port financial management challenges financing freight transportation improvements st. louis,...

Port Financial Management Challenges

Port Financial Management Challenges

Financing Freight Transportation ImprovementsSt. Louis, Missouri

April 29 to May 2, 2001

Financing Freight Transportation ImprovementsSt. Louis, Missouri

April 29 to May 2, 2001

Port Financial Management ChallengesPort Financial Management Challenges

• High Tech Terminals + Seamless Intermodal Transfer = No Local Jobs, No Taxes

• More Cargo = More Trucks = Pollution, Noise, Congestion

• Ugly Piles of Empties

• Warehouse/Distribution Jobs Adding Value Far From Waterfront

• Waterfront Land Demand High By Other Uses: Offices, Theme Parks

• Host Communities See Port As Part Of Past, Not Future

• High Tech Terminals + Seamless Intermodal Transfer = No Local Jobs, No Taxes

• More Cargo = More Trucks = Pollution, Noise, Congestion

• Ugly Piles of Empties

• Warehouse/Distribution Jobs Adding Value Far From Waterfront

• Waterfront Land Demand High By Other Uses: Offices, Theme Parks

• Host Communities See Port As Part Of Past, Not Future

Perceived Public Benefits DecliningPerceived Public Benefits Declining


Growth and DevelopmentGrowth and Development

Note: 1) Increased from current 1,500 Lifts per Acre

1995 2010 2020 2030 2040

TE

Us

in

Mil

lio

ns

2000

0

2

4

6

8

10

12

14

16

Forecasted Growth of Container Trafficwith 50 ft Channel Deepening

Forecasted Growth of Container Trafficwith 50 ft Channel Deepening

14.4MM

4.2% CAGR

Terminal Land Expansion Needs in 2040

Channel DepthTerminal ProductivityTotal Land RequiredNew Land RequiredReclaimed Land Required

50 feet3,500 lifts/acre

2,400 acres1,120 acres

600 acres

1


Growth IssuesGrowth Issues

2000 2040

ROI

MILLIONS OF TEUs

2020 20302010

Rail13.9%

Truck86.1%

PONYNJ

West CoastPorts

OtherNorth

AtlanticPorts

Canada

Modal SplitModal SplitLand CreationLand Creation

Environmental ImpactsEnvironmental Impacts Return on InvestmentReturn on Investment Regional Market ShareRegional Market Share


• Dredging / Disposal

• Landside Access

• Terminal Equipment

• Land Creation (Fill)

• Mitigation / Restoration

• Public Access

• Dredging / Disposal

• Landside Access

• Terminal Equipment

• Land Creation (Fill)

• Mitigation / Restoration

• Public Access

Port Development Costs Going Up...Port Development Costs Going Up...

Terminal Facilities

Berth Construction

Railroad and Road Access

Channel Deepening (Local Share)

Land Procurement & Reclamation

Environmental Mitigation

Average Cost/Acre ($ Millions)

Terminal Facilities

Berth Construction

Railroad and Road Access

Channel Deepening (Local Share)

Land Procurement & Reclamation

Environmental Mitigation

Average Cost/Acre ($ Millions)

31%

28%

8%

5%

20%

8%

3.4

31%

28%

8%

5%

20%

8%

3.4

20%

18%

7%

15%

27%

13%

4.0

20%

18%

7%

15%

27%

13%

4.0

Container Terminal Construction Costs: 1990 2000

...Prices Received For Services Going Down

...Prices Received For Services Going Down


Return on Investment Going DownReturn on Investment Going Down

• Inter-Port Competition is High

• Lease Rates Are Flat

• State Funding is Drying Up

• Competition For Federal Funding

• Inter-Port Competition is High

• Lease Rates Are Flat

• State Funding is Drying Up

• Competition For Federal Funding

2000 2040

ROI

Mill

ions

of

TEU

s

2020 20302010


Ports Change Business ModelPorts Change Business Model

• Maintain Market Share (Earn Market Share, Don’t Buy It)

• Strategic Plan To Meet ROI Objectives

• Competitive Bidding To Maximize Lease price

• Stress Capacity Expansion By Productivity

• Maintain Market Share (Earn Market Share, Don’t Buy It)

• Strategic Plan To Meet ROI Objectives

• Competitive Bidding To Maximize Lease price

• Stress Capacity Expansion By Productivity

2000 20402020 20302010

FINANCIALSTRATEGY


Mindset Change From Landlord to Logistics ProviderMindset Change From Landlord to Logistics Provider

• Challenge Jurisdictions

• Entrepreneurial Risk Taking

• Regional Logistics Service Management

• Challenge Jurisdictions

• Entrepreneurial Risk Taking

• Regional Logistics Service Management

Port LandlordPort Landlord


• Advance Competitive Advantage

• Decentralize Investment and Services

• Add Value By Integrating Cargo Handling With Distribution

• Build Leverage to Improve Pricing

• Advance Competitive Advantage

• Decentralize Investment and Services

• Add Value By Integrating Cargo Handling With Distribution

• Build Leverage to Improve Pricing

Demand ManagementDemand Management

Strategic Mandate: Maximize Real Economic Impact of Demand Stream On RegionStrategic Mandate: Maximize Real Economic Impact of Demand Stream On Region


Proposal to Improve Financial PerformanceProposal to Improve Financial Performance

Container Facilities ChargeContainer Facilities Charge

• NAFTA-Wide

• Collected By Local Port Authority

• To Be Invested in Facilities By Collecting Authority (Not on Maintenance Dredging)

• Initiate Research to Determine Feasibility

• NAFTA-Wide

• Collected By Local Port Authority

• To Be Invested in Facilities By Collecting Authority (Not on Maintenance Dredging)

• Initiate Research to Determine Feasibility

CFCCFC

port financial management challenges financing freight transportation improvements st. louis,...

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