Attachment B: Port of TacomaTerminal 4 Pier Modernization TIGER GrantBenefit Cost Analysis & Economic Appendix

PPort of TacomaTerminal 4 Pier Modernization TIGER GrantBenefit Cost Analysis & Economics Appendix

PREPARED FOR

Port of Tacoma

PREPARED BY

BST AssociatesPO Box 82388Kenmore, WA 98028-0388(425) 486-7722bstassoc@seanet.com

May 20, 2015

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Table of ContentsExecutive Summary........................................................................................................................ 1

Benefit Cost Ratio.................................................................................................................... 1Economic Impacts ................................................................................................................... 2

Construction (Short-term) ................................................................................................ 2Operations (Long-term).................................................................................................... 2Ladders of Opportunity .................................................................................................... 3

Introduction..................................................................................................................................... 4Puget Sound Container Market Trends – Reasons for Concern .............................................. 4Cost-Competitive Options for U.S. Exports Depend on Import Containers ........................... 5

Impact of Diversion of Containers to British Columbia Ports ......................................... 5Container Forecast for Terminal T4 ........................................................................................ 7

With Project...................................................................................................................... 7Without Project................................................................................................................. 8

Benefit Cost Assessment................................................................................................................. 9Methodology and Assumptions ............................................................................................... 9

Fixed costs ........................................................................................................................ 9Fuel costs .......................................................................................................................... 9Voyage Costs.................................................................................................................. 10

Annual Transportation Costs Savings and Emission Reductions.......................................... 10Annual Transportation Costs.......................................................................................... 10Annual Emissions Costs ................................................................................................. 11Summary Benefit-Cost Results ...................................................................................... 11

Economic Impacts......................................................................................................................... 25Short-term Construction Impacts........................................................................................... 25Economic Impacts from Operations ...................................................................................... 25Economic Impact - Jobs......................................................................................................... 26Economic Impact – Business Revenue and Local Consumption .......................................... 27Ladders of Opportunity.......................................................................................................... 29

List of TablesTable 1 – Net Present Value of Benefits (Benefit Cost)................................................................. 1Table 2 – Net Present Value of Benefits (in billions of 2015 dollars) (Economic Benefits) ......... 3Table 3 – Net Present Value of Benefits....................................................................................... 12Table 4 – “without project” and “with project” Vessel Operating Costs and Characteristics...... 13Table 5 – Terminal 4 Pier Modernization Forecast of Ship Calls and Days at Sea and at Port ... 15Table 6 – Terminal 4 Pier Modernization Forecast of Annual Cost at Sea and at Port................ 16Table 7 – Terminal 4 Pier Modernization Forecast of Bunker Consumption at Sea and at Port.. 17Table 8 – Terminal 4 Pier Modernization Forecast of NOx Emissions........................................ 18

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Table 9 – Terminal 4 Pier Modernization Forecast of CO2 Emissions........................................ 19Table 10 – Terminal 4 Pier Modernization Forecast of Particulate Emissions ............................ 20Table 11 – Terminal 4 Pier Modernization Forecast of SOx Emissions ...................................... 21Table 12 – Terminal 4 Pier Modernization Forecast of VOCs Emissions ................................... 22Table 13 – Terminal 4 Pier Modernization Project Summary of Emission Reductions............... 23Table 14 – Terminal 4 Pier Modernization Project Net Present Value of Benefits...................... 24Table 15 – Economic Impacts from Construction ........................................................................ 25Table 16 – Total Job Impacts Associated of With and Without Project Scenarios ...................... 27Table 17 – Business Revenue and Local Consumption Associated of With and Without Project

Scenarios ($1,000s)............................................................................................................... 28Table 18 – Net Present Value of Business Revenue and Local Consumption Associated of With

Project and Without Project Scenarios ($billions)................................................................ 29Table 19 – Value of Containerized Exports Moving Through Port of Tacoma in 2014 by County

($millions)............................................................................................................................. 31

List of FiguresFigure 1 – Puget Sound Full Containers (TEUs) ........................................................................... 4Figure 2 – Western Canada Intermodal Trends to U.S. Destinations (TEUs) ............................... 6Figure 3 – Container Volume Impacts at Terminal T3/T4 (TEUs) - With Project......................... 7Figure 4 – Container Volume Impacts at Terminal T3/T4 (TEUs) - Without Project ................... 8Figure 5 – Washington State Export Jobs..................................................................................... 30Figure 6 – Map of Washington State Distressed Counties ........................................................... 31

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Executive SummaryThis report presents benefit-cost ratios and economic impacts associated with proposed

improvements to Terminal 4 (T4) Pier, which includes reconstruction of the pier in alignmentwith the adjacent Terminal 3 Pier and associated construction activities.

At present, Terminal 4 pier can only accommodate vessels up to 6,500 Twenty-footEquivalent Units (TEUs.) After construction, Terminal 4 pier will be able to accommodatevessels up to 18,000 TEUs. Shipping lines are continually introducing larger vessels to takeadvantage of their economies of scale. As documented by Clarkson Research, container shipslarger than 8,000 TEUs comprised just 5 percent of the Transpacific fleet in 2007 but nowrepresent 48 percent of the fleet1. The size of container vessels on Transpacific routes isexpected to continue to grow in the future. The Port of Tacoma must improve its capabilityto handle larger container ships in order to remain competitive with other North Americanports, and serve existing customers interested in bringing in larger vessels.

In the benefit-cost analysis, the “without project” (existing conditions) assumes continuedcalls by a 6,500 TEU vessel. The “with project” scenario is based upon a 13,000 TEU vessel,which provides a conservative estimate of the benefits for this analysis over the 20 year period ofoperations, as larger vessels will likely be introduced. Several calls are currently being madewith 13,000 TEU vessels at West Coast ports.

Benefit Cost RatioThe benefit-cost assessment was undertaken using federal guidance for TIGER Grant

applications. Annual benefits and costs were estimated starting at the initiation of constructionin the first quarter of 2016 through the end of construction in late 2018 and for 20 years ofoperations after the improvements are completed and the terminal is operational (from 2019through 2038).

The Terminal 4 Pier Modernization Project is estimated to cost $113.0 million in 2015dollars. Annual maintenance costs are also included in the analysis (estimated at 1.5 percent ofconstruction cost per year). The net present value of costs (construction and annualmaintenance) is estimated at $136.1 million using a discount rate of 3 percent and $127.7 millionusing a discount rate of 7 percent. The net present value of benefits (discussed in greater detailbelow) was estimated at $1.8 billion using a discount rate of 3 percent and $975.0 million using adiscount rate of 7 percent.

The Terminal 4 Pier Modernization Project has a Benefit Cost (BC) ratio of 13.1 (at a 3percent discount rate) and 7.6 (at a 7 percent discount rate).

Table 1 – Net Present Value of Benefits (Benefit Cost)

1 Clarkson Shipping Intelligence Network

Benefits and Costs 3% 7%Cost ($millions) $136.1 $127.7Benefit ($millions) $1,781.1 $975.0BC Ratio 13.1 7.6

Discount Rate

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Economic Impacts

Construction (Short-term)Using federal guidance for construction impacts ($76,900 per job-year); the Terminal 4 Pier

Modernization Project will create an estimated 1,469 job-years, with 522 jobs occurring in 2016,763 jobs occurring in 2017 and 185 jobs occurring in 2018.

An alternate estimate, based on the IMPLAN model, provides an estimate of 2,061 jobs,with 740 jobs occurring in 2016, 1,067 jobs occurring in 2017 and 255 jobs occurring in 2018.

Operations (Long-term)As described below, the Port of Tacoma has significant competition from other North

American ports and particularly from ports in British Columbia, Canada (Port Metro Vancouverand the Port of Prince Rupert). It is imperative that the Port enhance its infrastructure to meetthe needs of carriers and shippers. The proposed Terminal 4 Pier Modernization Project willenhance the Port’s efficiency by allowing the Port to handle larger, more efficient and more costeffective vessels (such as 13,000+ TEU containerships). The ability to accommodate thesevessels will enable the Port to retain and grow the employment, income and taxes associated withcontainer terminal operations. If the project is not undertaken, these jobs (and the relatedbeneficial economic impacts) could be shifted to ports in British Columbia, Canada.

The Port of Tacoma updated the economic impact analysis2 in 2014, based on data forcalendar year 2013. In 2013, intermodal activity accounted for 58.3 percent of the totalthroughput at Terminal 4.

JobsWith Project:Based upon the economic impact report, if the project is undertaken, there will be an

increase in jobs from 4,262 total3 jobs in 2019 to 7,328 total jobs in 2038.Without Project:If the project is not undertaken, the number of jobs in Tacoma will markedly decline due to

a diversion of jobs related to intermodal activity to ports in British Columbia, Canada:T4 pier will retain jobs associated with local/regional cargo, which are expected toincrease from 1,777 total jobs in 2019 to 3,056 total jobs in 2038;The jobs associated with intermodal activity are expected to be diverted from Tacomato ports in British Columbia. The number of jobs diverted are expected to increasefrom 2,485 total jobs in 2019 to 4,272 total jobs in 2038.

Local Spending and Business RevenueWith Project:Based upon the economic impact report, if the project is undertaken, there will be an

increase in local consumption spending and business revenues from $713.0 million in 2019 to$1.3 billion in 2038. The net present value of economic activity (local consumption spending

2 Source: 2014 Economic Impact Study, prepared for the Port of Tacoma by Martin Associates3 Total jobs include direct, indirect and induced jobs.

