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Contract No.

10066
February 2015

Evaluation of the Market


Business Environment Analysis
for the Jacksonville Port Authority
Hon. Alvin Brown
Mayor, City of Jacksonville
Theodore N. Carter
Executive Director
Office of Economic Development
City of Jacksonville
John D. Baker
Co-Chair, Port Task Force
JAXPORT, Jacksonville Port Authority
Executive Chairman, Patriot Transportation Holding, Inc.

Principal Researcher:
Herbert M. Barber, Jr., Ph.D., Ph.D.
CEO, Xicon Economics

Engineering Economics

Xicon. We grow economies.


Xicon Economics
Post Office Box 61478
Savannah, Georgia 31420
United States of America
www.xiconeconomics.com
+1 912 536 4182

Intellectuals solve problems; geniuses prevent them.


Albert Einstein

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Individuals serving this Investigation


The following individuals served the investigation addressed herein:

Theodore N. Carter, Executive Director, OED, City of Jacksonville


Edward W. Randolph, Business Development Manager, OED, City of Jacksonville
John D. Baker, Executive Chairman, Patriot Transportation Holding, Inc.
David Kaufman, Senior Director, Planning & Commercial Development, JAXPORT
Linda M. Williams, Director, Corporate Performance & Compliance, JAXPORT

Members of the Port Task Force


The Port Task Force was established in March 2014, to focus on JAXPORTs strategic priorities for growth and
development in the trade and logistics industries, including the channel-deepening project that would allow larger
cargo ships to utilize JAXPORT.
The members of the Port Task Force include:

John Baker, Executive Chairman, Patriot Transportation Holding, Inc.


Martin E. Stein, Chairman & CEO, Regency Centers
Lathun Brigman, General Manager, Beaver Street Fisheries
Alvin Carpenter, (retired) President & Vice-Chairman, CSX
Moody Chisholm, President & CEO, St. Vincents Healthcare
Joe Debs, Executive Vice President & Chief Marketing Officer, RS&H
Dr. Adam Herbert, (former) President, University of North Florida and Indiana University
Ray Holt, Jacksonville City Council Member, District 11
Paola Parra Harris, Attorney, Harris Guidi
Matt Kane, Owner, Greenshades Software
Robert Lufrano, MD, (former) Chairman & CEO, Blue Cross & Blue Shield of Florida
Mark Middlebrook, Executive Director, St. Johns River Alliance
Janet Owen, Vice President for Governmental Affairs, University of North Florida
Ron Townsend, Communications Consultant and (former) President, Gannett Television
Dr. Quinton White, Executive Director, Marine Science Research Institute, Jacksonville University

This investigation represents a small portion of the efforts of these individuals on behalf of the City of Jacksonville and, moreover,
the citizens of Jacksonville MSA, the Greater North Florida Community, and the United States.

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About the Researcher


Herbert M Barber, Jr, PhD, PhD is the Chief Executive Officer of Xicon Economics. He has
over 25 years of experience leading, managing, and analyzing endeavors in industry and
infrastructure. Dr. Barber is an expert in infrastructure economics, particularly as it relates to
solving complex economic and financial issues associated with the implementation and
operations of large projects in industry and infrastructure. Prior to joining Xicon, he served for
11 years as the CEO of Seminole Southern, an engineering and management firm. Prior to
that, he was as a Senior Project Engineer with Fluor Corporation and Jacobs Engineering for
several years. Dr. Barbers professional and scientific research interests focus on the
development, analyses, and use of econometric models for estimating the potential statistical
effect and causality that projects in industry and infrastructure have on economic variables,
with particular emphasis on return on capital investment. He has conducted over 250
scientific and technological studies involving the infrastructure-economics nexus.
Dr. Barber earned a BS in civil engineering from Georgia Southern University, as well as an MS in industrial management,
where his research concentrated on the use of smart logistics as a means of controlling cost escalation on industrial
projects. Dr. Barber also earned an advanced MS and PhD in industrial technology at Florida State University, where his
research focused on construction engineering. He earned his second PhD in engineering, with a concentration in
engineering economic systems, from Mississippi State University. Through his research at Mississippi State University, Dr.
Barber developed econometric models that allowed him to investigate the statistical effect that global infrastructure
projects have on economies of scale, as viewed through the larger infrastructure-economics nexus.

About Xicon Economics


Xicon Economics is a highly specialized
engineering economics consulting firm
that uses higher order mathematics to
solve complex financial and economic
issues in industry and infrastructure.
Our experts consist of approximately 20
senior professionals, all of whom have
earned research doctorates coupled
with nearly 30 years of experience in
industry and infrastructure.

We bring intellectual rigor,

objectivity, and real

world experience together to solve some of the worlds


most complex engineering, economic, and

financial challenges.

Our experts are some of the most established professionals in their fields, and are well known within the scientific
communities in various countries. We have conducted over 1,500 scientific studies in the areas of infrastructure
economics, energy economics, and manufacturing economics in over 20 countries. Additionally, we have published 15
books and textbooks on various topics in engineering and economics. Further, our experts hold seven US patents.
The primary markets we serve include infrastructure, energy, manufacturing, and government, and our expertise includes
the areas of finance, research, economics, and engineering as it relates to applying higher-order mathematics to solve
complex financial and economic problems associated with economic output.

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No.

No.

Just the Facts

Objective

Key Findings, in Lay Terms

Objective

Just the Facts presents a basic overview of the findings of this


study. The overview must be considered in context with the
accompanying study.
1

Review the previously conducted


economic impact model as it
relates to validity of the
methodologies employed and
validity of the models and
subsequent findings

1.

Conduct an independent
investigation of the business
growth potential at JAXPORT, with
and without deepening

1.
2.
3.

Conduct a cost-benefit analysis of


harbor deepening

2.
3.

Content validity and construct validity existed in methodologies employed


by Martin Associates.
Overall methodologies used by Martin Associates appeared reasonable.
Projections were lower than those generated by Martin Associates.

4.
5.
6.

Data were analyzed using sound econometric techniques.


Multiple scenarios were developed to analyze data through CY 2020.
Without regard to harbor deepening and maintaining status quo, the
following is expected through CY 2020:

Inbound container tonnage: steady increase

Outbound container tonnage: slight decrease

Inbound break bulk tonnage: steady decrease

Outbound break bulk tonnage: steady decrease

Inbound bulk cargo tonnage: rapid decrease

Outbound bulk cargo tonnage: stable with slight decrease

Inbound auto/tractor tonnage: rapid decrease

Outbound auto/tractor tonnage: rapid increase


Projections were lower than those generated by Martin Associates.
Not deepening harbor will not alter current container tonnages adversely.
Opportunity costs of not deepening the harbor are substantial.

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Projected financial cost of harbor deepening: USD812.6 million


Projected non-federal (local) share of harbor deepening: USD394.0 million
Net jobs, optimistic scenario: 3,743
Net jobs, conservative scenario: 1,872
Net business revenue, optimistic scenario: USD7.5 billion
Net business revenue, conservative scenario: USD3.8 billion
Total net benefits, optimistic scenario: USD7.8 billion
Total net benefits, conservative scenario: USD3.9 billion
Benefit-cost ratio, optimistic scenario: 9.63
Benefit-cost ratio, conservative scenario: 4.82
Payout, optimistic scenario: CY 2022
Payout, conservative scenario: CY 2023

Conclusion
Harbor deepening at JAXPORT is financially feasible and economically feasible.
- Xicon Economics
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Contract No. 10066


February 2015

Evaluation of the Market


Business Environment Analysis
for the Jacksonville Port Authority
Principal Researcher:
Herbert M. Barber, Jr., Ph.D., Ph.D.
CEO, Xicon Economics

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Acknowledgements
Xicon Economics hereby expresses its sincere gratitude to the following persons, who fully supported
Xicon Economics and the efforts of its researchers while completing this study.
Theodore N. Carter
Edward W. Randolph
John D. Baker
David Kaufman
Linda M. Williams

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Table of Contents
Page
EXECUTIVE SUMMARY

11

INTRODUCTION

20

PURPOSE

21

METHODOLOGY

23

ANALYSIS & FINDINGS

26

CONCLUSIONS

100

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Basic Definitions, in Lay Terms


1.

2.
3.
4.

5.
6.

7.
8.
9.
10.
11.
12.
13.

14.
15.

16.
17.
18.
19.
20.
21.
22.
23.

Descriptive Statistics analyses that attempt to describe data through commonly accepted methods,
such as those associated with measures of central tendency and the like. As such, descriptive statistics
do not rely of mathematical probability theory as a means of explaining data or events.
Inferential Statistics analyses that use inferences, or generalizability, such that future events may be
explained or forecasted. Inferential statistics rely on mathematical probability theory.
Correlation a measure expressing the relationship between variables. Correlation ranges between 1.0 and +1.0, with zero demonstrating that there exists no relationship between variables.
Standard Deviation a measure noting distances from the mean. Under a normal curve, +/-1SD
encompasses approximately 68.2% of the population under study, +/-2SD encompasses 95.4%, and +/3SD encompasses 99.7%.
Standardization the process of norming data or scores; researchers often use z-scores to standardize
data.
Significance an expression attempting to describe whether a relationship or phenomenon is due to
chance, most often expressed using alpha levels, such as .1, .05, or .01. An alpha level of .01 means
that there exists a 1% probability that an effect, or difference, is due to chance.
Statistical Effect a measure of the differences between two or more variables. Effect can be direct or
indirect.
Effect Size a measure of the strength of a relationship or phenomenon; most often expressed as a
coefficient thorough Hedgess g, Cohens d, and many other techniques.
Practical Effect a statistic to measure the statistical effect of a relationship of phenomenon against
practical application or importance of said statistical effect.
Coefficient of Determination a means of describing mathematically how well data fit a specific curve.
Explained Variance a statistic describing the variance in a dependent variable explained by an
independent variable. Explained variance can run parallel with coefficient of determination.
Analysis of Variance (ANOVA) a statistic used to analyze differences in means between variables,
compared against levels of significance, e.g., p-values.
Linear Regression a method for describing and forecasting data associated with variables through
mathematical models. There are several types of regression, such as simple regression, quadratic
regression, multiple regression, and logistic regression.
Time Series data sets having seen or unseen tendencies of seasonal, trend, and irregular
characteristics.
Time Series Forecasting a statistical method for projecting series variables having seasonal, trend,
and irregular characteristics by coupling smoothing techniques, such as exponential smoothing or
moving average smoothing, with various forms of regression modeling (No universally accepted test
for significance has been established in the literature).
Causality an occurrence between two of more variables that allows a variable to be explained by
another variable. In lay terms, causality is considered to exist during cause-effect occurrences.
Structural Equation Modeling a multivariate analysis technique for testing and analyzing causal
relationships.
Granger Causality a method of determining whether a time series model can forecast another time
series model.
Econometrics the branch of economics that applies advanced mathematics and statistics to
phenomenon in economics such that empirical analyses can be rendered.
Internal Consistency a measure of scale reliability.
Cronbachs Alpha a measure of internal consistency within an instrument.
Deterministic Modelling mathematical techniques containing no elements of randomness.
Probabilistic Modelling mathematical techniques containing elements of randomness.

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24. Generalizability the ability of variables within a sample to mathematically describe, or infer,
phenomenon or relationships across a population.
25. Validity the extent to which a construct, or set of constructs, is operationalized.
26. Reliability the mathematical extent to which a measure captures its intended data.
27. Real Gross Domestic Product macroeconomic measure of economic output, adjusted for inflation.
28. Nominal Gross Domestic Product macroeconomic measure of economic output, without adjustments
for inflation.
29. F-statistic a test for a null hypothesis, often used for determining whether models have been fitted
to data correctly.
30. F-value interpreted differently, but generally represents the ratio of between-groups variance and
within-groups variance.
31. Latent Variables those operationalized constructs existing but hidden, or not readily observed, in
data that often are measured through observed variables.

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Executive Summary

his study reflects the analyses and subsequent findings of Xicon Economics as it related to three
objectives associated with deepening of the St. Johns River in north Florida as a means of increasing
economic output across the geographic region, and the United States at large. These three objectives included the
following:
1.
2.
3.

Review the economic impact model developed by Martin Associates; provide an evaluation regarding the
validity of the methodology of the impact model.
Provide an independent evaluation of the business growth potential for JAXPORT, given the ports current
water depth and water depth under the proposed harbor deepening project.
Provide a cost-benefit analysis, and economic benefits, of the harbor deepening project.

The study, Evaluation of the Market and Business Environment Analysis, was conducted for the City of Jacksonville
on behalf of the Port Task Force. All work noted herein was generated by Xicon Economics, unless noted otherwise.
The principal researcher for this study was Dr. Dr. Herbert Barber, the chief executive officer of Xicon Economics,
Savannah, Georgia.
Xicon Economics used the basic scientific method commonly associated with investigations such as this. In so doing,
the study consists of a brief introduction, followed by a discussion regarding the methodology employed during
execution of the study. Next, a section describing the analyses employed during this study was presented, along
with associated findings. Finally, conclusions were noted, coupled with a few recommendations.
Given the controversy associated with the proposed harbor deepening project and most large public infrastructure
projects, Xicon Economics sought in every regard to ensure that transparency existed in the analyses and
subsequent narrative. Such endeavors allowed stakeholders and taxpayers to follow the researchers thought
patterns when conducting this study. In so doing, Xicon Economics opened its assumptions, arguments, analyses,
findings, conclusions, and recommendations to critique by other professionals. While Xicon Economics has yet to
develop a comprehensive study completely without error or oversight, Xicon Economics respectfully requests that
any such critiques be fully substantiated with sound statistical and econometric analyses, those analyses similar to
that noted herein, or more advanced, as enough baseless opinions without serious analyses have been rendered
and read, in full, by the principal researcher. More specifically, opinions coupled with no advanced analyses only
lead to unfounded opinions.
Further, the objectives set forth by the RFP associated with this study, largely, were over-reaching, and thus, thus
stretched the boundaries of one developing a seamless narrative. Notwithstanding, every objective was warranted
and addressed. Thus, in fulfilling the requirements established for this study, the analyses and accommodating
narratives will be complex, and complicated, to the average reader. To fully understand the analyses, and fully
appreciate the subsequent findings, it is the opinion of Xicon Economics that one needs a basic understanding of
graduate level mathematics, statistics, probability, measurement, and econometrics, coupled with an understanding
of economics, research, and the scientific method. Therefore, Xicon Economics recommends every stakeholder,
proponent, opponent, and/or critic of 1) harbor deepening, 2) Xicon Economics, and/or 3) the principal researcher,

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read this study beginning with the first page of this document and continuing to the end without skipping narrative
or analyses not less than 3 times, taking written notes with each reading, before rendering an opinion regarding
this study, and more importantly, harbor deepening. Likewise, it is recommended that every footnote be read and
fully understood before rendering an opinion regarding harbor deepening. Any attempts otherwise to render a
sound decision regarding this study and harbor deepening will, in all probability, lead to erroneous decisions.
To this end, the basic methodology used to conduct this study included the following, in general:
1.

An independent review regarding the validity and reliability of the methodology employed by Martin
Associates during the data collection phase, data analyses, and findings for the previously conducted
economic impact study: Xicon Economics evaluated the previously conducted economic impact study by
examining the extent to which content validity, construct validity, and criterion validity existed; and the
extent to which reliability existed.

2.

An independent determination of the business growth potential for JAXPORT with, and without, harbor
deepening: Xicon Economics used descriptive and inferential statistical techniques for analyzing and
forecasting the business growth potential of JAXPORT with, and without, harbor deepening. Along with
basic descriptive statistics, time series forecasting was used, coupled with regression and analysis of
variance to render analyses and forecasting as it related to the current position of JAXPORT, by way of
commodities, and potential position, also by commodities. Ultimately, TEU and tonnage data were
translated into revenues. Additionally, comparisons were made to work previously conducted by Martin
Associates and Vickerman and Associates, when applicable.

3.

A cost-benefit model of the harbor deepening project: The technique used by Xicon Economics mandated
that the cost-benefit analyses be based upon a financial perspective and econometric perspective, rather
than a financial perspective, alone, with both financial and economic data considered holistically under the
overall cost-benefit model. Coupling estimated and projected construction costs with forecasted financial
and economic output, an anticipated flow of financial and economic output was presented, appropriate
benefit-cost ratios (BC) were developed, present values were calculated, net present values were
estimated, and statistical effect was calculated through CY 2030.

General findings of Xicon Economics included, but were not limited to, the following:
1.

The methodologies employed by Martin Associates offered evidence that scientific validity existed in terms
of data collection. No references were made as to reliability, or reliability coefficients, in the work
conducted by Martin Associates. Further, Xicon Economics could not calculate reliability coefficients
associated with the survey instruments developed and employed by Martin Associates to collect data, as
Xicon Economics was not privy to any data collected or analyses. However, the techniques employed by
Martin Associates for collecting data were considered more robust than the traditional input-output
method commonly used today in traditional economic impact studies, as many economic impact studies
using BEA multipliers and associated data are grounded with what appears to contain no scientifically valid
measure for rendering impact. Thus, it remains the opinion of Xicon Economics that the methodologies
employed by Martin Associates to collect data, notwithstanding questions associated with reliability, were
in keeping with accepted practices in the scientific research community.

2.

To further evaluate validity, Xicon Economics compared findings between Martin Associates, Vickerman
and Associates, and itself when applicable. For example, differences were found to exist between container
tonnage forecasts across all three firms, under moderate penetration scenarios and aggressive penetration
scenarios, through 2030 (and 2035 in some cases); in some cases, container tonnage projections developed
by Martin Associates were highest, and in other cases, container tonnage projections developed by
Vickerman and Associates were highest. In all cases, under both scenarios, tonnage projections developed
by Xicon Economics were lower. However, projections generated by Vickerman and Associates appeared to
have no statistical merit, and as such, were discounted altogether. Differences were attributed to varying

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techniques used in rendering such projections between Xicon Economics and Martin Associates. However,
in terms of actual data analyses, it is the opinion of Xicon Economics that projections rendered by Xicon
Economics were more statistically robust than those rendered by Martin Associates, and accordingly, Xicon
Economics used its own projections throughout this study. However, as it relates to the analyses and/or
findings of work conducted by Martin Associates, it appeared that a reasonable approach was used, but no
definitive determinations could be made as to overall validity without reviewing the raw data and
subsequent analyses and modeling techniques.
3.

Numerous determinations were made regarding the potential business growth of JAXPORT. However, in
general, Xicon Economics did not attempt to understand why its analyses yielded findings positive or
negative in terms of TEU or tonnage by commodity, or similar. Nonetheless, several of the findings should
be investigated further by JAXPORT to determine why such determinations were made. For example, while
container tonnages were forecasted to increase with, or without, harbor deepening, break bulk tonnages
were consistently decreasing. In fact, inbound break bulk tonnages were forecasted to be non-existent
altogether by FY 2019/20. Similarly, inbound bulk cargo tonnages were forecasted to be non-existent by FY
2018/19, at the current rate of decline. Perhaps troublesome, reversing these trends appears problematic,
as these declines have remained steady over the last several years. However, these tonnages perhaps are
being loaded and offloaded at private terminals in the Jacksonville area; again, such determinations were
not the intent of this study, but these declines should be addressed.

4.

Deepening the harbor under the moderate penetration scenario, container tonnages were projected to
increase more strongly through 2030, over not deepening in those same years. Deepening the harbor
under the aggressive penetration scenario container tonnages also were projected to increase more
strongly through 2030, over not deepening in those same years. However, these findings did not include
impacts associated with harbor deepening, such as delays associated with harbor deepening, nor
construction costs.

5.

Deepening the harbor under the moderate penetration scenario, container gross revenue was projected to
increase more strongly from FY 2014/15 through FY 2029/30, over not deepening in those same years.
Likewise, deepening the harbor under the aggressive penetration scenario, container gross revenue was
projected to increase more strongly from FY 2014/15 through FY 2029/30, over not deepening over those
same years. Again, however, construction impacts were not included in these analyses.

6.

Without incorporating negative impacts associated the construction phase of harbor deepening into the
analytical mix, gross revenues from container tonnage increases was projected to have a statistically
significant effect on economic output in Jacksonville MSA as expressed via GDP, using projections through
FY 2029/30, under the moderate penetration scenario. Likewise, gross revenues from container tonnage
increases were projected to have a statistically significant effect on economic output in Jacksonville MSA as
expressed via GDP, using projections through FY 2029/30, under the aggressive penetration scenario.
Further, effects under both moderate and aggressive penetration scenarios were determined to be of
practical significance, and large.

7.

