Brian Moench: Inland port is another of the Utah Legislature’s masterpieces in taxpayer waste

Expert analysis shows that the proposed transloading facility makes no economic sense.

(Chris Samuels | The Salt Lake Tribune) A QuayChain observation trailer stands outside the Union Pacific Intermodal hub in Salt Lake City, Thursday, June 2, 2022.

In recent years, using special ingredients of infatuation with economic growth, not doing their homework and ignoring science, facts and reality, Utah’s Legislature has concocted some real masterpieces in taxpayer waste.

Buying truckloads of hydroxychloroquine, dredging up fantasy islands on Utah Lake and pouring billions into a giant straw to suck up what’s left of Lake Powell come to mind. Now we can throw in this basket of expensive nonsense the inland port.

As an intermodal transportation and shipping hub, the port was supposed to be Utah’s 21st century economic palooza. Ever since its inception, the port has taken a beating from the public over concerns of aggravating Salt Lake Valley air pollution and its likely role as a facilitator of exporting fossil fuels and water-intensive alfalfa. Port officials then changed the narrative. Fossil fuels would no longer be shipped in and out of Salt Lake City, and port-related shipping upgrades would magically improve our air quality.

Last week state auditors further battered port cheerleaders for poor planning, lack of transparency, no-bid contracts and wasting taxpayer money, all while having nothing concrete (literally and figuratively) to show for it. But the knock-out punch came this week.

The heart of the port was to be a “transloading facility” where contents of three marine shipping containers would arrive by train, then be consolidated into two larger domestic shipping containers to be further distributed by truck, supposedly saving transportation costs for importers and emissions for Salt Lake residents.

It turns out the assumption that trains pollute less than trucks is not true. But now we know neither is the assumption of cost savings to importers, the pillar of business viability for the transloading facility.

Skepticism about the economics of the transloading facility led the Stop the Polluting Port Coalition to engage an expert to analyze the viability of the Utah Inland Port Authority’s business model. We hired Robert Leachman, Ph.D., professor at the University of California at Berkley teaching supply chain management and a national expert in logistics to do the analysis.

In his words, “The proposed facility is unlikely to capture import volumes destined to other regions.”

He explained UIPA’s aspirations of reducing transportation costs for importers by rerouting goods to Salt Lake City run up against the reality that it “foregoes the inventory economies afforded by pooling the demands of West Coast regions with demands of the inland regions. Thus for retailers operating regional distribution centers or fulfillment centers in the greater Salt Lake City area or outside the Intermountain region, the proposed facility is simply not a value proposition … The proposed facility also is unlikely to foster any significant reduction in emissions of import supply chains in the Intermountain region … Moreover, the proposed facility does not make it any easier or any more economically justifiable for importers to secure rail movement of marine containers from the San Pedro Bay Ports to Salt Lake City.”

Leachman states, “Capturing the export market at the proposed facility is problematic for different reasons … most Utah exports are high-value goods such as gold bars, semiconductors, aircraft engines and parts, medical instruments and essential oils. Such commodities are shipped via air freight, not as waterborne, containerized cargoes.”

Utah exporters capable of using the transloading facility to stuff their goods into marine containers returning to Asia are very limited, primarily agricultural goods (mostly alfalfa), corrugated scrap cardboard and specialty minerals.

The export part of this equation further suffers because imported container box volume far exceeds the volume of goods capable of export.

Leachman explains, “Ocean carriers are loath to stage and distribute marine boxes in the Intermountain region to garner relatively low-rate export shipments considering that their boxes can be sent back earlier to the Far East empty to collect another much higher-revenue import load.”

The volume of exportable goods originating far enough from Salt Lake City to use the transloading facility will be small, while for those close to Salt Lake City it will be difficult for them to recoup the cost of transloading their goods to the marine containers.

Leachman’s report is available at stopthepollutingport.org, and the message is clear. The heart of the port, the transloading facility, is destined to fail as a business proposition. Unfortunately, throwing good money after bad is all too often “the Utah Way.” It’s time for tax payers to demand UIPA be dissolved.

(Trent Nelson | The Salt Lake Tribune) Dr. Brian Moench speaks at a news conference by Stop the Polluting Port Coalition in Salt Lake City on Monday, Sept. 20, 2021.

Brian Moench, M.D., Salt Lake City, is president of Utah Physicians for a Healthy Environment.