Will The Investment of $1 Billion in Taxpayer Funds to Dredge/Deepen the St Johns River Produce the Claimed Return On Investment? David Jaffee Professor.

Will The Investment of $1 Billion in Taxpayer Funds to Dredge/Deepen the St Johns River Produce the Claimed

Return On Investment?

David Jaffee Professor of Sociology

Northeast Florida Center for Community InitiativesUniversity of North Florida

[email protected]

THE BIG PICTURE

Globalization, Discretionary Cargo, Containers, And Ports

OBJECTIVE: Moving imported goods as quickly and cheaply as possiblefrom the point of production to the point of consumption

GETTING THE GOODSFrom Landbridge to All-Water

Widening the Panama CanalSee: Impact of Panama Canal Expansion on US Intermodal System

Rail

Landbridge

All-Water

12.3 days

6 days

21 days

WHY YOU SHOULD NOT TRUST THE COST-BENEFIT NUMBERS

PROJECT/PUBLIC APPROVAL =(underestimate costs) +

(overestimate revenues) + (undervalue environmental impacts) +

(overvalue economic development effects)*

Lesson:Conduct/commission independent cost-benefit analysis of the project

* B. Flyvbjerg, M.S. Holm, & S. Buhl, S. “Underestimating costs in public works projects”, Journal of the American Planning Association 2002 Volume 68(3) p. 279-295.

The USACE Jacksonville Harbor Deepening Reportis not a comprehensive cost-benefit analysis

The only “benefit” that the report calculates is

Reduction in Transportation Costs

These benefits accrue to retailers, shippers and carriers

Public costs, private benefits.

This is a return to those who made no investment.

WHO BENEFITS?

“The economic function of competition between established regional container ports is to incentivize them to be more

responsive to the needs of global maritime freight transportation industry.”

(USACE Response to Independent External Peer Review)

Destructive Competition“…interport competition results in an unnecessary and unrewarded

transfer of wealth from local taxpayers and users to global firms.”

Potter, “Boxed In: How Intermodalism Enabled Destructive Interport Competition”

Job Benefit Claims Cannot Be Trusted

“65,000 jobs supported/generated/provided by the port”

~66% are “related jobs” that and should not be included

Leaves ~22,210

Of which 8,965 are “direct jobs”~8,845 are “induced”

~4,400 “indirect”

Based on Martin Associates report (2009)

If 47’ vs 40’13,844 additional jobs generated

by 2035

5,587 are direct private sector port jobs,

Current Job Claims for Project

“The Regional Economic Development (RED) benefits areincorrectly attributed to the harbor deepening and therefore overemphasize regional benefits of the Jacksonville Harbor

Project.” (External Peer Review)

Martin job/revenue numbers -- assumptions to question:

• Based on capturing how much cargo from other ports?

• Factor used to translate TEUs into jobs and revenue?

• Income level of jobs used to estimate induced jobs?

Job Quality Data Inaccurate

Claim: Avg Salary 43,000

Transportation and Material Moving Occupations* Occupation Code = 53

Total Employment = 44,260Median Annual Income = $28,538

Median Wage in this sector: $13.78

Living Wage for Duval County**1 adult, 1 child = $19.71 per hour

* Bureau of Labor Statistics’ Occupational Employment Statistics (OES), May 2013

** Living Wage Calculator, Massachusetts Institute of Technologyhttp://Livingwage.mit.edu

Job Quality

Transportation and Material Moving Occupations*

61% of employment in three largest occupations: Laborers and Freight, Stock Material Movers (34%)

Heavy and Tractor Trailer Drivers (21%)Packers and Packagers (6.4%)

Average Median Income for these three = $28,395 (assuming FT/Year round employment)

* Bureau of Labor Statistics’ Occupational Employment Statistics (OES), May 2013

Geographic Distribution of Benefits

Unanimous conclusion of research on changing socio-economic impact of ports as a result of containerization

and intermodalism:The geographic concentration of costs

($, infrastructure, environmental, air/water, congestion, noise)

and the dispersion of benefits (jobs, income, revenue)

