Chicken-Feet Exports Help Savannah Lead U.S. Port Growth
By: Mary Jane Credeur, Bloomberg.com
12/7/2012 2:10:56 PM
Asia's burgeoning middle class can't get enough chicken feet, and that demand is helping make Georgia's Port of Savannah the fastest growing in the U.S.
Feet and chicken leg quarters have pushed Savannah to an annual growth rate of 11 percent in the past decade, double that of Houston, the second-quickest. Savannah has ranked third in container shipments, trailing only Los Angeles/Long Beach and New York/New Jersey, since 2007 after not even cracking the top 10-list 15 years ago.
"Savannah has been a sneaker under the radar, and it has a really good niche," said K.C. Conway, executive managing director at consultant Colliers International in Atlanta. "Poultry is the ideal protein export in so many ways because it's grown and harvested so quickly, with slaughtering and processing quality standards here that Asia doesn't quite have."
Chickens are part of an export flow setting Savannah apart from other U.S. ports. While outbound goods make up about 30 percent of the tonnage at most U.S. ports, that share is 54 percent for Savannah, said Page Siplon, executive director of the Georgia Center of Innovation for Logistics.
That means shipping lines like A.P. Moeller-Maersk A/S can fill outbound vessels, making it less costly for importers such as Wal-Mart Stores Inc. and Home Depot Inc. to use Savannah, Siplon said.
"At ports in California, New York and New Jersey, ships come in and dump the containers, but there's not a lot going out," Siplon said. That's helped container traffic at Savannah more than double in the past decade, according to data from the American Association of Port Authorities.
The port is now bracing for a $652 million dredging project to handle the larger ships able to use a widened Panama Canal starting in 2015. That should pave the way for 5 percent annual growth in container shipments over the next decade, Georgia Ports Authority Executive Director Curtis Foltz said.
One-eighth of all U.S. exports by weight already go through Savannah, trailing only Los Angeles, according to data compiled by the U.S. Commerce Department. Weekly shipments averaging 57,300 containers a week include as many as 1,200 refrigerated export containers, with about 30 percent of them carrying chicken feet - known abroad as paws - bound for Hong Kong or China, Foltz said.
"It's typically dark meat, amazingly high volumes of chicken feet, and a lot of it's going to feed this growing middle class in China," Foltz said. "As they have more discretionary income, their protein intake increases and poultry is a great protein additive."
The feet are "a little rubbery, but good," he said.
Chicken feet and leg-quarter exports rose 5.6 percent this year through September to 2.72 million metric tons, according to the U.S.A. Poultry & Egg Export Council. Georgia Dock whole-bird prices, a proxy for what retailers pay processors, climbed 8.6 percent in the 12 months ended Dec. 5 to 97.5 cents a pound.
The beneficiaries include closely held poultry producers AJC International Inc. and Intervision Foods LLC and railroads CSX Corp. and Norfolk Southern Corp., which both serve Savannah.
Asia-bound poultry exports share Savannah with imports headed to retailers including Wal-Mart, Home Depot and Target Corp. Wal-Mart has more than 3 million square feet of warehouse space near the port, while Home Depot and Target each have about 2 million square feet, Foltz said.
Savannah's other main exports are wood pulp and paper products and kaolin clay, a binding material used in cosmetics and hundreds of other products such as glossy magazine pages.
The port won approval from the U.S. Army Corps of Engineers in October for a four-year project to deepen the harbor by 5 feet (1.5 meters), to 47 feet, to accommodate more of the large ships that will be able to use the Panama Canal after its $5.25 billion expansion.
Savannah's rise was fueled by competitors' misfortune when a 2002 West Coast dock strike - more sweeping than the just- ended walkout at Los Angeles/Long Beach - spurred customers to divert traffic to other eastern ports. Savannah's volume surged 32 percent in 2003.
"Economists anticipated it would drop off after the West Coast reopened, but the next year it grew even more," Siplon said. "Here was this sleepy little port, and shippers realized they got all their boxes through. It was a big testing point for Savannah and they passed and haven't looked back."
The export market for chicken feet began taking shape at about the same time.
Until the mid-2000s, feet were considered a castaway item and were removed at processing plants before even reaching U.S. Agriculture Department inspection stations, said Toby Moore, a spokesman for the Stone Mountain, Georgia-based poultry and egg export group.
"We threw them away," Moore said. "It was like feathers or eviscera that were sent to a rendering plant where protein is extracted."
Buyers in Hong Kong expressed interest in chicken paws, and a new category of poultry exports was born, Moore said. Shoppers across China are becoming richer, with sales of discretionary goods projected to rise at a compounded annual rate of 13.4 percent from 2010 to 2020, McKinsey & Co. said in a report in March.
This year, poultry has been a bright spot while other meat exports have declined due to higher grain prices and drought-cut output. Beef exports were down 12 percent in the first nine months, and lamb fell a third, according to the U.S. Meat Export Federation.
The U.S. Department of Agriculture forecasts poultry exports will rise 3.3 percent this year, while the poultry trade group's data show China's consumption of U.S.-produced chicken feet has quadrupled.
Consumers buy the paws to make soup or for a quick snack, sometimes fried and seasoned with local spices, said Moore, the poultry trade-group spokesman.
"There's very little meat, but they're very tasty," Moore said.
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