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HomeMy WebLinkAbout101322 Letter from Port of Port Townsend (C : 60u,(C ' 10• 13• a2- A."` P.O.Box 1350 Board of Commissioners 0 R T 338 West First Street Connie Beauvais,President Port Angeles Colleen McAleer,Vice President 1.11101110 of Port Angeles Washington 98362 Steven Burke,Secretary 360.457.8527 Executive Direr C ®E/'1 Geoff James V j•/ OCT 1 3 2022 A Foreword from the Commission President JEFFERSON COUNTY The Port of Port Angeles commissioned Olympus Consulting in the s9PPAVIMPMERS study the economic impacts of the Port's Intermodal Handling and Transfer Facility (IHTF), has towards the economy of the North Olympic Peninsula along with how its domestic exports also impact the economies outside of the area. Though a previous study was performed by Olympus Consulting in 2018 covered the business lines in Log Yard this latest study looks particularly at the IHTF's water interface where both rafting and barging operations are conducted. The Port is pleased to share this study with fellow agencies and the community. We feel the information in this study will be beneficial in informing the policy decisions and for the community to better understand the economic and environmental benefits that the unique water interface the ITHF provides. The Port is a leader in economic development and has at its core the mission of bringing prosperity to the communities of the North Olympic Peninsula. Our mission statement is: "We bring people, resources and industry together to foster economic prosperity and living wage jobs." Focusing on living wages jobs for working families is significant. As part of raising the overall well-being of the community, it is important for local organizations to embrace taking the lead on higher paying jobs that have a good multiplier in creating additional jobs. Since industrial jobs are typically tied to higher salaries, the Port focuses on industrial development and manufacturing, leaving other organizations to focus on the community's further needs. The Port will use this study to make informed decisions regarding current and future resource allocations, infrastructure planning, assessing opportunities in forest products, and providing better service to those who depend on the Port's IHTF. We also hope it will help readers gain a clearer understanding of how far-reaching the Port's IHTF impacts are felt and the advantages of using maritime transportation, both economically and its net affect the environment. Forest products touch our lives on a daily basis, from the homes we live in to the products we use from the direct jobs in the forests, to the supply chain and indirect services. Wood is a great renewable resource that is subject to conscientious regulation to protect the environment it grows in and to ensure that future generations will also reap the benefits of wood products. The Port is grateful to Olympus Consulting for the outstanding work it has produced. The data results are invaluable and will prove extremely useful not only to us, but to all those who have an interest in a healthy forest products industry. Connie B uvais Port Commission President WE BRING PEOPLE, RESOURCES AND INDUSTRY TOGETHER TO FOSTER LIVING WAGE JOBS www.portofpa.com A R ge k sr t s §.". a d „. ,max *,IV `,..a C a Where Green Meets it, ----4-'4'-'-- - - , ,___.-_,,,.,: , „. Blue - The Port of Porgy Angeles' - ,. ,... , ,,_. Intermodal -7.:::-',At,',,, 0 ^ gHandling ,,,,,,,', ,,,4,!,-,:fY & Transfer , ,,,,,,„„,,„ t Facility iF {m /00 A Preliminary Investigation �'�✓ Abstract OLYAM. PUS This preliminary investigation estimates the economic, ..,...1=2-F riAlirr ;;;;;;,:e;::. ....,diik )s- social and environmental benefits derived from the Port of 19 Port Angeles Intermodal Handling&Transfer Facility Alf;Itc ' i I , vx II (IHTF). Economic benefits in the form of employment and wage impacts from IHTF operations, mills and trucking in <- * — - �1111 1 Clallam and Jefferson Counties, and along the Northwest C O N S tI L T I N G Coast, are estimated to be 2,485 jobs at an annual average wage of$80,496. Those operations support an additional Daniel A . Underwood , P h . D . 3,307 jobs at an average annual wage of$44,295. Social OlympusConsulting@olypen . com benefits are derived from reduced highway congestion (Truck Miles) and Truck Accidents. Barge substitution for ( 3 6 0 ) 7 7 5 -0 5 0 7 long-haul trucking eliminates an estimated 750,000 Truck Miles resulting in 3 less Truck Accidents. Environmental benefits are estimated in terms of reduced greenhouse 9 / 2 9 / 2 0 2 2 gas emissions,which are 612 tons of CO2 annually. 1 TABLE OF CONTENTS EXECUTIVE SUMMARY Page 4 SECTION 1: OVERVIEW AND BACKGROUND Page 5 SECTION 2: THE NEED FOR GOOD JOBS WITH GOOD WAGES IN CLALLAM COUNTY Page 6 SECTION 3: CONCEPTUALIZING AND MODELING THE INTERMODAL HANDLING&TRANSFER FACILITY Page 10 The research question Page 10 SECTION 4: SOURCING WOOD FIBER AND WOOD PRODUCT MANUFACTURING Page 13 SECTION 5: THE ECONOMIC BENEFITS OF THE INTERMODAL HANDLING&TRANSFER FACILITY Page 14 Data and methodology Page 14 Economic impacts from the forest to the sea by way of the Intermodal Handling &Transfer Facility Page 16 Economic impacts from exported logs to regional sawmills Page 17 The economic impacts from mills in Clallam and Jefferson Counties supported by operations at the Intermodal Handling&Transfer Facility Page 18 SECTION 6: ESTIMATING NET BENEFITS FROM SUBSTITUTION OF BARGES FOR LONG-HAUL TRUCKING Page 20 The estimation of travel costs for long-haul trucking and barge transport Page 20 Calculating diesel fuel consumption by transport component Page 21 Estimating diesel fuel consumption,Truck Miles,Truck Accidents and GHG (CO2)emissions by transport option Page 22 Estimation of net social and environmental benefits derived from barge substitution Page 23 Discussion of results Page 24 SECTION 7: SUMMARY AND CONCLUSIONS Page 25 2 LIST OF FIGURES AND TABLES Table ES1: Economic impacts associated with the Intermodal Handling &Transfer Facility, 2021 Page 3 Table ES2: Social and environmental net benefits of the Intermodal Handling &Transfer Facility, 2021 Page 3 Figure 1: Satellite image of Port of Port Angeles Intermodal Handling&Transfer Facility Page 4 Table 1: Relative nominal annual wages between Clallam County and Washington State, 1990 and 2021 Page 6 Figure 2: Economically distressed counties in Washington State, 2018—2022 Page 7 Table 3: Educational attainment in Clallam County by age groupings Page 8 Table 4: Income distribution by earnings groupings in Washington State and Clallam County Page 9 Table 5: Mean and median wages in Clallam County and Washington State, 2021 Page 10 Figure 3: Current material flows through the Intermodal Handling&Transfer Facility Page 12 Figure 4: Visualizing the flow of wood fiber and the economic impacts of local mills Page 14 Table 6: Intermodal Handling&Transfer Facility economic impacts from the forest to the sea Page 16 Table 7: The direct, indirect and induced impacts of mills purchasing IHTF log exports, 2021 Page 17 Table 8: The direct, indirect and induced impacts of select mills in Clallam and Jefferson Counties, 2021 Page 19 Table 9: Fuel consumption and CO2 emissions from long-haul trucking by volume and destination, 2021 Page 22 Table 10: Fuel consumption for onload or offload operations per 50 load-barge, 2021 Page 23 Table 11: Diesel fuel consumption and CO2 emissions from barging by loads and destination, 2021 Page 24 Table 12: The net benefits from barge substitution for long-haul trucking, 2021 Page 25 3 EXECUTIVE SUMMARY The Intermodal Handling&Transfer Facility(IHTF)operated by the Port of Port Angeles in Clallam County,Washington, plays a pivotal role in the movement of wood fiber(primarily logs at this time)to and from the North Olympic Peninsula (NOP). The IHTF exports logs to regional mills and imports logs to NOP mills using barges. Those log flows help support the financial viability of mills on the NOP and those jobs and wages that improve economic well-being in an economically distressed region where the annual median private sector wage is$36,747 in 2021. In addition,those log flows help support operations at numerous mills along the northwest coast and the jobs and wages working people depend on. Those economic impacts derived from the IHTF and associated NOP Mills,and Regional Mills are summarized in Table ES1. IHTF Direct Impacts,consisting of IHTF Staff and Commercial Logging,support 76 Jobs at an annual average Wage of$72,051,$35,304 more than the median private sector wage. Those operations support an additional 25 Jobs in the supply chain (Indirect Effect)at an annual average Wage of$36,339,and 28 Jobs in the general economy(Induced Effects) at an annual average Wage of$30,820. The operations of NOP Mills are also supported by those log flows, and provide 878 Direct Jobs at an annual average Wage of$84,331,$47,584 more than the median private sector wage; Indirect Jobs of 659 at an annual average Wage of$44,827, and 367 Induced Jobs at an annual average Wage of$27,481. Regional Mills that make use of logs exported through the IHTF support 1,531 Direct Jobs at an annual Wage of$78,718; Indirect Jobs of 1,545 at an annual average Wage of$52,261; and 683 Induced Jobs at an annual average Wage of$35,647. Direct Effect Indirect Effect Induced Effect Industry Totals Industry Totals Jobs Wage Jobs Wage Jobs Wage Jobs Wage IHTOperations 76 $72,051 25 $36,339 28 $30,820 129 $56,227 NOP Mills 878 $84,331 659 $44,827 367 $27,481 1,904 $59,700 Regional Mills 1,531 $78,718 1,545 $52,261 683 $35,647 3,759 $59,892 Grand Totals 2,485 $80,496 2,229 $49,882 1,078 $32,742 5,792 $59,747 Table ES1: Economic impacts associated with the Intermodal Handling&Transfer Facility, 2021. The substitution of barging for long-haul trucking not only reduce shipping costs, but create social and environmental benefits. Social benefits are a reduction in Truck Miles (miles trucks travel on roads and highways) and associated Truck Accidents. In Table ES2 those social benefits are a reduction of approximately 750,00 Truck Miles and 3 Truck Accidents annually. Fewer Truck Miles reduces diesel fuel combustion,the outcome being a reduction in CO2 emissions,totaling over 600 tons in 2021. Long-Haul Trucking Barging Net Benefits Total Truck CO2 Barge Truck CO2 Truck CO2 Truck Destintation Loads Miles (tons) Loads Miles (tons) Miles (tons) Accidents Regional Mills 2,246 600,522 1,124 45 51,021 715 -549,500 -409 -2 Local Mills 1,521 207,180 388 30 9,619 184 -197,561 -204 -1 Grand Totals 3,768 807,702 1,512 75 60,640 899 -747,061 -612 -3 Table ES2: Social and environmental net benefits of the Intermodal Handling&Transfer Facility, 2021. 