Second Kentucky Freight Summit Delves Into Economic Strategies

The Kentucky Summit on Economic Development Strategies to Leverage Kentucky Riverports and Freight Network, hosted online by the Kentucky Transportation Cabinet March 24-26, is the second of three conferences planned by the state to help its riverports grow.

The state began its Kentucky Riverports, Highway and Rail Freight Study in early 2020, and the conferences are the next step for using the information gathered in the study to create a strategic map for the future. 

During the opening session March 24, Chandler Duncan, project manager with contractor Metro Analytics, explained that following a first round of visits to Kentucky’s public ports along with the initial summit in November, analysts had gathered information about each port’s infrastructure and capabilities and presented information to port representatives to help them better understand potential markets. 

“This one is about understanding the economic development process and how it’s going to be developing over time,” Duncan said.

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To do that, the summit included a focus on economic forecasts, including a look at what is driving growth.

 “We’ve forecasted future trade volumes and performance implications by mode and by trading partner,” Chandler said, adding, “We’re going to make a succinct case of where investment pays off for whom.”

To help drive economic development, the analysts hope to assist ports in getting a better idea of how to make the right investments. To go along with that, they will be making a second round of port visits in April to discuss their findings so far as well as to collaborate on investment strategies.

Kristina Slattery, deputy commissioner for the Kentucky Department for Business Development, housed within the Kentucky Cabinet for Economic Development, said that when state economic development officials court companies considering where to locate, “We feel like we really do have a logistical advantage.”

Part of that is because the state has a reliable network of waterways, rail hubs and major highways while being located within a day’s drive of two-thirds of the country’s population.

What the state hasn’t understood quite as well is what advantages each riverport possesses, from developable land to warehousing space.

“We want to make sure we are doing everything we can to maximize those assets,” Slattery said.

In that way, she views the information gathered in the summits and the study as a marketing tool.

“We’re going to have a better understanding of what the opportunities are statewide,” she said.

Additionally, she said, it will help identify where riverports have gaps that could be filled to help meet companies’ needs for the future and to do so quickly, to meet companies’ accelerated timelines. That information could help determine where the state should allocate its resources, including funding necessary for the ports to succeed economically.

“We want to be able to sell the riverports to our potential companies, that this saves money for them, that this is helpful to the environment, and we want to be able to give them the tools that they potentially will need,” Slattery said.

Knowing how best to invest the state’s available funding to augment the riverports’ offerings is especially important right now, she said, as recently passed federal legislation aimed at helping states recover from the COVID-19 pandemic may mean one-time federal funding available that the state wants to use wisely to bolster its infrastructure and resources and to promote job growth.

“I hope this will mean an opportunity to fund some things that we haven’t been able to in the past,” Slattery said.

Jeff Taylor, commissioner for the Department for Business Development, said riverports are especially of interest to him because they provide opportunities to enhance rural economic growth, something he feels is essential for Kentucky, with its many rural communities, to succeed in improving the lives of its populace.

The first day of the summit also included sessions examining economic development trends both at a national level and in surrounding states.

Federal Policy Changes

In a session titled “2021 Changes in Federal Transportation and Trade Policies,” Deb Calhoun, senior vice president of Waterways Council Inc. (WCI), outlined recent advocacy efforts and their results. Tim Pickering, operations development manager for the U.S. Maritime Administration’s (MarAd) America’s Marine Highway Program, spoke about the program and next month’s expected release of funding availability for Marine Highway grants.

Calhoun began by reflecting on the American Society of Civil Engineers’ 2021 report card for America’s infrastructure, where the inland waterways’ grade improved to a D+. That change reflects a slow reversal of some chronic underinvestment in the waterways, she said, adding that delays from unscheduled lock and dam closures cost up to $739 per hour for an average tow.

A WCI priority had been changing the cost-share distribution for the Inland Waterways Trust Fund (IWTF), raising it from 50 percent from general U.S. Treasury funds and 50 percent from diesel fuel taxes paid into the IWTF by commercial users to a 65 percent Treasury/35 percent IWTF cost share split. The change was signed into law as part of the Water Resources Development Act of 2020 following Congress’ lame-duck session. The agreement pays for construction and major rehabilitation of inland waterways projects.

The change in cost-share allows four to five priority navigation projects to be funded each year, Calhoun said.

“We’ll be able to complete more projects, get them off the books and get them delivering benefits to the nation,” she said.

The remaining cost of projects currently under construction totals $792,355,099, with $230,300,000 needed for Chickamauga Lock and Dam and $562,055,099 for Kentucky Lock and Dam.

Speculation remains on what President Joe Biden and Congress may look to address in a federal infrastructure spending bill, Calhoun said, although there is growing agreement that an infrastructure bill will be coming.

“We don’t know what that will look like,” she said. “We don’t know how that will be funded, but we do feel a lot more momentum for an infrastructure bill.”

Pickering spoke about the three steps of the America’s Marine Highway program: route designation, project designation and the awarding of grants for specified projects.

