Professional Documents
Culture Documents
10066
February 2015
Principal Researcher:
Herbert M. Barber, Jr., Ph.D., Ph.D.
CEO, Xicon Economics
Engineering Economics
Xicon Economics
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This investigation represents a small portion of the efforts of these individuals on behalf of the City of Jacksonville and, moreover,
the citizens of Jacksonville MSA, the Greater North Florida Community, and the United States.
Xicon Economics
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financial challenges.
Our experts are some of the most established professionals in their fields, and are well known within the scientific
communities in various countries. We have conducted over 1,500 scientific studies in the areas of infrastructure
economics, energy economics, and manufacturing economics in over 20 countries. Additionally, we have published 15
books and textbooks on various topics in engineering and economics. Further, our experts hold seven US patents.
The primary markets we serve include infrastructure, energy, manufacturing, and government, and our expertise includes
the areas of finance, research, economics, and engineering as it relates to applying higher-order mathematics to solve
complex financial and economic problems associated with economic output.
Xicon Economics
Page 4 of 102
No.
Objective
Objective
1.
Conduct an independent
investigation of the business
growth potential at JAXPORT, with
and without deepening
1.
2.
3.
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Conclusion
Harbor deepening at JAXPORT is financially feasible and economically feasible.
- Xicon Economics
Xicon Economics
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Xicon Economics
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Acknowledgements
Xicon Economics hereby expresses its sincere gratitude to the following persons, who fully supported
Xicon Economics and the efforts of its researchers while completing this study.
Theodore N. Carter
Edward W. Randolph
John D. Baker
David Kaufman
Linda M. Williams
Xicon Economics
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Table of Contents
Page
EXECUTIVE SUMMARY
11
INTRODUCTION
20
PURPOSE
21
METHODOLOGY
23
26
CONCLUSIONS
100
Xicon Economics
Page 8 of 102
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Descriptive Statistics analyses that attempt to describe data through commonly accepted methods,
such as those associated with measures of central tendency and the like. As such, descriptive statistics
do not rely of mathematical probability theory as a means of explaining data or events.
Inferential Statistics analyses that use inferences, or generalizability, such that future events may be
explained or forecasted. Inferential statistics rely on mathematical probability theory.
Correlation a measure expressing the relationship between variables. Correlation ranges between 1.0 and +1.0, with zero demonstrating that there exists no relationship between variables.
Standard Deviation a measure noting distances from the mean. Under a normal curve, +/-1SD
encompasses approximately 68.2% of the population under study, +/-2SD encompasses 95.4%, and +/3SD encompasses 99.7%.
Standardization the process of norming data or scores; researchers often use z-scores to standardize
data.
Significance an expression attempting to describe whether a relationship or phenomenon is due to
chance, most often expressed using alpha levels, such as .1, .05, or .01. An alpha level of .01 means
that there exists a 1% probability that an effect, or difference, is due to chance.
Statistical Effect a measure of the differences between two or more variables. Effect can be direct or
indirect.
Effect Size a measure of the strength of a relationship or phenomenon; most often expressed as a
coefficient thorough Hedgess g, Cohens d, and many other techniques.
Practical Effect a statistic to measure the statistical effect of a relationship of phenomenon against
practical application or importance of said statistical effect.
Coefficient of Determination a means of describing mathematically how well data fit a specific curve.
Explained Variance a statistic describing the variance in a dependent variable explained by an
independent variable. Explained variance can run parallel with coefficient of determination.
Analysis of Variance (ANOVA) a statistic used to analyze differences in means between variables,
compared against levels of significance, e.g., p-values.
Linear Regression a method for describing and forecasting data associated with variables through
mathematical models. There are several types of regression, such as simple regression, quadratic
regression, multiple regression, and logistic regression.
Time Series data sets having seen or unseen tendencies of seasonal, trend, and irregular
characteristics.
Time Series Forecasting a statistical method for projecting series variables having seasonal, trend,
and irregular characteristics by coupling smoothing techniques, such as exponential smoothing or
moving average smoothing, with various forms of regression modeling (No universally accepted test
for significance has been established in the literature).
Causality an occurrence between two of more variables that allows a variable to be explained by
another variable. In lay terms, causality is considered to exist during cause-effect occurrences.
Structural Equation Modeling a multivariate analysis technique for testing and analyzing causal
relationships.
Granger Causality a method of determining whether a time series model can forecast another time
series model.
Econometrics the branch of economics that applies advanced mathematics and statistics to
phenomenon in economics such that empirical analyses can be rendered.
Internal Consistency a measure of scale reliability.
Cronbachs Alpha a measure of internal consistency within an instrument.
Deterministic Modelling mathematical techniques containing no elements of randomness.
Probabilistic Modelling mathematical techniques containing elements of randomness.
Xicon Economics
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Xicon Economics
Page 10 of 102
Executive Summary
his study reflects the analyses and subsequent findings of Xicon Economics as it related to three
objectives associated with deepening of the St. Johns River in north Florida as a means of increasing
economic output across the geographic region, and the United States at large. These three objectives included the
following:
1.
2.
3.
Review the economic impact model developed by Martin Associates; provide an evaluation regarding the
validity of the methodology of the impact model.
Provide an independent evaluation of the business growth potential for JAXPORT, given the ports current
water depth and water depth under the proposed harbor deepening project.
Provide a cost-benefit analysis, and economic benefits, of the harbor deepening project.
The study, Evaluation of the Market and Business Environment Analysis, was conducted for the City of Jacksonville
on behalf of the Port Task Force. All work noted herein was generated by Xicon Economics, unless noted otherwise.
The principal researcher for this study was Dr. Dr. Herbert Barber, the chief executive officer of Xicon Economics,
Savannah, Georgia.
Xicon Economics used the basic scientific method commonly associated with investigations such as this. In so doing,
the study consists of a brief introduction, followed by a discussion regarding the methodology employed during
execution of the study. Next, a section describing the analyses employed during this study was presented, along
with associated findings. Finally, conclusions were noted, coupled with a few recommendations.
Given the controversy associated with the proposed harbor deepening project and most large public infrastructure
projects, Xicon Economics sought in every regard to ensure that transparency existed in the analyses and
subsequent narrative. Such endeavors allowed stakeholders and taxpayers to follow the researchers thought
patterns when conducting this study. In so doing, Xicon Economics opened its assumptions, arguments, analyses,
findings, conclusions, and recommendations to critique by other professionals. While Xicon Economics has yet to
develop a comprehensive study completely without error or oversight, Xicon Economics respectfully requests that
any such critiques be fully substantiated with sound statistical and econometric analyses, those analyses similar to
that noted herein, or more advanced, as enough baseless opinions without serious analyses have been rendered
and read, in full, by the principal researcher. More specifically, opinions coupled with no advanced analyses only
lead to unfounded opinions.
Further, the objectives set forth by the RFP associated with this study, largely, were over-reaching, and thus, thus
stretched the boundaries of one developing a seamless narrative. Notwithstanding, every objective was warranted
and addressed. Thus, in fulfilling the requirements established for this study, the analyses and accommodating
narratives will be complex, and complicated, to the average reader. To fully understand the analyses, and fully
appreciate the subsequent findings, it is the opinion of Xicon Economics that one needs a basic understanding of
graduate level mathematics, statistics, probability, measurement, and econometrics, coupled with an understanding
of economics, research, and the scientific method. Therefore, Xicon Economics recommends every stakeholder,
proponent, opponent, and/or critic of 1) harbor deepening, 2) Xicon Economics, and/or 3) the principal researcher,
Xicon Economics
Page 11 of 102
An independent review regarding the validity and reliability of the methodology employed by Martin
Associates during the data collection phase, data analyses, and findings for the previously conducted
economic impact study: Xicon Economics evaluated the previously conducted economic impact study by
examining the extent to which content validity, construct validity, and criterion validity existed; and the
extent to which reliability existed.
2.
An independent determination of the business growth potential for JAXPORT with, and without, harbor
deepening: Xicon Economics used descriptive and inferential statistical techniques for analyzing and
forecasting the business growth potential of JAXPORT with, and without, harbor deepening. Along with
basic descriptive statistics, time series forecasting was used, coupled with regression and analysis of
variance to render analyses and forecasting as it related to the current position of JAXPORT, by way of
commodities, and potential position, also by commodities. Ultimately, TEU and tonnage data were
translated into revenues. Additionally, comparisons were made to work previously conducted by Martin
Associates and Vickerman and Associates, when applicable.
3.
A cost-benefit model of the harbor deepening project: The technique used by Xicon Economics mandated
that the cost-benefit analyses be based upon a financial perspective and econometric perspective, rather
than a financial perspective, alone, with both financial and economic data considered holistically under the
overall cost-benefit model. Coupling estimated and projected construction costs with forecasted financial
and economic output, an anticipated flow of financial and economic output was presented, appropriate
benefit-cost ratios (BC) were developed, present values were calculated, net present values were
estimated, and statistical effect was calculated through CY 2030.
General findings of Xicon Economics included, but were not limited to, the following:
1.
The methodologies employed by Martin Associates offered evidence that scientific validity existed in terms
of data collection. No references were made as to reliability, or reliability coefficients, in the work
conducted by Martin Associates. Further, Xicon Economics could not calculate reliability coefficients
associated with the survey instruments developed and employed by Martin Associates to collect data, as
Xicon Economics was not privy to any data collected or analyses. However, the techniques employed by
Martin Associates for collecting data were considered more robust than the traditional input-output
method commonly used today in traditional economic impact studies, as many economic impact studies
using BEA multipliers and associated data are grounded with what appears to contain no scientifically valid
measure for rendering impact. Thus, it remains the opinion of Xicon Economics that the methodologies
employed by Martin Associates to collect data, notwithstanding questions associated with reliability, were
in keeping with accepted practices in the scientific research community.
2.
To further evaluate validity, Xicon Economics compared findings between Martin Associates, Vickerman
and Associates, and itself when applicable. For example, differences were found to exist between container
tonnage forecasts across all three firms, under moderate penetration scenarios and aggressive penetration
scenarios, through 2030 (and 2035 in some cases); in some cases, container tonnage projections developed
by Martin Associates were highest, and in other cases, container tonnage projections developed by
Vickerman and Associates were highest. In all cases, under both scenarios, tonnage projections developed
by Xicon Economics were lower. However, projections generated by Vickerman and Associates appeared to
have no statistical merit, and as such, were discounted altogether. Differences were attributed to varying
Xicon Economics
Page 12 of 102
Numerous determinations were made regarding the potential business growth of JAXPORT. However, in
general, Xicon Economics did not attempt to understand why its analyses yielded findings positive or
negative in terms of TEU or tonnage by commodity, or similar. Nonetheless, several of the findings should
be investigated further by JAXPORT to determine why such determinations were made. For example, while
container tonnages were forecasted to increase with, or without, harbor deepening, break bulk tonnages
were consistently decreasing. In fact, inbound break bulk tonnages were forecasted to be non-existent
altogether by FY 2019/20. Similarly, inbound bulk cargo tonnages were forecasted to be non-existent by FY
2018/19, at the current rate of decline. Perhaps troublesome, reversing these trends appears problematic,
as these declines have remained steady over the last several years. However, these tonnages perhaps are
being loaded and offloaded at private terminals in the Jacksonville area; again, such determinations were
not the intent of this study, but these declines should be addressed.
4.
Deepening the harbor under the moderate penetration scenario, container tonnages were projected to
increase more strongly through 2030, over not deepening in those same years. Deepening the harbor
under the aggressive penetration scenario container tonnages also were projected to increase more
strongly through 2030, over not deepening in those same years. However, these findings did not include
impacts associated with harbor deepening, such as delays associated with harbor deepening, nor
construction costs.
5.
Deepening the harbor under the moderate penetration scenario, container gross revenue was projected to
increase more strongly from FY 2014/15 through FY 2029/30, over not deepening in those same years.
Likewise, deepening the harbor under the aggressive penetration scenario, container gross revenue was
projected to increase more strongly from FY 2014/15 through FY 2029/30, over not deepening over those
same years. Again, however, construction impacts were not included in these analyses.
6.
Without incorporating negative impacts associated the construction phase of harbor deepening into the
analytical mix, gross revenues from container tonnage increases was projected to have a statistically
significant effect on economic output in Jacksonville MSA as expressed via GDP, using projections through
FY 2029/30, under the moderate penetration scenario. Likewise, gross revenues from container tonnage
increases were projected to have a statistically significant effect on economic output in Jacksonville MSA as
expressed via GDP, using projections through FY 2029/30, under the aggressive penetration scenario.
Further, effects under both moderate and aggressive penetration scenarios were determined to be of
practical significance, and large.
7.
For the cost-benefit analyses, models were modified to allow for impacts associated with the construction
phase of harbor deepening, such as construction delays and construction costs. In so doing, it was
determined that a net increase of 1,872 jobs (moderate penetration scenario) would be associated with
harbor deepening through CY 2030, excluding jobs directly involved in the construction phase of the
project. Further, it was determined that a net increase of 3,743 jobs would be associated with harbor
deepening through CY 2030, under an aggressive penetration scenario; again, excluding jobs generated
during the construction phase.
8.
Direct business revenues associated with harbor deepening were estimated to be USD7.5 billion, at best,
and USD3.8 billion at worst, through CY 2030.
Xicon Economics
Page 13 of 102
700000000
887,269,515
794,555,685
735,520,528
706,890,542
678,828,880
624,410,528
800000000
764,787,723
Optimistic Scenario
651,335,542
900000000
824,891,971
1E+09
855,796,581
Coupling net increases generated through container revenues with direct business revenues, two scenarios
were developed, including an optimistic scenario and a conservative scenario, using separate parameters,
to determine financial feasibility and econometric feasibility. In both scenarios, economic benefits
associated with harbor deepening outweighed financial costs associated with deepening; again, from a
financial perspective and econometric perspective. More specifically, the BC ratios were estimated to be
9.63 and 4.82 under the optimistic and conservative scenarios, respectively. Further, the effects that
harbor deepening was expected to have on Jacksonville MSA GDP was significant at the .001 alpha level
under both scenarios. Still further, the practical effect of harbor deepening was considered large under
both scenarios (Optimistic: Cohens d=23.883; and Conservative: Cohens d=24.001). Thus, under the
assumptions of this study, harbor deepening was determined to be financially feasible and econometrically
feasible. Refer below.