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and business revenues) with the project is estimated at $12.7 billion (discount rate of 3percent) and $8.3 billion (discount rate of 7 percent).Without Project:

If the project is not undertaken, local consumption spending and business revenues inTacoma will markedly decline:

The economic activity (local consumption spending and business revenues)associated with local/regional cargo will be retained; this is expected to increase from$297.3 million in 2019 to $523.9 million in 2038.The economic activity associated with intermodal activity is expected to be divertedfrom Tacoma to ports in British Columbia. The economic activity (localconsumption spending and business revenues) associated with intermodal cargo willbe lost; this is expected to increase from $415.7 million in 2019 to $732.5 million in2038.

If the project is not completed, the net present value of economic activity lost atTacoma is estimated at $7.4 billion (discount rate of 3 percent) and $4.9 billion (discountrate of 7 percent).

Table 2 – Net Present Value of Benefits (in billions of 2015 dollars) (Economic Benefits)

Ladders of OpportunityThe Port of Tacoma serves as a ladder of opportunity by enabling U.S. firms and employees

in distressed counties to participate in export markets. After full import containers are unloaded,the empty container is trucked to exporters (mainly in Washington State) that fill the containerwith agricultural products, forest products and other manufactures. In 2014, approximately $827million, representing 17 percent of the containerized exports from Tacoma, originated fromdistressed counties. These export opportunities would not be available if the importcontainers were diverted to British Columbia.

With Project

DiscountRate T3/4 T3/4

Net LossTacoma

Gain atBritish

ColumbiaPorts

3.0% $12.7 $5.3 ($7.4) $7.47.0% $8.3 $3.5 ($4.9) $4.9

Without ProjectNet Present Values ($billions)

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IntroductionThe Port of Tacoma’s Terminal T3/T4 (comprising 93 acres and two berths) is a vital

component of the Port’s international container business. T3 pier was recently upgraded, but atT4, aging infrastructure threatens the cost-competitiveness, efficiency, reliability, and safety ofmarine cargo operations. The current configuration limits T4 pier to serving vessels up to 6,500TEUs; T3 pier is limited to vessels up to 9,500 TEUS. If improvements are not made to T4pier, a loss of economic activity will impact Pierce County, the state of Washington and thenation. The improvements to T4 will reconfigure and align it with T3 pier, which will enablethe simultaneous berthing, loading, and unloading of modern ultra-large container ships. Theimprovement will also provide the added structural capacity necessary for the pier toaccommodate modern era cranes.

Puget Sound Container Market Trends – Reasons for ConcernThe Puget Sound region (i.e. Tacoma and Seattle) experienced a 3.1 percent average annual

decline in full import TEUs between 2005 and 2014. During the same period, the U.S. totalcontainer volume across all ports grew by an average of 1.4 percent per year, which means thatPuget Sound ports lost market share due to the diversion of containers to ports in BritishColumbia.

Figure 1 – Puget Sound Full Containers (TEUs) 4

Imports from Asia represent approximately 96 percent of the international containersoffloaded at Puget Sound ports. The ability to export U.S. products depends on the receipt ofthese import containers, which can be re-filled with U.S. products for shipment back to Asia.The number of full container exports increased by an average of 0.8 percent per year during thisperiod (2005 to 2014). During the past five years, approximately two-thirds of import boxeswere filled with exports. However, in 2014, the volume of exports declined by 10.3 percentfrom 2013 levels, as a result of a slowdown in the world economy and diversion of importcontainers from Puget Sound ports to British Columbia ports.

4 Source: PIERS Global Container Report

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Cost-Competitive Options for U.S. Exports Depend on Import ContainersIn the Pacific Northwest, the ports and transportation infrastructure created and sized to

handle imports has generated export opportunities for local goods-producing industries. Highdensity exports such as hay, logs, agricultural and forest products and manufactured goods weighconsiderably more than import cargos, and export containers tend to load the vessel to itsdeadweight capacity preventing the vessel from being completely filled with full containers. Asa result, fewer containers of export cargo can be carried by vessels returning to Asia. Thetrade imbalance between full import and full export boxes generates an increasing volume ofempty containers, and the large number of empty ocean containers moving back to Asia throughPuget Sound ports provides a low-cost option for exporting goods.

Low-density and lightweight import cargoes, such as toys, apparel, electronic equipment,sporting goods, and shoes, tend to fill the volume of a container before they reach the maximumweight that can be carried. In order to minimize inland transport costs, cross-dock facilities nearthe port are used to reload the contents of the international containers into larger domesticcontainers. The empty international containers are then available for loading with exportcargo.

Ocean carriers can move the containers back to Asia empty, and generate no revenue,or they can offset a portion of the backhaul cost by filling the empty containers with localproducts. In the Pacific Northwest, this has created new export markets for relatively low-valued goods such as hay and other agricultural product, logs and other forest products, andmanufactured goods. Farmers, manufacturers, and other goods-producers throughoutWashington and the rest of the Pacific Northwest depend on a steady supply of empty containers,and their exports are threatened by the shift of container traffic to ports in British Columbia. Ifthe container traffics shifts from Puget Sound to British Columbia, the empty containers will notbe available to local exporters. Without empty containers generated by imports, many localproducts would be unable to compete with foreign producers.

Impact of Diversion of Containers to British Columbia PortsThe recent loss of container traffic moving through Puget Sound ports corresponds directly

with the growth in volume through the ports in British Columbia (Vancouver and Prince Rupert).Ports in British Columbia have experienced a dramatic increase in intermodal traffic from Asiadestined for U.S. locations. As shown in Figure 2, the volume of import intermodal trafficmoving from Western Canada to U.S. destinations jumped from 88,000 TEUs in 2005 to 522,000TEUs in 2014 (representing growth of 21.7 percent per year).

Most of these imports are destined for the U.S. Midwest (79 percent if 2014) and the U.S.Southeast (20 percent in 2014). Mercator International notes that “Puget Sound gatewayintermodal volume is highly concentrated geographically, with 83 percent destined for Chicago,Cleveland, and Minneapolis, markets which are well served through other gateway portcomplexes.” The loss of intermodal cargo bound for the U.S. Midwest, which is the key marketfor Puget Sound intermodal traffic, has been particularly devastating for Puget Sound ports.Continued losses are expected if improvements are not made to T4 pier.

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Figure 2 – Western Canada Intermodal Trends to U.S. Destinations (TEUs) 5

Mercator International LLC6 describes these trends as overshadowing future potentialgrowth at Puget Sound ports:

Intermodal container volume from and to Asia is vitally important to the Puget Soundcontainer gateway; this volume is currently at-risk due to industry trends toward theuse of larger vessels, combined with a lack of adequate container terminalinfrastructure at Tacoma to handle the larger vessels.Other competing gateway ports currently have terminals capable of efficientlyhandling multiple ULCS vessels concurrently, are actively enhancing their terminalinfrastructure, and will be well positioned to capture intermodal share from the PugetSound ports should they not invest in developing comparable capabilities for handlingULCS ships.If nothing is done to mitigate its infrastructure deficiencies, the Puget Sound gatewaycould stand to lose a significant portion of intermodal imports that currently pass thruits ports.

With Canadian ports investing millions in infrastructure to ensure that they are able toefficiently serve Ultra Large Container Ships (ULCS), the Port of Tacoma must make strategicinvestments in terminal upgrades to avoid the further loss of discretionary cargo, andassociated maritime industry jobs, which accounts for 58 percent of the volume at T4.

5 Source: Intermodal Association of North America6 Mercator International LLC, Strategies for Enhancing the Puget Sound Container Trade Gateway Final

Report, prepared for the Ports of Seattle and Tacoma, May 2014

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Container Forecast for Terminal T4Terminal T4 handled approximately 335,000 TEUs in 2014 and is expected to handle

approximately 350,000 TEUs in 2015. The forecast for TEUs is based upon a survey of carriersby the Port of Tacoma for the years from 2016 through 2018, reaching 382,500 TEUs in 2018.From 2019 through 2038, the TEU forecast is based upon an average annual growth rate of2.5 percent.7 As shown in Figure 3, container volumes are expected to grow from approximately395,000 TEUs in 2019 to approximately 705,000 TEUs in 2038.

With ProjectIf the project is undertaken (“with project” scenario), the terminal would retain the both the

local/regional cargo base and the intermodal cargo. The local/regional cargo base is projected toincrease from approximately 165,000 TEUs in 2019 to 294,000 TEUs in 2038 (annual growth of3.1 percent). The intermodal cargo base is projected to grow from 230,000 TEUs in 2019 to411,000 TEUs in 2038 (annual growth of 3.1 percent)

Figure 3 – Container Volume Impacts at Terminal T3/T4 (TEUs) - With Project

7 Mercator International projected annual container growth at up to 3.3 percent per year for the Puget Soundgateway between 2015 and 2025, if projects to accommodate ULCS are undertaken. The benefit cost analysis uses amore conservative forecast as noted above.

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Without ProjectUnder the “without project” scenario, the intermodal cargo volume would be diverted to

ports in British Columbia. The potential losses are expected to be 230,000 TEUs in 2019,growing to 411,000 TEUs by 2038 (annual growth of 3.1 percent).

Figure 4 – Container Volume Impacts at Terminal T3/T4 (TEUs) - Without Project

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Benefit Cost AssessmentThis section provides the detailed benefit-cost analysis.

