Conference Points Kentucky Ports Toward Future Needs

The second freight conference geared toward Kentucky’s public riverports included a focus on their emerging markets and how to take advantage of potential economic development opportunities.

The Kentucky Transportation Cabinet presented the Kentucky Summit on Economic Development Strategies to Leverage Kentucky Riverports and Freight Network virtually March 24-26. A third conference is planned within a few months. (Previous coverage of the summit is here.)

In a session titled “Forecasting the Future of Kentucky’s Freight Economy,” Paul Bingham, director of transportation consulting for IHS Markit, and Chandler Duncan, project manager for Metro Analytics, sought to provide information the ports can act upon.

Bingham presented an economic forecast based on 2018 data, extending it to likely outcomes by 2045. He also included two alternative growth forecast scenarios, one more optimistic and one more pessimistic. He included waterborne freight as well as truck and rail freight in his calculations, as diverting truck and rail freight to the waterways system will be key.

“The volumes here are huge, and that’s not surprising. We’re talking about literally billions of tons in total in 2045, moving across this all-port hinterland,” he said, referring to the area within a one-way, 90-minute drive from each riverport, even if that encompasses multiple states.

“There’s a massive amount of freight activity in this part of the country, but that’s no surprise to any of you,” he continued.

The long-term forecast shows a decrease in coal movement, especially by rail, where coal-handling is projected to decrease by 5.4 percent, Bingham said. 

The decrease in coal movement comes up again and again, he said, “and I’m going to mention that several more times today in terms of its impact on these total numbers when we’re looking at the big picture of freight activity for Kentucky. This long-term decline of coal is going to continue to affect the big-picture total of what’s the opportunity set for growth of freight handling in the future as demand for thermal coal, especially, continues to decline. It shows up in the waterborne mode in terms of what we’re forecasting already as the baseline, and it shows up in rail as the two primary modes that have the greatest tonnage movement. It’s also actually embedded in some of the shorter-haul truck movements, but those are swamped by growth we see in the rest of the economy.”

Bingham showed the baseline total tonnage growth in all transportation modes increasing by 18.3 percent by 2045, with truck tonnage expected to grow the most, by 34.7 percent. In all, he said, shippers can expect to handle about a quarter more total freight in 2045 as compared to 2018.

“Even if the riverports are not able to capture any additional traffic, there will still be an expectation of growth in the overall market of what’s moving in total,” he said.

Bingham took a specific look at each port’s expected major cargoes. For most of them, he said, grain will overtake coal and become the top product moving into or out of the port. That was true for the Hickman-Fulton County Riverport Authority, the Paducah-McCracken County Riverport Authority, the Eddyville Riverport and Industrial Development Authority, the Henderson County Riverport Authority and the West Kentucky Regional Riverport Authority, which is under development in Ballard County.

The Owensboro Riverport Authority is unique in that its top cargoes are expected to be motor vehicles, motor vehicle parts, mixed freight, iron and steel, mixed consumer products in warehouses and plastics and synthetics. He attributed this to nearby automotive manufacturers.

“We don’t have expectations that you’re going to have a lot of finished motor vehicles moving by barge, but it’s much more likely in the auto parts category where there may be some opportunities there for efficient, reliable movements of some categories of those manufactured goods if we end up with some container-on-barge movements serving the state ports,” Bingham said.

The No. 1 commodity expected to be handled by the Louisville Riverport Authority and the three other developing Kentucky ports—the Meade County Riverport Authority, Maysville-Mason County Riverport Authority and the Northern Kentucky Port Authority—is broken stone/riprap, he said. Only one Kentucky riverport, the Greenup-Boyd County Riverport Authority, is expected to have coal as either its No. 1 or No. 2 cargo, although it will be declining, which will present challenges, Bingham said.

Duncan, in his presentation, looked at nearby water-divertible markets and said Louisville shows the strongest growth, followed by Nashville, Tenn., and the suburbs of Cincinnati, Ohio. When he looked at water-divertible growth corridors of interest through 2045, he additionally included Minneapolis, Minn.; Chicago, Ill.; Indianapolis, Ind.; St. Louis, Mo.; Columbus, Ohio; Detroit, Mich.; Cleveland, Ohio; and Pittsburgh, Pa.