For the cost-benefit analyses, models were modified to allow for impacts associated with the construction
phase of harbor deepening, such as construction delays and construction costs. In so doing, it was
determined that a net increase of 1,872 jobs (moderate penetration scenario) would be associated with
harbor deepening through CY 2030, excluding jobs directly involved in the construction phase of the
project. Further, it was determined that a net increase of 3,743 jobs would be associated with harbor
deepening through CY 2030, under an aggressive penetration scenario; again, excluding jobs generated
during the construction phase.

8.

Direct business revenues associated with harbor deepening were estimated to be USD7.5 billion, at best,
and USD3.8 billion at worst, through CY 2030.

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700000000

887,269,515

794,555,685

735,520,528

706,890,542

678,828,880

624,410,528

800000000

764,787,723

Optimistic Scenario
651,335,542

900000000

824,891,971

1E+09

855,796,581

Coupling net increases generated through container revenues with direct business revenues, two scenarios
were developed, including an optimistic scenario and a conservative scenario, using separate parameters,
to determine financial feasibility and econometric feasibility. In both scenarios, economic benefits
associated with harbor deepening outweighed financial costs associated with deepening; again, from a
financial perspective and econometric perspective. More specifically, the BC ratios were estimated to be
9.63 and 4.82 under the optimistic and conservative scenarios, respectively. Further, the effects that
harbor deepening was expected to have on Jacksonville MSA GDP was significant at the .001 alpha level
under both scenarios. Still further, the practical effect of harbor deepening was considered large under
both scenarios (Optimistic: Cohens d=23.883; and Conservative: Cohens d=24.001). Thus, under the
assumptions of this study, harbor deepening was determined to be financially feasible and econometrically
feasible. Refer below.

600000000

500000000
Net Benefits: USD 7.8 Billion
400000000

300000000

34,545,862

32,139,351

32,236,475

32,882,623

34,186,086

31,130,897

27,719,922

25,659,943

100000000

25,698,314

26,052,597

200000000

0
(3,000,000)

(7,000,000)

(140,100,000)

(167,600,000)

(165,000,000)

-3E+08

(160,000,000)

-2E+08

Net Costs: USD 812.6 Million


(130,000,000)

-1E+08

(13,000,000)

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
(26,900,000)

9.

Container Revenue

Total Costs

Direct Business Revenue

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427,898,089

397,277,655

382,393,681

367,760,090

353,445,104

339,414,280

325,667,617

Conservative Scenario
312,205,117

400000000

412,445,791

500000000

443,634,548

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300000000

Net Benefits: USD 3.9 Billion


200000000

17,272,923

16,069,668

16,118,230

16,441,304

17,093,035

15,565,441

13,859,954

12,829,966

12,849,151

13,026,292

100000000

0
(3,000,000)

(7,000,000)

(13,000,000)

(140,100,000)

(167,600,000)

(165,000,000)

(160,000,000)

-2E+08

Net Costs: USD 812.6 Million

(130,000,000)

-1E+08

(26,900,000)

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Container Revenue

Total Costs

Direct Business Revenue

Along with the findings of the study, Xicon Economics reached definitive conclusions derived through the analyses
that should be considered by stakeholders as equally important in the decision regarding harbor deepening. These
conclusions included, but were not limited to, the following:
1.

Numerous individuals have rendered opinions regarding harbor deepening at JAXPORT, as often is the case
on large infrastructure projects utilizing public monies. The principal researcher for this study received
some 300 emails, articles, papers, presentations, studies, and commentary regarding various opinions
specifically associated with deepening the St. Johns River. With very few exceptions, these documents
offered no definitive analyses to support the noted claims, scientifically or otherwise. In nearly every case,
even those made by others in the scientific community, such claims simply were not substantiated with
sound analyses; strong arguments were made; no analyses were rendered. Thus, Xicon Economics was left

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to consider these claims as they appeared on face value good arguments, at best, and disgruntled
opponents, at worst. Still further, other claims were disproved altogether through the analyses rendered in
this study.
To this end, however, several concerns noted by Dr. David Jaffee and other seasoned researchers were
considered of merit and warranted. Upon careful inspection of these concerns, it became, and remains,
the opinion of Xicon Economics that most, but not all, of these concerns were derivatives of a lack of
narrative in the studies produced by Martin Associates that described in detail the analyses, and techniques
for those analyses. As a researcher, likely Dr. Jaffee and the other researchers expected the economic
impact study, strategic master plan, and other documents generated by Martin Associates to delineate fully
the statistical and econometric techniques used in rendering findings and subsequent recommendations.
However, doing so would negate sound business sense, as the livelihood of Martin Associates is based
upon confidentiality in every regard, including the analytical techniques used. Dr. Herbert Barber worked
around such issues through multiple readings of documents generated by Martin Associates, multiple
readings of numerous other documents, multiple conversations with Dr. John Martin, multiple
conversations with JAXPORT, and more importantly, thorough independent analyses of raw data provided
by JAXPORT and other sources.
2.

Significant effort has been exerted as it relates to potential environmental impacts, management, and
remediation of the St. Johns River, presuming harbor deepening is elected. This fact was substantiated in
the meetings held by the Task Force, as most speakers and presenters discussed environmental concerns
of harbor deepening at length. Further, nearly every report, study, or presentation generated has focused
on environmental concerns. This held true for the work generated by the US Army Corps of Engineers;
overwhelmingly, these studies centered on environmental concerns; and certainly, such efforts are
warranted.
Unfortunately, however, outside of the study herein, relatively no work has been conducted as it relates to
the financial and economic issues associated with harbor deepening. While Martin Associates conducted an
economic impact study, the noted findings only scratched the surface. Arguably, the same holds true for
the findings herein. Subsequently, the current paradigm needs to be shifted from environmental constructs
to financial and economic constructs though certainly, environmental issues can eventually become
financial and economic issues, as well. While the noted environmental concerns have merit, these concerns
must be couched with the greater good of society, and thus, economic concerns must trump
environmental concerns after it is established that the latter can be properly managed or mitigated.
To this end, it is the recommendation of Xicon Economics that stakeholders concentrate its efforts on the
economics of harbor deepening, presuming the environmental issues have been fully addressed. In so
doing, it is the recommendation of Xicon Economics that the scope of work herein be extended, or
conducted by other PhD-level researchers, to allow for the development of additional economic analyses
prior to the Task Force rendering a decision regarding harbor deepening. While there exists many
arguments supporting this opinion, let the stakeholder consider the findings of this study holistically, as it
relates exclusively to economic output of Jacksonville MSA and the greater region. Subsequently, the
stakeholder will realize that, while the noted flow of economic output noted that while the benefits of
harbor deepening outweighed the financial costs of harbor deepening; and while the effect of harbor
deepening was deemed statistically and practically significant; determinations as to the interdependencies
of each industry sector and port output was not investigated. These interdependencies cannot be assumed,
as they may or may not exist.
To use the example noted in the body of this study, the relationship between manufacturing output and
port output is complex. Likely, this relationship is bi-directional to some extent, though the purpose of the
work herein was not to determine such. However, these type relationships must be determined prior to
considering harbor deepening a sound economic investment. Manufacturing output will not simply
increase because the harbor is deepened, nor will economic output in the transportation sector or
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wholesale sector increase. To suggest such, which is what many public entities unknowingly suggest, is in
serious err. Inbound and outbound cargo exit only at mandates set forth by demand; the port simply is a
vein through which these demands travel. Continuing this argument, there is a relationship between
manufacturing output and manufacturing employment; and manufacturing employment is steadily
decreasing in Jacksonville MSA. In fact, Jacksonville MSA has lost 7,600 manufacturing jobs in recent years.
While this is not atypical in the manufacturing sector today, it is problematic and needs to be investigated
further if port output is derived through the manufacturing sector at all. Refer to the figure below.

860,000
840,000

45,000
40,000

38,180

820,000

35,000

800,000

30,000

780,000

30,605

760,000
740,000

25,000
20,000

720,000

15,000

700,000

10,000

680,000

Total Jax MSA Employment

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

640,000
2002

5,000
2001

660,000

Mfg Employment

Equally as important, overall economic output generated in the manufacturing sector as a percentage of
total Jacksonville MSA GDP has declined for nearly three decades. While these declines may appear small
enough to be overlooked, following the 2008 economic collapse in the US, money supply in Jacksonville
MSA decreased by approximately USD2.2 billion in a single year. Of that total loss, Jacksonvilles
manufacturing sector accounted for nearly one billion dollars (USD989 million). Thus, fully understanding the
manufacturing sector, and every other sector, relative to the port sector and their interdependencies
becomes vitally important, as the manufacturing sector accounts for a disproportionate percentage of
economic output across Jacksonville MSA when compared to other metropolitan areas. Still further, note
that the direct business revenue estimated during completion of the third objective ultimately is a
derivative of other sectors, not the port sector directly; the same holds true of jobs associated with port
activity. Subsequently, Xicon Economics strongly recommends additional work is conducted that
investigates the interdependencies associated across port output and output in other industry sectors prior
to rendering a decision. To do otherwise is inadvisable by Xicon Economics.
Refer to the figure below.

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40,000.0

30.000

35,000.0 25.047
30,000.0 24.198

23.460
22.760

25.000
21.213
20.547

25,000.0

20.211
20.475 20.345
19.133
20.302
20.271 19.987
18.126

20.289

19.994

19.984

20,000.0

20.000
15.000

15,000.0

10.000

10,000.0
5.000

5,000.0

Jax Mfg GDP

Jacksonville MSA GDP

Mfg GDP as % Jax MSA GDP

Linear (Mfg GDP as % Jax MSA GDP)

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

0.000
1997

3.

Xicon Economics recommends that additional efforts be exerted toward strengthening the noted models
developed herein for projecting economic output at JAXPORT. For example, a portion of one model
developed by Xicon Economics only explained 58.6 percent of the variance in the dependent variable,
though this finding was statistically significant. Perhaps other techniques could have yielded higher
explained variances or stronger model fits. This is not to suggest that this portion of the overall model
developed was weaker than would be accepted in the scientific community. However, the development
and testing of such models is complex and demands substantial effort, but such complexities and demands
are sometimes overshadowed by the decision to spend nearly one billion dollars in the mere hope that
harbor deepening is a sound investment. Thus, additional effort needs to be devoted to developing
stronger models.

4.

Xicon Economics recommends that harbor deepening at JAXPORT be considered more closely as it relates
to relatively simultaneous harbor deepening projects in Miami, Savannah, Charleston, and other East Coast
ports.

5.

Xicon Economics recommends that additional efforts be exerted analyzing the current state of the US and
world economies, as well as forecasting the future state of the US and world economies, before rendering
a decision regarding harbor deepening. As a point in fact, Xicon Economics accurately predicted the 2008
economic collapse in 2005, though in retrospect, the pending collapse was suggested as early as 2003-2004
in construction data. Xicon Economics maintains the quantified opinion that the US economy is again
trending similarly as it did immediately leading up to the 2008 economic collapse, albeit without strong
employment. Thus, any near-future recessions and/or collapses is subject to leave the US and Jacksonville
MSA economically worse than the 2008 collapse. Moreover, be advised that portions of the models
herein were established using US GDP and Jacksonville MSA GDP as independent (predictor) variables of
various dependent variables.
Refer to the figure below.

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6.

Xicon Economics recommends holistically that additional efforts be exerted as it relates to analyzing
various political and economic climates around the world outside of only port activities from a risk
engineering perspective prior to a decision being rendered by the Task Force. Perhaps more than ever, the
world is in a state of perpetual political and economic uncertainty in many regards, albeit perhaps unknown
to those persons outside the economics community. In the United States, political unrest and uneasiness
can be seen by the most novice observers of national affairs; and internationally, the economic and political
climates are struggling across numerous nations, particularly those nations in and around the Middle East.
Worse, threats brought about in recent years by numerous terrorist groups have remained unchallenged,
largely, threatening the state of economic well-being in the US and abroad in ways never imagined, let
alone managed. For example, a Somali terrorist group affiliated with al Qaeda recently announced
potential bombings at the Mall of America in Minnesota, one of the nations largest shopping malls.
Jacksonville MSA is not immune from such ill-advised intents; and such events must be considered from a
risk engineering perspective when dealing with uncertainty as it relates to subsequent impacts.

7.

As experts in the field of engineering economics as it relates to economic output, it is the opinion of Xicon
Economics that overall political unrest in the US and world will continue to worsen with time and that the
rate of that unrest will increase. Such unrest has the ability to create havoc on US and world financial and
economic markets. Thus, it remains paramount that stakeholders of this endeavor fully understand the
potential repercussions associated with deepening and not deepening, to the Jacksonville MSA and US
economies. Subsequently, it remains the opinion of Xicon Economics that additional work be conducted as
it relates to the relationship between international political unrest and harbor deepening at JAXPORT,
particularly in the area of risk engineering.

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Introduction

nfrastructure spending has long been considered necessary catalysts for increasing economic output.
Such holds true across most economies, whether developing, developed, or advanced. In fact,
infrastructure spending often reveals direct relationships with economic output, e.g. GDP. As spending increases on
infrastructure endeavors, increases in economic output also occur. However, given that the relationship often is
direct, as infrastructure spending decreases, so does economic output. Nevertheless, scientific evidence suggests
that relationships between infrastructure spending and economic output is a highly complex paradigm
demonstrating directional, bi-directional, and non-directional relationships with and without significant lag as both
1
causal and non-causal endogenous and exogenous variables operate simultaneously.
Perhaps never before has such relationships been analyzed so closely as in recent years, especially since the world
2
economic collapse of 2008. The Bush and Obama Administrations both pressed to leverage infrastructure spending
as stimuli for the struggling US economy, each with only minimal to moderate success; thus, lending evidence to the
argument that the relationship between infrastructure spending and economic output is not only contentious, but a
problematic nexus that must not be endeavored haphazardly. Nonetheless, stakeholders remain left to sift through
a plethora of complex research with little to no understanding of the same in attempts to render decisions that
likely affect economies for generations. The City of Jacksonville and the Jacksonville Port Authority currently face
similar ambiguities surrounding its decision to deepen its harbor for the allowance of larger vessels and containers
into its port.
Subsequently, the Jacksonville Port Authority (JAXPORT) initially contracted with Martin Associates, Lancaster,
Pennsylvania, to help remove ambiguities surrounding its pending decision to deepen the St. Johns River in an
attempt to not only increase its market position across various maritime entities, but to ultimately increase
economic output across the greater region JAXPORT serves. This evaluation serves as an investigation conducted by
Xicon Economics, Savannah, Georgia, on behalf of the Office of Economic Development, City of Jacksonville, on
behalf of the Jacksonville Port Authority as to, generally, the validity of the findings proffered by Martin Associates.
Further, the study addresses potential maritime cargo impacts, and other impacts, associated with harbor
deepening. Still further, the study addresses issues associated with harbor deepening costs and benefits from a
financial perspective and economic perspective.

Barber, H. & El-adaway, I. (under review). Infrastructure engineering: Statistical effect of energy production and consumption
on economic output. Journal of Management in Engineering, ASCE.
2
Under a separate study conducted by Xicon Economics, it was concluded that all but 29 countries were adversely affected
economically by the 2008 world economic collapse (Barber, H. (2011). Global Economic Collapse. Xicon Economics).
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Purpose

he Jacksonville Port Authority, JAXPORT, sought to analyze its market position relative to competing
southeast US ports, and subsequently retained Martin Associates, Lancaster, Pennsylvania, to conduct
an evaluation of its market position, resulting in an analyses of the local and regional economic impacts of the Port
of Jacksonville (2013). Through the study, Martin Associates was to conduct the following:
1.

2.
3.

4.
5.
6.

Evaluate the potential areas of business growth for JAXPORT, given the location, water depth, facilities,
intermodal connections, available properties and available capital, as well as JAXPORTs realistic position
and potential within the maritime industry, i.e. port industry.
Profile the size and structure of existing business by 1) commodity group (Containers, Ro/Ro, 2 Break-bulk,
Bulk, Cruise and Non-Maritime) and 2) trade region, e.g. Asia, Latin America, and Europe.
Evaluate existing terminal layouts and infrastructure to determine best use of facilities to maximize
efficiency and utilization of assets. Evaluate current JAXPORT marketing opportunities to determine the
best use of capital and terminal design/planning.
Provide analysis and feasibility evaluation of commercial, non-maritime revenue producing opportunities in
which the Jacksonville Port Authority could become involved.
Recommend strategies to maximize future revenue growth, to include a short-term and long-term
marketing and development plan for both maritime and non-maritime business.
Assess current trade and the economic environment to determine potential impacts of state and federal
legislation, bi-lateral U.S. trade agreements, carrier mergers, acquisitions, and other economic conditions
that may impact future trade and investment opportunities relating specifically to JAXPORT.

Following completion of these analyses, Martin Associates findings and recommendations were questioned by
other professionals, professionals largely outside the maritime industry and economics profession but nonetheless
respected within their respective fields of expertise. More specifically, concerns were raised regarding the validity of
findings rendered in the study; particularly those findings associated with job growth across the north Florida area.
Additionally, the not-for-profit firm, Public Law Trust, raised concerns regarding the nondisclosure of the raw data
upon which the Martin findings and recommendations were rendered. Prior to the evaluation herein, questions
regarding the validity of the methodology used in rendering findings and recommendations, along with the raw data
used, remained in question, at least to some in the community.
The purpose of this investigation was to evaluate the market and business environment analysis previously
conducted by Martin Associates, with a holistic intent of resolving the aforementioned concerns, doubts, and
ambiguities to the extent realistically possible. In so doing, the position of Xicon Economics was grounded in the fact
that it was neither in favor of, nor against, the techniques employed by Martin Associates during their investigation
for JAXPORT. Likewise, Xicon Economics was neither in favor of, nor against, harbor deepening at JAXPORT. Thus,
any findings and recommendations rendered by Xicon Economics were offered through objective professional
judgment using statistical and econometric techniques accepted in the scientific community.

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To this end, the objectives of this evaluation required Xicon Economics to do the following:
1.
2.
3.

Review the economic impact model developed by Martin Associates; provide an evaluation regarding the
validity of the methodology of the impact model.
Provide an independent evaluation of the business growth potential for JAXPORT, given the ports current
water depth and water depth under the proposed harbor deepening project.
Provide a cost-benefit analysis, and economic benefits, of the harbor deepening project.

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Methodology

or the harbor deepening project for the Jacksonville Port Authority, the primary economic impact
models used to investigate the local and regional economic impacts of port authorities were developed
by Martin Associates using data they have collected over the last several years from port authorities and associated
firms around the world, and more importantly, data collected from companies JAXPORT serves. On face value, this
method has the opportunity to generate robust findings, substantially more robust than those analyses derived
through modern input-output methods. Conversely, however, this method has the opportunity to generate findings
that are equally as weak as they are robust if appropriate research design methodologies and strategies were not
developed and employed. In lay terms, from initial conceptualization of the economic impact study completed by
Martin Associates, to the summary and conclusions associated with the same, research design and methodology
were paramount to the delivery of robust findings. Subsequently, the guiding principle within the dilemma of
reviewing, critiquing, and or analyzing work conducted by Martin Associates as it relates to the purpose noted
herein resided in research design and methodology.
As such, Xicon Economics initially investigated the methodologies Martin Associates employed when collecting data,
port-specific, economic, and otherwise. When collecting data such as these, it is appropriate to utilize some form of
instrument that should offer evidence of validity and reliability. Subsequently, one of the first mandates associated
with the review was to determine whether the research design methodologies employed by Martin Associates
offered evidence that scientific validity and reliability existed, and if so, to what extent.
As a matter of explanation to stakeholders, attempting to establish validity and reliability is an arduous
undertaking. Thus, offered below is a brief overview of validity and reliability below in lay terms:
Validity is the extent to which a measure captures a specific variable, or set of variables, i.e. the
extent to which a construct, or set of constructs, is operationalized. For example, in economics
one is concerned with economic output; however, one must first define economic output; this is
validity. Reliability is the extent to which a measure consistently captures its intended data. In risk
engineering, for example, reliability is the ability of a system to perform consistently its required
functions under stated conditions for a specified period. As another example, in psychometrics,
reliability is the ability of an instrument, or test, to consistently collect the same data repeatedly.
However, it is possible to have reliability without validity; but technically, it is not possible to have
validity without reliability. As an example, a watch that consistently runs 30 minutes later than the
correct time offers no evidence that its measure holds validity as a measure of time; however, the
watch is consistent and therefore, reliable. In fact, while the time the watch keeps is not valid, to
use the term loosely, its reliability coefficient is 1.0 perfect.
In brief, there are three broad types of validity as it relates to instrument development and usage,
including content validity, criterion validity, and construct validity. Of these three types of validity,
content validity is the easiest to address; content validity often is equated with face validity and
asks the researcher to subjectively address two basic questions: 1) Does the instrument appear to

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measure the constructs, or variables, of the study? 2) Is the sample being measured adequate to
3
be representative of the construct to be measured?
Criterion validity allows researchers to approximate how well constructs within their study were
operationalized. A simple example may involve a researcher comparing data collected through
one instrument to data collected through a different, yet similar, instrument; or an estimation of
criterion validity may involve the degree to which an instrument predicts the outcome of a
variable, e.g. economic output of JAXPORT, using a particular instrument, scale, or other measure.
Similar to criterion validity, construct validity is the degree to which an instrument measures a
specific variable. Evidence of construct validity is most often considered the most difficult type of
validity to address; however, it is none less important. Construct validity addresses whether an
instrument accurately measures the constructs it was designed to measure. For example, human
intelligence is often measured in terms of an intelligent quotient (IQ), using 100 as the mean
across the population and 10 or 15 as the standard deviation. However, who is to define
intelligence, and moreover, who is to say that this represents intelligence and this does not? Until
intelligence is operationalized into a measurable variable, it remains merely an abstract
construct of relatively little value.
Upon commencement of this investigation, Xicon Economics reviewed, critiqued, and/or analyzed data and findings
associated with the following documents:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.

