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Georgia Ports poised to grow with size of the container ships

  • The container ship MSC Chicago sails up river to the Port of Savannah’s Garden City Terminal. (Georgia Ports Authority/Stephen B. Morton)
  • Stephen B. Morton/GPA Georgia Ports Authority set another record for container volume in 2017, an all-time high of 3.85 million containers. It was an increase of nearly a quarter-million over 2016.

After a record year, Georgia Ports Authority chairman Jimmy Allgood laid down a challenge to management.

“This has been a great year,” Allgood said this week. “Now, as we turn our attention to 2018, we have an opportunity to reach some really phenomenal milestones.

“We are looking at the potential of 4 million TEUs as well as the potential of $400 million in annual revenue.”

The port hit record container numbers for its just-completed fiscal 2017 reaching 3.85 million and producing record revenues of $373 million. Container numbers for June alone — the last month in GPA’s 2017 fiscal year — were up 17 percent year-over-year, a clear indication that the growth is picking up.

“With what the GPA team has put in place, that’s certainly a possibility,” Allgood said. The board backed the plan with investments in projects and infrastructure designed to bolster its position as the gateway port of choice in the Southeast.

GPA executive director Griff Lynch concurred with Allgood’s optimism.

“We feel we’re well-positioned to take advantage of the industry shifts and continue to grow market share into the future,” Lynch said last week, attributing much of GPA’s growth to decades of forward thinking and aggressive investment, even during the lean years.

“The strong leadership and vision of my predecessors, Doug Marchand and Curtis Foltz, a staff that is second to none and the unwavering support of our board and the state of Georgia — all of that has come together to give us the tools we needed to grow,” he said.

“As a result, we aren’t just surviving the industry changes, we’re thriving.”

Indeed, planning and preparation seem to have proven to be the real game changer.

Trailing the canal

Perhaps one of the largest paradigm shifts in the shipping industry has been the opening of the expanded Panama Canal in the summer of 2016.

It didn’t take long after the canal opened its new, wider locks — bumping ship capacity from 4,500-TEU vessels to megaships capable of carrying 14,000 TEUs — for the larger ships from Asia to begin calling on the East Coast.

Georgia Ports had hoped to have its newly deepened harbor ready by then, but delays pushed the Savannah Harbor Expansion Project out some four years beyond the new canal.

Fortunately, the Port of Savannah had already proven its worth during the West Coast labor crisis in 2014 and 2015, which mired most ports in congestion, traffic backups and slow turn times.

Across the logistics industry in 2015, Savannah became the center of national focus as it continued to handle a massive influx of cargo throughout the spring and summer without congestion.

This demonstrated ability to handle high container volumes made Savannah the only U.S. port to rank in the Top 10 of the Journal of Commerce’s 2015 listing of the Top 50 fastest-growing ports in the world.

Savannah was able to stand out, Lynch contends, because of its investment strategy of always staying 20 percent ahead of capacity.

That strategy continues to pay off this year, as the first 13,000-TEU container ship to pass through the Panama Canal — the largest container ship ever to call on the East Coast - called on Savannah in May as one of only three ports on the Eastern Seaboard.

That record was broken less than a month later by a slightly larger ship that called on the same three ports and more same-size ships have followed.

A consolidation bonus

Meanwhile, last fall’s bankruptcy of Hanjin Lines and rapidly falling freight rates brought the critical overcapacity in most shipping lines into frightening focus, prompting shippers to join forces to consolidate their services, cut costs and improve efficiencies.

On April 1, the major shipping lines realigned to form massive alliances, with some 35 weekly container services calling Garden City Terminal, more than any other port on the East Coast. These new rotations send a clear signal that more 13,000-plus TEU vessels are heading for Georgia’s ports.

What’s also clear is that the massive container terminal on the Savannah River is handling the big ships with ease and efficiency.

When the COSCO Development came into port in May, she was worked around the clock with six cranes and crews of several hundred, moving some 5,500 boxes on and off the terminal without a hitch, as have several same-size ships since.

But the size of the ships is only part of the story.

Container exchanges — the number of boxes moved on and off a vessel — are experiencing exponential growth, even on what are now considered “mid-sized” vessels in the 8,000- and 9,000-TEU range. For example, a 9,000-TEU vessel that recently called on Savannah’s Garden City Terminal delivered and took on more than 5,200 containers, or roughly 9,300 TEUs, meaning it delivered roughly half its cargo to Savannah and took on the same amount.

Despite the fact that both May and June were record-breaking months for container volume, the operation ran like a well-oiled machine, Lynch said.

And he plans to keep it that way.

“This massive consolidation and realignment of carriers benefitted the GPA greatly,” he said.

“Having 35 weekly services means that customers have lots of options to get to Georgia. It’s also helped improve our services from Europe.”

What’s next?

Another big plus is GPA’s ability to handle large numbers of container exchanges without getting bogged down.

“All these improvements that were made on terminal are now really beginning to pay off and will become more significant in the future,” Lynch said.

“Down the road, for example, when a container carrier says it has a ship that has as many as 7,000 — or even 10,000 — containers for one location, there is a very short list of ports that can handle that.

“In fact, technically, there is only one port on the East Coast that can move that number of containers efficiently right now — and that’s GPA.”

“We’re prepared. The space is there to do that — both at berth and on the land side — and we provide a very fluid environment. Our record-breaking numbers in May and June with no congestion or operational issues gave our customers increased confidence that we can simultaneously serve larger vessels and greater volumes while providing the excellent logistic solutions they have come to expect.”

That kind of confidence translates into future business, Lynch said.

With 10 new ship-to-shore cranes on order — four due in December and the remaining six coming in 2020 — Garden City Terminal will have an unprecedented 36 cranes working the waterfront.

Lynch is looking at having 18 of those huge cranes at the upriver berths to serve the very largest ships.

“That means we can have three 13,000-TEU vessels docked end-to-end, each being worked by six cranes,” he said. “And we would still have plenty of available berthing for other ships.

“Our peak is right at 10,000 gate moves a day,” he said. “That’s going to have to bump to 14,000 gate moves in the future. But the good news is that we have the ability to do that.

“In the last three years, we’ve added 700,000 TEUs throughout to our Garden City facility,” he said. “That’s the equivalent of adding another large terminal.

“And we were able to do it in a congestion-free environment.”

“At the end of the day, I think that if we continue to stay ahead of the curve, to invest in our people and facilities, improve efficiency and customer service, we’ll continue to be the port of choice for our customers.”

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