    [From the U.S. Government Printing Office, www.gpo.gov]

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        MARITIME ADMINISTRATION DEPARTMENT OF COMMERCE

                       1950

                  U.S. DEPARTMENT
                  OF COMMERCE
                  Juanita M. Kreps, Secretary
                  Sidney Harman, Under Secretary

                  MARITIME ADMINISTRATION
                  Robert J. Blackwell,
                  Assistant Secretary
                  for Maritime Affairs

                  Marvin Pitkin,
                  Assistant Administrator
                  for Commercial Development

                  Armour S. Armstrong, Director,
                  Office of Port and
                  Intermodal Development

                  September, 1978

                                               Property of CSC Library

                                              U.S. DEPARTMENT OF COMMERCE NOAA
                                              COASTAL SERVICES CENTER
                                              2234 SOUTH HOBSON AVENUE
                                              CHARLESTON , SC 29405-2413

                                      For sale by the Superintendent of Documents, U.S. Government Printing Office
                                                               Washington, D.C. 20402

                                                       Stock Number 003-007-00091-0

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          CONTENTS

          PORTS ARE GROWTH CENTERS 4

          THE MEASURING ROD 9

          PORTS ARE ECONOMIC ASSETS 10
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          PORTS ARE MORE THAN PIERS 12

          PORTS ARE SERVANTS 14
                                                                                            A
          PORTS ARE CUSTOMERS '19

          PORTS PROVIDE- INCOME 22

          PORTS PROVIDE JOBS 27

          PORTS PAY TAXES 28

          PORTS ARE INVESTORS 31

          PORTS AND GOVERNMENT     33
          PORTS; LIFEBLOOD: FOREIGN TRADE 36
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          WHAT WOULD HAPPEN IN THE PORTS IF .... 41
          Con su rnelr"S@end i-n-g increases
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          'Certain. Industry -Sales Levels Go Up
          There"*Is,-A Two-Moriths Dock Strike
          MF@AGT TABLES  52

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                                                        In olden days the arrival of a ship         Ports have continued through the
             PORTS ARE                                  was a great occasion. Almost                years to be exciting centers of
                                                        everyone in the port community              human endeavor and interest.
             GROWTH                                     turned out to watch her from the            From these centers have grown
             CENTIMMED-Mm                               moment she first came into sight.           the regions that became great
                                                                                                    nations and empires.
                                                        "What ship is she? Where is she
                                                        from? What is she carrying? What.           The steady progress of the United
                                                        kind of voyage did she have?"               States to its world leadership in
                                                        These were only a few of the                commerce and knowledge has
                                                        many questions asked as the                 stemmed from its ports. The
                                                        vessel proceeded to her berth.              original 13 colonies began as
                                                                                                    ports along the Atlantic coastline.
                                                        The scene was repeated in all               As the Nation expanded, new
                                                        ports, whether they were on the             ports were founded along its
                                                        oceans, lakes,'or rivers. In those          mighty rivers and Great Lakes.
                                                        simple days everyone knew that              The digging of canals to link its
                                                        any arrival was a benefit for their         inland waters with the seacoasts
                                                        port and its community. The                 stimulated the founding of more
             Every major metropolitan                   cargo meant new stock for the               new ports.
             region of the United States                merchants' shelves. Availability of
                                                        the vessel meant activity for the           Today some 170 major com-
             centers around a port.                     exporters. The loading, storing,            mercial ports on the Nation's
                                                        repairs, and other port services            coastlines, rivers, lakes, and
                                                        she would require meant jobs for            canals serve as.centers of
                                                        the port's workers.                         regional commerce and growth.
                                                                                                    Every major metropolitan region
                                                        Newly arrived vessels had an                of the United States centers
                                                        added significance in those days.           around a port, or is closely linked
                                                        Besides the cargo in t.heir holds           by rail or highway with a port.
                                                        and the passengers on their
                                                        decks they carried news and                 In these sophisticated times a
                                                        ideas from the outside world.               whole town rarely turns out for
                                                        These were the materials from               the arrival of a vessel - even a
                                                        which civilization was being                new  vessel - as they did in the
                                                        fashioned.                                  colorful days of the river steam-
                                                                                                    boats and of the glamorous ocean
                                                                                                    liners and superliners. Yet the
                                                                                                    containerships, freighters,
                                                                                                    tankers, ore carriers, and huge
                                                                                                    flotillas of barges that arrive daily
                                                                                                    at river, lake, canal, or coastal
                                                                                                    ports still symbolize the essential
                                                                                                    activities of those ports.
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                                                        Every person in this Nation                 The Maritime Administration
                                                        depends in some ways on its                 (MarAd) of the U.S. Department of
                                                        ports. For through the marine               Commerce is required by Federal
                                                        terminals move the domestic and             law to promote and encourage re-
                                                        foreign commerce that con-                  gional, State, local and national
                                                        stitutes the food, shelter, and             efforts to provide a dynamic port
                                                        transportation of modern                    industry.
                                                        civilization.
                                                                                                    Traditionally American ports,have
                                                        The United States Government                acted independently in planning
                                                        has long recognized the vital im-           and developing shoreside port
                                                        portance of adequate ports to the           facilities as the broad and divers-
                                                        Nation's economy and defense.               ified port industry that exists
                                                                                                    in the Nation today.
                                                        The strategic importance of its       .
                                                        ports has been apparent in every            MarAd has focused on port plan-
                                                        war in which the United States              ning and development activities
                                                        has become engaged. World Wars              that can result in benefits for all
                                                        I and 11 required unprecedented             the Nation's ports. In carrying out
            Government has long recog-                  port activity in supplying military         its mandate, MarAd has under-
            nized the vital importance of               and civilian needs during and               taken many research projects,
                                                        after the conflicts.                        alone and in cooperation with
            adequate ports.                                                                         various regions, which have had
                                                        Since the founding of this                  a nationwide application.
                                                        country, the Federal Government
                                                        has played a diversified role               To fulfill its mission, MarAd has
                                                        under legislation that has been             determined that it needs precise
                                                        adopted from time to time by the            information about the port in-
                                                        Congress to assure a healthy and            dustry's impact on the national
                                                        efficient national port industry.           economy. Although everyone has
                                                                                                    been generally aware that parts
                                                        The U.S. Army, through its Corps            mean much in the Nation's
                                                        of Engineers, is mandated to                economic life, no one can say
                                                        provide and maintain suitable               how much.
                                                        channels in all the Nation's
                                                        navigable waters. Federal                   To fill the information vacuum,
                                                        expenditures to carry out this              MarAd sponsored this input-
                                                        mandate on the sea coasts, rivers,          output study. It is the first nation-
                                                        and Great l2akes amount to many             wide economic evaluation of the
                                                        millions of dollars annually.               United States port industry. The
                                                                                                    analysis was contracted to the
            Although everyone has been                  The U.S. Coast Guard acts as a              Port Authority of New York and
                                                        safety and policing agency. The             New Jersey and accomplished
            generally aware that ports                  Coast Guard maintains light-                through the creation of an input-
            mean much in the Nation's                   houses and channel markers for              output (1-0) model with data
            economic life, no one could                 inland and offshore navigation. It          supplied by the Department of
            say how much.                               operates ice breakers to keep the           Commerce.
                                                        ports open during winters. It serv-
                                                        ices harbor radar systems to regu-
                                                        late port traffic. It also licenses
                                                        merchant marine personnel and
                                                        enforces safety regulations in
                                                        ocean and inland ports.

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         THE                                        The input-output model is an              The ability to produce multipliers
                                                    economic tool that is used by in-         is a property peculiar to  '1-0
                                                    dustrial and government econo-            models. Analysts have known
         MEASURING                                  mists throughout the world for            about economic chain reactions
                                                    measuring and forecasting eco-            for a long time, but until Nobel
         ROD                                        nomic phenomena.                          Prize Winner Wassily Leontief
                                                                                              .devised the 1-0 model technique,
                                                    In this country it consists of more       no reliable means existed for
                                                    than 8,000 items of data on the           measuring it.
                                                    Nation's industries arranged in
                                                    input columns and output rows.            Multipliers differ substantially
                                                    This part of the model measures           from one industry to another, de-
                                                    in dollars the production of all          pending on the complexity of the
                                                    goods and services in the United          chain relationships that are initi-
                                                    States. In short, it depicts the          ated. in the production processes
                                                    entire economy.                           of the various industries.

                                                    With the assistance of the                The model gave a multiplier of 1.6
                                                    computer and by a complicated             for the chain reactions initiated
         Each dollar of sales to the                mathematical procedure, the               by all purchases for port industry
                                                    model's data can be used to               operations throughout the Nation.
         port industry in the base year             derive multipliers that measure           This meant that each dollar of
         of the study produced $1.60                the chain reactions that occur in         sales to the port industry in the
         in sales within the economy.               the transactions depicted by the          base year of the study produced
                                                    model. This enables the analyst           $1.60 in sales within the
                                                    to determine not only the direct          economy. This consisted of $1 of
                                                    economic impact of a transaction,         direct sales plus 60 cents of
                                                    but also its ripple effects               indirect sales.
                                                    throughodt the economy.

                                                    For example: The purchase of a
                                                    crane by the port industry directly
                                                    affects the company that manu-
                                                    factured and sold that crane. But
                                                    it also affects the manufacturer
                                                    and supplier of parts for the crane;
                                                    the manufacturer of the steel
                                                    used in making the parts; the
                                                    mini,ng company that produces
                                                    ore for the steel; and the trans-
                                                    portation companies that move
                                                    each component, from the mine
                                                    to the crane's final position on
                                                    the port's waterfront. That chain
                                                    of event produces the indirect
                                                    impact.

                                                                                                                                   9

                                                                 Application of the port industry                  The analysis also revealed the
              PORTS ARE                                          multiplier to the model's data                    following:
                                                                 proved conclusively that the ports                      Port industry handling of U.S.
              ECONOMIC                                           are indeed the valuable economic                        waterborne exports and
                                                                 assets,to,the Nation that they had                      imports in 1970 was respons-
              ASSETS                                             been believed to be.                                    ible. for $16.2 billion of
                                                                                                                         revenues in the Nation's
                                                                 This analysis showed that in 1970,                      economy.
                                                                 the data year of the study, the                         The movement of each ton of
                                                                 port industry was directly and                          waterborne cargo in U.S.
                                                                 indirectly responsible for:         -                   foreign trade, therefore,
                                                                    @ Gross sales (revenues) of          $28             generated port revenues of
                                                                      billion within the economy.                        $34. Application of the 1.6
                                                                    9 A $15 billion contribution to                      multiplier meant that each
                                                                      the gross national product                         ton of waterborne foreign
                                                                      (G N P).                                           trade contributed direct and
                                                                    * 1,046,800 jobs.                                    indirect revenues of $55 to
                                                                    e Personal income of $9.6                            the U.S. economy in 1970.
                                                                      billion.                                           The port industry's handling
              Gross sales (revenue) of $28                          * Business income of $3.7                            of each 600 tons of foreign
              billion within the economy.                             billion.                                           trade in 1970 was responsible
                                                                    e Federal taxes of $5.2 billion.                     for one job in the national
              A $ "1.5.0 @illion contribution to                    9 State and local taxes of $2                        economy.
              the gross national product (GNP).                       billion.                                           Every million dollar increase
                                                                                                                         in U.S. exports brought about
                                                                 The base year for the model was                         an average increase of
                                                                 1970 because it was the latest                          $160,000 in demand for port
                                                                 year for which complete official                        services.
                                                                 figures were available. GNP is                       *  Every one million dollar in-
                                                                 known to have doubled to $1,890                         crease in imports required          .an
                                                                 billion - from 1970 to 1977. Thus                       average $229,000 increase in
                                                                 it can be assumed that 1977                             demand for port services.
                                                                 dollar figures for the port industry                 e  Direct purchases of goods
                                                                 would be approximately double                           and services by the port
                                                                 those of 1970.                                          in,dustry from other industries
                                                                                                                         in 1970 totaled $8.9 billion.
                                                                 It must be remembered in making                      - The direct and indirect im-
                                                                 such an adjustment that nondollar                       pact on the economy of port
                                                                 figures such as those for employ-                       investments in 1970 totaled
                                                                 ment and tonnage may not be                             $2.1 billion.
              Since GNP has doubled from                         doubled since they are not as re-
                                                                 sponsive to inflationary trends
              base year (1970) of study, all                     and other economic forces that
              dollar impact totals in 1977                       have acted recently on the
              would be nearly double                             American dollar.
              19701s.