The Local and Regional Economic Impacts of the Port of Jacksonville, 2013, dated August 4, 2013, by Martin
Associates
Presentation, The Economic Impact of the Port of Jacksonville, 2013, dated August 7, 2014, presented by
Dr. John Martin, Martin Associates
Jacksonville Port Authority: Strategic Master Plan, dated December 5, 2013, prepared by Martin Associates
Survey Instruments (7 total), Economic Impact Study of the Port of Jacksonville, (n.d.)
Email, Jacksonville Port Task Force, dated May 12, 2014, by Brian Taylor, JAXPORT
Historical Data, 1980/81-2013/14, Jacksonville Port Authority
Final Integrated General Reevaluation Report and Supplemental Environmental Impact States, dated
February 2014, by U.S. Army Corps of Engineers, Jacksonville District
Total Vessel Calls, 2002-2012, USDOT, Maritime Administration
Global Cities Initiative, dated December 2014, a joint venture by Brookings and JP Morgan Chase & Co.
Jacksonville Harbor Deepening, Mayors Task Force, dated August 7, 2014, by Col. Alan Dodd
Memo, Florida Logistics Center Market Analysis Update, dated May 1, 2014, by Brian Taylor, JAXPORT
Seven Questions to Ask about $1 Billion Spending of Public Funds for St. Johns Dredging/Deepening, (n.d.)
by Dr. David Jaffee, Northeast Florida Center for Community Initiatives, University of North Florida
Critical Considerations on St. Johns River Dredging/Deepening Project, (n.d.) by Dr. David Jaffee, Northeast
Florida Center for Community Initiatives, University of North Florida
The Port of Savannah Logistics Cluster, (n.d.) by Dr. Jean-Paul Rodriguez
Jacksonville Port Task Force Briefing, North Florida TPO, Path Forward, 2040 Port & Intermodal Cargo
Forecast, dated November 12, 2014, by John Vickerman, Vickerman & Associates
A Peer Review of the Impact Modeling by Martin Associates for JAXPORT regarding Dredging to 47 Feet,
(n.d.) by Dr. Paul Mason
Transcript, Port Task Force Meeting, dated August 7, 2014, by Ananth Prasad, (formerly) Florida
Department of Transportation
Numerous other papers, articles, and emails regarding harbor deepening at JAXPORT, both for and against

Further, Xicon Economics had multiple communications with numerous individuals associated with the economic
impact of harbor deepening of the Port of Jacksonville, including the following individuals:
3

Evidence of content validity is often offered through content experts.


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1.
2.
3.
4.
5.
6.
7.

Dr. John Martin, CEO, Martin Associates


John Baker, Co-Chair, Port Task Force, Jacksonville Port Authority
David Kaufman, Senior Director, Planning & Commercial Development, Jacksonville Port Authority
Theodore Carter, Executive Director, Office of Economic Development, City of Jacksonville
Ed Randolph, Business Development Manager, Office of Economic Development, City of Jacksonville
Linda Williams, Director, Corporate Performance & Compliance, Jacksonville Port Authority
Jason Harrah, Project Manager, US Army Corps of Engineers, Jacksonville District

Initially, all documents were reviewed in terms of their relevance to each of the three objectives as it related to the
purpose of this investigation, followed by a selected internal critique and analysis of data and findings noted within
each document, relative to the objectives. After such, Xicon Economics evaluated the extent to which validity
existed within the research design methodology Martin Associates used when developing the economic impact
model. To do so, the principal researcher of this study, Dr. Herbert Barber, spent approximately four hours in
discussions with Dr. John Martin, the developer of the economic impact model. Such discussions were necessary as
Martin Associates could not release the actual economic impact model, itself, nor the data associated with the
model, without nullifying confidentiality agreements held with its clients.
First, the seven (7) survey instruments Martin Associates used to collect data were reviewed and critiqued. In so
doing, the extent to which content, construct, and criterion validity existed within the data collection process was
evaluated as it related to each instrument. Next, a review was conducted to determine the reliability of each survey
instrument; again, to the extent possible. Finally, the items noted in each instrument were compared to the analyses
Martin Associates provided in the economic impact study, i.e. The Local and Regional Economic Impacts of the Port
of Jacksonville, 2013, dated August 4, 2013, to ensure that the data captured was congruent with the items found
within each instrument.
Following, the second objective was fulfilled by providing an independent evaluation of the business growth
potential of JAXPORT given the ports current water depth and water depth under the proposed harbor deepening
project. In so doing, it was not considered realistically feasible under the RFP, nor desired by the Office of Economic
Development or Port Task Force, that an exhaustive comprehensive investigation of every variable associated with
and without harbor deepening be examined. Subsequently, specific variables, or commodities, were selected to
serve as comparable variables such that an independent analysis of these variables could be conducted by Xicon
Economics and compared with findings noted by Martin Associates. In so doing, validity, as it related to findings
tendered by Martin Associates, was investigated further.
Upon completion of the first and second objectives, a cost-benefit analysis was conducted. In so doing, project costs
were levied against economic benefits. Cost and benefits were initially compared financially, then econometrically.

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Analysis & Findings

he analyses Xicon Economics used in conducting this study, along with the respective findings, were
divided into three overlapping sections, as they related to the three objectives established in the RFP.
In the first section, a review and evaluation of the economic impact model developed by Martin Associates was
conducted with accommodating arguments for and against the employed methodologies. Following, the potential
business growth potential benefits associated with and without harbor deepening of the St. Johns River were
investigated. Thirdly, harbor deepening was examined from a financial perspective and econometric perspective
through a cost-benefit analysis.

Objective 1: Review and Evaluation of the Economic Impact Model


Xicon Economics reviewed and evaluated the economic impact model developed by Martin Associates, specifically
as it related to validity of the methodology used during model development. In so doing, a review and critique of the
seven survey instruments Martin Associates developed to collect data was conducted. Each of the seven
instruments collected quantitative data, with no demonstration of any attempt to collect qualitative data, from 472
firms providing cargo and vessel services at the Jacksonville Port Authoritys maritime terminals. Each of the seven
instruments were developed individually to collect participant-specific data from seven types of entities, including
entities associated with government, ocean carriers, maritime services, marine cargo, tugs and barges, and
warehouses. Of the seven instruments developed, 65 closed-end items were constructed, with most allowing for
multiple-choice responses within each item. No items were found to be ambiguous, leading, or erroneous; the
scales were appropriate for the data collected; and all data collected could be traced to a variable within the
economic impact study. The seven instruments consisted of the following:
Inst. #
1
2
3
4
5
6
7

Participant Group
Government
Ocean Carriers A
Maritime Services
Ocean Carriers B
Marine Cargo
Tugs & Barges
Warehouse

Participants Identified
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Items
6
8
7
8
9
14
13

Data Relevant
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Ambiguities & Errors


None
None
None
None
None
None
None

Data were collected over the telephone and in-person by professionals employed by Martin Associates, with roughly
five conversations being necessary per respondent. No form of random sampling was necessary as the 472 firms
surveyed represented the population (Response Rate100%); thus, generalizability of a sample across a population
was not of concern. As noted in the economic impact study (p. 15), data collected through the instruments were
considered baseline data. These data allowed for the development of operational models, that when coupled with
appropriate BEA multipliers, further allowed Martin Associates to update the economic impacts JAXPORT marine
terminals and private terminals had annually on the following as each related to direct jobs, revenue and income
impacts, and similar variables:

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Marine cargo tonnage, by commodity


Seaport labor productivity and work rules
Modal distribution of seaport cargo
Vessel calls and vessel size
New carrier services

To this end, Xicon Economics reviewed the instruments and overall methodology employed during the collection of
data from a scientific perspective, as well. In general, Xicon Economics attempted to find evidence that validity
existed, as in cases of critique, such as the investigation herein, it arguably is more important to offer evidence that
validity exists and allow the sophisticated reviewer to render independent conclusions, rather than becoming overly
critical of the methodologies employed during data collection. However, validity is the extent to which a construct is
operationalized, and such could not be precluded from investigation.
In scientific research, constructs are precursors to variables. In this case, specifically, for example, economic
impact must be operationalized into a variable such that it can be quantitatively measured; in lay terms, economic
impact must be defined, e.g. GDP, jobs, income, taxes. While operationalization of a construct is an arduous
undertaking in scientific research, such is relatively straightforward in applied research, such as the economic impact
study discussed herein.
Of the three broad types of validity that exist, including content validity, construct validity, and criterion validity,
only content validity and construct validity were considered relevant to the Martin economic impact study. Content
validity is analogous to face validity. Investigating content validity is less rigorous than construct validity and criterion
validity, as it merely mandates that measures appear to measure intended constructs. Through construct validity,
researchers determine the extent to which constructs are operationalized. Most often construct validity is assessed
through subject matter experts coupled with experts well versed in scientific measurement. Unlike criterion validity,
both content validity and construct validity rely on the experiences of seasoned experts to assess validity, as
opposed to manipulating quantitative data to develop coefficients or similar measures. Subsequently, Xicon
Economics found evidence to support both content and construct validity as it related to the survey instrument and
data collection methodologies employed by Martin Associates. Further, Xicon Economics found evidence that
validity existed within the various graphical economic impact models.
However, a component to validity is reliability, but given that Xicon Economics was not allowed access the data
collected through the seven survey instruments by Martin Associates, reliability coefficients could not be calculated.
Such could easily be attained through any one of several forms of reliability, such as parallel forms, test-retest, or
split halves. Likewise, no evidence was found that suggested that internal consistency was estimated in the
instruments, such as that found using Cronbachs alpha. Thus, it is not possible for Xicon Economics to suggest the
research methodologies employed during the development and execution of the Martin economic impact model
offered evidence of validity further than that previously noted.
4

Nonetheless, in practice, especially as it relates to applied research, it is often not necessary to standardize
instruments that will collect data, at least to the extent one would in psychometric testing and research or other
peer-reviewed scientific research; arguably, such was the case with the Martin economic impact model. Regardless,
it remains the opinion of Xicon Economics that reasonable efforts were taken by Martin Associates to ensure validity
within their research design methodology and data collection processes, notwithstanding the noted issues
associated with reliability.

Significantly more effort is required to standardize instruments than that noted herein. However, let the reader be aware that
standardizing an instrument in this case, such as those used by Martin Associates, would be considered atypical and likely
unnecessary.
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Xicon. We grow economies.


Objective 2: Evaluation of Business Growth Potential of JAXPORT, with and without Deepening
In rendering an independent evaluation of the business growth potential of JAXPORT, with and without harbor
deepening, the original intent of Xicon Economics, was to evaluate business growth potential from a definitive
econometric perspective, in that statistical analyses would be applied to economic measures. Conducting any form
of comparative analysis with the analyses and subsequent findings of Martin Associates would only be possible if
Xicon Economics had access to data collected and analyzed by Martin Associates. Subsequently, on December 22,
2014, it was agreed between representatives of the Office of Economic Development, Port Task Force, and Xicon
Economics that the second objective would be fulfilled through an evaluation of selected variables rather than
through the generation of a comprehensive independent growth model for JAXPORT. Subsequently, it was agreed
that variables would be selected from within the Martin economic impact study and strategic plan and crosschecked
against calculations conducted by Xicon Economics; again, to the extent possible. Further, January 12, 2015, it was
readily understood between representatives from the Office of Economic Development, Port Task Force, and Xicon
Economics that the approach discussed herein for the second objective was in keeping with the overall intent of the
RFP and needs of the Office of Economic Development and Port Task Force.
Subsequently, the following variables were analyzed and projected as a means of estimating the business growth
potential of JAXPORT, using FY 2004/05 through FY 2013/14, as data were available from JAXPORT:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Inbound Containers (TEUs)


Outbound Containers (TEUs)
Inbound Containers (Short Tons)
Outbound Containers (Short Tons)
Inbound Break Bulk (Short Tons)
Outbound Break Bulk (Short Tons)
Inbound Bulk Cargo (Short Tons)
Outbound Bulk Cargo (Short Tons)
Inbound Auto/Tractor (Short Tons)
Outbound Auto/Tractor (Short Tons)

As an explanatory note to the stakeholders, however, data analyzed and subsequent findings of the second
objective should not be construed as identical to data analyzed and subsequent findings of the third objective,
depicted elsewhere in this study. While the raw data remained the same under every objective, treatment of those
data did not, as changes were necessary to accommodate each objective individually. For example, the findings
noted under the second objective were established via independent efforts exerted by Xicon Economics. However,
for comparative purposes, which relates to the critique of validity mandated under the first objective, similar
techniques were employed by Xicon Economics when necessary, presuming such techniques were considered
statistically sound. In so doing, the analyses and subsequent findings in the second objective did not allow for delays
as it related to the engineering and construction phases of harbor deepening. However, the third objective,
involving the cost-benefit analysis, mandated that Xicon Economics consider these delays.

Business Growth Potential without Harbor Deepening


Descriptive Analysis
Container and vessel data were reviewed descriptively using commonly accepted measures associated with central
tendency. In so doing, percentage change and correlation coefficients were calculated using TEU data, where
appropriate, and tonnage data on a total fiscal year basis. Refer to the figures below to review these data
graphically, without explanation.

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FY 2005/06
50,000
45,000
40,000

FY 2013/14

FY 2006/07

35,000
30,000
25,000
20,000
15,000
10,000

FY 2012/13

FY 2007/08

5,000
-

FY 2011/12

FY 2008/09

FY 2010/11

FY 2009/10

Inbound

FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
FY 2009/10
FY 2010/11
FY 2011/12
FY 2012/13
FY 2013/14

Inbound
156,145
120,650
115,798
139,301
159,701
173,424
192,657
199,957
222,728

YoY %Change
-22.7
-4.0
20.3
14.6
8.6
11.1
3.8
11.4

Outbound
394,359
363,914
365,743
363,066
402,482
433,980
418,709
413,542
394,160

Outbound

YoY %Change
-7.7
0.5
-0.7
10.9
7.8
-3.5
-1.2
-4.7

Historical Container, Inbound vs Outbound


Units: TEU
Notes
1.

2.

Correlation coefficient between Inbound and Outbound TEUs: r=.92, N=9, p=.039 (Sig at .05 alpha level).
Tonnage is represented monthly in above figure and by fiscal year (total) in the table.

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Page 29 of 102

FY 2004/05
300,000
FY 2013/14

FY 2005/06

250,000
200,000
150,000
100,000

FY 2012/13

FY 2006/07

50,000
-

FY 2011/12

FY 2007/08

FY 2010/11

FY 2008/09

FY 2009/10
Container

FY 2004/05
FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
FY 2009/10
FY 2010/11
FY 2011/12
FY 2012/13
FY 2013/14

Container
1,014,483
1,133,987
969,547
913,440
1,070,688
1,231,871
1,448,167
1,629,004
1,742,474
1,965,125

Auto/Tractor

Break Bulk
611,918
953,532
974,800
768,695
655,180
821,469
709,645
684,033
833,993
714,100

Bulk Cargo
2,268,448
2,077,573
2,105,125
2,265,260
1,595,842
1,401,732
1,107,362
1,082,575
918,834
1,084,166

Break Bulk

Auto/Tractor
712,905
875,960
866,518
745,943
376,601
478,160
406,928
503,084
303,273
324,786

Historical Tonnage, Inbound Container and Vessel


Units: Short Tons
Note: Tonnage is represented monthly in above figure and by fiscal year (total) in the table.

Bulk Cargo

Total
4,607,754
5,041,053
4,915,989
4,693,338
3,698,311
3,933,232
3,672,102
3,898,696
3,798,574
4,088,177

YoY %Change
9.4
-2.5
-4.5
-21.2
6.4
-6.6
6.2
-2.6
7.6

Xicon. We grow economies.


FY 2004/05
400,000
350,000

FY 2013/14

FY 2005/06

300,000
250,000
200,000
150,000

FY 2012/13

FY 2006/07

100,000
50,000
-

FY 2011/12

FY 2007/08

FY 2010/11

FY 2008/09

FY 2009/10
Container

FY 2004/05
FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
FY 2009/10
FY 2010/11
FY 2011/12
FY 2012/13
FY 2013/14

Container
3,152,897
2,945,785
2,669,168
2,687,275
2,823,908
3,187,460
3,416,904
3,276,295
3,152,533
3,097,844

Auto/Tractor

Break Bulk
195,033
259,386
186,975
183,855
119,585
168,883
184,721
131,994
107,806
78,244

Bulk Cargo
120,258
123,265
147,775
210,607
101,238
113,429
114,185
124,511
126,359
120,669

Break Bulk
Auto/Tractor
372,710
326,902
389,294
616,556
538,919
640,920
740,101
805,481
793,129
702,284

Bulk Cargo
Total
3,840,899
3,655,338
3,393,212
3,698,293
3,583,650
4,110,692
4,455,911
4,338,281
4,179,827
3,999,041

YoY %Change
-4.8
-7.2
9.0
-3.1
14.7
8.4
-2.6
-3.7
-4.3

Historical Tonnage, Outbound Container and Vessel


Units: Short Tons
Note: Tonnage is represented monthly in above figure and by fiscal year (total) in the table.

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Relationships between inbound and outbound container and vessel tonnages were also examined as part of the
descriptive analysis, using FY 2004/05 to FY 2013/2014. For inbound tonnages, the relationship between bulk cargo
tonnage and auto/tractor tonnage was significant at the .001 alpha level (r=.879), as were other relationships, albeit
inverse. For example, the relationship between bulk cargo tonnage and container tonnage was inverse but
significant (r=-.881, p<.01), and the relationship between container tonnage and auto/tractor tonnage was inverse
but significant (r=-.736, p<.05). In lay terms, as container tonnage increased over FY 2004/05 to FY 2013/2014,
auto/tractor tonnage decreased over these same years; and conversely, as container tonnage decreased over the
ten-year period, auto/tractor tonnage increased. For outbound tonnages, no statistically significant relationships
were found, though it could be accurately argued that there was a significant inverse correlation between outbound
container tonnage and outbound bulk cargo tonnage at the .1 alpha level (r=-.578). Refer to the tables below to
examine other relationships.
Relationships of Inbound Tonnage
Container

Break Bulk

Bulk Cargo

Auto/Tractor

Container
r
sig
N

1
10

r
sig
N

-0.190
0.599
10

1
10

r
-0.881
sig
**0.001
N
10
Auto/Tractor
r
-0.736
sig
*0.015
N
10
**Significant at .01 alpha level
*Significant at .05 alpha level

0.225
0.532
10

1
10

0.510
0.132
10

0.879
**0.001
10

1
10

Break Bulk

Bulk Cargo

Auto/Tractor

Break Bulk

Bulk Cargo

Relationships of Outbound Tonnage


Container
Container
r
sig
N

1
10

r
sig
N

-0.183
0.613
10

1
10

r
-0.578
sig
0.080
N
10
Auto/Tractor
r
0.549
sig
0.100
N
10
**Significant at .01 alpha level
*Significant at .05 alpha level

0.215
0.551
104

1
10

-0.690
0.716
10

-0.046
0.900
10

Break Bulk

Bulk Cargo

1
10

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Inferential Analysis
Following the descriptive analysis, projections were rendered for these same container and vessel data through FY
2019/20, using time series forecasting, for JAXPORT without harbor deepening. Time series forecasting allows one
to account for seasonal, trend, and irregular characteristics associated with ordered series data simultaneously.
While statistical arguments can be made for and against the use of time series on these specific data, it was the
opinion of Xicon Economics that time series was the most appropriate technique for forecasting container and
vessel data.
As it relates to JAXPORT opting to forego harbor deepening to 47 feet, the following general assumptions applied to
all analyses:
1.
2.
3.