600000000
500000000
Net Benefits: USD 7.8 Billion
400000000
300000000
34,545,862
32,139,351
32,236,475
32,882,623
34,186,086
31,130,897
27,719,922
25,659,943
100000000
25,698,314
26,052,597
200000000
0
(3,000,000)
(7,000,000)
(140,100,000)
(167,600,000)
(165,000,000)
-3E+08
(160,000,000)
-2E+08
-1E+08
(13,000,000)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
(26,900,000)
9.
Container Revenue
Total Costs
Xicon Economics
Page 14 of 102
427,898,089
397,277,655
382,393,681
367,760,090
353,445,104
339,414,280
325,667,617
Conservative Scenario
312,205,117
400000000
412,445,791
500000000
443,634,548
300000000
17,272,923
16,069,668
16,118,230
16,441,304
17,093,035
15,565,441
13,859,954
12,829,966
12,849,151
13,026,292
100000000
0
(3,000,000)
(7,000,000)
(13,000,000)
(140,100,000)
(167,600,000)
(165,000,000)
(160,000,000)
-2E+08
(130,000,000)
-1E+08
(26,900,000)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Container Revenue
Total Costs
Along with the findings of the study, Xicon Economics reached definitive conclusions derived through the analyses
that should be considered by stakeholders as equally important in the decision regarding harbor deepening. These
conclusions included, but were not limited to, the following:
1.
Numerous individuals have rendered opinions regarding harbor deepening at JAXPORT, as often is the case
on large infrastructure projects utilizing public monies. The principal researcher for this study received
some 300 emails, articles, papers, presentations, studies, and commentary regarding various opinions
specifically associated with deepening the St. Johns River. With very few exceptions, these documents
offered no definitive analyses to support the noted claims, scientifically or otherwise. In nearly every case,
even those made by others in the scientific community, such claims simply were not substantiated with
sound analyses; strong arguments were made; no analyses were rendered. Thus, Xicon Economics was left
Xicon Economics
Page 15 of 102
Significant effort has been exerted as it relates to potential environmental impacts, management, and
remediation of the St. Johns River, presuming harbor deepening is elected. This fact was substantiated in
the meetings held by the Task Force, as most speakers and presenters discussed environmental concerns
of harbor deepening at length. Further, nearly every report, study, or presentation generated has focused
on environmental concerns. This held true for the work generated by the US Army Corps of Engineers;
overwhelmingly, these studies centered on environmental concerns; and certainly, such efforts are
warranted.
Unfortunately, however, outside of the study herein, relatively no work has been conducted as it relates to
the financial and economic issues associated with harbor deepening. While Martin Associates conducted an
economic impact study, the noted findings only scratched the surface. Arguably, the same holds true for
the findings herein. Subsequently, the current paradigm needs to be shifted from environmental constructs
to financial and economic constructs though certainly, environmental issues can eventually become
financial and economic issues, as well. While the noted environmental concerns have merit, these concerns
must be couched with the greater good of society, and thus, economic concerns must trump
environmental concerns after it is established that the latter can be properly managed or mitigated.
To this end, it is the recommendation of Xicon Economics that stakeholders concentrate its efforts on the
economics of harbor deepening, presuming the environmental issues have been fully addressed. In so
doing, it is the recommendation of Xicon Economics that the scope of work herein be extended, or
conducted by other PhD-level researchers, to allow for the development of additional economic analyses
prior to the Task Force rendering a decision regarding harbor deepening. While there exists many
arguments supporting this opinion, let the stakeholder consider the findings of this study holistically, as it
relates exclusively to economic output of Jacksonville MSA and the greater region. Subsequently, the
stakeholder will realize that, while the noted flow of economic output noted that while the benefits of
harbor deepening outweighed the financial costs of harbor deepening; and while the effect of harbor
deepening was deemed statistically and practically significant; determinations as to the interdependencies
of each industry sector and port output was not investigated. These interdependencies cannot be assumed,
as they may or may not exist.
To use the example noted in the body of this study, the relationship between manufacturing output and
port output is complex. Likely, this relationship is bi-directional to some extent, though the purpose of the
work herein was not to determine such. However, these type relationships must be determined prior to
considering harbor deepening a sound economic investment. Manufacturing output will not simply
increase because the harbor is deepened, nor will economic output in the transportation sector or
Xicon Economics
Page 16 of 102
860,000
840,000
45,000
40,000
38,180
820,000
35,000
800,000
30,000
780,000
30,605
760,000
740,000
25,000
20,000
720,000
15,000
700,000
10,000
680,000
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
640,000
2002
5,000
2001
660,000
Mfg Employment
Equally as important, overall economic output generated in the manufacturing sector as a percentage of
total Jacksonville MSA GDP has declined for nearly three decades. While these declines may appear small
enough to be overlooked, following the 2008 economic collapse in the US, money supply in Jacksonville
MSA decreased by approximately USD2.2 billion in a single year. Of that total loss, Jacksonvilles
manufacturing sector accounted for nearly one billion dollars (USD989 million). Thus, fully understanding the
manufacturing sector, and every other sector, relative to the port sector and their interdependencies
becomes vitally important, as the manufacturing sector accounts for a disproportionate percentage of
economic output across Jacksonville MSA when compared to other metropolitan areas. Still further, note
that the direct business revenue estimated during completion of the third objective ultimately is a
derivative of other sectors, not the port sector directly; the same holds true of jobs associated with port
activity. Subsequently, Xicon Economics strongly recommends additional work is conducted that
investigates the interdependencies associated across port output and output in other industry sectors prior
to rendering a decision. To do otherwise is inadvisable by Xicon Economics.
Refer to the figure below.
Xicon Economics
Page 17 of 102
30.000
35,000.0 25.047
30,000.0 24.198
23.460
22.760
25.000
21.213
20.547
25,000.0
20.211
20.475 20.345
19.133
20.302
20.271 19.987
18.126
20.289
19.994
19.984
20,000.0
20.000
15.000
15,000.0
10.000
10,000.0
5.000
5,000.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0.000
1997
3.
Xicon Economics recommends that additional efforts be exerted toward strengthening the noted models
developed herein for projecting economic output at JAXPORT. For example, a portion of one model
developed by Xicon Economics only explained 58.6 percent of the variance in the dependent variable,
though this finding was statistically significant. Perhaps other techniques could have yielded higher
explained variances or stronger model fits. This is not to suggest that this portion of the overall model
developed was weaker than would be accepted in the scientific community. However, the development
and testing of such models is complex and demands substantial effort, but such complexities and demands
are sometimes overshadowed by the decision to spend nearly one billion dollars in the mere hope that
harbor deepening is a sound investment. Thus, additional effort needs to be devoted to developing
stronger models.
4.
Xicon Economics recommends that harbor deepening at JAXPORT be considered more closely as it relates
to relatively simultaneous harbor deepening projects in Miami, Savannah, Charleston, and other East Coast
ports.
5.
Xicon Economics recommends that additional efforts be exerted analyzing the current state of the US and
world economies, as well as forecasting the future state of the US and world economies, before rendering
a decision regarding harbor deepening. As a point in fact, Xicon Economics accurately predicted the 2008
economic collapse in 2005, though in retrospect, the pending collapse was suggested as early as 2003-2004
in construction data. Xicon Economics maintains the quantified opinion that the US economy is again
trending similarly as it did immediately leading up to the 2008 economic collapse, albeit without strong
employment. Thus, any near-future recessions and/or collapses is subject to leave the US and Jacksonville
MSA economically worse than the 2008 collapse. Moreover, be advised that portions of the models
herein were established using US GDP and Jacksonville MSA GDP as independent (predictor) variables of
various dependent variables.
Refer to the figure below.
Xicon Economics
Page 18 of 102
6.
Xicon Economics recommends holistically that additional efforts be exerted as it relates to analyzing
various political and economic climates around the world outside of only port activities from a risk
engineering perspective prior to a decision being rendered by the Task Force. Perhaps more than ever, the
world is in a state of perpetual political and economic uncertainty in many regards, albeit perhaps unknown
to those persons outside the economics community. In the United States, political unrest and uneasiness
can be seen by the most novice observers of national affairs; and internationally, the economic and political
climates are struggling across numerous nations, particularly those nations in and around the Middle East.
Worse, threats brought about in recent years by numerous terrorist groups have remained unchallenged,
largely, threatening the state of economic well-being in the US and abroad in ways never imagined, let
alone managed. For example, a Somali terrorist group affiliated with al Qaeda recently announced
potential bombings at the Mall of America in Minnesota, one of the nations largest shopping malls.
Jacksonville MSA is not immune from such ill-advised intents; and such events must be considered from a
risk engineering perspective when dealing with uncertainty as it relates to subsequent impacts.
7.
As experts in the field of engineering economics as it relates to economic output, it is the opinion of Xicon
Economics that overall political unrest in the US and world will continue to worsen with time and that the
rate of that unrest will increase. Such unrest has the ability to create havoc on US and world financial and
economic markets. Thus, it remains paramount that stakeholders of this endeavor fully understand the
potential repercussions associated with deepening and not deepening, to the Jacksonville MSA and US
economies. Subsequently, it remains the opinion of Xicon Economics that additional work be conducted as
it relates to the relationship between international political unrest and harbor deepening at JAXPORT,
particularly in the area of risk engineering.
Xicon Economics
Page 19 of 102
Introduction
nfrastructure spending has long been considered necessary catalysts for increasing economic output.
Such holds true across most economies, whether developing, developed, or advanced. In fact,
infrastructure spending often reveals direct relationships with economic output, e.g. GDP. As spending increases on
infrastructure endeavors, increases in economic output also occur. However, given that the relationship often is
direct, as infrastructure spending decreases, so does economic output. Nevertheless, scientific evidence suggests
that relationships between infrastructure spending and economic output is a highly complex paradigm
demonstrating directional, bi-directional, and non-directional relationships with and without significant lag as both
1
causal and non-causal endogenous and exogenous variables operate simultaneously.
Perhaps never before has such relationships been analyzed so closely as in recent years, especially since the world
2
economic collapse of 2008. The Bush and Obama Administrations both pressed to leverage infrastructure spending
as stimuli for the struggling US economy, each with only minimal to moderate success; thus, lending evidence to the
argument that the relationship between infrastructure spending and economic output is not only contentious, but a
problematic nexus that must not be endeavored haphazardly. Nonetheless, stakeholders remain left to sift through
a plethora of complex research with little to no understanding of the same in attempts to render decisions that
likely affect economies for generations. The City of Jacksonville and the Jacksonville Port Authority currently face
similar ambiguities surrounding its decision to deepen its harbor for the allowance of larger vessels and containers
into its port.
Subsequently, the Jacksonville Port Authority (JAXPORT) initially contracted with Martin Associates, Lancaster,
Pennsylvania, to help remove ambiguities surrounding its pending decision to deepen the St. Johns River in an
attempt to not only increase its market position across various maritime entities, but to ultimately increase
economic output across the greater region JAXPORT serves. This evaluation serves as an investigation conducted by
Xicon Economics, Savannah, Georgia, on behalf of the Office of Economic Development, City of Jacksonville, on
behalf of the Jacksonville Port Authority as to, generally, the validity of the findings proffered by Martin Associates.
Further, the study addresses potential maritime cargo impacts, and other impacts, associated with harbor
deepening. Still further, the study addresses issues associated with harbor deepening costs and benefits from a
financial perspective and economic perspective.
Barber, H. & El-adaway, I. (under review). Infrastructure engineering: Statistical effect of energy production and consumption
on economic output. Journal of Management in Engineering, ASCE.
2
Under a separate study conducted by Xicon Economics, it was concluded that all but 29 countries were adversely affected
economically by the 2008 world economic collapse (Barber, H. (2011). Global Economic Collapse. Xicon Economics).
Xicon Economics
Page 20 of 102
Purpose
he Jacksonville Port Authority, JAXPORT, sought to analyze its market position relative to competing
southeast US ports, and subsequently retained Martin Associates, Lancaster, Pennsylvania, to conduct
an evaluation of its market position, resulting in an analyses of the local and regional economic impacts of the Port
of Jacksonville (2013). Through the study, Martin Associates was to conduct the following:
1.
2.
3.
4.
5.
6.
Evaluate the potential areas of business growth for JAXPORT, given the location, water depth, facilities,
intermodal connections, available properties and available capital, as well as JAXPORTs realistic position
and potential within the maritime industry, i.e. port industry.
Profile the size and structure of existing business by 1) commodity group (Containers, Ro/Ro, 2 Break-bulk,
Bulk, Cruise and Non-Maritime) and 2) trade region, e.g. Asia, Latin America, and Europe.
Evaluate existing terminal layouts and infrastructure to determine best use of facilities to maximize
efficiency and utilization of assets. Evaluate current JAXPORT marketing opportunities to determine the
best use of capital and terminal design/planning.
Provide analysis and feasibility evaluation of commercial, non-maritime revenue producing opportunities in
which the Jacksonville Port Authority could become involved.
Recommend strategies to maximize future revenue growth, to include a short-term and long-term
marketing and development plan for both maritime and non-maritime business.
Assess current trade and the economic environment to determine potential impacts of state and federal
legislation, bi-lateral U.S. trade agreements, carrier mergers, acquisitions, and other economic conditions
that may impact future trade and investment opportunities relating specifically to JAXPORT.
Following completion of these analyses, Martin Associates findings and recommendations were questioned by
other professionals, professionals largely outside the maritime industry and economics profession but nonetheless
respected within their respective fields of expertise. More specifically, concerns were raised regarding the validity of
findings rendered in the study; particularly those findings associated with job growth across the north Florida area.
Additionally, the not-for-profit firm, Public Law Trust, raised concerns regarding the nondisclosure of the raw data
upon which the Martin findings and recommendations were rendered. Prior to the evaluation herein, questions
regarding the validity of the methodology used in rendering findings and recommendations, along with the raw data
used, remained in question, at least to some in the community.
The purpose of this investigation was to evaluate the market and business environment analysis previously
conducted by Martin Associates, with a holistic intent of resolving the aforementioned concerns, doubts, and
ambiguities to the extent realistically possible. In so doing, the position of Xicon Economics was grounded in the fact
that it was neither in favor of, nor against, the techniques employed by Martin Associates during their investigation
for JAXPORT. Likewise, Xicon Economics was neither in favor of, nor against, harbor deepening at JAXPORT. Thus,
any findings and recommendations rendered by Xicon Economics were offered through objective professional
judgment using statistical and econometric techniques accepted in the scientific community.
