"China Plus 1" sourcing trend is steering containers to Georgia, Port of Savannah says

The Port of Savannah says changing supply chain and demographic trends are steering a growing share of the nation’s global container trade to Georgia’s shores.

Trends in U.S. demographics and manufacturing, as well as changes in global sourcing, will steer cargo toward Savannah, Georgia Ports Authority (GPA) Executive Director Griff Lynch said Monday in remarks to the Georgia Foreign Trade Conference.

“The population of the U.S. Southeast is growing faster than any other region of the country, and manufacturers are flocking to the area’s business-friendly states,” Lynch said in a release. “Overseas, production is shifting to locations such as India and Vietnam that favor delivery via Savannah.” 

Lynch cited shifts in both domestic and global regions that will funnel more containers to Savannah.

One factor is that logistics operators have been shifting a growing percentage of cargo away from the West Coast to East and Gulf coast ports, in part because they are spooked by increasing labor strife during a protracted contract negotiation between dockworkers and West Coast port operators. Consequently, GPA’s share of the U.S. container market has expanded from 7.8% in FY2014 to a record 11.4% in FY2023. Georgia Ports now handles nearly one out of every eight loaded twenty-foot equivalent container units in the U.S.

Another factor is sheer population growth, he said. The population of the U.S. South increased by 2.3 million people from 2020 to 2022, while the population of the Western U.S. grew by only 92,000 according to U.S. Census data.

“As the nation’s fastest-growing region, the South is seeing increased consumer demand, which translates into higher port volumes,” Lynch said. “The area has also seen strong growth in manufacturing, including the recent announcement of the Hyundai Metaplant. The carmaker is poised to establish a whole new ecosystem of auto manufacturing and ancillary suppliers moving cargo through Georgia’s deepwater ports.”

A third factor poised to swell Georgia’s share of the container market is a move by many companies to diversify their supply chains away from China, Lynch said. Shippers are now exhibiting a “China Plus 1” policy, maintaining significant production capability in China while simultaneously adding secondary manufacturing locations in growing markets such as Vietnam, Korea, Thailand, and India.

As a result, imports flowing from China through the Port of Savannah have already dipped from 49% of the port’s total imports to 41% from 2018 to 2022. At the same time, Savannah’s rank among global container ports has risen from 46th to 27th worldwide since 2006, thanks to rising trade in agriculture, retail, and manufactured goods. 

“The question is, who is going to be the big China Plus 1 winner?” Lynch asked. “In our view, India is well positioned to take on significant volumes.” And cargo from India favors the Suez Canal to reach the U.S., benefiting the U.S. East Coast and Savannah, he said.