Methodology and AssumptionsThe methodology for the benefit-cost analysis employs bottom-up calculations of vessel

operating costs and emissions profiles using information from several publically available datasources within the overall context of the federal guidelines for the TIGER Grant application.

The “without project” conditions evaluate the costs and emissions of vessels with capacityof 6,500 TEU, the largest currently allowed to berth at T4 pier.

The “with project” condition evaluates vessels with capacity of 13,000 TEU, which will beable to berth at T4 pier after the project has been completed. The “with project” conditions arecapable of supporting much larger vessels as well (e.g., 18,000 TEU vessels), but these largervessels are not included in the analysis.

Shipping lines are continually introducing larger vessels to take advantage of theireconomies of scale. Clarkson Research reports that container ships larger than 8,000 TEUscomprised just 5 percent of the Transpacific fleet in 2007 but now represent 42 percent of thefleet8. A 13,000 TEU vessel was chosen for the “with project” analysis in order to provide aconservative estimate of the benefits. Several shipping lines are currently using 13,000 TEUvessels for service to West Coast ports, and 10,000+ TEU vessels began calling at the Port ofTacoma in 2013.

The project, which is described in detail in the main narrative, is planned for completion bythe end of 2018 and is estimated to cost $113.0 million in 2015 dollars. The analysis period foroperations begins in 2019 and continues for 20 years through 2038.

Table 4 presents the key assumptions (operational characteristics and costs) used in theanalysis for the “without project” (6,500 TEU vessel) and “with project” conditions (13,000 TEUvessel). The transportation benefits are based upon the net transportation cost savings accruedfrom shifting from the smaller vessel (6,500 TEU) to the larger vessel (13,000 TEUs).

Fixed costsFixed costs consist of annualized capital costs (cost to acquire the vessel) and annual

operating costs. The analysis assumes that the container ships are new in 2019. The acquisitioncosts are based upon recent new builds as documented by Clarkson Research. The capital costsare annualized using a life of 20 years at a discount rate of 7 percent.

Annual operating costs consist of manning (crew costs), lubes and stores, maintenance andrepair, insurance, administration and other costs, as reported by Drewry Research.

Fixed costs are reported per voyage and per day based on a 350 day service year.

Fuel costsThe vessels are assumed to be engaged in the Trans-Pacific trade, calling ports in Asia

(China and Japan) and in West Coast North America. The roundtrip distance is estimated at12,427 nautical miles (including port calls). The vessel(s) are assumed to travel at 18 knots(which is the typical speed by container ships calling the Port of Tacoma), with an at seaschedule of 28.8 days (12,447 miles divided by 18 knots and 24 hours).

8 Clarkson Shipping Intelligence Network

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Bunker consumption patterns for each vessel (tons per day for main and auxiliary engines)are based upon data provided by Clarkson Research and by Theo E. Nottebooma and BertVernimmena,9 and by Alphaliner.10 Bunker costs are also provided by Clarkson Research for theU.S. West Coast (Los Angeles)11. Bunker prices are not reported for Seattle, but are similar tothose at Los Angeles. Port call durations (which include all port calls) are based upon currentconditions as documented by Ocean Shipping Consultants (OSC)12 for the Transpacific trade.Bunker consumption patterns at port are also provided by Clarkson Research. Fuel costs arecalculated by multiplying typical consumption patterns per day (tons of bunker per day) and bythe price per ton of bunker. As an example, the cost per day at port for the “without project”vessel is 2.8 tons of marine diesel oil (MDO) consumption per day times the cost of MDO($1,032 per ton) or $2,889 per day at port for the 6,500 TEU vessel.13

Fuel costs per voyage are calculated by multiplying the number of days at sea by the cost perday at sea and the number of days at port by the cost per day at port.

Voyage CostsThe voyage costs consist of the sum of the daily fixed costs and fuel costs applied to the

number of days at sea and at port. The cost per day at sea is estimated at $84,852 for the“without project” vessel (6,500 TEU) and $108,819 for the ”with project” vessel (13,000 TEU).

Annual Transportation Costs Savings and Emission ReductionsTables 4 and 5 present the calculations of vessel operating costs.Tables 6 through 12 present the calculations of emissions.Table 13 presents the annual net benefits associated with reduced operating costs and

reduced emissions.

Annual Transportation CostsTable 4 commences with a container forecast, beginning at current volumes for T4 and

growing annually at 3.1 percent per year through the end of the study period. This rate of growthis at the low end of the rate of growth for Pacific Northwest ports prepared by OSC for the Portof Vancouver in 2013, which ranged from 2.5 percent (low) to 4.4 percent (high).14 Containervolumes at T4 pier are expected to reach 704,000 TEUs in 2038.

9

Nottebooma and Bert Vernimmena presented in the Journal of Transport Geography.10 Source: Alphaliner Glossary, 2013.11 Bunker prices at Los Angeles track closely with bunker prices at Seattle. However, data is more readily

available for LA, so it is used as a proxy.12 Ocean Shipping Consultants (OSC) was formed in 1985 as an independent economic consultancy company,

specializing in shipping economics and port development. Among its more recent projects was a forecast ofcontainer traffic through Port Metro Vancouver, which included a comparison of ocean and inland transportationcosts for containers imported from Asia through various competitive North American ports to key inland NorthAmerican destinations.

13 The two key types of bunker fuel are 380 cst (also referred to as IFO 380, designated by its approximatekinematic viscosity reaches a maximum of 380 cst at 50 C) and marine diesel oil (MDO).

14 Source: Port Metro Vancouver Container Forecasts, Final Updated Report, July 2013 prepared by OSC forPort Metro Vancouver.

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Table 4 presents a forecast of vessel calls and the number of days at sea and at port for the“without project” vessel (6,500 TEU) and the “with project” vessel (13,000 TEU). It is assumedthat vessel service is weekly. The number of calls is assumed to be a minimum of 52 per year, ormore as calculated using the capacity of the vessel and a load factor of 90 percent. As anexample, there are estimated to be 120 calls by the “without project” vessel and 60 by the “withproject” vessel in 2038. Fewer vessels calls are needed under the “with project” conditionbecause more containers are moved per vessel call.

The annual number of days at sea and at port is calculated by multiplying the number ofcalls by the number of days at sea and at port as determined in Table 3.

Table 5 presents a forecast of annual costs at sea and at port based upon the daily cost costsmultiplied by the number of days at sea and at port. The far right column in Table 5 presents thenet savings (costs) associated with shifting from the “without project” to the ”with project”vessel. The analysis presents the cost savings (costs) in real (2015) dollars.

Annual Emissions CostsTable 6 presents a forecast of bunker consumption based upon the estimated consumption at

sea and at port for each vessel, as presented in Table 4. Emission reductions accrue due to thereduction of vessel days and bunker consumption by shifting from the “without project” vessel tothe ”with project” vessel.

The emissions generated by the “without project” and “with project” vessel (NOx, CO2,particulates, Sox and VOCs) are estimated separately in tables 8 through 12. Emissions areestimated based upon the kilograms of each pollutant per metric ton (MT) of bunker fuel asestimated by the International Maritime Organization (IMO).15 The analysis assumes thatemission production decreases at 0.5 percent annually based upon IMO’s expectation of potentialemission reduction.

Tables 8 through 12 present a valuation of emissions reductions which utilize the cost perton in federal guidance. All costs are held constant at 2015 dollars except for CO2, which isassumed to increase over time in accordance with federal guidance.

The two columns at the right of each table show the metric tons of emission reduction andthe valuation of these emission savings based upon the federal guidance.

Table 13 presents a summary of the valuation of emission reductions.

Summary Benefit-Cost ResultsTable 14 presents a summary of the annual vessel operating benefits and the benefits from

reduced emissions. It also presents the net present value of these savings (costs) at discount ratesof 3 percent and 7 percent as per federal guidance.

The benefit-cost assessment was undertaken using the federal guidance for TIGER Grantapplications. Annual benefits and costs were estimated from the initiation of construction in thefirst quarter of 2016 through the end of construction in late 2018, and for 20 years of operationsafter the improvements are operational (from 2019 through 2038).

The Terminal 4 Pier Modernization Project is estimated to cost $113.0 million in 2015dollars. Annual maintenance costs are also included in the analysis (estimated at 1.5 percent of

15 Source: Prevention of Air Pollution from Ships, Second IMO GHG Study 2009, Update of the 2000 IMOGHG Study, Final report covering Phase 1 and Phase 2, prepared in 2009, Table 3-6.

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construction cost per year). The net present value of costs (construction and annual maintenanceis estimated at $136.1 million using a discount rate of 3 percent and $127.7 million using adiscount rate of 7 percent. The net present value of benefits (discussed in greater detail below)was estimated at $1.8 billion using a discount rate of 3 percent and $975.0 million using adiscount rate of 7 percent.

The Terminal 4 Pier Modernization project has a BC ratio of 13.1 (at a 3 percent discountrate) and 7.6 (at a 7 percent discount rate).

