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

                                                                 01926
       Coastal Zone
        Information
         Center
                               COASTAL ZONE
                              INFORMATION CENTER

                     P0TENTIALS FOR A
                           DELAWARE

                 DEEPWATER PORT

                                October, 1970

              HE             Gladstone associates
              554
              .A3
                             ECONOMIC CONSULTANTS
              G56
              1970

                           The preparation of this report was financed in part
                           through an urban planning grant from the Department
                           of Housing and Urban Development, under the provisions
                           of the Housing Act of 1954, as amended.

                                             POTENTIALS FOR A

                                                 DELAWARE

                                              DEEPWATER PORT

                                                 Prepared for
                                          DelawareState Planning OfficeG,

                                                October, 1970

                                                 DEPARTMENT OF COMMERCE NOAA
                                           COASTAL SERVICES CENTER
                                           2234 SOUTH HOBSON AV-ENUE
                                          CHARLESTON, SC 29405-2413

                                                     by

                                              Gladstone Associates
                                               Washington, D.C.

                                       PrOVOrtY Of   CSC Library
        1-u

                                                                                                MAY 16 1974

                                                      TABLE OF CONTENTS

                                                                                                           Page

                          PURPOSE

                          CONCLUSIONS

                          DETERMINANTS OF POTENTIALS

                                    General Transportation Factors

                                    Specific Parameters                                                       5
                                    Long Term Supply and Demand                                               13

                          DETAILED ANALYSIS

                                  Strong Potentials

                                    Petroleum                                                                76

                                    Iron Ore                                                                 32

                                  Weak Potentials

                                    Coal                                                                     42

                                    Grain                                                                    52

                                    Forest Products                                                          62

                                    General Cargo                                                            66

                          SUMMARY ANALYSIS AND COST SAVINGS                                                  75

                          ADDENDUM                                                                           85

                          APPENDICES                                                                        88

                          DEFINITIONS                                                                      725

                          REFERENCES                                                                       127

                                                             PURPOSE

                           The purpose of this report is to analyze the market potentials for a deepwater port
                   facility in the lower Delaware Bay.

                           While those items listed below are excluded from this analysis and to some extent
                   are being covered by other studies, nonetheless we recognize their relevance. These items
                   are appropriate for discussion in following stages based, in part, on the market potentials
                   analyzed in this report.

                           Items excluded from analysis at this stage are:

                           A     Public costs and benefits.
                           B     Economic impact on Southern Delaware.
                           C     Economic impact on Port of Wilmington.
                           D     Specific design or location considerations.
                           E     Environmental and ecological impact.
                           IF    Specific regulatory or fiscal policies of state government.

                                                                   CONCLUSIONS

                           A     At least one deepwater port facility will be built on the East Coast of North
                                 America in the 1970's.

                           B     Once a cleepwater port facility is in operation on the East Coast, the economic
                                 feasibility of a second deepwater port will be seriously diminished. It is unlike-
                                 ly that a second East Coast facility will be built during the 1970's.

                           C     Taking all factors into account, the Delaware Bay region is at least as advan-
                                 tageous as any of the other four locations given recent consideration, and
                                 probably more so. These other locations include Long Island Sound, Boston,
                                 Maine, and Nova Scotia.

                           D     Such a port will principally serve as a trans-shipment point for petroleum
                                 (POL) and iron ore imports. Trans-shipment of petroleum may be to smaller
                                 ships or eventually to a pipeline.

                           E     From a purely economic and technical point of view, on-shore development of
                                 industrial facilities is not necessary for a cleepwater port to be feasible. How-
                                 ever, certain industries could probably derive substantial economies from
                                 locating close to such a port facility. This is particularly true of the petro-
                                 leum industry. Therefore substantial pressures for on-shore industrial develop-
                                 ment should be expected.

                           F     Non-port related development might be affected indirectly, either positively
                                 or negatively. The magnitude and character of this impact has not been
                                 evaluated.

                           G     The private sector savings from a cleepwater port, as compared to present
                                 transportation systems, are likely to be on the order of $72 million to $105
                                 million annually by 1980, increasing to $205 million to $293 million by the
                                 late I 990's. These savings would be substantially decreased if at-sea POL
                                 transfers are not prohibited.

                           H     Under existing tax structures, little if any of these private sector savings
                                 would accrue as revenue to the State of Delaware. Since most commodities
                                 passing through the cleepwater port facility would be imports, not taxable
                                 by states, Delaware must carefully structure the way in which ft gains
                                 revenue from this facility.

                           I     This analysis has taken into account private market factors alone. We
                                 believe that the potential public costs and public benefits, including eco-
                                 logical and environmental considerations, could be of substantial significance
                                 in establishing the desirability of this project. These public sector factors
                                 could have a determining effect on whether such a facility should be built
                                 and the specific location and composition of the facility.

                                                                           ii

                                    DETERMINANTS OF POTENTIALS

      I

                        The potentials of a new deepwater port in lower Delaware Bay are analyzed in this section of
                        the report. General transportation factors are outlined first and serve as an introduction to
                        the second part of this section covering specific transportation parameters as they relate to a
                        deepwater port. Finally, long term supply and demand factors that relate to transporting specific
                        commodities are covered.

                                                  General Transportation Factors

                           Before actual and potential product movements can be analyzed in terms of volumes,
                   distance, routes and growth rates, it is necessary.to establish principles of transportation systems.
                   The following list outlines these principles:

                   Geperal Considerations

                   A       The value of a product may be changed simply by changing its location.

                   B       No mode of transportation is inherently more efficient than any other mode of
                           transportation.

                   C       The economics of transportation is not measured in distance but rather in the cost
                           of overcoming distance. A journey of 100 miles may be more expensive than a
                           journey of 1,000 miles depending upon: (1) the mode of transportation, (2) the
                           type of commodity transported, (3) the. configuration of the terrain or sea, and
                           (4) the terminal facilities at origin and destination.

                   Intermodal Transportation

                   D       A unified transportation system assures efficient movement in a worldwide integrated
                           network of transportation modes.

                   E       The employment of several different modes of transportation in a unified system
                           can offer substantial cost savings. A cleepwater port functions as a point at which two
                           modes of transportation can interchange, creating a more efficient transportation system.

                     Volume and Distance

                     F      As both the volume and distance a commodity is transported increases, the cost
                            per ton/mile decreases.

                     G      Economies are achieved in transportation systems by moving large cargos over long

                            distances.

                          H        Oil tankers, as single purpose modes of transport, have greater capacities than multi-
                                   purpose modes of transport such as bulk carriers.

                          Freight Rates

                          I        In the past, special low freight rates were established for high volume, frequent move-
                                   ment of bulk commodities over the same route. A new pattern of commodity movement
                                   may not qualify for these low rates even though the distance travelled is the same or
                                   less than established routes.

                                   Freight rates between frequently employed origins and destinations are lower for all
                                   modes of transportation.

                          K        Freight rates are generally lower on bulk raw materials than on semi-manufactured
                                   or finished products.

                          Technology

                          L        Rapid technological change in the past 20 years has revolutionized transportation.
                                   The payload capacity of all forms of transportation has increased greatly. The most
                                   obvious example of this is the unprecedented growth in the capacity of petroleum tank
                                   ships.

                          M        LASH, Seabee, and containerization are technological innovations for the handling of high
                                   value/low density products such as general cargo.

                          N        Delivery capacity has increased beyond the ability of receiving systems (ports) to
                                   operate efficiently.

                          0        As the deadweight tonnage of a ship increases, its draft increases.

                          Linka

                          P        Historically established transportation routes and circulation patterns tend to remain
                                   intact due to inertia to the point of inefficiency.

                          Q        Established transportation routes and circulation patterns between origins and destinations
                                   tend to become stronger with time and usage.

                                                                           2

                   R       The location of manufacturers, transportation facilities, and associated industries are
                           often fixed by transportation linkages. Once fixed, these facilities may make it difficult
                           to reorient a transportation network.

                   S       Freight rates generally are lowest on commodities moving between strongly linked
                           points.

                   T       The Jones Act requires that ocean freight domestic movement travel in ships built in the United
                           States and operated under American flags of registry.

                   Transfer Terminals

                   U       The most significant cost in intermodal shipments is terminal handling charges at
                           points of trans-shipment. Whether a commodity moves an additional 50 or 300 miles
                           after trans-shipment on a 10,000 miles journey has little affect on total transportation costs.

                   V       Given the location of East Coast markets and the significance of trans-shipment costs,
                           no port site from Maine to Virginia has a strong locational advantage as a transfer

                           terminal.

                                                                   3

                                                         Specific Parameters

                     TANKERS

                            Advancing shipbuilding technology, increasingly large demand for petroleum imports,
                     and greater distance of petroleum sources have been the impetus for the construction of super-
                     tankers. During the past ten years there has been an increase in the size of petroleum tankers
                     from the standard T-2 tanker of approximately 16,700 deadweight tons to supertankers in ex-
                     cess of 200,000 deadweight tons with drafts of more than 50 feet. Existing harbors in the United
                     States cannot handle these new supertankers because of draft restrictions. One solution to
                     this problem could be construction of an off-shore deepwater trans-shipment terminal.

                            Since 1960, the average size of new tankers has increased 150 percent, from 42,000
                     deadweight tons (DWT) to 105,000 DWT. Table I shows that ships in excess of 75,000 DWT
                     have such deep drafts as to prohibit their use of the Delaware River and Bay which has a channel
                     depth of 40 feet.

                       Table 1                     SUPERTANKER CHARACTERISTICS

                             DWT              Length             Breadth                Depth             Draft

                            77,000            752'                    80'                59'              44'
                          100,000             861'                  128'                 61'              44.5'
                          101,550             808'                  132'                 72'
                          130,000             858'                  147'                 75'              53'
                          151,000             951'                  156'                 79'              53'
                          173,000           11013,                  159'                 81'              54'
                          175,000           1,032'                  159'                 84'              49.5'
                          213,000           1 043'                  161'                 82'
                          214,000           1 013'                  159 1
                          224,000           1,023'                  160'                 85'              651
                          240,000           11100,                  1701                                  63'
                          250,000           1,056'                  171'                 88'              68 1
                          312,000           1,142'                  1761                                  80'
                          370,000             -                     -                                     89'
                          Source:    Gladstone Associates

                                                                  5

                               The increase in vessel sizes experienced in the 1960's is an ticipated to continue at an
                        even more rapid pace in the future. As seen in table 2, by 1983 it is projected that there
                        will be more than 400 ships with capacities in excess of one quarter million DWT.

                                   Table 2            PROJECTED SIZE AND NUMBER OF

                                                           TANK SHIPS IN 1983

                              Vessel Deadweight                     Number of Vessels
                              Tons (in thousands)                     Actual 1966               Projected 1983

                               10  -  50                                   2540                      2110
                               50  -100                                     288                      1189
                              100  -125                                      29                       397
                              125  -150                                      5                          48
                              150  -200                                      2                        2124
                              200  -300                                      -                        371
                              400  -600                                      -                          45
                              700  -800                                      -                        (1)
                              1,000                                          -                        (1)

                              (1) The number of ships in this class is       at present underterminable
                                   However, there should be a considerable number of ships in the
                                   700-800,000 DWT class and it is possible that there will be ships
                                   in the 1,000,000 DWT class by 1983.
                              Source: Litton Systems Inc, U. S. Army Corps of Engineers and Gladstone
                                       Associates.

                               Table 3, which shows ships under construction in 1968, lends support to these projections.
                        Although the number of ships with capacity of more than 125,000 DWT will be small,
                        they will have a great impact on petroleum movements. In 1966, only 7 tank ships had capa-
                        cities in excess of 125,000 DWT. By 1983, almost 700 tankers will have capacities in excess
                        of 125,000 DWT. These 700 ships will account for over 60 percent of the total tanker capacity
                        by 1983. By the year 2000, ships in this size class will account for 75 percent of total tanker
                        capacity.

                                                                    6

                           Table 3         DEADWEIGHT TONNAGE ANALYSIS OF TANK SHIPS
                                                   OF MORE THAN 175,000 DWT
                                             UNDER CONSTRUCTION OR ON ORDER AS OF
                                                      DECEMBER 31  1968

                             Deadweight
                             Tonnage In
                             Thousands-                 Number of Ships               Total DWT

                             175 to 180                          3                      526,000
                             180  to 185                         3                      540,000
                             185  to 190                         1                      188,000
                             190  to 195                         2                      380,000
                             195  to 200                         2                      395,000
                             200  to 205                         1                      200,000
                             205  to 210                         8                    1,663,000
                             210  to @l 5                      63                     13,304,000
                             215  to 220                       18                     3,874,000
                             220  to 225                       10                     2,218,000
                             225  to 230                       13                     2,959,000
                             230  to 235                         4                      922,000
                             240  to 245                         7                    1,683,000
                             250  to 270                       43                     10,953,000
                             Above 310                           5                    1,618,000

                             Source:   Sun Oil Company, "World Tank Ship Analysis."

                          Ships in excess of 125,000 DWT have drafts of 50 feet or more. Presently, ships with
                   drafts of 50 feet cannot serve any East Coast port. Furthermore, only 21 percent of the world's
                   ports have a depth of 50 feet or more. Only 6 of these are located in the United States, all of

                   which are on the West Coast.

                          The graph following indicates the percentage of tanker capacity which will be found
                   in tankers with drafts in excess of 50 feet. Clearly, 75 percent of all petroleum movements by
                   the year 2000 will be unable to utilize any existing port along the East Coast of the United

                   States.

                                                             7

                                                                 Graph .1

                                            PERCENT OF CAPACITY OF FLEET IN SHIPS WITH

                                                      MORE THAN 50 FOOT DRAFT

                                     100 -

                                      90-

                                      80-

                                                                                              Tankers
                                      70-

                                >1    60-
                                ot

                                      50
                                U

                                0

                                      40

                                      30-

                                      20 -
                                                                                              Ore/Bulk Oil
                                      10 -                                                     Dry Bulk
                                                              . ..................
                                                                       -----------------     1 General Cargo

                                       1960         1970              1983                 2000

                                                                 Year

                                         Source: Gladstone Associates

                              Because of thecost savings involved in the operation of superships, the Gulf Oil
                       Corporation has set up an off-shore, deepwater terminal in Bantry Bay, Ireland. This facility
                       allows Gulf Oil Corporation to minimize the cost of construction per deadweight ton of tanker
                       and the cost of transporting petroleum products on the Persian Gulf - Northern Europe route.

                                The main impetus for increases in tanker size and capacity has been cost savings. These
                       savings are in the form of both construction cost and transportation cost. As the size of the tanker
                       increases construction cost per deadweight ton decreases. On trips of more than 6,000 nautical
                       miles, tankers with more than 200,000 DWT capacity experience increased cost savings. These
                       pheonomena are displayed on the opposite page.

                                                                     8

                                                                                          G,@ph 2

                                                                        THE RELATIONSHIP BETWEEN VESSEL SIZE
                                                                                AND CONSTRUCTION COST

                                                                   COST pER VESSEL
                                                                   DEADWF IGH7 TONS
                                                                     (DOLLARS)
                                                                       100

                                                                        7

                                                                        60

                                                                       5 90 70 90 100 120   ISO 170  200                300
                                                                                       VESSEL DEADWEIGHT TONS
                                                                                           CIN THOUSANDS)

                                                                S,,,c,: Th, Amer,- A6@1 - @f P- A@th,r t.e5

                                                                                             Graph 3

                                                                     THE RELATIONSHIP BETWEEN
                                      VESSEL SIZE, TRANSPORTATION COST AND ROUTE LENGTH

                           COST PER
               BARREL OF OIL TRANSPORTED
                           (DOLLARS)
                           2.00

                            1.50
                                                                                              10,000 NAUTICAL M ILES - ONE WAY

                                                                                                   8500 NAUTICAL MILES
                           I. .00                                                                       6000 NAUTICAL MILES
                                                                                                              3000 NAUTICAL MILES

                                                                                                                  1500 NAUTICAL MILES

                                                                                                                       500 NAUTICAL MILES

                              .50

                                                                                                       -7-

                               01
                                 0               100            200               300             400              500              600              700              800
                                                                                 VESSEL DEADWEIGHT TONS
                                                                                            (THOUSANDS)
                  7.111 Barrels Per Long Ton                                                                            Source: The American Association of Port Authorities

                           Technology has made superships feasible and their cost savings necessarily will lead to
                     the construction of deepwater ports at major petroleum markets.

                     DRYBULKCARRIERS

                           A dry bulk carrier is a ship which i:arries coal, iron ore, grain, and other dry commodities
                     shipped in bulk.

                           Although substantial increases in the size of dry bulk carriers have been experienced
                     in the past few years, only a small number of these ships will require a deepwater or an off-
                     shore terminal by the year 2000. Dry bulk ships will necessarily be limited in size by the nature
                     of their cargo and the industries they serve.

                           Since 1965, the increase in the size of all dry bulk carriers has been substantial. The
                     average size of ore and ore-bulk-oil carriers (OBO) has nearly doubled in the two year period,
                     1965 - 1967. These phenomena are demonstrated in table 4.

                         Table 4        AVERAGE SIZE OF BULK CARRIERS CONSTRUCTED, 1940-1967

                                                            In Thousands of DWT

                                                                                               l/
                         Year                Bulk                   -Ore                   OB04i
                                            (alTT

                         1940                 12                    14.7

                         1945                 19                    17.7                    13.5

                         1950                 19                    23.0                    21.7

                         1965                 25                    37.0                    36.7

                         1966                 33                    46.0                    47.0

                         1967                 39                    63.0                    80.0

                         YOre,. Bulk Oi 1

                         Source: American Association     of Port Authorities.

                                                            10

                              Even though 45 percent of the bulk fleet capacity will be in vessels of more than 50,000
                      DWT by the year 1983, it is projected that only 5 percent Qf the capacity will be in ships having
                      50 foot drafts. It is anticipated that this will increase to 8 percent by the year 2000.

                              While the main impetus for switching to larger dry bulk carriers has been similar to
                      tfiat of petrot,6um tankers, projected increases will not be as significant. Bulk carriers must re-
                      spond to a series of fixed conditions in the form of industry location and product mixes. Con-
                      sequently, they are restricted in size due to a need for greater flexibility.

                      GENERA L CA RGO CA RRIERS

                              General cargo carriers move a diverse group of products which are higher in value and
                      lower in density than products.moved by bulk carriers.

                              Because general cargo carriers must be highly adaptable to varying localized factors, a
                      variety of products, and a great number of ports, there have been no trends to significantly
                      larger general cargo carriers as is the case with tankers and bulk carriers, nor is it anticipated
                      that ther will be.

                                Conventional general cargo carriers are below 20,000 deadweight tons and therefore
                      incur no difficulty in servicing any East Coast port due to draft problems. Container'iz'ing
                      cargo will have little effect on general cargo carriers. The largest container ship in service is the
                      21,900 DWT 'Encounter. Bay' which draws only 35 feet of water when fully loaded. While
                      container ships of the future will carry 2,500 containers they will not increase appreciably in their
                      draft requirements. It is projected that the largest container ship in the year 2000 will carry
                      4,000 containers. A ship of this size draws only 35 to 40 feet of water.

                      RAILROADS

                              Railroad freight rates, historically established, permit the movement of bulk commod-
                      ities at lower rates than those applied to general cargo. Freight rates are generally established on
                      commodities moving in large volume on a continuous basis. These rates tend to favor ports which
                      have historically handled the greatest volume of a given commodity.

                            Coal moving from the Applalachian coal fields to East Coast ports moves for the most
                    part at lower rates to Hampton Roads.

                                                                   11

                                 Any area or port that presently is not serviced by a first-class railroad line has little
                      chance of obtaining one. New track construction is very expensive and seldom undertaken.
                      Considering the strong linkage established between the Appalachian coal fields and Hampton
                      Roads, it is unlikely that a new cleepwater port would generate enough coal export traffic to
                      warrant construction of a feeder line.

                         PIPELINES

                                 Generally, pipelines are the most expensive form of transportation to construct and the
                         least expensive to operate. The major commodity that moves via pipeline is petroleum. However,
                         natural gas, coal slurry, and other forms of slurry can also use pipelines as a means of transport.
                         A new pipeline of coal slurry was recently activated in southern Utah.

                                 Efficient use of a pipeline requires the use of large diameter pipes 24 hours per day at
                         full capacity. For the most part, United States petroleum movements could only justify a pipe-
                         line for *short distance transport.

                                 By the year 2000 it is anticipated that pipeline technology will have advanced to the
                         point that many products will move via this form of transport.

                                                                      12

                                                 Long Term Supply and Demand

                            Potential demand for an East Coast cleepwater port is analyzed in this section with re-
                    gard to commodity volumes, commodity types, and route lengths as they relate to the geo-
                    graphic location of product sources and demands. The following contains a commodity analysis
                    of long term supply and demand.

                    COAL

                            Domestic coal production has remained relatively constant since 1935. This is reflected
                    in coal production statistics which indicate an average annual increase of only one percent in the
                    past three decades. Demand for domestic coal has also stabilized.

                            One half billion tons of coal was produced in 1966, 93 percent of which was domestically
                 consumed. Of the remaining 7 percent, one third was exported to Japan with anticipation
                 that this will increase to two th-irds by the year 2000.

                            The East Coast accounts for 75 percent of total United States coal production even
                 though only one half of United States coal reserves are located there.

                            East Coast ports handle virtually all United States coal exports, 90 percentof which are
                    exported through Hampton Roads. Hampton Roads is particularly well located for coal ex-
                    ports because of its proximity to 52 percent of coal production areas and favorable freight
                    rates from these sources.

