lower cargo handling costs, which include pilot fees and wharfage fees. The lower costs are the result of the same amount of cargo being moved in a more efficient fleet. Additionally, deeper channels reduce delays incurred by vessels awaiting tides, creating additional benefits. The economic benefits of channel deepening were estimated using the following five step process to determine transportation cost savings: (1) Projected commodity movements were developed for 1995 through 2045 (Table 20). (2) Projected the future fleet capacity by vessel dead weight classes from 1995 through 2045. Alternative forecasts were developed for the 40 and 42 foot projects (Table 21). (3) Allocated traffic to the projected fleet for each alternative channel depth and computed the total weighted cost to transport the annual commerce for each time period. (4) Compared the total transportation cost of each alternative channel depth to the without project cost. Reductions in the total costs equal NED benefits. (5) The last step in estimating channel deepening benefits Cost Reduction Benefits Since there are no changes in the origin and destination of commodities passing through Savannah Harbor, the benefit of deepening is the reduction in annual transportation costs. Deepening the harbor is not expected to result in a material increase in the volume of commerce moving through the port, but this Commerce will be transported in a fleet of more efficient vessel s. The multiport study presented in Appendix A indicates that deepening the Savannah Harbor will not induce any port shifts. Our analysis indicates that the structural cost relationship between Savannah and competing ports will not be altered enough by the deepening of Savannah's channel to induce shippers to change their choice of port. This is discussed in detail in Appendix A. Container Traffic Benefits The total cost of transporting projected traffic over the planning horizon was computed for the without project condition, as well as for each alternative channel depth. Because the fleet composition is expected to vary with increased channel depth, benefits will accrue to the use of larger vessels with the proposed project. In order to determine the total annual cost of transporting the containerized cargo moving through the port of Savannah, the projected traffic was allocated to each fleet on a pro rata share basis for each decade in the forecast. That is, the amount of annual cargo moved by ships of any given draft is allocated among the fleet based upon the percentage of the total Savannah fleet capacity which is comprised of vessels with that draft. As more large vessels become operational in the world fleet over time, more traffic will shift to these vessels with the deeper channel alternatives than with a 38-foot channel. Some adjustments to vessel dead weight tonnage (DWT) were made to determine the cargo capacity of a given vessel. In the deep draft navigation benefit analysis procedures manual, published by the Corps of Engineers Institute for Water Resources (IWR), adjustments to account for cargo density and space limitations due to machinery spaces and other factors are provided. Most container vessels can only carry about 90 percent of their DWT in cargo weight because of these space restrictions. Cargo density varies, of course, but a figure of approximately 0.77 is used to adjust capacity for this factor, as recommended by the IWR. It should be pointed out that this adjustment is only applied to determine the cost per revenue ton of cargo and does not include the weight of the container itself. Discussions with the Georgia Ports Authority indicate that average loaded containers (TEU) carry 11-13 tons of cargo, which is consistent with averages published elsewhere. Typical container weight is about 2 tons per TEU. Thus, when trying to determine the loaded draft of a container vessel, a figure of about 14 tons per TEU is normal, but the vessel operating cost per ton used to calculate project benefits would only be based on 12 tons of cargo. These parameters indicate that a vessel fully loaded with containers will often sail some 1-2 feet light of its registered draft. Thus, in the benefit analysis, the weight of only the cargo itself, not including the container, is the basis for the cost reduction, but the analysis of vessel operating drafts, from Tables 32 and 33 in Appendix A, includes the weight of the containers. Vessel operating costs were computed for each draft category using the IWR methodology and TBS average vessel deadweight tonnages previously discussed. The hourly operating costs were reduced to a ton-mile basis, so that the transportation cost calculation would be clearer (Table 28 in Appendix A). The methodology for calculating annual transportation cost is: trade route cargo tons x distance in miles