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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. 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