                            Neither the present level nor the anticipated increase of coal exports is sufficient to
                    warrant the use of superships. While the use of superships could be justified because of distance
                    between Japan and the United States, there would be insufficient volume to warrant their use.

                    IRON ORE

                            Major world sources of iron ore are located in Africa, South America, and Canada. Presently
                    75 percent of United States iron ore imports come from either Canada or Venezuela, areas
                    too close for the feasible use of superships. With changing technology, it is projected that by
                    the year 2000, iron ore reserves in Africa and the West Coast of South America will be more
                    accessible; hence the development of these reserves will be facilitated by the use of superships.

                                                                   13

                                  The demand for iron ore in the United States will increase at an average annual rate
                          of 2 percent to a level of 35 million tons in the year 2000. Over 80 percent of these imports
                          will enter the East Coast through either Baltimore or the Delaware River and Bay.

                                  Thus, by 2000, with continuing steady growth, a high volume, and increased distance
                          superships in the 100,000 to 200,000 DWT class will be used increasingly to import iron ore.

                          GRAINS

                                  Demand for United States grain in Africa and Asia is expected to increase at an average
                          annual rate of 10 percent while European demand will remain constant.

                                  Wheat, sorghum, and corn are predominantly located in the mid-west and far western
                          states whereas soybeans are located throughout the country. Consequently, 75 percent of
                          United States grains are exported through the gulf ports.

                                  An average annual increase of 4 percent and levels of 50 to 100 million tons moving
                          increasingly greater distances are a sufficient impetus for superships. However, due to the
                          location of domestic sources the Delaware River and Bay is not suitably located for deepwater
                          grain traffic.

                          FORESTPRODUCTS

                                  While total East Coast import and export of forest products has increased at an average
                          annual rate of 9 percent through the 1960's, it has achieved a present level of only 5 million
                          tons. This volume is insufficient to support even the marginal use of superships.

                          PETROLEUM

                                  Presently 82 percent of total United States demand for petroleum is met by domestic
                          production. The remaining 18 percent, or 100 million tons, is met through imports. There
                          will be an increasing reliance on oil imports to meet projected domesti c: demands.

                                  Domestic sources of oil are located in the central and western states and supply about
                          95 percent of local demand. Consequently 70 percent of United States petroleum imports flow
                          into East Coast ports.

                                  New York, with its demand for natural oil to be burned as industrial and residential
                          fuel, and Delaware, with 67 percent of the East Coast refinery capacity, account for 70 percent

                                                                           14

                     of total East Coast oil imports. It is projected that these two ports will account for 75 percent
                     of total East Coast oil imports by the year 2000.

                            Presently 75 percent of United States oil imports come from the Caribbean. This dis-
                     tance is insufficient to warrant the use of superships. However, projections indicate oil coming
                     from Africa and the Middle East (hauls in excess of 6,000 miles) will account for approximately
                     55 percent of total United States oil imports by the year 2000. African and Middle East oil
                     imports will reach a level of 200 million tons by the year 2000, 140 million tons of which will
                     enter the United States through East Coast ports.

                            In the 1960's there was a gufficient volume of petroleum moving increasingly greater
                     distances to stimulate the trend towards the use of supertankers. It is anticipated that there
                     will be even greater increases in both volume and distance of petroleum movement and a con-
                     sequent demand for an increasing number of supertankers. Given the demand for petroleum
                     imports on the East Coast and given the fact that 70 percent of all petroleum will move in
                     supertankers by the year 2000, the demand for a deepwater transfer terminal will be over-
                     whelming.

                     SUMMARY

                            This section has set forth a commodity by commodity analysis that considers the
                     interrelationships among transportation factors as they effect long term supply and demand.
                     These factors are related-to the need for a deepwater port along the. East Coast of the United

                     States.

                          A deepwater terminal appears to be most significant for the handling of petroleum pro-
                  ducts.  Because of increased use of supertankers and increased demanda deepwater port, in all
                  probability, will be constructed along the East Coast of North America by 1980. The lower
                  Delaware Bay would be a good choice from a market view point.

                            While the movement of POL justifies the construction of a deepwater port, such a
                 port could not be justified for movement of the other commodities discussed above with
                 the possible exception of iron ore.

                                                                  15

                                       DETAILED ANALYSIS

                        This section analyzes the movements of commodities to and from the East Coast with special em-
                        phasis on potential need for a deepwater trans-shipment terminal. The analyses encompass bulk
                        commodities and general cargoes with projections to the year 2000. The opening section covers
                        commodities with strong deepwater trans-shipment potentials, followed by a section on com-
                        modities with weak potentials.

                                                     Strong Potentials

                           PETROLEUM IMPORTS

                           Introduction

                                    Petroleum and oil are words used interchangeably to mean crude and residual oils.
                           These are natural or semi-refined oils which must either be further refined or, if of high enough
                           quality, burned as home heating oil or industrial fuel.

                                    World demand for petroleum (POL) has increased dramatically since the Second World
                           War. Most indications are that this trend will continue in the future at an unprecedented rate.

                                    At present, 82 percent of total United States demand for petroleum is met by domestic
                           production. The remaining 18 percent, 100 million tons, is met by imports. There will be an
                           increasing reliance on oil imports to meet projected increases in domestic demands.

                 Table 5                                      FLOW OF CRUDE AND RESIDUAL OILS:
                                                               EAST COAST PORTS, 1961 AND 1968
                                                                   (Thousands of Long Tons)

                                            Imports                         Receipts     Domestic      5.hipments               Net Flow Inboundl/
                                        1961           1968            1961           1968           1961         1968          1961            1968
                 Delaware River        22,491.5      29,534.2        15,853.5       16,126.8         614.7         174.4       37,730.3       45.486.6
                 New York              20,004.7      32,936.8        11,847.3        8,581.8       1,842.6      1,633.0        30,009.4       39,885.6
                 New England            7,061.4      13,869.0         2,426.1        4,158.4         396.3      2,259.4         9,121.9       15,768.0

                 Hampton Roads
                    and South           5,114.7        8,066.6        1,845.5        1,100.0       1,079.4      2,305.8         5,880.8        6,860.7
                 Baltimore              2,758.4        3,839.0        1,497.4        1,424.3-        li9.5          277.5       4,136.3        4,985.8
                 Total Coast           62,545.4      88,245.6        33,469.8       31,391.3       4,052.5      6,650.1        91,962.7      112,986,7
                                     (72,600)?/ (10.7,426)?/

                 ]J Imports and Receipts less Shipments.

                      Numbers in parentheses include oil imported
                      thru Maine to Canada.
                 SOURCE: Army Corps of Engineers and Gladstone Associftes.

                                                                               16

                              The movement of petroleum in waterborne commerce is a result of the distance between the
                      producing wells and the refining facilities for petroleum products. The movement of large
                      quantities of POL over great distances can be accomplished at significant cost savings in huge
                      skips.

                              Since 70 percent of American petroleum imports pass through East Coast ports, a
                      deepwater port in the lower Delaware could handle huge quantities of oil due to the enormous
                      transportation cost savings which accrue from the movement of petroleum in supertankers.

                      Petroleum Imports in the Past Decade

                              The figures in Table 5 indicate total East Coast oil imports have increased 6 percent
                      annually since 1961 to a level of 88 million long tons in 1968. However, domestic oil receipts
                      during the same period declined 1 percent annually to 31 million long tons.

                              The figures in Table 6 show the extent to which oil imports are becoming increasingly
                      important as a source for meeting domestic consumption of petroleum products. In 1961,.
                      domestic oil accounted for 32 percent of total East Coast petroleum movements. This figure
                      shrank to 22 percent in 1968.

                              Since 1961, Delaware River and Bay imports have risen 4.5 percent annually to a level
                      of 29.5 million long tons. In addition to imports, Delaware River and Bay ports received 16
                      million long tons of petroleum in domestic shipments.
                            Table 6                IMPOLRTSY AS A PERCENT OF TOTAL PORT
                                               OIL2--/ -HANDLING BY MAJOR PORTS, 1961 - 1968

                                                           imports as Percent of Net Inbound                 Annual
                                Port Area                     1961                    1968                 % Change
                            Delaware River                  59.6%                   64.9%                    + 0.76%

                            New York                        63.9%                   82.4%                    + 2.64%

                            Rest of East Coast              82.8%                   93.4%                    + 1.51%

                            Total Coast                     68.0%                   78.1%                    + 1.44%

                            I/ Excludes oil imports into Portland for
                                pipeline shipment to Canada.

                            21 Crude and    residual only.

                            SOURCE: Amy    Corps of Engineers and Gladstone      Associates.

                                                                    17

                              The Delaware River and Bay ports handled one-thifd of all East Coast oil imports in
                        1968, second only to New York which handled 37 percent On the other hand, the Delaware
                        River and Bay ports handled 51 percent of all East Coast domestic receipts in 1968. While
                        65 percent of all Delaware River and Bay inbound oil was imported, it has shown among all
                        East Coast ports the slowest growth in, and least reliance upon, imported oil to meet its consump-
                        tion requirements.

                                                           Graph 4

                            100 -

                                                                                             Rest of East Coast

                              80 -                                                           New York
                        0

                        0
                                                                                              Delaware River
                                                              .01

                              60
                        z
                        4--
                        0

                        iA
                        rz    40
                        LA
                        4@
                        1_
                        0
                        a-
                        E

                              20

                                0
                                                             1961                         1968

                                                             Year

                                THE GROWING IMPORTANCE OF IMPORTED OIL, 1961 -1968

                                                                 18

                      Projected Petroleum Imports

                               Among those groups which have attempted to forecast future oil imports, there is a wide
                      range of results due to varying assumptions necessary in multiple contingency analysis.

                               First, some projections include oil imported into Portland, Maine for pipeline shipment
                      to Canada whereas other projections do not include these impQrts.

                               Second, import projections are based on assumptions regarding domestic supply and
                      demand for petroleum. Domestic production projections vary due to the need to estimate
                      existing production sources as well as possible future domestic production (such as Alaskan
                      oil deposits and western shale reserves). Furthermore, the government can have a large impact
                      on projected oil imports through policies dealing with oil import quotas, off-shore drilling, and
                      indirectly port development which might otherwise permit the use of supertankers.

                               Perhaps the most important and difficult determinant of oil imports to project is domestic
                      demand for POL. The difficulty of projecting domestic demand results from multiple contingency
                      analyses of technological, environment, economic, and social changes and their possible affects
                      on petroleum use in the major consuming sectors. Factors strongly influencing increased petrol-
                      eum use include:

                               A  Economic and environmental factors affecting a relative decline
                                  in the demand for coal, nuclear fuel for power generation, and gas.

                               B  Accelerated substitution of plastics for other materials in a wide variety

                                  of uses.

                               C  New uses for petroleum.

                               Factors which might decrease the use of petroleum products include:

                               A  Greatly increased use of electricity generated by non-petroleum

                                  fuels.

                               B  Rapid growth in transportation systems utilizing non-petroleum
                                  sources of power.

                               C  Environment restrictions on the use of petroleum fueL

                                                                  19

                                      D      Revolutionary advancements in technology of substitutable raw
                                             materials and energy sources such as coal and oil shale.

                                      E      Slower population and economic growth rates than those projected
                                             for the forecast base.

                                      All of these considerations require assumptions which invariably differ for each group
                             making projections. Consequently, we have listed three or four projections of oil imports made
                             by both private and public agencies and have taken their mean. All projection information
                             referred to below is based upon the mean of these projections, thereby normalizing any grossly
                             incorrect assumptions which. might have been made in order to arrive at any single projection.

                                      Table 7 and graph 5 show United States oil imports reaching a projected level of 360
                             million long tons by the year 2000. This will represent a 5.5 percent average annual increase
                             compared with a historic growth rate of 10.6 percent annually in the 1950's.

                                        Table 7                     PROJECTED U.S. OIL* IMPORTS

                                                                                (Millions of Long Tons)
                                                                                        2/                  U S              Mean
                                        Year           Actual       Littonj-/     AAW:-1    Newportq/ Gover'nment4-/      Projprtion

                                        1953             55.0

                                        1963            113.4

                                        1973                         196.5        140.0        150.4        150.0            159.2
                                        1983                         307.4        170.0        M.2          180.0            214.9

                                        2003                         499.5        285.0        343.7        318.0            361.6

                                                                           (Averaqt Annual Percent Increase)

                                        1953-1963         10.6%

                                        1963-1973                       6.2%         2.4%        3.3%          3.2%             4.0%

                                        1973-1983                       5.6%         2.1%        3.4%          2.0%             3.5%

                                        1983-2003                       3.1%         3.4%        3.5%          3.8%             3.4%

                                        1963-2003                       8.5%         3.8%        5.1%          4.5%             5.5%

                                           These are projections for crude and residual oil only.

                                                    )J Littons Systems, Inc., 1968.

                                                    2/ American Association of Port Authorities, 1968.

                                                        Newport News Shipbuilding and Dry Dock Company, 1970.
                                                        Unpublished Department of Interior working paper.

                                                                                  20

                            400

                            350

                            300

                            250

                      tA
                      C
                      0

                      0
                      -J
                      4-    200
                      0

                      .0

                            150

                            100 -

                            50 -

                              0
                               1953       1963         1973         1983        2003    Year

                                                                     v
                                   Actu al                        Projection

                                                     Graph 5

                                           PROJECTED U.S. OIL IMPORTS

                                                     21

                                  Oil imports entering the United States through East Coast ports increased 7.4 percent
                          annually in the 1 950's and 5.7 percent in the 1960's. While this is slightly less than the increase
                          experienced for the United States as a whole, it is projected'that the East Coast will maintain
                          the same growth rate for imports as the entire, United States until the year 2000. Consequently,
                          East Coast oil imports will continue to represent 70 percent of all United States oil imports.

                               Table 8                  PROJECTED EAST COAST OIL* IMPORTS

                                                                        (Millions of Long Tons)
                                                                                                                      Mean
                               Year           Actuall/        LittonV           AAPA!/      N ewportA-/             PrOpction

                               1953              48.0

                               1963              83.6

                               1968              107.4          110.7            88.8          106.8                  102.1

                               1973                             137.7             94.0         130.0                  120.6

                               1983                             207.3           111.0          175.0                  164.4

                               2003                             327.8           155.0          276.0                  252.9

                                                                  (Average Annual Percent Increase)

                               1953-1963          7.4%

                               1963-1968          5.7%            6.5%            1.2%            5.6%                   4.4%

                               1968-1973                          4.9%            1.2%            4.3%                   3.6%

                               1973-1983                          5.1%            1.8%            3.5%                   3.6%

                               1983-2003                          2.9%            2.0%            2.9%                   2.7%

                               1963-2003                          7.3%            2.1%            5.8%                   5.1%

                                  These are projections of crud.e and residual oils only.

                                           I/    Amy Corps of Engineers, Waterborne Commerce
                                                 of the U.S., 1968.

                                           2/    Litton Systems, Inc., 1968.

                                           @J    American Association of Port Authorities, 1969.

                                                 Newport News Shipbuilding and Dry Dock
                                                 Company, 1970.

                                                                          22

                           250

                           200

                           150

                           100

                            50
                             1953         1963   1968  1973         1983         1993         2003 Year

                                         v
                                      Actual                             Projected

                                                           Graph 6

                                             PROJECTED EAST COAST OIL IMPORTS

                               Source: Gladstone Associates
                                                        23

                               By the year 2000 East Coast oil imports will reach a projected level of 250 million long
                        tons. Delaware River and Bay petroleum imports in the past two decades have been increasing
                        at a decreasing rate. Assuming this trend will continue in the future, Graph 7 portrays projected
                        oil imports for the Delaware River and Bay ports. While Delaware River and Bay POL imports
                        will increase to 75 million long tons by the year 2000, New York imports will reach a projected
                        level of 114 mil-lion long tons.

                                                                Graph 7

                     120 -

                                                                                                  New York - New Jersey
                                                                                                  Ports
                     100 -

                      80 -
                                                                                                   Delaware River and Bay Por

                0
                                                                                       .40e
                                                                                    loe

                      60
                                                                           0.01

                      40

                      20

                        0
                                       1963 1968     1973           1983           1993          2003        Year

                                         Actual                           Projected

                                     PROJECTED OIL IMPORTS BY PORT, 1973 to 2003
                        Source: Gladstone Associates               24

                     The Location of Refineries

                            Petroleum throughput capacity is a measure of the crude oil tonnage which a refinery
                     or group of refineries can process in a year allowing for downtime for maintenance.

                            As seen in Table 9 , total United States petroleum throughput capacity is presently
                     602 million long tons per year. Of this total, 398 million long tons of capacity, or 66 percent,
                     are located along ocean coasts. The largest capacity is located along the Gulf Coast of the
                     United States accounting for 59 percent of total coastal capacity. Refineries along the East
                     Coast of the United States account for 18 percent of total coastal capacity and 12 percent of
                     total United States capacity. In 1969, refineries along the East Coast had a combined petroleum
                     throughput capacity of 71 million long tons per year.

                   Table 9                PETROL THROUGHPUT CAPACITY PER YEAR*, 1969
                                                       (Millions of Long Tons)

                                                                                                             Annual Tons
                                                          Shut Down             New           Number of per Refinery
                                                                                                I
                                            Total       and Operable       Construction Refineries            (millions)

                   Total U.S.              602.21             59.86             18.62             284           2.114

                   Total East
                     Coast                   71.18              1.46             0.37              20           3.559

                   Gulf Coast              232.51               0.37            11.32              42           5.536

                   West Coast                93.81              0.73             4.38              44           2.132

                      Allows for "down-time" for maintenance, etc.

                   SOURCE: U.S. Department of Interior and Gladstone Associates.

                                                                25

                                The capacity of East Coast refineries has decreased approximately I percent annually
                         since 1960. However, refinery capacity shows a trend toward greater concentration in fewer
                         areas along the East Coast, specifically at New York and Philadelphia, in fewer but larger re-
                         fineries. Table 10 shows the extent to which East Coast Refinery capacity is concentrated along
                         the Delaware River and Bay. Refineries along the Delaware River and Bay comprise 67 percent
                         of total East Coast refinery capacity. Present Delaware River and Bay refinery capacity is
                         47 million long tons of oil per year, the second largest concentration of capacity for any single
                         port area in the nation.

                         Table 10                         1969 CRUDE OIL CAPACITY
                                                   BY PORT AREA OF THE U.S. EAST COAST

                                                                               Operating        Additional
                                                                               or operable                           % of
                                                                               in millions        capacity           Total
                                                                 Number of                          under
                         Port Area                city           Refineries    of long tons    Construction      East Coast
                                                                                per year                          Capacity

                         Total East Coast                              20        70.21               0.26           100.0%

                         Providence           Providence                1        00.38               -               0.5%
                         N.Y.-N.J.            Perth Amboy               6        18.88               -               26.8%
                         Baltimore            Baltimore                 2         1.03               -               1.5%
                         Hampton Roads        Yorktown                  1         2.21               -               3.1%
                         Savannah, Ga.        Savannah                  2         0.44               -               0.6%

                         Delaware River       Total                     8        47.10               0.26            67.1%

                                              Philadelphia              3        16.08               0.26            22.9%
                                              Marcus Hook               2        15.09               -               21.5%
                                              Paulsboro                 1         4.38               -               6.2%
                                              Westville                 1         4.38               -               6.2%
                                              Delaware City             1         7.19               -               10.2%

                         Note: Delaware River represents the second largest port concentration of capacity
                         in the U.S.

                         Source:   U.S. Bureau of Mines and Gladstone Associates

                                                                     26

                                            Map 1 and Table 10 indicate the refinery capacity of various port areas along the
                                East Coast. Well over 80 percent of the Delaware River and Bay refinery capacity is located in
                                the metropolitan area of Philadelphia.

                                                                        Cheasapeake & Delaware Canal    Delaware City (7.2)
                                                                                                           RIVE           Wilmington
                                                         DELAWARE                              DELAWAR
                                                                                                                                      %   Marcus Hook (15.1)   PENNSYLVANIA

                                                                                                     NEW IFRSEY

                                                                                                                          Paulsboro (4.4)
                                                                                                                            Weswlle (4,41        Philadelphi. (16.1)

                                                             '0;;
                                                               oz,

                                                                                                                                                                              Trenton
                                                                                                         Map I

                                                                                         DELAWARE RIVER & BAY REFINERIES

                                                 Numbers in parenthases indicate
                                                 refinery capacity in millions of
                                                 long tons per year.

                                                                                                         27

                            Petroleum Sources

                                    The projected origin of Un  ited States oil imports by the year 2000 may be seen in Table
                            11 below. Projections by the Newport News Shipbuilding and Dry Dock Company and the
                            American Association of Port Authorities indicate a growing reliance upon oil imports from
                            Africa and the Middle East to meet growing domestic demands. Graph 8 portrays the mean
                            of these projections in tons.

                                    Presently 75 percent of total United States oil imports originate in the Caribbean whereas
                            14 percent or 16 million long tons originate from Africa and the Middle East. By the year 2000,
                            from 45 percent to 65 percent of all United States oil imports will originate in Africa and the
                            Middle East. These imports will amount to between 160 and 235 million long tons by the year

                            2000.

                                Table 11        PERCENT DISTRIBUTION OF PROJECTED-U.S. OIL!-/ IMPORTS
                                                             BY PLACE OF ORIGIN, 1963 TO 2003

                                                 Actual@-/       1973 Projections        1983 Projections       2003 Projections
                                                   Origin        -
                                   Origin            1963        AAPA!/ Newport          AAPd-/ Newport         AAPA!/ Newport

                                Caribbean             75%           68%      60%            61%      45%            50%     30%

                                Africa                 0%             2%      12%            5%      25%            10%     38%

                                Middle East           14%            19%     20%            25%      25%            35%     30%
                                Other                 11%            11%       8%            9%       5%             5%       2%

                                All Oil Imports      100%          100%      100%          100%     100%           100%     100%

                                I/  Includes crude and residual oils only.