Table 3 – Net Present Value of Benefits

Benefits and Costs 3% 7%Cost ($millions) $136.1 $127.7Benefit ($millions) $1,781.1 $975.0BC Ratio 13.1 7.6

Discount Rate

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Table 4 – “without project” and “with project” Vessel Operating Costs and Characteristics

WithoutProject With Project

Component 6,500 13,000 Calculation SourcesCapital CostNew Build Cost (millions) $68 $116 Clarkson ResearchYears of service (expected) 20 20Discount rate 7.0% 7.0%Annual Capital Cost (millions) $6.4 $10.9 Annualized capital cost at 20 years, 7%Cost per day $18,272 $31,285 Based on 350 days

Fixed Annual Operating CostAnnual Operating Costs (millions) $3.3 $4.0 Drewry, Ocean Shipping ConsultantsCost per day $9,382 $11,359 Based on 350 days

Total Annual Fixed Cost (millions) $9.7 $14.9 Sum of annual capital and operating costsApplied Number of Operational Days Per Year 350 350Total Daily Fixed Cost $27,653 $42,643 Based on 350 days

Fixed Cost per voyage $1,149,430 $1,860,325Daily fixed cost multilplied by sum of days at sea and daysat port per roundtrip voyage

Fuel CostsAt Sea

Distance (round trip) 12,427 12,427Based upon an average distance to/from ports in Chinaand Japan.

Days at sea (18 knots) 28.8 28.8 Distance divided by 18 knotsBunkersConsumption 380cst at sea (tons/day) 90.6 110.0 Theo Notteboom and Alix PartnersPrice 380cst/ton $601 $601 Clarkson ResearchCost per day $54,454 $66,113 Tons per day times price of fuelConsumption MDO at sea (tons/day) 2.8 3.0 OSCPrice MDO/ton $944 $944 Clarkson ResearchCost per day $2,644 $2,833 Tons per day times price of fuelCost per day at sea $57,098 $68,947 Sum of fuel costs per day at seaAt PortDays at port 12.8 14.9 OSCBunkersConsumption IFO at port (tons/day)Price 380cst/ton $601 $601 Clarkson ResearchCost per day $0 $0Consumption MDO at port (tons/day) 2.8 3.0 OSCPrice MDO/ton $944 $944 Clarkson ResearchCost per day $2,644 $2,833 Tons per day times price of fuelCost per day at port $2,644 $2,833 Sum of fuel costs per day at port

Fuel Cost per voyage $1,676,316 $2,025,389Fuel cost at sea times days at sea plus fuel cost at porttimes days at port

Vessel Size

Page 14 May 20, 2015

Table 4 – “without project” and “with project” Vessel Operating Costs and Characteristics (continued)

WithoutProject With Project

Component 6,500 13,000 Calculation SourcesAt seaDays 28.8 28.8Cost/day $84,752 $111,590 Sum of daily fixed and fuel costsCost per trip $2,437,936 $3,209,938 Daily cost times number of days

At portDays 12.8 14.9Cost/day $30,298 $45,476 Sum of daily fixed and fuel costsCost per trip $387,811 $675,776 Daily cost times number of days

CombinedDays 41.6 43.6Cost/day $67,983 $89,070 Sum of daily fixed and fuel costsCost per trip $2,825,746 $3,885,714 Daily cost times number of days

Capacity (TEUs) 6,500 13,00090% utilization 5,850 11,700 Estimates typical capacity at 90%

Cost per TEU per trip $483 $332 Cost per trip divided by utilized capacityCost per TEU per day $11.62 $7.61 Cost per trip divided by number of daysDifferential to existing conditions (6,500 TEU vessel) -$4.01 With project less existing conditions 90% load per TEU

Vessel Size

Page 15 May 20, 2015

Table 5 – Terminal 4 Pier Modernization Forecast of Ship Calls and Days at Sea and at Port

YearTEU

Forecast

WithoutProject(6500)

WithProject(13000)

Reductionin ShipCalls

WithoutProject(6500)

WithProject(13000)

Reductionin Days at

Sea

WithoutProject(6500)

WithProject(13000)

Reductionin Days at

Port2015 350,137 59.9 52.0 (7.9) 1,722 1,496 (225.9) 766 773 6.62016 355,389 60.8 52.0 (8.8) 1,748 1,496 (251.7) 778 773 (4.9)2017 367,827 62.9 52.0 (10.9) 1,809 1,496 (312.9) 805 773 (32.1)2018 382,540 65.4 52.0 (13.4) 1,881 1,496 (385.2) 837 773 (64.3)2019 394,399 67.4 52.0 (15.4) 1,939 1,496 (443.5) 863 773 (90.2)2020 406,625 69.5 52.0 (17.5) 1,999 1,496 (503.6) 890 773 (117.0)2021 419,230 71.7 52.0 (19.7) 2,061 1,496 (565.6) 917 773 (144.6)2022 432,227 73.9 52.0 (21.9) 2,125 1,496 (629.5) 946 773 (173.0)2023 445,626 76.2 52.0 (24.2) 2,191 1,496 (695.4) 975 773 (202.3)2024 459,440 78.5 52.0 (26.5) 2,259 1,496 (763.3) 1,005 773 (232.6)2025 473,683 81.0 52.0 (29.0) 2,329 1,496 (833.4) 1,036 773 (263.7)2026 488,367 83.5 52.0 (31.5) 2,401 1,496 (905.6) 1,069 773 (295.8)2027 503,506 86.1 52.0 (34.1) 2,476 1,496 (980.0) 1,102 773 (329.0)2028 519,115 88.7 52.0 (36.7) 2,553 1,496 (1,056.8) 1,136 773 (363.1)2029 535,207 91.5 52.0 (39.5) 2,632 1,496 (1,135.9) 1,171 773 (398.3)2030 551,799 94.3 52.0 (42.3) 2,713 1,496 (1,217.5) 1,207 773 (434.6)2031 568,905 97.2 52.0 (45.2) 2,797 1,496 (1,301.6) 1,245 773 (472.1)2032 586,541 100.3 52.0 (48.3) 2,884 1,496 (1,388.3) 1,283 773 (510.7)2033 604,723 103.4 52.0 (51.4) 2,974 1,496 (1,477.7) 1,323 773 (550.4)2034 623,470 106.6 53.3 (53.3) 3,066 1,533 (1,532.9) 1,364 792 (572.3)2035 642,797 109.9 54.9 (54.9) 3,161 1,580 (1,580.4) 1,406 816 (590.1)2036 662,724 113.3 56.6 (56.6) 3,259 1,629 (1,629.4) 1,450 842 (608.3)2037 683,269 116.8 58.4 (58.4) 3,360 1,680 (1,679.9) 1,495 868 (627.2)2038 704,450 120.4 60.2 (60.2) 3,464 1,732 (1,732.0) 1,541 895 (646.6)

Number of Ship Calls/Year Number of Days at Sea/Year Number of Days at Port/Year

Page 16 May 20, 2015

Table 6 – Terminal 4 Pier Modernization Forecast of Annual Cost at Sea and at Port

Year

WithoutProject(6500)

WithProject(13000)

Reduction inCost at Sea

WithoutProject(6500)

WithProject(13000)

Reduction inCost at Port

WithoutProject(6500)

With Project(13000)

Reduction inCost at Port

2015 $145.9 $166.9 $21.0 $23.2 $35.1 $11.9 $169.1 $202.1 $32.92016 $148.1 $166.9 $18.8 $23.6 $35.1 $11.6 $171.7 $202.1 $30.42017 $153.3 $166.9 $13.6 $24.4 $35.1 $10.8 $177.7 $202.1 $24.42018 $159.4 $166.9 $7.5 $25.4 $35.1 $9.8 $184.8 $202.1 $17.32019 $164.4 $166.9 $2.6 $26.1 $35.1 $9.0 $190.5 $202.1 $11.52020 $169.5 $166.9 -$2.5 $27.0 $35.1 $8.2 $196.4 $202.1 $5.62021 $174.7 $166.9 -$7.8 $27.8 $35.1 $7.3 $202.5 $202.1 -$0.42022 $180.1 $166.9 -$13.2 $28.7 $35.1 $6.5 $208.8 $202.1 -$6.72023 $185.7 $166.9 -$18.8 $29.5 $35.1 $5.6 $215.3 $202.1 -$13.22024 $191.5 $166.9 -$24.6 $30.5 $35.1 $4.7 $221.9 $202.1 -$19.92025 $197.4 $166.9 -$30.5 $31.4 $35.1 $3.7 $228.8 $202.1 -$26.72026 $203.5 $166.9 -$36.6 $32.4 $35.1 $2.8 $235.9 $202.1 -$33.82027 $209.8 $166.9 -$42.9 $33.4 $35.1 $1.8 $243.2 $202.1 -$41.22028 $216.3 $166.9 -$49.4 $34.4 $35.1 $0.7 $250.7 $202.1 -$48.72029 $223.0 $166.9 -$56.1 $35.5 $35.1 -$0.3 $258.5 $202.1 -$56.52030 $230.0 $166.9 -$63.0 $36.6 $35.1 -$1.4 $266.5 $202.1 -$64.52031 $237.1 $166.9 -$70.2 $37.7 $35.1 -$2.6 $274.8 $202.1 -$72.72032 $244.4 $166.9 -$77.5 $38.9 $35.1 -$3.7 $283.3 $202.1 -$81.32033 $252.0 $166.9 -$85.1 $40.1 $35.1 -$4.9 $292.1 $202.1 -$90.02034 $259.8 $171.1 -$88.8 $41.3 $36.0 -$5.3 $301.2 $207.1 -$94.12035 $267.9 $176.4 -$91.5 $42.6 $37.1 -$5.5 $310.5 $213.5 -$97.02036 $276.2 $181.8 -$94.4 $43.9 $38.3 -$5.7 $320.1 $220.1 -$100.02037 $284.7 $187.5 -$97.3 $45.3 $39.5 -$5.8 $330.0 $226.9 -$103.12038 $293.6 $193.3 -$100.3 $46.7 $40.7 -$6.0 $340.3 $234.0 -$106.3

