DC Velocity - November 2017

sultancy A.T. Kearney & Co., says the Los Angeles-Long Beach complex remains the most cost-effective way to move Asian imports into the U.S. heartland. Freight from Shanghai to Chicago transiting the West Coast arrives at its final stop in as little as 15 days, and 21 days at the very outset if there is significant congestion at the U.S. gateway, Brogan reckons. By contrast, freight on the same vessel transiting the Panama Canal, calling on Savannah, and trans-loaded onto rail for movement to Chicago takes 24 days to arrive, he says.

The pricing differential between the two routes isn’t significant enough to move the needle, he says.

Brogan says that despite the original canal’s smallish size ( 5,500-TEU capacity), there wasn’t much pent-up demand to shift business from the West to the East Coast even before the expansion. Other than a two-month dip in early 2017 for West Coast loaded box traffic, there hasn’t been a meaningful decline out west since the expanded canal opened for business in June 2016, according to Kearney data gathered from the ports. This lends credence to the belief that there wasn’t any latent demand for the expanded canal to satisfy, he says.

Comparisons between Savannah and the Los Angeles/Long Beach complex rarely arise in discussions with shippers and beneficial cargo owners (BCOs), Brogan says. “It’s just not a major issue for them,” he says.

ODDS-ON FAVORITE

If one believes, however, that competition
among East Coast ports for burgeoning
“neo-Panamax” traffic will be fierce, then
Savannah holds a strong hand, experts
say. Its 1,200-acre Garden City terminal
is considered a model for landside opera-
tions, and it still has room to expand. All
rail traffic exiting Savannah leaves from
its docks. Even at Los Angeles and Long
Beach, less than one-third of box traffic
departs via on-dock rail, according to Jon
Slangerup, former executive director of
the Port of Long Beach and now executive
chairman and chief executive officer of
American Global Logistics, an Atlanta-
based third-party logistics services and
technology provider. The balance is still
trucked to urban near-dock truck-
to-rail transload facilities, he says.

Slangerup says the Port of New York and New Jersey has issues in strengthening its IT systems connecting vessels, ports, rails, and trucks. It is also hobbled by the congestion that accompanies being in the country’s most densely populated market. Savannah has the technology, it has the space, and it has a multimodal powerhouse just 250 miles to the west in Atlanta, which boasts the world’s busiest airport for passenger volumes and is a major aircargo gateway.

While Virginia has components
such as multimodal connectivity
Port of Charleston, S.C., mean-
while, needs to get its “arms around
the required capital” to position
itself as a competitor to Savannah,
he added.

Savannah also has another factor in its favor: its ownership. As one of four port-owned and -operated facilities—the others being Charleston, Norfolk, and Houston—it has the full support of the state, as well as access to state funding. By contrast, Los Angeles/ Long Beach and New York/New Jersey, being so-called landlord ports, have to deal with often-con-flicting objectives of terminal operators as well as multiple political masters.