Presentation To: HOSTED BY 12th Annual Southwestern Rail ...
Transcript of Presentation To: HOSTED BY 12th Annual Southwestern Rail ...
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JANUARY 22, 2016
Presentation By: Dr. Alexander Metcalf
Transportation Economics & Management Systems, Inc.
IMPACTOFTHE PANAMACANALANDMARKET
OPPORTUNITYFORTEXAS
PresentationTo:
12thAnnual
SouthwesternRailConference
HOSTEDBY
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TEMSKEYEXPERIENCE
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TEXASISGROWINGSTRONGLY
• TexasGDPhasbeengrowingby7percenteachyear
• Texasadded1.3millionpeoplefrom2010to2013
• Populationtogrowfrom26milliontodayto40millionby2050.
TexasTransportation
Systemneedsincrease
efficiencyandcapacityto
meetfutureneeds.
FEASIBILITY
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SUSTAINEDGROWTHISFORECASTEDFEASIBILITY
Historically,TexasGDPgrowthratehasbeensignificantlyhigherthanUSgrowthRate.“Forecasts
fromtheTexasComptrollerofPublicAccountspredictthattheU.S.andTexaseconomieswillrebound
fromthecurrentrecession(intermsofGSPandGDP),andgrowat2.6percentand3.37percent,
respectively,onaverage,peryearbetween2010and2035(Figure2-1).7Anefficientandwell-
maintainedtransportationsystemisvitaltothestate‘sabilitytoremaineconomicallycompetitiveat
homeandabroad.”
TheTexasComptroller
ForecastisinREALDOLLARS
Addinga2%annualinflation
getsusrightbackintothe5+%
range.
Averagegrowthratewillbe
5.4%(NOMINALDOLLARS)
fortheTexasmarketarea*Source:TexasStatewideLong-RangeTransportationPlan2035at:
http://ftp.dot.state.tx.us/pub/txdot-info/tpp/rural_2035/report/slrtp_final_ch2.pdf
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CONTAINERIMPORTSARECLOSELYLINKEDTO
NOMINALGDP
Growthratehasonlybeenmoderatedbyrecentrecession.
FEASIBILITY
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TEXASMARKETIS3RDLARGESTINTHEUSONLYAFTERCALIFORNIAANDNY/NJ(WHICHISDIVIDEDBETWEENTHETWOSTATES)
FEASIBILITY
NewYorkPortisdivided
betweentwostates
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HOWEVER,DFWANDMOSTOFTEXAS
ARECURRENTLYSERVEDOUTOFLA/LB
ThisisduetobigshipsontheWestCoastversussmallshipsinHouston;butHoustonfares
noworsethanEastCoastPortsinregardtoservingonlyitslocal(truck)porthinterland
area.MostofHouston’straffictodayisEuropeanandCaribbean-based.
USAsiaPortHinterlandsToday
FEASIBILITY
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CURRENTLYHOUSTON’SSHAREOFASIAN
CONTAINERSIS22%OFTEXASMARKET
Thisresultsfromtheeconomicsofsmallships,wheresmallvesselscurrentlyholdmore
than50%marketsharevs.theWestCoastinHouston.Houstoncurrentlyhasonlya
negligibleshareofDFWmarket,butTexasportssharewillincreasewithlargeships
providedtheyhaveeffectiveaccesstotheDFWmarket.
FEASIBILITY
HOUSTON DALLAS-FORTWORTH
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DFWASIANCONTAINERMARKETWILLGROWBYA
FACTOROFTHREE
FEASIBILITY
Thisgrowthwillputalotofstrainonexistingrailinfrastructureandcapacity
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CURRENTCOSTTRADEOFF:SMALLSHIPS
ChinaLA/LB$180
liftcost
DFW
Houston$180
liftcost
7,350x.02=
$147
11,994x.04=
$479
1,452x.12+
$125=$299
300x.12+
$125=$1611,601x.12+
$125=$317
DeliveredCostperTEUfromChina:
ToDFW:
ViaLA/LB:$147+$180+$299= $626
ViaHouston:$479+$180+$161= $820
ToHouston
ViaLA/LB:$147+$180+$317= $644
ViaHoustonDirect:$479+$180= $659
AboutEqual
Clear
Advantage
toLA/LB
FEASIBILITY
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PANAMACANALWILLCHANGETHESITUATION
CapacityofNewPanamaxshipwillincrease2-3times,butrequires48-51feetdraft.
