Foltz: ILA Pact, New Services to Spark Savannah Growth

Foltz: ILA Pact, New Services to Spark Savannah Growth

Shippers and carriers alike are ramping up cargo volumes through East Coast ports now that the International Longshoremen’s Association contract with East and Gulf Coast ports has been settled.

“It’s taken almost until this week in mid-April for the noise surrounding the ILA diversions (of cargo) to die down and the lag effect from it to go away,” said Curtis Foltz, executive director of the Georgia Ports Authority.

During the months of contract negotiations between the ILA and the United States Maritime Alliance, many retail importers had diverted some of their imports to West Coast ports for fear of possible supply chain interruptions.

“Things are starting to pick up now that we have the ILA contract behind us,” Foltz said in an interview. “We are seeing significant volumes starting to ramp up. After what will be a fairly muted first quarter of calendar 2013, the last three quarters should be fairly strong.”

Foltz said the GPA is anticipating calendar 2013 growth in the 3 to 5 percent range in container volumes handled by the Port of Savannah, following meager growth of 0.7 percent in throughput in 2012.

The GPA has not yet released its data on first quarter container throughput, but data for the first two months show total throughput declined by 2.35 percent year-over-year.

Savannah volumes stand to benefit from new services carriers are launching this spring that are routed through the Suez Canal rather than the more traditional Panama Canal route. Maersk Line and the G6 Alliance of the six carriers that belong to the Grand Alliance and the New World Alliance have announced new Suez services starting in April and May to take advantage of the better economics offered by the more fuel-efficient post-Panamax ships that can transit the Suez Canal.

But despite the better economics, other carriers have not yet announced new Suez services. “It’s surprising that we haven’t heard anything yet, given all the industry noise out there that the carriers can make more money on the Suez route,” Foltz said.

This may be because U.S. importers are not jumping at the new Suez services. “When you talk to their customers — our customers also, the BCOs — they still prefer the Panama route because of the transit time,” Foltz said.

Savannah will be getting five of the six new services the G6 Alliance will launch in May, including two of the three new Suez Canal services — the AVX and the SVS — and all three of the all-water services that are routed through the Panama Canal. “We are going to be kept whole on the new services, and they tell us there’s upside growth potential on it.”

In addition, Maersk line’s newly reconfigured TP7 service from Ningbo and other Chinese ports will start calling at Savannah, Charleston and Miami this month with a string of 11 post-Panamax ships. “They are committed to growing their market share in this region,” Foltz said.

Contact Peter Leach at pleach@joc.com and follow him at twitter.com/petertleach.