MARITIME COMMERCE IN GREATER PHILADELPHIA Assessing Industry Trends and Growth Opportunities for Delaware River Ports July 2008 1 TABLE OF CONTENTS Table of Contents Maritime Commerce In Greater Philadelphia Executive Summary 3 Introduction and Project Partners 8 Section 1: Economic Impact Analysis 9 Section 2: Delaware River Port Descriptions & Key Competitors 12 Section 3: Global Trends and Implications for Delaware River Ports 24 Section 4: Strategies and Scenarios for Future Growth 31 Section 5: Conclusions and Key Recommendations 38 Appendices Appendix A: Glossary 40 Appendix B: History of the Delaware River Ports 42 Appendix C: Methodology for Economic Impact Analysis 46 Appendix D: Port-Reliant Employment 48 Appendix E: Excerpts from Expert Panel Discussions 49 Appendix F: Port Profiles 55 Appendix G: Additional Data 57 Appendix H: Delaware River Port Maps 62 Appendix I: End Notes 75 Appendix J: Resources 76 2 EXECUTIVE SUMMARY Executive Summary For more than 300 years, the from origin to final destination. supports 12,121 jobs and $772 mil- Delaware River has served as a key ⇒ Implications for Delaware lion in labor income, generating $2.4 commercial highway for the region. River Ports. The region has ca- billion in economic output. While Greater Philadelphia’s mari- pacity to accommodate growth, The port industry’s regional job time roots remain, rapid globalization but its ports must collaborate to base is relatively small, but those jobs and technological advances are driv- develop a comprehensive plan generate higher than average income ing an industry-wide transformation that addresses existing con- and output per job. Regional direct that has impacted the role that Dela- straints and rationally allocates jobs represent an average annual in- ware River ports play in the larger cargo based on competitive ad- come (including fringe benefits) of economy. vantages. $80,000, more than double the re- Understanding the impact of ever ⇒ Recommended Strategies for gional per capita income. -evolving trends in maritime com- Port Growth. The potential for Port activity in the City of Phila- merce on Greater Philadelphia is Delaware River port growth will delphia is responsible for approxi- essential to make appropriate policy depend on the region’s ability to mately 45 percent of regional im- and investment decisions. To this leverage existing competitive pacts. City ports employ 1,945 work- end, the Philadelphia Industrial Devel- strengths, strategically invest in ers who earn $142 million and gener- opment Corporation (PIDC) spon- infrastructure enhancements, ate $569 million in economic output. sored a study of maritime commerce in and collaborate to ensure the Direct city port jobs support an addi- Greater Philadelphia, commissioning efficient deployment of re- tional 3,565 indirect and induced the Economy League of Greater Phila- sources. jobs. In sum, port activity in the City delphia to lead a project team that con- ⇒ Scenarios for Port Growth. of Philadelphia supports 5,510 jobs sisted of a partnership with the Eco- Given dynamic industry trends, and $338 million in labor income, nomic Development Research Group Delaware River ports are at a generating $1.0 billion in economic (EDR) and assistance from Select critical juncture. Future growth output. Greater Philadelphia and the Delaware will depend on the extent to Regional port activity annually Valley Regional Planning Commission. which the ports collaborate to adds $81 million in tax revenues to implement recommended strate- The study considered port activity Pennsylvania, New Jersey, and Dela- gies. ware, as well as $12 million to City of on both sides of the Delaware River, from Trenton, NJ and Bucks County, Philadelphia coffers.1 PA to the ocean. Its analysis included Economic Impact a review of dynamic factors impact- Delaware River port activity gen- Delaware River Port ing maritime commerce in Greater erates jobs, labor income, economic Descriptions Philadelphia. Its key findings include: output, and tax revenues. Delaware River ports employ 4,056 workers The Delaware River port indus- ⇒ Economic Impact. The port who earn $326 million and generate try’s contribution to the Greater industry’s regional job base is $1.3 billion in economic output. Philadelphia economy is a result of relatively small but generates Each direct port-related worker sup- activity at the region’s more than 40 higher than average labor in- ports an additional two jobs from port facilities and their associated come and economic output per industry demand and worker re- businesses. The region’s public port job. spending. Based on these impacts, facilities are owned by three state-run ⇒ Delaware River Port Descrip- port activity in Greater Philadelphia entities: the Philadelphia Regional tions. The region’s inability to overcome natural and market- based limitations have resulted in Economic Impacts Related to Delaware River Port Activity, 2005 a loss of global market share in maritime commerce. Greater Philadelphia City of Philadelphia ⇒ Global Trends. Projections in- Totals Direct Total Direct Total dicate continued containerization Employment 4,056 12,121 1,945 5,110 and rationalization of trade, es- Labor Income $326M $772M $142M $338M pecially from high-growth Asian markets seeking to improve the Economic Output (e.g., sales) $1.3B $2.4B $569M $1.0B cost-effectiveness of service Total Tax Revenues $81M $33M Note: Economic impact calculations using IMPLAN model. 