Container traffic is the primary source of economic impact. The distribution of total economic impacts of cargo- based activity at the Georgia Ports Authority’s facilities in Savannah and Brunswick by mode of cargo indicates that containerized cargo accounts for 94 percent of the reported economic impacts. Auto/vehicle cargo accounts for 4 per- cent of the reported impacts, and breakbulk and dry bulk cargo each accounts for 1 percent of the reported impacts. Liquid bulk cargo accounts for less than 1 percent of reported impacts. The Concept of Ports Economic Impact T he total economic impact of Georgia’s deepwater ports consists of (1) direct spending by the ports industry, (2) direct spending by ports users, and (3) the secondary or indirect and induced spending—often referred to as the multiplier effects—created as direct expenditures by either the ports industry or ports users are re-spent. The ports industry is defined to include economic activity (spending) that involves the transportation of water- borne cargo and ports services, including the ports themselves, the companies engaged in deepwater transportation as well as companies that provide ship services, and companies that provide inland transportation of waterborne cargo. Ports investment (capital expenditures) for additions and/or improvements to Georgia’s deepwater ports also are in- cluded as part of the ports industry. This definition of the ports industry is identical to the definition used by the U.S. Department of Transportation, Maritime Administration in the MARAD Port Economic Impact Kit. Thus, the ports industry includes activities that take place on the vessel, at the terminal, and during the inland movement of cargo. Since the firms and enterprises that provide these activities locate in Georgia because of the existence of the ports, all of their activity (spending) can be counted as direct economic impact. Ports users are mainly manufacturers, wholesalers, distributors, and warehousing and storage firms that use the ports to transport materials and/or products. Although most users are importers and exporters, some ship materials or products to and/or from domestic locations. All of the economic activity (spending) generated by ports users whose decision to locate, remain, and/or expand in Georgia hinges on the presence of these deepwater ports can be counted as direct economic impact. But since most ports users are only partially dependent on the presence of Georgia’s deep- water ports, only a portion of their total economic activity is counted as direct economic impact. For example, firms that use Georgia’s deepwater ports due to cost advantages over other ports or other modes of transportation are only partially dependent on Georgia’s ports. Also, users that only ship a portion of their production and materials through Georgia’s deepwater ports are only partially dependent on the ports. To avoid double counting, ports users’ activity is defined to exclude their transportation expenditures associated with the waterborne cargo that is handled by Georgia’s ports industry. Secondary spending often is referred to as the multiplier effect of direct spending. There are two types of second- ary spending: indirect spending and induced spending. Indirect spending refers to the changes in inter-industry pur- chases as Georgia’s industries respond to the additional demands triggered by spending by either the ports industry or ports users. It consists of the ripples of activity that are created when the ports industry or ports users purchase goods or services from other industries located in the state. Induced spending refers to the additional demands triggered by spending by households as their income increases due to changes in production. Basically, the induced impact captures the ripples of activity that are created when households spend more due to the increases in their earnings that were generated by the direct and indirect spending. The sum of the direct, indirect, and induced economic impacts is the total economic impact, which often is ex- pressed in terms of output (sales), state GDP, income, or employment. Output is gross receipts or sales, plus or minus inventory. Total output impacts are the most inclusive, largest, measure of economic impact. Because of their size, out- put impacts typically are emphasized in economic impact studies and receive much media attention. One problem with output as a measure of economic impact, however, is that it includes the value of inputs produced by other industries, which means that there inevitably is some double counting of economic activity. The other measures of economic impact (GDP, income, and employment) are free from double counting and provide a much more realistic measure of the true economic impact of Georgia’s deepwater ports. 5
