Port of Savannah sets new record

[tufsu1]

Makes sense and it's something I've heard prior to Brown becoming mayor.

Ock had made a similar remark, shippers prefer an extra cheaper day or two by boat, then save the 2 days by more expensive rail.

maybe so, but Ock has been a major supporter of dredging - and also of SR 9B (I-795) as a more direct route connecting the port and points south.

[Jim]

The time has come to accept reality and quit trying to be something we are not and will never be - a first-in, last-out port.  That ship sailed in the 1990's when Savannah recognized its advantages and started investing heavily in distribution centers, cranes, roads, intermodal, and all the infrastructure necessary to be a top tier port. 

So Savannah can bet big on the future but we cannot?

[FlaBoy]

I think the fact that Norfolk lists Jax as one of its competitors is a good sign, even if to just show its advantage. There is always a happy medium somewhere, but I promise you, there is no reason Jax cannot compete on this one. Also, Miami, Port Everglades, and Savannah are all attempting to dredge. I think it is funny that Jax should be the only one wondering if it can compete.

http://politics.blog.ajc.com/2017/03/03/dredge-ready-savannah-port-tests-georgias-clout-in-trumps-washington/

[Tacachale]

I am more than willing to take my environmentalist hat off and look at this simply as a Jacksonville native and concerned taxpayer. 

I doubt that's possible for someone whose handle is "riverkeepered"

It still doesn't add up.  While I am no big fan of corporate incentives, at least you have some idea of the number and type of jobs you can expect and there is the opportunity for clawback provisions to help protect taxpayers should the employer fail to live up to their end of the bargain. 

With the dredging, we must invest nearly $1 billion with absolutely no assurance that the big ships will come.  When you look at our prospects of taking market share from Savannah and Charleston, we are clearly betting against the odds.  The time has come to accept reality and quit trying to be something we are not and will never be - a first-in, last-out port.  That ship sailed in the 1990's when Savannah recognized its advantages and started investing heavily in distribution centers, cranes, roads, intermodal, and all the infrastructure necessary to be a top tier port. 

This is what I'm talking about regarding exaggeration. Unless things changed in the last year and a half or so, the project isn't estimated at "nearly $1 billion", it's $680 million. Of that, around $200 million is the local contribution, the rest is state and federal money. That's still taxpayer dollars, but it's already committed, and will be spent on something if it isn't spent on our port. In other words, it's our money that will be funneled to some other project, most likely far outside of Jacksonville.

Savannah only got where they are by years of investment, whereas we sat on our hands and got surpassed. There's no reason it wouldn't work here if we got serious about investing and tightening the ship, but we'll only know if that's the right path to follow if people start talking about it in more realistic terms. To me, the real question is whether we can really raise the $200 million in local money and whether the port is the best use of the money if we do. There you have to factor the jobs and economic impact versus the opportunity cost, environmental damage, etc. Unfortunately, no one on either side is really asking that question.

Even if you think it is still possible for us to take share from our competitors, consider this.  Dale Lewis, a retired Director of Strategic Analysis for CSX, has been conducting an extensive analysis of the dredging economics.  Here is what he found:
"To reach its cash-flow goals, Jaxport's plan requires 100% container growth in the first 9 years after dredging. This would be a huge, rapid change. Over the last 3 to 5 years, Jaxport's container business has grown 1% per year. Jaxport's growth plan is 1 Million TEU's per year (55%) higher than the Army Corps of Engineers' demand estimate. This additional 55% growth would have to come from taking 1 Million annual TEUs of market share away from ports in other states....To succeed, Jaxport would have to capture a much larger share from these ports than it does today, capture it quickly, make sure that it grows and then hold on to it for more than 25 years. This level of competitive performance would be more than triple anything ever accomplished by any Florida container port.  It takes a billion dollars to make the attempt."  Are you willing to make that bet?  More importantly, do you have confidence in Jaxport's team to make that bet for you?

I don't.  Instead, let's consider a much more realistic bet with far less risk - let's be the best "cascade ready", niche port.  We already have a successful port and will continue to prosper if we will capitalize on our strengths.  The recent news about the new LNG tanks and the new Dominican Republic service added by Trailer Bridge are examples of the niche markets that offer growth opportunities for Jaxport.  And, both are examples that don't require deep water.

Yes, the port supporters have exaggerated the probably impact the port improvements would have. It doesn't mean that the impact it does have won't still be significant.

