Although logistics is one of many topics in Chapter 11 (Supply Chain Management), USA Today (Oct.3, 2011) details its critical role in an article about the Port of Savannah, the nation’s fastest growing shipping port. The bustling 1,200 acre site touches the lives of 44% of the US population, serving as a supply line to 15 states, and is one of the few ports handling more exports than imports (only the Port of LA is bigger). But Savannah is at an important crossroads, as the Panama Canal completes (in 2014) its first major expansion in 100 years. When that project is done, the canal’s locks will be able to hold cargo ships 3 times the current capacity. This means that cargo currently unloaded at West Coast ports, and shipped by rail across the US, will be able to dock directly at East Coast ports like Savannah.
The only problem is that Savannah (and most other Eastern ports) do not have channels deep enough to handle these larger vessels (called “post-Panamax” ships). A long sought channel-deepening project would result in 15-20% cheaper shipping costs. For example, Home Depot, which imports about 20% of its goods through Savannah, says: “The deepening of the port creates efficiency and lowers the cost of doing business. We can pass the savings on to our customers”.
The holdup: the federal government. The Port asked for permission to start the harbor project in 1996. Congress authorized a study in 1999. But approval for the $569 million expansion requires the signoff of the Secretary of Commerce, Secretary of Army, Secretary of Interior, and the EPA. Port officials complain that this ” is one of the longest studied projects in history”.
Discussion questions:
1. Why is the dredging of the Eastern ports an important topic in OM?
2. Why is Savannah a major port for product exports? (Other Eastern ports include Miami, Jacksonville, Ft. Lauderdale, Charleston, Baltimore, Wilmington, Philadelphia, NY, and Boston).