                                21  U.S. Waterborne Foreign Trade, FT 985,
                                    Bureau of the Census

                                3/  American Association of Port Authorities, 1969.

                                    Newport News Shipbuilding and Dry Dock Company, 1970.

                                SOURCE: Gladstone Associates.

                                                                          28

                                        Since supertankers are most effective in reducing transportation costs for long journeys,
                            the growing importance of Africa and the Middle East as a sources of United States oil imports,
                            will add to the demand for a cleepwater port which can properly service supertankers.

                                                                                          Graph 8

                                       100

                                                                                                                                                                                    oo
                                       80

                              Ln

                              0
                                       60

                              0

                              0
                              LA

                              0

                                       4u

                                       20

                                                                                                                                                     .....                               .....

                                                                                                                                                     .....                               .....
                                                                                                                Mn

                                                                                                                  ...                                .....                               .....
                                                                                                                  ...                                .....                               .....
                                         0
                                                   Year                    1963                                1973                                1983                                2003
                                                                        (Actual)

                      Caribbean Irnports
                      African Imports                                 PROJECTED ORIGIN OF U.S. OIL IMPORTS, 1963 to 2003
                      Middle East Imports
                                                                                                                                                           OEM

                                                                                                 29

                                    Deepwater Port Potentials

                                                Earlier discussions indicated that 70 percent of tanker ship capacity would be found in
                                    ships with drafts in excess of 50 feet by the year 2000. Consequently, it could be conservatively
                                    assumed that 70 percent of non-Caribbean imports will be transported in supertankers. If the
                                    Dplaware River and Bay ports continue to import 33 percent of total East Coast oil imports, then
                                    a cleepwater transfer terminal in the lower Delaware would handle a projected 84 million long
                                    tons of oil by the year 2000.

                                                This appear@ to be a conservative estimate for a cleepwater transfer terminal along the
                                    East Coast. The only deepwater transfer terminal in existence, at Bantry Bay in Ireland, handles

                                    well over this amount.

                                                The oceanborne movement of East Coast oil imports is portrayed in Map 2 . These
                                    lines dramatically indicate the inefficiencies petroleum companies are facing and their desire for
                                    a deepwater transfer terminal to reduce transport costs.

                                                                                                            Map 2
                                                                                 PROJECTED ORIGINS OF UNITED STATES OIL IMPORTS

                                                              PRESENT                                        1983                                        2003

                                                                                        Africa
                                     Middle East
                                                                                                                                 Middle East

                                                                                                                                                                          Caribbean
                                                                                   M
                                                                                    iddle East
                                                                                                                            Caribbean
                                                                                                  Z.;
                                                                              Caribbe in
                                                                                                                                         Africa

                                                                                                                          6P

                                                                                                                                                                           ..... . . . . . .
                                                   ec,

                                    48(3 @@tt

                                                                                                                                                                                2003

                                                                                                        30

                                  IRON ORE

                                  Introduction

                                             United States and world demand for high grade iron ore has increased at a moderately
                                  high rate since the Second World War. It is projected that United States iron ore imports will
                                  increase at a rate of two percent annually through the year 2000. These imports will be bound
                                  mainly for East Coast ports which will handle a projected 35 million tons by the year 2000.

                                             Presently, 75 percent of United States iron ore imports come from either Canada or
                                  Venezuela, areas too close for the feasible use of superships. With changing technology, it is
                                  projected that iron ore production in Africa and the West Coast of South America will be eco-
                                  nomically feasible by the year 2000; the development of these reserves will facilitate the use
                                  of superships.

                                             It appears probable that a cleepwater transfer terminal located in the Delaware could
                                  .handle a significant amount of projected iron ore imports.

                                      Table 12                                         IRON ORE IMPORTS, 1961-t8
                                                         Delaware                   New (thousands of long tons)        Hampton        East Coast               Total
                                                        River & Bay                York             Baltimore            Roads              Total          United States

                                      1961                  9,427                   0                  8,564                510           18,501               26,500

                                      1968                 10,582                   2                 10,374                342           21,300               26,200

                                                                                       (Average Annual Percent Increase)

                                      1961-68               1.75%                                      3.02%            -7.02%              2.16%              -0.16%

                                                                        (Percent Distribution of United State Iron Ore Imports)

                                      1961                35.6%                   O.C%                32.3%                1.9%           69.8%               100.0%.

                                      1968                40.4%                    0.0%               39.6%                1.3%           81.3%               100.0%

                                      Source: Amy Corps of Engineers and Gladstone Associates.

                                                                                                  32

                     Iron Ore Imports in the Past Decade

                             While total United States iron ore imports in the I 960's remained constant at a level
                     of 26 million long tons, East Coast iron ore imports increased 2.2 percent annually to 21.3
                     million long tons in 1968.

                             East Coast iron ore imports in 1961 amounted to 18.5 million long tons, representing
                     70 percent of total United States iron ore imports. By 1968, East Coast tonnage accounted for
                     slightly more than 81 percent of total 'United States iron ore imports, amounting to 21.3 million
                     long tons.

                             East Coast ports showed varying trends through the I 960's, as seen in Table 12. Iron
                     ore imports into the Delaware River ports increased one and three-quarter percent annually
                     to 10.6 million long tons in 1968. At the beginning of the clecacl@ Delaware River and Bay
                     ports handled 36 percent of total United States iron ore imports increasing to 40 percent in
                     1968.- Iron ore imports moving into Baltimore increased 3 percent annually to a level almost
                     identical to that of the Delaware River and Bay ports. These two ports handled 80 percent of
                     United States, and virtually all East Coast, iron ore imports.

                    Projected Iron Ore Imports

                            Since 1960, the level of total United States iron ore imports has remained constant at
                    approximately 26 million long tons. However, several projections indicate that iron ore imports
                    will increase through the year 2000. Projections by Newport News Shipbuilding and Dry Dock
                    Company, Bath Iron Works, and Booz-Allen are set forth in Table 13.

                                                                  33

                                 Table 13     PROJECTED UNITED STATES OCEANBORNE IRON ORE IMPORTS

                                                                                                                    BooA/                 Mean
                                 Year                           Actual           Newpor             BatJ/           Allen              Projection
                                                                                       (millions of long    tons)
                                 1961                             26.5
                                 1965                             29.4
                                 1968                             26.2

                                 1970                                             29.0              28.5            32.0                  29.8

                                 1980                                             29.7              35.2            35.0                  33.3

                                 1990                                             32.2              40.1            40.0                  37.4

                                 2000                                             34.9              44.1            44.1                  41.0

                                                                          (Average Annual percent increase)

                                 1961-68                          -0-16%

                                 1968-80                                           1.11%              2.86%           2.80%                  2.26%

                                 1980-2000                                         0.75%              1.26%           1.30%                  1.01%

                                 1968-2000                                         1.04%              2.14%           2.14%                  1.77%

                                 l/ Newport News Shipbuilding and Dry Dock         Co., 1970
                                 21 Bath Iron Works Corp., 1970
                                 3/ Booz-Allen Applied Research, Inc. 1969

                                       The mean of these projections can be seen in graph 9. In the next three decades total
                              United States iron ore imports will increase at an anticipated rate of 1.8 percent annually.
                              While present imports amount to 26 million long tons, by the year 2000 the United States
                              will be importing a projected 41 million long tons.

                                                                                       34

                            50

                            40

                            30             /00

                     0

                     0

                     0
                            20

                            10

                             0
                              1961     1968 1970       1980          1990         2000     Year

                                                               v
                                  Actual                     Projected

                                                   Graph 9

                                       PROJECTED U.S. IRON ORE IMPORTS

                               Source: Gladstone Associates

                                                         35

                                    East Coast iron ore imports are projected to increase slightly faster than other coastal
                           areas. Since the East Coast is more remotely located with regard to domestic iron ore sources,
                           the Eastern seaboard will become more reliant upon imports to meet increased demand for
                           steel production. Iron ore imports into Baltimore are projected to increase slightly faster than
                           those into the Delaware River and Bay because of recent investment in steel producing capacity
                           in @Iaryland. Baltimore will surpass the Delaware River and Bay as the largest single destination
                           of United States iron ore imports, handling 44 percent of the total or 18 million long tons by the
                           year 2000. The Delaware River and Bay ports will continue to handle 40 percent of total United
                           States iron ore imports amounting to 16.3 million long tons by the year 2000.

                                    East Coast iron ore imports are projected to increase 2 percent annually, rising from a 1968
                           level of 21 million long tons to 35 million long tons by the year 2000. However, technological
                           advances which could reduce the costs of benefication processing of low grade domestic ores
                           could alter the import projections

                                      Table 14                          PROJECTED IRON ORE IMPORTS,
                                                                             BY PORTS, 1968-2000

                                                    Delaware         New          Balti-      Hampton      East Coast            Total
                                                  River & Bay      York           more         Roads            Total           U. S.
                                                                  (thousands of long     tons imported)

                                      1968           10,582            2        10,374           342           21,300           26,200

                                      1980           13,250            0        14,550           500           28,30.Q          33,300

                                      2000           16,315            0        17,915           620           34,850           41,000

                                                        (average annual percent increase in imports)-

                             1961-68                   1.75%           -          3.02%        -7.02%           2.16%            -0.16%

                             1968-1980                 2.10%           -          3.35%        3.85%            2.74%            2.26%

                             1980-2000                 1.16%           -          1.16%        1.20%            1.16%            1.01%

                             1968-2000                 1.69%           -          2.27%        2.54%            1.99%            1.77%

                             Source: Gladstone Associates

                                                                              36

                 20 -

                                                                                           Baltimore
                 15 -                                                                      Delaware River & Bay

                                                         .0e
             0                                         .01

             0
             -j                               011
                 10

                                                                                           Gulf & West Coasts

                  5

                  0
                                            1968             1980                      2000

                                                     Year

                                                 Graph 10

                           PROJECTED IRON ORE IMPORTS, BY PORTS, 1968 - 2000

                     Source: Gladstone Associates

                                                            37

                              The Source of Iron Ore Imports

                                        The impetus for the use of superships in transporting bulk commodities has been the
                              need to transport large volumes a great distance. Iron ore imports from Canada and Venezuela,
                              accounting for 72 percent of the United States total, do not move a sufficient distance to realize
                              large cost savings when transported in superships. However, 7 million long tons of iron ore in
                              1968 moved to the United States in vessels traveling in excess of 6,000 miles. As indicated
                              earlier in this report, sufficient cost savings are realized on journeys of this length to warrant
                              the use of superships.

                                                                                       Map 3
                                                                 THE ORIGIN OF UNITED STATES IRON ORE IMPORTS

                                                                PRESENT                                          1982

                                                                               ADA

                                                                                                AFRICA                       CANADA
                                                 AFRIC

                                                                                                        ........ ..
                                                                                            CHILE-PERU
                                            CHILE-PERU                          ENEZUELA
                                               BRAZIL

                                                                                                          Q.
                                                                                                  BRAZIL                        VENEZUELA

                                                                                                                                                  1995

                               Source Bath Iron Works and Gladstone Associates

                                                                                         38

                              Projections by the Bath Iron Works Company, seen in Table 15, anticipate iron ore
                      imports from nations more than 6,000 miles away to increase to 10 million long tons by 1982.

                       Table 15                         PROJECTED ORIGIN OF IRON ORE IMPORTS,
                                                       BY POTENTIAL USE OF SUPERSHIPS,1968-82

                                                                                                                       Average
                                                                  1968                           1982                  Annual
                                                                     PerEe-ntof                     Percent of         Percent
                                                      Millions of U.S. Total         Millions of U.S. Total            Increase
                                                        Long Tons       Imports       Long Tons-      Imports          1968-82

                       Total Imports                        26.18        100.0%         36.34           100.0%          2.77%

                       Country of Origin and
                        Use of Superships

                       Convential Ships

                          Canada                            8.56          32.7%         12.71           35.0%           3.46%
                          Venezuela                         10.33         .39.5%        13.74           37.8%           2.36%

                             Subtotal                       18.89         72.2%         26.45           72.8%           2.86%

                       Either Type   of Ship
                          Brazil                            1.25          4.8%            2.38            6.6%          6.46%
                             Subtotal                       1.25          -T. _8%       -2-.M-         --67T            -6-.T6T.

                       Supership Candidates

                          Chile                             1.45          5.5%            2.86            7.9%          6.95%
                          Peru                              0.92          3.5%            0.94            2.6%          0.16%
                          Africa                            3.67          14.0%           3.71          10.2%           0.08%

                             Subtotal                       6.04          23.0 %          7.51          20.7%           1.74%

                       Source: Bath Iron Works and Gladstone Associates

                                                                        39

                          Deepwater Port Potential

                                 A cleepwater port in the lower Delaware Bay could significantly reduce the transportation
                          costs of importing iron ore.

                                 United States demand for iron ore imports is predominantly concentrated in Baltimore
                          and along the Delaware River. Moving iron ore in superships from distant sources to such a
                          concentrated market would result in significknt transportation cost savings. Without the added
                          stimulant of a cleepwater port in lower Delaware Bay iron,ore shipments from nations in
                          excess of 6,000 miles from the United States are projected to increase to 13 million long tons by
                          the year 2000. The stimulus of cost savings resulting from the employment of superships might
                          double these figures. Ten and one-half million long tons of iron ore appears to be a conservative
                          estimate of trans-;shipments through a cleepwater port in the lower Delaware by the year 2000.

                                                                       40

                                                       Weak Potentials

                        COAL

                            Introduction

                                    The relative importance of coal as a world energy source has decreased since the turn
                            of the century. Even so, waterborne United States coal exports have remained at a constant
                            level since the I 95-O's. Due solely to increasing Japanese demand, slight increases in total
                            waterborne coal exports are anticipated for the remainder of this century.

                                    Japan is rapidly becoming the largest single consumer of United States coal exports.
                            It is anticipated that because of the great distance involved in shipping coal to Japan, quanti-
                            ties of coal will be moving in superships in the future between the--two countries.

                            Domestic Coal Reserves and Production

                                    Table 16 shows that one half of all United States coal reserves are located along the
                        East Coast of the United States. However, nearly three quarters of all United States bituminous
                        coal production is located in the same Eastern area.

                            Table 16            UNITED STATES COAL RESERVES AND 1966 BITUMINOUS COAL PRODUCTION

                                                         United States                              Bituminous Coal Production
                                                          Bituminous
                                                         Coal Reserves                     1935-39            1966             (1936- 1966)
                                                           Billions of                     Average                           Average Annual
                                                            Long Tons                     (Mill ons of Long   Tons           Percent Change

                            United States Total                599.3                        357.3             476.8               1.12%

                            Maryland                              1.1                         1.4                1.1             -0.67%

                            Pennsylvania, West                   51.3                       86.2                72.7             -0.52%

                            Virginia                              8.7                       10.9                31.8              6.39%

                            Kentucky                             58.9                       30.7                83.2              3.84%

                            West Virginia                        91.1                       96.0              133.7               1.31%

                            Source: U.S. Bureau of Mines, U.S. Geological Survey and Gladstone Associates

                                                                                 42

                                                             Map 4

                                         U.S. COAL RESERVES AND PRODUCTION

                                                                                             MAINE

                                                                                    \jT-

                                                                                         N. H.
                                                                               N. Y.

                                                                                                R. 1.

                                                                             PA
                                                                   rl 5%1)

                                                    OHIO.
                                                                     . . . . . ....
                                                                            MD
                                                                   .... ... . .          DEL.

                                                                          VA.

                                                KY.
                                                                         N.C.

                                          TENN.

                                                                    S.C.
                                    miss.                                                           Coal Field
                                                                                             Lj
                                                           GA.                             (D       Coal Production Region
                                               ALA.                                            % of Total U.S. Production 1966

                                                                  FLA.

                                                                43

                                Coal production is concentrated in West Virginia, Kentucky and Virginia. Reserves
                        close to Hampton Roads yield 52 percent of total United States coal production. This is the
                        only coal.producing area in the United States which has increased its production since the
                        1930's. Productive coal regions close to Philadelphia and Baltimore accounted for only 15
                        percent of total United States coal production in 1966 and have been steadily and slowly de-
                        creasing since 1935.

                                Changi ng technology in coal production in the late 1960's has accessed coal reserves
                        located in southern Utah. The importance of Utah coal for meeting future United States and
                        foreign consumption demands cannot be determined with any great precision. However, it
                        appears as exports increase to Japan, Utah coal production might very well serve as a more
                        economical source for that market.

                                In the past decade virtually all United States coal exports have moved through ports
                        located along the East Coast. However, in recent years, the.increasing importance of the Japanese
                        market for United States coal exports has given impetus to some coal movement through ports
                        located along the West Coast. The total amount of export coal passing through these West
                        Coast ports has been small.

                        Coal Exports in the Past Decade

                                In 1966, the United States mined.nearly Y2 billion long tons of coal; 93 percent of this
                        total coal production was domestically consumed.         I

                                Since 1960, total coal exports have increased at an average annual rate of one percent
                        while waterborne exports decreased at an average annual rate of one half percent. Total
                        United States waterborne coal exports have remained at approximately 31 million long tons
                        through the 1960's. However, coal exports to Asia (mainly to Japan) increased at an.average
                        annual rate of 35 percent, achieving a level of 14 million long tons in, 1968. These figures
                        are displayed in Table 17.

                                                                       44

                                           Table 17                      U.S. EXPORT OF COAL
                                                                       (Millions of Long Tons)

                                                                                                                  Average Annual
                                                                                                                 Percent Increase
                                                                            1964                 1968               1964-1968

                                           Bituminous Coal

                                             Total Exports                  42.9                 45.2                    1.3%
                                             Overseas Exports!-/            30.2                 30.3                    0.1%

                                             Exports to Asia                5.8                  14.1                   35.8%

                                          Anthracite Coal

                                             Total Exports                  1.4                    0.5                -16.1%
                                             Overseas Exports!-/            0.9                    0.1                -22.2%

                                             Exports to Asia                0.05                  0.02                -15.0%

                                          Total All Coals

                                             Total Exports                  44.3                 45.7                    0.8%
                                             Overseas Exports!-/            31.1                 30.4                 - 0.6%

                                             Exports to Asia                5.85                 14.12                  35.3%

                                           I/  Includes all exports of coal except those destined for
                                               Canada.

                                          SOURCE:    U.S. Bureau of Mines and Gladstone Associates.

                                   United States coal reserves are concentrated along the East Coast, with the greatest
                         mining activity located in West Virginia, Kentucky and Virginia. During the past decade
                         Hampton Roads was the only East Coast port which increased its coal exports because of its

                          Table 18                                          U.S. COAL EXPORTS
                                                                                 BY PORTS
                                                                            1964 AND 19681-/

                                                                  1964                                     1968                             1964-1968
                                                                                                                                             Average
                                                                            Percent                                Percent                   Annual
                                                          Thousands         of U.S.                Thousands       of U.S.                   percent
                                                        of Long Tons        Total                of Long Tons        Total                   Increase

                          Hampton Roads                     27,329          84.5%                     28,363         90.3%                      0.94%

                          Los Angeles                          -            0.0%                          7

                          Philadelphia                       1,905          5.9%                       845            2.7%                   -13.88%

                          New Orleans                          -            0.0%                         30           0.1%

                          Baltimore                          3,099          9.6%                      2,160           6.9%                     -7.58%

                          Total Overseas                    32,334          100.0%                    31,404        100.0%                     -0.30%

                          l/ Bituminous and anthracite coals.

                          Source: Association of American Railroads and Gladstone Associates

                                                                                    45

                                         100

                                         80

                                    7;
                                    0    60

                                    ui

                                    0

                                         40

                                         20

                                                                        ............
                                                                        .............

                                                                        .. ..........

                                                                        ............
                                           0                            . ...........
                                                                       Hampton      Delaware     Baltimore
                                                                        Roads       River &
                                                                                      Bay

                                                                  Graph 11
                                                  PORTS EXPORTING COAL OVERSEAS, 1968

                         more favorable location relative to coal producing regions. Hampton Roads presently handles
                         90 percent of total United States Coal exports.

                               Coal exports from Delaware River and Bay ports declined through the past decade from
                         2 million tons to less than 1 million tons. These ports handled slightly less than 3 percent of
                         total United States coal exports. The Delaware River and Bay ports are not as favorably lo-
                         cated as Hampton Roads to coal producing regions.

                                Special freight rates have been established by the railroad industry enabling a shipper
                         to move large volumes on a continuous basis to the same point at a relatively lower rate.
                         These special rates, once established, are rarely changed and favor a port which moves the
                         greatest volume of a bulk commodity. Hampton Roads is presently favored in freight rate
                         schedules. Consequently, coal moving from an equal distance to either the Delaware River
                         ports or Hampton Roads will incur higher transportation charges if shipped to the Delaware

                         River area.

                                                                      46

                     Projected Coal Exports

                            Several projections of total United States coal exports have been made. These include
                     projections by: (1) Litton, (2) Bath Iron Works, (3) Booz-Allen, and (4) National Coal Asso-
                     ciation. These projections are substantially congruent.

                            Coal exports will increase at a relatively slow rate of 2 percent annually through
                     the year 2000, increasing from 31 million to 56 million long tons. These projections are presented
                     in Table 19 andin graphic form on the following page.