              10

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           PORTS ARE                                  What is a port?                           Other definitions included produc-
                                                                                                tion activities that took place in a
                                                      This simple question can evoke            port area but which had nothing
           MORE THAN                                  many answers because the con-             to do with the basic function of
                                                      cept of a port seems to differ with       serving waterborne shipping. The
           PIERS                                      individual interests.                     production of soap, wigs, coffee,
                                                                                                sandwiches, or candy at estab-
                                                      To those who love tb watch the            lishments near the waterfront
                                                      vessels come and go, the poet             would fit into such a
                                                      means arrivals and departures. To         classification.
                                                      the employees of stevedore com-
                                                      panies, international banks,              The broadest definition included
                                                      freight forwarding companies,             activities producing all goods that
                                                      marine insurance underwriters,            move by water. The growing of
                                                      and the U.S. Customs Service it           wheat 1,000 miles from a port
                                                      means much more.                          would be included as port in-
                                                                                                dustry if the wheat was exported.
                                                      The diversity of port concepts
                                                      encountered presented a problem           The analysts discarded such defi-
           No definition or classifica-               to the analysts in creating the 1-0       nitions as unrealistic, and estab-
                                                      model for this study. An 1-0              lished the following criteria for a
           tion of port industry en-                  model requires a precise defini-          definition that would truly de-
           compassing all port func-                  tion of an industry or group of           scribe port functions and be
           tions had ever been                        industries, since the data used in        economically measurable.
           established.                               constructing it must be pertinent,             The definit'ion must refl ect
                                                      complete, and accurate.                        the port industry's unique
                                                                                                     mission to move waterborne
                                                      The data research showed that no               cargo.
                                                      definition or classification of port           The definition must be
                                                      industry encompassing all port                 consistent with the true
                                                      functions had ever been estab-                 contribution of ports to the
                                                      lished. As a result, much per-                 national economy.
                                                      tinent data-was buried in other                The definition must include
                                                      classifications and had to be                  only direct activities of port
                                                      traced and routed out. This was a              industry.
                                                      meticulous and time consuming                  The definition must be
                                                      process.                                       formulated in terms of the
                                                      Examination of the many regional               port industry's output.
                                                      and local port economic studies
                                                      that have been made from time to          Use of these criteria led to a con-
                                                      time was of little help. They             cise definition that would be
           Port industry is any economic              showed almost as many different           accurate for any port economic
           activity that is directly needed in        port concepts as there were               study:
           the movement of waterborne cargo.          studies. None of them integrated
                                                      the broad activities of the port          Port Industry is any economic
                                                      industry that truly represent a           activity that is directly needed in
                                                      port's scope and purpose.                 the movement of waterborne
                                                                                                cargo.
                                                      Some definitions limited port
                                                      industry to waterfront activities of
                                                      loading and discharging vessels.
                                                      But this definition was too
                                                      narrow. It excluded many func-
                                                      tions that are part of what ports
                                                      actually do.

           12

         This definition not only includes
         the loading and discharging of
         ships but also the many port acti-
         vities that take place beyond the
         piers. It includes such activities
         as cargo documentation, freight
         forwarding of waterborne cargo,
         marine insurance, international
         banking, warehousing, land feeder
         services, and all water carrier
         services.

         The definition does not include as
         part of port industry services
         (output) the activities of port
         suppliers and users such as ship
         repair services, fuel, port
         machinery, and export products.
         While such activities are part of a
         port's economic impact, they are
         not part of its output.

         However, the 1-0 model is a
         flexible tool and it was used in
         this study to measure such activi-
         ties as part of the port industry's
         input. This will be shown in the
         following pages.

                                                           L   -A

         This definition not only in-
         cludes the loading and dis-
         charging of ships but also
         the many port activities that
         take place beyond the piers.

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                                                                                                                          13

                     Chart 1
                     MAJOR USERS OF PORT INDUSTRY SERVICES - 1970                                                                                                                                         P                                        ARE
                     ($ Billions)                                                                                                                                                                         SERVANTS

                                                                                                                                                All other
                                                                                                                                                industries                           $1.65

                                                                                          9MOU, AA gj@g@ a ZW MR!          V..4@ Pall,! _%--M   Fabrics                                 .20
                                                                                                  Elk                  J-1
                                                                                          MESH HIM"",
                                                                                                                                                New construction                        .21
                                                                                          491         1 S 2,                                    Chemicals                               .22
                                                                                          U1,15                    117, ON. � Q,11, X 0     A
                                                                                                     g.                          -0
                                                                                                                         RUNS        1, A V .9
                                                            Industrial                                                                          Rubber                                  .24
                                                                                                                                                Lumber & wood                           .25
                                                            Users                         12,          g.
                                                            $6.7                                                                                Non-ferrous metal
                                                                                                   40
                                                                                                                                                Mfg.                                    .48
                                                                                                              a jr@   g,                    a
                                                                                                              q      H ME                 ff
                                                                                                                                                Petroleum refining                      .67
                                                                                          W        I11,111-m-
                                                                                                            tg nw
                                                                                                              .2
                                                                                                                                     Irgn
                                                                                                                     11  fffgfi                 Iron & steel Mfg.
                                                                                                                        11HURIH, A@                                                     .71
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                                                                                          Tra@&,Jagy@i                                                                                                    Every day of the study year,
                                                                                                                                                Food                                    .75               the Nation's port industry
                                                                                                                                                                                                          provided an average of $41
                                                                                                                           0',W.", UPI
                                                                                                                                                                                                          million in services to its
                                                                                                                                                Within port industry 1.22
                                                                                                                                 ME                                                                       users.

                                                                                                                                                Other                               $ .09
                     Total                                                                                                                      Investment                              .16
                     Output
                     $17.2                                                                                                                      Federal Gov't.                          .76

                                                                                                                                                Consumption                            3.78

                                                            Final
                                                            Users                                                                                                                                         Revenue from intermediate
                                                            $10.5                                                                                                                                         sales was 39 percent of the
                                                                                                                                                                                                          port industry's total output
                                                                                                                                                                                                          during 1970.

                                                                                                                                                Exports                                5.71

                     14

          The Nation's port industry p@o-             The port industry's intermediate
          vides water transportation serv-            sales are a very significant part of,
          ices for cargo and passengers.              its contribution to the national
          The services include stevedoring;           economy. They represent the
          underwriting marine insurance;              delivery of raw materials and
          issuing export licenses; cargo and          parts to a large number of U.S.
          baggage inspection; warehousing;            industries some of which could
          bank financing of letters of credit;        not function without this type of
          inland feeder services by railroads         port industry service.
          and trucks; docking and towing;
          pilotage; freight forwarding; and           The intermediate sales (output)
          water carriage by ship, river or            of the port industry in 1970
          lake boats, barges or tankers.              amounted to $6.7 billion. This was
                                                      the revenue from sales to users
          The U.S. port industry in 1970              who required the movement of
          grossed $1,7.2 billion from the             nearly every type of raw material
          sales of  its services.                     to their factories, processing
                                                      plants, and refineries.
          Every day of the study year, the
          Nation's port industry provided an          Revenue from intermediate sales
          average of $41 million in services          was 39 percent of the port indus-          Purchases of $749 million
          to its users-domestic and                   try's total output during 1970, and        worth of port services by the
          foreign shippers and passengers,            is about the same today.                   Nation's food and kindred
          and private and Government                                                             products industry made It
          customers.                                  Several key U.S. industries rely           the second major in-
                                                      more heavily than others on port           termediate user.
          In the study's input-output model           services for the transportation of
          those services were sorted into             their inputs. They are principally
          two output classifications called           heavy industries such as iron and
          intermediate and final sales.               steel, lumber, rubber, chemical,
                                                      oil refining, and food processing.
          The intermediate sales are port
          services purchased by industries            The biggest consumer of port
          for the movement of goods                   services is the port industry itself.
          destined for further processing by          In 1970, it paid $1,220 million for
          the buyers. Moving of crude oil       to    such services.
          refineries; shipping ore to steel
          mills; transporting sand and                These payments were for pilot-
          traprock for road construction, are         age, tugboat and towboat ser-
          examples of intermediate sales              vices; stevedoring; hull insurance;
          services performed by the port              and many other internal trans-
          industry.                                   actions in the port industry.

          Final sales are classified as final         Purchases of $749 million worth
          demand in the input-output study            of port services by the Nation's
          procedures. They are for pur-               food and kindred products in-
          chases of port services by pas-             dustry made it the second major
          sengers and by shippers for                 intermediate user of the port
          moving cargo destined for final             industry during 1970.
          consumption. All exports are
          rated as final demand because
          they are moved outside the
          national economy. Some imports
          are final demand; many are for
          further processing and therefore
          are listed as intermediate sales.

                                                                                                                                      Is

           The petroleum industry paid               The food industry's expenditures           While it is apparent from the
           $672 million to the port in-              were mainly for waterborne trans-          above sales that payments for
           dustry.                                   portation and cargo handling serv-         intermediate port services have
                                                     ices required in bringing wheat,           an important impact on the
                                                     corn, rice, sugar, coffee, and             national economy, none of those
                                                     other agricultural products by             expenditures was directly entered
                                                     inland and sea transportation   to         into gross national product (GNP)
                                                     processing and packaging plants,           accounts in 1970. This was
                                                     throughout the United States.              because GNP accounts are
                                                     Port services for shipments of             limited to final sales; intermediate
                                                     processed food products for final          sales are excluded to avoid
                                                     consumption were not included in           duplicate counting of products
                                                     this category.                             and services.

                                                     The huge volume of ore moved by            Table I in the back of this book
                                                     water transport between mines              lists the 20 leading intermediate
                                                     and metal mills provided a large           users of the Nation's port in-
                                                     part of port industry revenue. Pri-        dustry and their expenditures in
                                                     mary iron and steel manufacturers          1970 for port services.
                                                     paid $705 million for such serv-
           Exports were by far the                   ices in 1970; primary nonferrous           The sales of port services
           largest component of the                  metal manufacturers paid out               throughout the Nation in 1970 to
           port industry's final demand              another $484 million.                      final demand (final consumers)
           category.                                                                            were $10.5 billion or 61 percent of
                                                     The petroleum industry paid $672           the industry's direct revenues for
                                                     million to the port industry in            that year.
                                                     1970 for delivery of crude
                                                     products to refineries. This figure        Final sales are by definition GNP
                                                     has probably more than doubled             components. They were broken
                                                     for 1977 due to sharply increased          down in this study's 1-0 model
                                                     demand and inflation since 1970.           into traditional economic classifi-
                                                                                                cations: consumption, invest-
                                                     The lumber and wood products               ment, inventory changes, exports,
                                                     industry's payments for port               and Government expenditures.
                                                     industry services in moving logs
                                                     and unfinished wood to lumber              Waterborne exports were by far
                                                     mills and other plants totaled             the largest component of the port
                                                     $253 million during the base               industry's final demand category.
                                                     study year.                                In 1970, they accounted for $5,706
                                                                                                million of the port industry's
                                                     The rubber and    miscellaneous            sales. This was one-third of the
                                                     plastics industry paid $237 million        industry's gross revenues that'
           The Government spent'$756                 for port services; the chemical in-        year. The remaining two-thirds
           million for port services.                dustry, $223 million; and the con-         came from services to domestic
                                                     struction industry, $205 million.          trade and to imports.