The suggestions you're making of becoming a "cascade ready niche port" would be a step back from even where we are. Ie, we'd likely lose business and jobs we already have, not because of technological changes or natural disadvantages of our port, but because we've decided we just don't want to compete anymore.

By the way, the high-wage union jobs everyone likes to focus on are going by the wayside.  ILA jobs have been in decline for decades due to increased productivity, primarily from automation.  The unions continue to fight fully automated terminals, but some already exist and more are to come.   Also, a report was released by the White House in December of 2016 that said "A bulk of the jobs come from heavy trucking, which the report estimates will see 80% to 100% of nearly 1.7 million drivers' jobs automated."  For the most part, the job growth opportunities associated with ports have been in the distribution centers. These are primarily warehouse jobs with many being part-time, seasonal, and low-wage with limited to no benefits.

I'm sorry, but this is just fatalism. Jobs will be lost to automation across the country, but Jacksonville is also losing them to other ports, and that's just because we aren't competing. Or perhaps we shouldn't invest in any blue collar jobs anymore because the robots will eventually just take them all.

[thelakelander]

I think the fact that Norfolk lists Jax as one of its competitors is a good sign, even if to just show its advantage. There is always a happy medium somewhere, but I promise you, there is no reason Jax cannot compete on this one. Also, Miami, Port Everglades, and Savannah are all attempting to dredge. I think it is funny that Jax should be the only one wondering if it can compete.

http://politics.blog.ajc.com/2017/03/03/dredge-ready-savannah-port-tests-georgias-clout-in-trumps-washington/

I don't think Jax is the "only one" that should be worrying.  I believe several ports need to better define exactly what are they competing for and how to best exploit their core advantage. The key to me is not putting all your eggs in one basket.  If you can't get down to 48 or 50 feet, it's not the end of the world.  You just have to find your niche. So a viable Plan B or C is just as critical as a Plan A, imo.

[riverkeepered]

This is what I'm talking about regarding exaggeration. Unless things changed in the last year and a half or so, the project isn't estimated at "nearly $1 billion", it's $680 million. Of that, around $200 million is the local contribution, the rest is state and federal money.

The total projected by the Army Corps is $766 million.  However, the Corps is notorious for underestimating the cost of dredging projects.  For instance, the Corps projected in 2003 that the most recent St. Johns River dredge (about five miles of the harbor from 38 to 40 feet) to cost $16.4 million. When it was completed in 2010, the cost ran to $64.8 million.  Of that $766m to dredge to 47-ft., Jaxport is responsible for coming up with $383 million.  However, this does not include the infrastructure upgrades that are in Jaxport's strategic plan that would be necessary to handle the larger ships.  These costs are in excess of $200 million.

I promise you, there is no reason Jax cannot compete on this one.

There are actually lots of reasons.  For one, most of the anticipated shift in market share from West Coast to East Coast ports has actually already occurred.  According to a 2016 CBRE report, "Much of the cargo that could be transferred from West to East Coast delivery has already shifted." So, Jaxport would have to take existing market share from other ports in the Southeast.  Savannah has all of the necessary infrastructure to efficiently move goods to market and have a cost advantage over Jacksonville in reaching Atlanta and other major consumption markets due to their location.  Miami also has a cost advantage reaching the lower half of the state of Florida, where most of the Florida consumers reside. They also already have 50-feet of water and the post-Panamax cranes and other necessary infrastructure in place. Jacksonville is not a competitor with Norfolk.  They service different markets. 

The reality is that carriers don't need every port to have deep water.  Just because everyone else is doing it, doesn't mean it is a wise investment or that it will pay off.

According to Jaxport consultant John Martin, "The large ships can't call multiple ports. Carriers lose all economies of scale once they start doing milk runs." 

Instead, they will select the small number of strategically located ports that have the necessary infrastructure to get goods to major consumption markets as quickly and efficiently as possible.  Unfortunately, Jacksonville doesn't appear to be on this short-list.

Also, remember what it would take for Jaxport to justify this investment. According to Dale Lewis, a local retired logistics expert:
"To reach its cash-flow goals, Jaxport's plan requires 100% container growth in the first 9 years after dredging. This would be a huge, rapid change. Over the last 3 to 5 years, Jaxport's container business has grown 1% per year. Jaxport's growth plan is 1 Million TEU's per year (55%) higher than the Army Corps of Engineers' demand estimate. This additional 55% growth would have to come from taking 1 Million annual TEUs of market share away from ports in other states....To succeed, Jaxport would have to capture a much larger share from these ports than it does today, capture it quickly, make sure that it grows and then hold on to it for more than 25 years. This level of competitive performance would be more than triple anything ever accomplished by any Florida container port.  It takes a billion dollars to make the attempt."