4 SECTION 1: OVERVIEW AND BACKGROUND The Port of Port Angeles(Port) is in the process of seeking funding for investments to improve and expand operations at its Intermodal Handling&Transfer(IHTF). The area covers about 30 acres. An overhead view is presented in Figure 1.The IHTF makes possible transfer of materials from the shore to the water without use of large-scale docking and lifting equipment. The absence of those large-scale capital structures makes possible rapid adaptation to evolving needs of customers by utilizing flexible smaller scale capital equipment. In addition,the IHTF docking site,combined with expansive upland staging areas with capital infrastructure for preparation of materials, has lower operating costs compared to large-scale facilities. Road corridors from near-by private staging areas allow private sector businesses to readily utilize the facilities. This advantage helps Clallam County businesses remain financially viable by offsetting other costs associated with the remote geographic location. The result is that the IHTF and local businesses are competitive with markets in the distant urban-waterfront zones, and can support higher wage employment in an economically distressed region. Port of Port Angeles Intermodal Handling and Transfer Facility • Future Phases Cofferdam Dock 9- Y r , ` Phase 1 -Site Improvementspf Google Earth -on"n` Figure 1: Satellite image of Port of Port Angeles Intermodal Handling&Transfer Facility' At present,the IHTF is primarily used to barge logs as exports and imports. Export operations begin with sustainably harvested wood from Clallam and Jefferson Counties on the North Olympic Peninsula of Washington State. It is barged to wood product manufactures located along the Northwest coast. Import operations proceed in the same fashion,with the difference that logs are used by local sawmills in Clallam and Jefferson Counties. Each stage of these operations,from tree planting,to commercial harvesting,to short-haul trucking, log handling,shore to barge transfer, barging, barge to 1 Image provided by the Director of Engineering, Port of Port Angeles. 5 shore transfer,short-haul trucking, and wood sent to and used by manufacturers, plays an important role in supporting economic benefits in the form of jobs and wages in Clallam County. In addition,the IHTF creates social benefits in the form of reduced Truck Miles and Truck Accidents, and environmental benefits in the form of reduced greenhouse gas(GHG)emissions. The Port commissioned Olympus Consulting(Olympus)to analyze these impacts. The Port's facilities play a pivotal role providing the land and facilities that support employment at good wages for the residents of Clallam County.' For instance, a study conducted by Olympus on behalf of the Port in 2018 which included log operations and barging(now referred to as IHTF)and the Port's cargo terminal, indicated that international marine exports in 2016 supported 81 Direct jobs in the forest products industry and in shipside operations; an additional 19 jobs were supported in the supply chain and 80 jobs in the general economy. Diversions of some of the logs and other wood fiber to local sawmills helped support 256 jobs in wood product manufacturing, 186 jobs in the supply chain, and 154 jobs in the general economy.' This Preliminary Investigation builds upon some initial data from the 2018 study, refines the economic modeling and adds environmental and social benefits. The report proceeds as follows. • Section 1 provides an overview and background. • Section 2 explores the declining level of economic welfare in Clallam County relative to the overall state. • Section 3 presents the research question to be answered (i.e.,the premise of this study). It then develops a conceptual visualization of wood fiber flows to and from the IHTF that provides the foundation for subsequent quantitative analysis. • Section 4 traces the flow of logs to wood product manufacturers located on the North Olympic Peninsula of Washington State, identifying businesses whose operations are supported by those activities. • Section 5 estimates the economic benefits from forests on the peninsula to final destinations by way of the IHTF. It also estimates economic benefits at mills receiving exported logs. Lastly, economic benefits are estimated for mills on the North Olympic Peninsula who receive, directly or indirectly,flows of wood fiber that support their operations. • Section 6 estimates social and environmental benefits. • Section 7 summarizes conclusions from this Preliminary Investigation. 2 The concept of a"good wage"is complex. The MIT Living Wage Calculator establishes a subsistence wage,one that provides for minimum living standards without public assistance,based on household composition. For 2022, with 2 adults, both working,and 1 child,the before tax wage is$70,474. The Clallam Economic Development Council has defined a prosperity wage,one that allow homeownership and retirement savings. With one adult earning the mean wage of approximately$48,000,the other would need to earn around$65,000 to achieve a prosperity threshold of approximately$110,000. That wage would allow purchase of an entry level home at 85 percent of the current(Q1,2022) median priced home of$430,400 in Clallam County. 3 Daniel A. Underwood, The Port of Port Angeles Log Yard:A Nexus in the Forest Products Industry,2018. Project was funded by the Port of Port Angeles. The Port of Port Angeles Log Yard:A Nexus in the Forest Products Industry (Portofpa.com) 6 SECTION 2: THE NEED FOR GOOD JOBS WITH GOOD WAGES IN CLALLAM COUNTY The economic well-being in Clallam County is significantly less than state-wide, and has fallen further behind with time. This increasing disparity is illustrated in Table 1 and Figure 2. In 1990,the average annual nominal mean wage in Clallam County was$18,456; in Washington State it was $22,6768. Thus,those employed in Clallam County earned 81 percent of what those employed in Washington State as a whole earned. In 2021,the average annual nominal wage in Clallam County was $47,836; in Washington State it was$82,478. Thus, by 2021,the relative annual mean wage was 58 percent of the statewide average. This decline is explained by a decline in the average hourly wage.' Jobs Total Annual Wages Mean Annual Wage Proportion 1990 Clallam County 17,788 $328,293,884 $18,456 81% 1990 Washington State 2,132,868 $48,369,146,583 $22,678 123% 2021 Clallam County 23,148 $1,107,318,794 $47,836 58% 2021 Washington State 3,352,607 $276,514,659,439 $82,478 172% Table 1: Relative nominal wages between Clallam County and Washington State, 1990 and 2021.5 A second measure of economic disparity is found in unemployment rates. The Employment Security Department of Washington State (ESD) defines a county as distressed if its unemployment rate exceeds the state-wide average by 20 percent. For January 2022,the state-wide unemployment rate was 4.4 percent. In Clallam County it was 6.7 percent, 60 percent greater than the state-wide average.6 Clallam County as an economically distressed county is not a recent phenomenon, revealed in Figure 2. The potential for economic development that brings good paying jobs to residents is partly hampered by educational disparities. Levels of educational attainment in Clallam County are below state-wide averages for college degrees, Bachelors and greater. This is partly seen in Table 2 where 16.1 percent of those 25 and older have a Bachelor's degree compared to 22.4 percent statewide. For graduate degrees, respective values are 11.3 and 13.6 percent. These values, however,overstate the proportion of the working age population with Bachelor's degrees and greater in Clallam County, as the County median age is 50.8,compared to 37.7 state-wide.' Clallam has a higher proportion of retired persons who are 47 percent more likely to have a Bachelor's or graduate degree. This data appears in Table 3. Thus, adjusting,for the working age population of 25 to 64,the percent with a Bachelor's or graduate degree is 14.5 percent compared to 36 percent state-wide, or 60 percent less. Bringing jobs at good wages to residents will likely require development of industries that can provide on the job training, or make use of locally provided professional technical education, instead of relying on the possession of advanced credentials in higher education. Jobs requiring advanced education will likely recruit workers and thus not improve the economic well-being of working residents. 4 The 1990 mean hourly wage in Clallam County was$12.11 and$13.82 statewide,or 88 percent of the statewide average. In 2020 those values were$28.23 and$44.59,or 63 percent. ESD,Average hourly wage, 1990 thru 2020. 