                                                                                                The port industry's export re-
                                                                                                venues included payments for,
                                                                                                cargo handling, for carriage of ex-
                                                                                                ports on U.S. merchant vessels
                                                                                                and on domestic ocean and
                                                                                                inland vessels, and payments for
                                                                                                financing export letters of credit
                                                                                                and cargo insurance.

           16

         The port industry's next highest
         amount of revenues from final de-
         mand services in 1970 was $3,783
         million for handling freight and in-
         surance of imported consumer
         products and the waterborne
                                                                                         p@,
         movement of domestically pro-
         duced goods headed for final
                                                                                              W4
         consumer markets.

         The private consumption category
         of imports included thousands of                                        %
         specific commodities
                               - from
         automobiles and television sets
         to fruit and meat products. These                  lz
         imports required all kinds of
         cargo handling, including con-,
         tainer, pallet, sling, and roll-on
         roll-off techniques.

         The Federal Government was the
         port industry's third major
         provider of final demand reven-
         ues. In 1970, the Government
         spent $756 million for port ser-
         vices to move mat_erials and
         inputs including military goods.                      04-

         State and local governments
         spent an additional $36 million in
         1970 for port services.

         The private investment sector of
         the United States was also a
         significant final user of port
         services, accounting for $155
         million in revenues during the
         study year. These payments repre-_
         sented the costs of shipping
         capital goods to their destinations
         and included domestic and foreign
         machinery and equipment that
         moved by water.

         Inventory changes in the final
         demand sector of the port.
         industry itself amounted to $25
         million. (See table 2.)
                                                                                          @ I! -M-1i

                                                                                                                       17

            Chart 2
            MAJOR SUPPLIERS OF TH E PORT INDUSTRY - 1970
            ($ Billions)

            Total Supplies Purchased: $8.9

                                      0

                                  49

                 inance,, 'nsurance $..40

                                                                                                         All others $5.2
               petroleum refin .Ing $32.

                                 4A.

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                                      A-A

                                            Cl

           PORTS ARE                                    The port industry must purchase              Purchases of fuels for operating
                                                        various types of inputs to make              port machinery, vehicles, and
                                                        its services available to users.             vessels were also a major expend-
           CUSTOMERS                                    Such purchases range from real               iture of the port industry, costing
                                                        estate and business services to              $323 million. Maintenance and re-
                                                        maintenance, repair, utilities,              pair construction amounted to
                                                        meals, fuels, office supplies, and           $251 million. Other key industries
                                                        other goods and services.                    which made more than $200 mil-
                                                                                                     lion in sales to the port industry
                                                        Direct purchases of suppliesand              during 1970 were shipbuilding,
                                                        service by the port industry in              business travel, and communica-
                                                        1970 totaled $8,921 million.                 tions.
                                                        During the study year, $6,747
                                                        million of the port purchases                Table 3 lists the 20 principal
                                                        originated in the domestic                   sources of inputs for the Nation's
                                                        economy; $2,174 million in goods             port industry in 1970.
                                                        and services were imported from
                                                        other nations.                               Port industry purchases set off a
                                                                                                     chain reaction important to the
           Domestic business services                   The port industry's plant and                economy. Direct suppliers of the
           accounted for the largest                    equipment capital investment           is    port industry rely on port pur-
                                                        not included here, but is dealt              chases in indirect ways as well as
           block amounting to $719                      with later in this study.                    the direct purchases analyzed
           million.                                                                                  above. That is, goods they sell to
                                                        Domestic business services such              industries other than the port in-
                                                        as promotion, advertising, con-              dustry are used for the production
                                                        sulting, legal and accounting serv-          of other goods and services sold
                                                        ices, and dozens of other                    to the port industry.
                                                        peripheral business services ac-
                                                        counted for the largest block of             By combining the direct and
                                                        expenditures by the port industry,           indirect impact of port industry
                                                        amounting to $719 million in the             purchases a better perspective is
                                                        base year of this analysis.                  obtained of the overall reactions.
                                                                                                     of U.S. industries with port ser-
                                                        The large expenditures for                   vices.
                                                        promotional and other business
                                                        services indicate the enormous               The indirect impact can be mea-
                                                        competitiveness within the port              sured by using the multiplier of
                                                        industry. Ports and steamship                1.6 that was generated for the
                                                        companies both stress the im-                port industry by the 1-0 model.
                                                        portance of these aspects of their           Application of this multiplier
           Port industry purchases set                  port activities.                             showed that an additional $10,806
                                                                                                     million* of indirect output was
           off a chain reaction.                        Purchases from other transporta-             required throughout the economy
                                                        tion companies formed the                    to sustain the direct level of port
                                                        second leading category of por         't    industry sales of $17,150 million
                                                        industry expenditures, totaling              in 1970.
                                                        $537 million. These were for serv-
                                                        ices by domestic truck, rail, air,           *Adjusted for transferred imports.
                                                        and freight-forwarding companies
                                                        in transporting inputs to the port
                                                        industry.

                                                        Rental of properties at port and
                                                        off- port locations cost the port
                                                        industry $493 million. Finance and
                                                        insurance charges amounted to
                                                        $401 million.

                                                                                                                                            19

           The industry's total impact                Thus the U.S. port industry's com-          Five other broad industry groups
           on the economy averaged                    bi ned direct and indirect sales im-        made direct and indirect sales of
           about $76 million per day.                 pact was $27,956 million for the            more than $30b million to the port
                                                      base year of this analysis. It              industry and 10 additional groups
                                                      meant that the industry's total             made sales of $200-$300 million.
                                                      impact on the-economy averaged
                                                      abo 'ut $76 million per day during          Table 4 details the direct and in-
                                                      that year.                                  direct sales of the port industry's
                                                                 --                               20 leading supplying industries.
                                                      These figures are quite     distinct
                                                      from the "value added"     to gross         The )port industry's impact upon
                                                      national product in the model.              the economy other than the above
                                                      Using the value added concept,              groups of industries runs deeply
                                                      which omits cumulative resale               across a broad front of producers
                                                      values, the port industry's total           of goods and services. The pur-
                                                      annual contribution to GNP in               chasing power of the port in-
                                                      1970 was $14,953 million and the            dustry, with its ripple effect ex-
                                                      daily average, $41 million.                 tending to other industries, is of
                                                                                                  great importance to many sup-
           The purchasing power of the                The ranking suppliers of the port           pliers in the Nation.
           port industry, with its ripple             industry, in terms of direct and in-
                                                      direct sales, closely paralleled the        The U.S. shipbuilding industry,
           effect extending to other                  port industry's leading direct sup-         which sold 5.9 percent of its total
           industries, is of great im-                pliers in 1970.                             output in 1970 to the port industry
           portance to many suppliers                                                             directly and indirectly, is.among
           in the Nation.                             Business services of $1,042                 those industries which rely
                                                      million w ere purchased by the              heavily on U.S. port services to
                                                      port industry directly and by its           buy a meaningful share of their
                                                      suppliers indirectly. Transpor-             outputs. It should be noted that
                                                      tation services other than the    port      only maintenance and repairs are
                                                      industry's were the second                  included here. The purchase of
                                                      leading group of direct and in-             ships is categorized as invest-
                                                      direct purchases, amounting to              ment.
                                                      $909 million.
                                                                                                  Other suppliers in this group in-
                                                      Payments of $78.7 million for real          clude the travel industry which
                                                      estate and rentals formed the               sold 2.3 percent of its 1970 output
                                                      third largest category while the            to the port industry; the non-
                                                      finance and insurance industry              waterborne transportation in-
                                                      ranked as the fourth leading                dustry which sold 1.6 percent of
                                                      direct and indirect supplier at             its output; the maintenance and
           Shipbuilding industry sold                 $649 million.                               repair construction, 1.5 percent;
                                                                                                  and the petroleum refining in-
           5.9 percent of its total output                                                        dustry, 1.4 percent.
           in 1970 to the port industry.
                                                                                                  These percentages include the in-
                                                                                                  direct effect-the impact gener-
                                                                                                  ated by the sales of each of these
                                                                                                  industries to other suppliers of
                                                                                                  the port industry to enable them
                                                                                                  to produce such supplies in the
                                                                                                  first place.

           20

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           P                                          Production of port services in the
                                                      United States during 1970 gener-
                                                      ated $9,572 million in personal in-
           PROVIDE                                    come. The port industry itself
                                                      paid $6,695 million of that sum in
           PERSONAL                                   direct payroll while port pur-
                                                      chases from other industries were
           INCOME                                     directly and indirectly responsible                                             M"A--
                                                      for $2,877 million in wages and
                                                      salaries.

                                                      Transportation services not part
                                                      of the port industry were the most
                                                      benefited in 1970,,with $359 mil-
                                                                                                                                        av
                                                      lion in personal income generated
                                                      directly and indirectly during the
                                                      study year by port purchases  .

                                                      Direct and indirect wages and
                                                      salaries earned in the business
           Production of port services
           in the United States during                services industry through port
                                                      purchases amounted to $303
           1970 generated $9,572                      million while $269 million in
           million in personal income.                personal income were generated
                                                      in the finance and insurance
                                                      industry.

                                                      Other industries that were
                                                      strongly affected in 1970 in terms
                                                      of direct and indirect personal in-
                                                      come initiated by port purchases
                                                      were the maintenance and     repair
                                                      construction, $252 million;
                                                      wholesale and retail trade, $172
                                                      million; printing and publishing,
                                                      $107 million; Federal Government
                                                      enterprises, $99 million; and
                                                      communications, $94 million.                      ZVI TM
                                                      (See Table 5).

           The port industry itself paid
           $6,695 million of that sum in
           direct payroll while port
           purchases from other in.
                                                                                                                          ti
           dustries. were directly and
                Ctlyr
           ,indire   responsible for
           $2,877 million in wages and
           salaries.

           22

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                                                                                                                                                                                                     -23

                                                        Port activities in the U.S. are im-
           PORTS                                        portant producers of business
                                                        incomes such as rentals, interest,
           PROVIDE                                      and profits. In 1970, the port in-
                                                        dustry generated $3,741 million     in
           BUSINESS                                     direct and indirect business in-
                                                        come.
           'INCOME
                                                        Gross  profits within the industry
                                                        itself were $1,661 million while
                                                        business income generated in                                         J
                                                        other industries was $2,080 mil-
                                                        lion during the study year. This
                                                        impact was based on an income
                                                        multiplier of 2.2 derived in the 1-0
                                                        model.

                                                        Service  industries were the major
                                                        business income beneficiaries
                                                        from port activities during, 1970
           Port activities in the U.S. are
                                                        Real estate and rental activities
           important producers of
                                                        grossed $433 million; business
           business incomes in cases                    services, $239 million; other trans-
           such as rentals, interest and                portation outside the port indus-
           profits.
                                                        try, $154 million; and State and
                                                        local government enterprises,
                                                        $124 million in income from the
                                                        port industry during 1970.

                                                        Communications, crude
                                                        petroleum, electric, gas,   and
                                                        water suppliers grossed     a total of
                                                        $279 million from the port in-
                                                        dustry; the wholesale and retail
                                                        industry, $63  million; automobile
                                                        repair and services, $60 million,;
                                                        and maintenance and repair servi-
                                                        ces, $40 million. (See Table 6.)