Considering the inherent advantages of our closest competitors and the rapid growth that would be necessary, it just seems like it is time for Plan B. 

[Tacachale]

This is what I'm talking about regarding exaggeration. Unless things changed in the last year and a half or so, the project isn't estimated at "nearly $1 billion", it's $680 million. Of that, around $200 million is the local contribution, the rest is state and federal money.

The total projected by the Army Corps is $766 million.  However, the Corps is notorious for underestimating the cost of dredging projects.  For instance, the Corps projected in 2003 that the most recent St. Johns River dredge (about five miles of the harbor from 38 to 40 feet) to cost $16.4 million. When it was completed in 2010, the cost ran to $64.8 million.  Of that $766m to dredge to 47-ft., Jaxport is responsible for coming up with $383 million.  However, this does not include the infrastructure upgrades that are in Jaxport's strategic plan that would be necessary to handle the larger ships.  These costs are in excess of $200 million.

You're correct that the estimate is currently $766 million rather than $680 (which is still not a billion). Of this, the feds would cover half, $380 million; local and state money would cover the rest. As I said above, the federal and state money is money we've already paid that would go to some other project, probably well outside of Jacksonville.

For years the state has been clear it will commit to the project if the locals can get their act together. That seems unlikely to change at least through Governor Scott's tenure. The local contribution for the deepening is estimated in the neighborhood of $200 million dollars. Of course it doesn't take into account additional costs brought on by more business, but that's putting the cart before the horse. More business of any kind will require upgrades, as we're behind on them as it is.

Perhaps the Army Corps' estimates are off as you say. But exaggerating what the estimates are from the other side isn't helping.

I promise you, there is no reason Jax cannot compete on this one.

There are actually lots of reasons.  For one, most of the anticipated shift in market share from West Coast to East Coast ports has actually already occurred.  According to a 2016 CBRE report, "Much of the cargo that could be transferred from West to East Coast delivery has already shifted." So, Jaxport would have to take existing market share from other ports in the Southeast.  Savannah has all of the necessary infrastructure to efficiently move goods to market and have a cost advantage over Jacksonville in reaching Atlanta and other major consumption markets due to their location.  Miami also has a cost advantage reaching the lower half of the state of Florida, where most of the Florida consumers reside. They also already have 50-feet of water and the post-Panamax cranes and other necessary infrastructure in place. Jacksonville is not a competitor with Norfolk.  They service different markets. 

The reality is that carriers don't need every port to have deep water.  Just because everyone else is doing it, doesn't mean it is a wise investment or that it will pay off.

According to Jaxport consultant John Martin, "The large ships can't call multiple ports. Carriers lose all economies of scale once they start doing milk runs." 

Instead, they will select the small number of strategically located ports that have the necessary infrastructure to get goods to major consumption markets as quickly and efficiently as possible.  Unfortunately, Jacksonville doesn't appear to be on this short-list.

Also, remember what it would take for Jaxport to justify this investment. According to Dale Lewis, a local retired logistics expert:
"To reach its cash-flow goals, Jaxport's plan requires 100% container growth in the first 9 years after dredging. This would be a huge, rapid change. Over the last 3 to 5 years, Jaxport's container business has grown 1% per year. Jaxport's growth plan is 1 Million TEU's per year (55%) higher than the Army Corps of Engineers' demand estimate. This additional 55% growth would have to come from taking 1 Million annual TEUs of market share away from ports in other states....To succeed, Jaxport would have to capture a much larger share from these ports than it does today, capture it quickly, make sure that it grows and then hold on to it for more than 25 years. This level of competitive performance would be more than triple anything ever accomplished by any Florida container port.  It takes a billion dollars to make the attempt."

Considering the inherent advantages of our closest competitors and the rapid growth that would be necessary, it just seems like it is time for Plan B.

Much of this is apples to oranges. Miami isn't really a competitor in the way Savannah and Charleston are. Ships will never go into Miami to serve anywhere but southern Florida; they'd have to put the goods on trucks or trains that mostly go through Jacksonville anyway. It's still a viable port because there are so many people within that one region. But Jacksonville is the best positioned port in Florida for serving a wider area - we're the farthest north and have the best rail and highway connections.

