Jaxport As Urban Growth Strategy

[this was published as a backpage editorial in The Folio]

Jacksonville has proclaimed itself “America’s Logistics Center”.  Almost every local public official and politician has cited the Jacksonville Port Authority (herein Jaxport) as a regional economic engine for job growth. Over $1 billion dollars in public funds is being sought to dredge and deepen the St Johns River in order to allow the largest container vessels to reach Jaxport terminals and expand this sector of our local economy.

In spite of the attention directed to the port as a source of economic expansion for Jacksonville, most residents have little knowledge of what is involved in a local economy revolving around a container shipping port, the logistics industries, and the movement of goods. Most if not all of the information the public receives about the port is produced and disseminated by Jaxport, local businesses, the chamber of commerce, and stakeholders that may benefit directly from the expansion of the port. What is absent is an independent critical analysis of the port economy.

One objective of The Ports Project at the University of North Florida is to raise community awareness about the proposed Jaxport development strategy so that citizens can participate more effectively in decisions about the future economic direction of their community. Democratic citizenship and community engagement in public affairs requires information and knowledge. This is especially important when large sums of taxpayer money are being requested to support and expand the port infrastructure. If the proposed projects move forward as proponents hope, there are additional costs to be considered along with the widely touted benefits.

It is important to situate the local port logistics sector in the context of the larger global economy.  Jaxport is just one node among many in this larger global system of production, transportation, distribution, and consumption. The primary objective of this system is to move goods from the point of production to the point of consumption as quickly and cheaply as possible. These commodity supply chains are often driven by large retailers (e.g. Wal-Mart, Target, Home Depot, The Gap) who subcontract with manufacturers in less developed countries (China being the leading source). The goods are then moved to retailers and consumers using interacting modes of transportation (“intermodalism”) involving truck, container ship, rail, and air.

If the major players in this system can locate nodes that allow for the cheaper or swifter movement of goods to their final destination, they will choose these locations as entry points into national consumer markets.  It is within this system that Jacksonville and Jaxport hope to gain a foothold and become a major national port and logistics center.

Presently, there is intense competition among East coast ports for an anticipated increase in the volume of cargo that will result when the Panama Canal is expanded in 2014. This will allow the largest container vessels -- crossing the Pacific Ocean from Asia -- to reach the East coast. Currently, much of the Asian cargo entering the US has been through West coast ports – namely Los Angeles and Long Beach – with containers placed on rail cars and moved across the country to the East coast. This is known as the “land bridge” method. When the Panama Canal expansion is completed, the largest ships can take what is referred to as the “all-water” route through the Panama Canal and up to East coast ports and markets. Jaxport, with its new container terminals, is one potentially viable gateway for this cargo.

But here’s the hitch. The St Johns River channel is too shallow to accommodate the big “post-Panamax” container vessels that require a draught of 50 feet. Thus the river must be deepened from its current depth of 40 feet to something approximating 50 feet. This involves a huge public infrastructure project that must be approved by the Army Corp of Engineers and funded by Congress. The estimated cost is $1 billion.

People who have studied such “mega-projects” come to the following conclusion: those advocating approval and funding will invariably overestimate the benefits and underestimate the costs of the project.

The St Johns deepening project is no exception. In terms of benefits, the greatest emphasis is placed on the number of jobs that depend upon the port. But the figure consistently used by Jaxport and public officials – 65,000 – is overstated, based on my analysis of their data, by about 42,000. So the more accurate figure is closer to 22,000 jobs that directly or indirectly depend upon the port – not an insignificant contribution to the local economy.

Similarly, it has been claimed that port-related jobs provide an average salary of $42,000. But based on my independent analysis of the logistics occupational profile the figure is closer to $30,000. This does include some high paying jobs such as Ship Engineers, Logisticians, and unionized Longshore Workers. But the vast majority of jobs would be concentrated in the warehouse/distribution sector which provides low wage work with a heavy reliance on temporary workers. (see the Port Project report “Jaxport as an Urban Growth Strategy: Community Implications and Prospects” for the full analysis of the quantity and quality of port-related jobs.).  

An associated claim is that channel deepening would not only sustain port-related employment but expand the number of jobs based on additional cargo. The experience of Savannah is instructive. The Army Corp recently granted preliminary approval for the Savannah project to dredge and deepen its channel. As part of the review process, the Corp also came to the striking conclusion that there would be “no additional cargo volume through Savannah Harbor as a result of the proposed harbor deepening”.

If the deepening does not increase the quantity of cargo, it is unclear how the Savannah project will increase the number of port-related jobs to any significant degree.  Therefore, with a cost to taxpayers of $650 million, this dredging project would not appear to generate a sufficient return on investment in the area of jobs. Instead, according to the Army Corp report, the primary benefits will accrue to shipping companies, retailers, and foreign manufacturers who will save $174 million in transportation costs annually. Thus, the primary beneficiaries of this project are non-local businesses and perhaps consumers, assuming the cost savings is passed on in lower prices.  

Before Jacksonville and Jaxport begin the even more expensive St. Johns River deepening project, the community should have an accurate picture of exactly what the impact will be on the local economy and who will ultimately benefit. This is vital not only because the project will use $1 billion of taxpayer money, but also because the project will have a significant impact on one of the most treasured features of the region – the lower St John River basin (LSJRB).

As stated in the annual State of The River Report: “The LSJRB in Northeast Florida has long been recognized as a treasured watershed -- providing enormous ecological, recreational, socioeconomic, and aesthetic benefits. However, during recent years, it has also been recognized as a threatened watershed, which is critically in need of resource conservation, water quality improvement, and careful management.”  One of the threats to the watershed is further dredging and deepening.

The Army Corp of Engineers will be conducting a comprehensive Environmental Impact Study of the deepening project.  At this point, most observers believe one of the most significant effects will be salinity encroachment into the river that will threaten and impact a variety of river and estuarine species including marine mammals and plants.

More specifically, the increased salinity would be expected to shift the distribution of marine and estuarine species south (upstream) in the St. Johns River while displacing the fresh water species that currently live in that zone of the river. Aquatic or wetland species that cannot tolerate saline waters -- cypress, for example -- would be expected to die off as salinity increases.  A similar die off of submerged aquatic vegetation, such as Tape Grass, which serves as food for manatees and habitat for a variety of juvenile species of shrimp, crabs and fish, would negatively impact those species as well.  However, the degree of salinity increase that may occur in the river is highly uncertain since rainfall, tidal cycle, storm events and other river impacting situations are impossible to predict.

The citizens of Northeast Florida should understand how this economic development strategy will impact the larger natural environment, and the recreational and economic activities that depend upon the river.

Almost all forms of economic development involve tradeoffs – there are costs as well as benefits. We may decide that the benefits outweigh the costs. But one can only come to this determination with accurate information about both the costs and the benefits.

The port logistics sector currently plays an important role for the local economy. There is the potential for the impact of this sector to increase significantly in coming years. In order for the sector to have the most beneficial economic impact, we should be discussing and pursuing those policies and practices that will minimize costs and maximize benefits for the larger community. These policies and practices should be based on and informed by the most accurate data, the experience of larger ports, the existing research literature, and the most socially and environmentally responsible practices of the industry.