Xicon Economics
Page 21 of 102
Review the economic impact model developed by Martin Associates; provide an evaluation regarding the
validity of the methodology of the impact model.
Provide an independent evaluation of the business growth potential for JAXPORT, given the ports current
water depth and water depth under the proposed harbor deepening project.
Provide a cost-benefit analysis, and economic benefits, of the harbor deepening project.
Xicon Economics
Page 22 of 102
Methodology
or the harbor deepening project for the Jacksonville Port Authority, the primary economic impact
models used to investigate the local and regional economic impacts of port authorities were developed
by Martin Associates using data they have collected over the last several years from port authorities and associated
firms around the world, and more importantly, data collected from companies JAXPORT serves. On face value, this
method has the opportunity to generate robust findings, substantially more robust than those analyses derived
through modern input-output methods. Conversely, however, this method has the opportunity to generate findings
that are equally as weak as they are robust if appropriate research design methodologies and strategies were not
developed and employed. In lay terms, from initial conceptualization of the economic impact study completed by
Martin Associates, to the summary and conclusions associated with the same, research design and methodology
were paramount to the delivery of robust findings. Subsequently, the guiding principle within the dilemma of
reviewing, critiquing, and or analyzing work conducted by Martin Associates as it relates to the purpose noted
herein resided in research design and methodology.
As such, Xicon Economics initially investigated the methodologies Martin Associates employed when collecting data,
port-specific, economic, and otherwise. When collecting data such as these, it is appropriate to utilize some form of
instrument that should offer evidence of validity and reliability. Subsequently, one of the first mandates associated
with the review was to determine whether the research design methodologies employed by Martin Associates
offered evidence that scientific validity and reliability existed, and if so, to what extent.
As a matter of explanation to stakeholders, attempting to establish validity and reliability is an arduous
undertaking. Thus, offered below is a brief overview of validity and reliability below in lay terms:
Validity is the extent to which a measure captures a specific variable, or set of variables, i.e. the
extent to which a construct, or set of constructs, is operationalized. For example, in economics
one is concerned with economic output; however, one must first define economic output; this is
validity. Reliability is the extent to which a measure consistently captures its intended data. In risk
engineering, for example, reliability is the ability of a system to perform consistently its required
functions under stated conditions for a specified period. As another example, in psychometrics,
reliability is the ability of an instrument, or test, to consistently collect the same data repeatedly.
However, it is possible to have reliability without validity; but technically, it is not possible to have
validity without reliability. As an example, a watch that consistently runs 30 minutes later than the
correct time offers no evidence that its measure holds validity as a measure of time; however, the
watch is consistent and therefore, reliable. In fact, while the time the watch keeps is not valid, to
use the term loosely, its reliability coefficient is 1.0 perfect.
In brief, there are three broad types of validity as it relates to instrument development and usage,
including content validity, criterion validity, and construct validity. Of these three types of validity,
content validity is the easiest to address; content validity often is equated with face validity and
asks the researcher to subjectively address two basic questions: 1) Does the instrument appear to
Xicon Economics
Page 23 of 102
The Local and Regional Economic Impacts of the Port of Jacksonville, 2013, dated August 4, 2013, by Martin
Associates
Presentation, The Economic Impact of the Port of Jacksonville, 2013, dated August 7, 2014, presented by
Dr. John Martin, Martin Associates
Jacksonville Port Authority: Strategic Master Plan, dated December 5, 2013, prepared by Martin Associates
Survey Instruments (7 total), Economic Impact Study of the Port of Jacksonville, (n.d.)
Email, Jacksonville Port Task Force, dated May 12, 2014, by Brian Taylor, JAXPORT
Historical Data, 1980/81-2013/14, Jacksonville Port Authority
Final Integrated General Reevaluation Report and Supplemental Environmental Impact States, dated
February 2014, by U.S. Army Corps of Engineers, Jacksonville District
Total Vessel Calls, 2002-2012, USDOT, Maritime Administration
Global Cities Initiative, dated December 2014, a joint venture by Brookings and JP Morgan Chase & Co.
Jacksonville Harbor Deepening, Mayors Task Force, dated August 7, 2014, by Col. Alan Dodd
Memo, Florida Logistics Center Market Analysis Update, dated May 1, 2014, by Brian Taylor, JAXPORT
Seven Questions to Ask about $1 Billion Spending of Public Funds for St. Johns Dredging/Deepening, (n.d.)
by Dr. David Jaffee, Northeast Florida Center for Community Initiatives, University of North Florida
Critical Considerations on St. Johns River Dredging/Deepening Project, (n.d.) by Dr. David Jaffee, Northeast
Florida Center for Community Initiatives, University of North Florida
The Port of Savannah Logistics Cluster, (n.d.) by Dr. Jean-Paul Rodriguez
Jacksonville Port Task Force Briefing, North Florida TPO, Path Forward, 2040 Port & Intermodal Cargo
Forecast, dated November 12, 2014, by John Vickerman, Vickerman & Associates
A Peer Review of the Impact Modeling by Martin Associates for JAXPORT regarding Dredging to 47 Feet,
(n.d.) by Dr. Paul Mason
Transcript, Port Task Force Meeting, dated August 7, 2014, by Ananth Prasad, (formerly) Florida
Department of Transportation
Numerous other papers, articles, and emails regarding harbor deepening at JAXPORT, both for and against
Further, Xicon Economics had multiple communications with numerous individuals associated with the economic
impact of harbor deepening of the Port of Jacksonville, including the following individuals:
3
Initially, all documents were reviewed in terms of their relevance to each of the three objectives as it related to the
purpose of this investigation, followed by a selected internal critique and analysis of data and findings noted within
each document, relative to the objectives. After such, Xicon Economics evaluated the extent to which validity
existed within the research design methodology Martin Associates used when developing the economic impact
model. To do so, the principal researcher of this study, Dr. Herbert Barber, spent approximately four hours in
discussions with Dr. John Martin, the developer of the economic impact model. Such discussions were necessary as
Martin Associates could not release the actual economic impact model, itself, nor the data associated with the
model, without nullifying confidentiality agreements held with its clients.
First, the seven (7) survey instruments Martin Associates used to collect data were reviewed and critiqued. In so
doing, the extent to which content, construct, and criterion validity existed within the data collection process was
evaluated as it related to each instrument. Next, a review was conducted to determine the reliability of each survey
instrument; again, to the extent possible. Finally, the items noted in each instrument were compared to the analyses
Martin Associates provided in the economic impact study, i.e. The Local and Regional Economic Impacts of the Port
of Jacksonville, 2013, dated August 4, 2013, to ensure that the data captured was congruent with the items found
within each instrument.
Following, the second objective was fulfilled by providing an independent evaluation of the business growth
potential of JAXPORT given the ports current water depth and water depth under the proposed harbor deepening
project. In so doing, it was not considered realistically feasible under the RFP, nor desired by the Office of Economic
Development or Port Task Force, that an exhaustive comprehensive investigation of every variable associated with
and without harbor deepening be examined. Subsequently, specific variables, or commodities, were selected to
serve as comparable variables such that an independent analysis of these variables could be conducted by Xicon
Economics and compared with findings noted by Martin Associates. In so doing, validity, as it related to findings
tendered by Martin Associates, was investigated further.
Upon completion of the first and second objectives, a cost-benefit analysis was conducted. In so doing, project costs
were levied against economic benefits. Cost and benefits were initially compared financially, then econometrically.
Xicon Economics
Page 25 of 102
he analyses Xicon Economics used in conducting this study, along with the respective findings, were
divided into three overlapping sections, as they related to the three objectives established in the RFP.
In the first section, a review and evaluation of the economic impact model developed by Martin Associates was
conducted with accommodating arguments for and against the employed methodologies. Following, the potential
business growth potential benefits associated with and without harbor deepening of the St. Johns River were
investigated. Thirdly, harbor deepening was examined from a financial perspective and econometric perspective
through a cost-benefit analysis.
Participant Group
Government
Ocean Carriers A
Maritime Services
Ocean Carriers B
Marine Cargo
Tugs & Barges
Warehouse
Participants Identified
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Items
6
8
7
8
9
14
13
Data Relevant
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Data were collected over the telephone and in-person by professionals employed by Martin Associates, with roughly
five conversations being necessary per respondent. No form of random sampling was necessary as the 472 firms
surveyed represented the population (Response Rate100%); thus, generalizability of a sample across a population
was not of concern. As noted in the economic impact study (p. 15), data collected through the instruments were
considered baseline data. These data allowed for the development of operational models, that when coupled with
appropriate BEA multipliers, further allowed Martin Associates to update the economic impacts JAXPORT marine
terminals and private terminals had annually on the following as each related to direct jobs, revenue and income
impacts, and similar variables:
Xicon Economics
Page 26 of 102
To this end, Xicon Economics reviewed the instruments and overall methodology employed during the collection of
data from a scientific perspective, as well. In general, Xicon Economics attempted to find evidence that validity
existed, as in cases of critique, such as the investigation herein, it arguably is more important to offer evidence that
validity exists and allow the sophisticated reviewer to render independent conclusions, rather than becoming overly
critical of the methodologies employed during data collection. However, validity is the extent to which a construct is
operationalized, and such could not be precluded from investigation.
In scientific research, constructs are precursors to variables. In this case, specifically, for example, economic
impact must be operationalized into a variable such that it can be quantitatively measured; in lay terms, economic
impact must be defined, e.g. GDP, jobs, income, taxes. While operationalization of a construct is an arduous
undertaking in scientific research, such is relatively straightforward in applied research, such as the economic impact
study discussed herein.
Of the three broad types of validity that exist, including content validity, construct validity, and criterion validity,
only content validity and construct validity were considered relevant to the Martin economic impact study. Content
validity is analogous to face validity. Investigating content validity is less rigorous than construct validity and criterion
validity, as it merely mandates that measures appear to measure intended constructs. Through construct validity,
researchers determine the extent to which constructs are operationalized. Most often construct validity is assessed
through subject matter experts coupled with experts well versed in scientific measurement. Unlike criterion validity,
both content validity and construct validity rely on the experiences of seasoned experts to assess validity, as
opposed to manipulating quantitative data to develop coefficients or similar measures. Subsequently, Xicon
Economics found evidence to support both content and construct validity as it related to the survey instrument and
data collection methodologies employed by Martin Associates. Further, Xicon Economics found evidence that
validity existed within the various graphical economic impact models.
However, a component to validity is reliability, but given that Xicon Economics was not allowed access the data
collected through the seven survey instruments by Martin Associates, reliability coefficients could not be calculated.
Such could easily be attained through any one of several forms of reliability, such as parallel forms, test-retest, or
split halves. Likewise, no evidence was found that suggested that internal consistency was estimated in the
instruments, such as that found using Cronbachs alpha. Thus, it is not possible for Xicon Economics to suggest the
research methodologies employed during the development and execution of the Martin economic impact model
offered evidence of validity further than that previously noted.
4
Nonetheless, in practice, especially as it relates to applied research, it is often not necessary to standardize
instruments that will collect data, at least to the extent one would in psychometric testing and research or other
peer-reviewed scientific research; arguably, such was the case with the Martin economic impact model. Regardless,
it remains the opinion of Xicon Economics that reasonable efforts were taken by Martin Associates to ensure validity
within their research design methodology and data collection processes, notwithstanding the noted issues
associated with reliability.
Significantly more effort is required to standardize instruments than that noted herein. However, let the reader be aware that
standardizing an instrument in this case, such as those used by Martin Associates, would be considered atypical and likely
unnecessary.
Xicon Economics
Page 27 of 102
As an explanatory note to the stakeholders, however, data analyzed and subsequent findings of the second
objective should not be construed as identical to data analyzed and subsequent findings of the third objective,
depicted elsewhere in this study. While the raw data remained the same under every objective, treatment of those
data did not, as changes were necessary to accommodate each objective individually. For example, the findings
noted under the second objective were established via independent efforts exerted by Xicon Economics. However,
for comparative purposes, which relates to the critique of validity mandated under the first objective, similar
techniques were employed by Xicon Economics when necessary, presuming such techniques were considered
statistically sound. In so doing, the analyses and subsequent findings in the second objective did not allow for delays
as it related to the engineering and construction phases of harbor deepening. However, the third objective,
involving the cost-benefit analysis, mandated that Xicon Economics consider these delays.
Xicon Economics
Page 28 of 102
FY 2013/14
FY 2006/07
35,000
30,000
25,000
20,000
15,000
10,000
FY 2012/13
FY 2007/08
5,000
-
FY 2011/12
FY 2008/09
FY 2010/11
FY 2009/10
Inbound
FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
FY 2009/10
FY 2010/11
FY 2011/12
FY 2012/13
FY 2013/14
Inbound
156,145
120,650
115,798
139,301
159,701
173,424
192,657
199,957
222,728
YoY %Change
-22.7
-4.0
20.3
14.6
8.6
11.1
3.8
11.4
Outbound
394,359
363,914
365,743
363,066
402,482
433,980
418,709
413,542
394,160
Outbound
YoY %Change
-7.7
0.5
-0.7
10.9
7.8
-3.5
-1.2
-4.7
2.
Correlation coefficient between Inbound and Outbound TEUs: r=.92, N=9, p=.039 (Sig at .05 alpha level).
Tonnage is represented monthly in above figure and by fiscal year (total) in the table.
