©2008 vital economy, inc. 1 tdl cluster industry trends january 2009 vital economy alliance steve...
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©2008 ViTAL Economy, Inc.— 1 —
TDL ClusterIndustry Trends
January 2009
ViTAL Economy Alliance Steve Martin - Steve_Martin@InterVISTAS.us
Rob Beynon - Rob_Beynon@InterVISTAS.com
Industry Cluster Opportunity Analysis
Kick-off Workshop
©2008 ViTAL Economy, Inc.— 2 —
Trade and the Global Economy
Trade as a % of World GDP
Source – World Bank.
The proportion of the world economy related to trade has steadily increased in recent years.
Trade drives much of freight transportation
International Trade Total
©2008 ViTAL Economy, Inc.— 3 —
Growth of freight ton-miles
Freight ton-miles is a standard measure for comparing scale of activity. This index shows relative growth not total tons.
Freight ton-miles is a standard measure for comparing scale of activity. This index shows relative growth not total tons.
©2008 ViTAL Economy, Inc.— 4 —
Since the 1980s, Rail Rates Dropped(after adjustment for inflation)
While rail rates are generally lower, they increased in the last decade.
While rail rates are generally lower, they increased in the last decade.
©2008 ViTAL Economy, Inc.— 5 —
Inland Marine Transport Remains Important and Extensive
©2008 ViTAL Economy, Inc.— 6 —
Panama Canal Expansion
Panama Canal expansion will allow larger container ships to reach US Gulf ports from Asia, increasing the potential importance of
Mississippi waterways.
Panama Canal expansion will allow larger container ships to reach US Gulf ports from Asia, increasing the potential importance of
Mississippi waterways.
©2008 ViTAL Economy, Inc.— 7 —
Container Ships Keep Growing
©2008 ViTAL Economy, Inc.
— 8 —
Connect SIReadiness Assessment
©2008 ViTAL Economy, Inc.— 9 —
Logistics, Transportation & Distribution: Overview
Globalization and the Ten Flatteners open substantial doorways Trends to watch for include:
Logistics and transportation is an exploding global market opportunity due to shifts in supply-chain management
Work has begun on doubling the capacity of the Panama Canal — this $5.5B project will provide access to wider ships to the East Coast and Texas/Louisiana harbors to feed the Trans-Mexican-Canadian superhighway with Chinese goods
Due to capacity constraints, security risks and weather vulnerability at North American coastal ports, trans-loading/intermodal facilities enable the effective use of smaller ships via inland waterways
The NAFTA Super-highway is a venture unlike any previous highway construction project — it is actually a daisy chain of dozens of corridors and coordinated projects that are expected to stretch out for several decades, cost $100’s billions and end up radically reconfiguring not only the physical landscape of these U.S., but our political and economic landscapes as well — Kelly Taylor, 8/06 “New American”
Sources: Varied (see the rest of this Section); US Department of Commerce, Menlo Worldwide, Plunkett Research, Ltd.
©2008 ViTAL Economy, Inc.— 10 —
Key Transportation Trends
Transportation is one of the world's largest industries — sectors range from taxis to trucks to airplanes, trains, ships, barges, pipelines, warehouses and logistics services
In 2007, the U.S. Transportation Industry was about $400 billion Includes for-hire and not for-hire sectors, support & repair Transportation directly employs about 4.5 million Americans — >3% of
U.S. economy In the U.S. alone, total freight shipment volumes are expected to
increase by 70% between 1998 and 2020 Texas A&M University, analyzed traffic patterns and delays in 85 U.S.
major metropolitan areas Total annual cost of traffic congestion in these cities was $63 billion 3.7 billion hours of traffic delay and 2.3 billion gallons of fuel consumed by
delays
Well-positioned rural regions have a strategic advantage in becoming a “traffic-free” hub
Well-positioned rural regions have a strategic advantage in becoming a “traffic-free” hub
Source: U.S Bureau of Economic Analysis, U.S. Department of Transportation
©2008 ViTAL Economy, Inc.— 11 —
The World and Southern Illinois: Rail
From a regional network …
… to a North American one
SI is now the center of a rail network stretching to the Pacific, Atlantic and Gulf of Mexico SI is now the center of a rail network stretching to the Pacific, Atlantic and Gulf of Mexico
• When originally built in 1850’s, it’s goal was to connect Chicago with the Mississippi
• Modern rail is truly trans-continental, triangulating major seaports
©2008 ViTAL Economy, Inc.— 12 —
Container-On-Barge via Inland Waterways
Increasing sea container numbers, lack of U.S. truckers, cost of fuel among the factors driving containers to barges
This creates SI Mississippi and Ohio River terminal opportunities
Container on barge is developing on the Mississippi (Houston-Memphis) and will expand
Barges are less expensive because a barge can move 45 full-sized sea containers
These rivers have been key transportation systems for over 300 years
A ton of cargo can be moved 514 miles by barge on a gallon of fuel as compared to moving that same ton only 60 miles by truck or 202 miles by train
A ton of cargo can be moved 514 miles by barge on a gallon of fuel as compared to moving that same ton only 60 miles by truck or 202 miles by train
Source: Transportation for Illinois Coalition Press Release, Investment needed in Upper Mississippi-Illinois waterway for economic growth and jobs. September 15, 2006
