Department of Industrial Engineering 1

Economic Evaluation of the Impact of Waterways on the

Port of Cincinnati-Tristate

Heather Nachtmann, Ph.D.

River Industry ForumNovember 16, 2005

Department of Industrial Engineering 2

Outline

Project Overview Input-output model Regional multipliers

U.S. Waterways Statistics Importance

Cincinnati – Tristate Region Summary

Department of Industrial Engineering 3

Project Overview Analyzing and reporting the economic impacts of

port activities on the Port of Cincinnati tri-state area Economic impacts of port activities on the tri-state

area will be analyzed through the application of an input-output model

Empirical results will indicate how port activities directly and indirectly contribute to the economic growth of this area Economic value Earnings Employment

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Project Overview (cont.)

Findings of the study will help to show how the economic prosperity of this area is affected by waterway utilization

Further investment in port development has the potential to increase the tri-state area’s competitive advantage In addition to offering social and

environmental benefits

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Project Overview Input-output Model

Most widely used and accepted method for conducting economic impact studies of water transportation

Uses regional multipliers to estimate the indirect economic impacts of an activity within a region

Direct economic impacts are input into the model and multiplied by the input-output multipliers

Results are the total regional economic impacts of the activity, including both the direct and indirect impacts Economic value Earnings of employees Number of jobs

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Project Overview Regional Multipliers

Estimate the effects of the changes in the output of an industry (e.g. water transportation) in an area on the economic output, employment, and labor earnings in the other industries in that area

Developed by the Bureau of Economic Analysis (BEA), U.S. Dept. of Commerce Industry standard

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U.S. Waterways Important Trends

Amount of trade and cargo moving through ports is increasing in general

Increased need to maintain environmental and economic balance in their operations

Greater need for capital investment in port infrastructure

(AAPA, 2005)

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U.S. Waterways 2002 Barge Traffic by Commodity

30.1%

25.7%

18.1%

11.8%

8.3%

5.0%

0.6%

0.3%

Petroleum & PetroleumProducts

Coal

Crude Materials

Food & Farm Products

Chemicals

Primary ManufacturedGoods

ManufacturedEquipment

Waste & Scrap

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U.S. Waterways Cargo Movement Impacts

$1.1 million direct and indirect jobs $44 billion in personal income $56 billion in transportation service

revenue $729 billion to the Gross Domestic

Product $16.1 billion in federal, state and local

taxes

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Additional Benefits of Waterway Transportation

Low shipping rates 38% of rail, 18% of

truck Low fuel consumption

(ton-miles per gallon) 254% more than rail,

871% more than truck Low emission

Mode Hydrocarbon Carbon Monoxide

Nitrous Oxide

Towboat 0.09 0.20 0.53

Rail 0.46 0.64 1.83

Truck 0.63 1.90 10.17

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National Importance of Water Transportation

Traffic congestion caused 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel (~$63 billion)

Since 1982, 74% increase in vehicle miles traveled has occurred but road lane mileage has only increased 6%

Serious investment in new public transit, rail, airport, and waterway capacity has been neglected

(Texas Transportation Institute, 2003)

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National Importance of Water Transportation (cont.)

National highway system is nearly saturated Inland waterways are a logical transportation

alternative with great potential benefit to commerce and consumers

16% of the nation’s freight is moved by water for just 2% of the nation’s freight cost Saving over $7 billion/year for shippers and consumers

The key to maximizing efficiency of waterways transportation is modernizing ports and infrastructure

(Traffic World, 2002)

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Top 5 Inland U.S. Ports

Rank PortTons Trip Ton-Miles

Average (millions) % Diff. Average (millions) % Diff.CY 98-02 (M) CY 03 CY 98-02 (M) CY 03

1 Huntington 78.2 77.6 -0.7 28.3 26.7 -5.7

2 St. Louis 33.0 32.4 -1.6 24.6 24.2 -1.7

3 Pittsburgh 53.0 41.7 -21.3 18.3 16.1 -12.3

4 Memphis 17.1 18.1 5.7 7.2 8.5 17.7

5 Cincinnati 13.5 11.8 -12.7 9.0 8.2 17.7

Waterborne Commerce Statistics Center

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Tonnage for Selected Ohio River Ports

0

10

20

30

40

50

60

70

80

90

1998 1999 2000 2001 2002 2003 2004

Year

Millions of Tons

Cincinnati, OH

Pittsburgh, PA

Huntington - Tristate

Louisville, KY

Waterborne Commerce Statistics Center

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Cincinnati – Tristate Region

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BEA Economic Area

Relevant regional markets surrounding metropolitan or micropolitan statistical areas

Regional centers of economic activity and surrounding counties that are economically related

Cincinnati-Middletown-Wilmington, OH-KY-IN

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Summary

Objective is to raise awareness of the economic benefits of the Port of Cincinnati to the Tristate region

Overall goal is to use this increased awareness to obtain additional funding for port operations