                     Table 19                      PROJECTED UNITED STATES COAL EXPORTS

                                                                   (Millions of Long Tons)
                                                             Bath!-/   Litton@/      Booz!/ Nationall/
                                                              Iron      Systems       Allen       Coal                Mean
                     Year                Actual              Works        Inc.     Research Association           Projection

                     1955                 35.5
                     1960                 22.8
                     1968                 31.1

                     1970                                     33.9        34.8        32.0        35.7                34.1

                     1975                                     40.5        38.7        41.0        36.6                39.2

                     1980                                     45.4        43.0        48.0           -                45.4

                     1985                                     52.8        47.9        51.0                            50.6

                     2000                                       -         54.3        57.1                            55.7

                                                              (Average Annual Percent      Increase)

                     1968-1970                                 4.5%        6.0%        1.5%        7.4%                4.8%

                     1970-1975                                  3.9%       2.2%        5.6%        0.5%                3.0%

                     1975-1985                                 3.0%        2.4%        2.4%          -                 2.9%

                     1985-2000                                  -          0.89%       0.80%                           0.67%

                     1970-2000                                             1.87%       2.61%                           2.11%

                     l/   CMX Project, Bath Iron Works Corp., 1970.
                     2/   Oceanborne Shipping, Litton Systems, Inc. 1968.
                          Forecast of U.S. Oceanborne Foreign Trade,
                          Booz-Allen Applied Research, 1969.
                     4/   National Coal Association, 1970

                                                                      47

                                    60 -

                                                                                           00

                                    50 -

                                    40

                                Ln

                                    30
                                0

                                0

                                    20

                                    10

                                      0
                                     1955   1960 1965 1968 1970  1975        1985          1995  2000   Year

                                                v                              v
                                             Actual                         Projection

                                                                Graph 12

                                                    PRO) ECTED U.S. EXPORTS OF COAL
                                        v

                                        Source: Gladstone Associates

                                                              48

                    Deepwater Port Potential

                           Through the remainder of this century total United States coal exports will increase
                    only 2 percent annually whereas exports to Japan will increase at an average annual rate of
                    6 percent. The increasing importance of Japan as a consumer of United States coal exports is
                    displayed in Table 20.

                           Presently, 13 million long tons or 45 percent of all United States coal exports are bound
                    for Japan. By 1995, exports to Japan will increase to 35 million tons, or 65 percent of all
                    United States coal exports.

                      Table 20                      PRESENT AND PROJECTED
                                                                     1
                                              DESTINATION OF COALY EXPORTS
                                                         o n o f L'o n g T-o-n-sT-

                                      Total                                                South              All
                      Year          Exports            Europe           Japan             America           Other
                      1955             35.5             25.6               2.5               1.3              6.1
                      1960             22.8             15.1               5.1               1.9              0.7
                      1965             31.7             22.5               6.8               1.8              0.6

                      1970             31.8             15.1              13.4               1.9              1.4

                      1980                              14.8              27.8               3.1              2.1

                      1995             55.1             13.5              35.3               -3.9             2.4

                      l/ Bituminous coal only.

                      Source: Booz-Allen Applied Research, 1969.

                                                                49

                                                                                                                 Map 5

                                                                                   THE DESTINATION OF UNITED STATES COAL EXPORTS

                                                                 PRESENT                                             1980                                         1995

                                                                                   EUROPE                                           UROPE                                         UROPE

                                             JAPAN
                                                                                           JAPAN                                           JAPAN

                                                                 . . . . . . . . . . . . . . . . . . . . . . . . .

                                                                                                                                                                                        1995
                                        Source   Booz-Allen Applied Research and Gladstone Associates

                                                       As the route length and volume of bulk commodities increase, the greater are the
                                      economies of supership employment. While the use of superships could be justified because of the
                                      distance between Japan and the United States, the nature of coal and its domestic location make
                                      it virtually infeasible with present technology to ship directly in, or transfer to, deep draft vessels.
                                      The added restriction of a 34 foot channel through the Panama Canal would further inhibit their

                                      use.

                                                 Projections shown in Table 21 indicate coal exports through Philadelphia will remain
                                    at their 1968 level of 1 million long tons through the remainder of the century. Hampton Roads
                                    will continue to dominate coal exports.

                                                                                                                 so

                            With technological change and increased demand a cleepwater port located in the lower
                    Delaware would probably trans-ship 4 million long tons of coal by the year 2000. The terminal
                    %lould act mainly as a trans-shipment point for Hampton Roads coal bound for Asia. There
                    would be insufficient demand to justify construction of rail lines linking a Delaware Bay deepwater
                    port and existing main lines. Hampton Roads domination of coal exports will continue because
                    of its proximity to coal fields and its favorable freight rates.

                       Table 21        PRESENT AND PBOJECTED DELAWARE RIVER COAL EXPORTS
                                                                  1965-1995

                                                                                                            Total
                                                                         Deepwater Port                  Delaware
                     Year                     Philadelphia               Transshipping                 River & Bay
                                                 Exports
                     1965                            1.9                         N.A.                        1.9

                     1975                            1.0                         N.A.                        1.0

                     1985                            1.0                         3.0                         4.0

                     1995                            1.0                         4.0                         5.0

                                                              (Average annual percent increase)

                     1965-85                       -2.37%                          -                         5.56%

                     1985-95                         0.00%                       3.33%                       2.50%

                     1965-95                       -1.58%                          -                         5.44%

                     I/ These figures assume completion of the port in 1976 and are
                           for trans-shipping from a ship exporting coal from Baltimore,
                           Philadelphia or Hampton Roads to Japan and Asia. Assumes 30%
                           capture of'all Japan and Asia bound coal increases.

                     Source: Gladstone Associates

                                                                51

                          GRAIN

                          Introduction

                                      United States grain production for the past 20 years has been in excess of domestic

                          demand.

                                      World demand for grains,including wheat, corn, soybean and sorghum, has increased
                          rapidly in the past decade. A significant portion of this increased demand has been met by United
                          States grain exports.

                                      In the past, American grain exports to Europe have equalled the combined total of
                          grain exports to all other nations of the world. Projected grain exports to Europe will remain
                          constant through the year 2000 while exports to Africa and Asia are expected to increase at an
                          average annual rate of 10 percent. During this period United States grain exports will increase
                          from 40 million to 95 million long tons.

                                            Table 22        U.S. GRAIN EXPORTS BY COASTAL AREA

                                                                              1965

                                                                                (Millions of Long Tons)
                                                                                Sorghum                           Total
                                              Coast             Wheat          and Corn         Soybean           Grains

                                            Atlantic              1.62              -              0.70            2.32

                                            Gulf                11.16             16.34            5.53           33.03

                                            Pacific               3.96            2.60               -             6.56

                                            Other               -1.26               -              0.77            2.03

                                            Total               18.00             19.00            7.00           44.00

                                                                                (Percent Distribution)

                                            Atlantic              9%              0%               10%             5.27%

                                            Gulf                62%               86%              79%            75.07%

                                            Pacific             22%               14%              0%             14.91%

                                            Other                 7%              0%               11%             4.61%

                                            Total               100%            100%              100%            100.00%

                                              SOURCE. Newport News Shipbuilding and Dry Dock
                                                        Company and Gladstone Associates

                                                                                    52

                                      While it is anticipated there will be sufficient volume moving increasingly farther distances
                        to warrant the use of superships, this potential is precluded to a large extent by other factors.

                        Domestic Location

                                      The location of domestically produced grain for the most part has determined which
                        United States ports handle grain exports.

                                      Wheat, sorghum, and corn are predominantly located in the midwest and far western
                        states whereas soybeans are located throughout the United States. Consequently, 90 percent
                        of grain exports flow through Pacific and Gulf ports as seen in Table 22.

                        Grain Exports Since 7960

                                      Total United States grain exports in the 1960's increased at an average annual rate of
                        9 percent, rising from 24 million long tons to 40 million long tons in 1968.

                                      Because of its distance from the main grain producing regions of the United States,
                        East Coast grain exports have been decreasing in the past decade at an average annual rate of 3
                        percent. In 1968, East Coast ports handled slightly less than 3 million tons of grain, only 5 per-
                        cent of the United States total.

                               Table 23                                        EAST COAST GRAIN EXPORTS,*
                                                                                    BY PORT, 1961-1968

                                                                        1961                                    1968
                                                                              Percent of                               Percent             Average Annual
                                                            Thousands of          Coast             Thousands of          Coast           Percent Increase
                               Port                           Long Tons           Total               Long Tons           Total                1961-1968

                          Delaware   River & Bay                  291.2             8.1%                   354.1          12.4%                   3.09%

                          New York                                 105.2            2.9%                    24.7            0.9%                -10.93%

                          Baltimore                             1,407.9           39.3%                    700.5          24.6%                  -7.18%

                          Hampton Roads                         1,781.1           49.7%                  1,773.8          62.2%                  -0.06%

                            Major Port Total                    3,585.4           100.0%                 2,853.1          100.0%                 -2.92%

                          *Includes corn, sorghum, wheat and soybeans.

                          Source: Arvy Corps of Engineers and Gladstone Associates.

                                                                                         53

                                           East Coast ports showed varying trends through the 1 960's as seen in Table 23. The
                             Delaware River and Bay was the only port area to increase its grain exports, doing so at an average
                             annual rate of 3 percent to its 1968 level of 355,000 tons. The Delaware River and Bay increased
                             its share of total East Coast grain exports from 8 percent in 1960 to I 2Y2 percent in 1968.

                                           Hampion Roads is the largest exporter of grain along the East Coast, handling 1.8
                             million long tons of grain exports annually. In 1968, this was 62 percent of total East Coast grain
                             exports but only 3 percent of all United States grain exports.

                             Projected Grain Exports

                                           By the year 2000, it is anticipated that total United States grain exports will increase
                             at an average annual rate of 3% percent from 40 million long tons to 96 million long tons. This
                             compares with a 9 percent average annual increase experienced during the past decade. These
                             projections may be seen in Table 24 and in the graph on the opposite page.

                                                 Table 24                    PROJECTED U.S. GRAIN* EXPORTS

                                                                                           (Millions o:tLonq Tons)
                                                                   Newport          Booz-Allen         B h
                                                 Year              Projection       Projection      Projection        Actual         ProMieeacntion

                                                 1960                                                                  23.9

                                                 1968                                                                  40.3

                                                 1970                 49.0            49.7             47.5                            483

                                                 1975                 53.6            59.7             60.0                            57.8

                                                 1980                 58.4            68.4             68.9                            65.2

                                                 1985                 63.4            77.3             74.2                            71.6

                                                 2000                 80.0            114.0            95.0                            96.3

                                                                                    (Average Annual Percent Increase)

                                                 1960-1968                                                              8.69%

                                                 1970-1975             1.88%           4@02%            5.26%                            3.74%
                                                 1975-1985             1.83%           2.95%            2.37%                            2.39%

                                                 1985-2000             1.75%           3.17%            1.87%                            2.30%
                                                 1970-2000             2.11%           4.31%            3.33%                            3.26%

                                                     Includes sorghum, corn, wheat and soybeans.

                                                 SOURCES:

                                                         Newport News Shipbuildingand Dry Dock Company, 1970.

                                                         Booz-Allen Applied Research, Inc. 1969

                                                         Bath Iron Works Corporation, 1970.

                                                                                               54

                             Given the East Coast proximity to the European market and distance from inland grain
                  areas, projected East Coast grain exports will remain constant from 1968 to 1995 at a level of
                  2.7 million longtons.

                                          100

                                          80

                                          60
                                      0

                                          40

                                          20 1         1 1     1      1
                                           1960     1968      1975 1980 1985 1990           2000 Year
                                                                           v
                                               Actual                  Projections

                                                                 Graph 13
                                                      PROJECTED U.S. GRAIN EXPORTS

                                                                   55

                                 If ports located along Delaware River and Bay continue to increase their share of total
                       East Coast grain exports at the rate experienced during the I 960's, by 1995 these ports will export
                      slightly over one-half million long tons. The projected average annual increase of 2 1/3 percent
                       will be the largest gain of any East Coast port. These projections are presented in the table below.

                           Table 25                 PROJECTED EAST COAST GRAIN EXPORTS
                                                             BY PORTS, 1968 - 1995
                                             (Assuming No Deepwater Port is Constructed)

                                                                (Thousands of Long Tons)
                                              Delaware             New                           Hampton           Total
                           Year                  River            York         Baltimore          Roads            Coast

                           1968                    354              25              700           1,774            2,853
                           Alternative Ii/

                               1970                276              10              488           1,346            2,120

                               1980                370                1             229           1,700            2,300

                               1995                570                1                1          2,148            2,720

                           Average  Annual
                           Percent  Increase
                             197-0---- 1995--      4.26%         -3.33%           -3.69%           2.38%            1.13%
                           Alternative 112/

                               1970                212              42              678           1,187            2,120

                               1980                230              46              736           1,288            2,300

                               1995                272              54              870           1,523            2,720

                           Average  Annual
                           Percent  Increase
                            1970 -  1995           1.13%           1.13%           1.13%           1.13%            1.13%

                           I/   Alternative I assumes each port    will increase   or
                                decrease its percentage capture    of East Coast   Exports
                                as the 1960's trend indicated.

                           21   Alternative II assumes each port will maintain its 1965
                                capture of total East Coast exports and increase its
                                exports at the same rate as the coast total.

                           SOURCE: Booz-Allen Applied Research, Inc.,and Gladstone Associates

                                                                        56

                             Projected United States grain exports to Europe will increase at an average annual rate
                   of only one-half percent, rising from 18 million long tons to 21 million tons in 1995. However,
                   significant increases in grain exports to Asia and Africa are anticipated during this same period.
                   Exports to Asia and Africa will increase from 24 million long tons to 75 million long tons in the
                   late I 990's, increasing 8 percent annually.

                      Table 26               DESTINATION OF U.S. GRAIN EXPORTS
                                                          1965 - 1995

                                                                (Millions of Long Tons)
                                           Europe                     All Other                  Total Export
                                     Sorghum     Wheat and        Sorghum    Wheat and         Sorghum     Wheat and
                      Year         and Corn       Soybeans      and Corn      Soybeans      and Corn        Soybeans

                      1965           12.18           5.59          6.27         17.65          18.45         23.24

                      1970           10.77           5.10          9.13         22.28          19.90         27.38

                      1980           12.48           5.54          14.22        32.20          26.70         37.74

                      1995           14.39           6.56          21.81        50.84          36.20         57.40

                                                          (Average Annual Percent Increase)
                      1965-1970     - 2.32%          1.75%         9.12%         5.25%          1.56%         3.56%
                      1970-1980        1.59%         0.86%         5.58%         4.45%          3.42%         3.78%
                      1980-1995        1.01%         1.23%         3.56%         3.86%          2.37%         3.47%
                      1965-1995        0.60%         0.58%         8.26%         6.27%          3.21%         4.90%

                      'SOURCE: Booz-Allen Applied Research, Inc.
                               and Gladstone Associates.

                                                                  57

                                         Asia and Africa, at a significantly greater distance from the United States, will become
                            increasingly important as recipients of United States grain exports. Reflecting this trend, plans are
                            under way for dry bulk carriers in excess of 100,000 DWT. By the, year 2000, ten percent of the
                            dry bulk carrier capacity will be in ships of this size class or larger.

                                                                                         Map 6
                                                                THE DESTINATION OF UNITED STATES GRAIN EXPORTS

                                                   PRESEN r                             1980                                  1995

                                     EUROPE                                                          EUROPE
                                                                                                                                         EUROPE
                                                                         OTHER

                                                                                                             OTHER

                                                         CO

                                                                                                                                                 1995

                                Source Booz Allen Applied Research and Gladstone Associates

                                                                                         58

                    Deepwater Port Potential

                                A cleepwater port located along the Eastern coast of North America would suffer from
                    a severe locational disadvantage with regard to the export of grains. While route distance and
                    volumes are steadily increasing, only ten percent of the dry bulk carriers of the future will be ships
                    with drafts in excess of 50 feet. This is largely explained by the relative low density of grains com-
                    pared with other bulk commodities. An East Coast cleepwater terminal, with its relative isolation
                    from grain producing regions, could be expected to handle very small quantities of grain.

                                   Table 27 PROJECTED EAST ro;@^7   GRAIN EXPORTS, ASSUMING
                                            COMPLETION OF A DEEPWATER PORT IN DELAWARE BAY

                                                                 BY 1975

                                                             (Millions of Long Tons)          -       % of All
                                                      ToY           To OtheA/                         U.S. Grain
                                                      Europe          Nations          Total           Exports
                                   1965               2.32             0.00            2.32             5.27%

                                   1970               2.12             0.00-           2.12             4.48%

                                   1980               2.30             0.39            2.69             4.17%

                                   1995               2.72             2.47            5.19             5.54%

                                                                (Average Annual Percent Increase)

                                   1965-1970          -1.72%           0.0 %           -1.72%

                                   1970-1980          0.85%              -             2.69%

                                   1980-1995          1.2@%            35.56%          8.67%

                                   1965-1995          0.57%              -             4.12%

                                   SOURCE: Gladstone Associates
                                   NOTE: If another deepwater port is built on the west coast of the U.S.
                                          then the East Coast projections should be reduced by 50% of exports to "Other Nations."
                                   I/  Assumes all East Coast exports presently go.to
                                       Europe and supplies Europe with 41.5% of its U.S.
                                       grain imports.
                                       Assumes the following capture rate for East Coast of
                                       total U.S. grain exports to non-European nations.
                                         Wheat:                        Corn and Sorghum:
                                         1970 - 0.0%                   1970 - 0.0%
                                         1980 - 1.0%                   1980 - 0.5%
                                         1995 - 4.0%                   1995 - 2.9%

                                         Based on the following assumptions:
                                         -  By 1995 eight percent of the world dry bulk ship fleet capacity
                                            will be in ships of 100,000 DWT's or more.
                                         -  20% of total U.S. grain exports not going to Europe will go
                                            to non-Pacific Asia and Africa
                                         -  Corn and sorghum capture rate is 1/2 of wheat and soybeans
                                            because of origin of these exports closer to other coasts
                                         -  No deepwater port will be built on t4e West Coast before 1995.

                                                                            59

                                Without a cleepwater port it is projected that the East Coast will have no increase in
                      its grain shipments to the late 1990's. Assuming a cleepwater terminal is built along the East Coast
                      by 1975, grain exports might be expected to increase at an average annual rate of four percent
                      through the year 2000. Table 27 indicates this increase will be largely explained by increasing
                      volumes of United States grain exports to non-Pacific Asia and Africa.

                                While total East Coast and total American grain exports would increase at the same rate,
                      total grain handling in the Delaware Bay region is projected to increase more substantially due
                      to the volume of trans-shipments through a cleepwater terminal.

                                As seen in the table below, assuming a deepwater terminal is constructed by 1975, total
                      East Coast grain handling would increase from three million to five million long tons by the year
                      2000. Virtually all of this increase would be caused by ship to ship transfer of grains at the new
                      cleepwater terminal.

                                If a cleepwater transfer terminal were constructed in the lower Delaware Bay, it would
                      most probably handle trans-shipment of grain exports. However, the volume of grainexports
                      anticipated is relatively insignificant and would in no way, without additional commodities, make
                      such a port economically feasible.

                        Table 28                 PROJECTED EAST COAST GRAIN EXPORTS,
                                                   BY PORTS, 1968 - 1995, ASSUMING

                                           A DEEPWATER PORT IN OELAWARE BAY BY 1975

                                                              (Thousands of Long Tons)
                                          Delaware            New                           Hampton
                        Year                 River           York         Baltimore          Roads         -Total

                        1968                    354             25             700           1,774           2,853

                        1970                    276             10             488           1,346           2,120

                        1980                    850              1             230           1,610           2,690

                        1995                 3,150               1               1           2,040           5,190

                                                               (Average Annual Percent Increase)

                        1970-1995               38.57%          -3.33%          -3.69%            1.94%           5.36%

                        SOURCE: Gladstone Associates

                                                                      60

                       FORESTPRODUCTS

                       Introduction

                                Forest products, which include paper, lumber, wood, and pulp, are both imported and
                       exported. The nature of the commodity, the location of its sources, and its relatively small
                       tonnage make deepwater transport infeasible.

                       The Past Decade

                                The Delaware River and Bay port, as well as the entire East Coast, experienced an 8
                       percent average annual increase for forest product imports in the past 10 years. In 1968, total
                       East Coast forest product imports amounted to 3.3 million long tons. Delaware River and Bay
                       port captured   5 percent.of this total, or Y2million long tons.

                                5

                                                                         Total East Coast

                                4

                         0      3

                         0

                         0

                         0
                                2

                                                                                            Delaware River & Bay

                                0
                                1968                   1972                     1977                    1982

                                                                    Year

                                                                  Graph 14

                                   PROJECTED IMPORT OF FOREST PRODUCTS, DELAWARE RIVER, 1968 - 1982

                                                                    62

                               East Coast exports increased I OY2 percent annually during the 1960's. However, Delaware
                       River and Bay exports increased 3 percent annually to only 12,000 long tons in 1968.

                               Productive forests are extremely limited in the Delaware River and Bay hinterland.
                       Therefore, these ports necessarily suffer from a locational disadvantage with regard to forest
                       product exports. Eighty-two percent of all East Coast forest product exports left this country
                       through ports located south of Virginia.

                       Projections

                               No attempt has been made at projecting forest product exports because of their insignif-
                       icance to the Delaware River and Bay due to the location of productive forests.

                               Forest product imports, however, are of sufficient tonnage to warrant projection to
                       determine how much, if any, of these commodities would require a cleepwater transfer terminal.