x vessel operating cost per ton-mile x percent allocated to the draft increment x historical light-loading percentage = total ar.nual transportation cost for the draft increment. For example, the following information is used to calculate the annual transportation cost for the 40-foot project of 38-foot design draft fully-loaded containerships on the Far East trade route in the year 2005. (1) Total container traffic in 2005 is projected to be 7,232,922 short tons, or 6,563,450 metric tons (Table 18 in Appendix A). (2) The percentage of this traffic on the Far East trade route is calculated using the 1988 data from Tables 18 and 19 in Appendix A. (3) The percentage to the Far East is 1,586,864 tons / (4) Distance travelled on the Far East trade route is taken (6) The percent allocated to each 1-foot increment of design (7) Finally, the historical light-loading percentages are taken from Table 32 in Appendix A (0.077 for fullyloaded vessels). (8) Therefore, the total annual transportation cost for the 40-foot project of 38-foot design draft fully- loaded containerships on the Far East trade route in 2005 is: 6,563,450 MT x 0.49 x 13,500 miles x $0.00268 x 0.193 x 0.077 -$1,721,844 * Does not total due to rounding of actual values for this narrative. A grand summary of all draft increments and light-loading classes from fully loaded to 6 feet light is then performed in order to obtain the total annual transportation cost for each project, year, and trade route combination. The grand summary of these costs was annualized and compared to that for the without project condition. Table 24 illustrates the total annual transportation costs for each alternative by decade and trade route. The differences are the NED transportation savings benefits accruing to container traffic for each alternative channel depth. On a technical note, the transportation cost methodology assumes that 41-foot design draft containerships on the Far East trade route load to an operating draft of no more than 40 feet due to constraints imposed by the Panama Canal. In conversations with harbor pilots, it was learned that vessels load to 40 feet (fresh water in the Savannah River) rounded to the nearest whole foot. Enroute to Panama, the ship will burn off enough fuel to clear the lock sill at Miraflores. Total 40' PROJECT Europe Far East Total $90,634,856 $134,916,270 $170,107,433 $198,850,615 $228,145,620 $262,398,554 $133,940,008 $17,349,952 $25,525,092 $31,997,242 $37,306,367 $42,802,355 $53,203,474 $25,375,760 72.306,497 105.471,086 131.734.466 151.723.054 175.823.947 198.321.328 104.600.934 $89,656,449 $130,996,178 $163,731,708 $189,029,421 $218,626,302 $251,524,802 $129,976,694 $978,407 $3,920,092 $6,375,725 $9,821,194 $9,519,318 $10,873,752 $3,963,314 42/44' PROJECT Europe Far East Total Benefits Source: $17,118,407 $25,086,121 $31,367,371 $36,460,685 $41,832, 134 $51,997,566 $24,924,807 198.321.328 104.600.934 $89,424,904 $130,557,207 $163,101,837 $188,183,739 $217,656,081 $250,318,894 $129,525,741 $1,209,952 $4,359,063 $7,005,596 $10,666,876 $10,489,539 $12,079,660 $4,414,267 Calculated by Savannah District, Corps of Engineers. Bulk Traffic Benefits In 1988, the Waterborne Commerce of the United States reported over 9.1 million short tons of liquid and dry bulk commodities moving through the Port of Savannah. As described in Appendix A, Economic Analysis, a variety of different commodities are shipped and received. Liquid bulk commodities include: crude petroleum, distillate and residual oil, gasoline, asphalt, tars and pitches, and other. Dry bulk commodities include: kaolin clay, grains, sugar, building cement, woodchips, gypsum, and other. All shippers of bulk commodities would not immediately benefit if the Savannah Harbor were deepened from its present depth of 38 feet at mlw to 40, 42 or 44 feet. In discussions with shippers of bulk commodities, most indicated that they had no plans to modify their present operations in response to a deeper channel. However, the principal shippers of bulk grains and kaolin clay stated that they would charter larger vessels to carry their commodities if a deeper channel were available. Transportation benefits for bulk grain shipments are the only benefits claimed for bulk commodities, as shown in Table 25. Transportation benefits for kaolin clay are limited to further containerization of exports to major European and Far East container ports. As the average size of container vessels has increased, there has been a concomitant increase in the channel size required to navigate safely. With the increased drafts of the newer vessels, the maximum safe operating draft in the existing channel is being regularly exceeded in Savannah and other ports. The newer ships registered drafts frequently exceed the channel depth minus local underkeel clearance requirements. |