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IRPT Member Spotlight: 5R Enterprises LLC

Economic Impact


1) General Information and Purpose.

General Information. The widespread assumption that the local and regional economic effect of inland rivers ports is positive and beneficial is valid. However, supporting data and information concerning its magnitude and nature are rare at the local level and essentially non-existent at higher levels. Community and regional economic impact analyses are a typical standard segment of each feasibility study for a new inland port but those are analytical forecasts. They fail to meet standard management requirements for valid progress and achievement reports developed at regularly fixed time intervals.

The Purpose is (A) to examine the nature of the economic effect of an inland river port on its local, regional, and state citizenry employing evidence, albeit sketchy, at hand; and (B) to justify steps to rectify that lack of valuable and continuous useful information. This information is mutually valuable to elected officials who must represent the interests of the citizenry; and to the port management professionals who, in turn, should be constantly positioned to supply justifying data and trends along with pertinent recommendations. Management requirements from local through regional and state to national levels additionally demand that the routine reports of local public economic effects be formatted to permit aggregations for any one year and accumulations of trend data and graphics for many years. The processes to accomplish the end results do not exist at the present time.
All the activities described in “About the Waterways”, produce community economic impact. In addition, summations for regional. state, and national purposes must include the addition of port-like activities at isolated terminals and land based services which are not located within the impact boundary of individual ports.

The Proprietary Aspects of the Private Business at. most terminals, industries, services, and other commercial activities at a port site must not be violated in the process of routinely developing a community/regional economic impact report. That impact is not a summation of the annual corporate financial reports of port tenants, industries, and services.

2) The Community Economic impacts are:

(A) the sum of economic activities generated at a port;

(B) the measurement of linkages to local employment, business revenues, and tax base; and

(C) the measure of the port’s important role in the economic and industrial development on the local community level. (Credit – See paragraph 3, section f) Those annual totals can be derived from:

1. Average Direct Payroll Dollars – Jobs x a local and other various multipliers.
2. Non-routine Direct Dollars – (example, construction) x various multipliers.
3. First Generation Indirect Dollars – both of these x various multipliers. They can include food, housing, income taxes, clothing and personal purchases, transportation, social security, medical, other consumables, and miscellaneous community-wide paycheck expenditures. Local multipliers can
be used. Paragraph 3, section g below is a reference which contains examples of those multipliers.
4. Tax Dollars – local multipliers for each port/terminal, then state and national tax multipliers for aggregations at their levels.

3) Examples of efforts to meet the need for common approaches to annual impact statements have been made. A few are:

a. Workbook, Economic Impact of Ports On Inland Waterways, Rail and Water Division, Iowa Department of Transportation, October 1978. This provided a manual system with instructions and blank forms.

b. Measuring the Economic Impact of (Inland) Port Development, 1980, Bureau of Business and Economic Research, Memphis State University. This also provided a manual system with instructions and blank forms.

c. River Traffic and Industrial Growth, Tennessee Valley Authority, 1986. This is about ports and terminals within the TVA region. Employment at ten ports separately range from 2,450 to 700; regionally they total 28,163. The individual tenants at the ports are named in the report; many are industrial tenants. The original issue of this ports regional economic impact document dates from the late 1940′s.

d. An Economic Impact Workshop, Center for River Studies, Memphis State University, 1988, co-sponsored by the Maritime Administration and IRPT. This led to official IRPT action to continue to pursue the subject at its Annual Meeting in April 1989. A computer formatted program was demonstrated and selected attendees received hands-on instructions.

e. A Questionnaire, Center for River Studies, 1988. This was an opinion survey of IRPT members. Ten ports ranging in age from start-ups to 30 years in business estimated a total of 11,700 jobs. This total seems to be relatively consistent with the TVA comprehensive survey, paragraph c above. Four isolated terminals replied with 60 employees. The identity of all respondents is unknown. Individual jobs totals were either relatively small or very large. It was concluded that ports with industrial tenants produced much greater jobs totals than those with only transportation tenants.

f. Economic Impact of Coastal and Inland River Ports; Temple, Barker & Sloane, Inc., TRB Annual Meeting 1989. This is a presentation with slides. The ports are all in ocean or tidal waters. The process can be computer generated.

g. Inland River Port Financing – How Now – Who Benefits? appeared in the September issue of the IRPT NEWS. It supplied the secondary multipliers mentioned above and also refers to a bill (HR 2606, no year shown) in Congress to create a federal low-interest revolving loan fund.

4) An Estimate of the Situation. Briefly, the present status is:

Inland port managements are relatively new and are not accustomed to trade association undertakings which are proper and desirable within a profession;

Nonetheless there have been, over a period of more than a decade, widespread spontaneous realizations of the needs for individual port and collective ports economic impact statements (up to four decades ago) on at least an annual cycle;

Port Economic Impact Statements (1) convey effectively the port’s role, (2) are crucial to
support for funding, (3) support port investment analysis, (4) assist in land-use planning, and (5) provide ongoing in-house capability;

When they are combined regionally and nationally they accomplish all of the needs for the inland ports industry;

While deep draft ports traditionally have a wide range of fee incomes from anchorage, berthing, and many other charges inland ports generally derive a one-time income from land sales and little else. Within its community the airport receives fees per passenger, per landing, rental space, parking, and such to use for additional financing. Annually accumulated proof of impacts which are realized by dispersed community interests are much more essential from local to national levels if a port is to regenerate and enlarge its benefits into the future.

5) It Is Concluded that:

(A) Economic Impact Statements composed annually to include all commercial, industrial, service, and transportation ac-tivities at inland ports is top IRPT priority,

(B) the process must be arranged to permit accumulations to higher levels, and

(C) higher regional levels must function as a generalized port so that isolated terminals and land based waterway transportation activities can be included.