Cost at Port ($millions) per Year Cost at Sea/Port Combined ($millions)Cost at Sea (millions) per Year

Page 17 May 20, 2015

Table 7 – Terminal 4 Pier Modernization Forecast of Bunker Consumption at Sea and at Port

Year At Sea At Port Total At Sea At Port Total At Sea At Port Total At Sea At Port Total2015 1,722 766 2,488 160,808 2,145 162,953 1,496 773 2,269 169,026 2,318 171,3452016 1,748 778 2,525 163,220 2,177 165,397 1,496 773 2,269 169,026 2,318 171,3452017 1,809 805 2,613 168,932 2,253 171,186 1,496 773 2,269 169,026 2,318 171,3452018 1,881 837 2,718 175,690 2,344 178,033 1,496 773 2,269 169,026 2,318 171,3452019 1,939 863 2,802 181,136 2,416 183,552 1,496 773 2,269 169,026 2,318 171,3452020 1,999 890 2,889 186,751 2,491 189,243 1,496 773 2,269 169,026 2,318 171,3452021 2,061 917 2,979 192,541 2,568 195,109 1,496 773 2,269 169,026 2,318 171,3452022 2,125 946 3,071 198,509 2,648 201,157 1,496 773 2,269 169,026 2,318 171,3452023 2,191 975 3,166 204,663 2,730 207,393 1,496 773 2,269 169,026 2,318 171,3452024 2,259 1,005 3,264 211,008 2,815 213,822 1,496 773 2,269 169,026 2,318 171,3452025 2,329 1,036 3,366 217,549 2,902 220,451 1,496 773 2,269 169,026 2,318 171,3452026 2,401 1,069 3,470 224,293 2,992 227,285 1,496 773 2,269 169,026 2,318 171,3452027 2,476 1,102 3,578 231,246 3,085 234,331 1,496 773 2,269 169,026 2,318 171,3452028 2,553 1,136 3,688 238,415 3,180 241,595 1,496 773 2,269 169,026 2,318 171,3452029 2,632 1,171 3,803 245,806 3,279 249,084 1,496 773 2,269 169,026 2,318 171,3452030 2,713 1,207 3,921 253,426 3,381 256,806 1,496 773 2,269 169,026 2,318 171,3452031 2,797 1,245 4,042 261,282 3,485 264,767 1,496 773 2,269 169,026 2,318 171,3452032 2,884 1,283 4,168 269,381 3,593 272,975 1,496 773 2,269 169,026 2,318 171,3452033 2,974 1,323 4,297 277,732 3,705 281,437 1,496 773 2,269 169,026 2,318 171,3452034 3,066 1,364 4,430 286,342 3,820 290,162 1,533 792 2,325 173,213 2,376 175,5892035 3,161 1,406 4,567 295,219 3,938 299,157 1,580 816 2,397 178,583 2,449 181,0322036 3,259 1,450 4,709 304,370 4,060 308,431 1,629 842 2,471 184,119 2,525 186,6442037 3,360 1,495 4,855 313,806 4,186 317,992 1,680 868 2,548 189,827 2,603 192,4302038 3,464 1,541 5,005 323,534 4,316 327,850 1,732 895 2,627 195,711 2,684 198,395

Without Project Case (6500 TEU)Bunker Consumption (MT) per year

With Project Case (13000 TEU)Number of Days Bunker Consumption (MT) per yearNumber of Days

Page 18 May 20, 2015

Table 8 – Terminal 4 Pier Modernization Forecast of NOx Emissions

YearNOXkgperMT Bunker (MTs) NOXMTs Value ($mils) Bunker (MTs) NOXMTs Value ($mils) Bunker (MTs) Value ($mils)

2015 53.8 162,953 8,767 $69.8 171,345 9,218 $73.4 451 $3.62016 53.5 165,397 8,854 $70.5 171,345 9,172 $73.1 318 $2.52017 53.3 171,186 9,118 $72.6 171,345 9,126 $72.7 8 $0.12018 53.0 178,033 9,435 $75.2 171,345 9,081 $72.3 (354) -$2.82019 52.7 183,552 9,679 $77.1 171,345 9,035 $72.0 (644) -$5.12020 52.5 189,243 9,929 $79.1 171,345 8,990 $71.6 (939) -$7.52021 52.2 195,109 10,186 $81.1 171,345 8,945 $71.3 (1,241) -$9.92022 51.9 201,157 10,449 $83.2 171,345 8,900 $70.9 (1,549) -$12.32023 51.7 207,393 10,719 $85.4 171,345 8,856 $70.5 (1,863) -$14.82024 51.4 213,822 10,996 $87.6 171,345 8,812 $70.2 (2,184) -$17.42025 51.2 220,451 11,280 $89.9 171,345 8,767 $69.8 (2,513) -$20.02026 50.9 227,285 11,572 $92.2 171,345 8,724 $69.5 (2,848) -$22.72027 50.7 234,331 11,871 $94.6 171,345 8,680 $69.1 (3,191) -$25.42028 50.4 241,595 12,178 $97.0 171,345 8,637 $68.8 (3,541) -$28.22029 50.2 249,084 12,492 $99.5 171,345 8,593 $68.5 (3,899) -$31.12030 49.9 256,806 12,815 $102.1 171,345 8,550 $68.1 (4,265) -$34.02031 49.7 264,767 13,146 $104.7 171,345 8,508 $67.8 (4,639) -$36.92032 49.4 272,975 13,486 $107.4 171,345 8,465 $67.4 (5,021) -$40.02033 49.2 281,437 13,835 $110.2 171,345 8,423 $67.1 (5,412) -$43.12034 48.9 290,162 14,192 $113.0 175,589 8,588 $68.4 (5,604) -$44.62035 48.7 299,157 14,559 $116.0 181,032 8,810 $70.2 (5,749) -$45.82036 48.4 308,431 14,935 $119.0 186,644 9,038 $72.0 (5,897) -$47.02037 48.2 317,992 15,321 $122.0 192,430 9,272 $73.9 (6,050) -$48.22038 47.9 327,850 15,717 $125.2 198,395 9,511 $75.8 (6,206) -$49.4

NOXEmissionsWithout Project (6500 TEU) With Project (13000 TEU) Reduction/Savings

Page 19 May 20, 2015

Table 9 – Terminal 4 Pier Modernization Forecast of CO2 Emissions

Year kg perMT $ perMT Bunker (MTs) CO2 MTs Value ($mils) Bunker (MTs) CO2 MTs Value ($mils) Bunker (MTs) Value ($mils)2015 3,007.0 $23.80 162,953 489,995 $11.7 171,345 515,228 $12.3 25,233 $0.62016 2,991.9 $24.30 165,397 494,858 $12.0 171,345 512,652 $12.5 17,794 $0.42017 2,977.0 $24.80 171,186 509,616 $12.6 171,345 510,088 $12.7 472 $0.02018 2,962.1 $25.30 178,033 527,351 $13.3 171,345 507,538 $12.8 (19,813) -$0.52019 2,947.3 $25.80 183,552 540,980 $14.0 171,345 505,000 $13.0 (35,980) -$0.92020 2,932.5 $26.30 189,243 554,962 $14.6 171,345 502,475 $13.2 (52,486) -$1.42021 2,917.9 $27.00 195,109 569,305 $15.4 171,345 499,963 $13.5 (69,342) -$1.92022 2,903.3 $27.60 201,157 584,018 $16.1 171,345 497,463 $13.7 (86,555) -$2.42023 2,888.8 $28.30 207,393 599,112 $17.0 171,345 494,976 $14.0 (104,137) -$2.92024 2,874.3 $28.90 213,822 614,596 $17.8 171,345 492,501 $14.2 (122,096) -$3.52025 2,860.0 $29.60 220,451 630,481 $18.7 171,345 490,038 $14.5 (140,442) -$4.22026 2,845.7 $30.20 227,285 646,776 $19.5 171,345 487,588 $14.7 (159,187) -$4.82027 2,831.4 $30.90 234,331 663,491 $20.5 171,345 485,150 $15.0 (178,341) -$5.52028 2,817.3 $31.50 241,595 680,639 $21.4 171,345 482,725 $15.2 (197,915) -$6.22029 2,803.2 $32.10 249,084 698,230 $22.4 171,345 480,311 $15.4 (217,920) -$7.02030 2,789.2 $32.80 256,806 716,276 $23.5 171,345 477,909 $15.7 (238,367) -$7.82031 2,775.2 $33.40 264,767 734,788 $24.5 171,345 475,520 $15.9 (259,269) -$8.72032 2,761.3 $34.10 272,975 753,779 $25.7 171,345 473,142 $16.1 (280,637) -$9.62033 2,747.5 $34.70 281,437 773,260 $26.8 171,345 470,776 $16.3 (302,484) -$10.52034 2,733.8 $35.40 290,162 793,245 $28.1 175,589 480,025 $17.0 (313,220) -$11.12035 2,720.1 $36.00 299,157 813,747 $29.3 181,032 492,432 $17.7 (321,315) -$11.62036 2,706.5 $36.70 308,431 834,778 $30.6 186,644 505,158 $18.5 (329,620) -$12.12037 2,693.0 $37.30 317,992 856,353 $31.9 192,430 518,214 $19.3 (338,139) -$12.62038 2,679.5 $37.90 327,850 878,485 $33.3 198,395 531,608 $20.1 (346,878) -$13.1