USACE recommendation based on national not local economic benefits

If ROI Depends on Bringing In Largest Post- and

New Post-Panamax Vessels, And/or Jaxport Being a First-In/Last-Out Port

It Won’t Happen

CONTAINER VESSEL NAME

TEUs

(nominal)

Water Draft

(ft)

Air Draft

(ft)

 Evergreen

Ever Laurel

8,800

46.6

~175

Susan Maersk 8,000 47.6 ~180  

MSC SINDY 9500 49 NA  

New Panamax 13,200 49.9 > 180  

Emma Maersk 15,000 50.9 195  

Maersk Triple-E 18,000 51 239  

Dames Point Bridge air draft = 175 ft

47’ Water Too Shallow/Bridge to Low

Shallow Water Designed Maersk SAMMAX VesselCONTAINER

VESSEL NAME

TEUs

(nominal)

Water Draft

(ft)

Air Draft

(ft)

 Maersk

SAMMAX

7,500

39

? 

If ROI Depends on Capturing CargoWhy No Multiport Analysis?

“Federal interest has not been demonstrated in the General Reevaluation Report II (GRRII) because a multi-port analysis assessing competition

among regional ports is not provided.”(Peer Review: High Significance)

If a multiport analysis had been conducted, it is likely that the USACE would not have recommended dredging.

See multiport analysis in Savannah Harbor deepening study.http://www.sas.usace.army.mil/Portals/61/docs/SHEP/reports/GRR/SHEP%20FINAL%20GRR

%20APPENDIX%20A%20Economics%20Att%204.pdf

USACE response:“Historical data indicates that many of the ports that would be regional

competitors to the Port of Jacksonville are also on the same itineraries.”

Multiport Analysis of Where Carriers Will Be Taking Cargo

“Revealed Preferences” of Carrier Alliances

JAXPORT Losing Market Share to Other Ports

Alliance Port Rotation

East Coast Port CompetitionAnd Fiscal Irresponsibility:

Why no national plan?How many deep water ports do we need?

“Our challenge is to invest in capacity expansion in the right places at the right time consistent with industry needs. ..South of Norfolk there are no ports that are fully post-Panamax ready. The ports of Savannah, Charleston and Miami are at various stages of capacity

expansion. Successful development at these ports would fill the critical need on the Southeast coast. However, there may be a need

for “cascade ready” expansion at some of the smaller ports.’

U.S. Port and Inland Waterways Modernization : Preparing for Post-Panamax VesselsInstitute for Water Resources

U.S. Army Corps of Engineers http://www.iwr.usace.army.mil/Portals/70/docs/portswaterways/rpt/

June_20_U.S._Port_and_Inland_Waterways_Preparing_for_Post_Panamax_Vessels.pdf

http://www.iwr.usace.army.mil/Portals/70/docs/portswaterways/rpt/June_20_U.S._Port_and_Inland_Waterways_Preparing_for_Post_Panamax_Vessels.pdf

“Post-Panamax Ready”

“Cascade-Ready”

'Certainly we as an association and in the industry as a whole recognize and believe that not every port in the country needs to be at a depth to be able to accommodate the largest vessels in international trade,' Kurt Nagle, American Association of Port Authorities

Playing on Jaxport Strengths Without 47’,

$1 Billion, Bond Debt, Overcapacity, and Environmental Destruction

• Diverse range of cargos – containers, bulk, breakbulk, and ro-ro

• Niche carrier development with growing markets/economies of Caribbean, Central

America and South America – SAMMAX vessels?

• Developing LNG bunker fuel facilities for Puerto Rico and Caribbean shipping

• Receive feeder vessels from transshipment hubs in Central America and the

Caribbean

• Cultivate Port of Jacksonville firms and private terminal operators such as Crowley

• Mile Point fix will ensure 24 hour access