Market InsightNews

Charleston turns up the heat in winter as Savannah cools

 (Photo: Twitter @SCPorts)
(Photo: Twitter @SCPorts)

The Charleston area freight market is showing signs of rapid growth in the doldrums of winter and it appears to be doing it at the expense of its sister port town of Savannah. According to FreightWaves’ proprietary Tender Rejection Index (TRI), there has been a 60% increase in carrier tender rejections from mid-January to mid-March out of the Charleston market. In contrast, rejections on the TRI associated with Savannah, GA, dropped by a nearly identical amount.

TRI measures the willingness of carriers to honor the tender requests of loads they are electronically sent. So more rejections equals tighter market conditions; fewer rejections equals looser conditions. The bottom line is that Savannah is sucking wind right now, and Charleston is living high. 

The graphic shows that the number of Charleston and Savannah’s outbound rejected loads appeared to move in conjunction until March 1, where a sharp divergence can be seen.  

The increase implies there is a large truck shortage in Charleston relative to available loads. DAT shows an average of 9.6 loads available per truck as of March 21. The average rate per mile in the Charleston to Atlanta lane climbed to $2.70 from $2.53 the prior month. The rate from Savannah to Atlanta has decreased since January by about 2% from $638 to $625 per load (short-haul lanes are listed as notional value vs. spot rate).

According to the South Carolina Ports Authority, volume at the Port of Charleston in 2017 increased 9% from the prior year. By comparison, according to the Georgia Ports Authority, volume at the larger port of Savannah grew at 11% in 2017.

This area is not seeing the same equipment shortages its neighbor up the coast. That is due to the fact the Savannah port is the logical first stop when coming up the water from the Panama Canal and sees more annual volume. In 2017 the Savannah port handled over 4 million TEUs and Charleston did 2.2 million. Many carriers have already accounted for this surging volume as is exhibited in the relatively flat rate movement year to date as is exhibited in the slightly downward pressure on the rate and turndown numbers.

This could be an evolving trend where more shippers shift their port volumes away from the bigger ports to take advantage of lower costs. As the economy continues to grow and inflation continues to rise, shippers will find more creative ways of cutting costs in this constantly changing environment. Port pressure is just one variable, as all freight traffic grows in conjunction with the economy. Having the appropriate analytical tools and information will be crucial to shippers for maximizing profitability.

Many trucking companies are slow to move on this type of information, keeping with traditional knowledge instead of attempting to adapt to the markets. Savvy carriers should be able to use this information to adjust both rates and fleet positioning. Because of the overheated nature of Charleston currently, carriers would be advised to shift capacity into the market at lower inbound rates, therefore benefiting from outbound rates and volume. This is true especially for carriers that service Savannah and Charleston on a regular basis. While Savannah might have Charleston beat when it comes to St. Patrick’s Day celebrations, Charleston is where the green is these days. 

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Zach Strickland, FW Market Expert & Market Analyst

Zach Strickland, the “Sultan of SONAR,” curates the weekly market update. Zach is also a one of FreightWaves’ Market Experts. With a degree in Finance, Strickland spent the early part of his career in banking before transitioning to transportation in various roles and segments, such as truckload and LTL. He has over 13 years of transportation experience, specializing in data, pricing, and analytics.