                                       Table 29         PROJECTED IMPORT OF FOREST PRODUCTS,
                                                        DELAWARE RIVER AND BAY, 1968 - 1982

                                                                           (Thousands of Long Tons)
                                                                         Delaware                 Total
                                                                     River and Bay              East Coast

                                       1968

                                       Paper                             118.8                      895.9
                                       Lumber                            376.9                   1,811.6
                                       Wood                                0.0                       19.6
                                       Pulp                                8.6                      613.4

                                          Total                          504.3                   3,340.6

                                       1982

                                       Paper                             192.0                   1,538.0
                                       Lumber                            542.0                   2,490.0
                                       Wood                                0.0                       6.0
                                       Pulp                                39.0                  1,008.0_

                                          Total                          773.0                   5,042.0

                                       1968-1982                         - (Average Annual Percent   Increase)

                                       Paper                               4.40%                     5.12%
                                       Lumber                              3.13%                     2.67%
                                       Wood                                 -                        4.96%
                                       Pulp                                25.25%                    4.60%

                                          Total                            3.81%                     3.64%

                                       Source: Newport News Shipbuilding and Dry Dock Company,
                                                the Army Corps of Engineers and Gladstone Associates.

                                                                         63

                                 Analysis by the Newport News Ship Building and Dry Dock Company projected East
                          Coast forest product imports to increase. by slightly less than 4 percent annually by 1982. Of
                          the 5 million long tons imported in 1982, Delaware River and Bay ports will be handling a
                          projected 773,000 long tons. This will represent an average annual increase comparable to
                          that projected for the total East Coast.

                          Deepwater Port Traffic

                                 In general, forest products are not moving in sufficient tonnage to require the use of
                          superships. Even if a deepwater port were established in the lower Delaware Bay, it is doubtful
                          that it would have a significant impact on the projected tonnage outlined above. The impact
                          would be minimal because: (a) forest products are treated as a general cargo commodity and
                          therefore are not moved in huge ships, (b) the small hinterland of the Delaware River and Bay
                          ports restricts forest product imports to local consumption, and (c) forest product exports,
                          representing a miniscular portion of total Delaware River exports, will not increase significantly
                          because of their distance from productive forests.

                                                                      64

                       GENERAL CARGO

                       Introduction

                               General cargo includes a diverse group of products requiring separate analysis from
                       bulk cargos. It is treated separately from bulk cargos because of its higher value per ton,
                       related special handling problems, the relatively smaller quantities in which it moves, and the
                       great mixture of products involved. These diverse products are treated as a group since they have
                       similarities as cited above and include many diverse products of relatively small tonnage.

                               It is anticipated that virtually no general cargo will move through a deepwater port located
                       in the lower Delaware Bay.

                               A deepwater port offers no advantage over conventional ports since general cargo will
                       not be moving in ships with drafts in excess of 40 feet. The primary factors affecting the location
                       of ports that handle general cargo are port services, including rail and truck access, and large
                       population concentrations. Physical facilities and port costs are neutral competitive factors.
                       A deepwater port located in lower Delaware Bay would be at a competitive disadvantage with regard
                       to location and port services.

                       Projections and Port Competition

                               Through 1980, it is projected that general cargo handled by existing Delaware River and
                       Bay ports will increase at an average annual rate of slightly less than one percent, achieving
                       a level of 4.9 million tons. These projections also indicate that utilizationof general cargo
                       handling capacity will not exceed 57 percent during the same projection period. These are shown
                       in tabular form on the following page.

                               These figures project what will happen under present conditions . Altered conditions,
                       in the form of a deepwater port in the lower Delaware Bay, raise the following questions:

                               A    What specific competitive factors determine a cargo's port of export
                                    or import?

                                                                       66

                          Table 30      GENERAL CARGO HANDLING CAPACITY COMPARED WITH
                                        PROJECTED CARGO: DELAWARE RIVER PORTS 1963 AND 1970-80

                                                    (thousands of short tons)

                                           Total general            Cargo             Capacity
                          Year             cargo handled          Capacity           Utilization

                          1963                4,183                  7,080               59.1%
                          1970                4,485                  8,605               52.1%
                          1975                4,675                  8,585               54.5%
                          1980                4,875                  8,520               57.2%

                          SOURCE: Hammer, Greene, Siler Associates,
                                    The Delawa@e River Port, 1965.

                          B     Do these factors influence those individuals who ultimately decide
                                which port their cargo will flow through?

                          C     What impact will containerization have upon shipping in general and
                                the above mentioned competitive factors?

                          D     To what extent will general cargo be transported in deep draft vessels?

                   These questions are addressed in the material that follows.

                          Transportation analysis,. discussed earlier in this report, indicates general cargo will not
                   be transported in deep vessels because it generally moves shorter distances, requires a more
                   sophisticated ship, and is less dense than, bulk cargo. Therefore, a cleepwater port in lower
                   Delaware Bay may be assumed to have no advantage due to depth. Consequently, a cleepwater
                   port may be considered to be in competition with other East Coast ports in regard to general
                   cargo handling. Competitive factor s other than depth must be considered.

                   Competitive Factors

                          The four general factors which determine the competitive status of ports are:

                                A   location
                                B   physical facilities
                                C   port costs
                                D   port services

                                                                67

                          These factors are analyzed in the following discussion as they relate to the relative competitive
                          position of a new deepwater port
                                                                     location
                                  Relative access of the major East Coast ports to the open sea is inversely related to distance
                          from the in land industrial heart of the United States. Proximity to the open sea has virtually
                          no affect on the decision of a shipper to select a port. With few exceptions,intercontinental
                          ocean rates are equalized among East Coast ports to any common foreign destination. Thus,
                          the added cost of steaming 11 hours up the Delaware River and Bay to Philadelphia represents
                          an additional cost to the vessel operator which is not passed on to the shipper who is usually
                          responsible for the selection of the port.

                                  Inland transportation costs to North Atlantic ports become more equalized as goods
                          come from farther west. However, inland transportation cost for mid west shippers do not
                          correlate with the mileage to different ports. This is due for the most part to rail rate equali-
                          zation schedules. While truck rates are generally based on mileage, there is a trend towards.
                          the use of commodity rates which are applied to commodities moving in large volumes on
                          a continuous basis. Commodity rates from inland industrial areas    tend to favor Baltimore,
                          Philadelphia and New York in that order.
                                                                 physical facilities
                                  Quality and quantity of physical facilities appear to be of negligible importance as a
                          competitive factor because the shipper chooses the port through which his cargo will move,
                          not the carrier who finds varying physical conditions among ports. Physical facilities can be-
                          come important as a competitive factor when specialized cargo handling is required, as in the
                          case for most bulk commodities.

                                  Although general cargo has not been greatly affected by physical facilities, a growing
                          trend toward containerization warrants special consideration. The competitive status of a
                          port with regard to containerized cargo will in large part be determined by its ability to provide
                          adequate storage space for cargo containers. Perhaps most important with regard to port com-
                          petition for containerized cargo will be the trend of shipping lines to concentrate container
                          operations in fewer and larger terminals. This is necessarily a function of cost savings involved
                          in container operations. The present system of 'port hopping' up the coast with final clearance
                          from New York will be replaced by a direct shuttle service from American terminals to a single
                          foreign destination. The graph following indicates the point at which it becomes economically
                          feasible for a container ship to be diverted from New York tb lower Delaware Bay.

                                                                            68

                                                                                             Graph 15

                                                              BREAK-EVEN BETWEEN FEEDER AND PORT-OF-CALL SERVICES
                                                         (ABOVE EACH CURVE A PORT-OF-CALL SERVICE HAS THE LOWER COST;
                                                             BELOW EACH CURVE A FEEDER SERVICE HAS THE LOWER COST)

                                                     ,'a,g@ at second
                                                     ;,,@t 0,o. ci' c@n-                    3,ooo capacity                       2,500 capacity
                                                     tail'@Isl                          trans-oceanic shin                     trans-oceanic ship
                                                  "J

                                                                                                                                       2,000 capacit7
                                                                                                                                    tiunz-oceanic Up

                                           'A

                                                40J
                                                                                                                                  @-@iooo -cai acity
                                           E                                                                                         Tran5-oceanic Ship
                                           :3   3'Jo

                                                                                                         A diversion of 500 miles to pick up
                                                2uU                                                  i   300 containers is economic for a
                                                                                                         1 000 capacity ship whereas feeder
                                                                                                         services are more economic for con-
                                                                                                     I   tainer ships of 2,000 capacity or above.
                                                                                                     I

                                                                     200                400        500      6oo                800              1,000
                                                                                                   Miles
                                                                     FEEDER VOYAGE DISTANCE, AND INCREMENTAL
                                                                            TRANS-OCEANIC DISTANCE (MILES)

                                      For the 2,500 capacity cargo ships of the futurea diversion of 200 miles from New York
                          to the lower Delaware Bay appears economically feasible to pick up 500 containers. Fewer
                          containers would require a feeder service. Assuming one sailing every three days, a 50 percent
                          containerization rate, and the use of 20 ton containers -- to import and export 500 containers
                          every three days would require general cargo shipments into and out of the Delaware Bay in
                          excess of 4.8 million tons annually. Presently the Delaware River and Bay port handles approxi-
                          mately this tonnage in general cargo. However, this would require 100 percent use of'a deepwater
                          port for general cargo handling by the Delaware River ports. It does not appear economically
                          feasible nor desirable to use a deepwater port for such trans-shipment activity. Many shippers
                          will prefer to ship general cargo direct to New York where presumably it could depart for its
                          European destination as much as three days earlier than if it were shipped through a Delaware
                          Bay cleepwater port. As explained in transportation factors, trans-shipment of commodities
                          is a major cost factor. Therefore, the need to trans-ship all general cargo through the deepwater
                          port would add costs far greater to the shipper than direct land shipment to New York.

                                                                                                   69

                                                                  port costs
                                The third competitive factor, port costs, includes costs borne by inland carriers and
                         vessel operators. Inland carriers experience greater costs when servicing New York because
                         of excessive delays due to congestion and circuitous switching. Similarly, the vessel operators
                         experience extremely high costs when servicing the New York port. The table following indicates
                         stevedoring as the largest single cost item bDrne by a vessel operator.

                           Tabl e 31                 Cost Per Ton of Handling 500 Tons

                                                                        New         Phila-        Balti-       Hampton
                                                          Boston        York        delphia        more         Roads

                           Cost per ton:
                               Pilotage                    $.39         $.36          $.39         $.49         $.36
                               Tug hire                      .14           .15         .22          .36           .97
                               Line handling                 .13           .10         .04          .08           .08
                               Dockage                       .20           .60         .78          .35
                               Wharfage against ship         -           -             .50          .15           -
                           Stevedoring, basic              7.50         6.40          6.00         5.10         4.06
                           CC&W, basic                     3.98         3.00          2.38          .78           .37
                           Overtime
                               "NormaV?                    2.60         2.17          1.94         1.36         1.02
                               From sailing schedule         .76          -            .25          .47           .34

                                     Total                $15.70       $12.78       $12.50         $9.14        $7.20

                           Source: Rowland and MacNeil, "Port of.Boston Water-Borne Commerce Market," 1964.

                         While all ports from Maine to Hampton Roads along the East Coast are covered by a contract
                         with the International Longshoremen's Association and hourly straight time wages vary little
                         among East Coast ports, total stevedoring costs vary based on port congestion, local work rules,
                         and general physical port conditions.

                                Port costs as a competitive factor are of very minor importance because inland transportation
                         costs. as well as vessel operator costs are rarely borne by those who decide the port through which
                         the export or import traffic will move.

                                                                        70

                                                  port services
                       Port services, the fourth competitive factor, appears to be of greatest significance be-
                cause of its direct influence upon shippers. In the case of shipping services, quantity is to a
                great extent,synonymous with quality. Frequency of sailings and ancillary services are the two
                most important considerations in this regard.

                       An exporter seeking to ship to a number of overseas destinations or seeking to deliver
                his product in the shortest possible time will benefit by using a port with the greatest number
                of sailings to his market, In 1968, New York cleared 1,000 more cargo vessels than Philadelphia.
                Philadelphia and Baltimore had almost an equal number of clearances. Hampton Roads and
                Boston together cleared approximately the same number of cargo vessels as Baltimore. Clearly,
                New York with the greatest number of vessel calls offers a shipper a greater choice in reaching
                various foreign markets and a greater frequency with which he can reach a given destination.

                       New York's competitive advantage is not limited to the number of vessel clearances.
                The overwhelming percentage of vessels called last at the port of New York. The significance
                of the figures presented in the table below is that cargo loaded at Philadelphia could be sent
                to New York three or four days later and still arrive at its foreign destination at the same time.
                If shipped direct from New York, it might arrive sooner.

                   Table 32    FINAL CLEARANCE FOR FOREIGN DESTINATION,
                                         EAST COAST PORTS, 1968

                                                                 Average Number of Days
                                                             Elapsed Before Cleared For
                                 Port of Call                    Foreign Destination

                             New York                                     0.4

                             Hampton Roads                                4.6

                             Baltimore                                    5.0

                             Philadelphia                                 5.0

                             Other East Coast Ports                       8.9

                             SOURCE: Gladstone Associates,
                                       based on Bureau of Customs
                                       records from May 31 thru
                                       September 5, 1968.

                                                        71

                                 In addition to frequency and directness of shipping from competing North Atlantic
                         ports, other service factors may also influence a shipper's decision to select one port over another.
                         Aside from international banking, consular representatives., and foreign Chambers of Commerce,
                         the two most important services influencing a shipper's decision appear to be freight forwarding
                         and steamship agents. This becomes an increasingly important factor over time because of what
                         was referred to earlier as inertia in transportation linkages.

                                 The ocean freight forwarder, as an agent for the exporter or importer, performs services
                         essential in promoting foreign commerce, particularly when a manufacturer or consignee is
                         located at an inland point and does not have the advantages of a branch office or a regular
                         agent at the port.  These services include:

                                 A    The inland movement of shipments to seaboard within the United
                                      States and, if requested, from there to destinations within a foreign
                                      country.

                                 B    The preparation and processing of necessary papers as well as the
                                      clearance of shipments in accordance with the regulations of the
                                      United States government.

                                 C    Booking and arranging cargo space on ocean carriers and the con-
                                      solidation of ocean shipments.

                                 Given no direction from the shipper as to port preference and all other costs being
                         equal to the shipper (as in many cases they are), the freight forwarder will usually book shipments
                         through the port at which he is located. New York has 500 freight forwarders as compared to
                         only 30 for all the ports along the Delaware River and Bay.

                                 Competitive factors have been appraised above and   demonstrate that existing ports will
                         continue to attract general cargo. Deepwater port competition is considered in the following
                         portion of this report.

                       Deepwater Port Competition

                                 Location, physical facilities, and port costs affect the cost of operating through a given
                         port. The significant factor is who bears the burden of these costs. This is of vital importance
                         because costs have a competitive influence only if they fall on those who are responsible for the
                         selection of a port.

                                                                         72

                             Location is a negligible factor for a cleepwater port in the lower Delaware Bay.

                             For the handling of general cargo, physical facilities appear to have a minor influence
                     as a competing factor among ports. Given the specialized function of a cleepwater port and the
                     increasing trend towards the use of containers, it appears that a cleepwater port would suffer
                     a competitive disadvantage.

                             Port services, the non-cost competitive factor, appears to be of the greatest significance
                     in influencing the decision to use one port versus another. Shippers use ports which offer fre-
                     quent sailings and the lowest inland freight rates. Preferences among shippers for various ports
                     result either from repetitive use or as a result of the use of shipping agents.

                             Shippers, making their decision to select a port on inland freight rates and service,
                     prefer either Baltimore, with its more favorable location relative to major industrial centers
                     of the midwest, or New York, with its greater quantity of services,in traffic volume. This largely
                     explains the relatively small size of the hinterland serviced by the ports along the Delaware River
                     and Bay, ranking them third behind New York and Baltimore.

                           A deepwater port offers several distinct disadvantages. with regard to competition
                   for general cargo. Its newness would necessarily place it in poor competition with regard
                   to port services. The problem of trans-shipping through a specialized port would result in
                   diseconomies to shipl5ers.

                           Since bulk co M'modities will increasingly flow in very large superships, a Delaware
                   cleepwater port would have several competitive advantages with regard to the handling of
                   bulk commodities. it would offer the only physical facility for such enormous ships. In
                   addition, the handling of large volumes of various bulk commodities would enable the es-
                   tablishment of lower inland freight rates with regard to motor carriers.' Finally, in the handling
                   of bulk commodities, lower port costs as well as lower transportation costs are more frequently
                   passed on to the shipper.

                                                                   73

                                  I

                              SUMMARY ANALYSIS AND COST SAVINGS

                                                                                       I

                     Transportation factors, long term supply and demand, and detailed analyses of commodities
                     are summarized and interrelated in this section. Finally, the potential annual transportation
                     cost savings resulting from a deepwater port are quantified.

                                                                  75

                                             SUMMARY ANALYSIS AND COST SAVINGS

                               The previous sections analyzed both transportation factors and actual and potential
                       commodity movements. The interaction of these two phenomena allow us to project the demand
                       for, and potential cost savings of, a deepwater port located in the lower Delaware.

                               A deepwater port facility could handle substantial amounts of petroleum products
                       and iron ore at substantial cost savings. Furthermore, no change in final destination for product
                       movements will occurin the short-run.

                               Innovations in transportation technology have permitted the construction of ships with
                       greater capacities and hence deeper draft requirements. While this has been particularly true
                       for oil tankers it has been less the case for dry bulk carriers and ore bulk oil carriers. By the
                       year 2000, over 70 percent of the world tanker capacity will be in ships with drafts of 50 feet
                       or more. These ships are unable to service any existing East Coast port.

                               With anticipated larger volumes of bulk products moving increasingly greater distances,
                       the huge carrying capacity of superships will afford tremendous transportation cost savings.

                               As shown in Table 33, the Delaware River and Bay ports account for a substantial
                       portion of East Coast waterborne foreign trade in petroleum and iron ore. It is projected that
                       the Delaware River and Bay area will continue to capture significant amounts of total waterborne
                       foreign trade in petroleum and iron ore products in the future. The amount of waterborne
                       foreign trade captured by the Delaware River and Bay for all commodities are also shown in
                       Table 33 with projections for the years 1980 and 2000.

                               The add-on effect of a cleepwater port on Delaware River and Bay foreign trade would be
                       substantial for petroleum products by 1980. The add-on tonnage of petroleum products would
                       be on the order of six million tons by the year 1980, increasing to 23 million long tons by the
                       year 2000. This would result in Delaware River and Bay handling 97.3 million long tons of
                       petroleum products by the year 2000.

                                                                     76

                                                                                                              Graph 16
                                                                        so -

                                                                                                                                                          Petroleum

                                                                        60 -

                                                                        40

                                                                        20
                                                                                                                                          - - - - - -     Iron Ore

                                                                                                                                                          Grain, Coal, Wood & Paper,
                                                                                                                                                          General Cargo
                                                                        0
                                                                                        1960         1970              1980           1990            2000

                                                                                                                 Year

                                                                        PROJECTED TOTAL WATERBORNE FOREIGN TRADE, DELAWARE RIVER
                                                                                                        1961 -2000
                                                                                                 (Assuming no Deep.ater Port)

                                                                            Source: Gladstone Associates

                                                                                       PROJECTED TOTAL WATERBORNE FOREIGN TRADE, DELAWARE RIVER
                                                                                                      AND TOTAL EAST COAST, 1961-2000
                                                                        Table 33.                        (millions of long tons)

                                                                                                                    Pelaware
                                                                        1961                                      River & Bay           New York              East Coast

                                                                        Petroleum                                      22.5                 20.0                   62.5
                                                                        Iron ore                                         8.4                  0.0                  16.5
                                                                        Grain                                            0.3                  0.1                   3.6
                                                                        Coal                                             1.9                  0.0                  30.2
                                                                        Woo4d & paper                                    0.3                  0.9                   3.1
                                                                        General cargo                                    3.7                16.1                   23.5

                                                                            Total                                      36.9                 37.1                   139.4

                                                                        1968

                                                                        Petroleum                                      29.5                 32.9                   88.2
                                                                        Iron ore                                         9.5                  0.0                  19.0
                                                                        Grain                                            0.4                  0.0                   2.8
                                                                        Coal                                             0.8                  0.0                  30.3
                                                                        Wood & paper                                     0.5                  1.2                   4.9
                                                                        General cargo                                    5.0                19.8                   29.8

                                                                            Total                                      45.8                 53.9                   175.0

                                                                        1980

                                                                        Petroleum                                      53.0                 65.8                   164.4
                                                                        Iron ore                                       13.2                   0.0                  28.3
                                                                        Grain                                            0.4                  0.0                   2.3
                                                                        Coal                                             1.6                  0.0                  45.4
                                                                        Wood & paper                                     0.8                  1.6                   5.0
                                                                        General cargo                                    5.2                35.0                   44.0

                                                                            Total                                      74.2               102.4                    289.4

                                                                        2000

                                                                        Petroleum                                      75.3               11.4.5                   252.9
                                                                        Iron ore                                       16.3                   0.0                  34.8
                                                                        Grain                                            0.7                  0.0                   2.7
                                                                        Coal                                             1.9                  0.0                  55.7
                                                                        Wood & paper                                     1.1                  2.2                  10.4
                                                                        General cargo                                    5.5                52.0                   70.0
                                                                            Total                                      100.8              168.7                    426.5

                                                                        Source: Gladstone Associates

                                                                                                                  77

                              The redistribution of products moving through Delaware River and Bay with a cleepwater
                       port facility would be enormous. As shown in Table 35 a substantial number of products
                       would be trans-shipped through a deepwater port in Delaware Bay from superships to smaller
                       ships with final destination along the Delaware River and Bay complex. It is projected that 25
                       million long tons of petroleum products, almost 4 million long tons of iron ore and lesser amounts

                       of coal and grain products would be trans-shipped through a deepwater port for final destination
                       in Delaware River and Bay ports.

