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Georgia Statewide Freight and Plan

Projjpect Development Advisory Committee

June 2011 Update on Task 4 Economic Analysis

• Subtask 4.1 – Comppgare Freight Forecasts • Subtask 4.2 – Freight & Logistics (F&L) Importance to Georgia Economy » Builds on the “Making the Business Case” report and presentation completed in Task 2 • Subtask 4. 3 – Value of F&L Investment

2 Subtask 4.1 – Compare Freight Forecasts Comparison of Alternative Macro-Forecasts

Tonnage Annual Value Annual Source Time Period Growth Rate Growth Rate GDOT F&L Plan forecast (Transearch base with 2007-2050 1.5% 2.5% FHWA FAF3 growth rates)* GDOT Transearch forecast 2007-2027 1.0% 1.9%

FHWA FAF3 extrapolated (entire U.S.) 2007-2050 1.3% 2.7%

FHWA FAF3 extrapolated (Georgia flows only) 2007-2050 1.0% 2.5% economy.com Georgia GDP 2007-2050 – 2.1%

• *GDOT F&L Plan forecast is “middle of the ” relative to other forecasts

3 Subtask 4.1 – Compare Freight Forecasts Mode-Specific Forecasts

Mode and Source Time Period CAGR Units

Port of Savannah Container Growth (GPA) 2010-2050 4.5% TEUs

Georgia Air (GDOT F&L Plan)* 2007-2050 3.1% Tons Revenue National (Federal Aviation Authority) 2010-2030 5.0% ton-miles

Georgia (GDOT F&L Plan)* 2007-2050 1.5% Tons

National Truck ((g)American Trucking Association) 2009-2021 2.2% Tons

Georgia Rail (GDOT F&L Plan)* 2007-2050 1.0% Tons • *GDOT F&L Plan freight forecast is “middle of the

road” relative to other mode-specific forecasts 4 Subtask 4.1 – Compare Freight Forecasts Key Determinants of Future Freight Volumes

• Identifyyging key factors that affect movement forecasts » Economic, logistics, transportation, and policy factors • Identifying key trends for each that would lead to low growth, middle of the road (base case), or high growth in freight demand • Developing a matrix that maps factors, trends, and impacts on freight demand » Samp le sh own on next slid e

5 Subtask 4.1 – Compare Freight Forecasts Example – Economic Factor (Consumption)

Low Freight Base Case High Freight Demand Scenario Demand Scenario Demand Scenario Economic Factor – FihFreight FihFreight FihFreight Consumption Trend Implications Trend Implications Trend Implications

Moderate No growth High growth growth Population Slight Small Moderate Households decrease increase increase Freight Freight demand Freight demand Significantly Flat or Modest demand grows faster declines relative more dliideclining growthih in grows apace than to economy disposable personal and personal and with economy economy income and HH income HH income Income grows affluent HHs Tonnage Tonnage by about Older grows about grows about 50% by 2050 Older population 60% by 2050 100% by Older population; with changing 2050 population; greener consumption less lifestyle; more patterns; consumption leisure greener expenditures lifestyle Lifestyle Source: Consultant analysis 6 Subtask 4.2 – F&L Importance to Economy Four Key Economic Sectors Related to Freight

• Major economic sector » High dollar value industries (e.g. services) • Freight-intensive sector » Industries that are dependent on goods movement to be competitive (e.g. ) • Population-driven sector » Industries whose growth is driven by changes in population (e.g. ) • Opportunity sector » Strategic industries that could catalyze future economic growth in Georgia » Identified from GDEcD and regional agencies

7 Subtask 4.2 – F&L Importance to Economy Project to Be Done on Four Sectors

• Major economic sector » Developing summary profile • Freight intensive sector » Developing summary profile • Population-driven sector » DliDeveloping summary profil e • Opportunity sectors » Developing description of all opportunity industries » Developing detailed profile of food and , transportation equipment, and other manufacturing