5 Bureau of Labor Statistics,QCEW historical data, https://www.bls.gov/cew/downloadable-data-files.htm 6 ESDWAGOV-Monthly employment report Census-Table Results 7 2020 Distressed areas' three-year average unemployment rate, not seasonally adjusted January 2018 to December 2020 attutcam rt 1 :a-_Lan '0% Farr (4'- Oka,'ogan 7 . . Baugh -a,E eland c•*b Stevens s. Getiem Snohomish 7 6% 4 Pis Chetsn Jefferson I r.. 7'Ali `t t King [bugles Lincoln SOokene Grays Hart of Maeort GtBrtt g'5% ,. Kitten iitior n„ Adams 6 7% Whitman d 9.4 Pecfic a 4Wkt Frankatn B 4% r 3 K Yakima : rtea /i. o*% Skaertania Mean alas Walk ' ''Si( i As I) Wahktakum Klickklar r 5% _is-k tS.06 Oialtrassad area anampieyrnent rate greater ,an or equal to 6.8 percent m nrt Updated April 2e, 2021 Eier attune Watch2Q20 !W 'Pretested it,cooperation seen err BLsrtau or 4once statistics, Patois are seem to cletemss a datre*tcrd arenas 50,1ro Etephsvmerit SecurityCiatissnmentiLMEit J S E%u+eaj of Latex Star ice Loom Ave*JP repay'-re't Eta'at.,_6 Figure 2: Economically distressed counties in Washington State, 2018—2020.8 EDUCATIONAL ATTAINMENT Washington Clallam County Population 25 years and over 5,101,624 5,101,624 57,648 57,648 Less than 9th grade 186,275 3.7% 933 1.6% • 9th to 12th grade, no diploma 256,174 5.0% 3,399 5.9% High school graduate(includes equivalency) 1,122,330 22.0% 15,145 26.3% Some college,no degree 1,189,880 23.3% 16,483 28.6% Associate's degree 509,353 10.0% 5,878 10.2% Bachelor's degree 1,144,545 22.4% 9,281 16.1% Graduate or professional degree 693,067 13.6% 6,529 11.3% Table 2: Educational attainment Washington State and Clallam County for populations 25 years and over.' 8 Employment Security Department of Washington State, March 12,2022: ESDWAGOV-Distressed areas list 'Census-Table Results, 2019. 8 Educational Attainment by Age Group:CENSUS ACS 2010 Demographic--Age Group 25-34 35-44 45-64 65 plus Totals Degree Total Percent Total Percent Total Percent Total Percent All Ages Bachelor 729 16% 946 21% 1,220 27% 1,667 37% 4,562 Graduate 231 6% 270 7% 1,229 30% 2,356 58% 4,086 Totals 960 11% 1,216 14% 2,449 28% 4,023 47% 8,648 Table 3: Educational attainment in Clallam County by age groupings.'° Annual household income in Clallam County is below state-wide values,which is summarized in Table 4. For median annual household income, we see$52,192 ($56,623 in 2021$) in Clallam County compared to$73,775 ($80,038 in 2021$)state-wide,or 29 percent less. For annual mean household income,those respective values are$67,839 ($73,599 in 2021$)and$98,983 ($107,387 in 2021$),or 31 percent less. While these income distribution values indicate that economic welfare is less in Clallam County than state-wide,the standard of living for people who work for a living is below these median and mean annual values for household income. In Table 5,for all covered employment in Clallam County in 2021, the annual mean wage for those employed was$47,836,or$34,677 less than the state wide annual mean wage of$82,513. For government employees,those in Clallam County earn an annual mean wage of$61,732,or$13,035 less than the state wide annual average for government employees of$74,767. For private sector employees,those working in Clallam County earned an annual mean wage of$40,430, or$43,596 less than the state wide annual mean private sector wage of$84,026. Thus, in the private sector, Clallam County workers earn less than one-half of private sector workers in Washington State. Median annual wages tell us more about disparities in income. In Clallam County, half of the labor force earns less than$50,390. Contrasted with Washington State,we see half of the labor force earns more than$71,707,or$21,317 more than in Clallam County. For private sector employees,the disparity is larger. In Clallam County,the median annual private sector wage is$36,747. In Washington State the median annual private sector wage is$69,626. Thus,for private sector employees,the disparity in the median annual wage is$32,879. In Clallam County, 9.2 percent of all households were living at or below the poverty level in 2019. For Washington State,that value is 6.9 percent. Thus,the poverty rate in Clallam County is 33 percent greater than the state-wide average. For households with children,the poverty rate in Clallam County is 19.6 percent whereas it's 11 percent state-wide;the poverty rate for households with children is 78 percent greater in Clallam County. As a result,the household rate for cash public assistance is 5.3 1°Census -Table Results, 2010. 9 percent in Clallam County and 3.0 percent state-wide, or 77 percent greater in Clallam County.' Differentials in educational attainment may partly explain the income disparities explored above. A second explanation is a dearth of employment opportunities in industries where the necessary knowledge-skill set can be acquired locally and put to use by employers paying higher wages. In the analysis that follows,the economic sectors identified for investment and expansion pay wages above the County mean and median, and provide employment for existing residents. INCOME AND BENEFITS(2019 DOLLARS) Washington Clallam County Number Percent Number Percent Total households 2,848,396 2,848,396 32,958 32,958 Less than$10,000 136,214 4.8% 1,948 5.9% $10,000 to$14,999 91,269 3.2% 1,901 5.8% $15,000 to$24,999 196,496 6.9% 3,613 11.0% $25,000 to$34,999 208,347 7.3% 3,591 10.9% $35,000 to$49,999 322,372 11.3% 4,701 14.3% $50,000 to$74,999 490,349 17.2% 5,843 17.7% $75,000 to$99,999 390,278 13.7% 4,845 14.7% $100,000 to$149,999 503,497 17.7% 4,012 12.2% $150,000 to$199,999 238,716 8.4% 1,539 4.7% $200,000 or more 270,858 9.5% 965 2.9% Median household income $73,775 (X) $52,192 (X) Mean household income $98,983 (X) $67,839 (X) Table 4: Income distribution by earnings groupings in Washington State and Clallam County.' 'Census-Table Results, 2019. 12 Census-Table Results,2019. 10 Annual Mean Wages in 2021 Clallam County Washington Economic Sector Mean Median Mean Median QCEW Private $40,430 $36,747 $84,026 $69,626 QCEW GOV $61,732 $59,928 $74,767 $71,707 QCEW NCE $75,908 $75,908 N/A N/A QCEW Total $47,836 $50,390 $82,513 $71,707 Table 5: Mean and median wages in Clallam County and Washington State, 2021.13 In short,every new job directly associated with the IHTF is likely to reduce the economic disparities analyzed in this section.14 Thus, maintaining and increasing the jobs analyzed in this Preliminary Investigation are critical to improving the standard of living of working people. SECTION 3: CONCEPTUALIZING AND MODELING THE INTERMODAL HANDLING&TRANSFER FACILITY The research question The research question addressed in this Preliminary Investigation is "What is the value of the Port of Port Angeles Intermodal Handling& Transfer Facility?" This question is answered using four levels of analysis. • First, under its current configuration,the transport of logs is traced from source to final destination. As the IHTF plays a central role in this movement,economic impacts as dependent upon those volumes are estimated, beginning with activities in the forest and continuing to log exports. • Second,the economic impacts associated with the process of transforming those exported logs into finished products are estimated. • Third,the economic impacts of log imports and horizontal residual flows of wood chips and hog fuel are estimated. • Fourth,the social and environmental impacts in terms of Truck Miles, associated Truck Accidents, and reductions in GHG emissions are estimated. There are additional values attributable to the IHTF not explored in this Preliminary Investigation. First,there could be further investments to modify the transport capabilities of the existing cofferdam dock,which will have economic impacts during the investment period.' The resulting changes in infrastructure may expand transport capabilities,allowing not only barging, but also roll on roll off barging(RO-RO barging), another source of economic impacts.'6 RO-RO barging 13 gcew-annual-averages-2021-preliminary2.xlsx(live.com) NEC is not classified elsewhere. 14 The opposite is also true: every job directly associated with the IHTF lost is likely to increase economic disparity. is There are also plans to invest and expand import and export capabilities at the adjacent Terminal 5 and 7 in a future phase. The expected outcomes of those investments may be explored in a separate report. 16 The Port BST Associates to evaluate the feasibility of barging. See Barge Feasibility Update, February 2000;Port of Port Angeles Review of Barge Studies, March 21,2017. 11 accommodates fully loaded trucks that roll on, move by water to their final destination, and then roll off moving freight to the final user. This process reduces the number of trucks using highways and travel miles. Lastly,the IHTF will make possible additional transport possibilities for markets not yet well developed. Olympus utilized the expertise of the Port's Operations Director to trace the movement of materials at the Port's existing facility and to envision investments that would expand its capabilities and allow adaptation to future needs and opportunities. The goal was to develop a quantitative model of material flows,transport processes,and end uses. The analytical focal point is the IHTF located on the waterfront of the Port. The physical infrastructure consists of the loading and material handling facilities,the cofferdam dock, and Terminal 7. Anticipated investments will import fill and install new asphalt pavement surface which will increase the facilities' efficiency and throughput capacity while improving water quality of the stormwater runoff. In addition,the cofferdam dock will receive needed structural repairs and surface improvements. These investments on the cofferdam dock could be leveraged to provide the infrastructure to accommodate other barging opportunities, including access for the export of bio-energy. Figure 3 is an illustrative model that identifies key flows of materials that will provide the analytical context for the subsequent estimation of economic,social