                              Table 34.             PROJECTED IMPACT OF DEEPWATER PORT
                                               ON DELAWARE RIVER AND BAY FOREIGN TRADE,

                                                                   1980-2000
                                                           (millions of long tons)

                                                                              Added Delaware
                                                                                River & Bay,
                                                           Del-aware           Foreign Trade
                                                          River & Bay         as a result of
                                                         Foreign Trade        Deepwater Port-             Total
                              1980

                                Petroleum                      53.0                   6.0                   59.0
                                Iron Ore                       13.2                   0.0                   13.2
                                Grain                          .0.4                   0.0                   0.4
                                Coal                            1.6                   0.0                   1.6
                                Wood                            0.8                   0.0                   0.8
                                General Cargo                   5.2                   0.0                   5.2

                                  TOTAL                        74.2                   6.0                   80.2

                              2000

                                Petroleum                      75.3                 22.0                    97.3
                                Iron Ore                       16.3                   0.0                   16.3
                                Grain                           0.7                   0.0                   0.7
                                Coal                            1.9                   0.0                   1.9
                                Wood                            1.1                   0.0                   1.1
                                General Cargo                   5.5                   0.0                   5.5

                                  TOTAL                        100.8                22.0                   122.8

                              I/  This column excludes trans-shipments from         other East Coast
                                  ports to foreign nations and from foreign         nations to other
                                  East Coast ports. In other words, it is the net added to
                                  ultimate destination within the Delaware Bay and avoids
                                  double counting.

                              Source: Gladstone Associates.

                                                                  78

                                                               Table 35

                  DELAWARE RIVER & BAY FOREIGN COMMODITY MOVEMENTS IN THE YEAR 2000
                                                     (millions of long tons)

                                      WITHOUT CONSTRUCTION OF A DEEPWATER PORT

                                                       Petroleum           75.3
                                                       Iron Ore            16.3
                                                       Grain                 0.7
              Delaware River & Bay                     Coal                  1.9                     Foreign Port
                                                       Forest Products       1.1
                                                       General Cargo         5.5
                                                            Total          100.8

                                   ASSUMING COMPLETION OF A DEEPWATER PORT IN 1975

                                               Trans-shipped Through Deepwater Port

                                                       Petroleum           25.0
                                                       Iron Ore              3.7
                                                       Grain                 0.5
                                                       Coal                  1.0
                                                       Forest Products       0.0
                                                       General Cargo         0.0
                                                           Total           30.2

              Delaware River &    Bay                            Direct                              Foreign Port

                                                       Petroleum           72.3
                                                       Iron Ore            12.6
                                                       Grain                 0.2
                                                       Coal                  0.9
                                                       Forest Products       1.1
                                                       General Cargo         5.5
                                                            Total          92.6

               Source: Gladstone Associates

                                                                 79

                        Table 36.                          PROJECTED
                                                   DEEPWATER PORT TRAFFIC
                                                             IMPORTS

                                                   (millions of long tons)

                                                                             Trans-shipment Y
                                                 Total              To                   To Other
                        Year And                Import              Delaware River       East Coast
                         Import                Traffic              And Bay              Ports

                        1980
                         Petroleum               26.0                      8.0              18.0
                         Iron Ore   3/             7.5                      3.7               3.8
                           Total                 @3.5                      11.7             2 T 78

                        2000        4/
                         Petroleum               84.0                      25.0             69.0
                         Iron Ore   2/           10.1                       5.0               5.1
                           Total                 94.1                      30.0             74.1

                         l/ Ship to ship transfers.
                            Assumes 50% of non-Caribbean imports in       supertankers     and 33%
                            of this bound for-Delaware River and Bay.
                         3/ Assumes 80% of iron ore moving more than 6,000 milesrwill be in
                            superships      and 49% of this bound for Delaware River and Bay.
                         4/ Assumes 70% of non-Caribbean imports move in supertankers and
                            33% of this bound for Delaware River and Bay.

                        Source: Gladstone Associates

                                                                80

                  Table 37.                          PROJECTED
                                             DEEPWATER PORT TRAFFIC
                                                       EXPORTS

                                                                       Trans-shipments
                                              Total           From                  From Other
                  Year And                   Export           Delaware River        East Coast
                   Export                   Traffic           And Bay               Ports

                  1980
                     Coal                     3.5                    0.5               3.0
                     Grain                    0.7                    0.3               0.4
                       Total                  4.2                    01.8              3.4

                  2000
                     Coal                     5.0                    1.0               4.0
                     Grain                    3.0                    0.5               2.5
                       Total                  8.0                    1.5               6.5

                   I/ From ship to ship. Assumes 33% of East Coast increase in          Grain and
                      Coal exports to Asia will move in superships.

                  Source: Gladstone Associates

                        Tables 36 and 37 show the projected impact of a deepwater port on imports and exports
                  trans-shipped to Delaware River and Bay and to other East Coast ports. By- the year 2000 over
                  94 million long tons of petroleum and iron ore products will be trans-shipped at a cleepwater port
                  for final destination at the Delaware River and Bay complex or other East Coast ports. By the
                  year 2000, 8 million long tons of coal and grain products will be exported after being trans-shipped
                  at a deepwater port from ports along the Delaware River and Bay and other East Coast ports.

                                                         81

                               Table 38.                       POTENTIAL ANNUAL TRANSPORTATION COST SAVINGS FOR DRY SULK
                                                                IMPORTS AND EXPORTS RESULTING FROM A DEEPWATER TRANSFER
                                                                      TERMINAL IN THE LOWER DELAWARE BAY, 1980-2000

                                                                                     Millions of Dollars in Tran     short .1.0 st   Millions of 1970 Dollars
                                                                                               -Using 150,            0@ I          Potential Trans p-o-r-t-a Yi o -n
                                                   Millions of Long                  Using 50,000,      Ships and Trans-            Cost Savings Of A Deepwater
                                  Year             Tons in Deepwater Trade           DWT Ships          Shipping At   Delaware      Port In  Lower Delaware Bay
                               1980
                                  Iron Ore                  7.5                      $40.0                     $24.8                         $ 15.2
                                  Coal                      3.5                      $18.7                     $11.6                         $ 7.1
                                  Grain                     0.7                      $  3.7                    $  2.3                        $ 1.4
                                    Total                  127T                      T_62.4                    1_38.7                          23-7

                               2000
                                  Iron Ore                  10.1                     $53.8                     $33.3                         $ 20.5
                                  Coal                      5.0                      $26.7                     $16.5                         $ 10.2
                                  Grain                     3.0                      $16.0                     $  9.3                        $ 6.7
                                    Total                   18.1                     -$-9-6.5                  T59.1                          3 -7.4

                                  I/ These savings do not reflect added handling cost       at transfer terminal which would reduce these figures from
                                    20% to 30%.

                               Source: Gladstone Associates

                                            The potential annual transportation cost savings for dry bulk imports and exports, re-
                                  sulting from a deepwater transfer terminal, are portrayed.in Table 38. Savings of more than
                                  $23 million could be anticipated by the year 1980 as a result of a deepwater transfer terminal.
                                  By the year 2000, savings will increase to over $37 million annually.

                                            The potential transportation cost savings for oil imports resulting from a deepwater
                                  transfer terminal are displayed in Table 39. For the year 1980, it is estimated that annual trans-
                                  portation cost savings will range from a low of $48 million to a high of $81 million. This is
                                  expected to increase to from $167 million to $255 million by the year 2000.

                                            With construction of a deepwater transfer terminal in lower Delaware Bay, potential
                                  transportation cost savings for bulk commodities by the year 2000 could reach as high as
                                  $292 million annually. These figures are seen in graph 17.

                                                                                                82

                                                                    500

                                                                                       Millions of Dollars
                                                                                       Transport Cost for
                                                                    400                Non-Caribbean Imports
                                                                                       Using 50,000
                                                                                       DWT Tankers

                                                                                                  Millions of Dollars
                                                                    300                           Transport Cost for
                                                                                                  Non-Caribbean Imports
                                                                                                  Using 200,000
                                                                                                  DWT
                                                                                                         Tankers and
                                                                                                         shipping at
                                                                                                  Trans-
                                                            .2                                    Delaware
                                                                    200

                                                                                                                Millions of Dollars
                                                                                                                in Transport Cost
                                                                                z
                                                                                                                Using 50,000
                                                                                                                DWT  Ships                Millions of Dollars
                                                                    100
                                                                                                                                          in Transport Cost
                                                                                                                                          Using 150,000
                                                                                                                                          DWT Ships and
                                                                                                                                          Trans-shipping at
                                                                                                                                          Delaware

                                                                                       Oil                               Dry Bulk

                                                                       Source:  Gladstone Associates

                                                                                                    Graph 17

                                                                       POTENTIAL ANNUAL TRANSPORTATION COST SAVINGS
                                                                       RESULTING FROM A DEEPWATER TRANSFER TERMINAL
                                                                                              IN THE YEAR 2000

                         Table39.                     POTENTIAL ANNUAL TRANSPORTATION COST SAVINGS FOR OIL IMPORTS RESULTING FROM A DEEPWATER TRANSFER
                                                                                  TERMINAL IN THE LOWER DELAWARE BAY, 1980-2000

                                                                                                      Millions of Dollars Transport
                                            Millions of Lon'     Tons                                Cost For Non-Carillean Imports                         Transportation Cost
                                   Total East Ca@,        Oil Likely To Move In                                              Usi ng 201),000 11T           Savings of Deepwater
                                     Non-Caribbean        Supertankers T1ru The                U ing 50,000                     n'   an Trans-            lor, In Lower Delaware
                                      Oil Imports                   Dp.ater Port I/                                          a ers   t  d 1              (million of
                         Year                             Delaware                             Ds                        ShTippin, a De
                                                                                                 WT Tankers                               aware                      1970 dollarsl
                                     LOW          Hiqh      LOW            High              LOW            Hiqh             LOW          Hiqh            @_Ow          High

                         1980       48.0           80.0     19.0            32.0           $101.0          $171.0        $ 53.D           $ 90.0         $ 48.0        $ 81.0

                         2000      112.0          170.0     66.0           101.0           $352.0          $538.0        $185.0           $283.0         $167.0       $255.0

                          I/ Assumes 50% of Non-Caribbean imports move in supertankers in 1980           and 80% in 2000, and    assuming Delaware deepwater port     will capture 80%
                             of these movements in 1980 and 85% by the year 2000.

                             These savings do not reflect added handling cost at transfer terminal which would reduce             these figures from 20% to 30%.

                         Source: Gladstone Associates

                                                                                                       83

                                        ADDENDUM

        I

                                 This section summarizes information in a nianner corresponding to the outline of our
                          contract. As the study proceeded and analysis ensued,certain components warranted more
                          in-depth development as they related to the feasibility of a cleepwater port. While all contract
                          components were explored, some were found of greater importance; this weighting is reflected
                          in the content and structure of the preceeding text.

                                                              ADDENDUM

                         Demand for deep water facilities in the Middle A t1an tic Region.

                                A     The projected United States demand for iron ore imports in the next
                                      ten years will increase by 3 million long tons, from 30 million in 1970
                                      to 33 million in 1980. Baltimore and Delaware River ports will continue
                                      to handle practically all of these imports.

                                B     The projected 1 0-year demand for coal exports to Japan and elsewhere
                                      will increase 10 million long tons by 1980 to a level of 45 million long
                                      tons. Ninety percent will be shipped from Hampton Roads.

                                C     The projected I 0-year demand for petroleum imparts in the United
                                      States is 205 million long tons for 1980, an increase of 65 million long
                                      tons. For the East Coast specifically, imports will increase from 102
                                      million long tons to 160 million long tons in 1980.

                                D     Since the cleepwater port will serve primarily as a transfer point, the
                                      advantage of locating complementary processing facilities nearby is
                                      diminished. The primary cost of trans-shipping commodities is incurred
                                      at the transfer point; therefore, there would be no transportation cost
                                      advantage in shipping cargo 2 miles to shore as opposed to shipping it
                                      200 miles to New York.

                                      Consequently, a deepwater port would further entrench the existing net-
                                      work and locations of processing facilities.

                        Inventory and analysis of existing ocean going-handling facilities in the Middle Atlantic Region.

                                A     Given the specialized function of a cleepwater transfer terminal, it
                                      will not compete with existing East Coast and Delaware River and
                                      Bay ports. As such, a cleepwater port will complement projected
                                      commodity movements to and fiom established shipping terminals.
                                      As indicated earlier in this report, the existing port facilities along the
                                      Delaware are adequate to handle projected, cargo movements.- Fifty-
                                      seven percent of general cargo capacity will be utilized by 1980. Presently,
                                      the coal and grain export capacity of Delaware River ports is underutilized;
                                      projected export tonnage will not alter this condition. While iron ore and
                                      petroleum imports will increase substantially, present capacities appear
                                      adequate. These can not be quantified because capacity is, to a large extent,
                                      both a function of private storage space and the time element involved in com-
                                      modity processing.

                                                                    85

                                   B    Since a deepwater port will complement projected commodity
                                        movements to and from established ports, the average time re-
                                        quirements for loading and unloading cargo at existing ports is
                                        not a competitive factor in our analysis.

                                   C    The existing ports along the East Coast range in depth from ap-
                                        proximately 35 feet to 50 feet. These ports cannot handle super-
                                        tankers and will not compete with the proposed deepwater port.

                                   D    Since the East Coast ports, from Maine to Hampton   Roads, operate
                                        with similar water temperatures and weather conditions, as well as
                                        an identical longshoremen's contract, no single port has a competi-
                                        tive advantage due to number of operational days.

                                   E    The predominant imports and exports of major East Coast ports
                                        are as follows:

                                                1 . Delaware River and Bay - iron ore and petroleum
                                                    imports.
                                                2.  New York - fuel oil and general cargo.
                                                3.  Baltimore - iron ore imports.
                                                4.  Hampton Roads - coal exports.

                                   F    Since the same longshoremen's contract applies to all the ports
                                        along the East Coast, the labor costs are comparable as seen in
                                        Table 31 of the preceeding text.

                                   G    The existing ports have developed a set of supporting facilities. In
                                        general these facilities are utilized under capacity as follows:

                                                I . Sixty percent of East Coast- port capacity for
                                                    general cargo is utilized.
                                                2.  Iron processing facilities are currently operating
                                                    at 75 percent of capacity.
                                                3.  At the present time 70 percent of the refinery
                                                    capacity is being utilized.
                                                4.  Since the capacity for coal exports is related to
                                                    the existing, transportation network, which favors
                                                    Hampton Roads, all other ports are operating sub-
                                                    stantially under theoretical capacity. The Hampton
                                                    Roads ports are currently operating at 75.percent
                                                    of their coal export capacity.

                              Replacement and Incremental Demand Requirements

                                   A    There are few changes anticipated in channel depths and widths for
                                        existing ports. Baltimore is planning to increase the depth of its port
                                        to 52 feet -- not large enough to handle supertankers. The required

                                                                      86

                                       depth for the cleepwater port will be 80 feet for the next 10 years.

                                  B    Since the cleepwater port will primarily serve as a trans-shipment
                                       facility, limited loading and unloading facilities will be required.

                                  C    Our analysis indicates that railroad and truck facilities will not be
                                       needed for the cleepwater port due to its trans-shipment function.

                                  D    Based on the experience of Bantry Bay and other cleepwater ports,
                                       the deepwater facility will have only minor requirements for utili-
                                       ties such as water, gas, and electricity for the next 10 years.

                                  E    Even though the primary use of the cleepwater port will be petroleum
                                       shipments, the present refinery capacity and storage along the Delaware
                                       River and Bay will be adequate to meet the demand through 1980.
                                       However, approximately a 1 million ton storage facility will be necessary
                                       when the cleepwater port is opened and at least a doubling of this
                                       storage capacity will be necessary within 10 years.

                                  F    Two docking berths will be adequate to meet the demands of the deep-
                                       water port facility over the next 10 years.

                                  G    Over the next 10 years, there will be practically no need nor demand
                                       for complementary bulk processing facilities in the immediate vicinity
                                       of the cleepwater port because there would be Virtually no transportation
                                       cost advantage to facilities so located.

                                  H    Experience indicates immediate and long-run employment will be less
                                       than 100 full time employees for the operation and maintenance of a
                                       cleepwater port, exlusive of ship personnel. At least 75 percent of the
                                       employees would be highly trained technicians. In the long-run regard-
                                       less of increases in commodity volumes, there will not be a corresponding
                                       increase in employment. In fact, employment may decrease due to
                                       automation.

                                                                      87

                                          APPENDICES

                          Statistical information in these appendices are grouped to correspond with and support various
                          subsections of this report. The first deals with transportation factors covered in the Determinants
                          of Potentials. Appendices B and C cover liquid and dry bulk commodities found in text in
                          Detailed Analysis. The final appendix is supportive tables to Summary Analysis and Cost
                          Savings.

                                                                           Appendix A:. Transportation Factors

                                                                       MAINE

                                                                 VT.

                                                                     N.H.

                                                             N.Y.    &S
                                                                    W,SS'
                                                                         R. 1.00
                                                                    CONN. New York
                                                            PA.   DEL.    Philadelphia
                                                       r
                                            OHIO                          Delaware River & Bay
                               Appalachian Mountains          MD@

                                                 W-VA.   VA.              Baltimore
                                           KY.                            Hampton Roads

                                                         N.C.

                                     TENN.

                                                       S.C.

                                      ALA.      -GA.

                                                     FLA.

                                                    88

                                                                      RELATIONSHIP OF TRANSPORT OPERATING COST TO TANKER SIZE
                                        100

                                         90

                                         8o                                                                                    Unit Cost of Petroleum
                                                                                                                               Transportation by Ocean Tanker
                                                                                                                               as Vessel Size Increases

                                         70

                                                ............
                                                -,"""  ..........
                                                ..... ......

                                                       ............
                                                ...... ... .- -

                                                   ..... ....
                                           0
                                                    . ..........
         00                       tA
                                                ........... ... ...
                                  0
                                 U
                                                       ......... .

                                                     .. .......
                                         50

                                                   ............. .
                                                                                                                                                       77"
                                         40
                                                                                                 . .. . ... ... .                                                 .....
                                                                                                         ........                ......
                                                                                   .. .......
                                                                                                                                 ................. ... ........... ...............
                                                                   .......... ........... ... ... . ...     ....                 ......  .......
                                                .... ................. . .....
                                                                      ............. ..................... . ...
                                                          .... . ... .....       ...............                                                                         .....
                                                                                                                                                                         ......... .
                                                                                                            ....                 ........  ............                 .........
                                                                                                                                                                      ..........
                                                                    .........   . .......  ....                                                                   ................
                                                              ... ......                                      ..                 . ....  ......
                                                                                                                                                                  ..................... ...
                                                                         ........ .          .. ...
                                                                                                                                                                   . ... .......
                                                                                                                                                                    ..................
                                                                                                                                               . ........... .....
                                                                                                                                                                  ....................
                                                                                                                                                               .. ............-......
                                                     ............-... ... .

                                                                                                                                                                  ............. .....
                                                                                                                                                                  .................
                                         30
                                              10              20             30               40             so                60              70              80             90              100             110
                                                                                                    Tanker Size, Deadweight Tons (000)

                                Source:       Department of Army, Corps of Engineers. Total unit operating costs of a T-2 tanker,
                                              including capital costs, were taken as equivalent to 100 percent. Costs for larger
                                              vessels are related to this as a percent of the T-2 costs.

                        DEADWEIGHT TONNAGE OF SHIPS NEWLY CONSTRUCTED BY YEAR SINCE 1960.
                                                       (thousands of DWT)

                                1960          47               13 0

                                                                               AVERAGE SIZE
                                1961          45                               LARGEST VESSEL

                                              43
                                1962
                                                             1130

                                1963           50              130

                                                53
                                1964  ... ...... .           -71157

                                1965           51                            206

                                      ....... . ....
                                                 6
                                                  2
                                1966                                                       278

                                                      88
                                      ... ...... .. ...
                                            Xl  . . ...
                                196.7                                                            312

                                                         105
                                1968                                                                    370

                                     0                100                200                300

                                                                                 SOURCE:

                                                                                        SUN OIL COMPANY
                                                                                        ANALYSIS OF WORLD
                                                                                        TANK SHIP FLEET
                                    Fm
                                    Fm

                                                                                        DECEMBER 31, 1968

                                                                90

                     THE RELATIONSHIP BETWEEN VESSEL SIZE
                             AND TRANSPORTATION COST
                                 PERSIAN GULF-JAPAN

                 RELATIVE COST PER
           TON OF CARGO TRANSPORTED
                     100

                    90

                                                        INDEX NUMBER
                                                        60,000 DWT = 100

                    80

                    70-               NI'S

                    60

                    501 1    1 1    1          1
                     6070   90100 120    150 170    200                  300
                                      VESSEL DEADWEIGHT TONS
                                          CIN THOUSANDS)

         L ;ource: American Association of Port Authorities

                                               91

                                                                                                                                                      fill
                                                                                 EMU"

                                                                                                             L

                                                                         -.7t-

                                            Super bulk        carrier compared with conventional type

                  Source: American Association of Port Authorities.

                                      FORECAST OF WORLD OCEANBORNE TANKER TRADE
                                                (Millions of Long Tons)

                                        Year                  Tanker Trade

                                        1966                        935
                                        1973                     1,554

                                        1983                     3,354

                                        2003                     6,061

                                        2043

                                  Source:    Litton Systems Inc.

                                 CHARACTERISTICS OF NEW CONTAINERSHIPS, 1969

                    Line                                              Vessel Characteristics

                                                           Length        Width        Draft        Speed
                                                         (in feet)     (in feet)    (in feet)    (in knots)

               Atlantic Container Lines                   646/695       .86/92        29/28       22/25
               American Export Isbrandsen Lines            610            78           27          20
               Farrell Lines                               668            90           33          22
              .Matson Navigation                           719            95           31          23
               Moore-McCormack Lines                       620            90           31          25
               United States Lines                         700            90           28          25
               Transamerican Trailer   Transport           700            92           28,         26

               Source: The American Association of Port Authorities, 1969.

