Does Utah even need a river port?

The new leadership of the Utah Inland Port Authority has put plans for a transhipment facility on hold. And a study commissioned by port opponents found the agency may have dodged an expensive candy.

The multimillion-dollar project was often touted as the economic heart of the port by the agency’s former executive director, Jack Hedge. The facility would have shifted freight from trains to trucks and vice versa, attracting international freight from West Coast partners. But members of the Stop the Polluting Port Coalition have wondered how Utah lawmakers and port officials could justify such a massive investment that Hedge once forecast would cost more than $50 million.

The Coalition recently hired Robert Leachman, professor of industrial engineering and operations research at the University of California, Berkeley, to evaluate the Port Authority’s business plan. In a white paper published Tuesday, Leachman concluded that a railroad import-export hub in Utah didn’t make much sense.

“I’m afraid the backers will have a very hard time finding a market for this asset,” Leachman said at a virtual press conference. “I just don’t think it’s there.”

Utah’s Imports and Exports

Shipping logistics are complicated, but in short, Utah doesn’t have enough people nearby to justify a massive rail-to-road operation, he said. There’s a reason seaports are near megacities like Los Angeles and Oakland, and thriving river ports are in urban centers like Chicago and Kansas City.

The stuff the US imports these days consists almost entirely of retail goods like furniture, toys, and electronics. It no longer imports many raw materials for crafting.

And the typical shipping container that arrives from Asia was loaded in a single factory, Leachman said, “and therefore contains a very narrow range of goods that a factory produces.”

A shipping container contains far too much of any given item to sell in the limited number of stores in a small market like Utah or even the Intermountain West. Therefore, companies transport the containers from the ports to nearby hubs to repackage them with many things that, for example, all hardware stores or Walmarts would need for a short time in a certain region. These mixed loads then move to regional distribution centers and are trucked to local retail stores.

“If you tranship further inland … you can’t pool regional demand with the West Coast, and you lose inventory advantages,” Leachman said. “And… reloading isn’t cheap.”

This is because shipping containers are hand packed and must be hand unpacked, which is labor intensive.

“You can’t use a forklift to take out large packages of goods at once,” Leachman said. “They have to be handled manually, case by case.”

Creating a railroad hub for international exports might not make sense for Utah either.

Utah currently employs approximately 10,000 mining workers and 151,500 manufacturing workers. However, services account for nearly 1.4 million jobs in the state, and services cannot be exported.

“There’s no value in a taxpayer-funded investment in a government-run railroad transshipment facility,” said Craig Wallentine, a coalition member and retired DuPont executive with experience in supply chain management, “and no new job opportunities for those who work in healthcare, education, banking, finance or our fast-growing software companies.”

According to Leachman’s report, however, the goods that Utah exports tend to be high-value items such as aircraft and aerospace parts, medical equipment and essential oils. These goods are normally shipped by air, not by rail or sea.

Utah ‘tried this before and it didn’t work’

And Utah has experience supporting a large import-export center. Clearfield’s Freeport Center was converted from a World War II naval supply center to a transit facility in the 1960s.

“Freeport became a transshipment center for virtually every major implement manufactured in the United States and marketed on the West Coast,” Leachman wrote in his report, “as well as a transshipment center for many of America’s agricultural equipment manufacturers. ”

But as U.S. manufacturing moved overseas and major retailers began managing their own supply chains, the Freeport Center saw its freight traffic and importance dwindle. Managers there were trying to redesign the center as a distribution point for Asian goods arriving via West Coast ports, Leachman said.

“This attempt failed for the same reasons as this one [transloading facility] wouldn’t work,” he said. “I’m kind of disappointed that Utah’s leaders seem to have forgotten their own history. You’ve tried this before and it didn’t work, so why do you think it will work now?”

And while the previous Utah Inland Port leadership pointed to the supply chain problems caused by the pandemic and the need for more inland ports to alleviate shortages, Leachman called that argument mostly nonsense.

He said the shipping headaches caused by the pandemic stemmed from two trends. First, Americans were stuck at home bored, cinemas and travel were closed. So they bought a lot of things. Secondly, many employees in the supply chain became ill and could not show up for work.

“If you look at where the problems are,” Leachman said, “the problems aren’t with transshipment facilities in Southern California, but with shipping terminals and with the railroads … a Salt Lake transshipment facility doesn’t address those things either.”

A step back from reloading

The Utah Inland Port Authority has undergone a major leadership overhaul in recent months, with a new board of directors taking over in the spring and a new chief executive, Ben Hart, hiring this summer. This team has since shelved larger projects like the transhipment facility.

Hart and the board are also in the process of designing a master plan to better steer the port’s mission and priorities.

“If our planning efforts determine that a terminal is appropriate for this market,” Hart said in a written statement, “there will be strong collaboration with the West Side neighborhoods of Salt Lake County and the business community.”

The Port Authority currently spends millions each year to lease vacant land for the proposed terminal, under a no-bid contract that Hart has not yet been able to cancel.

Going forward, Hart said any projects of this size will require a board vote at a public meeting.

“Until then, we are speaking with all of our stakeholders,” Hart said, “to ensure this master plan reflects what best fits Utah and its logistics needs.”

What to do with the inland port instead?

Leachman’s white paper also offered an assessment of what Utah policymakers could support in the inland jurisdiction, which covers about 16,000 acres in Salt Lake City’s northwest quadrant, to better support the economy and curb emissions. It’s mostly what has already popped up in the area – distribution warehouses.

“I don’t need to tell you how fast the Salt Lake area is growing,” Leachman said.

However, the distribution required to meet the demands of this population has not quite caught up.

“There are still some retailers that have their Intermountain distribution center on the east side of the Front Range in Colorado,” Leachman said. “And then they truck everything over the mountains to the retail stores in Utah.”

Placing these centers closer to Wasatch Front consumers could reduce the greenhouse gases that cause climate change, but it’s not clear how that would affect emissions that lead to unhealthy levels of ozone and particulate matter in local communities air catchment areas would result.

Still, members of the Stop the Polluting Port Coalition said the white paper confirmed many of their concerns, including the fact that lawmakers had oversold the inland port to the public and that, rather than making big promises, the Port Authority received mostly millions in public money with little effort wasted show for it.

“With far too many unknowns, the risk of getting it wrong is too great,” said Katie Pappas, founding member of the Coalition. “… This entire project should be stopped.” Does Utah even need a river port?

Justin Scacco

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