The Peter Zeihan Podcast Series - Why the Port of Savannah Is Poised for Success (The Jones Act) || Peter Zeihan

Episode Date: November 21, 2023

Savannah is awesome! Not only is it home to my favorite bar and one of my favorite food scenes, but it is also the site of the largest containerport in North America. Donate to MedShare HERE: https://www.medshare.org/zukraine/ Full Newsletter: https://mailchi.mp/zeihan/why-the-port-of-savannah-is-poised-for-success

Hey everybody, Peter Zine here, coming to you from Savannah. One of my favorite cities in North America, and one of the reasons is the bars and one of the reasons of the restaurants. And the other one, it is home to the largest container port in the continental United States. Been operating for a few years now. They keep expanding it. You're looking at here, one of the merce medium-sized ships. The supers do come through here. They just have a problem getting through that bridge there.

All right, it's raining. We're going to do the rest of this inside. Sorry, I got waylaid by the client. couldn't do the rest of this one from Savannah, so I'm back home. Two big reasons to be really bullish and really impressed by the port of Savannah over the years to come. The first has to do with that Jones Act that I keep talking about, the law that says that only American vessels can dock at American ports in succession. So, for example, if you're in a cargo vessel and you're delivering things to the Chinese coast, the same vessel will go point, point, point, point, point, but if that same vessel, let's say it's Japanese, was to come to the U.S. West Coast and it stopped

in Seattle. It would then have to go back to Vancouver before it could go to San Francisco, then would have to go back to Vancouver before it could go to San Diego. As a result, the push for ports is to get bigger and bigger and bigger in order to take these big foreign vessels and it's crowded out all the smaller American ones. And because the infrastructure required to do that, requires a large chunk of land, and most American cities don't have a lot of port capacity. Instead, what you get are shuttle ships

where you'll take a big vessel into a place like Kingston, Jamaica, and the cargo will be relocated onto a lot of, again, foreign vessels that will then go directly to Miami or go directly to Charleston or go directly to New York. And as a result, the Jones Laws

has just completely hollowed out the American maritime space. Savannah is the first location in the United States since 1920 to manage to build a super container. port. It's up river a bit, but the biggest vessels, some of the biggest vessels in the world go there regularly. You saw the one that was coming through. That was actually a fairly

spulfful one. But it's the only place in the continent of the United States can actually take these vessels all at once, with the exception to maybe Long Beach. Other places tend to do more mix of business. So, for example, the Tacoma port does take fairly large containers, but it's also a major export point for commodities coming out of the interment and interior of eastern Washington and Oregon. Anywho, bottom line is as long as we have these very, very large container ships,

which are the norm for initial trade right now. Savan is really the only place in the United States that can take them on the East Coast at all. New Jersey just isn't up to snuff in that regard. So that's issue number one. Issue number two, if we're moving to a de-globalized, period. We're going to have a lot of different patterns here, and our interactions with the

Mexicans are going to become much, much, much, much, much more robust. Now, there are some limitations on the infrastructure between Texas and Mexico that do a decent job of integrating the northern tier of states, but half of the population of Mexico is in the greater Mexico City area. And if we're going to have the expansion industrial plant that we need in North America in order to deal with the post-Chinese environment, we're going to have to metabolize a lot of what is in Central Mexico. Now, there are two ways you can do this. The first one is to build a really robust multimodal roads and rail system going from the border all the way down into the Mexico City Corps. We should definitely do that. The second one is to turn Vera Cruz once again into a very,

very large port so that product from Mexican City Corps can go down to Verra Cruz, get on a vessel, and then come up to the United States. Now, you can do that in one of two ways as well. You can use small shuttle tankers that go to places like Houston or New Orleans or Miami, or if you're more interested in the eastern seaboard, you're just putting it on a mega ship and you put it in Savannah. So it doesn't really matter which path we're on here or how smart or how dumb we are and taking advantage of the changing world around us. Savannah's got the hardware in place for really any possible scenario here, and so the ships are going to keep coming. And so am I.