Xicon Economics
Page 29 of 102
FY 2004/05
300,000
FY 2013/14
FY 2005/06
250,000
200,000
150,000
100,000
FY 2012/13
FY 2006/07
50,000
-
FY 2011/12
FY 2007/08
FY 2010/11
FY 2008/09
FY 2009/10
Container
FY 2004/05
FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
FY 2009/10
FY 2010/11
FY 2011/12
FY 2012/13
FY 2013/14
Container
1,014,483
1,133,987
969,547
913,440
1,070,688
1,231,871
1,448,167
1,629,004
1,742,474
1,965,125
Auto/Tractor
Break Bulk
611,918
953,532
974,800
768,695
655,180
821,469
709,645
684,033
833,993
714,100
Bulk Cargo
2,268,448
2,077,573
2,105,125
2,265,260
1,595,842
1,401,732
1,107,362
1,082,575
918,834
1,084,166
Break Bulk
Auto/Tractor
712,905
875,960
866,518
745,943
376,601
478,160
406,928
503,084
303,273
324,786
Bulk Cargo
Total
4,607,754
5,041,053
4,915,989
4,693,338
3,698,311
3,933,232
3,672,102
3,898,696
3,798,574
4,088,177
YoY %Change
9.4
-2.5
-4.5
-21.2
6.4
-6.6
6.2
-2.6
7.6
FY 2013/14
FY 2005/06
300,000
250,000
200,000
150,000
FY 2012/13
FY 2006/07
100,000
50,000
-
FY 2011/12
FY 2007/08
FY 2010/11
FY 2008/09
FY 2009/10
Container
FY 2004/05
FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
FY 2009/10
FY 2010/11
FY 2011/12
FY 2012/13
FY 2013/14
Container
3,152,897
2,945,785
2,669,168
2,687,275
2,823,908
3,187,460
3,416,904
3,276,295
3,152,533
3,097,844
Auto/Tractor
Break Bulk
195,033
259,386
186,975
183,855
119,585
168,883
184,721
131,994
107,806
78,244
Bulk Cargo
120,258
123,265
147,775
210,607
101,238
113,429
114,185
124,511
126,359
120,669
Break Bulk
Auto/Tractor
372,710
326,902
389,294
616,556
538,919
640,920
740,101
805,481
793,129
702,284
Bulk Cargo
Total
3,840,899
3,655,338
3,393,212
3,698,293
3,583,650
4,110,692
4,455,911
4,338,281
4,179,827
3,999,041
YoY %Change
-4.8
-7.2
9.0
-3.1
14.7
8.4
-2.6
-3.7
-4.3
Xicon Economics
Page 31 of 102
Break Bulk
Bulk Cargo
Auto/Tractor
Container
r
sig
N
1
10
r
sig
N
-0.190
0.599
10
1
10
r
-0.881
sig
**0.001
N
10
Auto/Tractor
r
-0.736
sig
*0.015
N
10
**Significant at .01 alpha level
*Significant at .05 alpha level
0.225
0.532
10
1
10
0.510
0.132
10
0.879
**0.001
10
1
10
Break Bulk
Bulk Cargo
Auto/Tractor
Break Bulk
Bulk Cargo
1
10
r
sig
N
-0.183
0.613
10
1
10
r
-0.578
sig
0.080
N
10
Auto/Tractor
r
0.549
sig
0.100
N
10
**Significant at .01 alpha level
*Significant at .05 alpha level
0.215
0.551
104
1
10
-0.690
0.716
10
-0.046
0.900
10
Break Bulk
Bulk Cargo
1
10
Xicon Economics
Page 32 of 102
An explanation regarding container and vessel projections is noted below, followed by figures representing each
variable via TEU or tonnage, as well as a table reflecting all projections rendered for all variables.
Inbound and Outbound Container Projections by TEU without Harbor Deepening
The least squares regression (LSR) analysis associated with the time series modeling for projecting inbound
container TEUs through FY 2019/20 was determined to be statistically significant, F(1,108)=152.573, p<.001.
Likewise, the LSR intercept and slope coefficients were significant at the .001 alpha level. Further, the difference
factor, as determined by the correlation coefficient between the actual container TEU data and modeled container
TEU data for FY 2005/06 to FY 2013/14, was considered relatively strong (r=.787), and yielded a standard deviation
of .170. Overall, inbound container TEU projections appeared stable through FY 2019/20, with inbound TEU
increases projected to decrease in FY 2014/15 (198,135 TEU) from FY 2013/14 (222,729 TEU), then increase and
decrease year over year to yielding approximately 280,689 containers (TEU) FY 2019/20.
Similarly, the model developed to project outbound container TEUs through FY 2019/20, without harbor deepening,
was strong, as reflected by statistically significant LSR intercept and slope coefficients (p<.001, for both).
Additionally, the overall LSR model fit was significant at the .01 alpha level, as determined through an F-test
conducted under an analysis of variance (ANOVA), F(1, 108)=10.365. The relationship between actual container TEU
data and modeled container TEU data for FY 2005/06 to FY 2013/14, was .450 (SD=.099). Further, the relationship
between actual inbound container TEU data and actual outbound container TEU data for FY 2005/06 to FY 2013/14,
also was calculated through Pearsons product-moment method, and found to be .533 (p<.01).
Subsequently, outbound container volume via TEU was projected to increase steadily through FY 2016/17 to
465,824 TEU, decrease in FY 2017/18 to 432,468 TEU, and then increase steadily through FY 2019/20 to
approximately 442,092 TEU. Overall, outbound container TEU is expected to increase from FY 2013/14 (413,221
TEU) by 7.0 percent.
Inbound and outbound container projections, without harbor deepening, through FY 2019/20 are noted below:
Xicon Economics
Page 33 of 102
410,007
422,845
465,824
442,092
437,280
432,468
400,000
300,000
198,135
234,335
266,588
257,512
269,100
280,689
200,000
100,000
0
FY 2014/15
FY 2015/16
FY2016/17
FY 2017/18
Inbound
FY 2018/19
FY 2019/20
Outbound
3,256,217
1,908,675
FY 2014/15
3,295,319
2,017,173
FY 2015/16
3,334,421
2,125,670
FY2016/17
Inbound
3,412,625
3,373,523
2,234,167
FY 2017/18
2,342,664
FY 2018/19
3,451,727
2,451,161
FY 2019/20
Outbound
Let the reader be cautioned when using percentage change as a measure, as percentage change can be deceptive, depicting
changes that while indeed may be true of two data, may not exist holistically across the series. Thus, percentage change lends
itself to potentially describing change inaccurately against the series.
Xicon Economics
Page 34 of 102
9.63
7.94
8.61
7.97
7.79
7.16
8.73
8.71
8.68
7.80
7.80
7.81
FY 2017/18
FY 2018/19
FY 2019/20
6.00
4.00
2.00
0.00
FY 2014/15
FY 2015/16
Inbound
FY2016/17
Outbound
Poly. (Inbound)
Poly. (Outbound)
Inbound and Outbound Break Bulk Projections by Tonnage, without Harbor Deepening
The model developed to project inbound break bulk tonnage was not statistically significant at the .05 alpha level;
and the difference factor coefficient was .492, while the standard deviation was 1.026. Potentially lending
themselves to disrupt data stability, several potential outliers were observed in the series. Nonetheless, it became
obvious that inbound break bulk tonnage has steadily decreased since FY 2004/05, and as such, it could be inferred
that the negative regressive behavior of the series would continue through FY 2019/20. Therefore, projections were
rendered, albeit through a time series model not considered statistically significant.
Conversely, the time series model developed to project outbound break bulk tonnage was considered strong, with
an overall LSR model fit that was significant, F(1, 118)=34.867, p<.001, as well as both intercept and slope
coefficients. Similar to the inbound break bulk model, however, the time series model clearly demonstrated
negative regression of outbound break bulk tonnage through FY 2019/20. Thus, projections for inbound and
outbound break bulk tonnage, without harbor deepening or other form of market capture, are anticipated to
decrease steadily. In fact, outbound break bulk tonnage was estimated to dissipate altogether around CY 2020.
Projections for inbound and outbound break bulk tonnage are noted below.
Xicon Economics
Page 35 of 102
724,169
715,181
706,194
697,203
700,000
688,218
679,231
600,000
500,000
400,000
300,000
200,000
100,000
79,567
64,493
49,419
34,345
19,271
4,197
0
FY 2014/15
FY 2015/16
FY2016/17
Inbound
FY 2017/18
FY 2018/19
FY 2019/20
Outbound
Inbound and Outbound Break Bulk Projections by Tonnage, without Harbor Deepening
Inbound and Outbound Bulk Cargo Projections by Tonnage, without Harbor Deepening
Time series was also used to project bulk cargo tonnage through FY 2019/20, using FY 2004/05 to FY 2013/14
tonnage data. In so doing, the LSR analysis yielded a statistically significant fit, F(1, 118)=78.591, p<.001, with slope
and intercept coefficients both being significant, as well. Substantial decreases in inbound bulk cargo tonnage were
projected through FY 2019/20, with inbound tonnages dissipating altogether around first or second quarter of CY
2020, unless changes occur to alter this course. Conversely, outbound bulk cargo tonnage projections are expected
to remain relatively constant with a tendency to decrease by approximately 2,000 tons year after year, though the
overall LSR model fit was not statistically significant (p=.337).
Refer to the figure below:
800,000
700,000
667,437
600,000
498,942
500,000
400,000
330,447
300,000
200,000
119,022
117,056
115,091
161,953
113,126
100,000
111,160
0
109,195
0
0
FY 2014/15
FY 2015/16
FY2016/17
Inbound
FY 2017/18
FY 2018/19
FY 2019/20
Outbound
Inbound and Outbound Bulk Cargo Projections by Tonnage, without Harbor Deepening
Xicon Economics
Page 36 of 102
884,469
990,478
937,478
1,149,514
1,096,505
1,043,496
800,000
600,000
400,000
216,359
200,000
153,759
91,159
28,559
0
FY 2014/15
FY 2015/16
FY2016/17
Inbound
FY 2017/18
FY 2018/19
FY 2019/20
Outbound
Overall inbound and outbound projected vessel and container tonnage for FY 2019/20 is noted below by percentage
of (JAXPORT) market share. Considering inbound tonnage and outbound tonnage together, inbound tonnage was
projected to represent 39.9 percent of total tonnage, while outbound tonnage was projected to represent 60.1
percent of total tonnage.
100.0%
80.0%
78.3%
60.0%
40.0%
21.7%
20.0%
0.0%
0.0%
Bulk Cargo
Auto/Tractor
0.0%
Container
Break Bulk
No calculations were conducted to verify econometrically this statement, such as could be determined through the application
of statistical effect and causal techniques, like Granger causality.
Xicon Economics
Page 37 of 102
73.2%
60.0%
40.0%
24.4%
20.0%
0.1%
2.3%
Break Bulk
Bulk Cargo
0.0%
Container
Auto/Tractor
Container
Inbound Tonnage
Outbound Tonnage
Break Bulk
Bulk Cargo
Auto/Tractor
+28.4%
-6.2%
-100.0%
-100.0%
+6.0%
-94.7%
-8.3%
+30.0%
Container and vessel variables are represented individually below in TEU and/or tonnage on a monthly and annual
basis without incorporation of delays associated with actual harbor deepening, e.g. delays due to construction.
Xicon Economics
Page 38 of 102
30,000
25,000
20,000
15,000
Projected
10,000
Projections, Total
5,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 108)=152.573; p<.001.
4. Diff Factor Coefficient: r=.787; Std Dev=.170
TEU
198,135
234,335
266,588
257,512
269,100
280,689
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
2005/06
FY
2006/07
FY
2007/08
FY
2008/09
FY
2009/10
FY
2010/11
TEU Actual
FY
2011/12
FY
2012/13
CMA(12)
FY
2013/14
FY
2014/15
TEU Projected
FY
2015/16
FY
2016/17
FY
2017/18
FY
2018/19
FY
2019/20
45,000
40,000
35,000
30,000
25,000
Projected
20,000
15,000
10,000
5,000
Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 108)=10.365; p<.01.
4. Diff Factor Coefficient: r=.450; Std Dev=.099
TEU
410,007
422,845
465,824
432,468
437,280
442,092
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
2005/06
FY
2006/07
FY
2007/08
FY
2008/09
FY
2009/10
FY
2010/11
TEU Actual
FY
2011/12
FY
2012/13
CMA(12)
FY
2013/14
FY
2014/15
FY
2015/16
FY
2016/17
FY
2017/18
FY
2018/19
FY
2019/20
TEU Projected
45,000
Projected Outbound
40,000
35,000
30,000
Projected Inbound
25,000
Relationship, Inbound Actual vs Outbound Actual
r=.533 (p<.01)
20,000
15,000
Projected
10,000
5,000
0
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
2005/06
FY
2006/07
FY
2007/08
FY
2008/09
FY
2009/10
FY
2010/11
FY
2011/12
FY
2012/13
FY
2013/14
FY
2014/15
FY
2015/16
FY
2016/17
CMA(12) - Inbound
CMA(12) - Outbound
FY
2017/18
FY
2018/19
FY
2019/20
Relationship between Inbound and Outbound Container Projections, without Harbor Deepening
Units: TEU
Xicon Economics
Page 41 of 102
250,000
200,000
150,000
Projected
100,000
Projections, Total
50,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=259.057; p<.001.
4. Diff Factor Coefficient: r=.837; Std Dev=.189
Tons
1,908,675
2,017,173
2,125,670
2,234,167
2,342,664
2,451,161
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
Inbound Container Projections, without Harbor Deepening
Units: Short Tons
CMA(12)
Tons Projected
350,000
300,000
250,000
200,000
Projected
150,000
Projections, Total
100,000
50,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=15.519; p<.001.
4. Diff Factor Coefficient: r=.492; Std Dev=.104
Tons
3,256,217
3,295,319
3,334,421
3,373,523
3,412,625
3,451,727
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
CMA(12)
Tons Projected
Xicon Economics
Page 43 of 102
350,000
Projected Outbound
300,000
250,000
Projected Inbound
200,000
150,000
100,000
Projected
50,000
0
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual - Inbound
CMA(12) - Inbound
CMA(12) - Outbound
Relationship between Inbound and Outbound Container Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 44 of 102
140,000
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is not significant at .05 alpha level.
3 LSR model fit is not significant, p=.304.
4. Diff Factor Coefficient: r=.492; Std Dev=1.026
Projected
120,000
Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Tons
724,169
715,181
706,194
697,206
688,218
679,231
100,000
80,000
60,000
40,000
20,000
Projected
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
CMA(12)
Tons Projected
Potential Outlier
(No calcs to confirm)
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1,118)=34.867, p<.001.