8 Subtask 4.2 – F&L Importance to Economy Output by Major Georgia Economic Sectors in $billions of $2005 2007 $160 2050 $140 $120 $100 $80 $60 $40 $20 $- n ss ce nd nd nd es tail ity ion ing e ion on oo ee tt nn tt cc aa aa rr aa rr ee R Fina Servi Busin Energy Natural Informa Leisure Distributi Healthca Logistics Constructi Manufactu and Educa Resources

• Major economic sectors are those that have high total dollar output amounts, including » Manufacturing » Finance » Logistics and » Business services » Information 9 Source: economy.com Subtask 4.2 – F&L Importance to Economy Output for Georgia Freight Intensive Industries in billions of $2005 2007 100 2050 80 60 40 20 0 Retail atural spitality sources facturing d Energy struction isure and NN oo ee uu H R an Le Con Man

• Freight intensive industries rely heavily on freight infrastructure » Agriculture » » Manufacturing » Utilities » Retail and wholesale trade » » Leisure and hospitality

10 Source: economy.com Subtask 4.2 – F&L Importance to Economy Growth in Georgia Population Driven Industries in billions of $2005 2007 90 2050 80 70 60 50 40 30 20 10 0 Retail Other Related Related elated isure and Business struction- Services- Services- facturing- d Energy- Related elated Natural althcare ospitality- esources Related ee nn RR uu nn ee RR HH RR L a H Co and Man • Freight transportation system will also need to support population- driven industries, including » Utilities » Stone » Healthcare and » Construction » Furniture education » Food and beverage, » Repair and including food services » Consumer goods » Wood products » WtWaste » Personal services 11 Source: economy.com Subtask 4.2 – F&L Importance to Economy Output by Georgia ’s Key Opportunity Industries in billions of $2005 2007 140 2050 120 100 80 60 40 20 0 and Food Related istribution Related vironment- gistics and Agriculture nergy and quipment nufacturing nsportation iosciences- nn oo DD aa aa EE EE B L E M Tr • Opportunity industries are being targeted by GDEcD for recruitment and growth • Opportunity industries with most transportation needs are being analyzed in detail » Transportation equipment (automotive and aerospace) » Manufacturing – other mfg » Agriculture and food – shown in next slides 12 Source: economy.com Subtask 4.2 – F&L Importance to Economy Detailed Analysis – Agriculture and Food

• Aggjggriculture and food is a major freight generator » Agriculture and food are “freight-intensive” industries » Population growth is key determinant for agriculture and food demand • Agriculture and food is a key component of the Georgia economy » $12 billion contribution to GSP (gross state ) » $1.3 billion in Georgia-originated exports » 125, 000 jobs

Sources: Bureau of Economic Analysis, WISERTrade 13 Subtask 4.2 – F&L Importance to Economy Agriculture and Food - Industry Overview

• Georggpp(ia is the nation’s top producer of “broilers” (frozen chickens) and peanuts; ranks second in cotton » Georgia produces 16% of nation’s broilers – State’ s largest agricultural product – 25% of all GA agriculture – 1.4 billion chickens raised valued at $3.1 billion in 2010 – Increased 9% from 2000 to 2010 » Georgia produces half of nation ’ s peanuts – Increased from 1.3 to 2.0 billion pounds from 1990 to 2010 » Georgia produces 12% of nation’s cotton – Recent harvests generally 10%-20% higher than 1990s levels

14 Source: U.S. Department of Agriculture Subtask 4.2 – F&L Importance to Economy Geographical Distribution of Agricultural Production

• Agriculture produced in “Z f ormati on” i n G eorgi a

• Concentrated production are growing and raising areas for top agricultural outputs

• Broilers are concentrated in NE GA and stretch to just north of metro Atlanta

• Cotton and peanuts are produced in SW GA with the cotton belt extending to SC bdborder

Source: U.S. Department of Agriculture, 2009 15 Subtask 4.2 – F&L Importance to Economy Agriculture and Food - Logistics Considerations

