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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 Initiatives University of North Florida djaffee@unf.edu. THE BIG PICTURE

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slide1

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 Initiatives

University of North Florida

djaffee@unf.edu

slide2

THE BIG PICTURE

Globalization, Discretionary Cargo, Containers,

And Ports

  • OBJECTIVE:
  • Moving imported goods as quickly and cheaply as possible
  • from the point of production to the point of consumption
slide3

GETTING THE GOODS

From Landbridge to All-Water

Rail

6 days

Landbridge

12.3 days

All-Water

21 days

Widening the Panama Canal

See: Impact of Panama Canal Expansion on US Intermodal System

slide4

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.

slide5

The USACE Jacksonville Harbor Deepening Report

is 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.

slide6

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”

slide7

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)

slide8

Current Job Claims for Project

If 47’ vs 40’

13,844 additional jobs generated

by 2035

5,587 are direct private sector port jobs,

“The Regional Economic Development (RED) benefits are

incorrectly attributed to the harbor deepening and therefore overemphasize regional benefits of the Jacksonville Harbor Project.”

(External Peer Review)

slide9

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?
slide10

Job Quality Data Inaccurate

Claim: Avg Salary 43,000

Transportation and Material Moving Occupations*

Occupation Code = 53

Total Employment = 44,260

Median 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 Technology

http://Livingwage.mit.edu

slide11

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

slide12

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

slide13

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

slide14

47’ Water Too Shallow/Bridge to Low

Dames Point Bridge air draft = 175 ft

slide16

If ROI Depends on Capturing Cargo

Why 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.”

slide17

Multiport Analysis of Where

Carriers Will Be Taking Cargo

slide18

“Revealed Preferences” of Carrier Alliances

JAXPORT Losing Market Share to Other Ports

Alliance Port Rotation

slide19

East Coast Port Competition

And 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 Vessels

Institute 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

slide20

'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

“Post-Panamax

Ready”

“Cascade-

Ready”

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

slide21

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