of Georgia study found more than 150,000 jobs in the metropolitan Atlanta area are tied to Georgia deepwater ports, with businesses in the area shipping $6.12 billion in exports and receiving $2.5 billion in imports through the facilities.

Governor Nathan Deal stated the findings are “a testament to the ports’ sustaining power to create jobs. Our transportation and logistics industry drives statewide and regional commerce while our deepwater ports generate revenue, create jobs and offer opportunities for growth in every corner of the state through our global transportation network.”

Expanding the Port, Deepening the River 

Two projects are currently underway to prepare the Port of Savannah for future growth. GPA is engaged in a $1.36 billion expansion plan that will increase capacity from the current 3.2 million TEUs (twenty-foot equivalent units, the common standard for intermodal containers) to 6.5 million TEUs by 2018.

The second project, which should begin construction in 2013, would deepen the Savannah River, the port and its harbor. Traffic at the Savannah Port is already constrained by the port’s 42-foot depth. Larger ships must often wait hours for high tide before entering the channel or exiting the port -- particularly those laden with exports. (Most imports are lighter-weight retail items, while exports are often heavier machinery, chemicals, or forestry and agricultural products). Deepening the channel would reduce shipping costs by 15 to 20 percent, according to Georgia officials.

The harbor depth constraint will become more important within a few years. When the Panama Canal expansion is completed in 2014, it will be able to handle cargo ships with three times the capacity as those using the canal today. While the larger ships are not generally a problem for the deeper ports on the Pacific Coast, the only Atlantic port that can handle the huge “post-Panamax” ships is Norfolk, Virginia. Ports like Savannah; Charleston, South Carolina; Jacksonville and Miami, Florida; and even Norfolk are now working to deepen their ports to handle the new breed of freight ships.

In April 2012, the U.S. Corps of Engineers announced their approval in April 2012 for a $652 million project to deepen the harbor to 47 feet. (Congress originally approved dredging the 38-mile channel to 48 feet, but the Corps determined it would be more cost-effective to only deepen the channel to 47 feet.) The Corps estimates deepening the Savannah harbor will provide $174 million in net annual benefits.

Final approval by President Barack Obama and the Corps is expected by autumn 2011. Construction would begin in early 2013 and be completed by 2017.

Georgia has been seeking federal approval to deepen the Savannah port since 1996, and the battle is not over yet. Georgia and neighboring South Carolina have been vying for federal dollars to expand their competing ports in Savannah and Charleston. While the governors of Georgia and South Carolina reached a compromise allowing both ports to expand, South Carolina legislators are still resisting. Both Georgia and South Carolina have allocated local funds towards their respective dredging projects. The state of Georgia will fund 30 percent of the Savannah project cost, already setting aside $181.1 million. However, the federal government has not yet allocated its portion of the construction funds.

The Savannah project also faces environmental challenges. Environmental groups claim the work will dredge toxic cadmium from the river bed. Marshlands, drinking water, habitat for an endangered sturgeon and the Savannah National Wildlife Refuge would also be affected by the dredging. Those groups have filed legal challenges in federal court and with state permitting agencies, attempting to block the work.  

Despite those potential obstacles, Georgia officials remain confident that, having reached a milestone with last spring’s Corps approval, the remaining issues will be resolved and the Port of Savannah can continue growing as a vital gateway for international trade.

Questions or comments? Please email Michael Fenton at mfenton@atlantapacificgroup.com