                                                                                                                                              ik

           24

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                                                                                                                                                                                                                            w4k

           PORTS                                      The U.S. port industry's services       Business services hired some
                                                      require the efforts of every type of    40,600 persons during the study
                                                      worker-skilled and unskilled;           year to supply the port industry;
           PROVIDE                                    professional and nonprofessional;       wholesale and retail companies,
                                                      white collar and blue collar.           31,800; the finance (banking) and
           JOBS-                                                                              insurance business 30,700 to fill
                                                      The input-output model showed           port commitments; State and
                                                      that 1,046,800 jobs throughout the      local government enterprises,
                                                      United States were directly or in-      13,400; and in Oort activity related
                                                      directly attributable to the opera-     work and Federal Government
                                                      tions of the port industry in 1970.     enterprises, 12,100.
                                                      Of these, 686,800 persons were
                                                      directly employed and 360,000 in        Other industries benefiting
                                                      the various industries supplying        directly or indirectly in employ-
                                                      the ports.                              ment from port activities were the
                                                                                              maintenance and repair con-
                                                      Transportation that is not part of      struction, 17,200 jobs; printing
                                                      the port industry was the most          and publishing, 12,100; ship-
                                                      strongly affected in 1970 with          building, 12,000; and communk
           1,046,800 jobs throughout                  45,300 port related jobs in the car-    cations, 11,100. (See Table 7.)
           the United States were                     riage, transfer, and storage of
                                                      goods.
           directly or indirectly at-
           tributable to the operations
           of the port industry in 1970.

           686,800 persons were
           directly employed and
           360,000 in the various in-
           dustries supplying the ports.
                                                                                                                            V

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                                                                                                                                 27

                                                     Port activities in the United
           PORTS PAY                                 States are a significant source     of
                                                     Government revenue at all levels.
           TAX S                                     During 1970 the U.S. Treasury                                     VW
                                                     collected $5,198 million in taxes
                                                     directly or indirectly generated by
                                                     port operations.                                         EpM

                                                     Personal income taxes of $1,180
                                                     million from incomes generated
                                                     by port activities were collected
                                                     by the Treasury; business income
                                                     taxes totaled $672 million; and
                                                     Federal excise taxes on water-
                                                     borne goods came to $1,258
                                                     million.

                                                     In 1970, Customs collections on
                                                     waterborne imports totaled $2,088
           During 1970 the U.S.                      million. They are included in the
                                                     port industry's tax category
           Treasury  'collected $5,198               above. Although such collections
           million in taxes.                         at the ports are a direct function
                                                     of port operations, they should be
                                                     viewed for fiscal planning as a
                                                     separate source of Federal in-
                                                     come. Customs duty payments
                                                     are better reflected as a function
                                                     of the value of imports. Such
                                                     values may be derived independ-
                                                     ently of the input-output frame-
                                                     work.

                                                     Aside  from the revenues that
                                                     accrued to theFederal Govern-
                                                     ment, the port industry also con-
                                                     tributed meaningfully to State and
                                                     local tax revenues. In 1970, $1,975
                                                     million was received by State and
                                                     local governments from taxation
                                                     sources directly or indirectly gen-
                                                     erated by port operations.
           $1,975 million was received
           by State and local govern.-
           ments from taxation sources
           directly or indirectly gener-
           ated by port operations.

                                                                                               WgA

           28

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                                                                    64

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            PORTS ARE                                 Long-term capital investments for         Therefore, the induced impact
                                                      port machinery, vessels, construc-        that would be generated in future
                                                      tion of wharves and sheds, inter-         years as a result of the invest-
            INVESTORS                                 modal containers, computer hard-          ments in new capacities and
                                                      ware, and many other die mients           technologies in the port industry
                                                      are of key importance to the port         is not a part of the total impact
                                                      industry. This has been especially        figures in this study.
                                                      true in the last two decades, in
                                                      which rapid technological                 Analysis of private investment
                                                      changes and a strong growth in            within this study's framework
                                                      trade have required increased             showed that $1,187 million was
                                                      capital expenditures.                     spent by the port industry in 1970
                                                                                                on purchases of capital goods.
                                                      Private industry and Federal,             They included ships, communica-
                                                      State, and local governments              tions equipment, harbor craft,
                                                      make capital investments in the           river barges and towboats,
                                                      Nation's ports. This section of the       loading equipment, and other port
                                                      MarAd port analysis will focus on         m6chinery.
                                                      private investment. Government
            $1,187 million was spent by               investment will be analyzed in the        Application of the relevant sec-
            the port industry in 1970 on              next section.                             toral multipliers from the 1-0
                                                                                                model to each type of investment
            purchases of capital goods.               The input-output model is a static        showed that the direct and in-
                                                      analyzing tool that provides a pic-       direct impact of the port in-
                                                      ture of only 1 year's economic            dustry's capital purchases ac-
                                                      transactions. It is not possible to       tually totaled $2,057 million
                                                      use the model t 'orneasure fully          during the study year.
                                                      the dynamic impact of port in-
                                                      vestments.                                Shipbuilding was the largest
                                                                                                single investment category of the
                                                      A static analysis of capital invest-      port industry that year. The direct
                                                      ments' impact on the national             and indirect impact of new
                                                      economy is limited to the short-          merchant ship purchases
                                                      run impact-per-dollar delivered to        amounted to $664 million. They
                                                      the gross national product-as is          covered the costs of new U.S.
                                                      the case, for example, of annual          cargo ships and tankers. Ship
                                                      operating expenses. In contrast,          repairs and maintenance pur-
                                                      the dynamic impact of long-               chases were not classified as in-
                                                      term capital expenditures would           vestments.
                                                      take into account the impact of
                                                      improvements in operating                 The second leading category of
                                                      efficiency over the years. The            private port investment was com-
            The direct and indirect                   model's development has not yet           munications equipment. The port
            impact of the port industry's             reached that capability.                  industry purchased $146 million
            capital purchases actually                                                          in communications equipment for
            totaled $2,057 million during                                                       harbor, channel, and open-sea
            the study year.                                                                     navigation. Radar systems and
                                                                                                other sophisficated electronic and
                                                                                                telecommunications instruments
                                                                                                accounted for the bulk of these
                                                                                                purchases.

                                                                                                                                    31

          The primary iron and steel in-
                                                                        'sj
          dustry was the third largest
          beneficiary from port industry
          capita) investment-$93 miljion-
          mostly through the indirect im-
          pact of its sales of materials for
                                                                 low
          new construction of ships, harbor                              _4=
          craft, and pier facilities.

          The direct and indirect sales im-
          pact of private port investment in
          new construction in 1970 was $82
          million; in boat construction, $81
          million; transportation equipment
          other than communications, $68
          million; motor vehicles and equip-
          ment, $59 million; wholesale and
          retail purchases, $58 million;
          engines and tubes, $31 million;
          and finance and insurance, $25
          million. (See Table 8.)

          It should be noted that annual
          port investrnents fluctuate more
                                                        77
          than port operations expend-
          itures. Port operations tend
          toward a continuous volume of                                                                                    W
          traffic flows from year to year;
          investments tend to be more
          sporadic. In some years, many
          -more investments are made than
          in others, depending on the state
          of the economy.

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          32

            PORTS AND                                  While the private sector of the           Also excluded were maritime sub-
                                                       U.S. port industry is by far the          sidies representing a transfer of
                                                       most important element of port            funds, and government wages
            GOVERNMENT                                 operations, the government sector         which were not measurable
                                                       also plays an important role in           directly from the 1-0 model's final
                                                       waterborne cargo movements.               @Jemand sectors.
                                                       Federal, State and local govern-
                                                       ments provide a variety of support        Fedefal Government expenditures
                                                       services and investments that are         covered such activities as chan-
                                                       an integral part of the port in-          nel dredging, waterway mainten-
                                                       dustry.                                   ance, and the construction of
                                                                                                 public locks and dams by the
                                                       Although port authorities usually         Corps of Engineers; coordination
                                                       are technically part of State             of maritime"af fairs by the
                                                       governments, they were treated in         Department of Commerce; ad-
                                                       this study as part of the private         ministration of ocean freight rates
                                                       sector of port industry because of        and other regulations by the
                                                       the nature of their port activities       Federal Maritime Commission;
                                                       and the technique of the 1-0              collection of tariffs and inspec-
            Government port activities                 model.                                    tion of merchandise by the United
                                                                                         c       States Customs Service; and
            totaled $641 million in 1970.              Government port activities such           implementation of vessel traffic
                                                       as services, equipment, materials,        control systems and water safety
                                                       and facility construction improve-        operations such as channel mark-
                                                       ments by government agencies              ihg, harbor radar systems, and the
                                                       totaled $641 million in 1970'.            licensing of merchant seamen by
                                                                                                 the United States Coast Guard.
                                                       Application of appropriate in-
                                                       dustry multipliers to each form of        State and local governments also
                                                       government expenditures on ports          directly participate in various
                                                       increased the total impact                aspects of port planning, con-
                                                       throughout the economy to $1,457          struction, and operations. These
                                                       million for the study year.               activities are included in the
                                                                                                 above impact totals.
                                                       These figures excluded govern-
                                                       ment expenditures for the ship-           In addition, State and local gov-
                                                       ping services that were previously        ernments generally provide for
                                                       analyzed in this study as part of         new infrastructure requirements
                                                       the output of port industry.              around ports such as highway
                                                                                                 access, traffic signals, and the
                                                                                                 like. But indirect expenditures of
                                                                                                 this type are rarely associated
            Appropriate industry multi-                                                          with the handling of waterborne
            pliers increased the total                                                           -cargo and are not included in this
            impact throughout the                                                                analysis.
            economy to $1,457 million.

                                                                                                                                      33

                                                    Government port expenditures               Government port functions also
                                                    had a powerful direct and indirect         produced a meaningful number of
                                                    impact on many U.S. industries             jobs. While the 1-0 model does
                                                    during 1970. Most affected was             not provide estimates of the num
                                                    the new construction industry              ber of government jobs directly
                                                    with sales of $348 million stem-           related to port activities, other
                                                    ming directly and indirectly from          sources such as the "Budget of
                                                    government projects.                       the U.S.-1970" indicated that
                                                                                               about 23,000 Federal employees
                                                    The maintenance and repair con-            were primarily engaged in the
                                                    struction industry benefited by            facilitation of waterborne cargo
                                                    $83 million from government port           movements in 1970.
                                                    expenditures that year. Business
                                                    services directly and indirectly           Federal jobs ranged from top ad-
                                                    sold $79 million worth of services;        ministrators to engineers to
                                                    wholesale and retail industry              transportation specialists in the
                                                    came to $48 million.                       Maritime Administration and the
                                                                                               Corps of Engineers. However, the
                                                    The ripple effects of  govern-             23,000 figure does not refer to the
         Government port ex-                        mental port expenditures were              jobs generated in quasi-govern-
         penditures had a powerful                  strongly felt in demand for                ment enterprises such as the
                                                    construction materials such as             Export-Import Bank and the St.
         direct and indirect impact on              metals, lumber, heati  'ng and             Lawrence Seaway Development
         many U.S. industries during                plumbing equipment, and other              Corporation. They were counted
         1970. Most affected was the                supplies. The heating and plumb-           as part of the private sector
         new construction industry                  ing industry benefited directly            employment.
         with sales of $348 million.                and indirectly by sales of $36
                                                    million; stone and clay products,          Aside from creating jobs within
                                                    by $31 million; primary iron               the Government itself, govern-
                                                    and steel, also $31 million; and           mental port spending strongly
                                                    primary nonferrous metal, $29              affects civilian employment. Port-
                                                    million. (See Table 9.)                    related government purchases of
                                                                                               goods and services were re-
                                                                                               sponsible for an additional 42,000
                                                                                               jobs in the economy in 1970.

