Charleston turns up the heat in winter as Savannah cools

November 30, -0001 Zach Strickland

 (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. More rejections = tighter market conditions. Less rejections = looser conditions. Bottom line- Savannah is sucking wind right now, Charleston is living high. 

CHA vs SAV TD Percent.png

The graphic shows that the number of Charleston and Savannah's outbound rejected loads appeared to move in conjunction until the first of March where a sharp divergence started to take place. 

In recent days, as many as 40% of load tenders have been rejected by carriers in the Charleston market, while only 15% of the load tenders are being rejected in Savannah. Interesting enough, both cities were going up in rejections, until early March. Charleston continued its upward trajectory in rejections, while Savannah became a looser market.  

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

This demonstrates two things that we already know: tender rejections are leading indicators of spot rates and when carriers are rejecting more loads, spot rates will go up as shippers scramble to find truckers to carry loads for them. 

According to the South Carolina Ports Authority there was a 9% increase in 2017 vs 2016 in Port of Charleston. By comparison, according to the Georgia Ports Authority, the larger port of Savannah grew at an 11% rate in volume 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 surging markets 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 benefitting 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. Patty celebrations, Charleston is where the green is these days. 

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