SI centrally located on
the Mississippi & OhioRiver Systems
©2008 ViTAL Economy, Inc.— 13 —
The Rhine as a Comparison
Rhine River container traffic increased from 10,000 units in 1975 to 2.3 million units in 2003
Container barges travel as far as Switzerland
Cost-of-labor favors barge over truck; albeit somewhat slower
Like the Mississippi, the Rhinestretches from ocean ports to the
Continent’s interior
The Swiss Rhine Container Terminal
©2008 ViTAL Economy, Inc.— 14 —
SI Airports have capacity to accept large, jet aircraft & air-taxi service
Two major SI airports located near interstate highway and rail junctions, create the possibility of intermodal freight
Two major SI airports located near interstate highway and rail junctions, create the possibility of intermodal freight
Source: airnav.com
SI Has Significant Aviation Infrastructure
Southern Illinois aviation infrastructure includes: Three airports with instrument landing systems and runways over 6,000 ft Nationally acknowledged SIU School of Transportation
Including Aviation Management and Technology
Planned new Transportation Education Centre (TEC) at Southern Illinois Airport U.S. Transportation Command logistics specialist pool at Scott Air Force Base, an
SI neighbor — major “information exhaust” opportunity
AirportLargest
Runway
ILS
(Instrument Landing System)
Airframe/
Power Plant
Services
Scheduled
Passenger
Services
Mt. Vernon 6500 x 150 ft YES YES Not now
Southern Illinois 6500 x 100 ft YES YES Not now
Williamson County 8000 x 150 ft YES YES YES
©2008 ViTAL Economy, Inc.— 15 —
Warehousing & Distribution: Trade Growth Area
Transportation and warehousing continues to grow, supporting international trade
Between 2004 and 2014, the U.S. economy will add half a million transportation jobs
The number of distribution centers is increasing
A typical center has over 200,000 square feet, part of an international chain, focused on key market sectors, and offers value-added services
Distribution Centre services include: Pick & pack Consolidation Customer system order processing Returns processing Quality inspection Assembly Damaged returns management Exporting packing & order processing Bar code processing Labeling EDI services Kit assembly Sub-assembly Build to order Facility management Transportation management
SI is situated in the population centre of the U.S., near where FedEx and UPS both decided to establish their national hubs — Distribution is an investment opportunity
SI is situated in the population centre of the U.S., near where FedEx and UPS both decided to establish their national hubs — Distribution is an investment opportunity
Source: U.S. Department of Transportation
©2008 ViTAL Economy, Inc.— 16 —
Logistics: Unmet Opportunity
Growth of U.S. population for 2006 = 0.9%
California, Texas, Florida contained most of the fastest growing centers in the U.S.
Several centers within a day’s drive of SI included in 50 fastest-growing centers for 2000-2006 at growth rates of 12% to 98% (e.g., Red Stars)
Source: U.S. Census Bureau and Map Point
Note: Map shows calculated 8 hour driving time from SI
Illinois in Relationship to Nearby 50 Fastest Growing U.S. Cities
©2008 ViTAL Economy, Inc.— 17 —
Logistics, Transportation & Distribution: Implications
Dramatic reductions in shipping costs via containerization has enabled globalization of manufacturing
Distribution is conducted close to end markets — Southern Illinois is near the population center of the U.S.
124 million people reachable within 12-hour drive Distribution requires good rail and truck connections
Trade and distribution is projected to grow rapidly Will grow rapidly in the Midwest because of its central location
Southern Illinois sits on the ultimate U.S. logistics sweet-spot, the intersection of major North-South and East-West trade routes:
Will these bypass SI or will the Region be a substantial player? Through CN (was Canadian National Railway), SI can
potentially interact with three U.S. and two Canadian coasts SI aviation assets have the potential of serving as a niche market
player within a mid-America Intermodal Logistics strategy
©2008 ViTAL Economy, Inc.— 18 —
Logistics, Transportation & Distribution: Opportunities
Globalization has increased importance of transportation and logistics
SI is currently below national and state averages
CN has transformed the Illinois Central from a North-South operation to a strong East-West orientation serving three North American coasts via one railroad
SI global reach potential has significantly increased
SI has strategic geographic location especially to Eastern and Central U.S. Distribution centers favor center-of-population location Multimodal transport: Interstate/Rail/Barge
Opportunities: For multimodal/transload facilities — address 10 million TEU/year East-West deficit To attract distribution centers Range in complexity from simple distribution, to assembly and customization Explore niche-market opportunities for aviation assets
With the dramatic increase in the cost of fuel: Waterborne traffic becoming increasingly more attractive Key to keeping Illinois grains competitive in the world market Inland waterways re-opening as a major logics solution for East-West port congestion
SI infrastructure contains HUB facilities for ALL forms of transportation and distributionSI infrastructure contains HUB facilities for ALL forms of transportation and distribution
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