                                                                                               Government port spending in
                                                                                               1970 created 11,890 construction
                                                                                               jobs. More jobs were created in
                                                                                               construction than in any other
                                                                                               category. Wholesalers and re-
         Ripple effects of government                                                          tailers provided 4,190 jobs in 1970
                                                                                               to expedite various materials and
         port expenditures were                                                                supplies for government port
         strongly felt in demand for                                                           functions. Other business serv-
         construction materials such                                                           ices accounted for -4,140 jobs.
         as metals, lumber, heating                                                            (See Table 10.)
         and plumbing equipment.

         34

                                                                            Af

                                       Ta
                                k7,

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           PORTS,                                       The port industry serves the                 Cargoes valued'at $24.5 billion
                                                        Nation by moving its waterborne              were carried out of the United
           LIFEBLOOD:                                   domestic an   .d foreign commerce.           States on merchant vessels in
                                                        Most U.S. international trade,               1970, or 57.8 percent of the $42.6
                                                        measured either by weight or                 billion in exports moved that year.
           FOREIGN                                      value, moves into or out of the              Overland movements to Canada
                                                        country by water transport.                  and Mexico and international air
           TRADE                                        Exports and imports are the                  cargo accounted. for the
                                                        lifeblood of the ports.                      remainder (42.2 percent).

                                                        The input-output model has       been        All waterborne exports, regardless
                                                        used to this point of the port               of the flags of the ships on which
                                                        industry study to analyze the in-            they moved across the seas, re-
                                                        dustry's interaction with other.             quired port services in this
                                                        industries and to examine the                country. During the study year,
                                                        impact of port activities on jobs,           the port industry provided $5,706
                                                        income, and taxes in the national            million in direct services for
                                                        economy.                                     moving exports.
           Most U.S. international trade,               The model can also be used to                Other port activities, including a
           measured either by weight or                 analyze the impact of economic               variety of waterborne services re-
                                                        events on the port industry itself.          quired by the port industry itself
           value, moves into or out of                  Analysis of the impact of foreign            in obtaining its input supplies for
           the country by water trans-                  trade upon the port industry is an           handling exports, added another
           port.                                        example of the model's useful-               $421 million.
                                                        ness in examining cause and
           The model can also be used                   effect relationships from this               A further $667 million. in port
           to analyze the impact of                     perspective.                                 services was incorporated in the
           economic events on the port                                                               value,of the exports. These were
           industry itself.                             In 1970, port services for handling          services needed in moving raw
                                                        the Nation's  waterborne exports             materials and other input cargoes
                                                        and imports   were responsible for           by water to the export produc.ing
                                                        $16.2 billion of output in the               industries.
                                                        national economy.
                                                                                                     The Nation's total exports of
                                                        This means that the movement of              $42.6 billion in 1970 therefore
                                                        each ton of waterborne cargo by              generated a demand for port
                                                        the U.S..port industry in foreign            services amounting to $6,784
                                                        trade generated $34 of port                  million-the total, of the three
                                                        revenue. Applying the port multi-            impact areas. This came to 16
                                                        plier of 1.6 the direct and indirect         percent of the total value of U.S.-
                                                        revenue throughout the economy               merchandise exports.
           Port services for handling                   amounted to $55 per ton. This
           the Nation's waterborne                      does not include the value of the            This means that every million-
           exports and imports were                     cargo itself.                                dollar increase in U.S. exports
           responsible for $16.2 billion                                                             would require an average increase
           of output in the national                    International trade not carried by           of $160,000 in port services, ,
           economy.                                     ships consists of the growing                assuming proportionate increases
                                                        volume of high-value international           in the types of export mer-
                                                        cargo that moves by air transport            chandise.
                                                        and the two-way commerce that
                                                        moves by overland highway and
                                                        rail transport between the United
                                                        States and Canada and between
                                                        the United States and Mexico.

           36

           of 1.6. the direct and indirect
           Applying the port multiplier

           revenue throughout the
           economy amounted to $55
           per ton.

                                                                                                 -4w

                                                                               4 awl I

           The Nation's total exports of
           $42.6 billion in 1970,
           therefore, generated a
           demand for port services
           amounting to $6,784 million.

                                                  KI,

                                                      tj

           This means that every
           million- dollar increase in
           U.S. exports would require
           an average increase of
           $160,000. in port services.

                                                                                                                          37

           Agricultural exports valued                   However, application of such a              Most U.S. exports of construction,
           at $3,206 million had to move                 general ratio throughout the in-            manufacturing, and oil field
           through U.S. ports. The in-                   dustry is impractical because               machinery are far too bulky and
           dustry handled 70 percent of                  changes in the level of shipments           heavy to move overseas by air
           the Nation's agricultural ex-                 for specific export commodities             transport In 1970, 76 percent of
           ports during the.study year.                  have varying impacts on port in-            such exports, valued at $1,372
                                                         dustry in proportion to their trans-        million, were handled by.the port
                                                         port costs and their relative               industry. Most of the remaining
                                                         reliance on vessel shipments.               24 percent moved to Canada or
                                                         Such characteristics as weight,             Mexico by overland transport.
                                                         s.ize, and value of shipments de-
                                                         termine their dependence'on                 Other leading export products
                                                         water transport.                            that were handled principally by
                                                                                                     the port industry in 1970 were
                                                         Because of the weight and bulk              primary iron and steel, 77 percent
                                                         of their products, many industries          with a value of $972 million; paper
                                                         have no feasible alternative to             and allied products, 91 percent,
                                                         water transport for exporting their         valued at $922 million; special
                                                         products to overseas points. An             industry machinery, 75 percent,
           Waterborne imports,                           increase in these exports to such           valued at $843 million; and
                                                         destinations would therefore re-            general industrial machinery, 67
           amounting,to $25.4 billion in                 quire port facility expansion in            percent, valued at $539 million.
           1970, accounted for 63.8                      many instances. For instance, all           (See Table 11.)
           percent of the total U.S.                     of the Nation's $646 million of
           merchandise imports of                        coal exports and 98 percent of its          Waterborne imports, amounting to
           $39.,8 billion that year.                     $645 million of tobacco manu-               $25.4 billion in 1970, accounted
                                                         facturing exports moved abroad              for 63.8 percent of the total U.S.
                                                         by water transport.                         merchandise imports of $39.8
                                                                                                     billion that year.
                                                         Agricultural exports valued at
                                                         $3,206 million had to move                  Proportionately more imports than
                                                         through U.S. ports in 1970                  exports were carried by seagoing
                                                         because most of them were bulk              vessels because of an abundance
                                                         shipments of grain which could              of bulky commodities such as
                                                         not feasibly move by other                  agricultural products, petroleum,
                                                         transport. The port industry                and ores that constitute the
                                                         handled 70 percent of the                   Nation's inbound cargoes.
                                                         Nation's agricultural exports dur-          Waterborne imports weighed 42
                                                         ing the study year. The remaining           percent more than waterborne
                                                         30 percent, mostly fresh fruits             exports in 1970. Hence, imports
                                                         and vegetables, moved by over-              required a much larger per-
                                                         land and air transport.                     centage of the port industry's
                                                                                                     capacity than exports.
                                                         Food and kindred products were
                                                         the second leading classification           The 1-0 framework treats imports
                                                         of U.S. exports handled by the              differently than exports. The
                                                         port industry during the study              reason for this is that imports
                                                         year. Eighty-five percent of such           enter the Nation's economic
                                                         products, valued at $2,060 million,         scene much like any other input
                                                         moved by water carrier.                     in the production and consump-
                                                                                                     tion process. They are distin-
                                                         Third-ranking were chemicals,               guished only by whether or not
                                                         with 77 percent of such exports.            they undergo further processing
                                                         Chemicals valued at $1,766           '      and by the sector purchasing
                                                         million were handled by the port            them. This makes it more difficult
                                                         industry in 1970.                           to estimate their industry-by-
                                                                                                     industry impact on the ports.

           38

            Movements of waterborne                     However, it was possible     to              The primary nonferrous metals
            imports in 1970 accounted,                  develop a method of estimating               industry was second, with $1,097
            directly and indirectly, for                this transportation element and              million of waterborne imports.
            $9,440 million of port ser-                 compute an aggregate impact                  Next came the new construction
            vices.                                      figure for imports.,                         industry with imports valued at
                                                                                                     $1,017 million.
                                                        Through this method it was de-
                                                        termined that the, movements of              The value of the petroleum
                                                        waterborne imports in 1970 ac-               refining industry's imports totaled
                                                        counted, directly and indirectly,            $1,013 million in 1970 but have
                                                        for $9,440 million of port services,         increased relatively much more
                                                        slightly less than 23 percent of             than any other U.S. import
                                                        the $39.8 billion in United States           commodity and far exceeded the
                                                        imports that year.                           100 percent increase in GNP
                                                                                                     noted earlier for the period 1970-
                                                        .This meant that generally for each          77. (This is because of a com-
                                                        increase of a million dollars of im-         bination of inflationary pressures,
                                                        ports, the demand for port serv-             increased demand for oil pro-
                                                        ices would go up an average of               ducts and petroleum production
                                                        $229,400.                                    controls that have been imposed
            This means   tha t'for each                                                              by the countries that export oil to
            increase of a million dollars               The higher increase in port serv-            the United States'since the oil
            of imports, the demand for                  ices per dollar of imports com-              embargo of 1973-74.)
            port services would go up an                pared to exports wa's due in part
            average of $229,400.                        to the higher tonnage of imports             Waterborne primary iron and steel
                                                        carried by vessels, as noted                 imports during the study year
                                                        above. Other factors.included U.S.           amounted to $1,003 million; radio,
                                                        customs duties and excise taxes              television, and commercial equip-
                                                        associated only with imports to              ment imports, $729 million; motor
                                                        this, country.                               vehicles, $675 million; livestock,
                                                                                                     $479 million; rubber and miscella-
                                                        Here too, many U.S. industries               neous plastic products, $451 mil-
                                                        depend heavily on water transport            lion; lumber and wood, $379 mil-
                                                        in their production process, since           lion; chemicals, $375 million;
                                                        vessels offer the only economical            paper a 'nd allied materials, $320
                                                        transportation for the imports of            million; and heating and plumbing
                                                        raw materials or partly finished             supplies, $272 million. (See Table
                                                        products they need. Such in-                 12.)
                                                        dustries' production could be
                                                        greatly disturbed if foreign inputs
                                                        were not available. Consequently,
                                                        these industries have a great
                                                        stake in the viability of port
                                                        services.

                                                        The food and kindred products
                                                        industry depended most on port
                                                        industry for handling its imports,
                                                        valued at $3,111 million in 1970.

                                                                                                                                           39

                                                                                                                                                                                                                         Sz.