                                                        93

                                       SUPERTANKER DEADWEIGHT TONNAGE COMPOSITION
                                             OF WORLD TANK.SHIP FLEET AS OF
                                                    DECEMBER 31, 1968

                       DWT In                                                                  T-2
                       Thousands            Number  of Ships           Total DWT           Equivalen

                       100 to 105                   33                 3,362,900              224.3
                       105  to 110                  10                 1,079,800               69.7
                       110  to 120                  18                 2,082,000              131 4
                       120  to 130                  16                 1,969,000              130.0
                       130  to 140                   5                   678,600.              43.1
                       140  to 150                   4                   592,300-              39.1
                       150  to 160                   6                   922,700               60.7
                       160  to 170                   2                   334,100               23.4
                       170  to 180                   1                   .177,800              12.1
                       180  to 190                   4                   745,900               51.1
                       190  to 200                   4                   762,100               51.3
                       200  to 210                  11                 2,268,700              147.9
                       210  to 220                   6                 1,262,800               83.1
                       Over 31-0                     2                   652,000               39.2

                       Source: Sun Oil Company"World Tank Ship Analysis'!

                                                               94

                                           DRAFT ANALYSIS OF SUPERTANKERS
                                            OF WORLD TANK FLEET AS OF
                                                DECEMBER 3F, 196-8

                      Draft                                                                T-2
                     In Feet              Number of Ships               DWT               Equivalent

                       50                         16                  1,568,700            106.3
                       51                         9                   1,030,500            63.6
                       52                         10                  1,305,400            85.4
                       53                         6                     802,800            52.3
                       54                         8                   1,023,000            67.5
                       55                         5                     672,200            45.6
                       56                         3                     465,200            31.3
                       57                         3                     581,000            39.6
                       58                         2                     264 300            15.9
                       59                         6                     960:600            65.0
                       60                         2                     380,800            25.8
                       61                         2                     405,500            25.9
                       62                         13                  2,653,900            173.1
                       63                         3                     531,300            35.0
                       79.5                       2                     652,000            39.2

                          A T-2 Tanker is defined asapproximately 16,6GO D.W.T.

                       Source: Sun Oil Company, "World Tank Ship Analysis."

                                                           95

                                                COST OF JAPANESE TANKERS
                                                     IN TERMS OF DWT

                                                              Total Cost
                           Year             DWT                 (0001000L            Cost Per OWT

                           1968            23,600                 $4.3                    $182.0
                           1968            23,800                   4.8                    201.7
                           1967            35,200                   4.1                    116.5
                           1967            74,000                   6.8                    91.9
                           1968           150,000                 13.0                     84.0
                           1967           173,000                 14.5                     82.9
                           1968           175,000                 13.2                     75.4
                           1967           175,000                 14.0                     80.0
                           1968           209,000                 15.1                     72.2
                           1968           213,000                 14.5                     60.8
                           1968           230,000                 15.5                     67.0
                           1972-73        400,000                 22.1                     55.3

                           Source: Japan Daily     Shieping & Lhipbuilding Gazette, and
                                     Gladstone Associates,

                                                                96

                                 DISTRIBUTION OF TANKER SIZE, BY YEAR OF CONSTRUCTION

                                                     DEADWEIGHT TONS - (000's)

                'Year    20K       20-40       40-60     60-80       80-100      100-125       125-150       150-200        200

                1946     85.7      14.3

                1947     87.5      12.5

                '1948    93.4        6.6

                '1949    61.3      38.7

                1950     67.0      33.0

                1951     78.0      22.0

                1952     80.3      17.5          2.2

                1953     68.4      30.0          1.6

                1954     67.4      30.1          2.5

                1955     65.2      32.0          2.8

                1956     48.0      46.5          4.8                      0.7

                11957    38.8      47.6          11.0         1.0         1.6

                11958    40.0      42.2          16.2         0.4         1.2

                1959     33.8      40.7          21.6         2.6                       1.3

                1960     39.1      37.2          21.2         1.9                       0.5

                1961     41.5      22.9          30.1         4.2         1.2

                1962     41.8      20.6          30.6         2.4         3.5           0.6          0.6

                 963     29.0        9.7         44.8         10.3        6.2

                1964     26.2      10.9          32.2         19.8        10.4          0.5

                11965    34.4        7.1         17.9         29.7        7.6           3.3

                11966    26.8        7.2         9.5          30.7        14.5          8.9           1.1           0.6       0.6

                11967*   36.5      16.4          2.  7        10.7        13.6          5.0           1.1           6.8       7.2

                  Ships under construction or on order as of December 31, 1966.
                  Source: 1946-66 Data: U.S. Dept. of Commerce, Maritime Administration, "A Statistical Analysis
                           of the World's Merchant Fleets", December 1967; 1967 Data: Sun Oil Company, "Analysis
                           of World Tank Fleet", December 1967.

                                                                        97

                                                  ANALYSIS OFWORLD TANK FLEET

                                              BY SIZE CLASS AS OF DECEMBER 31, 1968

                            Size Group               World Fleet
                               . by                      0 OOQ
                          Deadweight Tons          Deadweight Tons)           Percent

                          Under*-   20,000              22,927.1              18.1
                              20 -  40,000              29,024.8              22.9
                              40 -  60,000              24 638.4              19.5
                              60 -  80,000              19:022.3              15.0
                              80   100,000              13,979.1              11.1
                            100  - 120,000               6,524.7               5.2
                            120  - 140,000               2,647.6               2.1
                            140  - 160,000               1,515.0               1.2
                            160  - 180,000                  511.9              0.4
                            180  - 200,000               1,508.0               1.2
                            200  - 220,000               3,531.5               2.8
                            300  - 320,000                  624.0              0.5
                                    Total              126,454.4              100.0

                         Source: Sun Oil Company, "World Tank Ship Analysis."

                                                     TANKER PORTS (CRUDE OIL)

                                          Percent of World Ports             Have Depths Over:

                                                  87                                 25'
                                                  76                                 30'
                                                  71                                 35'
                                                  53                                 401
                                                  35                                 451
                                                  21                                 501

                                   Of 108 U. S.   and  foreign tanker ports engaged in U. S. trade,
                          17  foreign ports and   7 U. S. ports have depths of 50 feet or over. The
                          6 U. S. ports are on    the West Coast and one is Baltimore Harbor as
                          authorized to be constructed by 1972.

                          Source: Litton Systems, Inc.

                                                                 98

                                   PORT DEPTHS AND POSSIBLE OBSTACLES TO
                                              HARBOR DEEPENING

            Harbor                   Authorized        Major Relocation]J           Rock
                                     Aep%)             and Dislocation
            Atlantic Coast                         (Beginning depth of Problem in feet)
            Boston                      40                 40-50                    60
            Portland, Me.               45                   45                     60
            New York                    45                   60                       -
            Baltimore                   55                   60
            Norfolk                     45                   55                       -
            Delaware River              40                     -                    41

            Gulf Coast

            Galveston                   42                     -                    52

            West Coast
            Columbia                    40                   45                     40
            San Francisco               55                   100                    300
            Los Angeles                 40                   42                       -

            Great Lakes                 30 Maximum Due to Seaway Constriants

            Source: U. S. Amy Corps of Engineers, Harbor and Port Development, 1968.

               The depth at which major investment must be placed in relocation of bridges,
               tunnels, piers and buildings.

                                                      99

                                                FOREIGN PORT DEPTHS HANDLING
                                                   BULK COMMODITIES-1968

                  Harbor                  Depth in Feet            DWT of                Type of
                                       Existing   Planned      Largest Vessel             Cargo  1/
                                                           Existing       Planned
                  Africa
                    Algiers, Algeria       52         -        -                           POL
                    Las Palmas,
                       Canary 1.           60         -    100,000                         POL
                    Ras Es Sider, Libya    -          -    200,000            -            POL
                    Marsa, Libya           72         -    100,000        300,000          POL

                  Australia

                    Port Hedland           54         -    100,000        160,000          ORE

                  Middle East

                    Bahrain                70         -    200,000                         POL
                    Kharg, Iran            68         -   @300,000+       500,000          POL
                    Tripoli, Lebenon       60+        -    100,000                         POL
                    Mena Ahmadi, Kuwait    100        -    300,000            -            POL
                    Oman                   66+        -    100,000            -            POL
                    Saudi Arabia           85         -    100,000            -            POL
                    Syria                  51+        -    100,000            -            POL

                  Asia

                    Indonesia              50+        -        -              -            POL

                  Americas

                    Tubar Ao, Brazil       53         -    120,000        250,000          ORE
                    Halifax, Canada        70         -        -              -            POL
                    Peru                   38         -      50,000                        POL,ORE
                    Palva, Venezuela       40+        -      70,000                        ORE

                  Source: Richard Waugh, ASCE, Water Depths Required for Ship Navigation, no date.

                           POL is petroleum products;ORE is iron ore.

                                                             100

                                                                                                                Figure
                                                                                                  WORLD DRY BULK FLEET
                                                         100                                                                                                 '76.OW -EWT
                                                             saffill 211

                                                                                                                                                      50-70,000 DWT

                                                                                                                                                              iwi
                                                                                                          I         I@T
                                                         to
                                                                                                                                                      36-  6,660 DWT
                                                                                                                              '4

                                                         70  7,
                                                                                                                  -4-
                                                     2

                                                         60

                                                     Cb
                                                             714AM-45     L  f.
                                                                                                              t  4 A             q
                                                         50
                                                     z
                                                     z                            x            @7-

                                                                                             @@l        ..I .-T
                                                                                             f.@
                                                         40
                                                     0
                                                                                                                               :.L. Ad
                                                                                                                                                   :-?NPE@    3.9,000 OWT
                                                     91
                                                                                f  1:,
                                                                                                 '-d
                                                         30                                            t -
                                                             Try
                                                                   Tf@
                                                                                            f
                                                                                                       4-
                                                                                          x                                          v,
                                                             Itill                                           4
                                                         20
                                                                                       '4
                                                                                                                            71:,

                                                                                                      t'         t-- i@. T
                                                         10
                                                                                                                      i7
                                                                                                 . . . . . . . ...

                                                                                                                                      q:@
                                                         1953-56                                 1960                                             1965       1966

                                                     YEAR

                                                                     SOURCE. FIGURE 4 DRAWN USING DATA FROM DEPARTMENT OF COMMERCE, MARITIME ADMINISTRATION.
                                                                              MERCHANT FLEETS Of THE WORLD, AND LLOYDS REGISTER OF SHIPS. 1946-1967.

                                                     PROJECTED 1983 WORLD DRY BULK CARRIER FLEET

                                                                       BY SHIP SIZE

                           Deadweight                  No. of Ships in                 No. of Ships
                             Tons                      Baseline Fleet                   to be Added                     Total

                               10,000                          106                             30                        136

                           10-20,000                           195                            173                        368

                           20-30,000                           326                            310                        636

                           30-40,000                           217                            138                        355

                           40-50,000                           ill                            143                        254

                           50-60,000                           107                             89                        196

                           60-80,000                           102                            116                        218

                           80-100,000                            31                            45                           76

                              100,000                             8                            14                          22

                                                              1,203                          1,058                      2,261

                           Source: "A Statistical Analysis of     the World's Merchant Fleets",
                                     U.S. Department of Commerce, Maritime Administration,
                                     December 1967.

                                                     SIZE CHARACTERISTICS OF DRY BULK CARRIERS

                               Type                 - DWT     -          Length              Width                   Draft

                               Dry Bulk             50-75,000          715-825  ft.           95-125 ft.           35-45 ft.
                               Dry Bulk              100,000           820-875'             125-130'               45-501
                               OBOY                  106,000             830'                  1311                491911
                               Dry Bulk              130,000              --                    --                  53'
                               Dry Bulk              146,218             996'                  142'                 55'
                               OBGIJ                 157,000              --                    --                 56-581
                               Dry Bulk              185,000            1,0401                 152'                 571
                               OBOY                  215,000              --                    --                 60-621
                               Dry Bulk              317,000            1,2301                 183'                 66'
                               Dry Bulk              400,000           .1,3251                 198,                 711

                               YOre, Bulk Oil Carrier

                               Source: American Association of Port Authorities, Department of
                                        Transportation, Gladstone Associates

                                       CONSTRUCTION COSTS OF DRY BULK AND COMBINATION CARRIERS

                                                             IN TERMS OF DWT

                                                          (United States Yards)

                                                                   Cost
                    Type of Ship.             DWT             ($ millions)            Cost Per DWT

                    Dry Bulk                20,000                11.0                    $550

                    Dry Bulk                60,000                18.2                    $303

                    Dry Bulk                100,000               23.8                    $238

                    Combination,
                      ore/grain             60,000                18.7                    $312

                    Combination,
                      ore/oil               60,000                19.5                    $325

                    Source: Bath Iron Works Report, May 1970 and
                            Gladstone Associates.

                                                           104

                                       AVERAGE ANNUAL INCREASE IN SIZE OF

                                     BULK CARRIERS CONSTRUCTED 1940       1967

                          Period                 Bulk              Ore-            OBOIJ
                                                 (all)

                          1940 - 1950            10.8%             5.6%             --

                          1950 - 1965              2.1%            4.0%             4.6%

                          1965 - 1967            28.0%            35.1%            59.1%

                          '/Ore, Bulk Oil

                          Source: Gladstone Associates

                                             PERCENT OF ALL BULKY FLEET

                                          IN VESSELS OF MORE THAN 50,000 DWT

                                          Year                         Percent

                                          1965                           13%

                                          1967                           28%

                                          1983                           45%

                          I/This includes OBO vessels.

                          Source: American Association of Port
                                    Authorities and Gladstone Associates.

                                                           105

                                                  PERCENT OF DRY BULK)J FLEET

                                               IN SHIPS OF MORE THAN 50,000 DWT

                                          Year                                 Percent

                                          1960                                     5%

                                          1965                                   12%

                                          1967                                   18%

                                          1983                                   23%

                                 !/This does not include OBO-vessels.

                                 Source: U.S. Department of Commerce, Maritime
                                          Administration,'and Lloyd's Register
                                          of Ships.

                                                             106

                                                                                     Appendix B: Petroleum

                                                                                 I

                                             PERCENT OF EAST COASTIJ OILV FLOW
                                             HANDLED BY MAJOR PORTS, 1961       1968

                                                                        Domestic                            3/
                                                Imports                 Receipts.              Net Inbound
                        Port Area           1961         1968         1961        1968         1961         1968-

                     Delaware River       36.0%        33.5%        47.4%       51.4%         41.0%       40.3%

                     New York             32.0%        37.3%        35.4%       27.3%         32.6%        35.3%

                     Rest of East
                       Coast              32.0%        29.2%        17.6%       21.3%        26.4%'.      24.4%

                     Total East
                       Coast             100.0%        100.0%       100.0%      100.0%       100.0%      100.0%

                     I/ Excludes Portland oil handled for
                         pipeline shipments to Canada.

                     2/ Crude and residual only.

                         Imports plus receipts less shipments.

                     SOURCE: Amy Corps of Engineers and Gladstone Associates.

                                                              108

                                         PERCENT INCREASE IN OIL HANDLINGIJ
                                            BY MAJOR PORTS, 1961 TO 1968

                                                         -Average Annual Percent Increase In:
                      Port Area                  Imports              Receipts            Net InbounA/

                   New England                    13.80%                10.00%                10.40%

                   New York                       9.24%                 3.94%                 4.70%

                   Delaware River                 4.47%                 0.26%                 2.94%

                   Baltimore                      6.11%                 0.75%                 2.93%

                   Hampton Roads
                    and South                     8.27%                 5.56%                 2.39%

                   Total East Coast               5.87%                 0.89%                 3.27%

                   l/  These figures exclude oil shipments
                       into Portland which are then piped
                       into Canada. Oil includes residual
                       and crude.

                   2/  Imports plus receipts less shipments.

                   SOURCE: Amy Corps of Engineers and Gladstone Associates.

                                                        109

                                            PROJECTED DOMESTIC OIL PRODUCTION

                                                      (Millions of Long Tons)
                                                                               U.S.   3/         Average of
                     Mar           Actual        LittonY         AAPA?/    Government-          Projections

                     1953           355.7

                     1963           432.0

                     1973                         531.7          530.0         600.0                553.9

                     1983                         652.1          575.0         780.0                669.0

                     2003                       1,000.0          600.0       1,139.0                913.0

                                             (Average Annual Percent   Increase)

                     1953-1963        2.2%

                     1963-1973                      2.3%           2.3%          3.9%                 2.8%

                     1973-1983                      2.3%           0.9%          3.0%                 2.1%

                     1983-2003                      2.7%           0.2%          2.3%                 1.8%

                     1963-2003                      3.3%           1.0%          4.1%                 2.8%

                               I/ Litton Systems, Inc., 1968.

                               @/ American Association of Port Authorities, 1969.

                               3/ Unpublished Department of Interior working paper.

                                                            110

                                  PROJECTED DOMESTIC DEMAND FOR PETROLEUM

                                                     (Millions of Long Tons)
                                                  l/                     U.S.              Average of
                Year          Actual         Litton         AAPA@-/   Government!/        Projections

                1953           380.2

                1963           527.6

                1973'                         739.0        647.0         843.0                743.0

                1983                        1,027.0        774.0       1,088.0                963.0

                2003                        1,526.0      1,055.0       1,670.0              1,41-7.0

                                                (Average Annual Percent Increase)

                1953-1963        3.9%

                1963-1973                      4.0%          2.3%          6.0%                 4.1%

                1973-1983                      3.9%          2.0%          2.9%                 3.0%

                1983-2003                      2.4%          1.8%          2.7%                 2.4%

                1963-2003                      4.7%          2.5%          5.4%                 4.2%

                           l/ Litton Systems, Inc., 1968.

                          2/ American Association of Port Authorities, 1969.

                               Unpublished Department of Interior working paper.

                                               PROJECTED OIL IMPORTSY BY PORT, 1973 TO 2003
                                                               (Millions of Long Tons)

                                                       Delaware River Projections?-/ New York-New Jersey Projections
                                  Year                   High3/       Medium         Low,-/                      Medium          Low,-/

                           1963 (Actual)                               (27.7)                                    (28.5)
                           19t8 CActual)                               (29.5)                                    (33.0)
                           1973
                             Alternative      1�-/        47.8         -41.8          32.6         47.8            41.8           32.6
                             Alternative      11�-/       44.3          38.8          30.3         54.9            48.1           37.5
                             Alternative      III@/       47.9          42.0          32.7         47.8            41.8           32.6

                           1983
                             Alternative      IY          72.1          57.2          38.6         72.1            57.2           38.6
                             Alternative      IN          61.6          48.8          33.0         93.7            74.3           50.2
                             Alternative      IIIL/       77.3          6 1.3         41.4         60.9            48.3           32.6

                           2003
                             Alternative      I-V         114.1         88.0          53.9         114.1           88.0           53,9
                             Alternative      11�-/       81.0          62.5          38.3         182.9          141.1           86.5
                             Alternative      III7J       138.7        107.0          65.6         61.6            47.5           29.1

                                Includes crude and residual oils             only.
                           21   Includes ports from Trenton, New             Jersey to Delaware City, Delaware.
                           3/   Litton Systems, Inc. 1968.
                           Y    American Association of Port Authorities, 1969.
                           5/   Alternative I assumes that each port will maintain its
                                average 1960's capture of East Coast imports.
                                Alternative II assumes each port will increase or decrease
                                its capture of East Coast imports at the same rate as the 1960's.
                                Alternative III assumes each port will increase or decrease its
                                capture of East Coast imports at the reverse rate of the 1960's.

                           SOURCE: Gladstone Associates.

                                                                             112

                                     AVERAGE ANNUAL CHANGE AND RATE OF GROWTH
                                   FOR PROJECTED OIL IMPORTS,-L' DELAWARE RIVER
                                                          1963-2003
                                                             Delaware River Projections@-/
                 Average Annual Change                HigO-/          Medium            Low@4/

                 1963-1968                                            +0.36
                 1968-1973                              -                -               -
                 1973-1983        5/
                    Alternative  1- 6/                +2.43           +1.54            +0.60
                    ,Alternative Il- 71               +1.73           +1.00            +0.27
                    Alternative  111-                 +2.94           +1.93            +0.87
                 1983-2003        5/
                    Alternative  I-                   +2.10           +1.54            +0.77
                                  @6/
                    Alternative  11-7/                +0.97           +0.69            +0.27
                    Alternative  111-                 +3.07           +2.29            +1.21

                 Average Annual   Rate of Growth

                 1963-T968                                            +1.3%
                 1968-1973
                 1973-1983        5/
                    Alternative  1  6/                +5.1%           +3.7%            +1.8%
                    Alternative  11 71                +3.9%           +2.6%            +0.9%
                    Alternative  111                  +6.1%           +4.6%            +2.7%
                 1983-2003        5/
                    Alternative  1                    +2.9%           +2.7%            +2.0%
                    Alternative  ITN                  +1.6%           +1.4%            +0.8%
                    Alternative  111 7/               +4.0%           +3.7%            +2.9%

                 l/  Includes crude + residual oils only.
                 2/  Includes ports from Trenton, N.J. to Delaware      City, Del.
                 3/  Litton Systems, Inc. 1968.
                 4/  Amer.ican Association of Port Authorities, 19,69.
                 5/  Alternative I assumes that each port will maintain its
                      average 1960's capture of East Coast imports.
                 6/  Alternative II assumes each port will increase      or decrease
                      its capture of East Coast imports at the same      rate as the 1960's.
                 7/  Alternative III assumes each port will increase or decrease
                      its capture of East Coast imports at the reverse.rate of the 1960's.