OnlyafewGulfandEastCoastportscansupportthis,butinthelongtermFreeport
willbeabletoaccommodatetheselargerships.
33
41
43
50
51
WaterDepth(ft)
48
FEASIBILITY
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ECONOMIESOFSCALEFORBIGGERSHIPS
• 2015Shippingcostwilldecreasefrom$0.04/TEU·Mileto$0.02/TEU·Mile
(70%loadingfactorandinflationsince2001).
• Thiscutsshippingline-haulcostsinhalf.
• EastCoastPortsareexpandingtheircapabilities,soBigShipswillbeusedin
bothPacificandAtlantic(e.g.Suez)tradelanes.
Source:Reproduced
basedonFigure4.3
Impactsof
ContainershipSize,
ServiceRoutes,and
DemandOnTexasGulf
Ports,TXDOT,2001
FEASIBILITY
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BIGSHIPSCOMETOTHEGULFANDEASTCOAST
FROMASIA.THISTIPSTHECOMPETITIVEBALANCEAfterPanamaCanalExpansion
FEASIBILITY
TheCompetitiveBalancewiththeWestCoastPortswillchangedramaticallyifaSouth
Texasporthas50feetofwaterandaneffectiveinlanddistributionnetwork
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FUTURECOSTTRADEOFF:LARGESHIPS
ChinaLA/LB$180
liftcost
DFW
Houston$180
liftcost
7,350x.02=
$147
11,994x.02=
$240
1,452x.12+
$125=$299
300x.12+
$125=$1611,601x.12+
$125=$317
DeliveredCostperTEUfromChina:
ToDFW:
ViaLA/LB:$147+$180+$299= $626
ViaHouston:$240+$180+$161= $581
ToHouston
ViaLA/LB:$147+$180+$317= $644
ViaHoustonDirect:$240+$180= $420
Advantage
toHouston
Clear
Advantage
toHouston
FEASIBILITY
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CONTAINERMARKETSHAREATDFWFEASIBILITY
Notes:
1. Estimateapprox.750,000containerstotalIMXmarketinandoutofDFWtoday.
2. Freeportwillcomeonlinebetween2020and2025.By2025fullyoperational.
3. FreeportwouldaddrailEuropeanboxesthatarecurrentlytruckedwhichresultsinanimmediateboostinrailtraffic
WithLarge-Vessel
economicsandarail
connection,Freeport
cancompeteatDFW.
Aforecastedmore
thantriplingofrail
intermodaldemandby
2035willput
considerablepressure
onbothraillineand
terminalcapacityin
Texas
9trainsperday
(fromWestCoast)
16trainsperday,
6fromFPT
27trainsperday,
11fromFPT
SystemUnder
Construction
ExistingRailFEU
FreeportAsiaFEU
FreeportEuropeFEU
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OVERALLFREEPORTCONTAINERMARKETFORECASTFEASIBILITY
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RAILINTEGRATIONFORPORTFREEPORT
ConceptStudyenvisioned– PortFreeport
Improvements– RailLinktoInlandPorts
at:• Dallas
• FortWorth
• SanAntonio
– IntegratedHubat:• Rosenberg
FEASIBILITY
(FORTHOOD)
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PRELIMINARYFINANCIALANALYSIS
• ConceptualAnalysisundertakenfromthepointofviewoftheRailroadAuthority,innominalyearof
expenditure(YOE)dollars.FreeporttoCaldwellest.cost$880millionassumedinoperationby2025
• Thisanalysisisbasedon40¢percarmileand$28.41perLoadedTEU(assuming100%emptyreturn)
• Duetothelengthoftherouteandforecastedtonnage,operatingandcapitalmaintenanceisasignificant
componentofthecorridor’scoststructure,whichmustberecoveredthroughusagefees.