                                                               JI

                                                                                                                                                                                                            .1N

             WHAT                                           The input-output model's a      'bility        Decisionmakers in the port in-
                                                            to determine impact in two                     dustry are continually confronted
                                                            directions - impact of the port                with the problem of interpreting
             WOULD                                          industry on the national economy               various available economic in-
                                                            and impact of economic events                  dicators in a way that is mean-
             HAPPEN                                         on the port industry - makes it a              ingful to their operations.
                                                            valuable economic forecasting                                     9
             IFE M 0 0                                      and planning tool.                             Personal consumption data
                                                                                                           published routinely as part of the
                                                            The model can be      used to                  national accounting system can
                                                            simulate external changes       in the         be put to good use as business
                                                            economy and determine their                    indicators via the 1-0 model's
                                                            effects on the port industry. It can           built-in linkage between the
                                                            also analyze the effects of simu-              private consumption sector of the
                                                            lated changes in port activities               economy and the port industry.
                                                            or investment. However, this does              Private consumption, in this
                                                            not mean that the model can                    context, would act as a barometer
                                                            serve as a mechanical forecaster.              mainly to demand for port. service
                                                            It'does not automatically generate             in handling domestic cargo and
             The input-output model's                       solutions and answers.                         imports.
             ability to determine impact                    Extensive sets of assumptions                  Consumer expenditures through-
             in two directions -impact of                   usually must be made whenever                  out the United States in 1970
             the port industry on the                       the 1-0 model is used to simulate              totaled $615 billion. This included
             national economy and im-                       the conditions of an external de-              $8,171 million for the waterborne
             pact of economic events on                     velopment. These assumptions                   movements of these consumer
             the port industry-makes it a                   may relate to the current state of             goods (including expenditures for
             valuable economic                              the economy, anticipated changes               passenger travel by water).
             forecasting and planning                       in technology, the possible im-
             tool.                                          pact of other global develop-                  A little more than half the costs
                                                            ments, and, above all, to                      of waterborne movements -
                                                            assumptions that are implicit in               $4,060 million - represented
                                                            all 1-0 analyses, that is the con-             direct andindirect payments for
                                                            stancy of input proportion and the             the transportation of imported
                                                            transfer of imports and secondary              products and domestic mer-
                                                            production to primary industries.              chandise for final consumption.

                                                            Furthermore, special adjustments               By using the inverse matrix of the
                                                            of the model may be necessary                  1-0 model, it was possible to
                                                            for particular applications.                   identify and measure the amount
                                                                                                           of port services absorbed by
             $4,060 million represented                     The following examples illustrate              private consumers through their
                                                            the model's ability to answer                  purchases of all consumer goods
             direct and indirect payments                   three hypothetical questions:                  and services. This showed that
             for the transportation of                                                                     $4,111 million was paid for port
             imported products and                          How Would Increased Consumer                   services indirectly generated by
             domestic merchandise for                       Spending Affect the Demand for                 consumers through purchases of
             final consumption.                             Port Industry Services?                        domestically produced goods and
                                                            The most prevalent problem that                services from industries that
                                                            confront producers of goods or                 purchased port services for
                                                            services is when, Where, and how               various inputs in their production
                                                            to adjust to variations in con-                processes.
                                                            sumer demands for their
                                                            products, especially increased
                                                            demands. When this occurs, too
                                                            little expansion of capital
                                                            facilities can result in bot-
                                                            tlenecks; overexpansion in
                                                            economic waste.

                                                                                                                                                41

         $4,111 million was paid for                  For example, the model was able              Since each industry requires a dif-
         port services indirectly                     to determine that the private                ferent amount of port services in
         -generated by consumers                      consumer was responsible for                 order to increase its output, the
         through purchases of                         the indirect consumption of                  impacts of their output changes
         domestically produced                        $1,109 million of port industry              will vary. Industries that have a
         goods and service@.                          services in 1970 through the                 strong demand for waterborne
                                                      purchases of $72 billion of                  transportation services or indirect
                                                      output from the food and kindred             linkages to other supplying indus-
                                                      products industry. This amount               tries that are heavy port users,
                                                      of port services was incorporated            have a substantially greater
                                                      into the value (prices) of the,out-          economic impact on ports than
                                                      put of food and kindred products             do industries with little direct or
                                                      industry during its production               indirect linkages to the port in-
                                                      process.                                     dustry.

                                                      Through these techniques the 1-0             Furthermore, the total impact of
                                                      model can be used to estimate                each industry's sales on the port
                                                      the impacts of changes in con-               industry depends not only on the
                                                      sumer expenditures on demand                 strength of these linkages but
         The model was able to                        for port services as follows:                also on the size of each industry's
         determine that the private                                                                output. Naturally, industries with
                                                      Assuming that proportionality of             greater absolute sales will tend to
         consumer was responsible                     input-to-output holds, a 10 per-             have a greater overall impact on
         for the indirect consumption                 cent increase in consumer spend-             the ports.
         of $1,109 million of port                    ing would result in an increase'in
         industry service in 1970                     demand for port services of $817             Two methods can be used to
         through the purchases of $71                 million (.10 X $8,171 million). This         demonstrate how a change in the
         billion of -output from the                  amounts to 5 percent of the port             output of each industry affects
         food and kindred products                    industry's total output of $17.2             demand for port service. One em-
         industry.                                    billion.                                     phasizes the absolute changes in
                                                                                                   industries' outputs; the other em-
                                                      How Would Changes in Industrial              phasizes the relative changes in
                                                      Output Affect Demand for Port                their outputs.
                                                      Services?
                                                      Will changes that occur from year            The first kind  of output simulation
                                                      to year.in the output of every in-           by individual industries is to com-
                                                      dustry in the economy make new               pare the impact on the industry of
                                                      demands (requirements) upon the              a $1 billion increase in output in
                                                      Nation's port industry?                      each industry. Industries with
                                                                                                   larger port multiplier effects
                                                      Forecasts of output changes            by    (direct and indirect demand) will
                                                      most industries are available          f rom register larger impacts than in-
         Assuming that propor-                        governmental and private sources.            dustries with small multipliers.
         tionality of input-to-output                 From these forecasts it is pos-
         holds, a 10 percent increase                 sible to estimate future demand              The model showed that the in-
         in consumer spending would                   for port services by applying the            dustry with the largest impact on
         result in an increase in                     projections to coefficients                  the port industry in 1970 was the
         demand for port service of                   developed in this study's 1-0                iron and ferro-alloy industry. Every
         $817 million.                                model.                                       billion dollars in new sales by this
                                                                                                   industry required $61 million in
                                                                                                   new port services.

         42

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          The industry with the largest             The second leading impact in-              If a 10 percent increase in output
          impact on the port industry               dustry was the primary nonferrous          is analyzed separately for each in-
          in 1970 was the iron and                  metal manufacturing industry,              dustry, a specific dollar amount
          ferro- alloy industry. Every              which generated $39 million in             of new port services can be
          billion dollars in new sales              new port services for each billion         determined in every case based
          by this industry required $61             dollars of new output.                     on the existing 1970 interindustry
          million in new port services.                                                        relationships and the sales levels
                                                    Other important impact industries          existing in that year.
                                                    with more than $30 million in new
                                                    port services demanded for each            The model showed that a 10
                                                    billion dollars of new sales were          percent increase in the *output of
                                                    primarily heavy industries that            the food'and kindred products in-
                                                    required wide usage of port serv-          Idustry would have the greatest
                                                    ices in their production proces-           impact, generating a $162 million
                                                    ses. These industries were                 demand for new port services.
                                                    nonferrous metal ore mining, $38           The second ranking impact in-
                                                    million; primary iron and steel,           dustry was the iron and steel with
                                                    $35 million; petroleum refining,           $121 million. New construction
                                                    $33 million; and lumber'and wood           was third with $109 million, and
          The model showed that a 10                products, $30 million.                     petroleum refining came fourth
          percent increase in the                   The textile goods industry was             with $104 million.
          output of the food and                    the leading light manufacturing            The demands for new port serv-
          kindred products* industry                industry in this category. Each bil-       ices generated by 10 percent
          would have the greatest                   lion dollars of new output of              increases in output by other in-
          impact, generating a $162                 textile goods required some $35            dustries were: Primary non-fer-
          million demand for new port               million in new port services.              rous metal, $102 million; chem-
          services.                                 Other industries which generated           icals and selected chemical
                                                    considerable demand for new port           products, $52 million; wholesale
                                                    services, according to the model           and retail, $49 million; lumber and
                                                    for each billion. dollars of new           wood products, $45 million; and
                                                    sales, were: forestry and fishery          broad and narrow fabrics, $43
                                                    products, $25 million; leather             million. (See Table 14.)
                                                    tanning and industrial leather
                                                    products, $24 million; equipment           This information can be very use-
                                                    for other transportation (outside          ful for the port industry in making
                                                    port.industry), $24 million; and           long-term growth projections.
                                                    rubber and miscellaneous plastics          What it actually demonstrates is
                                                    products, $23 million. (See Table          that demand for port services is a
                                                    13).                                       derived demand and that the logi-
                                                                                               cal approach to projecting de-
                                                    The second method of comparing             mand for new port services is via
                                                    the impact of changes in indus-            those industries that generate the
                                                    trial output on ports is to simu-          demand in the first place.
                                                    late an equal percentage increase
                                                    in output for all,industries regard-
                                                    less of their sales levels. By
                                                    doing so, the stress is put on the
                                                    overall growth impact of each
                                                    industry's demand for port serv-
                                                    ices rather than the strength of
                                                    the multipliers.

          44

                                                                                                          ------------
           Even broad indications about the
           future growth of each of the        key
           industries could be useful from
           this perspective. For example, if   it
                                                                                                  Yy
           is expected that a leading impact
           industry will have sharp growth
           rates in the short run but much                                                                                            J.
           lower growth rates in the long
           term, a strong signal should be
           perceived in the port industry
           about the level of demand for       its
           services. Capacity should then      be
           moderated despite the shortrun
           boom.

           However, if such a key impact       in-
           dustry has a steady long-term
           growth  potential, the demand       for
           new port capacity may be more
           soundly based despite short-run
                                                                                                   44_1
           f luctuations.

           Finally, this analytical tool can
           also help determine whether                                                                                        0
           certain economic developments
           have only a remote bearing on
           port traffic. Those industries
                                                          M
                                all amounts
           which need only sm
           of port services directly and       indi-
           rectly in their production process
           would not materially affect the
           port industry even if their output
           were to double.                                    77MI.I.

           By recognizing such industries as
                                                                            QIO-
           wooden containers, chemical
           fertilizer and mineral mining, agn-
           cultural forestry, and fishery serv-                                                          51-
                                               t
           ices, port management can reac
                                                      R.
           much more rationally to future de
           velopments in the marketplace.
           How Do Dock Strikes Affect the             Creation of an input-output
           Economy?                                   model for this study provided
           Dock strikes always have                   a tool for assessing the
           triggered questions as to their            economic impact of dock
           effects upon the economy.                  strikes.
           Assessments of such effects
           have appeared in the business
           trade press from time to time,
           often with little explanation as    to
           how the assessments were made.
           Such informal analyses have,
           nonetheless, found wide accept-
           ance because of the port in-
           dustry's great importance to
           almost every industry in the
           economy.