CO2 EmissionsWithout Project (6500 TEU)CO2 Emissions With Project (13000 TEU) Reduction/Savings

Page 20 May 20, 2015

Table 10 – Terminal 4 Pier Modernization Forecast of Particulate Emissions

YearP kg perMT Bunker (MTs) P MTs Value ($mils) Bunker (MTs) P MTs Value ($mils) MTs Value ($mils)

2015 1.06 162,953 172 $62.7 171,345 181 $66.0 9 $3.22016 1.05 165,397 174 $63.4 171,345 180 $65.7 6 $2.32017 1.05 171,186 179 $65.3 171,345 179 $65.3 0 $0.12018 1.04 178,033 185 $67.5 171,345 178 $65.0 (7) -$2.52019 1.04 183,552 190 $69.3 171,345 177 $64.7 (13) -$4.62020 1.03 189,243 195 $71.1 171,345 177 $64.3 (18) -$6.72021 1.03 195,109 200 $72.9 171,345 176 $64.0 (24) -$8.92022 1.02 201,157 205 $74.8 171,345 175 $63.7 (30) -$11.12023 1.02 207,393 211 $76.7 171,345 174 $63.4 (37) -$13.32024 1.01 213,822 216 $78.7 171,345 173 $63.1 (43) -$15.62025 1.01 220,451 222 $80.7 171,345 172 $62.8 (49) -$18.02026 1.00 227,285 227 $82.8 171,345 171 $62.4 (56) -$20.42027 1.00 234,331 233 $85.0 171,345 171 $62.1 (63) -$22.82028 0.99 241,595 239 $87.2 171,345 170 $61.8 (70) -$25.32029 0.99 249,084 245 $89.4 171,345 169 $61.5 (77) -$27.92030 0.98 256,806 252 $91.7 171,345 168 $61.2 (84) -$30.52031 0.98 264,767 258 $94.1 171,345 167 $60.9 (91) -$33.22032 0.97 272,975 265 $96.5 171,345 166 $60.6 (99) -$35.92033 0.97 281,437 272 $99.0 171,345 165 $60.3 (106) -$38.72034 0.96 290,162 279 $101.6 175,589 169 $61.5 (110) -$40.12035 0.96 299,157 286 $104.2 181,032 173 $63.1 (113) -$41.12036 0.95 308,431 293 $106.9 186,644 178 $64.7 (116) -$42.22037 0.95 317,992 301 $109.7 192,430 182 $66.4 (119) -$43.32038 0.94 327,850 309 $112.5 198,395 187 $68.1 (122) -$44.4

ParticulatesWithout Project (6500 TEU) With Project (13000 TEU) Reduction/Savings

Page 21 May 20, 2015

Table 11 – Terminal 4 Pier Modernization Forecast of SOx Emissions

YearSOX kg per

MT Bunker (MTs) SOXMTs Value ($mils) Bunker (MTs) SOXMTs Value ($mils) MTs Value ($mils)2015 9.61 162,953 1,565 $73.7 171,345 1,646 $77.5 81 $3.82016 9.56 165,397 1,581 $74.4 171,345 1,638 $77.1 57 $2.72017 9.51 171,186 1,628 $76.7 171,345 1,630 $76.7 2 $0.12018 9.46 178,033 1,685 $79.3 171,345 1,622 $76.3 (63) -$3.02019 9.42 183,552 1,728 $81.4 171,345 1,613 $76.0 (115) -$5.42020 9.37 189,243 1,773 $83.5 171,345 1,605 $75.6 (168) -$7.92021 9.32 195,109 1,819 $85.6 171,345 1,597 $75.2 (222) -$10.42022 9.28 201,157 1,866 $87.8 171,345 1,589 $74.8 (277) -$13.02023 9.23 207,393 1,914 $90.1 171,345 1,581 $74.5 (333) -$15.72024 9.18 213,822 1,964 $92.4 171,345 1,573 $74.1 (390) -$18.42025 9.14 220,451 2,014 $94.8 171,345 1,566 $73.7 (449) -$21.12026 9.09 227,285 2,066 $97.3 171,345 1,558 $73.3 (509) -$23.92027 9.05 234,331 2,120 $99.8 171,345 1,550 $73.0 (570) -$26.82028 9.00 241,595 2,175 $102.4 171,345 1,542 $72.6 (632) -$29.82029 8.96 249,084 2,231 $105.0 171,345 1,535 $72.2 (696) -$32.82030 8.91 256,806 2,288 $107.7 171,345 1,527 $71.9 (762) -$35.92031 8.87 264,767 2,348 $110.5 171,345 1,519 $71.5 (828) -$39.02032 8.82 272,975 2,408 $113.4 171,345 1,512 $71.2 (897) -$42.22033 8.78 281,437 2,470 $116.3 171,345 1,504 $70.8 (966) -$45.52034 8.73 290,162 2,534 $119.3 175,589 1,534 $72.2 (1,001) -$47.12035 8.69 299,157 2,600 $122.4 181,032 1,573 $74.1 (1,027) -$48.32036 8.65 308,431 2,667 $125.6 186,644 1,614 $76.0 (1,053) -$49.62037 8.60 317,992 2,736 $128.8 192,430 1,656 $77.9 (1,080) -$50.92038 8.56 327,850 2,807 $132.1 198,395 1,698 $80.0 (1,108) -$52.2

Without Project (6500 TEU) With Project (13000 TEU) Reduction/SavingsSOX

Page 22 May 20, 2015

Table 12 – Terminal 4 Pier Modernization Forecast of VOCs Emissions

YearVOC kgperMT Bunker (MTs) VOCMTs Value ($mils) Bunker (MTs) VOCMTs Value ($mils) MTs Value ($mils)

2015 2.31 162,953 376 $0.8 171,345 395 $0.8 19 $0.02016 2.29 165,397 379 $0.8 171,345 393 $0.8 14 $0.02017 2.28 171,186 391 $0.8 171,345 391 $0.8 0 $0.02018 2.27 178,033 404 $0.8 171,345 389 $0.8 (15) $0.02019 2.26 183,552 415 $0.8 171,345 387 $0.8 (28) -$0.12020 2.25 189,243 426 $0.9 171,345 385 $0.8 (40) -$0.12021 2.24 195,109 437 $0.9 171,345 383 $0.8 (53) -$0.12022 2.23 201,157 448 $0.9 171,345 381 $0.8 (66) -$0.12023 2.22 207,393 459 $0.9 171,345 380 $0.8 (80) -$0.22024 2.20 213,822 471 $1.0 171,345 378 $0.8 (94) -$0.22025 2.19 220,451 483 $1.0 171,345 376 $0.8 (108) -$0.22026 2.18 227,285 496 $1.0 171,345 374 $0.8 (122) -$0.22027 2.17 234,331 509 $1.0 171,345 372 $0.8 (137) -$0.32028 2.16 241,595 522 $1.1 171,345 370 $0.7 (152) -$0.32029 2.15 249,084 535 $1.1 171,345 368 $0.7 (167) -$0.32030 2.14 256,806 549 $1.1 171,345 366 $0.7 (183) -$0.42031 2.13 264,767 563 $1.1 171,345 365 $0.7 (199) -$0.42032 2.12 272,975 578 $1.2 171,345 363 $0.7 (215) -$0.42033 2.11 281,437 593 $1.2 171,345 361 $0.7 (232) -$0.52034 2.10 290,162 608 $1.2 175,589 368 $0.7 (240) -$0.52035 2.09 299,157 624 $1.3 181,032 378 $0.8 (246) -$0.52036 2.08 308,431 640 $1.3 186,644 387 $0.8 (253) -$0.52037 2.06 317,992 657 $1.3 192,430 397 $0.8 (259) -$0.52038 2.05 327,850 674 $1.4 198,395 408 $0.8 (266) -$0.5

VOCsWithout Project (6500 TEU) With Project (13000 TEU) Reduction/Savings

Page 23 May 20, 2015

Table 13 – Terminal 4 Pier Modernization Project Summary of Emission Reductions

Year Nox CO2 PM Sox VOC Total2015 $3.6 $0.6 $3.2 $3.8 $0.0 $11.32016 $2.5 $0.4 $2.3 $2.7 $0.0 $8.02017 $0.1 $0.0 $0.1 $0.1 $0.0 $0.22018 -$2.8 -$0.5 -$2.5 -$3.0 $0.0 -$8.92019 -$5.1 -$0.9 -$4.6 -$5.4 -$0.1 -$16.12020 -$7.5 -$1.4 -$6.7 -$7.9 -$0.1 -$23.62021 -$9.9 -$1.9 -$8.9 -$10.4 -$0.1 -$31.22022 -$12.3 -$2.4 -$11.1 -$13.0 -$0.1 -$39.02023 -$14.8 -$2.9 -$13.3 -$15.7 -$0.2 -$46.92024 -$17.4 -$3.5 -$15.6 -$18.4 -$0.2 -$55.12025 -$20.0 -$4.2 -$18.0 -$21.1 -$0.2 -$63.52026 -$22.7 -$4.8 -$20.4 -$23.9 -$0.2 -$72.12027 -$25.4 -$5.5 -$22.8 -$26.8 -$0.3 -$80.92028 -$28.2 -$6.2 -$25.3 -$29.8 -$0.3 -$89.92029 -$31.1 -$7.0 -$27.9 -$32.8 -$0.3 -$99.12030 -$34.0 -$7.8 -$30.5 -$35.9 -$0.4 -$108.52031 -$36.9 -$8.7 -$33.2 -$39.0 -$0.4 -$118.22032 -$40.0 -$9.6 -$35.9 -$42.2 -$0.4 -$128.12033 -$43.1 -$10.5 -$38.7 -$45.5 -$0.5 -$138.32034 -$44.6 -$11.1 -$40.1 -$47.1 -$0.5 -$143.42035 -$45.8 -$11.6 -$41.1 -$48.3 -$0.5 -$147.32036 -$47.0 -$12.1 -$42.2 -$49.6 -$0.5 -$151.42037 -$48.2 -$12.6 -$43.3 -$50.9 -$0.5 -$155.52038 -$49.4 -$13.1 -$44.4 -$52.2 -$0.5 -$159.7