and environmental benefits. The outflow of wood fiber(primarily logs at this time) is derived from sustainably managed private and public forest lands in Clallam and Jefferson Counties. Logs moving to the IHTF are illustrated using solid green arrows. Jobs and wages commensurate with those activities are supported in the forests,on the highways via surface transport, at the log scales, in log preparation,and handling and loading. Some of those logs are sold to local sawmills(Evergreen Fibre, Interfor and Port Angeles Hardwoods)where they are manufactured into final products. On-site operations are conducted by Port IHTF union staff who work collaboratively with truck drivers and barge crews. Logs are off-loaded from trucks,sorted, stacked in decks, inventoried, and ultimately loaded on barges for export. Exports, denoted by solid blue arrows, currently move to destinations in Skagit and Snohomish counties in Washington, and Coos County Oregon, are denoted by black line arrows. From there, logs are off-loaded and short hauled to BUSE Timber and Canyon Lumber(Snohomish),Sierra Pacific Industries—Burlington (Skagit), and Roseburg Lumber and Southport Forest Products(Coos). The IHTF also receives barged logs from locations in Canada and Washington,which are off-loaded and short hauled to Port Angeles Hardwoods. Imports too are denoted by a solid blue arrow and import sources by black line arrows. Evergreen Fibre will soon import logs by barge to support its operations. Logs moving through the IHTF to local mills are denoted by a solid green arrow. 12 CSkagit Snohomish C Coos EXPORTS CEvergreen') Clallam Intermodal Wood Fiber Handling Transfer C PAHW Facility Jefferson / ( Interfor IMPORTS South Alaska C Canada ) ( Washington,) Figure 3: Current material flows through the Intermodal Handling&Transfer Facility. The next step was to model log flows so that expected benefits can be quantified.The benefits analyzed in this Preliminary Investigation are, in general,three-fold. • The first are economic benefits measured in terms of jobs and wages. Call these ECON;, where j is an activity associated with IHTF operations and whose economic impact is supported by the flow (export and import) of materials.' • The second are social benefits,SOC;.,where j is an outcome derived from barge substitution for long-haul trucks. The social benefits are measured in terms of Truck Miles (a proxy for road congestion)and associated Truck Accidents. • The third are environmental benefits, ENV;. They will be measured as reductions in greenhouse gas emissions (GHG) resulting from decreased use of diesel fuel.'8 These benefits will be used to answer the research question "What is the value of the Intermodal Handling& Transfer Facility?" 17 In Figure 4,these elements will consist of log exports, log imports,and the economic activities associated with commercial logging. Their economic impacts estimated. 18 There are additional economic,social and environmental benefits that remain to be analyzed. Those economic benefits include proprietor employment and income,and local,state and federal tax revenues. Social benefits would include reduced travel time resulting from fewer Truck Miles and reduced road maintenance costs. There are also additional environmental benefits, including reductions in surface and air pollutants. Tied into these are the environmental benefits associated with the forest products industry. They include carbon sequestration derived from use of renewable wood products and reduced carbon dioxide resulting from the substitution of wood for concrete and steel in construction. Those topics are beyond the scope of this Preliminary Investigation. 13 SECTION 4: SOURCING WOOD FIBER AND WOOD PRODUCT MANUFACTURING The Forest Products Industry is highly integrated,vertically from the forest to retail outlets for finished products, and horizontally with wood fiber flows between manufacturers.19 All components of harvested trees are economically utilized. Buyers compete over a wide geographic area to secure supplies to keep their mills operating. The primary components of wood fiber important to this Preliminary Investigation are saw logs, chip and saw logs, and hog fuel (mixture of limbs, bark,and clean wood waste that is used for bio-energy production). Saw logs are not "equal." They vary by species and diameter. Wood product manufacturers have specific species and dimensional needs based upon their milling equipment and final markets. Figure 4 illustrates the movement of wood fiber(again, primarily logs), beginning with the forests of Clallam and Jefferson Counties,to final destinations. As explained in previous sections, many of those logs are exported by barge. Additional logs are imported by barge and distributed through the IHTF. The three primary mills that directly acquire logs through the IHTF are Evergreen Fibre (Evergreen), Interfor, and Port Angeles Hardwoods (PAHW).20 21 Thus, not all of the wood sorted and stacked in decks at the IHTF, nor the Port's upland facilities, is exported. Some is diverted to local mills, and this additional supply is critical to support their overall operations. This complex integration extends another step in the economy of the North Olympic Peninsula. Evergreen, which manufacturers wood chips, is the primary supplier for the Port Townsend Paper Corporation in Jefferson County.22 Port Townsend Paper Company is the largest private sector employer in Jefferson County and pays the highest wages.23 McKinley Paper, located in Clallam County, began operations in 2020.24 It produces cardboard from recycled materials. Its capital infrastructure includes a bio-energy electric power plant which can use steam generated by hog fuel to power production processes. It is capable of producing upwards of 8 megawatts of baseload renewable power. The plant also uses steam generated by hog fuel to power production processes. Evergreen Fibre is the source of that hog fuel,a bio-energy material by-product of log processing operations for exports, both domestic and international. Thus,operations at McKinley are supported by activities revolving around the IHTF.25 19 For more detailed discussion and analysis,see Daniel A. Underwood,The Port of Port Angeles Log Yard:A Nexus in the Forest Products Industry. Published by the Port of Port Angeles,2018. The Port of Port Angeles Log Yard:A Nexus in the Forest Products Industry(portofpa.com) 2°At present,two new mills are preparing for operations on the North Olympic Peninsula. The Sustainable Green Team will operate in West Clallam County and expects to employ 95 people. Spencer Forest will operate in West Jefferson County and expects to begin with 45 employees,increasing to 100. Executive Director Clallam EDC. 21 As discussed above,Evergreen Fibre plans to import wood fiber by barge beginning in 2023,if not sooner. It is to be emphasized the financial viability of mills is determined at"the margin,"by the last incremental additions to the wood fiber it purchases. Daniel A. Underwood, Dan Friesner and Jason Cross,Toward an Institutional Legitimation of Sustainability,Journal of Economic Issues(September 2014): pages 877-878. 22 Evergreen Fibre is a subsidiary of Hermann Brothers Logging and Construction,the largest truck transport company on the North Olympic Peninsula. Hermann Brothers plays a pivotal role in providing efficient trucking that supports local wood product manufactures,a point rejoined below. 23 Port Townsend Paper Corporation » EDUCATION(ptpc.com) 24 McKinley employs approximately 200 people. Correspondence, McKinley Paper. 25 Investment and expansion plans at the IHTF might accommodate the import of recycled cardboard,the input McKinley uses to produce cardboard. Similarly,finished products might be moved to other ports by barge and then short-haul trucked for all local mills. 14 CPTPC -McKinley Evergreen Clallam Intermodal Wood Fiber Handling& 4 C PAHW Transfer Facility Jefferson ( Interfor ) IMPORTS \. _�// Figure 4: Visualizing the flow of wood fiber and the economic impacts of local mills. SECTION 5: THE ECONOMIC BENEFITS OF THE INTERMODAL HANDLING&TRANSFER FACILITY Data and methodology Economic impacts were estimated using IMPLAN 6.5 (industry standard software). For sawmills and paper mills, data was acquired for total employment using a variety of sources. These included human resource departments, company owners,general managers,other correspondence and the internet. The Port provided employment and wage data which was used to estimate IHTF economic impacts. To estimate the economic impacts in commercial forestry,the value of exported logs was used. Export volumes were provided by log buyers.26 Prices of$750 per MBF for PSME and $600 per MBF were used for TSHE and true firs.27'29 The total export volume of 9,435 MMBF had a value of $7,048,128. The economic impacts for Clallam and Jefferson Counties-the North Olympic Peninsula- were estimated using a multi-regional input-output model. Economic impacts from sawmills in Snohomish,Skagit and Coos Counties were modeled at the county level. The 2019 IMPLAN data set was used to estimate economic impacts.30 The model was run for 2019(no use of deflators)and current year(2019) used as end point for the analysis. Estimated IMPLAN wages were then adjusted to 2021 26 Green Crow; Northwest Logistics, Port Angeles Hardwoods; BUSE Timber; and Sierra Pacific Industries. 27 Provided by Interfor's log buyer. 28 MBF is thousands of board feet; MMBF is millions of board feet. A board foot is 12 inches by 12 inches by 1 inch. 29 PSME is Pseudotsuga menziesii(Douglas-fir),and TSHE is Tsuga heterophylla(Western hemlock). so 2019 was the last"pre-pandemic"data year. Government imposed lock downs and significant changes in peoples shopping behavior altered expenditure relationships throughout the economy. Thus,it is professional practice to use 2019 to model a stable economy. 