                 Source: Gladstone Associates

                                                              113

                                           PROJECTED ORIGIN OF U.S. OILY IMPORTS$
                                                          1963 TO 2003
                                                     (Millions of Long Tons)
                                        Caribbean Imports          African Imports         Middle East Imports
                                     Al ter-@u                         zu                                   _3/
                                                 Alter-!         Alter-    Alter-2/       Alterl      Alter -
                      Year           native I native II         native I native II        native I native II

                1963 (Actual)                 (83)                      (0)                        (16)

                1973
                 Highi/                  134         118              4         24             37          39
                 Medium6/                108          96              3         19             30          32
                 Low5/                     95         84              2         17             27          28

                1983
                 Highi/                  188         138             15         76             77          77
                 Mediun-t6/              131          97             11         54             54          54
                 Low5/                   104          76              8         43             43          43

                2003
                 HighY                   250         150             50         190            175         150
                 Med i um_1_/            181         109             36         138            127         109
                 Low.V                   143          86             28         108            100         86

                1/   Includes residual   and  crude oil  only.
                21   Alternative I is   based upon percentage projections of
                     the American Association of Port Authorities, 1969. For
                     detailed percentage breakdown see preceeding table.
                3/   Alternative II is based upon percentage projections of
                     the Newport News Shipbuilding and Dry Dock Company, 1970.
                     For detailed percentage breakdown see preceeding table.
                     The high projections are based upon total U.S. Oil import
                     projections of Litton Systems, Inc., 1968.
                5/   The low projections are based upon total U.S. oil import
                     projections of the American Association of Port Authorities, 1969.
                6/   Medium projections are based upon the average of total U.S. oil
                     imports projected by the American Association of Port Authorities,
                     1969; the U.S. Government; Litton Systems, Inc., 1968; and Newport
                     .News Shipbuilding and Dry Dock Company, 1970.

                SOURCE: Gladstone Associates

                                                               114

                                                    AVERAGE ANNUAL CHANGE & RATE OF GROWTH
                                                   FOR PROJECTED ORIGIN OF U.S. OIL IMPORTS!-/

                                                                    1963-2003
                                                            (millions of long tons)

                                                   Caribbean Imports               African Imports              Middle East Imports
                                              Alternative    Alternative      Alternative   Alternative     Alternative     Alternative
            Average Annual Change                                 I Ll/                              3/            1@/

            1963-73                                                                                               -
            1973-83                                                -                                              -
              High  4/                           +5.40           +2.00           +1.10          +5.20           +4.00           +3.80
              Medium                             +2.30           +0.10           +0.80          +3.50           +2.40           +2.20
              Low     5/                         +0.90           -0.80           +0.60          +2.60           +1.60           +1.50

            1983-2003
              Highi/  6/                         +3.10           +0.60           +1.75          +5.70           +4.90           +3.65
              Medium -                           +2.50           +0.60           +1.25          +4.20           +3.65           +2.75
              Low     5/                         +1.95           +0.50           +1.00          +3.25           +2.85           +2.15

            Average Annual Rate of  Growth

            1963-73
            1973-83
              High  4/                           +4.0%           +1.7%          +27.5%          +21.7%          +10.8%          +9.7%
              Mediu 6/                           +2.1%           +0.1%          +26.7%          +18.4%          +8.0%           +6.9%
              Low MErl                           +0.19%          -1.0%          +30.0%          +15.3%          +5.9%           +5.4%

            1983-2003
                  4/
              High@ 6/                           +1.6%           +0.4%          +11.7%          +7.5%           +6.4%           +4.7%
              Mediuff'K/                         +1.9%           @0.6%          +11.4%          +7.7%           +6.8%           +5.1%
              Low   -                            +1.9%           +0.7%          +12.5%          +7.6%           +6.6%           +5.0%

            I/ Includes residual .+ crude oil only.
            21 Alternative I is based upon percentage projections of the
                  American Association of Port Authorities, 1969.
            3/ Alternative II is based upon percentage projections of the
                  Newport News Shipbuilding & Dry Dock Company 1970.
            4/ 'rhe high projections are based upon total U.S. Oil import
                  projections of Litton System, Inc. 1968.
            5/ 'rhe low projections are based upon total U.S. Oil import pro-
                  jections of the American Association of Port Authorities, 1969.
            6/ Medium projections are based upon the average of total U.S. oil imports projected
                  by American Association of Port Authorities, 1969; the U.S. Government; Litton Systems Inc., 1968
                  and Newport News Shipbuilding & Dry Dock Company, 1970.

            Source: Gladstone Associates

                                                                    115

                                               EAST COAST TRENDS IN CRUDE OIL

                                                     CAPACITY SINCE 1960
                                                   (Millions of Long Tons)

                                                 1960                   1969
                                                         % OT-                  % of          % Increase
                                            Capacity    Total      Capacity    Total           1960-1969
                      Delaware River           47.57     63%          47.10     67%             - 0.99%

                      New York-
                      New Jersey               19.95     26%         18. 88     27%              - 5.41%

                      Other East
                        Coast                   7.84     11%           4.23       6%              -46.05%

                      Total East
                        Coast                  75.35     100%         70.21     100%                6.82%

                      SOURCE: Gladstone Associates and U.S. Bureau of Mines

                                                             116

                                                                 .  Appendix C: Dry Bulk Commodities

                                              1966 BITUMINOUS COAL PRODUCTION
                                                  (Thousands of Long Tons)

                                                                                              Average Annual
                                                       1935-39                               Percent Change
                          Mine Area                    Average                1966             (1936-1966)

                       U.S. Total                      357,300               476,800                1.12%

                       Maryland                           1,367                 11091               -0.67%

                       Pennsylvania, West               86,190                72,729                -0.52%

                       Virginia                         10,884                31,760                6.39%

                       Kentucky                         38,667                83,188                3.84%

                       West Virginia                    95,980               133,665                1.31%

                       SOURCE: U.S. Bureau of Mines and Gladstone Associates

                                               UNITED STATES COAL RESERVESIJ

                                                                            Billions of
                                        Mine Area.                           Long Tons

                                        Total United States                     599.3

                                        Maryland                                   1.1

                                        Pennsylvania, West                       51.3

                                        Virginia                                   8.7

                                        Kentucky                                 58.9

                                        West Virginia                            91.1

                                        .L/ Bituminous coal only.

                                        Source: U.S. Geological Survey.

                                                                118

                                         AVERAGE ANNUAL CHANGE & RATE OF GROWTH
                                         FOR PRESENT AND PROJECTED COAL EXPORTS

                                                         1955-1995

              Average Annual        Total             (millions of   long tons)        soutn           ATT-
                   Change         Exports           Europe            Japan          America           Other

              1955-65                -.38            -.31               .43             .05            -.55
              1970-80                1.60            -.03              1.44             .17              .07
              1980-95                  .49           -.09               .50             .05              .02
              1965-95                  .78           -.30               .95             .07              .06

              Average  Annual
              Rate of  Growth                    (Average annual percent change)

              1955-65                -1.1%          -1.2%            17.2%             3.8%          -16.4%
              1970-80                5.0%           -0.2%            10.7%             6.3%            5.0%
              1980-95                1.0%           -0.6%              1.8%            1.6%            1.0%
              1965-95                2.5%           -1.3%            14.0%             3.9%           10.0%

              Source:  Booz-Allen Applied Research and
                       Gladstone Associates.

                                                           119

                                                                                                                                                                                  EAST COAST EXPORTS OF FOREST PRODUCTS,
                                                     EAST COAST IMPORTS OF FOREST PRODUCTS,                                                                                                   BY PORT, 1961 - 1968
                                                              BY PORT, 1961 - 1968

                                                                                                                                                                                                  (Exports in Thousands of Long Tons
                                                                  (Imports in Thousands of Long Tons)                                                                                                                                       South
                                                                                                            South                                                             New             New         Delaware                        Atlantic            Total
                                             New             New         Delaware                        Atlantic            Total                                        England             York          River         Baltimore         Coast        East Coast
                                           England          York             River        Baltimore         Coast         East Coast
                           1961                                                                                                                             1961
                           Paper             21.0           437.3            90.4            25.4           121.1             695.1                         Paper             23.8            94.0             8.7             16.9         256.9              400.3
                           Lumber           153.7           337.6            199.3           82.3            95.8             868.7                         Lumber            0.0             8.0              0.6             6.0            64.2              i8.9

                           Wood                9.0           12.6             0.6             2.0            10.5                34.7                       Wood              0.1             2.4              0.0             8.0            21.9              32.4
                           Pulp             118.5            31.3            34.6             6.6           354.1             545.2                         Pulp              0.0             0.7              0.5             0.7          415.8              417.   *7
                             Total          302.2           818.8            324.9           116.3                           2,143.7                        Total             23.9            105.1            9.8             31.6         758.8              929.3

                           1968                                                                                                                             1968
                           Paper             33.1           485.3            118.8           36.0           222.8             895.9                         Paper             24.2            123.2            6.1             15.2         697.6              866.3
                           Lumber           257.5           528.7            376.9           268.3          380.2            1,811.6                        Lumber            0.2             11.0             1.6             3.9            97.5             114.2
                           Wood                0.5            7.7             0.0             1.5            10.0                19.6                       Wood              0.1             4.6              0.8             29.7           43.2              78.4
           C:)             Pulp              55.3            45.7             8-6             0.5           503.4             613.4                         Pulp              23.7            41.8             3.4             1.5          476.5              546.9
                             Total          346.4          1,067.3           504.3           306.3         1,116.6           3,340.6                        Total             48.1            180.6            11.9            50.4        1,314.9           1,605.8

                                                            (Average Annual Percent Increase        in Imports)                                                                               (Average Annual Percent Increase       in Exports)

                           1961-1968                                                                                                                        1961-1968
                           Paper               8.23%          1.57%           4.49%           5.96%          12.00%              4.13%                      Paper             0.24%           4.44%        - 4.27%         - 1.44             24.51%            16,63%
                           Lumber              9.65%          8.09%          12.73%          32.29%          42.41%              15.51%                     Lumber               -            5.36%            23.811.     - 5.001.             7.411.            6.39.

                           Wood            - 13.49%         - 5.56%             -            -3,57%            0.68%             6.22%                      Wood              0.0%            13.10%           -               38.75%         13.891            20.281o
                           Pulp            - 7.62%            6.57%        - 10.73%          -13.20%           6.02%             1.79%                      Pulp                 -   -        838.78%          82,86%          16.33%           2.09%             4.42'
                             Total             2.09%          4.34%           7.89%          23.34%          13.15%              7.98%                      Total             14,47%          10.26%           3.06%           8.50',         10.47%            10.401.

                           SOURCE: Derived from       Waterborne Commerce     of the U.S.,                                                                  SOURCE: Derived from      Waternborne Commerce of the'U.S.,
                                   Amy Corps of      Engineers, 1961- and     1968.                                                                                 Amy Corps of Engineers 1961 and 1968.

                                                                       Appendix D: Summary of Projections

                                           SUMMARY OF EAST COAST WATERBORNE TRADE
                                                         BY PORT, 1961-68

                                          Delaware            New               Balti-               Hampton
                                         River & Bay          York                more               Roads-
                                                            (millions of long tons)

                 1961

                   Total Tons                62.1              96.2               28.4               43.2
                   Tons-foreign trade        36.9              37.1               17.6               26.4
                   Percent-foreign trade     59.0%             39.0%              62.0%              61.0%

                 1968

                   Total tons                71.1              115.6              31.0               46.8
                   Tons - Foreign
                            Trade            45.8              53.9               21.8               35.6
                   Percent-Foreign
                            Trade            65.0%                                70.0%              76.0%

                                             (Average annual percent increase)

                 1961-1968

                   Total Tons                 2.07%              2.88%             1.31%               1.19%
                   Foreign Trade              3.45%             6.47%              3.41%               4.98%

                 Source: -Army Corps of Engineers and Gladstone Associates.

                                                               122

                                       PROJECTED DEEPWATER PORT TRAFFIC
                                   (millions of long tons trans7shipped)

                                                                             Total
                          Year                 Imports        Exports   Trans-shipments

                          1980                  33.5            4.2           37.7

                          2000                  94.1            8.0          102.1

                          Source: Gladstone Associates

                                                     123

     I
     I

                          DEFINITIONS

                             I-

                                                             DEFINITIONS

                       A. add-on effect of a deepwaterport: the net change in tonnage going to or coming from a.
                                                              specific port area as a result of commodities being trans-
                                                              shipped at a deepwater terminal nearby.

                       B. bulk carriers: ships constructed specifically for the movement of dry bulk commodities
                                        permitting minimum handling of cargo and maximum space utilization aboard.

                       C. bulk commodities: products or raw materials normally handled and shipped in bulk without
                                              special packaging.

                       D. containerization: the recent innovation in general cargo oceanborne shipping which  places
                                            cargo in trailer- truck-I ike containers for easier handling and greater pro-
                                            tection. These containers require special ships and port facilities for pro-
                                            per handling in transit.

                       E. crude oil: unrefined natural petroleum.

                       F. deadweight ton: the long ton capacity of a ship.

                       G. deepwaterport: a port or transfer terminal capable of servicing ships with drafts in excess
                                           of 55 feet.

                       H. Delaware Riverand Bay Ports: includes all ports south ofand including,Trenton located
                                                          along the Delaware River and Bay.

                       1. draft: the depth of the bottom of a ship below water when fully loaded.

                       J. dry bulk: products or materials normally handled and shipped in bulk without special
                                    packaging, for example iron ore, coal, or grain, but excluding liquid commod-
                                    ities.

                       K. general cargo., a grouping of diverse products in semi-finished or manufactured state which
                                         requires special handling and protection while in transit.

                       L. Hampton Roads: the term used for a group of ports which includes Newport News, Norfolk,
                                            and Hampton Roads Channel in Virginia.

                       M. liquid bulk: fluid products or materials shipped without packaging, for example crude oil
                                      or liquid sulfur.

                       N. long ton: 2,240 pounds (1.12 short tons) or 7.111 barrels of crude oil.

                       0. Middle East: the area surrounding the Persian Gulf.

                       P. nautical mile: 6,080 feet or 1.15 land miles.

                                                                   125

                         Q. New York Port: the term applied to a group of ports in t'he New York area which includes
                                             Newark, Elizabeth, Hoboken, Brooklyn, Erie Basin, and Albany.

                         R. orelbulkoll(OBO): a ship capable of carrying both dry and liquid bulk commodities.

                         S. petroleum fPOL): the term used to include crude and residual oils.

                         T. petroleum throughput capacity per year: the amount of crude oil which arefinery can
                                                                      process in one year allowing for maintenance
                                                                      and shut down time.

                         U. residual oil: semi-refined crude oil or natural crude oil of high quality (mainly from Middle
                                         East wells) that is either further refined for petro-chemical products or burned
                                         as diesel, home heating, or industrial fuel.

                         V. short ton: 2,000 pounds (0.893 long tons) or 6.349 barrels of crude oil.

                         W. supertanker: the name given to a class of oceanborne ships capable of carrying 125,000
                                          long tons of liquid with drafts in excess of 55 feet when fully loaded.

                         X. T-2 tanker: 16,700 deadweight ton liquid bulk carrier.

                         Y. tankers: liquid bulk oceangoing vessels.

                         Z. tonlmile: the movement of one ton one mile.

                                                                   126

                                        REFERENCES

      I

         I

      I

                                                         REFERENCES

                     United States Government Publications

                     United States Department of the Army, Coi-ps. of Engineers. Deepwater Terminal in Delaware
                            Bay, Parts I and 11. Philadelphia, Pennsylvania: Custom House, 1970.

                     United States Department of the Army, Corps of Engineers. Harbor and Port Development.
                            Washington, D.C.: Government Printing Office, 1968.

                     United States Department of the Army. Corps of Engineers. Water Depths Required for Shi
                            Navigation,  by Richard G. Waugh, Jr. Washington, D.C.: Government Printing Office,
                            1969.

                     United States Department of the Army. Corps of Engineers. Waterborne Commerce of the
                            United States, Part 1. Washington, D.C.: Government Printing Office, 1961, 1964
                            and 1968.

                     United States Department of Commerce. CMX Proiect. Bath Iron Works Corporation. Spring-
                            field, Virginia: Clearinghouse, 1968.

                     United States Department of Commerce. Forecasts of United States Oceanborne Foreign Trade.
                            Booz-Allen Applied Research. Springfield, Virginia: Clearinghouse, 1969.

                     United States Department.of Commerce. Oceanborne Shipping. Litton Systems, Incorporated.
                            Springfield, Virginia: Clearinghouse, 1968.

                     United States Department of Commerce. Projections: Principal U.S. Dry Bulk Commodit
                            Seaborne Imports and Exports for 1975 and 1995. Stanford Research Institute.
                            Springfield, Virginia: Clearinghouse, 1969.

                     United States Department of Commerce. Research Report. Newport New5 Shipbuilding and
                            Dry Dock Company. Springfield, Virginia: Clearinghouse, 1970.

                     United States Department of Commerce. Maritime Administration. A Statistical Analysis of
                            the World's Merchant Fleets.    Washington, D.C.: United States Government
                            Printing Office, 1967.

                     United States Department of Commerce.  Maritime Administration. Information and Pre-
                            liminarV Criteria on Planning Container Terminals. Washington, D.C.: 1968.

                                                              127

                       United States Department of Commerce. Maritime Administration. The Economic Impact of
                              United States Ocean Ports. Washington, D.C.

                       United States Department of Commerce. Maritime Administration. United States Seaports
                              Atlantic Coast, Part 1. Washington, D.C.: United States Government Printing Office, 1*965.

                       United States Department of Interior. Mineral Facts and Problems. "Iron". Bulletin 630.
                              Washington, D.C.: United Stat   overnment Printing Office, 1965.

                       United States Department of the Interior. Bureau of Mines. Mineral Industry Surveys.
                              "Petroleum Refineries in the United States and Puerto Rico - Crude Oil Capacity".
                              Washington, D.C.: United States Government Printing Office, 1960 and 1969.

                       United States Department of Interior. Office of Coal Research. Annual Report, 1970.
                              Washington, D. C.: United States Government Printing Office, 1970.

                       United States Department of Interior. Office of Oil and Gas. United States Petroleum
                              Through 1980. Washington, D.C.: United States Government Printing Office, 1968.

                       United States Geological Survey. U. S. Coal Reserves. Washington, D.C.: United States
                              Government Printing Office, 1966.

                       Books

                       Chisholm, Michael. Rural Settlement and Land Uses. London: Hutchinson University Li-
                              brary, 1966.

                       Christaller, Walter. Central Places in Southern Germany. Jena, Germany: 1933.

                       Hoover, E.M. The Location of Economic Activity New York; 1948.

                       lasard, Walter. Location and Space Econom   Cambridge, Massachusetts: MIT Press, 1956.

                       Losch, August. The Economics of Location. 1954.

                       Manners, Gerald. The Geography of Energy. London: Hutchinson University Library, 1964.

                       Reports

                       American Association of Port Authorities. Merchant Vessel Size in United States Offshore
                              Trades by the Year 2.000. Washington, D.C.: 1969.

                       The Annual Report of the Shipbuilders Council of America for 1969. Washington, D.C.: 1969.

                       Boston Redevelopment Authority. Transportation Facts for the Boston Region. Prepared for
                              the City of Boston. Boston, Massachusetts: 1968.

                       Hammer, Greene, Siler Associates. The Delaware River Port. Prepared for the Commonwealth
                              of Pennsylvania State Planning Board: 1965.

                                                                128

                      Hampton Roads Maritime Association. The Ports of Greater Hampton Roads Annual 1970.
                              Norfolk, Virginia: 1969.

                      Lloyd. Lloyd's Register of Ships.. London: 1967.

                      McKinsey and Company. Study for the British Docks Board. London: 1967.

                      National Coal Association. Bituminous Coal Facts, 1968. Washington, D.C.: 1968.

                      National Coal Association. World Coal Trade. Washington, D. C.: 1969.

                      Port of New York Authority. The Port of New York Foreign Trade 1970. New York: 1970.

                      Port of New York Authority. Ocean Petroleum Tanker Size and Traffic Forecast, Port of
                              New York. 1975. New York: 1970.

                      Rawland and MacNeal. Port of Boston, Waterborne Commerce Market and Development
                              Requirements. New York: 1964.

                      Schenker, Eric. The Effects of Containerization on Great Lakes' Ports. University of
                              Wisconsin at Milwaukee: Center for Great Lakes Studies, 1968.

                      Sun Oil Company. Analysis of World Tank Ship Fleet Philadelphia, Pennsylvania: 1969.

                      Systems Analysis ar)d Research Commission. New England Regional Commission: Regional
                              Transportation Needs, November, 1968. Cambridge: 1968.

                      Texas Transport and Terminal Company. Directory of Ports, Bulk Liquid Terminals, Grain
                              Elevators and Bulk Handling Facilities. New Orleans, Louisiana: 1969.

                      Newspapers and Magazines

                      lapan Daily Shipping and Shipbuilding Gazette. Japan.

                      World Ports Magazine. Washington, D.C.; Amundsen Publications.

                      Miscellaneous

                      Brown, joel Barry. Russian and Soviet Transportation Policy: A Geographical Appraisal.
                              Unpublished M.A. Thesis, Department of Geography, Syracuse University, Syracuse,
                              New York: 1968.

                      United States Department of Interior. "Outlook for Petroleum Utilization," Unpublished.

                                                                129

                                            Ft

                                            )00029