Emissions Reduction (savings in $millions)

Page 24 May 20, 2015

Table 14 – Terminal 4 Pier Modernization Project Net Present Value of Benefits

Value of Emission Reduction

YearConstruction

CostAnnual O&M

Costs TotalReduced VesselOperating Costs

ReducedOcean

Emissions TotalNet Benefit(Costs)

2015 113.0 - 113.0 - - - (113)2016 - - - - - -2017 - - - - - -2018 - - - - - -2019 1.7 1.7 (12) 16 5 32020 1.7 1.7 (6) 24 18 162021 1.7 1.7 0 31 32 302022 1.7 1.7 7 39 46 442023 1.7 1.7 13 47 60 582024 1.7 1.7 20 55 75 732025 1.7 1.7 27 63 90 892026 1.7 1.7 34 72 106 1042027 1.7 1.7 41 81 122 1202028 1.7 1.7 49 90 139 1372029 1.7 1.7 56 99 156 1542030 1.7 1.7 64 109 173 1712031 1.7 1.7 73 118 191 1892032 1.7 1.7 81 128 209 2082033 1.7 1.7 90 138 228 2272034 1.7 1.7 94 143 238 2362035 1.7 1.7 97 147 244 2432036 1.7 1.7 100 151 251 2502037 1.7 1.7 103 155 259 2572038 1.7 1.7 106 160 266 264

O&M Annual Cost% of construction cost 1.5%

Net Present ValueDiscount Rate

3.0% $113.0 $23.1 $136.1 $617.7 $1,163.4 $1,781.1 $1,645.07.0% $113.0 $14.7 $127.7 $321.5 $653.5 $975.0 $847.4

Cost Benefit

Page 25 May 20, 2015

Economic ImpactsThis section presents estimates of the economic impacts during construction (short-term)

and operations (long-term).

Short-term Construction ImpactsThe construction project is expected to begin in 2016 and be completed in 2018. The

phasing of construction is presented in Table 15.Using federal guidance for construction impacts ($76,900 per job-year); the Terminal 4 Pier

Modernization Project will create an estimated 1,469 job-years, with 522 jobs occurring in 2016,763 jobs occurring in 2017 and 185 jobs occurring in 2018.

An alternate estimate, based on the IMPLAN model, provides an estimate of 2,061 jobs,with 740 jobs occurring in 2016, 1,067 jobs occurring in 2017 and 255 jobs occurring in 2018.

Table 15 – Economic Impacts from Construction

Source: Federal Guidance for TIGER Grants, IMPLAN model

Economic Impacts from OperationsBST Associates used data from the 2014 Economic Impact Study, prepared for the Port of

Tacoma by Martin Associates. The economic impacts in this analysis are defined as follows:Jobs

Direct jobs are those jobs created by marine cargo activity at the Terminal T3/T4,including jobs associated with the firms direct cargo handling and vessel services,which includes trucking companies, terminal operators, stevedores, members of theInternational Longshore and Warehouse Union (ILWU), customhouse brokers, vesselagents, pilots, and tug assist companies. Under the “with project” scenario, directjobs are those that would exist if activity at the Terminal T3/T4 were improved..Under the “without project” scenario, intermodal cargo would be diverted to BritishColumbia (Canada), resulting in a loss of direct jobs created by marine cargo activityat the Terminal T3/T4.Indirect jobs are based on actual local purchase patterns of the directly dependentfirms, and occur with such industries as utilities, office supplies, contract serviceproviders, maintenance and repair, and construction. These are jobs createdthroughout the region as a result of purchases for goods and services by the firmsdirectly impacted by Terminal T3/T4 intermodal activity that would be lost to

Category 2016 2017 2018 TotalProject spending 40,157,000$ 58,646,000$ 14,197,000$ 113,000,000$$/job guidance 76,900$ 76,900$ 76,900$Jobs based on guidance 522 763 185 1,469

IMPLAN resultsDirect 338 488 117 942Indirect 143 206 49 399Induced 259 373 89 721Total 740 1,067 255 2,061

Page 26 May 20, 2015

Canada, including the tenants, terminal operators and the firms providing services tothe cargo and vessel operations. Total jobs are the sum of direct, indirect and inducedjobs.Induced jobs are jobs with grocery stores, restaurants, health care providers, retailstores, local housing/construction industry, and transportation services, as well aswith wholesalers providing the goods to the retailers. These jobs are based on thelocal purchase patterns of residents of Pierce County. These are jobs created inWashington State by purchases of goods and services by those individuals directlyemployed by the activity at Terminal T3/T4 associated with the intermodal cargo thatwould potentially be lost to Canada.

Business revenue consists of total business receipts by firms providing services in support ofthe intermodal marine cargo activity at Terminal T3/T4. Local purchases for goods and servicesmade by the directly impacted firms are also measured. These local purchases by the dependentfirms create the indirect impacts.

Economic Impact - JobsTable 16 shows the economic impacts associated for both “with project” and “without

project” conditions. Under the “With Project” Scenario, T4 pier is improved and the jobs are allretained and increased in Tacoma. Under the “Without Project” Scenario, T4 pier is notimproved. Jobs associated with local/regional cargo are retained at significantly lower levels.Jobs associated with intermodal traffic are lost at Tacoma and captured at British Columbiaports.

Jobs represent total jobs (direct, indirect and induced) based upon 10.9 total jobs per 1,000TEUs in 201316. Due to increased productivity and decreases in multiplier effects overtime, thejob impacts are assumed to decrease by -0.2 percent per year, reaching 10.4 total jobs per 1,000TEUs in 2038.

16 Martin Associates, The 2013 Economic Impact of the Port of Tacoma, September 23. 2014

Page 27 May 20, 2015

Table 16 – Total Job Impacts Associated of With and Without Project Scenarios

Source: BST Associates using the results of the Port ofTacoma 2013 Economic Impact Study prepared by MartinAssociates in 2014.

Economic Impact – Business Revenue and Local ConsumptionThe sum of the direct business revenue to the firms providing the services to T4 plus the

additional local consumption expenditures by the direct and induced job holders associated withthe cargo that would be lost to Canada, is used as a proxy for the impact on the U.S. domesticproduct should the required renovations of T4 pier not be undertaken (“Without Project”scenario).

The direct business revenue and the re-spending and local consumption impact are truemeasures of economic contribution to the regional and national economies of the current andprojected Terminal T4 activity that would be lost to Canada if the improvements to T4 pier arenot undertaken. Table 17 presents estimates of the annual business revenues and localconsumption under “With Project” and “Without Project” scenarios. Under the “With Project”scenario, business revenues and local consumption spending increases from approximately$713.0 million in 2019 to $1.3 billion in 2038. Under the “Without Project” scenario, businessrevenues and local consumption spending is much smaller because the intermodal cargo is

With Project

Year T4 T4Net LossTacoma

Gain atBritish

ColumbiaPorts

20152016201720182019 4,262 1,777 (2,485) 2,4852020 4,385 1,829 (2,556) 2,5562021 4,512 1,881 (2,630) 2,6302022 4,643 1,936 (2,707) 2,7072023 4,777 1,992 (2,785) 2,7852024 4,915 2,050 (2,866) 2,8662025 5,057 2,109 (2,948) 2,9482026 5,204 2,170 (3,034) 3,0342027 5,354 2,233 (3,122) 3,1222028 5,509 2,297 (3,212) 3,2122029 5,669 2,364 (3,305) 3,3052030 5,833 2,432 (3,400) 3,4002031 6,001 2,503 (3,499) 3,4992032 6,175 2,575 (3,600) 3,6002033 6,354 2,650 (3,704) 3,7042034 6,538 2,726 (3,811) 3,8112035 6,727 2,805 (3,922) 3,9222036 6,922 2,886 (4,035) 4,0352037 7,122 2,970 (4,152) 4,1522038 7,328 3,056 (4,272) 4,272

Without Project

Page 28 May 20, 2015

shifted to Canadian ports. The losses at Tacoma increase from approximately $415.7 million in2019 to $732.5 million in 2038.

Table 17 – Business Revenue and Local Consumption Associated of With and WithoutProject Scenarios ($1,000s)

Source: BST Associates using the results of the Port of Tacoma 2013Economic Impact Study prepared by Martin Associates in 2014.