Data were accurate and reflected true representations of each variable.


Data were consistent with what is considered ordered series, with seasonality.
Inbound and outbound container and vessel volumes remained relatively stable through FY 2019/20,
including container and/or vessel volumes generated through Asia.

An explanation regarding container and vessel projections is noted below, followed by figures representing each
variable via TEU or tonnage, as well as a table reflecting all projections rendered for all variables.
Inbound and Outbound Container Projections by TEU without Harbor Deepening
The least squares regression (LSR) analysis associated with the time series modeling for projecting inbound
container TEUs through FY 2019/20 was determined to be statistically significant, F(1,108)=152.573, p<.001.
Likewise, the LSR intercept and slope coefficients were significant at the .001 alpha level. Further, the difference
factor, as determined by the correlation coefficient between the actual container TEU data and modeled container
TEU data for FY 2005/06 to FY 2013/14, was considered relatively strong (r=.787), and yielded a standard deviation
of .170. Overall, inbound container TEU projections appeared stable through FY 2019/20, with inbound TEU
increases projected to decrease in FY 2014/15 (198,135 TEU) from FY 2013/14 (222,729 TEU), then increase and
decrease year over year to yielding approximately 280,689 containers (TEU) FY 2019/20.
Similarly, the model developed to project outbound container TEUs through FY 2019/20, without harbor deepening,
was strong, as reflected by statistically significant LSR intercept and slope coefficients (p<.001, for both).
Additionally, the overall LSR model fit was significant at the .01 alpha level, as determined through an F-test
conducted under an analysis of variance (ANOVA), F(1, 108)=10.365. The relationship between actual container TEU
data and modeled container TEU data for FY 2005/06 to FY 2013/14, was .450 (SD=.099). Further, the relationship
between actual inbound container TEU data and actual outbound container TEU data for FY 2005/06 to FY 2013/14,
also was calculated through Pearsons product-moment method, and found to be .533 (p<.01).
Subsequently, outbound container volume via TEU was projected to increase steadily through FY 2016/17 to
465,824 TEU, decrease in FY 2017/18 to 432,468 TEU, and then increase steadily through FY 2019/20 to
approximately 442,092 TEU. Overall, outbound container TEU is expected to increase from FY 2013/14 (413,221
TEU) by 7.0 percent.
Inbound and outbound container projections, without harbor deepening, through FY 2019/20 are noted below:

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500,000

410,007

422,845

465,824

442,092

437,280

432,468

400,000
300,000

198,135

234,335

266,588

257,512

269,100

280,689

200,000
100,000
0
FY 2014/15

FY 2015/16

FY2016/17

FY 2017/18

Inbound

FY 2018/19

FY 2019/20

Outbound

Inbound and Outbound Container Projections by TEU, without Harbor Deepening

Inbound and Outbound Container Projections by Tonnage without Harbor Deepening


The overall LSR model fit for inbound container tonnage projections also was significant, F(1,118)=259.057, p<.001,
as was the intercept and slope coefficients. The relationship for the difference factor for FY 2005/06 to FY 2013/14
was .837, and the standard deviation was .189. Likewise, the LSR model developed as a component to the time
series analysis for outbound container tonnage projections was also significant, F(1,118)=15.519, p<.001. The
difference factor coefficient was .492, and the standard deviation was .104.
Subsequently, inbound container tonnages were projected to increase through FY 2019/20, from 1.965 million tons
5
in FY 2013/14 to 2.451 million tons in FY 2019/20 (24.7%). Likewise, outbound container tonnage is expected to
increase, from 3.097 million tons in FY 2013/14 to 3.451 tons in FY 2019/20 (11.4%).
Refer to the figure below for inbound and outbound container tonnage projections through FY 2019/20:
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0

3,256,217

1,908,675

FY 2014/15

3,295,319

2,017,173

FY 2015/16

3,334,421

2,125,670

FY2016/17
Inbound

3,412,625

3,373,523
2,234,167

FY 2017/18

2,342,664

FY 2018/19

3,451,727
2,451,161

FY 2019/20

Outbound

Inbound and Outbound Container Projections by Tonnage, without Harbor Deepening

Let the reader be cautioned when using percentage change as a measure, as percentage change can be deceptive, depicting
changes that while indeed may be true of two data, may not exist holistically across the series. Thus, percentage change lends
itself to potentially describing change inaccurately against the series.
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Xicon. We grow economies.


Side Note
Though not part of this study, per se, given that the necessary data were readily available and could easily be
manipulated, average projected container efficiencies, or densities, were calculated and noted below:
12.00
10.00
8.00

9.63
7.94

8.61

7.97

7.79

7.16

8.73

8.71

8.68
7.80

7.80

7.81

FY 2017/18

FY 2018/19

FY 2019/20

6.00
4.00
2.00
0.00
FY 2014/15

FY 2015/16
Inbound

FY2016/17
Outbound

Poly. (Inbound)

Poly. (Outbound)

Inbound and Outbound Container Efficiency


Units: Short Tons/TEU

Inbound and Outbound Break Bulk Projections by Tonnage, without Harbor Deepening
The model developed to project inbound break bulk tonnage was not statistically significant at the .05 alpha level;
and the difference factor coefficient was .492, while the standard deviation was 1.026. Potentially lending
themselves to disrupt data stability, several potential outliers were observed in the series. Nonetheless, it became
obvious that inbound break bulk tonnage has steadily decreased since FY 2004/05, and as such, it could be inferred
that the negative regressive behavior of the series would continue through FY 2019/20. Therefore, projections were
rendered, albeit through a time series model not considered statistically significant.
Conversely, the time series model developed to project outbound break bulk tonnage was considered strong, with
an overall LSR model fit that was significant, F(1, 118)=34.867, p<.001, as well as both intercept and slope
coefficients. Similar to the inbound break bulk model, however, the time series model clearly demonstrated
negative regression of outbound break bulk tonnage through FY 2019/20. Thus, projections for inbound and
outbound break bulk tonnage, without harbor deepening or other form of market capture, are anticipated to
decrease steadily. In fact, outbound break bulk tonnage was estimated to dissipate altogether around CY 2020.
Projections for inbound and outbound break bulk tonnage are noted below.

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800,000

724,169

715,181

706,194

697,203

700,000

688,218

679,231

600,000
500,000
400,000
300,000
200,000
100,000

79,567

64,493

49,419

34,345

19,271

4,197

0
FY 2014/15

FY 2015/16

FY2016/17
Inbound

FY 2017/18

FY 2018/19

FY 2019/20

Outbound

Inbound and Outbound Break Bulk Projections by Tonnage, without Harbor Deepening
Inbound and Outbound Bulk Cargo Projections by Tonnage, without Harbor Deepening
Time series was also used to project bulk cargo tonnage through FY 2019/20, using FY 2004/05 to FY 2013/14
tonnage data. In so doing, the LSR analysis yielded a statistically significant fit, F(1, 118)=78.591, p<.001, with slope
and intercept coefficients both being significant, as well. Substantial decreases in inbound bulk cargo tonnage were
projected through FY 2019/20, with inbound tonnages dissipating altogether around first or second quarter of CY
2020, unless changes occur to alter this course. Conversely, outbound bulk cargo tonnage projections are expected
to remain relatively constant with a tendency to decrease by approximately 2,000 tons year after year, though the
overall LSR model fit was not statistically significant (p=.337).
Refer to the figure below:
800,000
700,000

667,437

600,000

498,942

500,000
400,000

330,447

300,000
200,000

119,022

117,056

115,091

161,953
113,126

100,000

111,160
0

109,195
0

0
FY 2014/15

FY 2015/16

FY2016/17
Inbound

FY 2017/18

FY 2018/19

FY 2019/20

Outbound

Inbound and Outbound Bulk Cargo Projections by Tonnage, without Harbor Deepening

Inbound and Outbound Auto/Tractor Projections by Tonnage, without Harbor Deepening


Inbound auto/tractor tonnage is decreasing rapidly at JAXPORT, given prior actual inbound tonnage data and the
subsequent time series model developed. The overall LSR model was significant at the .001 alpha level,
F(1,118)=149.444, and the difference factor had a correlation coefficient of .768 (SD=.457). Inbound auto/tractor

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Xicon. We grow economies.


tonnage was forecasted to be non-existent the end of CY 2018, or sooner, without catalysts to stave these
projections.
However, outbound auto/tractor tonnage was projected to continue to increase, given the time series model
developed from previous data, reaching approximately 1.15 million tons of auto/tractor, and the like, by FY 2019/20.
In fact, the 2008 US economic collapse appeared to only moderately impact auto/tractor tonnage departing
6
JAXPORT. The LSR model fit for the time series was significant, F(1, 118)=138.372, p<.001, and the correlation
coefficient for the difference factor was .755 (SD=.273).
1,400,000
1,200,000
1,000,000

884,469

990,478

937,478

1,149,514

1,096,505

1,043,496

800,000
600,000
400,000

216,359

200,000

153,759

91,159

28,559

0
FY 2014/15

FY 2015/16

FY2016/17
Inbound

FY 2017/18

FY 2018/19

FY 2019/20

Outbound

Inbound and Outbound Auto/Tractor Projections by Tonnage, without Harbor Deepening

Overall inbound and outbound projected vessel and container tonnage for FY 2019/20 is noted below by percentage
of (JAXPORT) market share. Considering inbound tonnage and outbound tonnage together, inbound tonnage was
projected to represent 39.9 percent of total tonnage, while outbound tonnage was projected to represent 60.1
percent of total tonnage.
100.0%
80.0%

78.3%

60.0%
40.0%

21.7%

20.0%

0.0%

0.0%

Bulk Cargo

Auto/Tractor

0.0%
Container

Break Bulk

Total Inbound Projections by Tonnage in FY 2019/20


Note: Percentages may not equal 100% due to rounding.

No calculations were conducted to verify econometrically this statement, such as could be determined through the application
of statistical effect and causal techniques, like Granger causality.
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Page 37 of 102

Xicon. We grow economies.


100.0%
80.0%

73.2%

60.0%
40.0%

24.4%

20.0%

0.1%

2.3%

Break Bulk

Bulk Cargo

0.0%
Container

Auto/Tractor

Total Outbound Projections by Tonnage in FY 2019/20


Note: Percentages may not equal 100% due to rounding.

Container

Inbound Tonnage

Outbound Tonnage

Break Bulk

Bulk Cargo

Auto/Tractor

+28.4%

-6.2%

-100.0%

-100.0%

+6.0%

-94.7%

-8.3%

+30.0%

Projected Changes in Inbound and Outbound Tonnages, FY 2019/20 over 2014/15


Note: Loss of the Asian market is not depicted in container tonnages. Refer elsewhere in this document for these allowances.

Container and vessel variables are represented individually below in TEU and/or tonnage on a monthly and annual
basis without incorporation of delays associated with actual harbor deepening, e.g. delays due to construction.

Xicon Economics
Page 38 of 102

30,000

25,000

20,000

15,000

Projected

10,000

Projections, Total

5,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 108)=152.573; p<.001.
4. Diff Factor Coefficient: r=.787; Std Dev=.170

TEU
198,135
234,335
266,588
257,512
269,100
280,689

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10

FY
2005/06

FY
2006/07

FY
2007/08

FY
2008/09

FY
2009/10

FY
2010/11
TEU Actual

Inbound Container Projections, without Harbor Deepening


Units: TEU

FY
2011/12

FY
2012/13
CMA(12)

FY
2013/14

FY
2014/15

TEU Projected

FY
2015/16

FY
2016/17

FY
2017/18

FY
2018/19

FY
2019/20

Xicon. We grow economies.


50,000

45,000

40,000

35,000

30,000

25,000
Projected
20,000

15,000

10,000

5,000

Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 108)=10.365; p<.01.
4. Diff Factor Coefficient: r=.450; Std Dev=.099

TEU
410,007
422,845
465,824
432,468
437,280
442,092

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
2005/06

FY
2006/07

FY
2007/08

FY
2008/09

FY
2009/10

FY
2010/11
TEU Actual

FY
2011/12

FY
2012/13
CMA(12)

FY
2013/14

FY
2014/15

FY
2015/16

FY
2016/17

FY
2017/18

FY
2018/19

FY
2019/20

TEU Projected

Outbound Container Projections, without Harbor Deepening


Units: TEU
Xicon Economics
Page 40 of 102

Xicon. We grow economies.


50,000

45,000
Projected Outbound
40,000

35,000

30,000
Projected Inbound

25,000
Relationship, Inbound Actual vs Outbound Actual
r=.533 (p<.01)

20,000

15,000
Projected

10,000

5,000

0
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
2005/06

FY
2006/07

FY
2007/08

FY
2008/09

FY
2009/10

FY
2010/11

FY
2011/12

FY
2012/13

FY
2013/14

FY
2014/15

FY
2015/16

FY
2016/17

TEU Actual - Inbound

CMA(12) - Inbound

TEU Projected - Inbound

TEU Actual - Outbound

CMA(12) - Outbound

TEU Projected - Outbound

FY
2017/18

FY
2018/19

FY
2019/20

Relationship between Inbound and Outbound Container Projections, without Harbor Deepening
Units: TEU

Xicon Economics
Page 41 of 102

250,000

200,000

150,000

Projected

100,000

Projections, Total

50,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=259.057; p<.001.
4. Diff Factor Coefficient: r=.837; Std Dev=.189

Tons
1,908,675
2,017,173
2,125,670
2,234,167
2,342,664
2,451,161

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual
Inbound Container Projections, without Harbor Deepening
Units: Short Tons

CMA(12)

Tons Projected

Xicon. We grow economies.


400,000

350,000

300,000

250,000

200,000

Projected

150,000

Projections, Total

100,000

50,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=15.519; p<.001.
4. Diff Factor Coefficient: r=.492; Std Dev=.104

Tons
3,256,217
3,295,319
3,334,421
3,373,523
3,412,625
3,451,727

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual

CMA(12)

Tons Projected

Outbound Container Projections, without Harbor Deepening


Units: Short Tons

Xicon Economics
Page 43 of 102

Xicon. We grow economies.


400,000

350,000
Projected Outbound
300,000

250,000
Projected Inbound
200,000

150,000

Relationship, Inbound Actual vs Outbound Actual


r=.632 (p<.01)

100,000
Projected

50,000

0
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual - Inbound

CMA(12) - Inbound

Tons Projected - Inbound

Tons Actual - Outbound

CMA(12) - Outbound

Tons Projected - Outbound

Relationship between Inbound and Outbound Container Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 44 of 102

Xicon. We grow economies.


160,000
Potential Outlier
(No calcs to confirm)

140,000

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is not significant at .05 alpha level.
3 LSR model fit is not significant, p=.304.
4. Diff Factor Coefficient: r=.492; Std Dev=1.026
Projected

120,000

Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Tons
724,169
715,181
706,194
697,206
688,218
679,231

100,000

80,000

60,000

40,000

20,000
Projected

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual

CMA(12)

Tons Projected

Inbound Break Bulk Projections, without Harbor Deepening


Units: Short Tons
Xicon Economics
Page 45 of 102

Xicon. We grow economies.


45,000

Potential Outlier
(No calcs to confirm)

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1,118)=34.867, p<.001.
4. Diff Factor Coefficient: r=.506; Std Dev=1.468

40,000

35,000
Projections, Total

30,000
Projected

25,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Tons
79,567
64,493
49,419
34,345
19,271
4,197

20,000

15,000

10,000

5,000

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
(5,000)

FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual

CMA(12)

Tons Projected

Outbound Break Bulk Projections, without Harbor Deepening


Units: Short Tons

Xicon Economics
Page 46 of 102

Xicon. We grow economies.


160,000

140,000
Projected
120,000

Relationship, Inbound Actual vs Outbound Actual


r=.185 (p<.05)

100,000
Projected Inbound
80,000

60,000

40,000

Projected Outbound
20,000

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
(20,000)

FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual - Inbound

CMA(12) - Inbound

Tons Projected - Inbound

Tons Actual - Outbound

CMA(12) - Outbound

Tons Projected - Outbound

Relationship between Inbound and Outbound Break Bulk Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 47 of 102

Xicon. We grow economies.


300,000
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=78.591, p<.001.
4. Diff Factor Coefficient: r=.628; Std Dev=1.346

250,000

Projections, Total
200,000
Projected

150,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Tons
667,437
498,942
330,447
161,953
0
0

100,000

50,000

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
(50,000)
Tons Actual

CMA(12)

Tons Projected

Inbound Bulk Cargo Projections, without Harbor Deepening


Units: Short Tons
Xicon Economics
Page 48 of 102

Xicon. We grow economies.


80,000
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3. LSR model fit is not significant, p=.337.
4. Diff Factor Coefficient: r=.329; Std Dev=.491

Potential Outlier
(No calcs to confirm)
70,000

60,000

Projections, Total

50,000

40,000

Projected

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Tons
119,022
117,056
115,091
113,126
111,160
109,195

30,000

20,000

10,000

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual

CMA(12)

Tons Projected

Outbound Bulk Cargo Projections, without Harbor Deepening


Units: Short Tons

Xicon Economics
Page 49 of 102

Xicon. We grow economies.


300,000

250,000

Projected

200,000

150,000

100,000

50,000

Relationship, Inbound Actual vs Outbound Actual


r=.191 (p<.05)

Projected Inbound

Projected Outbound
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
(50,000)
Tons Actual - Inbound

CMA(12) - Inbound

Tons Projected - Inbound

Tons Actual - Outbound

CMA(12) - Outbound

Tons Projected - Outbound

Relationship between Inbound and Outbound Bulk Cargo Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 50 of 102

Xicon. We grow economies.


140,000
Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3. LSR model fit is significant, F(1,118)=149.444, P<.001.
4. Diff Factor Coefficient: r=.768; Std Dev=.457

120,000

Projections, Total

100,000

80,000
Projected

60,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Tons
216,359
153,759
91,159
28,559
0
0

40,000

20,000

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
(20,000)

FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual

CMA(12)

Tons Projected

Inbound Auto/Tractor Projections, without Harbor Deepening


Units: Short Tons

Xicon Economics
Page 51 of 102

Xicon. We grow economies.


120,000

Projected

100,000

80,000

60,000

40,000
Projections, Total

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3. LSR model fit is significant, F(1,118)=138.372, p<.001.
4. Diff Factor Coefficient: r=.755; Std Dev=.273

20,000

FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20

Tons
884,469
937,478
990,478
1,043,496
1,096,505
1,149,514

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual

CMA(12)

Tons Projected

Outbound Auto/Tractor Projections, without Harbor Deepening


Units: Short Tons
Xicon Economics
Page 52 of 102

Xicon. We grow economies.


