Source: adapted from Google Earth.

Savannah Logistics Cluster

The port of Savannah is under the jurisdiction of the Georgia Port Authority and has seen a strong growth of its traffic up to 2008, when it handled about 2.6 million TEU. Such a growth was the outcome of two major trends. The first concerns demographic and commercial changes that have attracted cargo that conventionally transited through the middle or north Atlantic ranges of the east coast. The second concerns investments in port infrastructures to provide additional capacity, shorter transit times through the all-water Panama route, large assets of greenfield real estate and lower labor costs, which have contributed to position the region as a North American gateway.

Savannah’s growth has increasingly placed pressures on the setting of satellite terminal facilities to alleviate the port’s terminals and to facilitate inland distribution. Nearby are two near dock real terminals, one owned by CSX and the other by NS, which transited 235,000 TEU in 2007, about 9% of the port’s traffic. The port authority has particularly been active in the setting of logistic zones in the port’s periphery. They include:

• One such zone is the Savannah Port Authority Industrial Park (SPAIP) which is a site specializing in satellite activities removing pressures from the container terminals, such as container and chassis storage and repair.
• About 10 km from the port terminals are two large logistics zones; the Crossroads Business Park (CBP) owned by the Savannah Economic Development Agency and the Savannah River International Trade Park (SRITP) owned by the Georgia Port Authority. They both replicate the revenue generation landlord model where facilities are leased to tenants for various time periods, but some have purchased land and built their own facilities, such as the retailer Target that completed in 2007 a 2.1 million square foot distribution center.

Although such a speculative strategy can help attract customers since their entry costs are lower, it also comes at a risk that the landlord must bear if the expected customer base does not materialize or if some customers decide to move elsewhere. For instance, in 2008, due to a drop in retail volumes, Wal-Mart decided to break the lease of its 800,000 square foot distribution center in CBP and consolidate its activities in Statesboro, about 70 km inland.

The usage of Free Trade Zones (FTZ) is also a common postponement and added value strategy in American inland ports. For the logistic cluster of Savannah, SPAIP and CBP are both entirely considered as FTZ. Retailers are using this advantage to delay payments on their imports until they are leaving the FTZ to their stores or regional distribution centers.

On another front, a project to establish an inland port 275 km west of Savannah is gaining momentum. The main promoter of the Cordele Intermodal Center (CIC) is a county industrial council that follows the conventional strategy of landlord revenue generation and economic development by securing land in proximity to a rail terminal (CSX) and making it available for the development of logistic activities. Another goal is to improve the hinterland of the port of Savannah in southwestern Georgia, in the Florida panhandle and in western Alabama, competing more effectively with the port of Mobil. While in terms of traffic it could be a zero-sum game, lower inland distribution costs could lead to indirect economic benefits. The rail link mainly belongs to two short line operators, which confers the advantage of having a rail shuttle service that does not impair the existing CSX network. The satellite terminal activities and the possible development of an inland port underline a set of strategies spearheaded by the port authority to cope with the import oriented functions generated by the freight distribution activities of North America’s largest “big box” retailers.