The Future Of Freight

A panel discussion on how the future of freight is likely to impact other modal operations included Tim Kizer, executive vice president of the Louisville Riverport Authority, emphasizing the importance of taking a multi-modal outlook and working on being a supply chain solutions provider for industry partners.

William Downey of RJ Corman Railroad Group, which operates 17 short-line railroads and is based in Nicholasville, Ky., noted that the state has five Class 1 roads, along with some short line and regional railroads, several of which connect to the state’s riverports. The rail freight categories most commonly originating and terminating in Kentucky include coal, farm products, grain, aggregate, automotive and chemicals.

P.J. Donovan, chief of the Corps’ National Planning Center of Expertise for Inland Navigation, based in Huntington, W. Va., said Kentucky has a unique mix of cargoes traveling on its rivers, including agricultural products, aggregates and coal, although much of that never touches a Kentucky riverport. That includes about 43 million tons of coal floating up and down the Ohio River, he said. 

In a session on freight infrastructure needs and Kentucky’s funding process, participants broke up into small groups by region to have discussions. Top needs previously identified were for increased funding, stable funding and marketing support, said Lindsay Hoskins, environmental and planning engineer from Qk4 Inc.

Economic Development

Finally, a session titled “Economic Development and Riverport Markets” pulled together content from across the entire conference, with moderator Kevin Johns noting the ultimate goal of Kentucky’s three planned summits and the accompanying Kentucky Riverports, Highway and Rail Freight Study is to enable each port to have an economic and marketing toolkit for growth.

Anthony Ellis, executive director of Kentucky Innovation, talked about how ports can link with the state’s regional innovation hubs, some of which are already located on port authority properties in Kentucky, providing increased communication and potential opportunities to grow technology that will be important to the future economy.

Adam Wasserman, managing partner in economic strategy, economic development, ports management and public policy for Global Logistics Development Partners, spoke about port development projects such as the California Inland Port and Utah Inland Port as well as some international projects with which his company has been involved.

“We didn’t focus on e-commerce a lot five years ago,” Wasserman said. “We knew what it was, but we didn’t focus a lot of our business on that. We certainly do today.”

Private investors are looking for underlying value for investable projects, he said.

“The inland ports category, we would say, are clearly the most underdeveloped logistics assets in the United States,” Wasserman said.

His advice included for ports to capitalize on their location, know which industries are growing and build on legacy business, recognizing potential customers’ connectivity to other locations and what modes of transportation they are using.

Derek Cutler, chief economist at EBP, focused on using business intelligence, including freight data, to attract industry by looking at both their market and connectivity and infrastructure capacity and bottlenecks and investing strategically to foster growth in industries and trade integration with broader regions.

Matt Yates, vice president of the Louisville Riverport Authority, admitted that modernizing and thinking about technology in a broader sense can have its challenges. “For a bunch of guys who unload barges for a living, what do we do with that information, right?” he asked.

Ultimately, he said, the industry must figure out, “How do you take a bunch of ports, like us, that were built for coal in the 1980s and try to transition to the new economy?”

He suggested the answers lie in developing relationships not only with industry but also with local and state economic development officials as well as the formation of a state strategy that always looks to maximize on its best return on investment when it funds projects at the port level.

“I think that using the port system as a catalyst—not just as a port for the sake of having a port but for a catalytic purpose —is really what this is all about,” Johns said. 

He said the ports must have a closer relationship with local and state economic development officials.

“I think growing into that allows the state port system to be much more competitive,” he said.

From his personal experience with business recruitment in the Austin, Texas, area, he said, port representatives went on every business recruitment trip.

“It brings a new awareness to the companies that you’re recruiting because it’s the hands-on, local, experienced people closest to the problems and the solutions,” Johns said.

He added that ultimately the state is concerned about business recruitment and retention so that its populace can have good-paying jobs, so it is important to improve communication at all levels and make sure the state gets a good return on its investment into the ports.

“The state is concerned about poverty reduction,” Johns said. “The port system can be an incredible prosperity engine to make that happen.”