4. Diff Factor Coefficient: r=.506; Std Dev=1.468
40,000
35,000
Projections, Total
30,000
Projected
25,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Tons
79,567
64,493
49,419
34,345
19,271
4,197
20,000
15,000
10,000
5,000
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
(5,000)
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
CMA(12)
Tons Projected
Xicon Economics
Page 46 of 102
140,000
Projected
120,000
100,000
Projected Inbound
80,000
60,000
40,000
Projected Outbound
20,000
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
(20,000)
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual - Inbound
CMA(12) - Inbound
CMA(12) - Outbound
Relationship between Inbound and Outbound Break Bulk Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 47 of 102
250,000
Projections, Total
200,000
Projected
150,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Tons
667,437
498,942
330,447
161,953
0
0
100,000
50,000
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
(50,000)
Tons Actual
CMA(12)
Tons Projected
Potential Outlier
(No calcs to confirm)
70,000
60,000
Projections, Total
50,000
40,000
Projected
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Tons
119,022
117,056
115,091
113,126
111,160
109,195
30,000
20,000
10,000
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
CMA(12)
Tons Projected
Xicon Economics
Page 49 of 102
250,000
Projected
200,000
150,000
100,000
50,000
Projected Inbound
Projected Outbound
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
(50,000)
Tons Actual - Inbound
CMA(12) - Inbound
CMA(12) - Outbound
Relationship between Inbound and Outbound Bulk Cargo Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 50 of 102
120,000
Projections, Total
100,000
80,000
Projected
60,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Tons
216,359
153,759
91,159
28,559
0
0
40,000
20,000
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
(20,000)
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
CMA(12)
Tons Projected
Xicon Economics
Page 51 of 102
Projected
100,000
80,000
60,000
40,000
Projections, Total
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3. LSR model fit is significant, F(1,118)=138.372, p<.001.
4. Diff Factor Coefficient: r=.755; Std Dev=.273
20,000
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Tons
884,469
937,478
990,478
1,043,496
1,096,505
1,149,514
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
CMA(12)
Tons Projected
Projected
120,000
Projected Outbound
100,000
Relationship, Inbound Actual vs Outbound Actual
r=-.632 (p<.01)
80,000
60,000
40,000
Projected Inbound
20,000
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
(20,000)
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual - Inbound
CMA(12) - Inbound
CMA(12) - Outbound
Relationship between Inbound and Outbound Auto/Tractor Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 53 of 102
Container TEU and tonnage projections also were rendered beyond FY 2019/20, to allow stakeholders to gage
potential changes in TEU and tonnage output across container and vessel data over the next several years as it
considers deepening the harbor for JAXPORT. The remaining vessel tonnages, i.e. break bulk, bulk cargo, and
auto/tractor, were not projected beyond FY 2019/20. However, rendering long-term projections using relatively
small data sets has the potential of becoming problematic, as under the most robust parameters, forecasting is
rendered through the application of probability theory, and therefore, sound professional judgment from all
individuals, including those individuals well versed in statistics and econometrics, must be exercised. In lay terms,
the farther away from a known observation or set of observations one goes, the less likelihood that a rendered
projection, or projections, will be accurate or inaccurate. However, such arguments should not discount the
methodologies herein from being cautiously employed to render data-driven decisions. Certainly, models that are
more statistically sophisticated can be developed for rendering the projections herein, but such would be unrealistic
under the constraints associated with the RFP. In any case, probability diminishes proportionally with time, though
not necessarily linearly, and subsequently, the likelihood of projections being correct or incorrect. To this end, it is
the opinion of Xicon Economics that time series can be used to develop projections beyond FY 2019/20, but
professional judgment, coupled with caution, is urged when rendering decisions using single constructs, such as
using forecasts of single variables only, as opposed to rendering decisions from a holistic perspective using multiple
variables, quantitative, qualitative, and otherwise. In lay terms, stakeholders are encouraged to consider
projections, especially those beyond FY 2019/20, as one of multiple factors influencing the decision of deepening
the harbor.
Thus, the models previously depicted and described herein to render container projections through FY 2019/20,
were used to render projections through FY 2029/30, without harbor deepening. In so doing, all former model
assumptions and parameters remain constant, unless noted otherwise.
Without harbor deepening, JAXPORT has the potential to increase inbound container TEU from approximately
198,000 TEU in FY 2014/15 to approximately 397,000 TEU in FY2029/30 (100.2%), meaning inbound container TEU
likely will double from TEU output in FY 2014/15. Outbound container TEU should also increase through FY 2029/20,
albeit less, from approximately 410,000 TEU to 490,200 (19.6%). Refer to the figure below:
600,000
500,000
446,903
400,000
300,000
292,277
451,715
303,866
456,527
315,454
461,339
327,043
466,150
338,631
470,962
350,219
475,774
361,808
480,585
373,396
485,397
384,985
490,209
396,573
200,000
100,000
FY 2020/21FY 2021/22FY 2022/23FY 2023/24FY 2024/25FY 2025/26FY 2026/27FY 2027/28FY 2028/29FY 2029/30
Inbound
Outbound
Inbound and Outbound Container Projections beyond FY2019/20 by TEU, without Harbor Deepening
Similarly, without harbor deepening, inbound container tonnage at JAXPORT has the potential to increase from
approximately 1.908 tons in FY 2104/15 to approximately 3.536 tons in FY 2029/30, while outbound container
tonnage has the potential to increase from 3.256 tons in FY 2014/15 to 3.843 tons in FY 2029/30. Inbound and
outbound tonnage increases represent a change in container tonnages of 85.3 percent and 18.0 percent,
respectively, through FY 2029/30. As with container projections by TEU, tonnage projections mandate that JAXPORT
maintain a container market similar to that it has held since FY 2004/05. Refer to the figure below:
2,000,000
1,000,000
FY
2020/21
FY
2021/22
FY
2022/23
FY
2023/24
FY
2024/25
Inbound
FY
2025/26
FY
2026/27
FY
2027/28
FY
2028/29
FY
2029/30
Outbound
Inbound and Outbound Container Projections beyond FY2019/20 by Tonnage, without Harbor Deepening
Monthly changes in container TEU and tonnage output is noted on the figures below, allowing stakeholders to gain
understanding regarding the ebb and flow of projected container output versus actual container output over
increments less than annually (monthly). Be reminded that statistical confidence depreciates with time.
Notwithstanding this established fact associated with probability theory, the container projections presented should
hold relatively true presuming all previously noted assumptions also hold relatively true across time. However, in
reality, such truisms seldom perform exactly as predicted, and subsequently, stakeholders must incorporate sound,
common-sense judgment when using these forecasts, and all other forecasts herein, to render decisions.
Refer to the figures below to review projected container TEU and tonnage through FY 2029/30.
Xicon Economics
Page 55 of 102
40,000
Projections, Total
35,000
30,000
25,000
FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30
TEU
292,277
303,866
315,454
327,043
338,631
350,219
361,808
373,396
384,985
396,573
Projected
20,000
15,000
Confidence
10,000
More
Less
5,000
TEU Actual
CMA(12)
TEU Projected
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Projections, Total
Projected
FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30
TEU
446,903
451,715
456,527
461,339
466,150
470,962
475,774
480,586
485,397
490,209
Confidence
More
Less
TEU Actual
CMA(12)
TEU Projected
Xicon Economics
Page 57 of 102
350,000
Projections, Total
300,000
250,000
200,000
FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30
Tons
2,559,659
2,668,156
2,776,653
2,885,150
2,993,647
3,102,145
3,210,642
3,319,139
3,427,636
3,536,133
Projected
150,000
Confidence
100,000
More
Less
50,000
Tons Actual
CMA(12)
Tons Projected
350,000
300,000
250,000
200,000
Projections, Total
150,000
100,000
50,000
FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30
Tons
3,490,828
3,529,930
3,569,032
3,608,134
3,647,236
3,686,338
3,725,439
3,764,541
3,803,643
3,842,745
Projected
Confidence
More
Less
Tons Actual
CMA(12)
Tons Projected
Xicon Economics
Page 59 of 102
732,816 739,180
762,889
886,782
804,781
796,093
832,752
600,000
400,000
200,000
0
2020
2025
Martin
2030
2035
Xicon
Converting Martin container TEU to container tonnage yields tonnages of 6,082,372; 6,331,979; 6,607,572; and
10
6,911,842; respectively, holding container efficiency constant, at 8.3 tons/TEU. Subsequently, this conversion
allows comparisons to be made on a tonnage basis, as noted below:
7
Barber, H. (2013). Economic Assessment of the Southeastern United States Manufacturing Sector. Xicon Economics.
An investigation at the industry sector level is not congruent with the scope of work noted under the RFP addressed herein.
9
Per Martin Associates, the Asian container market currently accounts for 17 percent of all container tonnage at JAXPORT (p. 21,
Strategic Plan).
10
Xicon Economics also investigated container efficiency across the years associated with this study, and overall, container
efficiency remained relatively stable, with some deviation.
8
Xicon Economics
Page 61 of 102
6,082,372 6,050,487
6,331,979
6,640,883
6,607,572
7,378,878
6,911,842
4,000,000
2,000,000
2020
2025
Martin
2030
2035
Xicon
However, the projections depicted above as Xicon do not allow for the 17 percent loss of the Asian market, as
anticipated by Martin Associates should JAXPORT opt not to deepen its harbor and the noted loss become reality.
11
Assuming the loss of the Asian market occurred in total in FY 2013/14, with all other variables remaining relatively
constant as it relates to variable growth rate, the following tonnage projections were forecasted for JAXPORT using
adjusted time series models:
11
The loss of the Asian market was forced to theoretically occur in FY 2013/14, for simplification, and remodeled using time
series, as actual raw data for FY 2014/15 in its entirety did not exist at the time this study was conducted. Thus, very slight errors
were imputed into this method, albeit negligible for these purposes.
Xicon Economics
Page 62 of 102
300,000
250,000
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=201.950; p<.001.
4. Diff Factor Coefficient: r=.808; Std Dev=.177
Confidence
More
Less
200,000
Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30
150,000
100,000
50,000
Projected
Tons Actual
CMA(12)
Inbound Container Projections with Loss of Asian Market, without Harbor Deepening
Units: Short Tons
Tons Projected
Tons
1,773,730
1,863,770
1,953,810
2,043,849
2,133,889
2,223,929
2,313,969
2,404,008
2,494,048
2,584,088
2,674,128
2,764,128
2,854,207
2,944,247
3,034,287
3,124,327
Confidence
350,000
More
Less
300,000
250,000
200,000
150,000
Projected
Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
100,000
50,000
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is not significant (p=.281).
3 LSR model fit is not significant (p=.281).
4. Diff Factor Coefficient: r=.354; Std Dev=.122
Tons
3,060,160
3,072,435
3,084,708
3,096,982
3,109,256
3,121,530
3,133,803
3,146,077
FY
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30
Tons
3,158,351
3,170,625
3,182,899
3,195,173
3,207,447
3,219,721
3,231,995
3,244,268
Tons Actual
CMA(12)
Tons Projected
Outbound Container Projections with Loss of Asian Market, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 64 of 102
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
6,082,372
5,345,459
6,331,979 5,869,301
6,607,572
6,368,595
6,911,842
+13.8%
+7.9%
+3.8%
2020
2025
Martin
2030
2035
Xicon
Combined Inbound and Outbound Container Projections with Loss of Asian Market, without Harbor Deepening
Units: Short Tons
Note: Xicon Economics did not render projections past FY 2029/30.
When comparing Xicon projections against Martin projections, Xicon container tonnage projections were
736,913 tons lower in CY 2020, 462,678 tons lower in CY 2025, and CY 238,977 tons lower in 2030. Expressed
conversely, Martin projections were 13.8 percent higher in 2020, 7.9 percent higher in 2025, and 3.8 percent
higher in 2035. Admittedly, some form of testing, such as a t-test, could have been conducted to determine whether
these differences were statistically significant, and indeed, perhaps such would be of merit. Regardless, a portion of
these differences was considered acceptable given that two separate economic research firms, using different
methodologies coupled with different modeling techniques, generated similar findings. However, whether a full
12
difference of 13.8 percent is acceptable remains the decision of the Task Force.
Further, Xicon Economics reviewed the argument underpinning recommendations established by Martin Associates
as it related to deepening of the St. Johns River in and around JAXPORT to 47 ft (pp. 24-47, Strategic Plan). Though
extensive, the argument ultimately presented by Martin Associates for harbor deepening clearly demonstrated the
need for the Task Force to consider the harbor deepening project and its accommodating implications, to the extent
that a holistic decision is rendered relative to this entire study and all efforts taken by Martin Associates and others.
The argument for harbor deepening began with a presentation regarding historical container volumes around the
world, as they related to inbound and outbound tonnage to and from US ports, with these arguments augmented
with appropriate discussions associated with movements through the Panama and Suez canals. In so doing,
historical data were presented regarding ports along the West Coast, East Coast, and Gulf Coast of the United
States, with an emphasis ultimately on Asian carriers. A review of current container fleet sizes was presented,
coupled with evidence suggesting that 43 percent of new container carriers on order are in excess of 8,000 TEUs,
thus, requiring channel depths ranging from 47 to 50 feet.
Following, a narrative regarding distribution centers across the state of Florida then was presented, along with
transportation cost analyses regarding the distribution of cargo from port to distribution center. Martin Associates
determined that, JAXPORT offers the least cost intermodal routing to Atlanta on a Hong Kong routing via the
Panama Canal, as well as a Singapore routing through the Suez Canal (p.40). Further, it was determined that
JAXPORT offered a more cost effective scenario for moving cargo in the Florida region. Additionally, it was
concluded, the Florida market can be more cost effectively served via a North, South, or Gulf Coast Florida port
and associated distribution centers rather than via truck from the Port of Savannah and intermodally for the West
Coast ports to distribution centers in Atlanta and related into the North Florida consumption markets. All three
12
No commonalities existed between the methodologies employed by Xicon Economics and the methodologies employed by
Martin Associates until the Asian market was incorporated by both firms.
0.766
16
0.586
0.534
0.910
Observations
10
ANOVA
df
Regression
Residual
Total
1
8
9
Coefficients
Intercept
7.119
Tonnage
1.84E-06
Note: Data included years 2005-2014.
SS
9.387
6.632
16.018
Standard
Error
2.401
5.48E-07
MS
9.388
0.829
F
11.3245
t Stat
2.965
3.365
P-value
0.01997
0.00988
Significance F
0.009857
Lower 95%
1.583042
5.8E-07
Upper
95%
12.6554
3.11E-06
Lower
95.0%
1.583042
5.8E-07
Upper
95.0%
12.655
3.11E-06
13
Xicon Economics used GDP in 2014 US dollars and JAXPORT container tonnages to determine relationships and a slightly
different technique to establish coefficients. Raw data supplied by The World Bank (2014) and Statisca (2014).