15 dollars (2021$).31,32 Employment, as explained above,was used to estimate annual wages based upon industry averages when actual payroll data was not available. IMPLAN wage estimates include benefits and are greater than wages reported in Bureau of Labor Statistic Quarterly Census of Employment and Wages (QCEW) data. Jobs are total employment (wage and salary jobs)for firms in each analyzed industry.33 While these are not full-time equivalents, employment at mills is generally full-time. Wages are presented as annual averages (mean)expressed as 2021$. Economic impacts are presented as direct, indirect and induced effects: • Direct effects are those from the specified operations; • Indirect effects capture the jobs and wages resulting from expenditures by operations in the supply chain. Firms in the supply chain likewise make expenditures which further amplify the indirect effects;34 • Induced effects occur when those directly and indirectly employed make expenditures in the economies of Clallam and Jefferson Counties,which support jobs and wages throughout the economy. The economic benefits associated with the IHTF are estimated using four economic impacts, ECON;, illustrated and analyzed in Section 5. These elements are ECON1=economic impacts associated with commercial logging and movement of wood fiber through the IHTF; ECON2=economic impacts associated with the use of exported logs to sawmills in Snohomish, Skagit and Coos Counties; ECON3=economic impacts from mills in Clallam and Jefferson Counties associated with the import and export of logs through the IHTF; ECON4=economic impacts derived from trucking of materials to and from mills in Clallam and Jefferson Counties. The economic impacts are estimated for a single year. Thus,future benefits are not included in the Preliminary Investigation. 31 Inflation has increased significantly since 2019. Olympus tested IMPLAN estimates using the model's dollar year (inflation adjustment)function for 2021,and found that IMPLAN significantly under estimates inflation. 32 The Bureau of Labor Statistics(BLS)Inflation Calculator was used to convert 2019$into 2012$, December to December,at a rate of 1.0849. CPI Inflation Calculator(bls.gov) 33 Job values are rounded,though corresponding annual mean wages used decimal estimates. 34 Use of a multi-regional model captured jobs supported by expenditures across county lines,expenditures which otherwise would be leakages. The result was an increase in Indirect and Induced employment of about 2 percent. 16 Economic impacts from the forest to the sea by way of the Intermodal Handling&Transfer Facility To estimate the economic benefits of ECONI IHTF operations at the cofferdam dock, IMPLAN Industry Code 420,Scenic and Sightseeing Transportation and Support Activities for Transportation to capture IHTF operations,35 and Code 16 Commercial Logging to capture operations from the forest. Code 19,Support Activities, and Code 15, Forestry and Timber Tract Preparation,supply chain industries,are presented individually to help the reader better understand the nature, organizational structure and the distribution of economic impacts in this industry. All other industries impacted are presented as Other for indirect and induced effects. The results appear in Table 6.36 Economic Impacts of IHTF From the Forest to the Sea Direct Effect Indirect Effect Induced Effect Total Effects Sector Jobs Wage Jobs Wage Jobs Wage Jobs Wage I HTF Operations 7 $70,000 5 $34,417 6 $30,692 18 $46,753 Commercial Logging 69 $72,258 69 $72,258 Support Activities 13 $30,909 13 $30,909 Forestry,Tract Prep 3 $83,990 3 $83,990 Other 5 $23,018 21 $30,859 26 $29,418 Grand Totals 76 $72,051 25 $36,339 28 $30,820 129 $56,227 Table 6: Intermodal Handling&Transfer Facility economic impacts from the forest to the sea, 2021. The seven people working at the IHTF earn an average annual wage of$70,000.37 Those operations support an additional 5 Indirect jobs in the supply chain at an average annual wage of $34,417,and 6 Induced jobs in the general economy at an average annual wage of$30,692.38 Commercial Logging employed 69 people to support$7,048,128 worth of annual production at an average annual wage of$72,258 to harvest and transport those logs to the IHTF.39 Support Activities provided 13 Indirect jobs in the supply chain at an average annual wage of$30,909; Forestry and Timber Tract Production provided an additional 3 Indirect jobs at an average annual wage of$83,990. Elsewhere in the supply chain an additional 4.8 Indirect jobs were supported at an average annual wage of$23,018. Those directly employed in commercial logging and those employed in the supply chain made expenditures in the local economy that supported an additional 21 Induced jobs at an average annual wage of$30,859. 36 Code 420 is the appropriate industry for this activity. Correspondence IMPLAN. 36 Number may not sum because of rounding. 37 Director of Finance, Port of Port Angeles. 38 IMPLAN does not provide a direct Industry Code match for the North American Industrial Classification System (NAICS)488320, Marine Cargo Handling. Olympus explored the industry structure IMPLAN recommends and found that it underestimates wage averages in this highly unionized sector for marine exports. Thus,the induced impacts are biased downward. 39 The reader is reminded that this inflation adjusted wage was estimated by IMPLAN and includes estimated benefits. Thus,it is larger than the 2019 QCEW wage of$56,060($61,380 2021$),which implies estimated benefits are about 18%of the annual wage. 17 The economic impacts from exported logs to regional sawmills The analysis used to estimate the impacts in ECON2 follows the methodology explained above. IMPLAN Industry Code 132 Sawmills was used for impact analysis. Mills purchasing logs that were exported using the IHTF are BUSE Timber and Canyon Lumber in Snohomish County,Sierra Pacific Industries (SPI)-Burlington in Skagit County,and Roseburg Forest Products and Southport Lumber in Coos County,Oregon. While the wood fiber imported from Clallam and Jefferson Counties using the IHTF are a fraction of the total volume processed by those mills,that fraction is critical to maintain financial viability.40 Hence,as those mills are partly dependent on exported logs through the IHTF,their economic impacts are estimated and presented in Table 7. Economic Impacts of Saw Mills Receiving IHTF Exports Direct Impacts Indirect Impacts Induced Impacts Total Impacts Company Jobs Wage Jobs Wage Jobs Wage Jobs Wage BUSE 68 $74,806 14 $56,733 15 $43,570 97 $67,367 Canyon 65 $74,806 13 $56,566 14 $43,613 92 $67,482 SPI Burlington 200 $79,778 38 $58,590 43 $39,557 281 $70,758 Roseburg 1,000 $78,554 1,235 $52,035 510 $34,996 2,745 $58,530 Southport 198 $78,718 245 $51,935 101 $34,989 544 $58,537 Grand Totals 1,531 $78,410 1,545 $52,261 683 $35,647 3,759 $59,892 Table 7: The direct, indirect and induced impacts of mills purchasing IHTF log exports,2021. BUSE and Canyon Sawmills in Snohomish County provide 133 Direct jobs at an annual average wage of$74,806.41 Those Sawmill expenditures and Direct employment support an additional 27 Indirect jobs in the supply chain at an average annual wage of$56,653. SPI-Burlington in Skagit County provides 200 Direct jobs at an annual average wage of$79,778.42 Those Sawmill expenditures and Direct employment support an additional 38 Indirect jobs in the supply chain at an average annual wage of about$58,590. The relatively small number of supply chain jobs in Snohomish and Skagit Counties are attributable to the existence of few jobs in Commercial Logging given the limited acreage and yields in commercial forests.43 Thus,those three mills are dependent upon logs purchased from outside counties to maintain their financial viability. Direct and Indirect employment and wages in Snohomish Sawmills support an additional 29 Induced jobs at an average annual wage of approximately$43,591. The Skagit sawmill supports 43 Induced jobs at an average annual wage of$39,557. 4°Underwood,et.al., Ibid. 41 Buse Timber&Sales, Inc.Company Profile I Everett,WA I Competitors, Financials&Contacts-Dun&Bradstreet (dnb.com);Canyon Lumber-Overview, News&Competitors I Zoominfo.com 42 Correspondence,Sierra Pacific Industries. 43 In Skagit County, Forestry and Logging provided 91 jobs at an annual average wage of$13,212 in 2019($14,334 2021$). In Snohomish County,it was 106 jobs at an annual average wage of$45,046 in 2019($49,316). In Clallam County there were 381 jobs at an annual average wage of$56,060 in 2019($60,820 2021$). QCEW 2019. Conversely,Clallam and Jefferson have well-developed commercial logging industries that provide high wage employment. 