With Project

Year T4 T4Net LossTacoma

Gain atBritish

ColumbiaPorts

2015 $0 $0 $0 $02016 $0 $0 $0 $02017 $0 $0 $0 $02018 $0 $0 $0 $02019 $713,019 $297,329 ($415,690) $415,6902020 $734,589 $306,324 ($428,265) $428,2652021 $756,812 $315,591 ($441,222) $441,2222022 $779,709 $325,139 ($454,570) $454,5702023 $803,300 $334,976 ($468,324) $468,3242024 $827,606 $345,112 ($482,494) $482,4942025 $852,649 $355,554 ($497,094) $497,0942026 $878,450 $366,314 ($512,137) $512,1372027 $905,034 $377,399 ($527,635) $527,6352028 $932,424 $388,821 ($543,603) $543,6032029 $960,644 $400,589 ($560,056) $560,0562030 $989,720 $412,713 ($577,007) $577,0072031 $1,019,678 $425,206 ($594,472) $594,4722032 $1,050,544 $438,077 ($612,467) $612,4672033 $1,082,345 $451,338 ($631,007) $631,0072034 $1,115,112 $465,002 ($650,110) $650,1102035 $1,148,871 $479,079 ($669,792) $669,7922036 $1,183,655 $493,584 ($690,071) $690,0712037 $1,219,494 $508,529 ($710,965) $710,9652038 $1,256,420 $523,927 ($732,493) $732,493

Without Project

Page 29 May 20, 2015

Table 18 describes the net present value of business revenues and local consumptionassociated with the “With Project” and “Without Project” scenarios.

Under the “With Project” scenario, the net present value of business revenues and localconsumption is:

$12.7 billion in 2015 dollars (at 3 percent discount rate)$8.3 billion in 2015 dollars (at 7 percent discount rate)

Under the “Without Project” scenario, the net present value of business revenues and localconsumption, the losses are:

$7.4 billion in 2015 dollars (at 3 percent discount rate)$4.9 billion in 2015 dollars (at 7 percent discount rate)

Table 18 – Net Present Value of Business Revenue and Local Consumption Associated ofWith Project and Without Project Scenarios ($billions)

Source: BST Associates using the results of the Port of Tacoma 2013 EconomicImpact Study prepared by Martin Associates in 2014.

Ladders of OpportunityTIGER Grants represent a unique opportunity to enhance long-term employment

opportunities for all Americans by investing in projects that better connect communities tocenters of employment, education, and services, especially in economically distressed areas.Transportation projects can have dramatic impacts on opportunity in a number of ways,including:

Connect: A multimodal transportation system provides people with reliable andaffordable connections to employment, education, and other critical services.Work: Transportation projects create jobs, both in constructing projects andoperating them.Revitalize: Transportation infrastructure can provide support for healthy main streetcenters and direct more equitable business and residential developments designed tobring everyone closer to opportunities.

Ports can also provide a ladder of opportunity by enabling community access tointernational markets. Table 19 illustrates the value of containerized exports moving through thePort of Tacoma in 2014. In total, the Port’s containerized exports totaled $7.8 billion. Themajority of these exports were sourced in Washington State, accounting for $5.0 billion, or 63percent of the total. The remainder ($2.8 billion) was sourced in other states.

Washington State is one of the leading states in exports, ranking 3rd overall (behind Texasand California), with $90 billion in exports in 2014. On a per capita basis, Washington

With Project

DiscountRate T3/4 T3/4

Net LossTacoma

Gain atBritish

ColumbiaPorts

3.0% $12.7 $5.3 ($7.4) $7.47.0% $8.3 $3.5 ($4.9) $4.9

Without ProjectNet Present Values ($billions)

Page 30 May 20, 2015

exported $12,837 in 2014, which was second only to Louisiana, and was 2.5 times thenational average of $5,091 per person.17

Washington State added 107,000 export jobs between 2009 and 2014, growing from283,666 export jobs to 390,690. This level of growth was behind only Texas, and comprised 10percent of the gain in export-driven jobs in the U.S.18 See Figure 4.

Figure 5 – Washington State Export Jobs

Exports help sustain small and medium sized businesses in Washington State. In 2013,there were 12,646 companies that exported products from Washington locations. Approximately90 percent of these firms (11,365 companies) were small and medium-sized enterprises (SMEs)with fewer than 500 employees. These SMEs accounted for nearly one-quarter (24.2 percent) ofWashington's total exports of merchandise in 2013.19

Using data by county of export for Washington State, it is possible to identify the percentageof exports originating from distressed counties. As of 2014 (latest guidance available), therewere 29 counties in Washington State that were considered distressed. The methodology fordetermining if a county is distressed or not is discussed at the end of the report.

Exports from distressed counties across Washington State were valued at $827 million in2014, accounting for 17 percent of the containerized exports from Washington State movingthrough the Port of Tacoma’s container terminals. These estimates are considered conservativebecause most of the service providers (freight forwarders and other cargo service providers) arelocated in King, Snohomish and Pierce counties (which are not distressed counties) but may becoordinating shipments for firms that are located in distressed counties.

17 Based upon data provided by the International Trade Administration on exports by state and populationestimates by state provided by the US Census Bureau.

18 Source: Jobs Supported by State Exports 2014, Office of Trade and Economic Analysis, International TradeAdministration, Department of Commerce, April 9, 2015

19 Source: Washington Exports, Jobs and Foreign Investment, Office of Trade and Economic Analysis,International Trade Administration, U.S. Department of Commerce..

0%

1%

2%

3%

4%

5%

6%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2009 2010 2011 2012 2013 2014

Percen

tofU

.S.

Num

bero

fExportJob

s

Washington Percent of US

Page 31 May 20, 2015

Table 19 – Value of Containerized Exports Moving Through Port of Tacoma in 2014 byCounty ($millions)

Source: WISERTrade, Port of Tacoma, BST Associates

Figure 6 – Map of Washington State Distressed Counties

County Total Yes No County Total Yes NoClallam $99.6 $99.6 $0.0 Benton $155 $155 $0Clark $33.4 $33.4 $0.0 Chelan $69 $69 $0Cowlitz $7.5 $7.5 $0.0 Columbia $0 $0 $0Grays Harbor $8.5 $8.5 $0.0 Douglas $5 $5 $0Island $11.7 $11.7 $0.0 Franklin $10 $10 $0Jefferson $7.3 $7.3 $0.0 Grant $31 $31 $0King $2,862.0 $0.0 $2,862.0 Kittitas $120 $120 $0Kitsap $5.9 $0.0 $5.9 Okanogan $0 $0 $0Lewis $1.8 $1.8 $0.0 Pend Oreille $3 $3 $0Mason $12.7 $12.7 $0.0 Spokane $166 $166 $0Pacific $0.8 $0.8 $0.0 Walla Walla $0.0 $0.0 $0.0Pierce $280.7 $0.0 $280.7 Whitman $0.5 $0.5 $0.0Skagit $29.0 $29.0 $0.0 Yakima $56.4 $56.4 $0.0Skamania $0.3 $0.3 $0.0 Other $3.5 $0.0 $3.5Snohomish $953.0 $0.0 $953.0 Eastern WA Total $618.3 $614.8 $3.5Thurston $8.5 $0.0 $8.5Whatcom $28.6 $0.0 $28.6 Washington Total $4,970.5 $827.3 $4,142.3Other $0.9 $0.0 $0.0Western WA Total $4,352.1 $212.5 $4,138.7

DistressedDistressedEstimate inMils$ Estimate inMils$

WesternWashington EasternWashington

Page 32 May 20, 2015

Economically Distressed Counties in Washington StateThe federal definition of “economically distressed,” is based on a county having:

per capita income of 80 percent or less than the national average;an unemployment rate one percent greater than the national average for the past 24months; orUnemployment or economic adjustment problems, “special need” as determined bythe Secretary of Commerce.

The federal per capita income data used for this assessment represents 2013 figures ,and theemployment data represents March 2013 to February 2015 figures. The “special need” definitionwas clarified on by FHWA on August 24, 2009, which established that a county with businessclosures or restructuring that resulted in a sudden drop in employment greater than 1 percent ofthe county labor force in the past 12 months qualifies as economically distressed.

Specifically, if a State believes that an area that does not meet the economically distressedcriteria in section 301(a)(1) or (2) of PWEDA (42 U.S.C. 3161) relating to the area'sunemployment rate or per capita income) is nonetheless economically distressed, the State mayconsider whether such area meets the special need criteria under PWEDA by determiningwhether the area satisfies one or more of the criteria described below. An "area" may be a region,county, municipality, a smaller area within a larger community, or other geographic area. (See 42U.S.C. 3161(b)).

Actual Business Closure or RestructuringThreatened Business ClosureMilitary Base Closures or Realignments, Defense Contractor Reductions-In-Force, orDepartment of Energy Defense-Related Funding ReductionsNatural or Other Major Disasters or Emergencies

While Pierce County is not currently an economically distressed county using the criterianoted above, the County had an unemployment rate 1 percent greater than the nationalaverage for 12 of the 24 months preceding the grant application period, and currently has anunemployment rate above the state average. Additionally, reductions in force at Joint BaseLewis McChord are expected to place increased pressure on the Pierce County labor market inforthcoming years. Calculations based on the criteria above to determine which counties inWashington State

The “with project” scenario provides the opportunity for the Port of Tacoma to create jobs inPierce County and provide ladders of opportunity through export success for several counties inthe state. The “without project” scenario results in loss of jobs in Pierce County to foreign portsand reduces the opportunities for exporting businesses to be successful in foreign markets.

are available in the Economically Distressed Area Evaluation attachment.