14
Barber, H. & El-adaway, I. (under review). An econometric model for forecasting US economic output using construction cost
indices as predictor variables. Journal of Infrastructure Engineering. American Society of Civil Engineers.
15
No calculations were conducted to determine practical effect using Cohens d or similar technique, as it was deemed
unnecessary for these purposes.
16
Admittedly, the independent variable in this model explains only 58.6 percent of the variance in the dependent variable.
Nonetheless, the model is significant, and thus, of merit.
Xicon Economics
Page 66 of 102
2020
1,379,800
1,713,294
1,877,695
2025
1,566,364
1,952,976
2,143,562
2030
1,769,642
2,217,831
2,438,772
2035
2,010,604
2,530,178
2,786,309
2030
14,688,029
18,407,997
20,241,808
2035
16,688,013
21,000,477
23,126,365
2020
11,452,340
14,220,340
15,584,869
2025
13,000,821
16,209,701
17,791,565
Categorically, the methodology used in developing the argument presented by Martin Associates for harbor
deepening at JAXPORT was textbook, in that the argument began with a discussion of the broader maritime
industry, followed by a discussion regarding various international container and vessel markets. This discussion,
along with pertinent data and analyses, was further refined to include narratives associated with ports along the
West, East, and Gulf coasts of the United States, followed with narratives and accommodating analyses regarding
the ports of Florida. Finally, the argument was further refined to include likely repercussions of opting against
harbor deepening JAXPORT; and the potential benefits of opting to deepen JAXPORT. To this end, these arguments
appeared reasonable.
Xicon Economics used a slightly different model for projecting container tonnages. While utilizing the same
argument developed by Martin Associates, as it related to the potential for JAXPORT to capture additional container
tonnage with harbor deepening via Asian container market capture, along with capture from other markets, Xicon
Economics modeled US GDP through CY 2030, using years 2005-2014. These calculations resulted in the following
model: US GDPproj= 0.428(t)+12.786; F(1,9)=134.768 (p<.001). Ninety-four percent (94.4%) of the variance in GDP
was explained through the model.
17
An aggressive penetration with 47 ft deepening, plus intermodal penetration estimate was not made by Xicon Economics.
Xicon Economics
Page 67 of 102
0.972
0.944
0.937
0.335
10
ANOVA
Regression
Residual
df
1
8
SS
15.121
0.898
Total
16.018
Coefficients
12.786
0.428
Standard
Error
0.229
0.037
Intercept
t
MS
15.121
0.112
F
134.768
Significance F
2.76E-06
t Stat
55.873
11.609
P-value
1.17E-11
2.76E-06
Lower 95%
12.257
0.343
Upper
95%
13.313
0.513
Lower
95.0%
12.257
0.343
Upper
95.0%
13.313
0.513
After US economic output was forecasted through CY 2030, via GDP, revised tonnages were projected that
incorporated capture of the Asian market and other markets described by Martin Associates (p.46). Following, Xicon
Economics projected revised container tonnage projections through CY 2030, under the proposed moderate
scenario and aggressive scenario. For simplification, a dynamic multiplier was developed using a ratio of current year
over year changes as it related to changes in US GDP. Following, projected Asian tonnage was multiplied by the
dynamic multipliers (noted as Multiplier from Projected US GDP on the table below) to establish revised tonnage
projections. In turn, these revised tonnage projections then were compared to projections rendered by Martin
Associates.
Refer to the tables and figures below.
Xicon Economics
Page 68 of 102
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Notes
1.
2.
3.
4.
Projected
Tonnage
Projected
US GDP
Multiplier
from
Projected
US GDP
Initial Asian
Tonnage
from
Martin
Projected Asian
Tonnage using US
GDP Multiplier
5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878
17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916
1.0244655
1.0239371
1.0233230
1.0227914
1.0222835
1.0217978
1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221
2,121,546
-
2,121,546
2,173,451
2,225,477
2,277,382
2,329,286
2,381,191
2,433,096
2,485,001
2,536,905
2,588,810
2,640,715
2,692,741
2,744,646
2,796,550
2,848,455
2,900,360
7,286,439
7,485,943
7,685,568
7,885,072
8,084,575
8,284,079
8,483,583
8,683,087
8,882,590
9,082,094
9,281,598
9,481,223
9,680,727
9,880,230
10,079,734
10,279,238
18,000,000
16,688,013
16,000,000
14,688,029
13,000,821
14,000,000
12,000,000 11,452,340
10,000,000
10,279,238
9,281,598
8,284,079
8,000,000
+42.9%
6,000,000
4,000,000
2,000,000
+40.1%
+38.2%
2020
2025
Martin
2030
2035
Xicon
Xicon Economics
Page 69 of 102
Year
Projected
Tonnage
Projected
US GDP
Multiplier
from
Projected
US GDP
Initial Asian
Tonnage
from
Martin
Projected Asian
Tonnage using US
GDP Multiplier
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878
17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916
1.0244655
1.0239371
1.0233230
1.0227914
1.0222835
1.0217978
1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221
4,243,094
-
4,243,094
4,346,904
4,450,956
4,554,765
4,658,575
4,762,384
4,866,194
4,970,003
5,073,813
5,177,622
5,281,432
5,385,484
5,489,294
5,593,103
5,696,913
5,800,722
9,407,987
9,659,396
9,911,047
10,162,455
10,413,864
10,665,272
10,916,681
11,168,089
11,419,498
11,670,906
11,922,315
12,173,966
12,425,375
12,676,783
12,928,192
13,179,600
Notes
1.
2.
3.
4.
25,000,000
21,000,477
20,000,000
18,407,997
16,209,701
15,000,000
14,220,340
10,665,272
11,922,315
13,179,600
10,000,000
+39.7%
5,000,000
+33.3%
+36.0
2020
2025
Martin
2030
2035
Xicon
Xicon Economics
Page 70 of 102
18,000,000
16,185,000
16,000,000
14,688,029
13,695,000
14,000,000
12,000,000
13,000,821
11,452,340
10,790,000
10,279,238
10,000,000
9,281,598
8,284,079
8,000,000
6,000,000
4,000,000
2,000,000
2020
2025
2030
Vickerman
Martin
Xicon
Poly. (Vickerman)
Poly. (Martin)
Poly. (Xicon)
Xicon Economics
Page 71 of 102
18,407,997
16,209,701
14,220,340
15,000,000
15,355,000
13,179,600
11,620,000
11,922,315
10,665,272
10,000,000
5,000,000
2020
2025
2030
Vickerman
Martin
Xicon
Linear (Vickerman)
Linear (Martin)
Linear (Xicon)
Differences were found to exist when comparing the projected tonnages in the moderate penetration scenario and
aggressive penetration scenario, as projected by Martin Associates and Xicon Economics. Container tonnage
projections developed by Martin Associates in CY 2020, 2025, and 2030 under the moderate penetration scenario
were 38.2 percent, 40.1 percent, and 42.9 percent, respectively, higher than projections developed by Xicon
Economics. Similarly, tonnage penetrations developed by Martin Associates for CY 2020, 2025, and 2030 under the
aggressive scenario were 33.3 percent, 36.0 percent, and 39.7 percent, respectively, higher than tonnage
projections rendered by Xicon Economics.
Xicon Economics attempted to trace the source of these differences by comparing techniques used individually by
Martin Associates and Xicon Economics to render these projections. Xicon Economics used time series to develop its
original growth models based on data provided by JAXPORT; the forecasting technique used by Martin Associates
was unclear, as such was not divulged. Subsequently, Xicon Economics was unable to analyze any statistical or
mathematical models developed by Martin Associates.
It appears that differences between projections established by Martin Associates and Xicon Economics steadily
digressed for one or more of three reasons. First, any initial differences between projections had the tendency to
increase, or creep, as calculations were made. The extent that Martin Associates attempted to employ methods to
counter any creep in their findings could not be determined without reviewing their raw data and statistical and
mathematical techniques. To counter creep, Xicon Economics regularly used the original time series models as a
source of statistical control, or point of reference, allowing Xicon Economics to work against an established, known,
baseline.
Xicon Economics
Page 72 of 102
18
It appears the critical difference between forecasts generated by Xicon Economics and forecasts generated by Martin
Associates primarily lies within these areas of forecasting.
Xicon Economics
Page 73 of 102
14,000,000
13,179,600
11,922,315
12,000,000
10,665,272
10,279,238
10,000,000
9,281,598
+103.1%
8,284,079
8,000,000
+61.4%
+99.5%
6,000,000
5,869,301
+58.1%
6,368,595
5,345,459
+55.0%
4,000,000
2,000,000
2020
2025
Without Deepening
Container Tonnage Projections with and without Harbor Deepening (DOES NOT ALLOW FOR DELAYS FROM HARBOR DEEPENING)
Units: Short Tons
Notes
1.
2.
3.
2030
+106.9%
19
Modern-day input-output methods associated with economic impact modeling, such as those models generated using BEA
REMS II, are far removed from accepted statistical norms.
Xicon Economics
Page 76 of 102
10.00
1970: 9.2%
9.00
20,000,000
8.00
7.00
2014: 7.0%
15,000,000
6.00
5.00
10,000,000
4.00
3.00
5,000,000
2.00
1.00
Jacksonville MSA
State of Florida
2010
2005
2000
1995
1990
1985
1980
1975
1970
20
Data sources: Florida Office of Economic & Demographic Research, Texas A&M University, and US Census (2015)
Xicon Economics
Page 77 of 102
1,200,000
1,000,000
800,000
600,000
1970: 621,827
400,000
200,000
R =.991
p<.001
2010
2005
2000
1995
1990
1985
1980
1975
1970
Xicon Economics
Page 78 of 102
51.0
49.3
50.4
49.9
50.0
50.0
49.0
49.9
49.7
49.1
49.3
49.0
48.9
49.3
48.6
48.3
48.0
48.0
47.0
47.4
48.0
47.7
46.9
47.4
46.3
46.0
46.0
45.7
L: 45.5
2010
2005
2000
1990
1995
45.0
1,600,000
52.0
1,400,000
51.0
50.0
1,200,000
49.0
1,000,000
48.0
800,000
47.0
600,000
46.0
45.0
400,000
44.0
200,000
43.0
Population
% Wkg
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
42.0
1990
Linear (% Wkg)
Xicon Economics
Page 79 of 102
1,706,595
5.9%
1,700,000
1,650,000
1,611,946
6.2%
1,600,000
1,550,000
1,517,296
1,500,000
6.7%
1,450,000
1,400,000
1,350,000
1,300,000
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
1,250,000
21
All financial and economic data sets involving data from CY 2002 to the present have tendencies to be problematic given the
2008 economic collapse in the United States in all but approximately 30 world economies. More specifically, mathematically
managing the positive and negative skews resulting from the economic collapse is an arduous undertaking, and one that can
destabilize financial and economic projections, despite attempts to the contrary.
Xicon Economics
Page 80 of 102
5.41
5.24
5.14
5.45
6.02
6.49
6.76
6.14
5.93
5.80
6.14
7.28
6.87
6.61
6.47
6.83
5.00
4.00
3.00
2.00
1.00
0.00
Projected Container Revenue per Ton, with and without Harbor Deepening
Units: USD/Short Ton
Notes:
1.
2.
3.
Applying unit revenues to projected container tonnages, annual gross revenue was calculated through FY 2029/30
with, and without, harbor deepening. Fiscal years estimated to produce the greatest revenue from container
tonnage, without harbor deepening, included FY 2029/30, FY 2025/26, and FY 2026/27, at USD43.5 million, USD43.4
million, and USD41.6 million, respectively. Without harbor deepening, total revenue from FY 2014/15 through FY
2029/30 was estimated to be approximately USD556.1 million.
Conversely, with harbor deepening and moderate penetration, highest revenues were estimated to be USD70.2
million, USD69.0 million, and USD66.5 million in FY 2029/30, FY 2025/26, and FY 2026/27, respectively. Further, with
harbor deepening and aggressive penetration, highest revenues were estimated to be USD90.0 million, USD88.6
million, and USD85.5 million in FY 2029/30, FY 2025/26, and FY 2026/27, respectively. Total revenues with harbor
deepening were estimated to be USD 873.4 million through FY 2029/30 under the moderate penetration scenario;
and USD 1.1 billion through FY 2029/30 under the aggressive penetration scenario. Further, while net profits
generated under the moderate and aggressive penetration scenarios were not estimated, net profit per container
tonnage has averaged approximately USD4.90 per ton over the last few years; however, container profit margins
have steadily decreased in recent years, after steadily increasing leading up to and through the 2008 US economic
collapse.
Refer to the figures and tables below to review projected revenues, revenue changes, and net revenue changes
through FY 2029/30.
