Ray Charles needed this song to remind him of Georgia. Maybe years ago that was necessary, but today, this part of the U.S. economy is singing for itself. The extensive infrastructure it boasts has enabled the economic zone to broaden its reach globally and provide access to and from the U.S. market when other parts of the lower 48 were not able to do so. Is the future for Georgia and the surrounding states as bright in the future as in the past, and are there opportunities for Canadian exporters?
A key eye-catching moment in Georgia’s recent economic story was 2004. During that memorable year, there was a West Coast ports crisis: extensive traffic on the seaboard ran into an infrastructure wall. At the time, lease rates on container and bulk ships were sky-high, as economic flows had outstripped shipping capacity. As such, the inability to offload at Los Angeles-Long Beach and other key West Coast ports became extremely expensive—so much so that shipping lines were diverting through the Panama Canal, and locking in U.S. Gulf Coast and eastern seaboard capacity.
The Port of Savannah was at the ready, and for the next three years, container traffic rose at a compound annual growth rate of 16%. This is an impressive number for at least two reasons: first, it was well ahead of economic growth, or even growth in foreign trade, or any other significant economic aggregate; and second, this was before accounting for inflation; this was just the number of physical containers that were moving. Since then, the port has managed an annual average growth path of 5% in spite of the Great Recession, and has more recently averaged 7.5%—things are still going strong.
There are a lot of features that go in to creating this capability. Key to this are not only visionary port facilities, but road and rail networks that efficiently and reliably move goods quickly to either distribution centres or final destinations. Speaking of which, Georgia hosts key regional distribution facilities for giants like Walmart, UPS, Amazon, DHL, Home Depot and others. There’s also the renowned, world-class international airport in Atlanta, from where anyone can reach more than 80% of the US in just two hours.
Corporations seem to like this. Atlanta alone is home to the headquarters of no less than 16 Fortune 500 companies, including, in order of 2018 revenues, Home Depot, UPS, Coca-Cola, Delta Airlines and Southern Company. Firms with a global reach are operating here, indicative of the competitiveness of this region and its future prospects.
For these reasons and more besides, it should come as no surprise that Canadian exporters do well here. Total export growth to the entire U.S. market grew at a 3.6% annual pace in the past five years, but to this region, the number was 6.4%. Roll in contiguous states that are within a 500-kilometre radius, and the growth is upped to a near-doubling at 6.9%.
It gets better. Among the top 25 goods that we ship to this zone, there are a significant number that are consistently up by double digits. The 14 fastest-growing merchandise exports to Georgia are rising at a sustained 18% annual pace in the past five years. Throw in Alabama, Tennessee, Kentucky, North and South Carolina, and the 10 export sectors that are growing by double digits, and average five-year growth rises to over 20%. This is a dynamo that, if sustained in the future, could yield very promising results for Canadian exporters.
These are among the reasons that EDC opened its first-ever U.S. office in Atlanta at a gala celebration last night. This is a place that is not only a hot trading zone in the U.S., but an access point to businesses and supply chains with a significant global reach. While Canadian exporters are diversifying, there are still great prospects in key pockets of our top export market that are worth giving a good hard thought to.