Founded under the Clean Energy Act, the program seeks to decrease traffic on America’s highways by moving specific transportation projects to the nation’s underutilized waterways network.

“We can measure the truck miles that have been removed from the highways,” Pickering said.

The program currently has 45 designated projects. Within the last year, it has grown to include the U.S. territories of American Samoa and the U.S. Virgin Islands, and within the next month MarAd hopes to approve a project in Guam, Pickering said.
The projects require the use of U.S. documented vessels loaded or unloaded at U.S. ports or between a U.S. port and a Canadian port with the Great Lakes/St. Lawrence Seaway System.

Eligible freight types include containerized, roll-on/roll-off, palletized or unitized or freight vehicles carried aboard commuter ferry boats. Although the program does not currently include pure bulk freight projects, a legislative change has been requested that would alter that, Pickering said.

Grant funding can be used for development and expansion of port and landside infrastructure, including cargo-handling equipment; development and expansion of documented vessels, including the purchase, lease or modification of vessels or barges; and planning, preparation or design efforts in support of a designated project. Since 2016, MarAd has provided $33.8 million in America’s Marine Highway Grants for 18 eligible projects. Significantly, almost 10 percent of the grant recipients ($3.5 million) have been in Kentucky. Both of the grants awarded in Kentucky in 2020 were in support of Nucor Steel operations.

Pickering said he expects the notice of funding availability for this year’s grant program to go out in mid-April and that the notice will have the Biden administration’s priorities highlighted.

“What form that will take is still under development,” Pickering said.

However, he said to expect an emphasis on zero-emissions equipment.

Additionally, “I think you’ll see an emphasis on the opportunity zones that has been there the last couple of years,” he said.

MarAd hopes to make the awards in late July.

Neighboring State Programs

An afternoon session titled “What’s New In the Neighborhood?” provided an opportunity for transportation officials in the neighboring states of Ohio, Tennessee and Illinois to give 10-minute highlights of maritime programs, including those related to their states’ ports.

Mark Locker, manager of maritime, freight and logistics for the Ohio Department of Transportation, said Ohio is in the midst of updating its freight plan as required every few years by the U.S. Department of Transportation. 

Ohio’s freight system transported nearly 900 million tons of goods worth more than $1 trillion in 2018, Locker said. Its maritime system includes both the Ohio River and Great Lakes, with the Ohio River having a larger share in terms of both tonnage and value.

Ohio has 97 ports and terminals on the Ohio River as opposed to 65 on the Great Lakes. It has four statistical port districts. Of those, the Huntington-Tri-State district is the No. 1 inland port in the nation in terms of freight volume, and Cincinnati-Northern Kentucky is No. 2, with the ports ranking as 17th and 18th out of all U.S. ports. 

The Mid Ohio-Valley Port District is a statistical port district in the planning stages. Locker reported that the application for the statistical port has been reviewed favorably and could come online in as little as a couple of weeks.

Ohio has addressed maritime funding in part through a state grant program established in 2019 with the goal of increasing cargo handling on Ohio waters. The Ohio Maritime Assistance Program has awarded $23 million in grants to companies with projects on Lake Erie and the Ohio River.

Additionally, Ohio sought an Infrastructure For Rebuilding America (INFRA) grant to expand the Central Ohio River Information (CORIS) system, which shows Automatic Identification System (AIS) transponder data to mark towing vessels, ports and terminals, showing the movements of freight along the Ohio River between ports. AIS data is more limited for now and includes portions of the river between Huntington, W.Va., and Louisville, Ky.

Dan Pallme, assistant chief of freight and logistics with the Tennessee Department of Transportation’s Environmental and Planning Bureau, said the state’s $10.3 million Competitive Rail Connectivity Grants program awarded grants for eight projects, some of which included river-rail transload facilities. The program provided a maximum award of $2 million per project.

They include 2,000 feet of current railbed and line and construction of a new rail spur to serve a new riverport in the Nashville area; a public terminal rail extension of 4,900 feet of new track and four switches at the City of Memphis and Shelby County Port Commission; and a rail spur to facilitate an expansion of Colonial Chemicals and the Nickajack Port Industrial Park in the Chattanooga area.

Finally, B.J. Murray, section chief of aviation and marine program planning at the Illinois Department of Transportation, noted that Illinois did not have a ports and waterways section or marine program planning section until 2017, despite having 19 public port districts and 27 locks.

The state has recently completed its Marine Transportation System Plan and an economic impact analysis study and determined there are 167,000 jobs within Illinois that relate to the maritime industry. 

In late 2019, the state rolled out its $45 billion capital investment program with $150 million dedicated to marine transportation and ports. That included $40 million for the planned Alexander-Cairo Port District in southern Illinois.

“We have developed a port capital investment program, and that’s still in the works,” Murray said. “We’ve developed the guidance and the application and are waiting for approval to do a call for projects.”

The program will focus on the state’s public port districts as well as terminals that lease property or equipment at a public port.

Most recently, Murray said, the state announced six port planning projects and is working on partnering with the Corps of Engineers on the beneficial use of dredged material.