Economic Impact Analysis for Gulfport Area of New Rice Bran

Supplier Alternative

Lorenzo Capobianco and Tami MonkUniversity of southern Mississippi

LOGISTICS, TRADE AND TRANSPORTATION SYMPOSIUMFebruary 25, 26 2014

IntroductionMississippi’s poultry sector exceeded $ 2.4 billion in sales

at the farm’s gate in 2010.Mississippi produced 757 million broilers in 2010, at a rate

of 1,441 broilers per minute.Mississippi chickens ate 9 billion pounds of feed in 2010.

(Dr Hood, Al, & Dr Peebles, 2012)Rice Bran’s average percentage inclusion in feed is around

10 to 12 percent Potential use of this product is 1 billion pounds or 450,000

MT per year This product is regionally provided by rice mills located

mainly in Louisiana, Texas and Arkansas.

Analysis of Potential International Supply Locations

FACTORS TO BE CONSIDERED

• Product Availability.

• Comparative transportation and handling needs.

• Total cost at the customer’s warehouse.

• Proximity to the market served.

• Operational aspects of both alternatives.

• Product quality.

• Ease of doing business.

Prospective CountriesThe best possible alternative is to find a supplier located in

the Caribbean and the northern coast of South America. These alternatives have to be compared to rice mills locations in the sates surrounding Mississippi with transit time restrictions.

Within the transit time of two weeks, the potential suppliers are rice mills located in Dominican Republic, Belize, Guyana and Surinam. Among these countries the one that has more probabilities of having export surplus for rice bran is Guyana.

Guyana may have a maximum of 80.000 Metric Tons per year available for exports, which is 20 pct of local demand

Cost Analysis of Alternatives

LC (Local Cost): Price per Metric Ton of the product at the mill, in the way it is currently sold, meaning this packed or in bulk, and free to be transported the customer’s warehouseIC (Imported Cost): Price per metric Ton at a particular port of entry, including all duties and port charges paid, with the container loaded on a flat truck and free to be dispatched to the customer’s warehouse.

= =

Comparative Total CostsFor LC = 230 and IC = 195

0 20 40 60 80 100 120 140 1600

50

100

150

200

250

300

COMPARATIVE COSTS

TLCTIC

TOTA

L CO

ST

Average Driving Distances

DRIVING DISTANCE IN MILES

CROWLEY TO MOBILE TO DIFFERENCE

FOREST 292 190 102

HATTIESBURG 243 100 143

WAYNESBORO 302 82 220

SEBASTOPOL 311 199 112

BROOKSVILLE 400 202 198

BAY SPRINGS 296 141 155

CANTON 275 215 60

CARTHAGE 302 216 86

LAUREL 273 115 158

SUMMIT 175 216 -41

HAZLEHURST 275 191 84

PEARL 254 191 63

JACKSON 249 191 58

VICKSBURG 236 173 63

AVERAGE 277 173

What is This in Terms of Logistics

• 3,200 40’ or 6400 TEU loads per year or 260 per

month.

• 640,000 miles round trip for truck loads

transportation within the State of Mississippi at an

average of 200 miles round trip.

• Potential new business for shipping companies

• New Back Hauling alternative for Mississippi export

industry.

Economic Impact for Gulfport

• $ 17 Million per year CIF value imports if this process could be done through Gulfport. • $ 1.5 Million per year in port related income

expenses, like THC, container storage and other fees.• $ 1.4 Million per year in inland transportation

income.• 200 new jobs between direct and indirect

related to the activity.

Following Steps

I. Deeper analysis of supply and demand issues related to the imported alternative.

II. Economic Analysis from potential customers.III. Contact different authorities that are involved in

imports to confirm feasibility and determine any type of import control.

IV. Involve present or potential freight shipping lines with Gulfport as a port of call to study potential route including Georgetown (CROWLEY, ZIM, Others)

Conclusions

There is an alternative supply to be considered.

This alternative may have an important economic impact on Gulfport.

There is still a lot of work to do in order to consider Gulfport as the landing port.

Thanks for your attention. Questions?