Xicon Economics
Page 81 of 102
43,477,185
40,514,628
40,764,249
41,633,450
35,335,348
32,807,573
32,885,093
33,454,870
34,697,126
28,036,450
25,912,455
30,000,000
25,850,839
35,000,000
26,169,259
40,000,000
31,568,262
45,000,000
39,612,564
50,000,000
43,355,346
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
-
Xicon Economics
Page 82 of 102
39,525,899
39,203,792
30,000,000
55,766,284
89,974,624
70,174,401
65,170,499
83,587,197
83,835,541
65,341,060
66,490,442
68,977,720
66,280,884
51,556,201
51,448,596
66,172,612
67,039,543
52,097,842
53,771,580
62,700,460
48,676,130
43,002,661
50,971,255
50,586,138
50,932,075
39,446,638
50,000,000
40,000,000
55,422,784
70,000,000
60,000,000
69,227,797
80,000,000
62,773,813
71,662,227
80,633,657
90,000,000
85,341,596
88,567,946
100,000,000
Cumulative Totals
Moderate Penetration: USD873.4 Million
Aggressive Penetration: USD1.1 Billion
20,000,000
10,000,000
Moderate Penetration
Aggressive Penetration
Projected Container Revenue, with Harbor Deepening, Moderate Penetration & Aggressive Penetration
Units: USD
Xicon Economics
Page 83 of 102
30,000,000
Units: USD
43,477,185
40,514,628
40,764,249
41,633,450
89,974,624
83,587,197
83,835,541
85,341,596
88,567,946
80,633,657
70,174,401
65,170,499
65,341,060
66,490,442
68,977,720
62,773,813
71,662,227
66,280,884
66,172,612
55,766,284
51,556,201
51,448,596
67,039,543
90,000,000
43,355,346
39,612,564
35,335,348
32,807,573
32,885,093
52,097,842
69,227,797
80,000,000
33,454,870
53,771,580
62,700,460
70,000,000
34,697,126
48,676,130
55,422,784
50,971,255
50,586,138
43,002,661
39,525,899
31,568,262
28,036,450
25,912,455
39,203,792
50,932,075
60,000,000
25,850,839
50,000,000
39,446,638
40,000,000
26,169,259
100,000,000
20,000,000
10,000,000
0
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30
80,000,000
120.0
70,000,000
94.6
95.7
96.7
97.7
98.6
99.5
100.4
101.2
102.0
102.8
103.6
104.3
105.0
105.7
106.3
106.9
100.0
60,000,000
80.0
50,000,000
40,000,000
50.7
51.7
52.5
53.4
54.2
55.0
55.7
56.4
57.1
57.8
58.5
59.1
59.7
60.3
60.9
61.4
60.0
30,000,000
40.0
20,000,000
20.0
10,000,000
0.0
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30
After projecting container revenue under moderate and aggressive penetration scenarios, efforts were taken to
determine whether projected container tonnage revenues would have an effect on economic output in Jacksonville
MSA. Certainly, these increases in revenue are subject to influence geographic regions outside of Jacksonville MSA;
but, for the purposes of this study, only Jacksonville MSA was considered. To render such determinations, GDP was
forecasted for Jacksonville MSA through CY 2030 using simple regression; that model resulted in the following:
2
22
JAXGDP=1589.418(t)+4322.231 (R =.759, p<.001). Refer to the table below to review projected GDP for
Jacksonville MSA through 2030.
Projected GDP, Jacksonville MSA
CY
Projected GDP
CY
Projected GDP
2014
65,374
2023
79,679
2015
66,963
2024
81,268
2016
68,553
2025
82,858
2017
70,142
2026
84,447
2018
71,732
2027
86,037
2019
73,321
2028
87,626
2020
74,911
2029
89,215
2021
76,500
2030
90,805
2022
78,089
22
As with other variables forecasted herein, confidence is a function of time, and as such, as time increases, confidence in
projections decreases.
From modeled GDP for Jacksonville MSA, statistical effect was investigated. Xicon Economics determined that
projected container revenue (CY2015-2030) under the moderate penetration scenario would have a statistically
24
significant effect on GDP in Jacksonville MSA, F(1,14)=4828267295, p<.001. Further, Xicon Economics determined
that projected container revenue (CY2015-2030) under the aggressive penetration scenario also would have a
statistically significant effect on GDP in Jacksonville MSA, F(1,14)=2753668022, p<.001 using total container
revenue under each scenario; and applying all benefits to Jacksonville MSA.
However, it indeed is possible to have statistical effect of no practical importance. Subsequently, the practical effect
that increased container revenues would have Jacksonville MSA was determined via Cohens d. By definition,
Cohens d is a measure of effect size as it relates to standardized differences between means. To develop such
25
estimates, Cohens d norms data in this case, revenue projections and GDP using pooled standard deviations.
Refer to the figure below for graphical representation of Cohens d.
Cohens d
X1
X2
The practical effect that increased revenues generated from container tonnages under the moderate penetration
scenario was projected to have on GDP in Jacksonville MSA was considered large (d=14.741) using Cohens
guidelines for effect size. Similarly, the practical effect that increased revenues from container tonnages under the
aggressive penetration scenario was projected to have on GDP in Jacksonville MSA also was considered large
(d=14.740).
Continuing, engineering, construction, and environmental costs associated with harbor deepening were estimated
by the US Army Corps of Engineers to be approximately USD766.2 million, depending upon which parameters were
being considered. Of the USD766.2 million, USD371.5 must be funded under the cost-sharing program established
26
by the federal government by a non-federal entity. Given the cost estimate for the project was estimated in 2014
23
Admittedly, using revenues that were generated in part through US GDP to investigate relationships between revenue and GDP
in Jacksonville MSA is cumbersome, and potentially problematic, as Jacksonville GDP is related to US GDP; thus, giving the
appearance of circular forecasting. Subsequently, decisions must be rendered holistically.
24
Be advised that statistical effect does not necessarily imply causal relationships.
25
Norming standardizes data, or scores. Perhaps most often, standardization is conducted using z-scores.
26
U.S. Army Corps of Engineers, Jacksonville District (2014, February). Final Integrated General Reevaluation Report and
Supplemental Environmental Impact States.
Xicon Economics
Page 87 of 102
Units: USD
In reality, cost increases must be adjusted incrementally against construction expenditures across project duration
to determine ultimate project cost. However, holding project costs constant across time for these purposes, and
presuming these monies do not accrue interest from debt obligations and a mid-construction date of CY 2017
for example, the projected non-Federal cost-share of Jacksonville was estimated to be approximately USD394.0
million, assuming no change orders or cost overruns occur during engineering or construction. The projected total
cost was estimated to reach USD812.6 million; again, assuming no change orders of costs overruns occur during
engineering or construction and moreover, that the original estimate developed by the US Army Corps of
Engineers indeed was accurate. Additionally, of course, incurrence of these costs presumes the Task Force opts to
affirm the harbor deepening project.
In an attempt to balance project costs against job impacts and business revenues, Xicon Economics used the impacts
established by Martin Associates in the economic impact study (p. 22). This decision was reached based upon the
fact that the methodology developed and used by Martin Associates was determined to offer evidence that validity
existed within each of the survey instruments used in collecting economic impact data. Further, let the stakeholder
recall that all 472 entities directly associated with the Jacksonville Port Authority participated in the data collection
process employed by Martin Associates, rendering the methodology employed stronger than traditional input28
output models prevalent in the US today.
29
Assuming that 0.74 jobs are created for every 1,000 tons of container cargo, the number of jobs associated with
port activities, given tonnage increases, was calculated. However, it should again be emphasized that the
Jacksonville Port Authority creates jobs directly associated with port activities only; the port does not create jobs
in other industry sectors. Conversely, the port serves at the pleasure of industry sectors that produce, buy, and sell
products, here and abroad. That is not to suggest that infrastructure endeavors such as the port project presented
herein do not influence the economy, certainly, but it is paramount that users of economic impact findings shift
from the current, flawed paradigm to the correct paradigm as it relates to the larger infrastructure-economics
nexus. As an example, while a relationship between port sector output and manufacturing sector output likely
exists, the relationship likely is slightly bi-directional, at best, and non-directional at worst, meaning that likely,
manufacturing output has a much stronger impact on port output than port output has on manufacturing output
or other sectors. In fact, when only considering the last few years (2005-2012), not only did total annual container
-3
revenue at JAXPORT have no effect on total annual manufacturing revenue in Jacksonville MSA, F(1,6)=7.9x10 ,
p=.932; total annual manufacturing revenue in Jacksonville MSA had no statistically significant effect on container
27
Xicon Economics will provide additional information regarding this model upon request.
Again, no supporting narrative or calculations were provided in the economic impact study, leaving Xicon Economics to assume
figures were accurate. Nonetheless, any reasonable efforts taken by Martin Associates during the determination of this, and
other factors, were considered more accurate than the commonly accepted input-output methods.
29
Per communications between Dr. Herbert Barber and Dr. John Martin, the noted ratio should not necessarily be considered a
multiplier, as used by Xicon Economics herein, as the relationship was considered curvilinear rather than linear. However, over
short time spans, coupled with limited other options available, the ratio can be, and was, used as a multiplier.
28
Xicon Economics
Page 88 of 102
revenue, F(1,6)=7.9x10 , p=.932. The relationship was non-existent (r=-.036). This, overwhelmingly, is problematic,
but such investigations were outside the scope of work conducted by Xicon Economics. Thus, it is strongly
recommended that these and other similar interrelationships be examined before rendering a decision.
Nonetheless, the noted analyses, projections, and other figures thus far do not account for the construction phase
of harbor deepening. Thus, models for projecting container tonnage and other variables were modified to allow for
realistic cost-benefit analyses. In so doing, it was assumed that harbor deepening would require six (6) years, plus an
30
additional three (3) years of environmental monitoring and mitigation, with tonnage increases from Asian and
other previously noted markets beginning after year six (6), with all potential market share noted herein beginning
in full. Further, the modified models assume container tonnage generated through the Asian market, and all other
31
container tonnages, remain constant similarly as previously projected.
Given these assumptions, US GDP again was used as a predictor of (Asian) container tonnage. Projected tonnages
then were used to determine the statistical and practical effects that projected container tonnage would have on
projected GDP in Jacksonville MSA, along with revised job estimates and increases in personal income and business
revenue. The model for projecting revised container tonnage, for cost-benefit purposes, is noted below.
Revised Model for Projecting Container Tonnage for Cost-Benefit Purposes, Moderate Scenario
Year
Projected
Tonnage
Projected
US GDP
Multiplier
from
Projected
US GDP
Initial Asian
Tonnage
from
Martin
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878
17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916
1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221
2,121,546
2,166,805
2,212,063
2,257,322
2,302,580
2,347,944
2,393,203
2,438,461
2,483,720
2,528,978
Projected Asian
Tonnage using US
GDP Multiplier
2,121,546
5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
8,172,033
8,364,891
8,557,748
8,750,606
8,943,463
9,136,426
9,329,284
9,522,141
9,714,999
9,907,856
30
Refers only to environmental monitoring and mitigation under the total project cost presented herein.
Constant should not be construed to mean same, as in the same tonnage being held constant year over year, but rather as
the same, or similar, rates of change via increases and decreases month over month.
31
Xicon Economics
Page 89 of 102
Year
Projected
Tonnage
Projected
US GDP
Multiplier
from
Projected
US GDP
Initial Asian
Tonnage
from
Martin
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878
17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916
1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221
4,243,094
Projected Asian
Tonnage using US
GDP Multiplier
5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
10,293,581
10,531,697
10,769,813
11,007,929
11,246,045
11,484,373
11,722,489
11,960,605
12,198,721
12,436,837
4,243,094
4,333,611
4,424,128
4,514,645
4,605,162
4,695,891
4,786,408
4,876,925
4,967,442
5,057,959
Assuming again that 0.74 jobs are created for every 1,000 tons of container cargo, job volumes were adjusted.
Under the moderate penetration scenario, net job increases for CY 2021 were projected to be 1,570. In CY 2030, net
job increases were estimated to be 1,872, in total. Refer to the tables below to review both scenarios.
Projected New Jobs for Cost-Benefit Purposes, Moderate Scenario, Revised Model
Calendar Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
w/o Deepening
4,477
4,587
4,696
4,805
4,914
5,023
5,133
5,242
5,351
5,460
w/ Deepening
6,047
6,190
6,333
6,475
6,618
6,761
6,904
7,046
7,189
7,332
Difference
1,570
1,603
1,637
1,670
1,704
1,738
1,771
1,804
1,838
1,872
Net Jobs/Year
1,570
33
34
34
34
34
33
34
34
34
1,872
Xicon Economics
Page 90 of 102
w/o Deepening
4,477
4,587
4,696
4,805
4,914
5,023
5,133
5,242
5,351
5,460
w/ Deepening
7,617
7,793
7,970
8,146
8,322
8,498
8,675
8,851
9,027
9,203
Difference
3,140
3,206
3,274
3,341
3,408
3,475
3,542
3,609
3,676
3,743
Net Jobs/Year
3,140
66
67
67
67
67
66
67
67
67
3,743
Assuming an average income of USD51,656, (assumed 2014) as noted by Martin Associates (p. 29), with a 1.02318
32
multiplier as an annual adjustment for inflation, the additional monies induced into the local money supply from
personal income were estimated. Further, to accommodate critics of the personal incomes used by Martin
Associates, the additional monies induced into the local money supply were recalculated using an average personal
33
income of USD44,021 (2014), times the same annual multiplier. These additional monies are noted below based
on penetration scenario.
Revised Net Personal Income Per Year in Money Supply using Income Base of USD51,656 (CY2014)
Calendar Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Moderate Penetration
81,115,645
1,729,076
1,823,234
1,865,497
1,908,739
1,957,516
1,938,984
2,044,573
2,091,966
2,140,458
98,615,687
Aggressive Penetration
162,212,751
3,499,206
3,634,396
3,718,641
3,804,840
3,902,101
3,924,007
4,075,609
4,170,081
4,266,744
197,208,376
Units: USD
Note: Income changes year over year (Base Year: 2014).
32
Inflation was averaged from CY 2005 through CY 2014, and used as the multiplier to increase personal income. While other
methods could be generated to determine these increases to personal income, it was considered unnecessary.
33
Federal Reserve Bank of St. Louis (2012). Personal income per capita was USD41,900 in 2012. Translating this figure into 2014
dollars, a 1.025 multiplier was used, for simplification, to reach USD44,021 per annum.
Xicon Economics
Page 91 of 102
Moderate Penetration
69,126,371
1,473,510
1,553,751
1,589,767
1,626,618
1,668,186
1,652,393
1,742,376
1,782,764
1,824,088
84,039,824
Aggressive Penetration
138,236,943
2,982,007
3,097,215
3,169,009
3,242,466
3,325,352
3,344,020
3,473,215
3,553,724
3,636,099
168,060,050
Units: USD
Note: Income changes year over year (Base Year: 2014).
Finally, container revenues were re-estimated based on revised tonnage projections, with construction ending in CY
2020 and the Asian tonnage, and other tonnages, captured by JAXPORT in full in CY 2021.
Revised Container Revenue for Cost-Benefit Purposes, Moderate Penetration
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Projected
Revenue/Ton
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2,121,546
2,166,805
2,212,063
2,257,322
2,302,580
2,347,944
2,393,203
2,438,461
2,483,720
2,528,978
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
6.14
5.93
5.80
6.14
6.76
7.28
6.87
6.61
6.47
6.83
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
13,026,292
12,849,151
12,829,966
13,859,954
15,565,441
17,093,035
16,441,304
16,118,230
16,069,668
17,272,923
151,125,963
Units: USD
Note: Revised Net Revenue is based on the difference between not deepening and not deepening.