18 In Coos County, Roseburg and Southport provide over 1,000 and 198 Direct jobs, respectively, at annual average wages of$78,544 and$78,718.44 Those Sawmill expenditures and Direct employment support an additional 1,480 Indirect jobs in the supply chain at an average annual wage of$52,019. Direct and Indirect employment and wages from Coos County sawmills support an additional 611 Induced jobs at an average annual wage of approximately$34,965. In total,Sawmills purchasing logs exported through the IHTF provide 1,531 Direct jobs at an average annual wage of$78,410. Those operations support an additional 1,545 Indirect jobs at an average annual wage of$52,261 in the supply chain. The expenditures of those Directly and Indirectly employed in the economies of Snohomish,Skagit and Coos support an additional 683 Induced jobs at an annual average wage of$35,647. Overall,the grand total for all Sawmills, Direct, Indirect and Induced, is 3,759 jobs at an annual average wage of$59,892. The economic impacts from mills in Clallam and Jefferson Counties supported by operations at the Intermodal Handling&Transfer Facility To estimate ECON3 and ECON4, Olympus contacted each of the mills analyzed in this section to obtain information on total employment and payroll for 2021. Olympus also utilized additional sources of data such as QCEW, Payroll Protection Plan payroll data, and wage estimates from IMPLAN. A multi- regional model consisting of Clallam and Jefferson Counties was constructed using IMPLAN 6.5 using the 2019 data set.45 Interfor and Port Angeles Hardwoods were analyzed using Code 132;Code 145 was used for McKinley Paper and Port Townsend Paper.The model was also run for 2019 (no use of deflators)and current(2019) used as end point for the analysis. The dollar year 2019 was used for analysis,though the inputted values were in 2021 dollars (2021$).46 IMPLAN indirect employment impact estimates by industry were tested against known industry values to assess accuracy. Estimates for trucking employment impacts within the sawmill and paper mill sectors were deficient by a factor of approximately 3. This estimation deficiency warranted further investigation. Hermann Brothers is the primary supplier of trucking services for Interfor, McKinley Paper,and Port Townsend Paper. In addition, Evergreen Fibre, a subsidiary of Hermann Brothers, is the primary source of wood chips for Port Townsend Paper. Hermann Brothers'trucks haul recycled cardboard to McKinley for processing and their finished products to Tacoma.47 There are three critical points to be 44 Correspondence, Northwest Logistics;Southport Forest Products-Overview, News&Competitors I Zoominfo.com 45 2019 was the last"pre-pandemic"data year. Government imposed lock downs and significant changes in peoples shopping behavior altered expenditure relationships throughout the economy. Thus, it is professional practice to use 2019 to model a stable economy. 46 Olympus tested IMPLAN's estimate against base years. Use of 2021$and the base year 2021 over-estimated actual values. Hence,the base year 2019 was used. The implicit assumption is that IMPLAN is estimating 2021$ values under this approach. 47 Recent correspondence reveals the logistical complexity of Hermann Brothers'operations."We have(164) involved with the transportation activity.3 dispatchers,4 office support, 1 safetymanager,3 officers of employees pp g p Y p the company, 12 mechanics,4 truck wash crew,3 utility crew(clean up and yard maintenance and dust control) and 137 truck drivers. The drivers are very hard to pin down to the customers as to keep them all efficient they are NOT assigned to any one customer.A driver may take his first load to Tacoma loaded with lumber-drop his 19 emphasized here. First,the trucking jobs supported by these operations are not captured in IMPLAN estimates. Second, Hermann Brothers utilizes a complex logistical model to ensure its trucks carry loads (back haul)from one destination to another. Thus,when they move rolls of McKinley paper to Tacoma, that truck may carry an additional load to another destination near Tacoma before picking up a load of recycled cardboard to be delivered to McKinley Paper. These efficiencies reduce transport costs for local mills relative to their competitors,compensating for their seemingly remote geographic location. Third, Hermann Brothers, by way of Evergreen Fibre and its log export operations, is also directly a component of mill production on the North Olympic Peninsula. Accordingly, Hermann Brothers is included in the multiregional model as a trucking transport company(Code 417). Table 8 presents the estimated economic impacts. Jobs are total employment(wages and salary)at each mill. While these are not FTEs, employment at mills is generally full-time. Wages are presented as annual averages, including benefits. To protect the proprietary nature of payroll data provided by companies,the grand mean is used for the average annual wage of all companies. Hence, the uniformity of wage values. Wage values are presented in 2021$. Economic impacts are presented as direct, indirect and induced effects. The direct effects are those from the specified company. Indirect effects capture the jobs and wages resulting from expenditures by the company in the supply chain. The primary indirect industry is commercial logging,which pays on average$72,258.48 Firms in the supply chain likewise make expenditures which further amplify the indirect effects across the two counties.49 Those directly and indirectly employed make expenditures in Clallam and Jefferson Counties,which support jobs and wages throughout the economy. These are induced effects. Economic Impacts of Local Mills Utilizing IHTF Log Flows,2021 Direct Impacts Indirect Impacts Induced Impacts Total Impacts Company Jobs Wage Jobs Wage Jobs Wage Jobs Wage Interfor 131 $84,331 149 $56,984 68 $30,903 348 $62,182 Port Angeles Hardwoods 96 $84,331 110 $56,565 51 $30,814 257 $61,827 McKinley Paper 200 $84,331 160 $49,407 84 $30,869 444 $61,632 Port Townsend Paper 278 $84,331 186 $38,419 110 $26,974 574 $58,462 Hermann Brothers 173 $84,331 54 $42,314 54 $31,641 281 $66,131 Grand Totals 878 $84,331 659 $48,633 367 $29,814 1904 $61,467 Table 8: The direct, indirect and induced impacts of select mills in Clallam and Jefferson Counties, 2021. trailer and get another then go haul Pepsi cola Products for a load then go to Costco warehouse to get a load of OCC(old corrugated cardboard)and bring that load to McKinley. Another may take a load of chips to Wanna OR then get a load of fuel wood (hogged fuel)and bring it back to PTPC then stop at a forest slash harvesting site to bring to McKinley.Another will take a load of sawdust from Interfor to a blue berry farm in the Skagit Valley then go haul recycled car parts to a company making insulation then bring a load of fuel wood back to McKinley. Another may take a load of finished paper rolls to Tacoma and bring a load of OCC back. There is nothing consistent about the work that we do---we provide a lot of efficient transportation." Bill Hermann, Hermann Brothers. 48 BLS,QCEW,Clallam County,2021 indicates the average annual wage to be$63,954 without benefits. 49 More detailed analysis of the intersectoral indirect effects is possible,and may be included in a subsequent final report. 20 Direct employment at the sawmills Interfor and Port Angeles Hardwoods ranges were 131 and 96 in 2021 respectively. Employment at McKinley Paper and Port Townsend Paper was 200 and 278 respectively. Employment at Hermann Brothers was 173. Total direct employment is estimated to be 878 jobs. The annual average wage rate ranged from a high of$91,727 to a low of$67,156. Only the grand mean of$84,331 is presented for average annual wages under Direct impacts to protect the proprietary nature of disclosed payrolls. The Indirect job impacts in the supply chain range from a high of 186 from Port Townsend Paper to a low of 54 at Hermann Brothers. The total number of Indirect jobs is 659. The average annual wage for those indirect jobs' ranges from a high of$56,984 from Interfor to a low of$38,419 at Port Townsend Paper. Those Indirect jobs are supported in a wide range of industries. The largest employment impact is in commercial logging,with 174 jobs paying an estimated average annual wage of $72,258. The average annual Indirect wage is estimated at$48,633 for all companies analyzed.50 The Induced job impacts in the overall economy range from a high of 110 from Port Townsend Paper to a low of 51 from Port Angeles Hardwoods. Average annual wages range from a high of$31,641 from Hermann Brothers to a low of$26,974 from Port Townsend Paper. The average annual Induced wage is estimated at$29,814 for all companies analyzed. In general, Induced impacts are shaped by the total number of Direct and Indirect jobs and their corresponding wages. The higher the product of direct and indirect jobs and wages,the greater the induced impacts. In summary,total Direct employment was estimated at 878 jobs at an annual average wage of $84,331. Total Indirect employment was estimated at 659 jobs at an annual wage of$48,633. Total Induced employment was estimated at 367 jobs at an annual wage of$29,814. The Total impact—sum of Direct, Indirect and Induced—was estimated at 1,904 jobs paying an annual average wage of$61,467. SECTION 6: ESTIMATING NET BENEFITS FROM SUBSTITUTION OF BARGES FOR LONG-HAUL TRUCKING The estimation of travel costs for long-haul trucking and barge transport Substitution of barging for long-haul trucking can reduce transport costs. The substitution of barging for long-haul trucking requires additional stages of on-loading materials to the barge. There will also be the cost of barging,off-loading, and use of short-haul trucks to move logs from the port of destination to the final purchaser. As off-loading by the purchaser—in this analysis,wood product manufacturers—would be necessary independent of transport method,there will be no additional off- loading costs at that point. Barging will reduce the total Truck Miles on highways,a reduction which will decrease highway congestion and improve public safety, depreciation of roadways, and diminish travel pollutants caused by trucking. The analysis in this section quantifies reductions in Truck Miles and Diesel fuel consumption, and GHG emissions. In the next section,the analysis is extended to capture changes 50 Hermann Brothers was modeled using truck transport(Code 417), its single largest activity. However, Hermann Brother also contains 2 forest product companies—Evergreen and log export operations. Log export operations support approximately 5 estimated jobs. The range of indirect jobs from log export depends on export volumes. Thus,the estimated indirect employment for Hermann Brothers does not capture these high paying jobs. 21 in road Accidents. Essential to this process will be identification of the parameters needed to