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Regional leaders drafting plan to create Jefferson City port authority

Regional leaders drafting plan to create Jefferson City port authority

May 13th, 2018 by Philip Joens in Local News

Backers of a proposed river port at Jefferson City are trying to cover their financial bases and garner support for it.

Photo by Julie Smith /News Tribune.

Hiding within Missouri's border lies an untapped economic engine.

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The Missouri River runs 550 miles from the state's northwest corner to St. Louis. Life in Missouri grew up around the river, but in recent decades, the waterway itself has rarely played a large role in the state's economic fortunes.

Now groups from government and the private sector want to change that by creating a shipping powerhouse to carry goods from St. Joseph all the way to Pittsburgh, Chicago and beyond.

"You can get in the water and go anywhere in the world," said Mark Coulter, Port of Kansas City vice president and general counsel.

Efforts to build a Missouri River port in the Jefferson City area are gaining steam as regional leaders prepare to submit a joint proposal to create a port authority. If built, the project would be years away from completion and faces an uncertain funding future. Still, executives from a Miami-based shipping company hope the port will serve a new fleet of river-shipping vessels.

Missouri's transportation network

Thirty-three thousand miles of highways snake through every corner of Missouri. In the Midwest, these small strips of concrete act as nerves that connect small towns and large cities to each other.

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More than 4,200 miles of rail lines serve as the state's veins, carrying crops and freight across the state at far greater tonnage than can be carried on roads.

The Mississippi River and its tributaries, including the Missouri River, serve as the state's arteries, connecting many of the state's cities such as St. Joseph, Kansas City, Jefferson City, St. Louis and Cape Girardeau.

Right now, though, business leaders from around the region said the Missouri River is an artery that's not working.

"It's not feasible for us to have big distribution centers in central Missouri of overseas products," Callaway County Western District Commissioner Roger Fischer said. "If we can bring it up the river at a comparable cost, we can sell those goods on a more equal (playing field)."

Building a port authority

For years, the Jefferson City Area Chamber of Commerce has championed the idea of bringing a river port to Jefferson City. The project finally gained momentum last year when the Callaway County Commission, Cole County Commission, Jefferson City and the chamber hired Atlanta consultancy firm Cambridge Systematics to conduct a feasibility study to look at what it would take to build a Missouri River port.

An additional economic benefits analysis could be done at the beginning of July. The groups are about to submit a proposal to the Missouri Department of Transportation to create a port authority.

"The big step was getting the resources for the feasibility study," said Randy Allen, president of the Jefferson City Area Chamber of Commerce. "Had we not determined it was feasible by people that know, then we were always guessing."

Cambridge's study identified two options for building a river port.

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The first option would build a port on the Missouri River in southern Jefferson City, adjacent to the Missouri National Guard Ike Skelton Training Facility and near the chamber's industrial park.

A second option would build ports on the site in southern Jefferson City and on a site on the Missouri River in Callaway County near OCCI Inc.

Under the two-site plan, dry bulk commodities would be handled at the south site using conveyor systems. Commodities moved by crane, like those in shipping containers, would be handled at the north site.

Building only the south site will cost at least $54.77 million, Cambridge Systematics officials said in February. The combined plan would cost $59.5 million.

Construction of south site facilities are expected to take about two years under both plans. In the dual-site plan, operations at the north site could begin about a year after construction starts.

Fischer said the port authority application likely will be submitted to MoDOT by mid-June. It generally takes at least 60 days for the Missouri Highways and Transportation Commission to consider applications, said Cheryl Ball, MoDOT freight and waterways administrator.

The application's approval is far from guaranteed. MoDOT considers six factors when determining whether to approve a port authority, including proximity of other ports to the proposed port, the number of clients that would use the port and how the port could benefit the state's economy.

About 45 river miles away from Jefferson City, the Port of Howard-Cooper County is the closest Missouri River port to Jefferson City. To be approved, the Jefferson City application will need to show a port in this region would generate new customers and not poach customers from the Howard-Cooper region, Ball said.

"If they said they are going to pull from Callaway, Cole, Osage counties, then that would probably be OK," Ball said. "If they said they were going to pull from Boone (County) or closer to Howard-Cooper, then that might be a problem."

After the submission of the paperwork, the Cole County Commission, Callaway County Commission and Jefferson City Council will be required to approve their participation in the project. If MoDOT declines to approve the creation of the port authority, the project likely will die.

"If we don't get a port authority approved, we're dead because we can't get any government funding without a port authority," Allen said.

Relieving pressure on roads

Missouri's roads and rail lines aren't crumbling — yet. But if something isn't done soon, they will, according to the American Society of Civil Engineers.

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Statewide, 12.9 percent of bridges are structurally deficient, compared to 8.9 percent nationwide, the ASCE said in an April report. More than 4,200 bridges are in need of repair statewide at a cost of $4.2 billion.

Generally, rail lines operated by private companies are in fair shape, but all freight traffic is expected to increase by 30 percent through 2031, according to the ASCE. Allen, Fischer and others said pressure needs to be taken off roads and rail lines.

Of the 20 million tons of goods that moved to, from or within Boone, Callaway, Cole and Osage counties in 2012, 14.4 million tons were moved by trucks, according to the Cambridge study. This accounted for 72 percent of all freight moved through the area that year. Waterways accounted for 16 percent of goods moved through the area, and railways moved 7.7 percent of goods.

Because of the cost savings incurred by shipping in bulk, waterways also move goods cheaper than other modes of transportation.

Fischer said semi-trailers typically carry 22-25 tons of goods, rail cars typically carry 100-120 tons of goods per car, and each barge that floats up the Missouri typically carries 1,750 tons per barge.