3 EXECUTIVE SUMMARY fruit, nuts, cocoa beans, and meat Vessel Calls by Ship Type, 2005 products. These cargoes require spe- cialized facilities that are difficult to replicate; Greater Philadelphia’s ag- glomeration of specialized facilities is Virginia Ports a significant competitive advantage Product Tanker for capturing a large market share of Crude Tanker Delaw are Riv er these commodities. Por ts Container Dry Bulk Where Delaware River ports are most lacking is in container facilities, Ro-Ro New Y ork which has accounted for the vast General Cargo majority of global growth in mari- Combination time commerce over the past quarter Baltimore Gas Carrier -century. Competitor ports, such as the Port of New York/New Jersey, 0 1,000 2,000 3,000 4,000 5,000 6,000 Baltimore, and Virginia, have supe- Source: U.S. Department of Transportation, Maritime Division. rior location and market advantages and have made significant invest- Port Authority (Pennsylvania); the inability to strategically position itself ments to expand container capacity, South Jersey Port Corporation (New to leverage a flourishing maritime managing to increase share of con- Jersey); and the Diamond State Port industry. As a result, while Delaware tainer shipments. Delaware River Corporation (Delaware). Dozens River ports have managed to capture ports have failed to match these in- more facilities are owned and oper- a share of global growth, their overall vestments. As a result, no port on ated by private entities. market share has declined. the Delaware River is considered a The region has historically strug- Another reason for the region’s top-tier container destination, and gled to keep pace with the ever- decline in market share is the nature the region has not enjoyed the full evolving maritime industry. This real- of cargo handled by its ports. Ap- impact of global containerization. ity is due in part to inherent physical proximately 65 percent of the re- Emblematic of this shortcoming is limitations of its port complex, lo- gion’s cargo tonnage is in petroleum, the region’s paucity of trade partner- cated 60-100 miles up the naturally a stable industry but one that has not ships with Asia, the world’s largest shallow Delaware River, increasing experienced market growth. The re- container growth market. shipping costs and constraining mar- gion also specializes in “niche” car- Another factor in the Delaware ket competitiveness. But the region’s goes such as steel, wood products, River ports status is a drastic import/ struggles are also owed in part to the and perishable items such as fresh export trade imbalance. A weak ex- port market compromises cost com- petitiveness by limiting the ability for Rankings of U.S. Ports by Tonnage and Value, 2005 shipping lines to “backhaul” cargo, thereby increasing the unit costs of Cargo Tonnage calling upon a port. In 2005, the re- Imports Exports gion’s import tonnage outpaced ex- Rank Port Short Tons Rank Port Short Tons port tonnage 34:1. Philadelphia’s 11 Philadelphia 25,914,744 60 Camden-Gloucester 545,293 import/export trade imbalance was 17 Paulsboro 18,133,852 66 Chester 400,092 even more severe at 80:1, while Cam- 33 Wilmington 6,896,449 67 Wilmington 381,567 den (9:1) and Wilmington (18:1) were 40 Camden-Gloucester 4,742,854 70 Philadelphia 322,702 comparably less severe. 66 Chester 1,243,599 Cargo Value Imports Exports Global Trends Rank Port Value ($) Rank Port Value ($) Shifts in technology, consump- 6 Philadelphia 29,462,379,151 22 Philadelphia 2,430,517,679 tion, and trade patterns are changing 35 Chester 5,684,957,894 24 Wilmington 2,175,543,116 the nature of global maritime com- 37 Wilmington 5,499,289,565 32 Chester 1,594,532,247 merce. Specifically, the containeriza- 79 Paulsboro 255,203,257 74 Camden 149,968,973 tion of cargo and rise of Asian manu- 103 Camden 67,409,025 84 Paulsboro 88,580,455 facturing have driven increases in Note: Tonnage is for foreign trade only. 4 EXECUTIVE SUMMARY global cargo demand, led by double- digit annual growth of demand from Annual Growth in Container Demand South and East Asian markets. Con- by World Region, 1990-2005 tainerization is expected to continue, World Region 1990-1995 1995-2000 2000-2005 with container-based shipping pro- North Europe 6.45% 8.07% 8.52% jected to double from its 2000 total S. Europe/Mediterranean 11.41% 12.86% 9.96% by 2020.