140,000

Projected

120,000

Projected Outbound
100,000
Relationship, Inbound Actual vs Outbound Actual
r=-.632 (p<.01)
80,000

60,000

40,000

Projected Inbound

20,000

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10

(20,000)

FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Tons Actual - Inbound

CMA(12) - Inbound

Tons Projected - Inbound

Tons Actual - Outbound

CMA(12) - Outbound

Tons Projected - Outbound

Relationship between Inbound and Outbound Auto/Tractor Projections, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 53 of 102

Container TEU and tonnage projections also were rendered beyond FY 2019/20, to allow stakeholders to gage
potential changes in TEU and tonnage output across container and vessel data over the next several years as it
considers deepening the harbor for JAXPORT. The remaining vessel tonnages, i.e. break bulk, bulk cargo, and
auto/tractor, were not projected beyond FY 2019/20. However, rendering long-term projections using relatively
small data sets has the potential of becoming problematic, as under the most robust parameters, forecasting is
rendered through the application of probability theory, and therefore, sound professional judgment from all
individuals, including those individuals well versed in statistics and econometrics, must be exercised. In lay terms,
the farther away from a known observation or set of observations one goes, the less likelihood that a rendered
projection, or projections, will be accurate or inaccurate. However, such arguments should not discount the
methodologies herein from being cautiously employed to render data-driven decisions. Certainly, models that are
more statistically sophisticated can be developed for rendering the projections herein, but such would be unrealistic
under the constraints associated with the RFP. In any case, probability diminishes proportionally with time, though
not necessarily linearly, and subsequently, the likelihood of projections being correct or incorrect. To this end, it is
the opinion of Xicon Economics that time series can be used to develop projections beyond FY 2019/20, but
professional judgment, coupled with caution, is urged when rendering decisions using single constructs, such as
using forecasts of single variables only, as opposed to rendering decisions from a holistic perspective using multiple
variables, quantitative, qualitative, and otherwise. In lay terms, stakeholders are encouraged to consider
projections, especially those beyond FY 2019/20, as one of multiple factors influencing the decision of deepening
the harbor.
Thus, the models previously depicted and described herein to render container projections through FY 2019/20,
were used to render projections through FY 2029/30, without harbor deepening. In so doing, all former model
assumptions and parameters remain constant, unless noted otherwise.
Without harbor deepening, JAXPORT has the potential to increase inbound container TEU from approximately
198,000 TEU in FY 2014/15 to approximately 397,000 TEU in FY2029/30 (100.2%), meaning inbound container TEU
likely will double from TEU output in FY 2014/15. Outbound container TEU should also increase through FY 2029/20,
albeit less, from approximately 410,000 TEU to 490,200 (19.6%). Refer to the figure below:
600,000
500,000

446,903

400,000
300,000

292,277

451,715
303,866

456,527
315,454

461,339
327,043

466,150
338,631

470,962
350,219

475,774
361,808

480,585
373,396

485,397
384,985

490,209
396,573

200,000
100,000
FY 2020/21FY 2021/22FY 2022/23FY 2023/24FY 2024/25FY 2025/26FY 2026/27FY 2027/28FY 2028/29FY 2029/30
Inbound

Outbound

Inbound and Outbound Container Projections beyond FY2019/20 by TEU, without Harbor Deepening
Similarly, without harbor deepening, inbound container tonnage at JAXPORT has the potential to increase from
approximately 1.908 tons in FY 2104/15 to approximately 3.536 tons in FY 2029/30, while outbound container
tonnage has the potential to increase from 3.256 tons in FY 2014/15 to 3.843 tons in FY 2029/30. Inbound and
outbound tonnage increases represent a change in container tonnages of 85.3 percent and 18.0 percent,
respectively, through FY 2029/30. As with container projections by TEU, tonnage projections mandate that JAXPORT
maintain a container market similar to that it has held since FY 2004/05. Refer to the figure below:

Xicon. We grow economies.


5,000,000
3,764,541 3,803,643 3,842,745
3,608,134 3,647,236 3,686,338 3,725,439
3,529,930
3,490,828
3,569,032
3,319,139 3,427,636 3,536,133
3,102,145 3,210,642
2,993,647
2,885,150
3,000,000 2,559,659 2,668,156 2,776,653
4,000,000

2,000,000
1,000,000
FY
2020/21

FY
2021/22

FY
2022/23

FY
2023/24

FY
2024/25

Inbound

FY
2025/26

FY
2026/27

FY
2027/28

FY
2028/29

FY
2029/30

Outbound

Inbound and Outbound Container Projections beyond FY2019/20 by Tonnage, without Harbor Deepening

Monthly changes in container TEU and tonnage output is noted on the figures below, allowing stakeholders to gain
understanding regarding the ebb and flow of projected container output versus actual container output over
increments less than annually (monthly). Be reminded that statistical confidence depreciates with time.
Notwithstanding this established fact associated with probability theory, the container projections presented should
hold relatively true presuming all previously noted assumptions also hold relatively true across time. However, in
reality, such truisms seldom perform exactly as predicted, and subsequently, stakeholders must incorporate sound,
common-sense judgment when using these forecasts, and all other forecasts herein, to render decisions.
Refer to the figures below to review projected container TEU and tonnage through FY 2029/30.

Xicon Economics
Page 55 of 102

40,000
Projections, Total

35,000

30,000

25,000

FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30

TEU
292,277
303,866
315,454
327,043
338,631
350,219
361,808
373,396
384,985
396,573

Projected

20,000

15,000

Confidence
10,000
More

Less

5,000

TEU Actual

Inbound Container Projections beyond FY 2019/20, without Harbor Deepening


Units: TEU

CMA(12)

TEU Projected

Xicon. We grow economies.


50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

Projections, Total
Projected
FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30

TEU
446,903
451,715
456,527
461,339
466,150
470,962
475,774
480,586
485,397
490,209

Confidence
More

Less

TEU Actual

CMA(12)

TEU Projected

Outbound Container Projections beyond FY 2019/20, without Harbor Deepening


Units: TEU

Xicon Economics
Page 57 of 102

350,000
Projections, Total

300,000

250,000

200,000

FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30

Tons
2,559,659
2,668,156
2,776,653
2,885,150
2,993,647
3,102,145
3,210,642
3,319,139
3,427,636
3,536,133

Projected

150,000

Confidence
100,000
More

Less

50,000

Tons Actual

Inbound Container Projections beyond FY 2019/20, without Harbor Deepening


Units: Short Tons

CMA(12)

Tons Projected

Xicon. We grow economies.


400,000

350,000

300,000

250,000

200,000
Projections, Total
150,000

100,000

50,000

FY
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30

Tons
3,490,828
3,529,930
3,569,032
3,608,134
3,647,236
3,686,338
3,725,439
3,764,541
3,803,643
3,842,745

Projected

Confidence
More

Less

Tons Actual

CMA(12)

Tons Projected

Outbound Container Projections beyond FY 2019/20, without Harbor Deepening


Units: Short Tons

Xicon Economics
Page 59 of 102

Business Growth Potential of JAXPORT with Harbor Deepening


Potential business growth potential for JAXPORT, with harbor deepening, was substantially more complex to
estimate, as operating parameters at US ports remain in flux due to 1) recent and current changes in the Panama
and Suez canals, 2) the desire to have larger containers and vessels using US terminals, and 3) a competitive US
maritime industry attempting to capitalize on these changes while maintaining current market share. Nonetheless,
business growth potential with harbor deepening was analyzed and projected using the previous container and
vessel projections, coupled with other variables, such as financial and economic output associated with JAXPORT. As
a precursor to these analyses, however, theoretical constructs associated with economic impact were addressed as
they lend themselves to forthcoming analyses. Further, the analyses and projections herein do not allow for delays
associated with the construction phase of harbor deepening; delays were addressed under the third objective.
Subsequently, large entities in the private and public sector often seek to determine the impacts they generate on
the greater economy under which they operate; such endeavors have become common in recent years. However,
establishing these impacts becomes problematic when the economic reach generated from these entities is
unrealistically stretched beyond reasonable parameters. Such tendencies to overreach hold no preferential bias
among entities, public or private, as overreaching remains a temptation for all. However, the temptation to
overreach perhaps holds true more so for public sector entities. Certainly, while the tendency to overreach is
understandable, such tendencies must be tempered, or quenched altogether, when considering spending
endeavors using public monies, as in the end, these monies most often are derived through the private sector, albeit
not always.
For example, job creation serves as a source of contention when considering the spending of public monies on large
infrastructure projects, such as the harbor deepening project at JAXPORT. It can be correctly argued that the impact
of economic output generated through JAXPORT is far-reaching in terms of job growth, not only in North Florida and
South Georgia, but also across the greater United States. Of course, the problem arises when one attempts to
quantify these impacts, as in reality, the only jobs generated by JAXPORT are those jobs directly associated with the
management and operation of port activities; no more, no less. Thus, it is more correct to postulate that other
industry sectors directly influence, and cause, growth at JAXPORT, as opposed to the converse. More explanatorily,
industry sectors that produce goods, such as the manufacturing sector, grow because of product demand, not
merely because the port exists, or does not exist, and thus, the port serves at the mercy of the manufacturing sector
and other industry sectors. Such holds true in every capitalist economy. Subsequently, it remains paramount that
the converse never be construed when considering the economic impact of JAXPORT.
In keeping with this simple theoretical argument, substantial effort must be given to analyzing not only port activity,
but also individual industry sector activity utilizing port services. Martin Associates analyzed the various industry
sectors, though not holistically, when they collected data from the 472 firms providing cargo and vessel services at
the Jacksonville Port Authoritys maritime terminals. The extent to which Martin Associates investigated the various
industry sectors at large could not be determined. To note the significance for the need to examine closely entire
industry sectors, recall that port impacts of JAXPORT extend into the southeast United States, serving multiple
manufacturing, wholesale, transportation, retail, and other companies across multiple port service markets, who in
turn, serve other companies. Regarding the manufacturing sector in the southeast United States, Xicon Economics
determined in a separate study that,
In terms of total GDPReal, the manufacturing industry in Alabama, Florida, Georgia, North Carolina,
South Carolina, and Tennessee substantially contributed to the U.S. GDP Real from 1997-2011. The
manufacturing industry, in fact, drives the economy in these six states, collectively; its statistical
effect is significant at the .01 alpha level, F(1,13)=73.935, p<.01, and its coefficient of
2
determination is high (R =.922).
Further,

Xicon. We grow economies.


The economic output of the manufacturing industries in the six states has a statistically
significant effect on the collective economic output of the US, using GDPReal, F(1,13)=51.171,
2
p<.01. The model produced was YUSGDP=53.379XTOTMFGGDP144570.47 (R =.797). In contrast, the
economic output of the construction industry in these six states, collectively, does not have a
7
significant effect on U.S. GDP; nor does [other sectors].
However, in Georgia and South Carolina, economic output generated through the manufacturing sector no longer
has a statistically significant effect on each states total economic output, a point worth pondering. Notwithstanding,
the effect that economic output generated in the manufacturing sector in Florida remains statistically significant at
the .01 alpha level when considering total state output. However, manufacturing output per capita in the southeast
US has remained in a definitive state of decay for decades, as has been presented exhaustively by Xicon Economics
through numerous mediums; this includes the state of Florida and all states served by JAXPORT. Thus, it is the
opinion of Xicon Economics that more effort be taken to address statistically the interdependent relationships
between port output at JAXPORT and all industry sectors the port serves, recalling that the relationship between
infrastructure spending and economic output is sophisticated and highly complex, often being bi-directional with
substantial lag. Until these relationships are clearly understood, one cannot fully estimate financial or economic
8
feasibility. However, this does not negate the efforts exerted by Martin Associates, nor the investigation herein.
Conversely, an investigation into the interrelationships underpinning economic output at JAXPORT would
complement and augment work conducted by Martin Associates and Xicon Economics, and moreover, lend sound
statistical credence to any decisions rendered by the Task Force as it relates to deepening the St. Johns River.
Certainly, such an investigation would remain an estimate, albeit a statistically probabilistic estimate rather than
only a mathematical estimate that does not manage statistical uncertainty.
Nonetheless, without harbor deepening, Martin Associates rendered the container projections, including total
inbound and total outbound containers, through 2035 (p. 47, Strategic Master Plan). In so doing, Martin Associates
9
presumes JAXPORT loses the Asian container market but rebounds to CY 2010 levels by CY 2035. For comparative
purposes, the combined inbound and outbound projections rendered by Xicon Economics, which assume the
current Asian market remains at JAXPORT, are noted below. For these purposes, fiscal year was used congruently
with calendar year; for example, CY 2020 was assumed to parallel FY 2019/20.
1,000,000
800,000

732,816 739,180

762,889

886,782

804,781

796,093

832,752

600,000
400,000
200,000
0
2020

2025
Martin

2030

2035

Xicon

Comparison of Container TEU Projections without Harbor Deepening


Note: Xicon Economics did not render projections past FY 2029/30.

Converting Martin container TEU to container tonnage yields tonnages of 6,082,372; 6,331,979; 6,607,572; and
10
6,911,842; respectively, holding container efficiency constant, at 8.3 tons/TEU. Subsequently, this conversion
allows comparisons to be made on a tonnage basis, as noted below:
7

Barber, H. (2013). Economic Assessment of the Southeastern United States Manufacturing Sector. Xicon Economics.
An investigation at the industry sector level is not congruent with the scope of work noted under the RFP addressed herein.
9
Per Martin Associates, the Asian container market currently accounts for 17 percent of all container tonnage at JAXPORT (p. 21,
Strategic Plan).
10
Xicon Economics also investigated container efficiency across the years associated with this study, and overall, container
efficiency remained relatively stable, with some deviation.
8

Xicon Economics
Page 61 of 102

Xicon. We grow economies.


8,000,000
6,000,000

6,082,372 6,050,487

6,331,979

6,640,883

6,607,572

7,378,878

6,911,842

4,000,000
2,000,000
2020

2025
Martin

2030

2035

Xicon

Comparison of Container Tonnage Projections without Harbor Deepening


Note: Xicon Economics did not render projections past FY 2029/30.

However, the projections depicted above as Xicon do not allow for the 17 percent loss of the Asian market, as
anticipated by Martin Associates should JAXPORT opt not to deepen its harbor and the noted loss become reality.
11
Assuming the loss of the Asian market occurred in total in FY 2013/14, with all other variables remaining relatively
constant as it relates to variable growth rate, the following tonnage projections were forecasted for JAXPORT using
adjusted time series models:

11

The loss of the Asian market was forced to theoretically occur in FY 2013/14, for simplification, and remodeled using time
series, as actual raw data for FY 2014/15 in its entirety did not exist at the time this study was conducted. Thus, very slight errors
were imputed into this method, albeit negligible for these purposes.
Xicon Economics
Page 62 of 102

300,000

250,000

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is significant at .001 alpha level.
3 LSR model fit is significant, F(1, 118)=201.950; p<.001.
4. Diff Factor Coefficient: r=.808; Std Dev=.177

Confidence
More

Less

200,000
Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30

150,000

100,000

50,000

Forced Loss of Asian


Container Market

Projected

Tons Actual

CMA(12)

Inbound Container Projections with Loss of Asian Market, without Harbor Deepening
Units: Short Tons

Tons Projected

Tons
1,773,730
1,863,770
1,953,810
2,043,849
2,133,889
2,223,929
2,313,969
2,404,008
2,494,048
2,584,088
2,674,128
2,764,128
2,854,207
2,944,247
3,034,287
3,124,327

Xicon. We grow economies.


400,000

Confidence

350,000
More

Less

300,000

250,000

200,000

Forced Loss of Asian


Container Market

150,000

Projected

Projections, Total
FY
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22

100,000

50,000

Notes
1. LSR projected intercept is significant at .001 alpha level.
2. LSR projected slope coefficient is not significant (p=.281).
3 LSR model fit is not significant (p=.281).
4. Diff Factor Coefficient: r=.354; Std Dev=.122

Tons
3,060,160
3,072,435
3,084,708
3,096,982
3,109,256
3,121,530
3,133,803
3,146,077

FY
2022/23
2023/24
2024/25
2025/26
2026/27
2027/28
2028/29
2029/30

Tons
3,158,351
3,170,625
3,182,899
3,195,173
3,207,447
3,219,721
3,231,995
3,244,268

Tons Actual

CMA(12)

Tons Projected

Outbound Container Projections with Loss of Asian Market, without Harbor Deepening
Units: Short Tons
Xicon Economics
Page 64 of 102

8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0

6,082,372
5,345,459

6,331,979 5,869,301

6,607,572

6,368,595

6,911,842

+13.8%
+7.9%
+3.8%
2020

2025
Martin

2030

2035

Xicon

Combined Inbound and Outbound Container Projections with Loss of Asian Market, without Harbor Deepening
Units: Short Tons
Note: Xicon Economics did not render projections past FY 2029/30.

When comparing Xicon projections against Martin projections, Xicon container tonnage projections were
736,913 tons lower in CY 2020, 462,678 tons lower in CY 2025, and CY 238,977 tons lower in 2030. Expressed
conversely, Martin projections were 13.8 percent higher in 2020, 7.9 percent higher in 2025, and 3.8 percent
higher in 2035. Admittedly, some form of testing, such as a t-test, could have been conducted to determine whether
these differences were statistically significant, and indeed, perhaps such would be of merit. Regardless, a portion of
these differences was considered acceptable given that two separate economic research firms, using different
methodologies coupled with different modeling techniques, generated similar findings. However, whether a full
12
difference of 13.8 percent is acceptable remains the decision of the Task Force.
Further, Xicon Economics reviewed the argument underpinning recommendations established by Martin Associates
as it related to deepening of the St. Johns River in and around JAXPORT to 47 ft (pp. 24-47, Strategic Plan). Though
extensive, the argument ultimately presented by Martin Associates for harbor deepening clearly demonstrated the
need for the Task Force to consider the harbor deepening project and its accommodating implications, to the extent
that a holistic decision is rendered relative to this entire study and all efforts taken by Martin Associates and others.
The argument for harbor deepening began with a presentation regarding historical container volumes around the
world, as they related to inbound and outbound tonnage to and from US ports, with these arguments augmented
with appropriate discussions associated with movements through the Panama and Suez canals. In so doing,
historical data were presented regarding ports along the West Coast, East Coast, and Gulf Coast of the United
States, with an emphasis ultimately on Asian carriers. A review of current container fleet sizes was presented,
coupled with evidence suggesting that 43 percent of new container carriers on order are in excess of 8,000 TEUs,
thus, requiring channel depths ranging from 47 to 50 feet.
Following, a narrative regarding distribution centers across the state of Florida then was presented, along with
transportation cost analyses regarding the distribution of cargo from port to distribution center. Martin Associates
determined that, JAXPORT offers the least cost intermodal routing to Atlanta on a Hong Kong routing via the
Panama Canal, as well as a Singapore routing through the Suez Canal (p.40). Further, it was determined that
JAXPORT offered a more cost effective scenario for moving cargo in the Florida region. Additionally, it was
concluded, the Florida market can be more cost effectively served via a North, South, or Gulf Coast Florida port
and associated distribution centers rather than via truck from the Port of Savannah and intermodally for the West
Coast ports to distribution centers in Atlanta and related into the North Florida consumption markets. All three

12

No commonalities existed between the methodologies employed by Xicon Economics and the methodologies employed by
Martin Associates until the Asian market was incorporated by both firms.

Xicon. We grow economies.


Florida port ranges can be used to serve the Florida market more cost effectively than via the West Coast ports or
via Savannah (p. 38).
Martin Associates further argued that there was a strong relationship between container volume and US Real GDP
(p.41), theorizing that the US container market could expect to increase relative to US GDP. Xicon Economics has
found similar relationships between economic output and GDP to hold true, but this is not the case in all industry
sectors. As such, Xicon Economics investigated this relationship further, as if it could be determined that a strong
relationship exists between container volume, or more largely, port output, and economic output in the US,
evidence could be offered to further substantiate the need for harbor deepening at JAXPORT, presuming GDP was
increasing and stable.
Xicon Economics determined that there indeed existed a relationship between combined inbound and outbound
13
container tonnage, specifically at JAXPORT, and US GDP; that relationship was found to be .766 (p<.01). While a
few industry sectors have demonstrated much stronger relationships when compared to economic output of the
14
United States, such as the US construction sector via material and labor cost indices (r=.987, p<.001), the
relationship between US GDP and container tonnage at JAXPORT proved significant. Further, it was determined that
US economic output could be used as a predictor of container tonnage at JAXPORT using analysis of variance
15
(ANOVA). Refer to the table below to review the model for projecting container tonnage.

US GDP as a Predictor of Container Tonnage


Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error

0.766
16
0.586
0.534
0.910

Observations

10

ANOVA
df
Regression
Residual
Total

1
8
9

Coefficients
Intercept
7.119
Tonnage
1.84E-06
Note: Data included years 2005-2014.

SS
9.387
6.632
16.018
Standard
Error
2.401
5.48E-07

MS
9.388
0.829

F
11.3245

t Stat
2.965
3.365

P-value
0.01997
0.00988

Significance F
0.009857

Lower 95%
1.583042
5.8E-07

Upper
95%
12.6554
3.11E-06

Lower
95.0%
1.583042
5.8E-07

Upper
95.0%
12.655
3.11E-06

13

Xicon Economics used GDP in 2014 US dollars and JAXPORT container tonnages to determine relationships and a slightly
different technique to establish coefficients. Raw data supplied by The World Bank (2014) and Statisca (2014).
14
Barber, H. & El-adaway, I. (under review). An econometric model for forecasting US economic output using construction cost
indices as predictor variables. Journal of Infrastructure Engineering. American Society of Civil Engineers.
15
No calculations were conducted to determine practical effect using Cohens d or similar technique, as it was deemed
unnecessary for these purposes.
16
Admittedly, the independent variable in this model explains only 58.6 percent of the variance in the dependent variable.
Nonetheless, the model is significant, and thus, of merit.
Xicon Economics
Page 66 of 102

Xicon. We grow economies.


