November – December 2016 Commentary

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shipping illustration
Illustration by James Yang

Economic Development – A Bridge to Prosperity

As predevelopment work progresses on the $2.1-billion Gordie Howe International Bridge in southwest Detroit, private businesses and government planners have an opportunity to drive billions of dollars in increased trade activity by establishing a better coordinated commercial transportation network of ships, rail lines, and roads.

inside the numbers

The new bridge, to span the Detroit River from the city’s Delray area to land south of Windsor’s central business district, is scheduled to open in 2021, following four years of construction. The exact date of the opening won’t be known until planners acquire all of the more than 900 parcels of land needed for the project on both sides of the river.

As it stands, the 25 terminals along the river’s edge stretching from Detroit to Monroe are prime candidates for increased trade once the new bridge opens. That includes a boost in the number of cargo containers that come from the Far East and elsewhere through the St. Lawrence Seaway, with final destinations that include the Midwest and beyond.

Right now, the majority of cargo containers transferred from ships to rail cars at ports in Halifax and Montreal head to Chicago via a rail line that runs through Port Huron and across the state. Given that Chicago’s rail yards are located at different points throughout the city, the sequencing of cargo containers for final delivery to St. Louis or Kansas City contributes to daily traffic delays.

In Detroit, railroad operations are concentrated at Junction Yard in southwest Detroit. The four rail companies that service the region — Canadian Pacific, Canadian National, Norfolk Southern, and CSX — also operate other area rail distribution centers. By better coordinating cargo arrival and delivery between the railroads and port terminals, and by taking advantage of trucking opportunities, the region could draw increased cargo from Europe and the Far East.

“The real value of having cargo coming into a region is the ability to sequence it, conduct light assembly, or deliver it within a given radius,” says John Loftus, executive director of the Detroit Wayne County Port Authority. “For example, a majority of the cargo that comes to metro Detroit is consumed within a 50-mile radius. We have a golden opportunity to expand trade.”

Our goal is, within 20 minutes of your door, you should be able to walk to all of the neighborhood amenities that people enjoy in complete neighborhoods — transit, grocery stores with fresh produce, restaurants, retail, and parks. *

— Maurice Cox, planning director, Detroit

Because cargo delivered by rail is more expensive than cargo that arrives via large ships, Loftus argues manufacturers are starting to seek out ways to lower their transportation costs. “Rather than have large ships that enter the St. Lawrence Seaway stop at major ports at Halifax and Montreal, where quite a bit of the cargo is transferred to rail, it would be cheaper to keep that cargo on those ships for as long as possible — which gives Detroit an advantage,” Loftus says.

Nearly 19 million tons of cargo moved through Detroit area terminals here in 2015, according to the Great Lakes Seaway Partnership. Since freight traffic will continue to increase, private businesses — along with federal, state, and local leaders — should work more closely to boost trade activity and add new jobs in the region.

* From a Sept. 30, 2016 article on CNBC.com, “Building a New Detroit Means Tearing Down the Old”


Shipping – Full Steam Ahead

Legislation recently passed by the Michigan House of Representatives that would allow the Detroit Wayne County Port Authority to finance improvements of privately owned terminals should be passed by the Senate and signed into law by Gov. Rick Snyder. The measure would allow the port authority to better coordinate trade activity among some 200 acres of active terminals and vacant land along the Detroit River.

Currently, the port authority can only finance upgrades to the facilities it owns. The law is keeping the region from drawing more cargo-laden ships that utilize the St. Lawrence Seaway to deliver commodities and goods from Europe and the Far East. The cargo includes iron ore, steel, cement, sand, gravel, coal, salt, and more.

By allowing the port authority to assist cargo dock facilities with upgrades, the nonprofit agency could also work to expand the export of Michigan commodities and agricultural output such as grain, soybeans, and corn. Manufactured equipment and goods, along with products in the chemical sector, would have better access to foreign markets, as well. 

The measure, which is expected to reach Snyder’s desk by the end of the year, would also help local steel producers such as U.S. Steel and AK Steel. By providing the port authority with another tool to expand economic activity, the region and state would see increased jobs, lower shipping costs, and greater foreign trading opportunities.


Sports and Entertainment – Economic Goal

As Wayne County moves to issue bids to complete the stalled jail site at Gratiot Avenue and I-375 in downtown Detroit, a project it has a fiduciary responsibility to finalize in one capacity or another, it should be open to other proposals for the site that would improve economic activity and tax revenue. As it stands, the county is deriving no taxes from its court and jail operations — which is made worse by the fact that the justice complex is aging and in the way of an expanding downtown district.

Billionaires Dan Gilbert and Tom Gores have proposed moving the justice site and replacing it with an open-air soccer stadium; residential, hotel, and office towers; a rooftop park; and parking facilities. Possible sites for the jail relocation in Detroit include the Mound Road Correctional Facility, the former train station in southwest Detroit, and the former State of Michigan offices along the west side of the Lodge Freeway, just north of Howard Street.

Even if the county loses some money as it works to complete a modernized jail and court complex at a different site, government leaders should consider the greater good of adding jobs, stimulating the economy, and boosting tax receipts — something a private investment from Gilbert and Gores would bring.

With a surge in downtown investment since 2010, the justice complex at its current location no longer makes economic sense. Wayne County Executive Warren Evans says he’s open to working with Gilbert and Gores on relocating the facility, as long as the county doesn’t lose any money on the deal. That’s shortsighted, as the soccer project at I-375 and Gratiot is poised to generate millions of dollars of new tax revenue for decades to come.

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