Xicon Economics
Page 92 of 102
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Revised Projected
Tonnage
Projected
Revenue/Ton
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4,243,094
4,333,611
4,424,128
4,514,645
4,605,162
4,695,891
4,786,408
4,876,925
4,967,442
5,057,959
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
6.14
5.93
5.80
6.14
6.76
7.28
6.87
6.61
6.47
6.83
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
26,052,597
25,698,314
25,659,943
27,719,922
31,130,897
34,186,086
32,882,623
32,236,475
32,139,351
34,545,862
302,252,069
Units: USD
Note: Revised Net Revenue is based on the difference between not deepening and not deepening.
Also included in the cost-benefit analysis were gross revenues of entities associated directly with JAXPORT. Similar to
the 0.74 jobs per 1,000 container tons ratio used to estimate the number of (direct) jobs associated with port
activity, Martin Associates developed a ratio that cautionsly could be used for estimating gross revenue for entities
whose existence was derived directly through the port, i.e. direct business revenue. Given no other alternative,
outside of conducting independent research beyond the scope of work noted under the RFP, Xicon Economics used
the established ratio of USD125.80 (assumed 2014 dollars) per container ton to estimate business revenues (p. 28,
economic impact study); again, for cost-benefit purposes only. In so doing, this ratio was increased year over year
using projected increases in US GDP, as previously used herein. These estimates are noted below for moderate and
aggressive penetration scenarios.
Xicon Economics
Page 93 of 102
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Revised Projected
Tonnage
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2,121,546
2,166,805
2,212,063
2,257,322
2,302,580
2,347,944
2,393,203
2,438,461
2,483,720
2,528,978
Business
Revenue/Ton
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
147.15925
150.29857
153.43789
156.57721
159.71653
162.86318
166.00250
169.14182
172.28114
175.42046
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Revised Projected
Tonnage
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4,243,094
4,333,611
4,424,128
4,514,645
4,605,162
4,695,891
4,786,408
4,876,925
4,967,442
5,057,959
Ratio
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
147.15925
150.29857
153.43789
156.57721
159.71653
162.86318
166.00250
169.14182
172.28114
175.42046
Substantial ambiguity exists in the scientific literature and professional literature as to how economic benefits
should be calculated on publically funded infrastructure projects, and as such, estimates of economic benefits must
be couched with subject matter expertise in multiple areas of infrastructure and industry. Such particularly holds
true when determining whether economic benefits removed several times over should be considered as actual
benefits in costing scenarios such as that herein. It is the opinion of Xicon Economics that such benefits should be
considered only after substantial analyses, and even then, with extreme caution. Subsequently, no other economic
benefits were considered in the cost-benefit model, outside of those noted to be directly associated with port
activity, recalling that the purpose of cost-benefit analyses was to determine project feasibility, only, though to
Xicon Economics
Page 94 of 102
Total Costs:
Total Benefits:
USD 812,600,000
USD 7,826,539,564
Total Costs:
Total Benefits:
USD 812,600,000
USD 3,913,267,937
Note
The financial and economic benefits associated with the construction phase of harbor deepening should not be negated as it
relates to benefits to Jacksonville MSA, north Florida, and the United States. Over the estimated six-year project, presuming the
Task Force opts to deepen the harbor, nearly one billion dollars (USD812.6 million) will be induced into the current money supply
in addition to the benefits depicted above primarily in north Florida. While these increases are substantial, indeed, these monies,
and all economic benefits derived therefrom, cannot be considered a benefit and a cost, simultaneously, under the cost-benefit
scenarios presented.
Xicon Economics
Page 95 of 102
887,269,515
824,891,971
794,555,685
735,520,528
706,890,542
651,335,542
624,410,528
700000000
678,828,880
800000000
764,787,723
900000000
855,796,581
1E+09
600000000
500000000
Net Benefits: USD 7.8 Billion
400000000
300000000
Revenues intentionally omitted, CY 2015-2020
34,545,862
32,139,351
32,236,475
32,882,623
34,186,086
31,130,897
27,719,922
25,659,943
100000000
25,698,314
26,052,597
200000000
0
(3,000,000)
(7,000,000)
(13,000,000)
(140,100,000)
(167,600,000)
(165,000,000)
-3E+08
(160,000,000)
-2E+08
-1E+08
(26,900,000)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Container Revenue
Total Costs
OPTIMISTIC SCENARIO: Estimated Flow of Net Economic Output, Net Costs vs Net Benefits
Aggressive Penetration
Units: USD
Xicon Economics
Page 96 of 102
412,445,791
397,277,655
382,393,681
367,760,090
353,445,104
339,414,280
312,205,117
325,667,617
400000000
427,898,089
500000000
443,634,548
300000000
200000000
Net Benefits: USD 3.9 Billion
Revenues intentionally omitted, CY 2015-2020
17,272,923
16,069,668
16,118,230
16,441,304
17,093,035
15,565,441
13,859,954
12,829,966
12,849,151
13,026,292
100000000
0
(3,000,000)
(140,100,000)
(167,600,000)
(165,000,000)
(160,000,000)
-2E+08
(130,000,000)
-1E+08
(7,000,000)
(13,000,000)
(26,900,000)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Container Revenue
Total Costs
CONSERVATIVE SCENARIO: Estimated Flow of Net Economic Output, Net Costs vs Net Benefits
Moderate Penetration
Units: USD
Xicon Economics
Page 97 of 102
The optimistic scenario yielded a benefit-to-cost ratio of 9.63 (BC=9.63). Comparatively, the conservative scenario
yielded a benefit-to-cost ratio of 4.82 (BC=4.82). Thus, both optimistic and conservative scenarios yielded BC ratios
within traditionally accepted scenarios for accepting projects. Accounting for the time value of money, all costs and
benefits were discounted to 2014 dollars, as necessary. More specifically, construction costs were discounted using
the original cost estimate developed by the US Army Corps of Engineers (USD766.2 million); and direct business
revenues were discounted using the previously used ratio of USD125.80 per ton. For simplification, container
t
revenues were discounted using PV=Rt/(1+i) , allowing 3.75 percent to serve as a constant discount rate.
Refer to net present value calculations below.
Present Values (2014 dollars)
COST: Engineering, Construction, and Environmental: USD766,200,000
BENEFIT: Business Revenues, Optimistic Scenario: USD5,850,362,484
BENEFIT: Business Revenues, Conservative Scenario: USD2,925,179,863
BENEFIT: Container Revenues, Optimistic Scenario (Discount Rate=3.75%): USD196,925,430
BENEFIT: Container Revenues, Conservative Scenario (Discount Rate=3.75%): USD98,462,668
Net Present Values (2014 dollars)
Net Present Value (Optimistic Scenario)=(5,850,362,484 +196,925,430)-766,200,000=5,281,087,914 > 1.0
Net Present Value (Conservative Scenario)=(2,925,179,863 +98,462,668)-766,200,000=2,257,442,531 > 1.0
Further, a payout was estimated for each scenario using net present values, i.e. when costs equal benefits, under
the assumptions noted. Under the conservative scenario, the payout was estimated to occur in CY 2023. Conversely,
under the optimistic scenario, the payout was estimated to occur in CY 2022.
Additionally, the cost-benefit model was investigated from an econometric perspective to determine whether the
economic benefits noted would have a statistically significant effect on Jacksonville MSA GDP. Using analysis of
variance, it was determined that both scenarios, including the optimistic scenario and conservative scenario, would
have a significant effect on Jacksonville MSA GDP; in both scenarios, the effects were significant at the .001 alpha
level. Further, statistical effects of both scenarios were determined to be practically important, and large, using
Cohens d (Optimistic Scenario: Cohens d=23.883; Conservative Scenario: Cohens d=24.001). Refer to the analyses
below.
Econometric Analysis, Optimistic Scenario, Effect of Economic Benefits on Jacksonville MSA GDP
ANOVA
df
SS
MS
Regression
2.08295E+20
2.08295E+20
Residual
1.17217E+17
1.46521E+16
Total
2.08412E+20
Coefficients
Standard Error
t Stat
Lower 95%
Upper 95%
Intercept
40973862493
346736972.7
118.1698686
2.93947E-14
40174285600
41773439386
4.02E+10
4.18E+10
Revenue
52.49975059
0.440319295
119.2310924
2.73667E-14
51.48437247
53.51512871
51.48437
53.51513
34
F
14216.0534
P-value
Significance F
2.73667E-14
BC ratios were calculated using projected costs and benefits. Conversely, BC ratios can be calculated using net present values.
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SS
MS
Significance F
Regression
2.08295E+20
2.08295E+20
14216.0534
2.73667E-14
Residual
1.17217E+17
1.46521E+16
Total
2.08412E+20
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Intercept
40973862493
346736972.7
118.1698686
2.93947E-14
40174285600
Upper 95%
41773439386
4.18E+10
Revenue
104.9995507
0.880639006
119.2310924
2.73667E-14
102.9687935
107.0303079
102.9688
107.0303
Thus, in both cases, the harbor deepening project proved to be financially feasible and economically feasible from a
cost-benefit perspective.
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Conclusions
here were three objectives established for this study under the RFP. Those three objectives included
the following:
1.
2.
3.
Review the economic impact model developed by Martin Associates; provide an evaluation regarding the
validity of the methodology of the impact model.
Provide an independent evaluation of the business growth potential for JAXPORT, given the ports current
water depth and water depth under the proposed harbor deepening project.
Provide a cost-benefit analysis, and economic benefits, of the harbor deepening project.
Through this investigation, several findings were determined. Among other findings, the primary findings of this
study included the following:
1.
The methodologies employed by Martin Associates offered evidence that scientific validity existed in terms
of data collection. No references were made as to reliability, or reliability coefficients, in the work
conducted by Martin Associates. Thus, Xicon Economics could not calculate a reliability coefficient
associated with the survey instruments developed and employed by Martin Associates to collect data; and
therefore could not access overall validity of the data collection methodologies. However, the techniques
employed by Martin Associates was substantially more robust for collecting data than using the traditional
input-output methods commonly used today in traditional economic impact studies. Subsequently, it
remains the opinion of Xicon Economics that the data collection methodologies employed by Martin
Associates, notwithstanding questions associated with reliability, were in keeping with accepted practices
in the scientific research community.
2.
To further evaluate validity, Xicon Economics compared findings between Martin Associates, Vickerman
and Associates, and itself when applicable. Initially acceptable differences were found to exist among
tonnage projections developed by Xicon Economics and Martin Associates. However, these differences
later digressed. For example, ultimately, relatively large differences were found to exist between container
tonnage forecasts across all three firms, under moderate penetration scenarios and aggressive penetration
scenarios, through 2030 (and 2035 in some cases); in some cases, container tonnage projections developed
by Martin Associates were highest, and in other cases, container tonnage projections developed by
Vickerman and Associates were highest. In all cases, under both scenarios, tonnage projections developed
by Xicon Economics were lower.
However, projections generated by Vickerman and Associates appeared to have no statistical merit, and as
such, were discounted altogether. Differences between Xicon Economics and Martin Associated were
attributed to varying techniques used in rendering projections. However, in terms of actual data analyses, it
is the opinion of Xicon Economics that projections rendered by Xicon Economics were more statistically
robust than those rendered by Martin Associates, and accordingly, Xicon Economics used its own
projections throughout this study. However, no definitive determination could be made as to the validity of
findings generated by Martin Associates as Xicon Economics was prohibited from accessing raw data,
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Numerous determinations were made regarding the potential business growth of JAXPORT. However, in
general, Xicon Economics did not attempt to understand why its analyses yielded findings positive or
negative in terms of TEU or tonnage by commodity, or similar. Nonetheless, several of the findings should
be investigated further by JAXPORT to determine why such determinations were rendered. For example,
while container tonnages were forecasted to increase with, or without, harbor deepening, break bulk
tonnages were consistently decreasing; in fact, inbound break bulk tonnages were forecasted to be nonexistent altogether by FY 2019/20. Similarly, inbound bulk cargo tonnages were forecasted to be nonexistent by FY 2018/19, at the current rate of decline. Perhaps troublesome, reversing these trends
appears problematic, as these declines have remained steady over the last several years. However, these
tonnages perhaps are being loaded and offloaded at private terminals in the Jacksonville area; again, such
determinations were not the intent of this study, but these declines should be addressed by JAXPORT.
4.
Deepening the harbor under the moderate penetration scenario, container tonnages were projected to
increase through CY 2030, over not deepening in those same years. Deepening the harbor, under the
aggressive penetration scenario, container tonnages also were projected to increase through CY 2030, over
not deepening in those same years. However, these tonnage projections did not incorporate the
construction phase into the analyses, as the construction phase was not incorporated into the analytical
mix until the third objective.
5.
Deepening the harbor under the moderate penetration scenario, container gross revenue was projected to
increase CY 2030, over not deepening in those same years. Deepening the harbor, under the aggressive
penetration scenario, container gross revenue was projected to increase through CY 2030, over not
deepening over those same years. Again, however, these tonnages did not incorporate the construction
phase into the analyses.
6.
Without incorporating the negative impacts associated the construction phase of harbor deepening into
the analytical mix, gross revenues from container tonnage increases was projected to have a statistically
significant effect on economic output in Jacksonville MSA as expressed via GDP. Further, the effects under
both moderate and aggressive penetration scenarios were determined to be of practical significance, and
large.
7.
For the cost-benefit analyses, models were modified to allow for impacts associated with the construction
phase of harbor deepening, such as construction delays and construction costs. In so doing, it was
determined that a net increase of 1,872 jobs (moderate penetration scenario) would be associated with
harbor deepening through CY 2030, excluding jobs directly involved in the construction phase of the
project. Further, it was determined that a net increase of 3,743 jobs would be associated with harbor
deepening through CY 2030, under an aggressive penetration scenario; again, excluding jobs generated
during the construction phase, which in this case, were considered costs.
8.
Coupling net increases generated through container revenues with direct business revenues, two scenarios
were developed, including an optimistic scenario and a conservative scenario, using separate parameters.
In both scenarios, economic benefits associated with harbor deepening outweighed costs associated with
deepening from a financial perspective and econometric perspective. Thus, under the assumptions used
in this study, harbor deepening was determined to be financially feasible and econometrically feasible.
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Xicon Economics
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