Freight Transportation Through the State of Mississippi
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1 Center for Logistics, Trade and Transportation IES 970/ CEE 970 Colloquium on Transportation Management and Policy: Freight Transportation Along the Mississippi River Corridor Freight Transportation Through the State of Mississippi Chad R. Miller, Ph.D. Assistant Professor & Graduate Coordinator of the Masters of Science in Economic Development Program Assistant Director of the Center for Logistics, Trade, and Transportation November 30, 2012
2 The University of Southern Mississippi Home of Brett Favre Jimmie Buffet 14,096 undergraduates and 3,158 graduate students with 650 faculty Research funding University of was Southern $82 million Mississippi in Hattiesburg 2012 Campus The Dome (left): The main Southern Miss administrative building Trent Lott National Center for Excellence in Economic Development and Entrepreneurship Building (right): Home of the CLTT 2
3 Dual Campus University University of Southern Mississippi Gulf Park Campus The Gulf Park Campus is located in the midst of a freight transportation center in close proximity to the Port of Gulfport and the Gulfport/Biloxi International Airport 3
4 About the CLTT Combines the School of Construction Logistics Management with the Department of Economic & Workforce Development Masters of Economic Development program founded in 1979 Other UTC in State: National Center for Intermodal Transportation Consortium Mississippi State, Ole Miss, and University of Denver
5 Mississippi Needs Economic Development America s Poorest State Median household income: $36,919 Population: 2,978,512 Unemployment: 10.7% (4 th ) Below Poverty: 22.6% (Highest) Mississippi Delta: The Most Southern Place on Earth Mid-rank state if the MS Delta is excluded
6 Birthplace of Modern Economic Development Balance Agriculture with Industry (BAWI) 1936 State assumed responsibility for economic growth and development Attract mfg with public bonds Market and improve agriculture Tourism development Conduct research & maintain data Publicity campaign In and outside of Mississippi Community Development Small Business & Hobby Clinic Import-Export Conference Leverage transportation assets
7 Major Industries Services including casinos Agriculture Most valuable crops are cotton and soybeans Substantial quantities of corn for grain, rice, sweet potatoes, and blueberries Broilers (5 to 12 week-old chickens) are most valuable livestock Aquaculture (catfish) ranks second, shrimping on coast Wood products Manufacturing ALet s look at automotive mfg Processed food e.g., poultry processing and transportation Furniture Chemicals Transportation Equipment (cars, boats, and military eqpt) Huntington-Ingalls (largest employer), Nissan, and Toyota
8 Southern Auto Corridor OEMs, Tier 1 Suppliers, and States Coded by Supplier Establishments Share of U.S. Auto Industry 2008 Production 26% Vehicle GDP 27% Parts Suppliers 24% Over 1,500 Establishments with 200,000+ employees Source: ELM International Employment 26% Sales of New Vehicles 23%
9 Center for Logistics, Trade and Transportation North American Auto Light Truck Region OEMs and States Coded by Supplier Establishments North American Car Production 2008 North American Light Truck Production 2008 Canada 16% U.S. 45% Mexico 3% Canada 14% Mexico 39% U.S. 83% Source: Automotive News Source: Automotive News
10 Center for Logistics, Trade and Transportation Auto Supplier Location Criteria Driven by Transportation One day delivery drive time (approx. 400 miles) to a final assembly plant Ideally two final assembly plants located within the one day drive Access to four-lane divided highway/interstate or two-lane highways with limited access and few stoplights Two route options for inbound and outbound material Access to rail (not a requirement for all suppliers) Workforce density times the number of projected employees Avoid competing workforce Educational assets location near engineering programs and engineering support for new employee recruitment and research and development collaborations; job skill training programs through community colleges or local/state workforce training programs Sources: (Canup, 2006; Canup, 2007; Goldsmith, n.d.; Klier and Rubenstein, 2008; Murrary, Dowell, and Mayes, n.d.)
11 Center for Logistics, Trade and Transportation Mercedes-Benz Growth Pole Tier One Supplies
12 How much supplier attraction from new Toyota assembly plant? Many Toyota suppliers already located within delivery time zone of Blue Springs ew/124
13 Transportation is Important for Most State Target Industry Clusters Blueprint Mississippi and Mississippi Development Authority Automotive (e.g., Nissan & Toyota) Healthcare (e.g., healthcare logistics) Energy (e.g., Tuscaloosa Marine Shale) Wood products (e.g. pellets, biomass) Creative economy (e.g., Home of the Blues) Value-added agriculture Polymers/Advance materials Warehouse & distribution
14 Mississippi Department of Transportation (MDOT) Center for Logistics, Trade and Transportation The Mississippi Department of Transportation is to provide a safe intermodal transportation network that is planned, designed, constructed, and maintained in an effective, cost efficient, and environmentally-sensitive manner. Goal: Economic Development: Provide a Transportation System that Encourages and Supports Mississippi s Economic Development Three member elected commission with annual budget $1.097 billion with over 3,000 employees. Office of Intermodal Planning Aeronautics, public transit, and ports & waterways
15 Transeconomy: Freight Transportation + Economy = Jobs MS Goods Movement Study: Freight Master Plan Prioritized corridor-based improvements strategies to enhance freight movement Establish Mississippi as a leader in freight, economic and trade issues.
16 Mississippi Has a Good Highway System #1 in the Southeast The 1987 Four Lane Program: Every Mississippian would be linked to a four-lane highway within 30 miles or 30 minutes by 2000.