                                                                                                                                   45

          To demonstrate how the                         Creation of an input-output model                   Canadian, Mexican, or U.S.
          input-output model can be                      for this study provided a tool for                  ports not affected by a stop-
          used to evaluate the                           assessing the economic impact                       page.
          economic impact of a dock                      of dock strikes. However, impact                    Extent of post-strike recovery
          strike, a simulation was                       measurement cannot be made                          of lost tonnage.
          performed using a                              with great precision because of a
          hypothetical set of                            large number of variables that                 Given these basic assumptions
          assumptions.                                   influence the outcome of such a                about a strike's duration and
                                                         strike.                                        effectiveness, the 1-0 model can
                                                                                                        generate reasonable estimates of
                                                         Key  variables that must be taken              losses in output by the port in-
                                                         into consideration in assessing                dustry. Moreover, by including
                                                         the  impact of a strike are:                   specific assumptions on the re-
                                                              �Duration of the work stop-               sponses of different industries to
                                                              page.                                     a dock strike, its impact can be
                                                              �Geographical extent of the               estimated for the economy as a
                                                              strike (ports tied up).                   whole.
                                                              �Expectations of the duration             Experience gained from past
                                                              and severity of the walkout               dock strikes has shown that the
                                                              and the extent of anticipatory            detrimental impact of a strike
                                                              inventory buildup by ship-                increases exponentially (by geo-
                                                              pers.                                     metric progression) with time.
                                                              �Lead time warning before the             The daily impact becomes more
                                                              strike's onset.                           severe as the strike enters its
                                                              �Amount of cargo divertable to            more advanced stages.
                                                              other modes or.routes such
                                                              as air or overland transport to

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          46

           If a 6 month dock strike were in            Industries that depend only                 The 1-0 model showed that a
           effect on all the Nation's coast-           slightly on the Nation's foreign            2-month strike would result
           lines, waterborne foreign trade             trade for supplies or markets               in a direct and indirect loss
           and most export production                  would not be affected to a great            of $1,258 million to the
           throughout the country would                extent by a strike of short                 United States economy.
           come to a halt. By the end of 6             duration. However, beyond a
           months there would be a logjam              certain amount of   'time, even
           of exports awaiting shipment with           these industries could be injured
           no space left for storing them.             if their domestic suppliers or
           Alternative short-term outlets of           buyers were severely affected by
           Canadian or Mexican ports.or air            such a strike.
           cargo could not possibly absorb
           this high level of overflow.                Therefore, production losses,re-
                                                       sulting from a dock strike should
           Similarly, industries 'that depend          be carefully assessed in each in-
           on imported raw materials with no           dustry by taking into considera-
           domestic substitutes would run              tion its individual characteristics
           into major supply problems that             in export production relative to
           would affect production. Many               total production, existing inven-
           would be forced to shut down for            tories, warehousing space,                  The direct impact would
           the walkout's duration and for a            alternative supplies, potential
           while afterward, until the flow of          bottlenecks, and seasonality of             amount to $803 million.
           imported supplies could be re-              shipments.
           sumed.
                                                       To demonstrate how the input-
           As a consequence of a long port             output model can be used to eval-
           industry shutdown, many in-                 uate the economic impact of a
           dustries unable to withstand the            dock strike, a simulation was
           strike's effects could be forced            performed u  sing a hypothetical
           into bankruptcy with a resulting            set of assumptions. They were for
           increase in unemployment and                a strike:
           other severe economic disrup-                 9 Of 2-months' duration;
           tions.                                        * On the East and Gulf Coasts;
           In contrast, a strike of only 1               e Affecting all waterborne inter-
           month affecting one coast would                 national and all deep-sea
           have only minor impact con-                     domestic cargo except
           sequences for the U.S. economy.                 petroleum;
           Meaningful output losses would                * With 20 percent of struck
           occur mainly within the port                    waterborne traffic (based    on
           industry itself. No major impact                value) diverted to air and
           on production and sales would be                overland transport; and
           noted in such an event, particu-              e With 50 percent recovery of
           larly if the duration of the strike             traffic through anticipatory
           was in line with general expec-                 shipments and post-strike in-
           tations before it began, or if the              ventory adjustments (50 per-
           delay of seasonal cargo was at a                cent based on value).
           minimum.

           The severity of a dock strike's im-
           pact for any work stoppage be-
           tween the 1 month and 6 month
           durations would depend on the
           above assumptions. But with
           each passing day of a shutdown,
           more industries would begin to be
           affected.

                                                                                                                                      47

          The direct impact of such a                 The 1-0 model showed that such a            Th?3 role of expectations is ex-
          strike therefore would                      2-month strike would result in a            tremety important because the im-
          amount to approximately 5                   direct and indirect loss of $1,258          pact of a strike can be greatly
          percent of the port industry's              million to the United States@               cushioned by hedging during the
          annual output.                              economy.                                    warning period. Industries that de-
                                                                                                  pend on exports of their products
                                                      The direct impact within the     port       can rush to get off as many or-
                                                      industry resulting from idling of           ders as possible before the work
                                                      ships, machinery, loading, and all          stoppage deadline; steamship
                                                      other parts of the industry would           companies push up sailing times
                                                      amount to $803 million; the rest            so their ships will not be caught
                                                      of the impact would be diffused             in struck ports; industries that de-
                                                      throughout the economy through              pend on imports stock up before
                                                      a chain of lost sales to the port           the walkout takes place.
                                                      industry.
                                                                                                  Changes in any of the assump-
                                                      The direct impact of such a strike          tions would lead to different
                                                      therefore would amount to ap-               impact figures than those ob-
                                                      proximately 5 percent of the port           tained.
                                                      industry's annual output. A foot-
                                                      note to the above figures is that           It was also assumed that the 2-
                                                      the strike's impact on port in-             month duration of the strike was
                                                      come may be relatively less than            expected, allowing ample warning
                                                      on output to the extent that                for an anticipatory buildup of ex-
                                                      overtime is paid in clearing back-          ports and imports by shippers.
                                                      log after the strike is settled or
                                                      in hedging before the strike is             In general, the closer the expecta-
                                                      called.                                     tions are to the final outcome of
                                                                                                  the strike, the less negative im-
                                                      The assumptions for the. hypothe-           pact the walkout is likely to have.
                                                      tical strike were roughly consis-           Correct expectations allow
                                                      tent with the characteristics of            shippers and carriers alike to
                                                      most U.S. dock strikes during the           react by hedging or accumulating
                                                      last two decades. The 2-month               inventory to reduce the potential
                                                      duration of the strike probably re-         loss of output.
                                                      presents the maximum period in
                                                      which production in most indus-             In contrast, incorrect expecta-
                                                      tries would not be seriously-af-            tions can be costly in overtime
                                                      fected.                                     and storage costs. If no strike is
                                                                                                  expected, hedging usually is at a
                                                      The joint shutdown of East and              minimum. When an unexpected
                                                      Gulf ports has been the rule                strike takes place, losses will
                                                      rather than the exception. These            then be greater. Similarly, if
                                                      two coasts handle approximately             expectations of a prolonged strike
                                                      75 percent of the Nation's water-           do not materialize, short-run
                                                      borne foreign trade., Diversion of          misallocations of resources occur
                                                      20 percent of the struck cargo to           at some cost to the affected
                                                      other modes and coasts could                industries.
                                                      mean traffic increases of 40
                                                      percent to 80 percent for inter-
                                                      national airlines and Pacific and
                                                      Great Lakes ports that remain
                                                      open.

           48

           The 1970 input-output model               The assumption that petroleum             Further Applications
           has many other potential                  movements would not be affected           The 1970 input-output model has
           applications that,can shed                simplified the analysis by elimi-         many other potential applications
           light on various economic                 nating the possibility of a crisis        that can shed light on various
                                                     stemming from energy shortages.           economic questions that are
           questions that are national in            In 1970, petroleum and petro   .leum      national in scope. Simulations
           scope.                                    products accounted for 10 per-            can be made to answer such
                                                     cent of the U.S. waterborne im-           questions as:
                                                     port value and less than 4 percent           9 How many jobs are created
                                                     of the Nation's export value.                  as a result of port facility
                                                                                                    construction of a certain.
                                                     No attempt was made to measure                 size?
                                                     losses in export production and              * What would be the impact on
                                                     some other repercussions which                 the port industry of changes
                                                     may result from dock strikes.
                                                     Such impacts cannot be quan-                   in tax policy?
                                                     tified without- extensive surveys.             What would be the impact on
                                                     Permanent losses of export                     the port industry of changes
                                                     markets during a strike because                in Government expenditures?
                                                     foreign buyers turn to other              Special attention would have to
                                                     countries Are examples of such-           be paid in any further simulations
                                                     unquantified impacts. Domestic            of the model to assure that inter-
                                                     bankruptcies resulting directly           pretation of results be made only
                                                     from dock tie-ups are other               within the limitations of the 1-0
                                                     examples.                                 model. For example, the model
                                                     The simulation was therefore              does not account directly for
                                                     based on all the above assump-            possible supply shortages in the
                                                     tions and confined to the direct          economy or under-utilized labor
                                                                                               and capital resources in specific
                                                     impact on the port industry and           industries.
                                                     the resulting indirect impact
                                                     throughout the economy as
                                                     measured by the port indListry
                                                     multiplier in the model.

                                                              17

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                                                                                                                                   49

           The national 1-0 model also               The model provides estimations             Since different regions tend to be
           can be applied in analyzing               based on conditions existing in            more specialized in the handling
           regional impact of ports.                 the survey year. These must be             of different commodity groups,
                                                     compared with any new develop-             and since regions also tend to
                                                     ments in the economy that are              have a nonhomogenous produc-
                                                     not intrinsic to the model.                tive base, the regional economic
                                                                                                impact of ports cannot be
                                                     Updating results into current              achieved by dividing the national
                                                     dollars is another aspect of the           impact by any simple-weight
                                                     analysis which must be handled             factor.
                                                     with great caution. Assumptions
                                                     of fixed coefficients may hold             For example, it is not appropriate
                                                     less for certain specific industries       to use regional trade volumes by -
                                                     than for others.                           vessels as proxies for regional im-
                                                                                                pacts. Nor should any other
                                                     Moreover, real economic growth             single indicator such as regional
                                                     and inflation vary by industry. It         population, income, or production
                                                     may be insufficient to merely use          serve such a purpose.
                                                     trends in real gross national pro-
                                                     duct growth and price deflators to         The national model can be ex-
                                                     obtain a current dollar impact fig-        tremely useful, however, in draw-
                                                     ure for the port industry. It would        ing some inferences from the
                                                     be preferable to use more precise          linkages of regional ports to spe-
                                                     data'for such purposes.                    cific national industries. The
                                                                                                model is able to pinpoint the
                                                     The national 1-0 model also can            industries that benefit most from
                                                     be applied in analyzing regional           the existence of a port industry.
                                                     impact of ports. Obviously, the            Conversely, the model can pin-
                                                     total impact of the national port          point the port industry that
                                                     industry is made up of the various         benefits most from certain in-
                                                     regional components, with each             dustries. Each region can evalu-
                                                     region contributing its share              ate its own position relative to the
                                                     depending on the amount of                 national standard. In addition, by
                                                     di:rect port.activities taking place       using various adjustments,
                                                     within it and on the direct link-          national impact yardsticks derived
                                                     ages that it has with the rest of          by the model can be refined to
                                                     the economy.                               approximate regional impacts.

                                                                                                For example, regions that handle
                                                                                                bulk items primarily could com-
                                                                                                pensate their impact estimates
                                                                                                per ton by lowering them in some
                                                                                                proportion to the national norm.
                                                                                                On the other hand, regions that
                                                                                                specialize in general cargo com-
                                                                                                modities, or which have a strong
                                                                                                international banking sector,
                                                                                                could compensate in the other di-
                                                                                                rection above the national
                                                                                                average.

           so

           Although these crude methods do        The national model can be
           not provide precise regional           extremely useful, however, in
           measures, they could serve a           drawing some inferences
           useful purpose in gauging overall      from the linkages of regional
           impact trends in various regions.      ports to specific national
           Actually, all of the factors that      industries.
           make a region unique economi-
           cally must be taken into consider-
           ation when making inferences
           from the national model. Not only
           must ratios of bulk to general
           cargo be analyzed but also the
           proportions of export, import, and
           domestic trade as well as regional
           production and consumption
           patterns.

           All of which indicates that while
           the national 1-0 model does pro-
           vide a valuable blueprint for the
           derivation of a regional 1-0 study
           of individual ports, the national
           study in itself is not a substitute
           for a more refined regional
           analysis.

