Savannah bets heavily on Asian market, while Charleston seeks diversity

By Dan McCue
Staff Writers

Though they compete tooth and nail to enhance their standing in the eyes of the ocean shipping companies, the ports of Charleston and Savannah have served different markets throughout their respective histories.

The rough breakdown is as follows:

A third of Charleston’s inbound and outbound cargo is tied to Northern Europe, while 21% comes from Asia and India and South America each account for 11%. The Mediterranean and other regions account for the remaining 24%, according to a 2005 breakdown compiled by PIERS Port Horizons, an independent maritime industry analyst.

In Savannah, meanwhile, about 66% of its trade activity is with Asia, with North Europe and the Mediterranean each accounting for 8%, South America and the Middle East accounting for 4% each, and “others” accounting for 10%.

“Traditionally, the Northern European market has always been very important to us, and while it’s a large market, it’s also a mature market, and that means you’re not going to see a rate of growth comparable to that with some of the Asian countries,” said Byron Miller, spokesman for the S.C. State Ports Authority.

While Savannah is banking heavily on the China trade, the Port of Charleston is actually being more affected by trade from India, the economy of which is growing by 5% a year.

“That really is a new issue for us,” Miller said. “Back in 1999, about 17,000 containers a year came through Charleston from India, representing about 1 percent of our total annual activity. Today, we see about 100,000 Indian containers annually, about 7 percent of our total annual activity, making them our third largest trading partner.

“India really is a major, major story in international trade. In fact, if it weren’t for China, we’d all be talking about India.”

What’s hard to assess, except anecdotally, is what impact the Asian trade is truly having on the major ports’ contracts with the shipping lines. Both South Carolina and Georgia have passed legislation to make the agreements exempt from the Freedom of Information Act.

As the recent announcements from both ports authorities attest, there’s always movement between one port and another, with the shipping companies throwing in their lot with whichever port represents the least resistant path to trade at the time.

In years past, the goal of almost all ports was to tie their customers in for a three- to five-year period. Today, many ports, including the Port of Savannah, are asking for 10- to 15-year contracts.

“Given the confidentiality of these agreements, it’s hard to say with certainty what these long-term contracts say, but our feeling is that our competitors, backed by state subsidies, are agreeing to set structures which in the long term, given that we also believe there are no set guarantees for container volume, may not be to their benefit,” Miller said.

“Locked-in rates are great for the shipper, but in the long run we believe subsidized ports that go for the short-term gain will have a lot of explaining to do to the taxpayers at the end of the day.”

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

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