17 Mississippi State Rail System Five major railroads cross the state and twenty-six smaller railroads Major rail systems account for more than 75% of the state s railways, with smaller operators accounting for the remaining 25%. $300m for KCS Meridian Speedway $2 billion-plus NS rail Crescent corridor Some short-lines railroads are in good condition, but most are in fair or poor condition because of deferred investment and maintenance Requires $270m of public funds Avg. $6m per line MDOT annual budget $1.1b for highway $15m for other modes
18 Mississippi Rail Policy strives to preserve and enhance the state s rail system, and provides the states agricultural and industrial shippers a needed transportation choice that is vital for continued economic development (MDOT 2007) Criteria for Investment Decisions in Shortlines the economic impact to the State of Mississippi will need to be made for each rail line to see if the investment of public funds is warranted. The benefit to the local economy in the form of jobs, businesses retained and attracted, quality-of-life, and local tax base need to be considered in the politically charged decisions to invest public money in the neglected short-line railroads (DJMM 2005)
19 Cost-Benefit Analysis of Railroad Infrastructure REMI or Global Insight s Regional Transportation models estimating changes in freight movement, these models determine the impacts on both gross state product (GSP) and employment by business sector Impact of transportation costs on local shippers Construction phase labor & local materials Trend data of jobs from economic developers The return for the state of employment and GSP is compared to the public investment needed for the ROI calculations
20 Mississippi Shortlines Toyota Assembly Plant Nissan Assembly Plants Public Financial Assistance Results of Analysis Statewide Rail Needs Assessment Recommendations Fund Consider Funding Direct and Indirect Jobs Created $273 million 66,430 over 30 years $356 million 4,000 jobs in 5 years $363 million 4,000 jobs in 5 years Rail-Bank Public Investment: Economic Development versus Short-lines Public Expenditure Per Job Created $4,000 $89,000 $90,000
21 CBA Limitations 1. Not all the public investment will come from state funds as much of these investments are eligible for federal funds Minnesota 39% of the $109m from state funds (general obligation bonds and general revenue) 2. Modeled scenarios are not adjusted for actual events on the ground Toyota assembly plant, SeverCorr 3. Does not include all the externalities of the investment decision 4. Entire transportation system is not fully considered 5. Limited public input
22 Columbus & Greenville Railway (CAGY) Economic Impact study of revitalization of the middle 93 miles with Mississippi State Estimated cost to revitalize the 93 miles of railroad would be approximately $99 million in today s dollars greenville_railway 873 new direct jobs and generate $144.4 million in annual personal income.
23 Rail Authority of East Mississippi (RAEM) Center for Logistics, Trade and Transportation Est $225m to establish a 50 mile stretch to link two short-lines Help attract wood pellet facilities and chip mills particularly if the Port of Pascagoula proceeds with its plans to invest in wood pellet handling facilities. Wood Pellet Transportation Costs Transportation Medium Cost per Ton ($) Existing rail Truck Barge 5.00 New rail to Pascagoula
24 Circumnavigate the State by Water 16 public ports with an annual state impact of $1.4b Major commodities Coal Steel Wood products Grain Chemicals Major industries SeverCorr Steel Nucor Corporation Steel Timberland Lumber Tom Soya Grain Company University of Southern Mississippi in Context Westervelt Renewable Energy LLC Weyerhaeuser 24
25 Tenn-Tom Waterway The Tennessee-Tombigbee Waterway was opened in 1985 Connects the Tennessee River to the Warrior-Tombigbee navigation 234 miles with 17 public ports and terminals Moves 1.2 billion ton-miles of commerce each year at an annual savings of nearly $100 million in transportation costs. Trying Container-on-barge
26 Center for Logistics, Trade and Transportation GROWPORTS Generating Regional Opportunity on the Waterway Collaborative effort of the Yellow Creek Port, Port Itawamba, Amory Port, Aberdeen Port and Columbus Port Promotes green energy driven economic development and transportation through the development of a comprehensive, energy-efficient intermodal transportation network connecting the inland waterways of the Tennessee River with the international waterways through Mobile, Alabama. Website:
27 Clustering and Transportation A geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalties and complementarities (Porter 1998)
28 Center for Logistics, Trade and Transportation Collective Action Regimes and Innovation in Clusters Clusters function via informal yet relatively stable group with access to institutional resources, and which has a significant impact on local policy (Stone 1989). Quality Governance Requires: Presence of leader firms Participation of public organizations Organizational infrastructure Openness Presence of a community consensus Having a group of smart people (and organizations) in a setting where they can share ideas and learn from each other on a particular topic leads to new and better ideas. Localized because of the informal nature of knowledge flow Short feedback loops
29 Applying the Cluster Concept Structural Challenges (Beyond the purview of a regional cluster) Financial continuity across fiscal years Infrastructure (locks etc) is an aging system Agential Challenges Invisibility: Quiet, Low-profile, off the public s radar Conflicting demands for water resources Linking the inland system with gateway ports and other modes Containerization Container-on-barge (COB) Reliable Delivery Just-in-time (JIT) delivery ml
30 Findings of the survey There is little industry involvement in the actual governance of the Tenn- Tom waterway There seems to be stronger linkages among Cargo Handling, Transportation and Logistics than there is with Trade and Manufacturing External Competition is Stronger than Internal Competition More Internal Competition would be welcomed (vitality and vibrant competition) There is not a problem with congestion, high wages, or labor unions on the Tenn-Tom The lack of innovation and hinterland connections are the largest collective action problem for the Tenn-Tom Secondary collective action problems include Training and Education and Marketing and Promotion
31 Gulfport-Biloxi International Airport (GPT) Cargo Seeking to be a main gateway for produce from Central and South America New $70m 46,000 sq. ft refrigerated warehouse
32 Port of Bienville 3600-acre industrial park with 12 draft port on Intercoastal waterway Port Bienville Shortline Railroad (PBVR) International Airport which is part of NASA Stennis Space Center
33 Gulf Coast Container Ports Let s take a break and talk about the Gulf Coast ports when we get back
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