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Trucking Trends: Georgia on my Mind: How additional container traffic in Savannah is affecting truckload rates in the South

By Mark Montague

A rising tide may lift all boats, but they’re riding a little higher in Savannah.

Container traffic at the Port of Savannah grew 14 percent during February to a total of 284,037 TEUs. Activity is up in virtually every category, from heavy machinery to breakbulk freight to bulk commodities such as soybean meal and peanut pellets.

Savannah’s annualized volume during the last two months has approached the 4.5-million TEU mark that is considered the port’s capacity. Last year’s volume was 3.3 million TEUs.

The Georgia Port Authority no doubt expects business to stay strong. The GPA will deepen the port’s 18.5-mile outer harbor to 49 feet at low tide and significantly expand truck and rail facilities this year.

While it takes almost twice as long for ships from Asia to reach ports on the Atlantic Coast compared to the Pacific, congestion and a still-uncertain labor situation at West Coast ports have many shippers shifting to less crowded berths on the Gulf Coast and East Coast.

Plus, cargo that’s destined for East Coast population centers can be transported by land more quickly and economically from ports like Savannah, just a four-hour drive from Atlanta and Orlando. So shippers get a couple of days back on the total transit time.

A predictor of rates

How has the additional volume affected outbound truck capacity and rates?

In 2014, the ratio between demand and capacity was an excellent predictor of rate changes for outbound vans from Savannah. There was a 0.76 correlation between truckload load-to-truck ratios and the spot market line haul rate, and the correlation was even stronger between the ratio in one month and the price in the following month.

That means a change in the load-to-truck ratio predicted a rate change in the following month 79 percent of the time (0.89 x 0.89 = 0.79). This was true despite a robust supply of trucks in Savannah, which kept load-to-truck ratios at or below national averages.

Some of those trucks are coming up from Florida,

running empty all the way. During the off-season, trucks delivering to southern and central Florida often deadhead out, sometimes as far as the Florida panhandle or even Georgia, to find northbound and westbound freight.

Most truckload freight leaving Savannah is bound for markets within a single day’s driving distance, like Georgia and the Carolinas, or back down to Florida. The primary destination is Atlanta, the region’s biggest freight hub.

Freight availability was up 8.3 percent outbound from Savannah in January compared to January 2013, which is a strong result. (I’m comparing this winter to 2013 because the Polar Vortex of 2014 led to atypically high demand on the spot market.) Even with the increased freight availability, however, carriers searched for loads almost twice as often in January 2015 as they did in the same month of 2013.

The diversion of freight from West Coast to East Coast ports may be permanent. At minimum, it is likely to continue until late May, when the backlog is expected to clear at the Ports of Los Angeles and Long Beach. Truck turn times in Los Angeles-Long Beach are improving but the average truck visit to the harbor in February was still 50 percent longer than a year prior.

In the meantime, East Coast and Gulf Coast ports are working hard to attract business. Shifting freight patterns and additional traffic should have a significant impact on capacity and rates as the busy season ramps up.

Mark Montague is manager, industry rates, for DAT Solutions, which operates the DAT® network of load boards. As a mathematician and statistician, he has applied his expertise to logistics, rates, and routing for more than 30 years, and was instrumental in developing DAT’s RateView truckload rates and analysis product. Mark is based in Portland, Ore. For information, visit www.dat.com.