Wednesday, August 12, 2009

Anchorage Port Tour - Video

We waited to go on the Anchorage Port tour until DZ (our guest from China) was here and it finally worked out Sunday. At the end of the tour DZ had two questions, "How come it was free? And why did they give us free hotdogs?" The hotdog question was one I had had when I first heard about these tours. It's reasonable, good even, for government agencies to open their doors and let people see what they are doing. But to feed them too? Actually, when you consider the costs of running a giant coach bus, I suspect the hot dogs are a minor expense. But tours every Sunday for most of the summer? When does public information turn into propaganda?

The tour was basically technical information about the expansion of the port and how things work. But there was also the part that answered DZ's questions: Eventually they're going to have to float some bonds, and presumably they'll want us to vote for them. Whether that's a good idea or not, I can't judge at this point. But more information is generally better than less.

Note: Although we passed this sign, the guide said we could take pictures.

The video contains a good part of the tour. Our guide had a very welcoming banter and also had good technical knowledge of what is going on. Below the video I've listed the topics and where they come up on the video if you don't want to watch the whole thing. It's about 16 minutes long. I also have tags on the video so you can jump to what you want to hear.

There's a spot on the video where he says we're getting off the bus now. That's when we went into a main port building and they were barbecuing hot dogs for us on the roof.

We watched trucks pull up to get containers and drive off while we ate our hotdogs. (Double click to enlarge the picture.)

What he tells us and where it is on the video:
0:03 - Horizon and Totem Lines discussion
1:06 - How many cars are in the port?
1:43 - Port expansion - discussion of the land on recovered tidelands
2:45 - Why we don't have military cargo on Anchorage streets anymore
3:24 - New docks - steel sheet construction explanation
4:48 - Dry barge berth
6:13 - Dredging schedule
6:35 - Freight coming versus leaving Anchorage
7:20 - How do they put the sheet pile in?
9:06 - Why so few lifeboats?
9:19 - Are the cars for sale?
9:38 - What ports do containers ship go to?
10:33- What is Horizon?
10:51- How does the port make its revenue? Who owns the port?
  • 11:20- Lease land
  • 11:59- Dockage
  • 12:34- Wharfage or tonnage
12:51- How much do they make and how do they use it?
13:30- What's the total cost of expansion? ($750 million) And how funded?
15:35- Cranes and crane rails

When he got to the money part, he did cover the points that the tour is about - convincing us that not only is the port a good idea, but it's a great bargain for people in Anchorage. First, the idea that role of the Port Authority is minor:
"Our job is to make sure the streets are clean and the lights are on and the plumbing works and the place can function. . . We just lease them the land."
Yeah right. And the Port Authority isn't also wheeling and dealing (that's not necessarily bad) to get the partnerships and money to make this 3/4 billion dollar project going? I think they do a little more than clean the toilets.

Then, we don't cost you anything, we give you money:
"We get zero property tax dollars download to run the port. None. In fact, we give the Municipality about half a million dollars of revenue every year to help run city hall. We pay our own payroll, we pay our own bills. . . After the bills are paid we have anything from $2.5 to $5 million dollars that we put toward the expansion project ourselves."
Except as he goes on, it's not quite that clear. OK, this is a private/public partnership. He said
"the construction project doesn't belong to the port of Anchorage, doesn't belong to the Municipality of Anchorage. It belongs to the Department of Transportation, Maritime Administration."
Of the $750 million that will be needed for the port expansion, 50% will come from the Feds, 25% from the state, and the rest will have to come from 'us'. Out of the profits or "any debt financing we choose to do." Probably they will float a revenue bond in 2015 and they'll have 20 years to pay it off.

No one - including me - asked about the needs assessment to determine how big it needs to be and who all the new clients will be when it is finished. This is a big project - slightly more than the bridge KABATA wants to build from right near the port two miles to Matsu. In projects this big there is often a lot of loose money.

And the head of the Port is Bill Sheffield, who proved to be a good enough business man to make a good profit selling his Sheffield Hotels to Holland Line, was governor - and almost impeached for construction dealings - and then was appointed head of the Alaska Railroad, which now owns the Airport Depot that was built with Federal and State money (tens of millions of dollars) and is only used four months a year by the cruise lines. And it's named for Sheffield. And now he's the director of the Port of Anchorage at the age of 81 years. While he started out as a Democrat and was elected Governor as a Democrat, most of his fund raising lately has been for Republicans.

This begs to have some external scrutiny that goes well beyond bus rides and hot dogs.

A Northern Economics feasibility study completed in 2006 raises some questions. To be successful, they have to get a mileage-based carrier, steal fuel barge business away from Nikiski (does Anchorage really have to screw over small Alaska towns to succeed?), and they have to keep out unions ("carriers say they will only use the new facility if it were non-union.") Here is the executive summary:

Executive Summary
This report presents the findings of a study to evaluate the feasibility of establishing a consolidation and distribution center at the Port of Anchorage with the intent to serve coastal and riverside communities in rural Alaska. It contains an analysis of the feasibility of the concept, as well as marketing arguments that can be used to present the concept to transportation companies.

The findings of this study include:

The concept could result in cost savings. While the cost of transportation may be slightly higher with this concept, the inventory holding cost savings may offset the increased cost of transportation.

Freight rate savings on cargo shipments could require a mileage-based carrier. At present, the price for sending cargo to western Alaska is the same or very similar whether it originates in Anchorage or Seattle. To generate savings for residents of western Alaska would require a carrier who would charge for cargo shipments based on the distance traveled, rather than the market rate.

Incentives could be required to encourage a mileage-based carrier. In order to attract a mileage- based carrier, incentives could be required to make up for the lost revenues that would result from charging lower prices than the industry norm.

Anchorage has an opportunity to increase its fuel barge business. The Port of Anchorage is the preferred location for fuel sales in Cook Inlet. Estimates vary about the percent of fuel that is sold in Anchorage versus Nikiski, but capturing additional sales from Nikiski could substantially increase the Port’s market share.

Need to work on the key issues: Attracting a mileage-based carrier. One of the key issues that must be addressed is the identification and recruitment of a carrier that is willing to charge mileage- based rates. This would represent a break from the industry norm for the concept to work and it is vital that a carrier be identified who is willing to do this.

Need to work on the key issues: Union vs. non-union. Another key issue is unions. Carriers have expressed a high level of concern about union work rules and have said that they would only use a new facility if it were non-union. While the Port of Anchorage is an open port, this is nonetheless a significant issue that needs to be addressed in order to attract customers for a new facility.

There are two more Sundays when you can take the tour, every half hour, between 11am and 3 pm. The bus leaves from the Alaska Railroad Headquarters (the building north of the downtown train station and across the street from the Ulu Factory). See for yourself what is going on. And ask your own questions.

1 comment:

  1. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.



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