Draft Outline of Economic White Papers

This outline identifies "white papers" for updating the economic analysis associated with the proposed deepening of the Savannah Harbor navigation channel. It contains all the assumptions identified by the Economic Working Group (EWG) as the relevant assumptions used in the economic analysis for the feasibility report. The assumptions are listed by subject heading for each white paper. Also included for each white paper are additional issues identified by the EWG members or others to be addressed in any economic update of the feasibility report economic analysis. The white papers will examine these assumptions and additional issues as a basis to assist the EWG in making recommendations to GPA for the economic update.

Papers:

Trade Projections

Assumptions:

• Savannah will retain its regional market share
• Savannah share of US market will decrease slightly
• 6.1% short term growth, 4.8% long term growth
• Local, regional, national, and international economic growth will continue
• Projections in the South Atlantic Ports Study apply
• Non-containerized shipments are important to project economics
• Industry trend is away from general cargo
• Transition from general to container cargo is moderate in the future
• Some growth in Asian trade will shift to the Suez Canal

Examine:

• Use of international trade projections based on ICF Kaiser, DRI/McGraw Hill, WEFA, PIERS, South Atlantic Container Study, Corps of Engineers Waterborne Commerce statistics, Dept. of Energy, Dept. of Commerce projections
• Railroad congestion
• Railroad mergers
• 1996 forecast for 2000 was exceeded in 1998, 592,000 TEUs forecast v. 743,000 actual
• More specific statements from port customers examine: trade lane changes as a result of use of larger vessels
• Emergence of mega-regional distribution cente examine: trade imbalance examine: land-side infrastructure capacity

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Fleet Projections

Assumptions:

• No bulk vessel fleet growth, loading facilities are too constrained
• Container vessel sizes will increase assumption: foreign ports will continue to invest in necessary infrastructure
• Sufficient demand exists to fill larger vessels at the same level of frequency of service. assumption: trends in Savannah fleet will reflect trends in world fleet
• TEU capacity of fleet will equal demand, reflect market equilibrium
• Forecast methodology is same for world fleet and Savannah fleet.
• Fleet overcapacity will be reduced. assumption: replacement vessels will be 15% larger than scrapped or retired vessels

Examine:

• Larger ships will result in fewer port calls examine: post-panamax vessel deployment
• Potential for mega-ships examine: methodology from Oakland Feasibility Report is applicable to Savannah

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Operating Practices:

Assumptions:

• Number of TEUs projected are adjusted based on existing light loading practices
• One-way traffic assumption: channel transit time is 2.5 hours
• Vessels arrive and depart in random distribution

Examine:

• Savannah pilots require 4 feet underkeel allowance
• Beam width restrictions will be more frequent with larger vessels
• Channel dimensions; width, depth
• Landside/intermodal constraints
• Tidal delay practices examine: density of cargo, cube out v. weigh out

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Base Year

Assumptions:

• Base year for projections was designated as 1996
• Base year for construction was designated as 2000.

Examine:

• Use fixed year v. rolling average or least squares for base year

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Multiport Analysis

Assumptions:

• Costs at competing ports are comparable
• Competitive position depends on quality and frequency of service
• Costs of shipping through Savannah are competitive with other ports in region
• Competition factors ship through other ports: Charleston Freeport Norfolk Wilmington Jacksonville West Coast ports (land bridge) Canada (Halifax) port capacity
• Competitive hinterland markets do not change
• Land distance less than 500 miles is transported by truck
• Land distance greater than 500 miles is transported by rail
• Atlanta and Memphis are good sample destination cities
• All competitive port infrastructure will keep pace with needs

Reexamine:

• Use of a 4000 teu vessel for the multiport analysis

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Data Use:

Assumptions:

• Corps of Engineers vessel operating costs and route distances changes in Savannah fleet have mirrored changes in world fleet for period 1986-1996. actual fleet growth has exceed 42-foot channel report predictions discount rate is prescribed by law

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Other Economic Factors:

Assumptions:

• Alternate assumptions do not have supporting rationale
• Light loading characteristics remain the same for all classes of vessels, except when the vessel class can operate unconstrained

Examine:

• BAH approach is conservative
• Second order impacts
• Economic value of SNWR
• Analyze storm surge damage
• Practicable alternatives: load center/feeder port concept; land bridge; other transshipment options; fast ship market share; alternative ship operating characteristics, e.g., one-way traffic

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