Given this argument, coupled with the quantitative and qualitative data generated by Martin Associates but omitted
herein, Martin Associates more fully developed its argument as it related specifically to the ability of Florida ports to
capture the Asian container market, and more directly, to the ability of JAXPORT to capture additional Asian
container tonnage. Through the analyses, both quantitative and qualitative, Martin Associates determined that
potentially 3.1 million TEU (3,067,300 TEU) could be captured by Florida ports, when including cargo captured
through the Asian market and other non-Asian markets (refer to p. 46 for delineation of the 3.1 million TEU
estimate). Of the 3.1 million TEU, Martin further assumed that Florida ports would capture 25 percent, of which
JAXPORT would capture one-third; resulting in JAXPORT capturing an additional 255,608 TEU (2,121,546 tons;
Moderate Penetration with 47 ft Deepening Scenario). Still further, Martin Associates developed an aggressive
scenario (Aggressive Penetration with 47 ft Deepening Scenario) that assumed Florida ports would capture 50
percent of the potential 3.1 million containers; and of that, JAXPORT would capture one-third (511,216 TEU;
4,243,094 tons). Thirdly, a scenario with aggressive market penetration, coupled with intermodal penetration, was
17
developed by Martin Associates.
Martin Associates projections for each scenario are noted below. All three scenarios assumed harbor deepening of
JAXPORT to 47 ft.
Container TEU Projections by Martin Associates, with Harbor Deepening
TEU Projections Scenarios
Moderate Penetration
Aggressive Penetration
Aggressive Penetration + Intermodal Penetration

2020
1,379,800
1,713,294
1,877,695

2025
1,566,364
1,952,976
2,143,562

2030
1,769,642
2,217,831
2,438,772

2035
2,010,604
2,530,178
2,786,309

2030
14,688,029
18,407,997
20,241,808

2035
16,688,013
21,000,477
23,126,365

Extrapolated Container Tonnage Projections of Martin Associates, with Harbor Deepening


Units: Short Tons
Note: Container TEU projections were converted to tonnage holding 8.3 tons/TEU constant.
Tonnage Projections Scenarios
Moderate Penetration
Aggressive Penetration
Aggressive Penetration + Intermodal Penetration

2020
11,452,340
14,220,340
15,584,869

2025
13,000,821
16,209,701
17,791,565

Categorically, the methodology used in developing the argument presented by Martin Associates for harbor
deepening at JAXPORT was textbook, in that the argument began with a discussion of the broader maritime
industry, followed by a discussion regarding various international container and vessel markets. This discussion,
along with pertinent data and analyses, was further refined to include narratives associated with ports along the
West, East, and Gulf coasts of the United States, followed with narratives and accommodating analyses regarding
the ports of Florida. Finally, the argument was further refined to include likely repercussions of opting against
harbor deepening JAXPORT; and the potential benefits of opting to deepen JAXPORT. To this end, these arguments
appeared reasonable.
Xicon Economics used a slightly different model for projecting container tonnages. While utilizing the same
argument developed by Martin Associates, as it related to the potential for JAXPORT to capture additional container
tonnage with harbor deepening via Asian container market capture, along with capture from other markets, Xicon
Economics modeled US GDP through CY 2030, using years 2005-2014. These calculations resulted in the following
model: US GDPproj= 0.428(t)+12.786; F(1,9)=134.768 (p<.001). Ninety-four percent (94.4%) of the variance in GDP
was explained through the model.

17

An aggressive penetration with 47 ft deepening, plus intermodal penetration estimate was not made by Xicon Economics.
Xicon Economics
Page 67 of 102

Xicon. We grow economies.


GDP Modeling
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations

0.972
0.944
0.937
0.335
10

ANOVA
Regression
Residual

df
1
8

SS
15.121
0.898

Total

16.018

Coefficients
12.786
0.428

Standard
Error
0.229
0.037

Intercept
t

MS
15.121
0.112

F
134.768

Significance F
2.76E-06

t Stat
55.873
11.609

P-value
1.17E-11
2.76E-06

Lower 95%
12.257
0.343

Upper
95%
13.313
0.513

Lower
95.0%
12.257
0.343

Upper
95.0%
13.313
0.513

After US economic output was forecasted through CY 2030, via GDP, revised tonnages were projected that
incorporated capture of the Asian market and other markets described by Martin Associates (p.46). Following, Xicon
Economics projected revised container tonnage projections through CY 2030, under the proposed moderate
scenario and aggressive scenario. For simplification, a dynamic multiplier was developed using a ratio of current year
over year changes as it related to changes in US GDP. Following, projected Asian tonnage was multiplied by the
dynamic multipliers (noted as Multiplier from Projected US GDP on the table below) to establish revised tonnage
projections. In turn, these revised tonnage projections then were compared to projections rendered by Martin
Associates.
Refer to the tables and figures below.

Xicon Economics
Page 68 of 102

Xicon. We grow economies.


Moderate Penetration Tonnage Projections, with Harbor Deepening

Year

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Notes
1.
2.
3.
4.

Projected
Tonnage

Projected
US GDP

Multiplier
from
Projected
US GDP

Initial Asian
Tonnage
from
Martin

Projected Asian
Tonnage using US
GDP Multiplier

5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878

17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916

1.0244655
1.0239371
1.0233230
1.0227914
1.0222835
1.0217978
1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221

2,121,546
-

2,121,546
2,173,451
2,225,477
2,277,382
2,329,286
2,381,191
2,433,096
2,485,001
2,536,905
2,588,810
2,640,715
2,692,741
2,744,646
2,796,550
2,848,455
2,900,360

Revised Projected Tonnage

7,286,439
7,485,943
7,685,568
7,885,072
8,084,575
8,284,079
8,483,583
8,683,087
8,882,590
9,082,094
9,281,598
9,481,223
9,680,727
9,880,230
10,079,734
10,279,238

US GDP (USD Trillions).


CY 2015 was assumed to parallel FY 2014/15; and similarly across all years noted.
Projected Tonnage refers to those tonnages previously forecasted through time series, without harbor deepening but
including existing inbound and outbound container tonnages through the Asian market.
Changes in Projected Tonnages resulting from changes in GDP were accounted for in the original time series models;
thus, no additional tonnage increases resulting from changes in GDP were necessary.

18,000,000

16,688,013

16,000,000

14,688,029
13,000,821

14,000,000
12,000,000 11,452,340
10,000,000

10,279,238

9,281,598

8,284,079

8,000,000

+42.9%

6,000,000
4,000,000
2,000,000

+40.1%
+38.2%

2020

2025
Martin

2030

2035

Xicon

Comparison of Moderate Penetration Tonnage Projections, with Harbor Deepening

Xicon Economics
Page 69 of 102

Xicon. We grow economies.


Aggressive Penetration Tonnage Projections, with Harbor Deepening

Year

Projected
Tonnage

Projected
US GDP

Multiplier
from
Projected
US GDP

Initial Asian
Tonnage
from
Martin

Projected Asian
Tonnage using US
GDP Multiplier

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878

17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916

1.0244655
1.0239371
1.0233230
1.0227914
1.0222835
1.0217978
1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221

4,243,094
-

4,243,094
4,346,904
4,450,956
4,554,765
4,658,575
4,762,384
4,866,194
4,970,003
5,073,813
5,177,622
5,281,432
5,385,484
5,489,294
5,593,103
5,696,913
5,800,722

Revised Projected Tonnage

9,407,987
9,659,396
9,911,047
10,162,455
10,413,864
10,665,272
10,916,681
11,168,089
11,419,498
11,670,906
11,922,315
12,173,966
12,425,375
12,676,783
12,928,192
13,179,600

Notes
1.
2.
3.
4.

US GDP (USD Trillions).


CY 2015 was assumed to parallel FY 2014/15; and similarly across all years noted.
Projected Tonnage refers to those tonnages previously forecasted through time series, without harbor deepening but
including existing inbound and outbound container tonnages through the Asian market.
Changes in Projected Tonnages resulting from changes in GDP were accounted for in the original time series models;
thus, no additional tonnage increases resulting from changes in GDP were necessary.

25,000,000
21,000,477
20,000,000

18,407,997
16,209,701

15,000,000

14,220,340
10,665,272

11,922,315

13,179,600

10,000,000
+39.7%
5,000,000
+33.3%

+36.0

2020

2025
Martin

2030

2035

Xicon

Comparison of Aggressive Penetration Tonnage Projections, with Harbor Deepening

Xicon Economics
Page 70 of 102

Xicon. We grow economies.


Further, a review of container tonnage projections made by Mr. John Vickerman with Vickerman and Associates,
Williamsburg, Virginia, was conducted. Mr. Vickerman is an architect and structural engineer, with no education or
training in economics, statistics, or econometrics, as Xicon Economics understands it. Nonetheless, Mr. Vickerman
presented tonnage projections to the Task Force November 12, 2014 (Jacksonville Port Task Briefing); his tonnage
projections reflected no evidence that commonly accepted statistical or econometric techniques were utilized.
However, given that these projections previously were presented to the Task Force, they are depicted below.
Outside of presenting projections made by Vickerman and Associates, no other investigations were conducted of
the same, as doing so was considered futile.

18,000,000
16,185,000

16,000,000

14,688,029
13,695,000

14,000,000
12,000,000

13,000,821

11,452,340
10,790,000

10,279,238

10,000,000

9,281,598
8,284,079

8,000,000
6,000,000
4,000,000
2,000,000
2020

2025

2030

Vickerman

Martin

Xicon

Poly. (Vickerman)

Poly. (Martin)

Poly. (Xicon)

Moderate Penetration, with Harbor Deepening


Units: Short Tons
Note: LSR and/or polynomial line is for graphic representation only.

Xicon Economics
Page 71 of 102

Xicon. We grow economies.


25,000,000
20,750,000
20,000,000

18,407,997
16,209,701
14,220,340

15,000,000

15,355,000
13,179,600

11,620,000

11,922,315

10,665,272
10,000,000

5,000,000

2020

2025

2030

Vickerman

Martin

Xicon

Linear (Vickerman)

Linear (Martin)

Linear (Xicon)

Aggressive Penetration, with Harbor Deepening


Units: Short Tons
Note: LSR and/or polynomial line is for graphic representation only.

Differences were found to exist when comparing the projected tonnages in the moderate penetration scenario and
aggressive penetration scenario, as projected by Martin Associates and Xicon Economics. Container tonnage
projections developed by Martin Associates in CY 2020, 2025, and 2030 under the moderate penetration scenario
were 38.2 percent, 40.1 percent, and 42.9 percent, respectively, higher than projections developed by Xicon
Economics. Similarly, tonnage penetrations developed by Martin Associates for CY 2020, 2025, and 2030 under the
aggressive scenario were 33.3 percent, 36.0 percent, and 39.7 percent, respectively, higher than tonnage
projections rendered by Xicon Economics.
Xicon Economics attempted to trace the source of these differences by comparing techniques used individually by
Martin Associates and Xicon Economics to render these projections. Xicon Economics used time series to develop its
original growth models based on data provided by JAXPORT; the forecasting technique used by Martin Associates
was unclear, as such was not divulged. Subsequently, Xicon Economics was unable to analyze any statistical or
mathematical models developed by Martin Associates.
It appears that differences between projections established by Martin Associates and Xicon Economics steadily
digressed for one or more of three reasons. First, any initial differences between projections had the tendency to
increase, or creep, as calculations were made. The extent that Martin Associates attempted to employ methods to
counter any creep in their findings could not be determined without reviewing their raw data and statistical and
mathematical techniques. To counter creep, Xicon Economics regularly used the original time series models as a
source of statistical control, or point of reference, allowing Xicon Economics to work against an established, known,
baseline.

Xicon Economics
Page 72 of 102

Xicon. We grow economies.


Secondly, Xicon Economics used 8.3 tons per container TEU, while Martin Associates used 8.8 tons per TEU (p.43).
While this difference of 0.5 ton per TEU is not negligible, the cumulative difference does not account for the noted
tonnage differences. Moreover, Xicon Economics only used 8.3 tons/TEU as a conversation factor during the later
stages of its projections. In nearly all calculations, raw data for both tonnage and TEU were modeled, without any
conversion.
Finally, the methodology Martin Associates employed when rendering projections in favor of harbor deepening
appeared potentially problematic. To render final (revised) tonnage projections, Xicon Economics modeled US
GDP to develop a dynamic multiplier. The model incorporated actual GDP and actual (JAXPORT) tonnage data (CY
2005-2014) at JAXPORT, not projected GDP and tonnage data, or tonnage data throughout the United States.
Additionally, the model Xicon Economics developed for predicting GDP, and eventually container tonnage, yielded a
2
strong coefficient of determination (R =.944), and moreover, was significant at the .001 alpha level as evidenced
18
through an F-test. Conversely, it appeared that Martin Associates used a mathematical constant of sorts to
estimate changes in Asian container TEU and tonnage that included output associated with Puerto Rico and other
economies. Exactly how that constant was developed was unclear (see pp. 41-42, as well as pp. 43-46), though it
appeared that effort was taken to develop the constant. Nonetheless, presuming Martin Associates indeed used a
constant, error was induced into projections year over year.
Notwithstanding, Xicon Economics is as subject to succumb to errors and omissions as any firm. For example, it
could be argued that other techniques could have been employed to capture more of the variances within the
dependent variables. Certainly, enormous efforts could go into developing models, though the techniques herein
are statistically sound.
To this end, it is the opinion of Xicon Economics that the following tonnages have the potential to be captured by
JAXPORT, without harbor deepening, and with harbor deepening, under the moderate penetration scenario and
aggressive penetration scenario. All prior methodologies and assumptions remain constant, including the fact that
these scenarios do not allow for delays associated with the construction phase of the harbor deepening project
(Refer to the third objective to review impacts associated with the construction phase of the project).

18

It appears the critical difference between forecasts generated by Xicon Economics and forecasts generated by Martin
Associates primarily lies within these areas of forecasting.
Xicon Economics
Page 73 of 102

14,000,000

13,179,600

11,922,315

12,000,000

10,665,272

10,279,238

10,000,000

9,281,598
+103.1%

8,284,079
8,000,000

+61.4%

+99.5%

6,000,000

5,869,301

+58.1%

6,368,595

5,345,459
+55.0%

4,000,000

2,000,000

2020

2025

Without Deepening

Harbor Deepening with Moderate Penetration

Harbor Deepening with Aggressive Penetration

Linear (Without Deepening)

Linear (Harbor Deepening with Moderate Penetration)

Linear (Harbor Deepening with Aggressive Penetration)

Container Tonnage Projections with and without Harbor Deepening (DOES NOT ALLOW FOR DELAYS FROM HARBOR DEEPENING)
Units: Short Tons
Notes
1.
2.
3.

2030

All former assumptions remain constant.


LSR lines (dashed lines) are for descriptive purposes only.
Without deepening includes loss of the Asian market.

+106.9%

Objective 3: Cost Benefit Analysis, with Harbor Deepening


Estimating impacts of infrastructure spending as catalysts for economic output are arduous endeavors, endeavors
that result in relationships eventually proving to be non-causal, causal, non-directional, directional, and/or bidirectional. Using historical data to project economic impact, these calculations prove difficult; using forecasted data
to render economic impacts, these calculations prove onerous. For example, when analyzing known historical data,
it can be determined through statistical effect, practical effect, Granger causality, and other techniques whether
variable A had an effect on variable B, variable A caused variable B, or a change in variable B. Conversely, however, it
is equally as important to determine whether variable B had an effect on variable A, and whether variable B caused
variable A, or similarly, a change in variable A; and if so, to what extent statistically. In lay terms, one must
determine whether infrastructure spending has a statistical impact on economic output, or economic output has a
statistical impact on infrastructure spending. It becomes important to estimate not only financial feasibility of
harbor deepening, but also economic feasibility of harbor deepening, e.g. whether harbor deepening will have a
statistical effect and/or causal impact on economic output, such as GDP, jobs, tax generation; or whether economic
output will have a statistical effect and/or causal impact on infrastructure spending. Notably, while such arguments
appear as puns, or overly sensitive, to laypersons, these determinations are strongly recommended, but beyond the
19
scope of the RFP being fulfilled.
The typical cost-benefit analysis used by Xicon Economics incorporates financial and economic data into a single
model. However, unlike other cost-benefit analyses, Xicon Economics incorporates econometrics into the analysis to
explore both effect (and causation, when possible) among variables. For example, a public entity can exert
significant effort into developing a policy or economic endeavor into reality, only for researchers, economists, and
statisticians to prove that entity efforts were in vain in that, while efforts may have been noteworthy, and perhaps
financially feasible, results had no measurable effect or causal impact on the economy. In fact, the scientific
literature is littered with examples of failed policies and economic endeavors that were developed in err.
Subsequently, it is the opinion of Xicon Economics that financial and economic data must be investigated from
multiple perspectives across multiple industry sectors, especially in the case of a large public sector endeavor. Thus,
Xicon Economics investigated harbor deepening of the St. Johns River from an econometric cost-benefit analysis,
rather than from only the traditional financial cost-benefit methods commonly conducted, as in reality, there is no
financial data outside engineering and construction costs of deepening.
First, population dynamics of Jacksonville MSA were reviewed to allow the stakeholder to gage the growth of
Jacksonville MSA and the state of Florida. For Xicon Economics, however, the review of population dynamics was
conducted to determine whether spurious phenomenon existed in the population that may adversely affect any
calculations herein. Following a review of population dynamics, the harbor deepening project was considered from a
financial cost-benefit perspective and an econometric cost-benefit perspective.

19

Modern-day input-output methods associated with economic impact modeling, such as those models generated using BEA
REMS II, are far removed from accepted statistical norms.

Xicon. We grow economies.


Population Analysis
To gain understanding into the population dynamics associated with the JAXPORT area, the population of
Jacksonville MSA was investigated relative to the state of Florida. More specifically, Xicon Economics sought to
determine whether any obvious issues could be revealed in population data for the state of Florida and Jacksonville
MSA that affected prior findings in this study.
No definitive concerns were noted in the population data in Jacksonville MSA or the state at large. Of note,
however, population in the state of Florida has increased annually by 4.4 percent, on average, since 1970, and the
population in Jacksonville MSA has increased annually, on average, by 2.8 percent, over the same years. Thus, as a
percentage of state population, Jacksonville MSA is decreasing, which would be expected in a heavily populated
state, such as Florida. The population of Jacksonville MSA currently is approximately 1.4 million (2014). Using simple
regression, the population of Jacksonville MSA was projected to be 1.5 million in CY 2020, 1.6 million in CY 2025, and
2
1.7 million in CY 2030, using population data from 1970-2014 (R =.991).
While the population of Jacksonville MSA is increasing, however, the percentage of persons employed fulltime is
decreasing. As an example, the percentage of persons working in Jacksonville MSA in CY 2000 was 50.8 percent,
while the percentage of persons working dropped to 45.5 percent in 2010. Let the stakeholder be advised, however,
that these decreases are not simply a derivative of Florida housing a disproportionate percentage of retired persons;
nor should it be inferred that other states are immune from such decreases in employment. Across much of the
United States, the relationship between population growth and employment is inverse, meaning that a decreasing
percentage of the US population is financially and economically supporting an ever-increasing percentage of the
population. While detailed analyses regarding population dynamics was not within the scope of this study, such
should not be considered without concern to stakeholders, as clearly, this inverse relationship is not conducive to
maintaining economically sound economies.
Refer to the figures below to review population data graphically.

Xicon Economics
Page 76 of 102

Xicon. We grow economies.


25,000,000

10.00
1970: 9.2%
9.00

20,000,000

8.00

7.00
2014: 7.0%
15,000,000

6.00

5.00

10,000,000

4.00

3.00

5,000,000

2.00

1.00

Jacksonville MSA

State of Florida

2010

2005

2000

1995

1990

1985

1980

1975

1970

Jacksonville MSA Population as Precentage of State Population


20

Historical Population, Jacksonville MSA compared to State of Florida, 1970-2014


Secondary Units: Percentage (%)

20

Data sources: Florida Office of Economic & Demographic Research, Texas A&M University, and US Census (2015)
Xicon Economics
Page 77 of 102

Xicon. We grow economies.


1,600,000
2014: 1,397,224
1,400,000

1,200,000

1,000,000

800,000

600,000
1970: 621,827

400,000

Population Growth Model

200,000

R =.991
p<.001

2010

2005

2000

1995

1990

1985

1980

1975

1970

Historical Population, Jacksonville MSA, 1970-2014

Xicon Economics
Page 78 of 102

Xicon. We grow economies.