• AtacompetitivetollinglevelandexistingcarloadtrafficnorthofRosenbergtoCaldwell;4.4%interest
and1.4%inflationtheNPVis$567millionpositive:thissuggeststhataninfrastructureauthoritycould
fullyserviceitsBondsfromfeeswithoutneedingsubsidyorgrantassistance.
• Morestudyisneededtopositivelyconfirmcostsandrevenues,butsuggestspotentialforaRRIFloanor
useofRevenueBondsasalow-costfinancingvehiclefordevelopingneededinfrastructureimprovements
FEASIBILITY
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SH36ARAILCORRIDORJOBCREATION
PortofFreeport2035:
10,000-20,000jobs.
RosenbergHub2035:
5,000-10,000jobs
• Currentmodelingsuggestsrailtraffic
volumeswillcontinuetoincreaseand
UPandBNSFwillneedtodevelop
additionalrailyardcapacityinthe
Houstonarea.• Rosenbergiswellpositionedinthe
futuretobecomeamajorraillogistics
hub.Shiftingintermodalactivityfrom
UPEnglewoodandBNSFPearlandto
Rosenbergwouldreducerail
congestionindowntownHouston.• Overall,potentialis15,000-
30,000jobslikelyintheSH36A
corridor,mostlyconsistingof
distributionandindustrialjobs.
FEASIBILITY
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SH36ARAILINCOMEIMPACTS–
INCOMEANDSALESTAXREVENUESBY2035
TotalIncomeIncrease
(million$perYear)
TotalStateSalesTaxIncrease
(million$perYear)
IncomeIncrease(million$)
$-
$200
$400
$600
$800
JobsUnderExisgngPahernofDistribugon
768.022
424.6654
DirectJobs DirectJobsand
IndirectJobs
SalesTaxIncrease(m
illion$)
$-
$11
$22
$33
$44
JobsUnderExisgngPahernofDistribugon
43.5568
24.0841
DirectJobs DirectJobsand
IndirectJobs
FEASIBILITY
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• TheportsofSeattleandTacomajoinedforcesinAugust2015tounifymanagementofourmarinecargofacilitiesandbusinesstostrengthenthePugetSoundgatewayandattractmoremarinecargoandjobsfortheregion
• Theportstogetherhaveninecontainerterminals,butnoneofthemarecurrentlyabletoeffectivelyhandlebigships.
• “Weusedtothink,themorecompetitionthebetter,”saidJockO’Connell,aninternationaltradeeconomist.Buttheadventofultra-largeships,someofwhichcancarryupto20,000cargocontainers,hasthrownportoperationsforaloop,hesaid.
• BookoutsaysiftheseaportsinSeattleandTacomawanttoremainadestinationforcargoships,theymustinvest."Wedon'thaveachoice,"shesaid."Wecan'tchoosetojusthandlesmallships.Weneedtohavethefacilitiesthatwillhandletheshipsofthefuture."
PORTSALLIANCEFORTEXAS?
PortsofSeattle,TacomaAgreetoAllianceathttp://www.wsj.com/articles/ports-of-seattle-tacoma-agree-to-
alliance-1433542075;Seattle,TacomaPortsVotetoFormAlliancehttp://www.wsj.com/articles/seattle-tacoma-ports-
vote-to-form-alliance-1438714867;https://www.nwseaportalliance.com;https://www.linkedin.com/pulse/seattle-
tacoma-gateway-development-strategy-unfolds-shawn-goh?forceNoSplash=true;http://kuow.org/post/notice-fewer-
containers-puget-sound-ports-canada-grabbed-our-business
FEASIBILITY
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THANKYOU
FORMOREINFORMATIONCONTACT
ALEXANDERE.METCALF,PHD
PRESIDENT
301-846-0700