Georgia’s ports prepare for slower, yet still-positive future growth

The port of Brunswick performed very well in fiscal 2013, with revenue up 41 percent over the previous year. The better-known container port of Savannah, 80 miles to the north, barely grew.

Georgia’s ports, overall, aren’t performing with their usual gusto. The Georgia Ports Authority, the state agency that runs Brunswick, Savannah and truck depots in Bainbridge and Columbus, fell about 3 percent short of fiscal 2013 projections.

After a decade of meteoric, double-digit annual growth, Georgia’s ports are expected to grow between 4 percent and 6 percent each year over the next decade. A slowing Chinese economy, weak European growth and less-than-expected demand from developing countries such as Brazil and Russia are likely to hamper the ports’ prospects.

While the growth is respectable, the slowdown diminishes the aura that once surrounded Georgia’s gateways to the global economy, and it worries Georgians who depend upon busy ports for their livelihoods.

Metro Atlanta alone, a major distribution center, tallies 100,000 ports-dependent jobs.

“I don’t think a lot of people really know how important the ports are,” said Marcia Stutz, the owner of Hattie’s Books in Brunswick. “They certainly provide a lot of jobs, like longshoremen and truckers. And the seafarers buy supplies from Wal-Mart and downtown businesses.”

The ports mirror, to a large extent, where Georgia’s economy is headed. In good times, Americans buy more from China and other manufacturing hot spots, which boosts imports through Savannah. And foreigners buy more Georgia-made products, raising exports. The world’s tepid recovery from the Great Recession, though, threatens to prolong economic uncertainty, depress wages and keep unemployment high.

It also raises uncomfortable questions for port boosters about the necessity of spending $686 million, mostly by taxpayers, to deepen the Savannah River. Will slower growth in exports and imports translate into fewer ships than anticipated? Will bigger ships even call on Savannah?

Curtis Foltz, who runs Georgia’s ports, says proximity to Atlanta and a growing Southeastern population will fuel imports and necessitate a bigger, deeper port of Savannah.

“Even at a much more moderate growth rate, our ports will be full,” Foltz told The Atlanta Journal-Constitution during a recent interview at the Mayor’s Point Terminal alongside the East River.

Mirrors on the world economy

It has been a dizzying 21st century for Georgia’s ports. In 2001, Savannah imported and exported more than 1 million containers, the steel boxes filled with clothes, electronics and food that make the world economy turn. A global economic boom was under way.

Savannah gained immensely when a 2002 West Coast port strike persuaded retailers to shift delivery of many Asian imports to the East Coast. Savannah’s strategy of attracting huge distribution centers for Home Depot, Target, Wal-Mart and other retailers paid off handsomely.

By 2011, Savannah was handling nearly 3 million containers a year. It rocketed to No. 4 on the nation’s list of busiest container ports.

The Brunswick port’s fortunes rose too, fueled by the world’s burgeoning middle class and its appetite for U.S. soybeans, wheat and paper products. Clean-air rules in Europe, for example, sent wood pellet exports through the roof.

The port, long second banana to Savannah, also transformed itself into a major car, truck and machinery port of call. Acres of BMWs, Hyundais and Subarus surround the Colonel’s Island Terminal. Brunswick is now the nation’s third-busiest auto port.

All of Georgia benefits from the ports — $39 billion a year in economic impact, according to the University of Georgia. The Brunswick port sustains 3,500 jobs in surrounding Glynn County, UGA reported.

“It puts a lot of money into the local economy,” said Elaine Knight, a handful of shrimp boats tied up along the East River behind her wholesale seafood business. “But the whole economy has slowed. I see fewer trucks going to the terminals on Fourth Avenue. I get the feeling things have settled down.”

The Great Recession deadened trade as U.S. consumers kept a tight grip on pocketbooks (slowing imports) and foreign markets shriveled (slowing exports). Savannah is stuck, for the third year in a row, below the 3 million-container plateau.

Revenue at Georgia’s ports grew 3.2 percent last year to $293 million. Savannah, individually, posted only a 0.4 percent growth rate — a troubling result since the container-centric port accounts for 85 percent of all Ports Authority revenue.

“Basically, since 2007, our economy has been dead — no growth or only minimal growth like last year,” Foltz told 20 Brunswick employees gathered recently for an end-of-fiscal-year update. “Until it picks up, we will not see robust growth at our terminals.”

He also blamed last winter’s threatened longshoremen’s strike for a slight drop-off in business as retailers such as Target steered imports through West Coast ports.

‘Port of Atlanta’

Global trade, like the U.S. economy, is expected to muddle along for the remainder of 2013. The National Retail Federation predicts container imports should post a 2.4 percent increase over last year.

Foltz is more bullish on Georgia’s prospects. He expects annual container growth to run between 4 percent and 6 percent over the next decade. And the healthy import-export balance of Georgia’s ports — 53 percent export, 47 percent import — should further insulate the state from the vagaries of the global economy.

Maritime experts also cite proximity to Atlanta — the Southeast’s population stronghold — as further proof of the ports’ economic strength.

“Some people call Savannah the ‘port of Atlanta,’ ” said Anne Strauss-Wieder, a transportation economist in New Jersey. “Look at all the square footage of the warehouses and distribution centers in Atlanta and the number of shuttle trains between Savannah and Atlanta daily. Savannah really serves that robust area of the economy very well.”

East and Gulf Coast ports plan to spend $15 billion over the next decade dredging harbors and adding terminals and warehouses in anticipation of the 2015 opening of a deepened Panama Canal. Theoretically, ever-larger container ships will traverse the canal en route to East Coast ports. Savannah awaits congressional approval to spend $686 million to deepen its river from 42 to 47 feet.

Such an expense doesn’t make economic sense to some.

“Nobody predicts the worldwide economy, which is important for shipping, is going to go gangbusters,” said Steve Ellis, vice president of Taxpayers for Common Sense in Washington. “It will take a long time to have a level of economic growth to justify all these seaport projects.”

Competition, Foltz says, is precisely why Savannah must expand its port. He cites the project’s cost-benefit ratio — more than 5-to-1, according to the Army Corps of Engineers — as proof of the deepening’s economic viability.

The benefits redound to the shipping lines and retailers (not the port or taxpayers), which will lock them into Savannah for years to come, Foltz predicts.

“It’s all about efficiencies and taking costs out of the supply chain,” he said. “I don’t see our investment strategy changing in any way, shape, manner or form.”

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