• of Savannah is keyyg gateway with 44 electrified container racks able to power over 1,000 “reefer” containers • Atlanta airport also has expanding cold storage capabilities • Atlanta’s Forest Park Farmer’s Market acts a wholesale distribution center for entire southeast • Food safety and are critical » Cold storage requires specialized fleets and containers » Fast ggggrowing organic market requires carrier certification and isolation from other foods during shipping » Due to ease of resale, theft of food loads is the #1 freight theft - recently surpassing electronics and pharmaceuticals

Source: Georgia Logistics Summit 16 Agribusiness presentations 2011 Subtask 4.2 – F&L Importance to Economy Leading States in Broiler Production

GEORGIA Arkansas Alabama Mississippi North Carolina Texas Kentucky Maryland Virginia South Carolina

0 200 400 600 800 1,000 1,200 1,400 1,600

Broiler Production (in millions)

Georgia is also the top broiler exporting state

17 Source: U.S. Department of Agriculture Subtask 4.2 – F&L Importance to Economy Georgia Peanut Production Trends, 1990-2010

2,500 60%

50% 2,000

40% uction of pounds) dd ss

1,500 30% n (in million n (in re of US Pro re of

oo 20% 1,000 aa

10%

500 Georgia Sh Producti aa 0% Pe

0 -10% 1990 1995 2000 2005 2010

Georgia Peanut Prod. - LEFT Axis GA Share of US - RIGHT Axis

18 Source: U.S. Department of Agriculture Subtask 4.2 – F&L Importance to Economy Georgia Cotton Production Trends, 1990-2010

2,500 14.0%

12.0% 2,000

10.0% uction ds of bales ds of dd

1,500 8.0% n in thousan re of US Pro re of

oo 6.0% 1,000 aa

4.0%

500 Georgia Sh tton Producti

oo 20%2.0% C

- 0.0% 1990 1995 2000 2005 2010 Georgia Cotton Prod. - LEFT Axis GA Share of US - RIGHT Axis

19 Source: U.S. Department of Agriculture Subtask 4.2 – F&L Importance to Economy Georgia Agricultural Industry Freight Flows

• Mode and distance » Truck dominates trips less than 500 miles » Higher rail mode share for longer trips • IbInbound dfl flows » Reflect inputs required by broiler industry, mainly high-volume flows of grain/feed by rail from the Midwest corn belt » Rail also brings in field crops and potatoes from Pacific NW » bring in fresh produce from around the U.S. • Outbound flows » Perishability of broilers, fruits/vegetables increases truck share » Major markets include U.S. urban areas and export gateways » Rail used to pean uts from SW GA to Virginia processors

20 Subtask 4.2 – F&L Importance to Economy Agricultural Rail Inbound Flows and Forecast

21 Source: Transearch Subtask 4.2 – F&L Importance to Economy Agricultural Truck Inbound Flows and Forecast

22 Source: Transearch Subtask 4.2 – F&L Importance to Economy Agricultural Rail Outbound Flows and Forecast

23 Source: Transearch Subtask 4.3 – Value of F&L Investment Case Studies

• Demonstrates specific use of GA transportation infrastructure • To include interviews of logistics managers anddd devel opment of high-level supply chain maps • Pursuing case studies with » Perdue Chicken » Home Depot » Weyerhaueser

Source: Go Ohio Study, 2011 24 Subtask 4.3 – Value of F&L Investment Economic Benefit of Delay Reduction

Total Transportation Costs in Georgia ($ Billions) 37.9

Cost • By reducing savings transportation costs by 0 .5% pe r yea r fr om 2011 to 2040, the 17.5 Georgia economy will cumulatively gain • $16 billion in output • 188,000 jobs

2010 2040 Source: BEA, REMI Forecast, Consultant Analysis. 25 Next Steps

• Continue with economic analysis task » Subtask 4.1 – Describe key economic metrics that will drive future Georgia freight demand » Subtask 4.2 – Develop detailed analysis for remaining 3 sectors » Subtask 4.3 – Conduct case studies

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