There's no particular reason that Jacksonville would not have similar success to Savannah and Charleston if it committed to similar investment. Charleston is an example of a port that fell off, went way behind, and then rebounded when it performed its investments (and when competitors like us dropped the ball). Neither have any real natural advantage over Jacksonville.

[thelakelander]

Seems like those two are pooling their resources together:

Georgia, South Carolina ready to take steps toward joint port

Georgia and South Carolina are ready to start spending some real money to build the $5 billion Jasper Ocean Terminal planned for a scrubby patch of South Carolina dirt and sand 15 miles below downtown Savannah.

The Georgia Ports Authority is expected to dedicate $7.5 million Monday for environmental studies for the hoped-for port that wouldn't open for at least a decade. South Carolina legislators have already ponied up their share. In three years the states will need to kick in an additional $50 million to $100 million each for engineering, design and further environmental work.

Taxpayers are already spending about $1 billion deepening harbors and upgrading terminals and roads at the ports of Savannah and Charleston. The construction and maintenance price tag for all three ports could top $9 billion over the next 15 years, though not all costs would be borne by taxpayers.

http://www.myajc.com/news/state--regional-govt--politics/georgia-south-carolina-ready-take-steps-toward-joint-port/O0aL4tdRWgyeANEkepbcMK/

[riverkeepered]

Letter in today's T-U from former CSX CEO Pete Carpenter - http://jacksonville.com/opinion/letters-readers/2017-03-29/thursday-lead-letter-second-thoughts-dredging-river

[ChriswUfGator]

The problem with the port is perfectly illustrated by Norfolk's clever poster. We've now been talking about dredging for so long with no action that by the time we get it done, the competitors will have already gone to a new class of ship with deeper draft. The life cycle on port improvements is shortening, and if you want to be a player you can't talk about everything for 5 years first. By the time you fire up the first dredge it's already passed you by.

[riverkeepered]

By the time you fire up the first dredge it's already passed you by.

Later this month, Savannah will have 26 of the massive cranes necessary to handle the Post-Panamax ships. This is more than any other U.S. terminal. "The new shipping alliances, which set sail beginning Saturday, will have some 35 vessels serving the Port of Savannah weekly – the most of any East Coast port," he said.
http://savannahnow.com/news/2017-03-30/portside-new-ship-shore-cranes-coming-online-gpa-s-garden-city-terminal

Last year, Jaxport purchased and installed 3 at a cost of $37.6 million.   Their long-term plan is to have a total of 10.

[Jim]

Savannah has 24.  Jax currently has 18.  We are not as far behind them as you are making it out to be.

[Tacachale]

By the time you fire up the first dredge it's already passed you by.

Later this month, Savannah will have 26 of the massive cranes necessary to handle the Post-Panamax ships. This is more than any other U.S. terminal. "The new shipping alliances, which set sail beginning Saturday, will have some 35 vessels serving the Port of Savannah weekly – the most of any East Coast port," he said.
http://savannahnow.com/news/2017-03-30/portside-new-ship-shore-cranes-coming-online-gpa-s-garden-city-terminal

Last year, Jaxport purchased and installed 3 at a cost of $37.6 million.   Their long-term plan is to have a total of 10.

I'm sorry, but this is more obfuscation. The article explains that Savannah will have 26 cranes this year: 6 of the new huge Post-Panamax cranes and 20 "Neo-Panamax" cranes. Jaxport has 18 cranes, 3 of the biggest Post-Panamax cranes that just became operational in December, and 15 others.

For context, Miami has 6 of the biggest cranes, Houston has 4, Charleston, Mobile, and Tampa have 2 each, and neither Port Everglades or New Orleans has any yet to my knowledge. So yeah, we're not so far behind as all that.

[riverkeepered]

The problem is that most of the 18 cranes you refer to cannot handle the bigger Post-Panamax ships.

However, Savannah has 6 Post-Panamax (17 containers across) cranes and 20 Super Post-Panamax (22 containers across) cranes, with 4 more expected to arrive in 2018.  Only, the 3 Jaxport just received are this big and can reach 17 or more containers across. 

So, yes Jaxport is way behind, in not only dredging, but also infrastructure.

[BridgeTroll]

The size of your crane doesn't matter as much as how you use it...