One ton of freight cost 39 cents per mile to move by semi-trailer in 2016, 4 cents per mile by rail and 1 cent per mile by water, according to the Cambridge study.

"MoDOT is behind (the proposal) because it would take trucks off the road," Cole County Presiding Commissioner Sam Bushman said. "I think this would be one of the biggest things to happen for Jeff City in a long time."

Creating new industry

Cambridge estimates both plans could have an economic impact on the region of between $200 million and $581 million. Fischer, Bushman and Allen said farmers and agricultural industries would almost certainly feel some of the largest benefits if the port is built.

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Ag and related industries employed 12,138 people and had sales totalling $1.9 billion in Boone, Cole, Callaway and Osage counties in 2016, according to the Missouri Department of Agriculture.

Retail and manufacturing trades also could benefit, according to the Cambridge study. Retail is the largest freight-dependant sector in Cole County, comprising 13 percent of the workforce. Manufacturing comprises 5 percent of workers in Cole County and is the second-largest freight-dependent sector.

Boone, Cole, Callaway and Osage counties are projected to transport 412,000 tons of goods through the four counties by 2045. In December, Cambridge officials said 115,000 tons of that total could be transported by barge.

Though the port currently is just a paper idea, a Miami shipping company said it's seriously considering including the port in a new network of inland waterway cargo vessels it plans to build. Based in Miami, American Patriot Holdings ships products on ocean vessels at ports around the country. The company's inland waterways subsidiary is in the midst of testing new ships that could make river shipping much easier.

Barge-like in construction but with an attached wheelhouse, APH ships will be able to carry about 1,800 shipping containers. At 100 feet wide and 595 feet long, ships designed for the Mississippi's tributaries are designed to operate in the Missouri's shallow waters — sometimes with drafts as low as 9 feet.

Typical barges are 200 feet long and 35 feet wide and pushed by a tug boat. Shipping containers can be loaded into barges, but the process is cumbersome and barges only carry a couple hundred shipping containers at most.

APH plans to base its inland waterways unit out of a Mississippi River port near New Orleans. The company already has signed a memo of understanding with ports in Kansas City, St. Louis, Memphis and Little Rock.

"We can move a lot of critical mass and reduce that unit cost and become a viable alternative to anything that's out there today," said Sal Litrico, chief executive officer of APH.

Finding funding

Jefferson City Mayor Carrie Tergin said the city supports the proposal for the economic benefits it could bring to the city. Tergin, who owns Carrie's Hallmark Shop at 117 E. High St., said it's important to think of new ways goods can be shipped.

"You're getting shipments every day, and there's a significant cost," she said. "If there's a way to be more efficient, business owners like ourselves would support it."

Once a river port is built, its survival depends on scratching together enough money to survive.

Nearly 4 million tons of freight valued at $12 billion moved through Missouri's 12 ports in 2016. Many of the state's ports sit with facilities in disrepair or sparse use by freight operators. The Port of Howard-Cooper County operates a 0.3-acre site jointly with one private company at its site.

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The dock at the site has fallen into disrepair and did not see any freight activity for six to eight years between 2008-16, according a separate 2018 Cambridge report prepared for MoDOT that studied the condition of Missouri's ports. Howard-Cooper received a grant for $400,000 to begin engineering work for a new facility just down river from the current site, but that will take an investment of an additional $2 million to $3 million, the report noted.

The Port of St. Joseph is the northernmost port on the Missouri in the state, but has not handled commodities since 2011. In 2014, the Port of Kansas City reopened to barge traffic after being closed for seven years. Lease revenues made up $4 million of the $6.5 million in revenues the Port of Kansas City reported in fiscal year 2017, according to its latest audit.

Much of this money came from the lease the port has with the Isle of Capri Casino, which sits on land the port owns. Other revenue was generated by shipping companies using its main terminal.

Fischer, from the Callaway County Commission, thinks a port site in Jefferson City could work in tandem with shippers that move refrigerated cargo if meatpackers spring up around a new port.

Coulter, from Port KC, said once ports become operational, most rely on revenues from private companies for support through leases and user fees. In 2017, Port KC even got creative and signed a long-term lease for a developer to build 410 luxury apartments and 12,000 square-feet of retail space.

Taxpayer funds generally make up a small fraction of operational revenue, Coulter said. Occasionally ports can receive taxpayer money for big projects like when the Port of Kansas City received funding from the Missouri General Assembly to complete a rail-spur project near its main terminal in 2017.

"You have to have some sort of up-front investment," he said. "It has to fund itself to keep itself going."

Coulter said the important thing now is that groups like the Jefferson City coalition and businesses like APH are finally designing the infrastructure to sustain shipping on the Missouri River.

"The more ports we have on the Missouri, the more people we have shipping on the Missouri," he said. "It's not competition to us."

Fischer, Bushman and Tergin know the project likely will require the governments they represent to contribute money, but they're unsure how much would be required or from where the money might come. Callaway County, Cole County and Jefferson City agreed to contribute up to $47,600 each to fund the feasibility study and the economic impact report. The chamber agreed to contribute up to $27,000 of its own money.

Allen said the chamber plans to apply for state and federal grants to offset some of the cost. Already the chamber is in the midst of applying for federal BUILD grants, which allocate a maximum of $25 million to projects that support roads, bridges, ports or other infrastructure projects.

The coalition hopes to have information about its status as a port authority before the fiscal year 2018 BUILD grant deadline of July 19. In the short term, though, Allen said it doesn't help that the port authority is not quite formed.

"One of the thing that's not going for us is we're not in existence," Allen said. "So they may look at ports that are currently in existence to enhance. We don't know."

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