construct conversion coefficients. The coefficients for analysis are (1) Long-haul trucking(distance/MPG): MPG is miles per gallon; (2) Barging(distance x time/distance x gph); (3) Onload and offload activities (loads x hours/load x gph); (4) Short-haul trucking(distance/MPG); (5) Road Accidents (accidents/distance); (6) CO2 emissions (total gallons Diesel fuel x CO2/gallon). Calculating diesel fuel consumption by transport component The assumptions, data and methodology used to estimate SOC1,SOC2 and ENV1 are as follows. First,to determine long-haul distances, Google Maps'was used to find travel distance from the Port to purchasing wood product manufactures. Likewise, long-haul truck distances for imports to Port Angeles Hardwoods were found. Second, and similarly,short-haul distances from the port of destination to the wood product purchaser(manufacturer)were found. Third,distances between the Port of Port Angeles and the Port of Everett were provided by the barge operator along with their diesel fuel consumption rate of 4.17 gallons per nautical mile.51 As diesel fuel consumption for large scale ocean barging was not available,values for inside passage barging were used for all barging transport routes.52 Distance to the Port of Coos and Port Mellon were found using Ports.com.53 Published studies were consulted for log truck fuel consumption,and a value of 6 MPG used.54 Diesel fuel consumption for Onload/Offload was estimated using average operations at the Port.55 It is assumed that these costs are approximately the same at all ports. The Energy Information Administration was used to find GHG emissions, measured in terms of CO2,emitted from combustion of diesel fuel: 22.46 pounds (lbs.) per gallon of diesel fuel.56 Lastly, logs move from the forest to scales, and then to a yard where it is off-loaded, sorted and stacked. Those operations are independent of final destination and transport mode. Accordingly,they are not analyzed.57 51 General Manager and Operator of Star Marine provided diesel fuel consumption for these trips. 52 It is unknow at this time the direction of bias resulting from this assumption. However,as in general fuel efficiency for volume/weight hauled increases with barge size,the likely direction of bias is upward. 53 Sea route&distance-ports.com Sa A wide range of studies have been completed that estimate diesel fuel consumption for hauling by log trucks,on gravel and paved roads. The Washington Log Trucking Industry:Costs and Safety Analysis, Rural Technology Initiative,estimates 5.1 MPG on roads with 17 percent gravel and 83 percent paved. Brandon Schoettle, Michael Sivak and Michael Tunnel,A Survey of Fuel Economy and Fuel Usage by Heavy-Duty Truck Fleets, University of Michigan,October 2016. A value of 6 MPG was used in this study. 55 Provided by the Port's Operations Director. 56 Energy Information Administration. 57 This assumption likely causes a downward bias in the estimates of net benefits. The reason is that the costs of on-loading long-haul trucks is not addressed,whereas picking up logs for movement to barges is. Technically, there should be a deduction in time and effort to pick up Loads using the equipment in the IHTF. • 22 Estimating diesel fuel consumption,Truck Miles,Truck Accidents and GHG (CO2)by transport option Table 9 presents the total Diesel fuel consumption,Truck Miles,Truck Accidents and corresponding GHG (CO2) emissions that would result if export log from the Port to final destinations at BUSE Timber,Canyon Lumber,Sierra Pacific Industries, Roseburg Lumber Company and Southport Forest Products used long-haul trucking. Similar results are presented for imports from Washington and Canada using distances from the Port of Everett and Port Mellon to Port Angeles Hardwoods(PAHW).58 The table begins with the total export volume, in thousands of board feet(MBF),to each site.59 The same was done for imports. Volumes were converted to Loads(truck loads) using the conversion factor of 4,200 board feet (BF). Distances in miles were estimated using Google Maps. A fuel efficiency factor of 6 MPG was used for trucking to calculate total diesel fuel consumption.Truck Miles are the product of loads and distance. Lastly,diesel fuel consumption was converted into tons of CO2. Efficiency Gains from Substitution of Barging for Long-Haul Trucking Long Haul Trucking Barging Net Benefits Total Truck CO2 Barge Truck CO2 Truck CO2 Truck Destintation Loads Miles (tons) Loads Miles (tons) Miles (tons) Accidents BUSE Ti mber 213 19,627 37 4.3 1,493 26.3 -18,134 -10.5 -0.07 Canyon Lumber 37 3,343 6 0.7 130 4.3 -3,213 -1.9 -0.01 Sierra Pacific Industries 946 123,005 230 18.9 39,740 178.6 -83,265 -51.7 -0.33 Roseburg&Southport 1,050 454,547 851 21.0 9,658 506.3 -444,889 -344.5 -1.78 PAHW(WA) 960 89,280 167 19.2 2,880 111.1 -86,400 -56.0 -0.35 PAHW(CA) 561 117,900 221 11.2 1,684 72.9 -116,216 -147.8 -0.46 Totals 3,768 807,702 1,512 75 55,585 899 -752,116 -612 -3.01 Table 9: Fuel consumption and CO2 emissions from long-haul trucking by volume and destination, 2021.60 The estimated values presented in Table 10 indicate that for 2021 it would have taken 3,768 trucks traveling 807,702 Truck Miles to export and import 15,825 MBF of logs, or 3,768 loads. Those trucks would have traveled on surface streets and highways.61 That transport would have required 134,617 gallons of diesel fuel. Combustion of that diesel fuel would result in 1,512 tons of CO2 emissions. These estimated values represent the cost of using long-haul trucking to support the export and import of logs from the North Olympic Peninsula. When barging is substituted for long-haul trucking,those costs are reduced,the difference representing a net benefit to society. 58 Import data provided by Port Angeles Hardwoods aggregates all Canadian imports from Vancouver Island and the Sunshine Coast of British Columbia. 59 These manufacturers are located in Snohomish,Snohomish,Skagit and Coos Counties,respectively. While exports to Sierra Pacific Industries were sent to both the Burlington and Shelton plants,only the former was analyzed in this study. It was assumed all export were sent to that destination. 60 As the volume exported to Roseburg and Southport were aggregated,the travel distance to sites was averaged. 61 The trucks traveling to BUSE and Canyon had the option of using a ferry crossing. It was assumed that travel option was used which reduced total travel mileage to 92 and 90 miles respectively. 23 Onload or Offload Operations: Diesel Fuel and CO2 per 50 Load Barge Gallons Total Total Hours Gallons CO2 Equipment Hour Hours Loads Load Diesel Tons Wagner L80 18 3 50 0.06 54 0.6 Doosan 300LL 12 2 20 0.10 24 0.3 Doosan 380LL 14 3 30 0.10 42 0.5 Totals 44 8 50 0.26 120 1.3 Table 10: Fuel consumption for onload or offload operations per 50 load-barge, 2021. To capture potential efficiency gains and the corresponding net benefits resulting from the substitution of barge shipping for long-haul trucking,a travel model was developed that consisting of the following components: (1) Onloading and offloading at ports; (2) Barging between ports; (3) Short-haul trucking to the final purchaser. These components are the only additional sources of wood handling and transport between forest operations and arrival at the purchasing wood product manufacturer.62 Thus, Diesel fuel used with corresponding CO2 emissions, and short-haul Truck Miles were analyzed and estimated. Logs that have been scaled, sorted and stacked by final purchaser, are moved by Wagner L80's to the Cofferdam.63 A Wagner L80 consumes 18 gallons of diesel fuel per hour(G/HR). It takes a Wagner L80 3 hours to move 50 loads,the capacity of a small barge. In the process, it consumes a total of 54 gallons of diesel fuel, releasing 0.6 tons of CO2. Logs are then loaded onto the barge using a Doosan 300LL and a Doosan 380LL. They consume 12 and 14 G/HR respectively to complete barge loading. Working in tandem, it takes 2 and 3 hours to complete barge loading, consuming an additional 66 gallons of diesel fuel,which releases 0.8 tons of CO2. Thus, on-loading uses a total of 120 gallons of diesel fuel with 1.3 tons of CO2 emissions. The same process is reversed at the port of destination. These estimated one-way values are presented in Table 11. Estimation of net social and environmental benefits derived from barge substitution Table 11 integrates the analysis in Table 9 and Table 10 to estimate the total consumption of Diesel fuel,Truck Miles and CO2 emissions from using barges rather than long-haul trucking. The total Loads in Table 8 are converted to Barge Loads, at 50 Loads per barge. Total Diesel fuel consumption is then estimated using 120 gallons of Diesel fuel per barge, doubled for offloading,and the total number of barges. The impacts of short-haul trucking as Truck Miles are the product of loads and travel distance between the port and final purchaser. CO2 is estimated using the coefficient described above. The 64.1 62 Wood moves from the forest to the Port for scaling,sorting and stacking. Not all of that wood is exported. Some is purchased and used at local mills,an additional source that makes operations profitable. 63 Operations Director, Port of Port Angeles. 