52.0
H: 50.8

51.0

49.3

50.4

49.9

50.0

50.0
49.0

49.9

49.7
49.1

49.3

49.0

48.9

49.3
48.6

48.3
48.0

48.0

47.0

47.4

48.0
47.7
46.9

47.4

46.3

46.0

46.0

45.7

L: 45.5
2010

2005

2000

1990

1995

45.0

Percentage of Population Working, Jacksonville MSA, 1990-2013


Units: %
Note: LSR fit noted for graphical purposes only.

1,600,000

52.0

1,400,000

51.0
50.0

1,200,000

49.0

1,000,000

48.0

800,000

47.0

600,000

46.0
45.0

400,000

44.0

200,000

43.0

Population

% Wkg

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

42.0
1990

Linear (% Wkg)

Total Population vs Working Population (%), Jacksonville MSA


Secondary Units: %

Xicon Economics
Page 79 of 102

Xicon. We grow economies.


1,750,000

1,706,595
5.9%

1,700,000
1,650,000

1,611,946
6.2%

1,600,000
1,550,000

1,517,296

1,500,000

6.7%

1,450,000
1,400,000
1,350,000
1,300,000
2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

1,250,000

Projected Population, Jacksonville MSA

Financial and Econometric Cost Benefit Analysis


To conduct the actual cost-benefit analysis, gross revenue of JAXPORT was investigated. Initially, Xicon Economics
sought to project gross revenue per ton for the variables previously used in this study, particularly those associated
with container cargo. First, the relationship between container gross revenue and other variables were investigated
from FY 2004/05 through FY 2013/14 in an attempt to determine independent variables that could be used to
project revenue per ton through 2030. For example, the relationship between container revenue per ton and US
GDP was investigated; that relationship was found to be relatively weak (r=.368) and problematic. Year-over-year
container revenue per ton data also proved to have a higher than preferred standard deviation. Container revenue
per ton then was reviewed from FY 1993/94 through FY 2013/14, and after numerous attempts to develop models
using various techniques, along with an attempt to incorporate structural equation modeling (SEM) into the
analytical mix, whereby potential causal dependencies between endogenous and exogenous variables are coupled
with appropriate measures to manage latent variables, Xicon Economics resorted to time series to render container
revenue per ton through FY 2029/30. In so doing, a time series model was developed that, in fact, did yield a
21
statistically significant LSR model, albeit using a six-year cycle.
It was assumed that projected container revenue per ton would follow a predictable pattern regardless as to
whether the Task Force opted to maintain harbor depth at 40 ft, opted to deepen harbor depth to 47 ft, or opted
otherwise. Unit revenues ranged from USD5.14/ton to USD7.28/ton across fiscal years FY 2014/15 through FY
2029/30. Refer to the figure below to review projected container revenue per ton through FY 2029/30.

21

All financial and economic data sets involving data from CY 2002 to the present have tendencies to be problematic given the
2008 economic collapse in the United States in all but approximately 30 world economies. More specifically, mathematically
managing the positive and negative skews resulting from the economic collapse is an arduous undertaking, and one that can
destabilize financial and economic projections, despite attempts to the contrary.
Xicon Economics
Page 80 of 102

Xicon. We grow economies.


8.00
7.00
6.00

5.41

5.24

5.14

5.45

6.02

6.49

6.76
6.14

5.93

5.80

6.14

7.28

6.87

6.61

6.47

6.83

5.00
4.00
3.00
2.00
1.00
0.00

Projected Container Revenue per Ton, with and without Harbor Deepening
Units: USD/Short Ton
Notes:
1.
2.
3.

LSR line is for descriptive purposes only.


Actual LSR fit for the time series model was significant, F(1,19)=31.610, p<.001.
Relationship between projected revenue/ton and actual revenue/ton for FY 1993/94 through 2013/14 was significant
(r=.795, p<.001).

Applying unit revenues to projected container tonnages, annual gross revenue was calculated through FY 2029/30
with, and without, harbor deepening. Fiscal years estimated to produce the greatest revenue from container
tonnage, without harbor deepening, included FY 2029/30, FY 2025/26, and FY 2026/27, at USD43.5 million, USD43.4
million, and USD41.6 million, respectively. Without harbor deepening, total revenue from FY 2014/15 through FY
2029/30 was estimated to be approximately USD556.1 million.
Conversely, with harbor deepening and moderate penetration, highest revenues were estimated to be USD70.2
million, USD69.0 million, and USD66.5 million in FY 2029/30, FY 2025/26, and FY 2026/27, respectively. Further, with
harbor deepening and aggressive penetration, highest revenues were estimated to be USD90.0 million, USD88.6
million, and USD85.5 million in FY 2029/30, FY 2025/26, and FY 2026/27, respectively. Total revenues with harbor
deepening were estimated to be USD 873.4 million through FY 2029/30 under the moderate penetration scenario;
and USD 1.1 billion through FY 2029/30 under the aggressive penetration scenario. Further, while net profits
generated under the moderate and aggressive penetration scenarios were not estimated, net profit per container
tonnage has averaged approximately USD4.90 per ton over the last few years; however, container profit margins
have steadily decreased in recent years, after steadily increasing leading up to and through the 2008 US economic
collapse.
Refer to the figures and tables below to review projected revenues, revenue changes, and net revenue changes
through FY 2029/30.

Xicon Economics
Page 81 of 102

43,477,185

40,514,628

40,764,249

41,633,450

35,335,348

32,807,573

32,885,093

33,454,870

34,697,126

28,036,450

25,912,455

30,000,000

25,850,839

35,000,000

26,169,259

40,000,000

31,568,262

45,000,000

39,612,564

50,000,000

43,355,346

Xicon. We grow economies.

25,000,000
20,000,000

Cumulative Total: USD556.1 Million

15,000,000
10,000,000
5,000,000
-

Projected Container Revenue, without Harbor Deepening


Units: USD
Note: Includes loss of Asian market.

Xicon Economics
Page 82 of 102

Xicon. We grow economies.

39,525,899

39,203,792

30,000,000

55,766,284

89,974,624
70,174,401

65,170,499

83,587,197

83,835,541
65,341,060

66,490,442

68,977,720

66,280,884
51,556,201

51,448,596

66,172,612

67,039,543
52,097,842

53,771,580

62,700,460
48,676,130

43,002,661

50,971,255

50,586,138

50,932,075
39,446,638

50,000,000

40,000,000

55,422,784

70,000,000

60,000,000

69,227,797

80,000,000

62,773,813

71,662,227

80,633,657

90,000,000

85,341,596

88,567,946

100,000,000

Cumulative Totals
Moderate Penetration: USD873.4 Million
Aggressive Penetration: USD1.1 Billion

20,000,000

10,000,000

Moderate Penetration

Aggressive Penetration

Projected Container Revenue, with Harbor Deepening, Moderate Penetration & Aggressive Penetration
Units: USD

Xicon Economics
Page 83 of 102

30,000,000

Units: USD

Projected Container Revenue, with and without Deepening


Without Deepening
Moderate Penetration
Aggressive Penetration

43,477,185

40,514,628

40,764,249

41,633,450

89,974,624

83,587,197

83,835,541

85,341,596

88,567,946

80,633,657

70,174,401

65,170,499

65,341,060

66,490,442

68,977,720

62,773,813

71,662,227

66,280,884

66,172,612

55,766,284

51,556,201

51,448,596

67,039,543

90,000,000

43,355,346

39,612,564

35,335,348

32,807,573

32,885,093

52,097,842

69,227,797

80,000,000

33,454,870

53,771,580

62,700,460

70,000,000

34,697,126

48,676,130

55,422,784

50,971,255

50,586,138

43,002,661

39,525,899

31,568,262

28,036,450

25,912,455

39,203,792

50,932,075

60,000,000

25,850,839

50,000,000

39,446,638

40,000,000

26,169,259

100,000,000

20,000,000

10,000,000

0
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30

80,000,000

120.0

70,000,000
94.6

95.7

96.7

97.7

98.6

99.5

100.4

101.2

102.0

102.8

103.6

104.3

105.0

105.7

106.3

106.9
100.0

60,000,000
80.0

50,000,000

40,000,000
50.7

51.7

52.5

53.4

54.2

55.0

55.7

56.4

57.1

57.8

58.5

59.1

59.7

60.3

60.9

61.4
60.0

30,000,000
40.0
20,000,000
20.0
10,000,000

0.0
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30

Revenue Change Moderate Penetration

Revenue Change Aggressive Penetration

Increase, Moderate Penetration

Increase, Aggressive Penetration

Change in Projected Container Revenue with Deepening relative to Not Deepening


Primary Units: USD
Secondary Units: Annual Percentage Change (%) over Not Deepening Harbor (Revenue from not deepening harbor intentionally omitted from figure)

Change in Projected Container Revenue with Deepening relative to Not Deepening


% Change
Net Revenue Change
% Change
Net Revenue Change
FY
Moderate Penetration
Moderate Penetration
Aggressive Penetration
Aggressive Penetration
2014/15
50.7
13,277,379
94.6
24,762,816
2015/16
51.7
13,352,953
95.7
24,735,299
2016/17
52.5
13,613,444
96.7
25,058,800
2017/18
53.4
14,966,211
97.7
27,386,334
2018/19
54.2
17,107,868
98.6
31,132,198
2019/20
55.0
19,074,454
99.5
34,530,671
2020/21
55.7
18,642,972
100.4
33,584,673
2021/22
56.4
18,563,503
101.2
33,287,519
2022/23
57.1
18,748,628
102.0
33,473,311
2023/24
57.8
20,430,936
102.8
36,326,879
2024/25
58.5
23,161,249
103.6
41,021,093
2025/26
59.1
25,622,374
104.3
45,212,600
2026/27
59.7
24,856,992
105.0
43,708,146
2027/28
60.3
24,576,811
105.7
43,071,292
2028/29
60.9
24,655,871
106.3
43,072,569
2029/30
61.4
26,697,216
106.9
46,497,439
Units: Revenue: USD
Note: Remain mindful that these revenues do not consider delays associated with harbor deepening.

After projecting container revenue under moderate and aggressive penetration scenarios, efforts were taken to
determine whether projected container tonnage revenues would have an effect on economic output in Jacksonville
MSA. Certainly, these increases in revenue are subject to influence geographic regions outside of Jacksonville MSA;
but, for the purposes of this study, only Jacksonville MSA was considered. To render such determinations, GDP was
forecasted for Jacksonville MSA through CY 2030 using simple regression; that model resulted in the following:
2
22
JAXGDP=1589.418(t)+4322.231 (R =.759, p<.001). Refer to the table below to review projected GDP for
Jacksonville MSA through 2030.
Projected GDP, Jacksonville MSA
CY

Projected GDP

CY

Projected GDP

2014

65,374

2023

79,679

2015

66,963

2024

81,268

2016

68,553

2025

82,858

2017

70,142

2026

84,447

2018

71,732

2027

86,037

2019

73,321

2028

87,626

2020

74,911

2029

89,215

2021

76,500

2030

90,805

2022

78,089

Units: USD, Millions

22

As with other variables forecasted herein, confidence is a function of time, and as such, as time increases, confidence in
projections decreases.

Xicon. We grow economies.


23

From modeled GDP for Jacksonville MSA, statistical effect was investigated. Xicon Economics determined that
projected container revenue (CY2015-2030) under the moderate penetration scenario would have a statistically
24
significant effect on GDP in Jacksonville MSA, F(1,14)=4828267295, p<.001. Further, Xicon Economics determined
that projected container revenue (CY2015-2030) under the aggressive penetration scenario also would have a
statistically significant effect on GDP in Jacksonville MSA, F(1,14)=2753668022, p<.001 using total container
revenue under each scenario; and applying all benefits to Jacksonville MSA.
However, it indeed is possible to have statistical effect of no practical importance. Subsequently, the practical effect
that increased container revenues would have Jacksonville MSA was determined via Cohens d. By definition,
Cohens d is a measure of effect size as it relates to standardized differences between means. To develop such
25
estimates, Cohens d norms data in this case, revenue projections and GDP using pooled standard deviations.
Refer to the figure below for graphical representation of Cohens d.

Cohens d

X1

X2

Graphical Representation of Cohens d


Units of d: Standard deviation; Units of Mean: USD

The practical effect that increased revenues generated from container tonnages under the moderate penetration
scenario was projected to have on GDP in Jacksonville MSA was considered large (d=14.741) using Cohens
guidelines for effect size. Similarly, the practical effect that increased revenues from container tonnages under the
aggressive penetration scenario was projected to have on GDP in Jacksonville MSA also was considered large
(d=14.740).
Continuing, engineering, construction, and environmental costs associated with harbor deepening were estimated
by the US Army Corps of Engineers to be approximately USD766.2 million, depending upon which parameters were
being considered. Of the USD766.2 million, USD371.5 must be funded under the cost-sharing program established
26
by the federal government by a non-federal entity. Given the cost estimate for the project was estimated in 2014
23

Admittedly, using revenues that were generated in part through US GDP to investigate relationships between revenue and GDP
in Jacksonville MSA is cumbersome, and potentially problematic, as Jacksonville GDP is related to US GDP; thus, giving the
appearance of circular forecasting. Subsequently, decisions must be rendered holistically.
24
Be advised that statistical effect does not necessarily imply causal relationships.
25
Norming standardizes data, or scores. Perhaps most often, standardization is conducted using z-scores.
26
U.S. Army Corps of Engineers, Jacksonville District (2014, February). Final Integrated General Reevaluation Report and
Supplemental Environmental Impact States.
Xicon Economics
Page 87 of 102

Xicon. We grow economies.


dollars, allowances were made for changes in inflation, materials, equipment, and labor. Those allowances were
determined through other research conducted by Xicon Economics, using the following model:
2
FCost=17.565(t)+79.441 (R =.971, p<.001). The model was developed from construction material, equipment, and
27
labor indices across the United States using data from CY 1970 through CY 2013, and included changes in inflation.
Thus, based upon construction start and completion, the following construction costs were projected for the
JAXPORT deepening project:
Construction Start
CY 2014
CY 2015
CY 2016
CY 2017

Projected Non-Federal Share


371.5 Million
379.0 Million
386.5 Million
394.0 Million

Projected Total Cost


766.2 Million
781.7 Million
797.1 Million
812.6 Million

Units: USD

In reality, cost increases must be adjusted incrementally against construction expenditures across project duration
to determine ultimate project cost. However, holding project costs constant across time for these purposes, and
presuming these monies do not accrue interest from debt obligations and a mid-construction date of CY 2017
for example, the projected non-Federal cost-share of Jacksonville was estimated to be approximately USD394.0
million, assuming no change orders or cost overruns occur during engineering or construction. The projected total
cost was estimated to reach USD812.6 million; again, assuming no change orders of costs overruns occur during
engineering or construction and moreover, that the original estimate developed by the US Army Corps of
Engineers indeed was accurate. Additionally, of course, incurrence of these costs presumes the Task Force opts to
affirm the harbor deepening project.
In an attempt to balance project costs against job impacts and business revenues, Xicon Economics used the impacts
established by Martin Associates in the economic impact study (p. 22). This decision was reached based upon the
fact that the methodology developed and used by Martin Associates was determined to offer evidence that validity
existed within each of the survey instruments used in collecting economic impact data. Further, let the stakeholder
recall that all 472 entities directly associated with the Jacksonville Port Authority participated in the data collection
process employed by Martin Associates, rendering the methodology employed stronger than traditional input28
output models prevalent in the US today.
29

Assuming that 0.74 jobs are created for every 1,000 tons of container cargo, the number of jobs associated with
port activities, given tonnage increases, was calculated. However, it should again be emphasized that the
Jacksonville Port Authority creates jobs directly associated with port activities only; the port does not create jobs
in other industry sectors. Conversely, the port serves at the pleasure of industry sectors that produce, buy, and sell
products, here and abroad. That is not to suggest that infrastructure endeavors such as the port project presented
herein do not influence the economy, certainly, but it is paramount that users of economic impact findings shift
from the current, flawed paradigm to the correct paradigm as it relates to the larger infrastructure-economics
nexus. As an example, while a relationship between port sector output and manufacturing sector output likely
exists, the relationship likely is slightly bi-directional, at best, and non-directional at worst, meaning that likely,
manufacturing output has a much stronger impact on port output than port output has on manufacturing output
or other sectors. In fact, when only considering the last few years (2005-2012), not only did total annual container
-3
revenue at JAXPORT have no effect on total annual manufacturing revenue in Jacksonville MSA, F(1,6)=7.9x10 ,
p=.932; total annual manufacturing revenue in Jacksonville MSA had no statistically significant effect on container
27

Xicon Economics will provide additional information regarding this model upon request.
Again, no supporting narrative or calculations were provided in the economic impact study, leaving Xicon Economics to assume
figures were accurate. Nonetheless, any reasonable efforts taken by Martin Associates during the determination of this, and
other factors, were considered more accurate than the commonly accepted input-output methods.
29
Per communications between Dr. Herbert Barber and Dr. John Martin, the noted ratio should not necessarily be considered a
multiplier, as used by Xicon Economics herein, as the relationship was considered curvilinear rather than linear. However, over
short time spans, coupled with limited other options available, the ratio can be, and was, used as a multiplier.
28

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Xicon. We grow economies.


-3

revenue, F(1,6)=7.9x10 , p=.932. The relationship was non-existent (r=-.036). This, overwhelmingly, is problematic,
but such investigations were outside the scope of work conducted by Xicon Economics. Thus, it is strongly
recommended that these and other similar interrelationships be examined before rendering a decision.
Nonetheless, the noted analyses, projections, and other figures thus far do not account for the construction phase
of harbor deepening. Thus, models for projecting container tonnage and other variables were modified to allow for
realistic cost-benefit analyses. In so doing, it was assumed that harbor deepening would require six (6) years, plus an
30
additional three (3) years of environmental monitoring and mitigation, with tonnage increases from Asian and
other previously noted markets beginning after year six (6), with all potential market share noted herein beginning
in full. Further, the modified models assume container tonnage generated through the Asian market, and all other
31
container tonnages, remain constant similarly as previously projected.
Given these assumptions, US GDP again was used as a predictor of (Asian) container tonnage. Projected tonnages
then were used to determine the statistical and practical effects that projected container tonnage would have on
projected GDP in Jacksonville MSA, along with revised job estimates and increases in personal income and business
revenue. The model for projecting revised container tonnage, for cost-benefit purposes, is noted below.

Revised Model for Projecting Container Tonnage for Cost-Benefit Purposes, Moderate Scenario

Year

Projected
Tonnage

Projected
US GDP

Multiplier
from
Projected
US GDP

Initial Asian
Tonnage
from
Martin

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878

17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916

1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221

2,121,546
2,166,805
2,212,063
2,257,322
2,302,580
2,347,944
2,393,203
2,438,461
2,483,720
2,528,978

Projected Asian
Tonnage using US
GDP Multiplier

2,121,546

Revised Projected Tonnage

5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
8,172,033
8,364,891
8,557,748
8,750,606
8,943,463
9,136,426
9,329,284
9,522,141
9,714,999
9,907,856

30

Refers only to environmental monitoring and mitigation under the total project cost presented herein.
Constant should not be construed to mean same, as in the same tonnage being held constant year over year, but rather as
the same, or similar, rates of change via increases and decreases month over month.
31

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Revised Model for Projecting Container Tonnage for Cost-Benefit Purposes, Aggressive Scenario

Year

Projected
Tonnage

Projected
US GDP

Multiplier
from
Projected
US GDP

Initial Asian
Tonnage
from
Martin

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
6,050,487
6,198,086
6,345,685
6,493,284
6,640,883
6,788,482
6,936,081
7,083,680
7,231,279
7,378,878

17.494
17.922
18.351
18.779
19.207
19.635
20.063
20.491
20.919
21.347
21.775
22.204
22.632
23.060
23.488
23.916

1.0213328
1.0208872
1.0204599
1.0200497
1.0197015
1.0192758
1.0189113
1.0185603
1.0182221

4,243,094

Projected Asian
Tonnage using US
GDP Multiplier

Revised Projected Tonnage

5,164,893
5,312,492
5,460,091
5,607,690
5,755,289
5,902,888
10,293,581
10,531,697
10,769,813
11,007,929
11,246,045
11,484,373
11,722,489
11,960,605
12,198,721
12,436,837

4,243,094
4,333,611
4,424,128
4,514,645
4,605,162
4,695,891
4,786,408
4,876,925
4,967,442
5,057,959

Assuming again that 0.74 jobs are created for every 1,000 tons of container cargo, job volumes were adjusted.
Under the moderate penetration scenario, net job increases for CY 2021 were projected to be 1,570. In CY 2030, net
job increases were estimated to be 1,872, in total. Refer to the tables below to review both scenarios.