                                                                            4
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                                                                                                                           51

                                                     TABLE 1                                    TABLE2
          IMPACT                                     Interindustry Sales of the                 Expenditures for Port Services by
                                                     U.S. Port Industry - 1970                  Final Demand Sectors -    970
          TABLES                                     ($ Millions)                               ($ Millions)

                                                     Purchasing Industry          Amount        Final Buyers                 Amount
                                                     Port services                  $1,220      Exports                        $5,706
                                                     Food & kindred products          749       Consumption                     3,783
                                                     Primary iron & steel                       Federal Government                756
                                                     manufacturing                    705       Investment                        155
                                                     Petroleum refining               672       State & local government           36
                                                     Primary nonferrous metal mfg.    484       Inventory                          25
                                                     Lumber & wood products           253
                                                     Rubber & misc.
                                                     plastic products                 237
                                                     Chemicals                        223
                                                     New construction                 205
                                                     Fabrics, yarn & thread           199
                                                     Paper& al I led products         183
                                                     Stone & clay mining              181
                                                     Radio, television &
                                                     communication equipment          178
                                                     Other agricultural products      170
                                                     Misc. manufacturing              127
                                                     Federal Government
                                                     enterprises                      114
                                                     Misc. textile goods              112
                                                     Wholesale & retail trade         107
                                                     Iron & ferroalloy ores mining      97
                                                     Nonferrous metal ores mining       84

                                .00""
                                     71

          52

           TABLE3                                     TABLE4                                    TABLE5
           Direct Input Requirements of the           The Direct & Indirect                     Direct and Indirect Personal
           U.S. Port Industry by 20 Leading           Requirements of the U.S. Port             Income Generated by the U.S.
           Supplying Industries - 1970                Industry by 20 Leading Supplying          Port Industry by the Ten Leading
           ($Millions)                                Industries - 1970                         Supplying Industries - 1970
                                                      .($ Millions)                             ($ Millions)
           Supplying Industries          Amount
           Business services                $719      Supplying Industry            Amount      Supplying Industry            Amount
           Other transportation              537      Business Services              $1,042     Other transportation              $359
           Real estate and rental            493      Other transportation             909      Business services                 303
           Finance and insurance             401      Real estate                      787      Finance & insurance               269
           Petroleum refining                323      Finance & insurance              649      Maintenance & repair
           State and local gov't                      Maintenance & repair                      construction                      252
           enterprises                       320      construction                     477      Wholesale & retail trade          172
           Maintenance & repair                       Petroleum refining               456      Printing & publishing             107
           construction                      251      Wholesale & retail               402      Federal Government
           Shipbuilding                      251      State & local                             enterprises                        99
           Business travel &                          government enterprises           395      Communications                     94
           entertainment                     228      Business travel                  311      Primary iron & steel
           Communications                    203      Primary iron & steel             297      manufacturing                      85
           Automobile repair & services      169      Printing & publishing            288      State & local
           Other fabricated                           Communication                    287      government enterprises             81
           metal products                    149      Electric, gas                    280
           Wholesale & retail trade          117      Food & kindred products          261
           Food & kindred products           105      Shipbuilding                     253
           Electric, gas, water                       Crude petroleum                  229
           and sanitary                       88      Primary nonferrous metal         234
           Primary iron & Steel                       Other fabricated metal,          218
           manufacturing                      81      Automobile repair& service       217
           Federal Government                         Paper& allied products           195
           enterprises                        73
           Rubber& misc. plastic
           products                           70
           Primary nonferrous metal
           manufacturing                      68
           General industrial machinery
           &equipment                         61

                                                                                                                                    53

           TABLE6                                        TABLE7                                        TABLE8
           Direct and Indirect Business                  Direct & Indirect Employment                  Direct and Indirect Sales Impact
          .Income Generated by the U.S.                  Impact of the U.S. Port                       of Private Port Investment in the
           Port Industry by the Ten Leading              Industry in the Ten Leading                   20 Leading Supply Industries - 1970
           Supplying Industries - 1970                   Supplying Industries - 1970                   ($ Millions)
           ($ Millions)
                                                         Supplying Industry         Employment         Supplying Industry              Amount
           Supplying Industry              Amount        Other transportation              -45,300     Shipbuilding -                      $664
           Real estate & rental                $433      Business services                 40,600      Communication equipment               146
           Business services                    239      Wholesale & retail                31,800      Pri m'ary iron & steel                93
           Other transportation                 154      Finance & insurance               30,700      New construction                      82
           State & local                                 Maintenance & Repair                          Boat construction                     81
           government enterprises               124      construction                      17,200      Other transportation
           Communications                       102      State and local government                    equipment                             68
           Crude petroleurh                     101      enterprises                       13,400      Nonferrous metal                      66
           Electric, gas and water               76      Printing and publishing           12,100      Motorvehicles &
           Wholesale& retail                     63      Federal Government                            equipment                             59
           Automobile repair                             enterprises                       12,100      Wholesale & retail                    58
           & services                            60      Shipbuilding                      12,000      Heating & plumbing                    46
           Maintenance & repair                          Communications                    11,100      Business services                     39
           services                              40                                                    Other transportation                  3,4
                                                                                                       Engines & tubes                       31
                                                                                                       General industrial machinery          31
                                                                                                       Lumber & wood products                30
                                                                                                       Other fabricated
                                                                                                       metal products                        28
                                                                                                       Finance and insurance                 25
                                                                                                       Real estate and rental                25
                                                                                                       Electronic components                 21
                                                                                                       Electric, gas                         19

           54

          TABLE9                                    TABLE 10
          Direct & Indirect Output Impact           Direct & Indirect Jobs
          Of Government Port Expenditures           Generated By Direct Government
          on the Twenty Leading Supplying           Port Expenditures in the
          Industries - 1970                         Twenty Leading Supplying
          ($ Millions)                              Industries - 1970

          Supplying Industry           Amount       Supplying Industry             Jobs
          New construction                $348      New construction               11,890
          Maintenance & repair                      Wholesale & retail             4,190
          construction.                     83      Business services              4,140                                 LPN
          Business services                 79      Maintenance & repair
          Wholesale & retail                48      construction                   2910
          Heating & plumbing                36      Hotel & personal services      1:390
          Stone & clay products             31         Other transportation        1,240
          Primary iron & steel              31      Stone & clay products          1,120
          Primary nonferrous metal          29      Primary iron & steel            900
          Lumber & wood products            28      Printing & publishing           790
          Other transportation              26      Electric industrial equipment   720
          Electric & gas                    20      Finance & insurance             530
          Construction & mining mach.       19      Construction & mining
          Electric industrial equipment     19      machinery                       520
          Printing & publishing             19      Primary nonferrous metal        490
          Hotel & personal services         18      Other fabricated metal
          Real estate & rental              16      products    -'                  400
          Service industry machines         14      Sh.ipbuilding                   390
          Finance & insurance               13      Office & computing
          Shipbuilding                      13      machines                        350
          Petroleum refining                12      Federal Governme  .nt
                                                    enterprises                     290
                                                    Electric lightih g equipment    250
                                                    Communication                   240
                                                    Forestry & fishing products     220

                                                                                                                                55

            TABLE 11
            Leading Waterborne Export Industries
            in'the United States - 1970

            ($ Mil(ions)

            Industry                                        Value        Water Penetration
            Agricultural products                                                 70%
            Food & kindred products
                                                             2,060                85
            Chemicals                                        1,766                77                       AXIM,
            Construction, manuf. & oil field mchy.           1,372                76
            Primary iron & steel                              972                 77
            Motor vehicles & equipment                        959                 33
            Paper& allied products                            922                 91
            Petroleum refining                                874-                92
            Special industry machinery                        843                 75
            Primary nonferrous metal                          828                 76
            Coal mining                                       646                 100
            Tobacco manufacturing                             645                 98
            General industrial machy.                         539                 67,
            Lumber & wood products                            471                 77
            Service industry m  'achines                      425                 83
            Metal working machy.                              419                 67
            Engines & turbines                                373                 70
            Other fabricated metal products                   362                 66
            Drugs, cleaning & toilet preps                    359                 57
            Ordinance & accessories                           342                 86

            56

         TABLE 12                                   TABLE 13
         Ranking of Waterborne Imports              Increase in Port Industry's Output Resulting from
         by Consuming Industry in the               Additional Sales of Other Key Industries - 1970
         United States - 1970                       (Mil I ions of Dollars per $1 Bi Ilion Sales by Other Industries)
         I$ Millions)
                                                    Industry in Which Output                              Resulting Port Output
         Industry                        Value      Increased $ 1 Billion                                     (in $ millions)
         Food & kindred products         $3,111     Iron & ferro-alloy ores mining                                 $ 61
         Primary nonferrous metals       1,097      Primary nonferrous metal manufacturing                           39
         New construction                1,017      Nonferrous metal ore mining                                      38
         Petroleum refining              1,013      Primary iron & steel                                             35
         Primary iron & steel            1,003      Misc. textile goods                                              35
         Radio, television &                        Petroleum refining                                               33
         comm. equipment                   729      Lumber & wood products                                           30
         Motorvehicles                     675      Forestry &.fishery products                                      25
         Livestock                         479      Leather tanning and industrial leather products                  24
         Rubber & misc.                             Other transportation equipment                                   24
         plastics products                 451      Rubber& misc. plastic products                                   23
         Lumber & wood products            379      Misc. manufacturing                                              21
         Chemicals                         375      Chemicals                                                        20
         Paper& allied products            320      Paper& allied products                                           19
         Heating & plumbing products       272      Paints & allied products                                         19
         Wholesale & retail                255      Metal containers                                                 19
         Other agricultural products       245      Other fabricated metal products                                  18
             Office, computing &                    Plastic & synthetic materials                                    18
         accounting machines               234      Heating & plumbing equipments                                    18
         Electric & gas                    220      Special industry machinery                                       17
         Misc. manufacturing               219
         Business services                 182

                                                                                                                                 57

                                            r7         TABLE 14
                                                       Increase in Port Industry's Output Resulting from
                                                       Ten Percent Additional Sales of Other Key Industries - 1970
                                                         Millions)

                                                       Industry in Which Output Increased                       Resulting Port Output
                                                       Food & kindred products                                            $162
                                                       Primary iron & steel                                               121
                                                       New construction                                                   109
                                                       Petroleum refining                                                 104
                                                         rimary nonferrous metal                                          102
                                                       Chemicals & selected chemical products                              52
                                                       Wholesale & retai 1                                                 49
                                                       Lumber & wood products                                              45"
                                                       Broad & narrow fabrics                                              43
                                                       Rubber & misc. plastic products                                     40
                                                       Paper & al I led products                                           38
                                                       Livestock & livestock products                                      36
                                                       Real estate & rental                                                34
                                                       Other agricultural products                                         33
                                                       Apparel                                                             32
                                                       Radio, television & communication equipment                         31
                                                       Electric & gas                                                      28
                                                       Other fabric metal products                                         26
                                                       Other transportation                                                26
                                                       Heating & plumbing equipment                                        25

                                                                                                     U.S, GOVERNMENT PRINTING OFFICE 1978 0-273-284

            58

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                                                                                                        Report written by:

                                                                                                        Economists
                                                                                                        Jerome Gilbert, project leader
                                                                                                        Nal-Ching Sun
                                                                                                        Amos Ilan

                                                                                                        Technical assistance provided by:
                                                                                                        John Pisani, Maritime Administration and
                                                                                                        Philip M. Ritz, Bureau of Economic Analysis,
                                                                                                        U.S. Department of Commerce
                                                                                                        Consulting Editor
                                                                                                        Walter Hamshar

                                                                                                        Report designed and produced by
                                                                                                        Port Authority Graphic Services

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                                                                                                                    DATE DUE

                                                                                               GAYLORDIN. 2333

                                                                                                             3 66 38 14106@9650