Transcript David Jaffee, "Will the Investment of $1 Billion in Taxpayer Funds to Dredge/Deepen the St Johns River Produce the Claimed Return on Investment?" -- Presentation to City Council

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
[email protected]
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
GETTING THE GOODS
From Landbridge to All-Water
Widening the Panama Canal
See: Impact of Panama Canal Expansion on US Intermodal System
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 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.
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)
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)
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 = 44,260
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
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
47’ Water Too Shallow/Bridge to Low
CONTAINER
TEUs
Water
VESSEL
(nominal) Draft
NAME
(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
Shallow Water Designed Maersk SAMMAX Vessel
CONTAINER
VESSEL
NAME
Maersk
SAMMAX
TEUs
(nominal)
Water
Draft
Air Draft
(ft)
(ft)
7,500
39
?
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%20A
PPENDIX%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 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_Wa
terways_Preparing_for_Post_Panamax_Vessels.pdf
'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”
“CascadeReady”
http://www.iwr.usace.army.mil/Portals/70/docs/portswaterways/rpt/June_20_U.S._Port_and_Inla
nd_Waterways_Preparing_for_Post_Panamax_Vessels.pdf
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
feeder vessels from transshipment hubs in Central America and
•theReceive
Caribbean
Cultivate Port of Jacksonville firms and private terminal operators such as
•Crowley
• Mile Point fix will ensure 24 hour access