24 Barge Loads exported and imported consumed 15,391 gallons of Diesel for on and off-loading,49,226 gallons for barge transport, and 9,264 gallons for short-haul trucking,for a total of 80,088 gallons of Diesel fuel. The sum total of this Diesel fuel combustion resulted in 899.4 tons of CO2 emissions. Barging:Diesel Fuel,Truck Miles,and CO2 Onload+Offload Barge Transport Short Haul Trucking Totals Barge Diesel CO2 Dist Diesel CO2 Dist Diesel CO2 Diesel Truck CO2 Desintation Loads (gal) (tons) (NM) (gal) (tons) (MI) (gal) (tons) (gal) Miles (tons) BUSE Timber 4.3 1,024 11.5 60 1,068 12.0 7 249 2.8 2,340 1,493 26.3 Canyon Lumber 0.7 178 2.0 60 186 2.1 4 22 0.2 386 130 4.3 Sierra Pacific Industries 18.9 4,542 51.0 60 4,735 53.2 42 6,623 74.4 15,900 39,740 178.6 Roseburg&Southport 21.0 5,039 56.6 439 38,435 431.6 9 1,610 18.1 45,083 9,658 506.3 PAHW(WA) 19.2 4,608 51.7 60 4,804 53.9 3 480 5.4 9,892 2,880 111.1 PAHW(CA) 11.2 2,695 30.3 75 3,512 39.4 3 281 3.2 6,487 1,684 72.9 Totals 75.4 18,086 203.1 49,226 552.8 9,264 104 80,088 55,585 899.4 Table 11: Diesel fuel consumption and CO2 emissions from barging by loads and destination,2021. The Net Benefits (NB)to society from the substitution of barging for long-haul trucking can now be estimated as the difference between transport costs, or NB=cost of barge transport-cost of long-haul trucking; = [(cost on/off-loading)+(cost barging)+(cost short-haul trucking)]-cost long-haul trucking, where cost is measured in terms of Truck Miles, CO2 emissions, and truck Accidents. Truck Accidents are added to the NB equation in the next section. Discussion of results The preceding analysis was used to compile the summary results contained in Table 12. The first section presents the total Truck Miles needed to deliver total Loads to the final purchaser with corresponding CO2 emissions. The 3,768 Loads exported and imported in 2021 would have required 807,702 Truck Miles for delivery, resulting in a total of 1,512 tons of CO2 emissions. In actuality, 75 barges were used to deliver those Loads, rather than long-haul trucking,creating a Net Benefit. Onloading and offloading operations, barge transport,and short-haul trucking used 60,640 Truck Miles (less than one-tenth)with 899 tons of CO2 emissions. The difference between the cost of long-haul trucking in terms of Truck Miles and CO2,and the cost of barge transport represent social and environmental Net Benefits. Thus,current operations at the IHTF reduce total highway traffic by 747,061 Truck Miles and CO2 emissions by 612 tons. Truck Miles also affect traffic safety. The column Truck Accidents in Net Benefits was constructed using the data from the Federal Highway Administration and the National Highway Safety Administration. In 2019,a total of 124,746,000,000 Truck Miles occurred on rural and urban roads.64 In the same year there were "an estimated 538,000 64 Miles traveled in 2019.pdf 25 large truck police-reported traffic crashes" injuring 159,000 people, 5,005 fatally.65 This translated into an accident rate of 0.000,004 accidents per 1,000 Truck Miles. The coefficient was used to estimate a total change in Truck Accidents of-2.99 associated with reductions in Truck Miles by substitution of barging for long-haul trucking.This is a second social benefit derived from the substitution of barging for long-haul trucking made possible by the IHTF. A third set of social benefits not analyzed in this Preliminary Investigation pertain to reductions in road and highway depreciation and other surface and air pollutants emitted from long-haul trucking. Efficiency Gains from Substitution of Barging for Long-Haul Trucking Long Haul Trucking Barging Net Benefits Total Truck CO2 Barge Truck CO2 Truck CO2 Truck Destintation Loads Miles (tons) Loads Miles (tons) Miles (tons) Accidents BUSE Timber 213 19,627 37 4.3 1,493 26.3 -18,134 -10.5 -0.07 Canyon Lumber 37 3,343 6 0.7 130 4.3 -3,213 -1.9 -0.01 Sierra Pacific Industries 946 123,005 230 18.9 39,740 178.6 -83,265 -51.7 -0.33 Roseburg&Southport 1,050 454,547 851 21.0 9,658 506.3 -444,889 -344.5 -1.78 PAHW(WA) 960 89,280 167 19.2 6,739 111.1 -82,541 -56.0 -0.33 PAHW(CA) 561 117,900 221 11.2 2,880 72.9 -115,020 -147.8 -0.46 Totals 3,768 807,702 1,512 75 60,640 899 -747,061 -612 -2.99 Table 12:The net benefits from barge substitution for long-haul trucking, 2021. SECTION 7: SUMMARY AND CONCLUSIONS The Port is concerned about the historical decline in economic prosperity in Clallam County relative to Washington State. Between 1990 and 2021,the average annual nominal mean wage in Clallam County fell from 81 percent to 58 percent of the statewide average.66 This trend is explained by a transition to a higher proportion of jobs with lower hourly wages and fewer hours worked over 30 years. The decline in earned income has caused higher rates of poverty for adults, households with children,and an increase in the relative demand for cash public assistance. "The Port of Port Angeles has at its core the mission of bringing prosperity to the communities of the north Olympic Peninsula."67 To do this,the Port must make strategic investments that attract and retain businesses that produce good wage jobs and offer full-time work.This Preliminary Investigation was conducted to help the Port understand the economic,social and environmental value of its IHTF. This type of investigation allows the Port to evaluate the potential impacts to our community from maintaining, reducing or expanding its IHTF operations.The impacts from IHTF are distinct and separate from the Port's marine terminal wood fiber export operations. The Port's waterfront properties and infrastructure along with upland areas play a critical role in supporting and expanding economic enterprises that pay some of the highest wages in Clallam County. 6s National Highway Traffic Safety Administration, Traffic Safety Facts 2019 Data. 66 Table 1,page 6. 67 mission statement port of port angeles-Google Search 26 This Preliminary Investigation highlighted the significant role the IHTF plays in supporting,directing and managing the flow of wood fiber to and from the north Olympic Peninsula and its significant economic benefits. In the process, 954 jobs are directly supported in waterfront activities,ground transport and in sawmill and paper mill operations in Clallam and Jefferson Counties at an average annual wage of $83,353.68 Often, it is the last batch of logs processed that make the difference between a mill operating at a profit or loss. The direct employment supports an additional 684 indirect jobs in the supply chain at an average annual wage of$48,184.68 These jobs are in truck transport,commercial logging,wholesale, forestry preparation activities, real estate, package delivery, local government electric utilities, auto repair, services to buildings, management of companies, accounting services, and more. The employment and wage benefits of the IHTF operations do not end here. Those directly and indirectly employed spend income in the local economy,supporting an additional 395 jobs at an annual average wage of$29,885.70 The businesses supported include local government, restaurants, retail establishments, nursing and community care facilities, and individual and family services.71 The benefits in the form of jobs and wages are not limited to Clallam and Jefferson Counties. Logs exported to mills in Skagit,Snohomish and Coos Counties provide logs to support milling operations. Those regional mills provide 1,531 direct jobs paying an average annual wage of$78,410. Supply chain operations provide an additional 1,545 indirect jobs at$52,261, and 683 induced jobs at $35,647. Thus,were one to observe the onloading and offloading of barges at the Port's waterfront,they might, having read this Preliminary Investigation, know that over 2,000 jobs are supported in Clallam and Jefferson Counties, and an additional 3,759 jobs along the northwest coast of Washington and Oregon. The 954 direct jobs in Clallam and Jefferson Counties—forestry and logging,waterfront operations, paper mills and sawmills are in the top ten highest paid sectors in the counties.72 While these benefits are substantial,there are more. There are also social benefits analyzed as, but not limited to,the reduction of 750,000 truck miles on highways resulting with at least 3 fewer truck related accidents. The substitution of barging for trucking goes further. The efficiency gains in terms of larger volumes transported per unit of diesel fuel reduced annual CO2 emissions by 612 tons annually. These 68 Table 6, page 16;Table 8, page 19. 954 jobs is the sum of 76 direct jobs in table 6, page 16,and 878 direct jobs in table 8, page 19.$83,353 is the grand mean for total direct jobs. 69 Ibid. 70 Ibid. 71 The reader may ask"What is the expenditure relationship that links IHTF operations and nursing and community care facilities?" The answer is that the people employed and analyzed in this study—direct and indirect—buy services throughout the economy of Clallam County,and these include expenditures to support loved ones who require special assistance. Thus, both export and import barge also make possible support of people who require special care. 72 Wood product manufacturing is number three,behind electronic markets and agents,and securities,commodity contracts and investments. QCEW 2021, qcew-annual-averages-2021-preliminary2.xlsx(live.com) 27 are some of the benefits derived where green meets blue at the Port of Port Angeles Intermodal Handling&Transfer Facility. While these are the benefits supported today,there is the promise of more tomorrow. With investments,from dredging to accommodate barges throughout the tidal cycle,to capital investments at the cofferdam and log yard,the substitution of barging for long haul trucking can be increased. There are other forms of freight, both for material imports to support local businesses and the export of finished products,that can benefit from these investments. Those benefits will not only include fewer truck miles and reduced CO2 emissions, but lower transport costs. Transport efficiency gains are critical to helping local businesses maintain cost competitiveness given the distance to final markets. Those efficiency gains will help them increase operations and jobs at high wages. This Preliminary Investigation has not only quantified the current role of the IHTF is supporting economic prosperity, but illustrates there can be a vibrant future here for our children.