Projected New Jobs for Cost-Benefit Purposes, Moderate Scenario, Revised Model
Calendar Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

w/o Deepening
4,477
4,587
4,696
4,805
4,914
5,023
5,133
5,242
5,351
5,460

w/ Deepening
6,047
6,190
6,333
6,475
6,618
6,761
6,904
7,046
7,189
7,332

Difference
1,570
1,603
1,637
1,670
1,704
1,738
1,771
1,804
1,838
1,872

Net Jobs/Year
1,570
33
34
34
34
34
33
34
34
34
1,872

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Projected New Jobs for Cost-Benefit Purposes, Aggressive Scenario, Revised Model
Calendar Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

w/o Deepening
4,477
4,587
4,696
4,805
4,914
5,023
5,133
5,242
5,351
5,460

w/ Deepening

7,617
7,793
7,970
8,146
8,322
8,498
8,675
8,851
9,027
9,203

Difference
3,140
3,206
3,274
3,341
3,408
3,475
3,542
3,609
3,676
3,743

Net Jobs/Year
3,140
66
67
67
67
67
66
67
67
67
3,743

Assuming an average income of USD51,656, (assumed 2014) as noted by Martin Associates (p. 29), with a 1.02318
32
multiplier as an annual adjustment for inflation, the additional monies induced into the local money supply from
personal income were estimated. Further, to accommodate critics of the personal incomes used by Martin
Associates, the additional monies induced into the local money supply were recalculated using an average personal
33
income of USD44,021 (2014), times the same annual multiplier. These additional monies are noted below based
on penetration scenario.

Revised Net Personal Income Per Year in Money Supply using Income Base of USD51,656 (CY2014)
Calendar Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Moderate Penetration
81,115,645
1,729,076
1,823,234
1,865,497
1,908,739
1,957,516
1,938,984
2,044,573
2,091,966
2,140,458
98,615,687

Aggressive Penetration
162,212,751
3,499,206
3,634,396
3,718,641
3,804,840
3,902,101
3,924,007
4,075,609
4,170,081
4,266,744
197,208,376

Units: USD
Note: Income changes year over year (Base Year: 2014).

32

Inflation was averaged from CY 2005 through CY 2014, and used as the multiplier to increase personal income. While other
methods could be generated to determine these increases to personal income, it was considered unnecessary.
33
Federal Reserve Bank of St. Louis (2012). Personal income per capita was USD41,900 in 2012. Translating this figure into 2014
dollars, a 1.025 multiplier was used, for simplification, to reach USD44,021 per annum.

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Xicon. We grow economies.


Revised Net Personal Income Per Year in Money Supply using Income Base of USD44,021 (CY 2014)
Calendar Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Moderate Penetration
69,126,371
1,473,510
1,553,751
1,589,767
1,626,618
1,668,186
1,652,393
1,742,376
1,782,764
1,824,088
84,039,824

Aggressive Penetration
138,236,943
2,982,007
3,097,215
3,169,009
3,242,466
3,325,352
3,344,020
3,473,215
3,553,724
3,636,099
168,060,050

Units: USD
Note: Income changes year over year (Base Year: 2014).

Finally, container revenues were re-estimated based on revised tonnage projections, with construction ending in CY
2020 and the Asian tonnage, and other tonnages, captured by JAXPORT in full in CY 2021.
Revised Container Revenue for Cost-Benefit Purposes, Moderate Penetration

Year

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Revised Net Projected


Tonnage

Projected
Revenue/Ton

Revised Net Revenue

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2,121,546
2,166,805
2,212,063
2,257,322
2,302,580
2,347,944
2,393,203
2,438,461
2,483,720
2,528,978

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
6.14
5.93
5.80
6.14
6.76
7.28
6.87
6.61
6.47
6.83

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
13,026,292
12,849,151
12,829,966
13,859,954
15,565,441
17,093,035
16,441,304
16,118,230
16,069,668
17,272,923
151,125,963

Units: USD
Note: Revised Net Revenue is based on the difference between not deepening and not deepening.

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Revised Container Revenue for Cost-Benefit Purposes, Agressive Penetration

Year

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Revised Projected
Tonnage

Projected
Revenue/Ton

Revised Net Revenue

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4,243,094
4,333,611
4,424,128
4,514,645
4,605,162
4,695,891
4,786,408
4,876,925
4,967,442
5,057,959

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
6.14
5.93
5.80
6.14
6.76
7.28
6.87
6.61
6.47
6.83

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
26,052,597
25,698,314
25,659,943
27,719,922
31,130,897
34,186,086
32,882,623
32,236,475
32,139,351
34,545,862
302,252,069

Units: USD
Note: Revised Net Revenue is based on the difference between not deepening and not deepening.

Also included in the cost-benefit analysis were gross revenues of entities associated directly with JAXPORT. Similar to
the 0.74 jobs per 1,000 container tons ratio used to estimate the number of (direct) jobs associated with port
activity, Martin Associates developed a ratio that cautionsly could be used for estimating gross revenue for entities
whose existence was derived directly through the port, i.e. direct business revenue. Given no other alternative,
outside of conducting independent research beyond the scope of work noted under the RFP, Xicon Economics used
the established ratio of USD125.80 (assumed 2014 dollars) per container ton to estimate business revenues (p. 28,
economic impact study); again, for cost-benefit purposes only. In so doing, this ratio was increased year over year
using projected increases in US GDP, as previously used herein. These estimates are noted below for moderate and
aggressive penetration scenarios.

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Xicon. We grow economies.


Business Revenue for Cost-Benefit Purposes, Moderate Penetration

Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Revised Projected
Tonnage
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2,121,546
2,166,805
2,212,063
2,257,322
2,302,580
2,347,944
2,393,203
2,438,461
2,483,720
2,528,978

Business
Revenue/Ton
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
147.15925
150.29857
153.43789
156.57721
159.71653
162.86318
166.00250
169.14182
172.28114
175.42046

Direct Business Revenue


n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
312,205,117
325,667,617
339,414,280
353,445,104
367,760,090
382,393,681
397,277,655
412,445,791
427,898,089
443,634,548
3,762,141,974

Business Revenue for Cost-Benefit Purposes, Agressive Penetration

Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Revised Projected
Tonnage
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4,243,094
4,333,611
4,424,128
4,514,645
4,605,162
4,695,891
4,786,408
4,876,925
4,967,442
5,057,959

Ratio
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
147.15925
150.29857
153.43789
156.57721
159.71653
162.86318
166.00250
169.14182
172.28114
175.42046

Direct Business Revenue


n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
624,410,528
651,335,542
678,828,880
706,890,542
735,520,528
764,787,723
794,555,685
824,891,971
855,796,581
887,269,515
7,524,287,495

Substantial ambiguity exists in the scientific literature and professional literature as to how economic benefits
should be calculated on publically funded infrastructure projects, and as such, estimates of economic benefits must
be couched with subject matter expertise in multiple areas of infrastructure and industry. Such particularly holds
true when determining whether economic benefits removed several times over should be considered as actual
benefits in costing scenarios such as that herein. It is the opinion of Xicon Economics that such benefits should be
considered only after substantial analyses, and even then, with extreme caution. Subsequently, no other economic
benefits were considered in the cost-benefit model, outside of those noted to be directly associated with port
activity, recalling that the purpose of cost-benefit analyses was to determine project feasibility, only, though to

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Xicon. We grow economies.


some extent, rates of return can be inferred through this cost-benefit analysis. As such, economic benefits in the
cost-benefit analysis included 1) increased revenue resulting from harbor deepening, 2) increased personal income
monies resulting from harbor deepening, and 3) direct business revenue associated with harbor deepening.
However, given direct business revenue includes economic benefits derived through increased personal income,
personal incomes were omitted from cost-benefit calculations to avoid double counting. Likewise, no efforts were
taken to include tax generation into the analytical mix.
Refer to the following figures to review dynamics associated with the economic benefits of harbor deepening,
relative to total project cost, using the assumptions noted below (without discounting). In so doing, an optimistic
scenario was used, followed by a conservative scenario, for comparison. Further, be reminded that benefits were
considered in terms of differences between deepening and not deepening, not total benefits.
Optimistic Scenario: Aggressive Penetration
1.
2.
3.
4.
5.

Total project cost: USD812.6 million


Direct business revenue: USD7.5 billion
Container revenue: USD302,252,069
Construction: 6 years, max; Environmental monitoring/mitigation: 3 years post-construction
Assumes successful marketing and business development efforts

Total Costs:
Total Benefits:

USD 812,600,000
USD 7,826,539,564

Conservative Scenario: Moderate Penetration


1.
2.
3.
4.
5.

Total project cost: USD812.6 million


Direct business revenue: USD3.8 billion
Container revenue: USD151,215,963
Construction duration: 6 years, max; Environmental monitoring/mitigation: 3 years post-construction
Assumes successful marketing and business development efforts

Total Costs:
Total Benefits:

USD 812,600,000
USD 3,913,267,937

Note
The financial and economic benefits associated with the construction phase of harbor deepening should not be negated as it
relates to benefits to Jacksonville MSA, north Florida, and the United States. Over the estimated six-year project, presuming the
Task Force opts to deepen the harbor, nearly one billion dollars (USD812.6 million) will be induced into the current money supply
in addition to the benefits depicted above primarily in north Florida. While these increases are substantial, indeed, these monies,
and all economic benefits derived therefrom, cannot be considered a benefit and a cost, simultaneously, under the cost-benefit
scenarios presented.

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Page 95 of 102

887,269,515

Xicon. We grow economies.

824,891,971

794,555,685

735,520,528

706,890,542

651,335,542

624,410,528

700000000

678,828,880

800000000

764,787,723

900000000

855,796,581

1E+09

600000000

500000000
Net Benefits: USD 7.8 Billion
400000000

300000000
Revenues intentionally omitted, CY 2015-2020

34,545,862

32,139,351

32,236,475

32,882,623

34,186,086

31,130,897

27,719,922

25,659,943

100000000

25,698,314

26,052,597

200000000

0
(3,000,000)

(7,000,000)

(13,000,000)

(140,100,000)

(167,600,000)

(165,000,000)

-3E+08

(160,000,000)

-2E+08

Net Costs: USD 812.6 Million


(130,000,000)

-1E+08

(26,900,000)

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Container Revenue

Total Costs

Direct Business Revenue

OPTIMISTIC SCENARIO: Estimated Flow of Net Economic Output, Net Costs vs Net Benefits
Aggressive Penetration
Units: USD

Xicon Economics
Page 96 of 102

412,445,791

397,277,655

382,393,681

367,760,090

353,445,104

339,414,280

312,205,117

325,667,617

400000000

427,898,089

500000000

443,634,548

Xicon. We grow economies.

300000000

200000000
Net Benefits: USD 3.9 Billion
Revenues intentionally omitted, CY 2015-2020

17,272,923

16,069,668

16,118,230

16,441,304

17,093,035

15,565,441

13,859,954

12,829,966

12,849,151

13,026,292

100000000

0
(3,000,000)

(140,100,000)

(167,600,000)

(165,000,000)

(160,000,000)

-2E+08

(130,000,000)

-1E+08

(7,000,000)

Net Costs: USD 812.6 Million

(13,000,000)

(26,900,000)

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Container Revenue

Total Costs

Direct Business Revenue

CONSERVATIVE SCENARIO: Estimated Flow of Net Economic Output, Net Costs vs Net Benefits
Moderate Penetration
Units: USD
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Xicon. We grow economies.


34

The optimistic scenario yielded a benefit-to-cost ratio of 9.63 (BC=9.63). Comparatively, the conservative scenario
yielded a benefit-to-cost ratio of 4.82 (BC=4.82). Thus, both optimistic and conservative scenarios yielded BC ratios
within traditionally accepted scenarios for accepting projects. Accounting for the time value of money, all costs and
benefits were discounted to 2014 dollars, as necessary. More specifically, construction costs were discounted using
the original cost estimate developed by the US Army Corps of Engineers (USD766.2 million); and direct business
revenues were discounted using the previously used ratio of USD125.80 per ton. For simplification, container
t
revenues were discounted using PV=Rt/(1+i) , allowing 3.75 percent to serve as a constant discount rate.
Refer to net present value calculations below.
Present Values (2014 dollars)
COST: Engineering, Construction, and Environmental: USD766,200,000
BENEFIT: Business Revenues, Optimistic Scenario: USD5,850,362,484
BENEFIT: Business Revenues, Conservative Scenario: USD2,925,179,863
BENEFIT: Container Revenues, Optimistic Scenario (Discount Rate=3.75%): USD196,925,430
BENEFIT: Container Revenues, Conservative Scenario (Discount Rate=3.75%): USD98,462,668
Net Present Values (2014 dollars)
Net Present Value (Optimistic Scenario)=(5,850,362,484 +196,925,430)-766,200,000=5,281,087,914 > 1.0
Net Present Value (Conservative Scenario)=(2,925,179,863 +98,462,668)-766,200,000=2,257,442,531 > 1.0
Further, a payout was estimated for each scenario using net present values, i.e. when costs equal benefits, under
the assumptions noted. Under the conservative scenario, the payout was estimated to occur in CY 2023. Conversely,
under the optimistic scenario, the payout was estimated to occur in CY 2022.
Additionally, the cost-benefit model was investigated from an econometric perspective to determine whether the
economic benefits noted would have a statistically significant effect on Jacksonville MSA GDP. Using analysis of
variance, it was determined that both scenarios, including the optimistic scenario and conservative scenario, would
have a significant effect on Jacksonville MSA GDP; in both scenarios, the effects were significant at the .001 alpha
level. Further, statistical effects of both scenarios were determined to be practically important, and large, using
Cohens d (Optimistic Scenario: Cohens d=23.883; Conservative Scenario: Cohens d=24.001). Refer to the analyses
below.

Econometric Analysis, Optimistic Scenario, Effect of Economic Benefits on Jacksonville MSA GDP
ANOVA
df

SS

MS

Regression

2.08295E+20

2.08295E+20

Residual

1.17217E+17

1.46521E+16

Total

2.08412E+20

Coefficients

Standard Error

t Stat

Lower 95%

Upper 95%

Intercept

40973862493

346736972.7

118.1698686

2.93947E-14

40174285600

41773439386

4.02E+10

4.18E+10

Revenue

52.49975059

0.440319295

119.2310924

2.73667E-14

51.48437247

53.51512871

51.48437

53.51513

34

F
14216.0534

P-value

Significance F
2.73667E-14

Lower 95.0% Upper 95.0%

BC ratios were calculated using projected costs and benefits. Conversely, BC ratios can be calculated using net present values.
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Xicon. We grow economies.


Econometric Analysis, Conservative Scenario, Effect of Economic Benefits on Jacksonville MSA GDP
ANOVA
df

SS

MS

Significance F

Regression

2.08295E+20

2.08295E+20

14216.0534

2.73667E-14

Residual

1.17217E+17

1.46521E+16

Total

2.08412E+20

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Intercept

40973862493

346736972.7

118.1698686

2.93947E-14

40174285600

Upper 95%
41773439386

Lower 95.0% Upper 95.0%


4.02E+10

4.18E+10

Revenue

104.9995507

0.880639006

119.2310924

2.73667E-14

102.9687935

107.0303079

102.9688

107.0303

Thus, in both cases, the harbor deepening project proved to be financially feasible and economically feasible from a
cost-benefit perspective.

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Conclusions

here were three objectives established for this study under the RFP. Those three objectives included
the following:

1.
2.
3.

Review the economic impact model developed by Martin Associates; provide an evaluation regarding the
validity of the methodology of the impact model.
Provide an independent evaluation of the business growth potential for JAXPORT, given the ports current
water depth and water depth under the proposed harbor deepening project.
Provide a cost-benefit analysis, and economic benefits, of the harbor deepening project.

Through this investigation, several findings were determined. Among other findings, the primary findings of this
study included the following:
1.

The methodologies employed by Martin Associates offered evidence that scientific validity existed in terms
of data collection. No references were made as to reliability, or reliability coefficients, in the work
conducted by Martin Associates. Thus, Xicon Economics could not calculate a reliability coefficient
associated with the survey instruments developed and employed by Martin Associates to collect data; and
therefore could not access overall validity of the data collection methodologies. However, the techniques
employed by Martin Associates was substantially more robust for collecting data than using the traditional
input-output methods commonly used today in traditional economic impact studies. Subsequently, it
remains the opinion of Xicon Economics that the data collection methodologies employed by Martin
Associates, notwithstanding questions associated with reliability, were in keeping with accepted practices
in the scientific research community.

2.

To further evaluate validity, Xicon Economics compared findings between Martin Associates, Vickerman
and Associates, and itself when applicable. Initially acceptable differences were found to exist among
tonnage projections developed by Xicon Economics and Martin Associates. However, these differences
later digressed. For example, ultimately, relatively large differences were found to exist between container
tonnage forecasts across all three firms, under moderate penetration scenarios and aggressive penetration
scenarios, through 2030 (and 2035 in some cases); in some cases, container tonnage projections developed
by Martin Associates were highest, and in other cases, container tonnage projections developed by
Vickerman and Associates were highest. In all cases, under both scenarios, tonnage projections developed
by Xicon Economics were lower.
However, projections generated by Vickerman and Associates appeared to have no statistical merit, and as
such, were discounted altogether. Differences between Xicon Economics and Martin Associated were
attributed to varying techniques used in rendering projections. However, in terms of actual data analyses, it
is the opinion of Xicon Economics that projections rendered by Xicon Economics were more statistically
robust than those rendered by Martin Associates, and accordingly, Xicon Economics used its own
projections throughout this study. However, no definitive determination could be made as to the validity of
findings generated by Martin Associates as Xicon Economics was prohibited from accessing raw data,

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analytical techniques, and modeling methods used by Martin Associates, though the approach developed
by Martin Associates appeared to be logical and in keeping with sound scientific principles.
3.

Numerous determinations were made regarding the potential business growth of JAXPORT. However, in
general, Xicon Economics did not attempt to understand why its analyses yielded findings positive or
negative in terms of TEU or tonnage by commodity, or similar. Nonetheless, several of the findings should
be investigated further by JAXPORT to determine why such determinations were rendered. For example,
while container tonnages were forecasted to increase with, or without, harbor deepening, break bulk
tonnages were consistently decreasing; in fact, inbound break bulk tonnages were forecasted to be nonexistent altogether by FY 2019/20. Similarly, inbound bulk cargo tonnages were forecasted to be nonexistent by FY 2018/19, at the current rate of decline. Perhaps troublesome, reversing these trends
appears problematic, as these declines have remained steady over the last several years. However, these
tonnages perhaps are being loaded and offloaded at private terminals in the Jacksonville area; again, such
determinations were not the intent of this study, but these declines should be addressed by JAXPORT.

4.

Deepening the harbor under the moderate penetration scenario, container tonnages were projected to
increase through CY 2030, over not deepening in those same years. Deepening the harbor, under the
aggressive penetration scenario, container tonnages also were projected to increase through CY 2030, over
not deepening in those same years. However, these tonnage projections did not incorporate the
construction phase into the analyses, as the construction phase was not incorporated into the analytical
mix until the third objective.

5.

Deepening the harbor under the moderate penetration scenario, container gross revenue was projected to
increase CY 2030, over not deepening in those same years. Deepening the harbor, under the aggressive
penetration scenario, container gross revenue was projected to increase through CY 2030, over not
deepening over those same years. Again, however, these tonnages did not incorporate the construction
phase into the analyses.

6.

Without incorporating the negative impacts associated the construction phase of harbor deepening into
the analytical mix, gross revenues from container tonnage increases was projected to have a statistically
significant effect on economic output in Jacksonville MSA as expressed via GDP. Further, the effects under
both moderate and aggressive penetration scenarios were determined to be of practical significance, and
large.

7.

For the cost-benefit analyses, models were modified to allow for impacts associated with the construction
phase of harbor deepening, such as construction delays and construction costs. In so doing, it was
determined that a net increase of 1,872 jobs (moderate penetration scenario) would be associated with
harbor deepening through CY 2030, excluding jobs directly involved in the construction phase of the
project. Further, it was determined that a net increase of 3,743 jobs would be associated with harbor
deepening through CY 2030, under an aggressive penetration scenario; again, excluding jobs generated
during the construction phase, which in this case, were considered costs.

8.

Coupling net increases generated through container revenues with direct business revenues, two scenarios
were developed, including an optimistic scenario and a conservative scenario, using separate parameters.
In both scenarios, economic benefits associated with harbor deepening outweighed costs associated with
deepening from a financial perspective and econometric perspective. Thus, under the assumptions used
in this study, harbor deepening was determined to be financially feasible and econometrically feasible.

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