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Development of Logistics Infrastructures in the World and
its Impact on Latin America: Trends and Perspectives
10 April 2012
Robert West
2
Main Topics
Global Economic and Trade Outlook
Latin America, Shipping, & the Expansion
Growth in Transshipment
A word on North America
Conclusions
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2000 2002 2004 2006 2008 2010 2012 2014
Real GDP Industrial Production
(World GDP, Percent change)
The World Economy is still recovering
from the nightmare of 2008-09
Source: IHS Global Insight
Cargo trade demand reflects more volatile industrial production
Indust. Production, Percent change
Nightmare
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Source: IHS Global Insight & Halcrow
Source: Global Insight, Worley Parsons
Real GDP (% change)
The emerging markets have helped to keep the world
from falling into an even deeper recession
and are leading the recovery.
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2011
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World Advanced Countries Emerging Countries
US > Europe, Japan
Nightmare
Gap between
emerging and
advanced countries
will keep shrinking.
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NAFTA Lat Am W
Europe
E Europe Mideast,
N Afr
Sub-
Sahara
Afr
Japan Other
Asia-
Pacific
2009 2010 2011 2012 2013-20
(Real GDP, percent change)
GDP growth rate differences
affect the pace of
trade growth and volumes by trade route
Sources: IHS Global Insight, WorleyParsons, IMF, Goldman
Sachs
Geography of production / consumption is changing as emerging markets
grow 6% on average over the next decade vs. 2.3% for advanced countries.
World’s Largest
Museum
Aging
Expensive
Not much growth –
recession!
Being a museum
might be better:
• Assets with
increasing value
• Stability
• Public willing to
pay
Ship Happens…
Source: Jean-Paul Ridrigue
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15
20
25
30
35
40
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Pe
rce
tn S
ha
re
(World imports, percent of GDP)
World trade’s share of the economy
grows again after a temporary decline
Source: IHS Global Insight
Globalization trend is long-term and has not reversed or stopped
No change
This was NOT
a reversal of
globalization
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Main Topics
Global Economic and Trade Outlook
Latin America, Shipping, & the Expansion
Growth in Transshipment
A word on North America
Conclusions
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Fastest-Growing South American Importers from USA
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2009 2010 2011 2012
5.8
(Real GDP, percent change)
In Latin America,
most countries are expected to have
solid economic growth in 2012.
Source: Data from IHS Global Insight, CIA Factbook, OECD, Moody’s, Goldman Sachs, Oxford Economics, BMI
US US
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80,000,000
90,000,000
100,000,000
110,000,000
120,000,000
130,000,000
140,000,000
150,000,000
160,000,000
2008 2009 2010 2011 2012 2013 2014 2015
World TEUs now exceed the 2008 numbers.
However, the years of double digit growth
(’03, ’04, ’06) are not to be seen again.
The
Nightmare
8.8%
FULL TEUs
2008-10 0.0%
CAGR
0.0%
2010-15 6.6%
2015-30 5.0%5.4
%
2010-15 6.2%
2015-30 5.0%
33.5 m (110’)
32.3 m (106’)
12.8 m (42’)
55 m (180’)
49 m (160’)
18.3 m (60’)
12.4 m (39.5’)
15.2 m (50’)
Existing locks' maximum
vessel size: 4,400 TEU
New locks' maximum vessel size: 12,600 – 14,000 TEU
“We intend to deploy the biggest
ships as quickly as possible
once the locks are open.”
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Cost per TEU
Shanghai to Louisville KY
4000 TEU 8000 TEU
Intermodal Panama Intermodal Panama
Cost Days Cost Days Cost Days Cost Days
Ocean $1,302 13.7 $2,085 23.7 $1,155 9.8 $1,830 22.8
Inland $2,564 8.3 $1,077 4.2 $2,564 8.3 $1,077 4.2
Total $3,865 22.0 $3,162 27.9 $3,719 18.1 $2,907 27.0
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
All-Water (Current) All-Water after Expansion
4000 T
EU
8000 T
EU
On Asia-USEC, the all-water Canal route
cost falls when a larger vessel is deployed.
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For a typical Asia-USEC voyage, shifting to an
8000 TEU ship expands the market reach
of the USEC ports.
48%*
4000 TEU ship 8000 TEU ship
Assumptions
Shanghai to Louisville, KY
Canal tolls based on current rates
Owned ship, financed at current rate
Inland move by rail
61%*
*Share of the US population reachable by rail
Intermodal Advantage Canal Advantage
2015 NOW
25
0 -
0 -
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0 -
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0 -
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00
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50
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61%*
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P. CABELLO P. of SPAIN
RIO HAINA
SAN JUAN
CAUCEDO
Caribbean Transshipment Triangle
FREEPORT
COLON/MIT
KINGSTON
CARTAGENA
CUBA
The best transshipment options
are now becoming clear.
MOIN At capacity
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Moín – Limón, Costa Rica
$992 million by APM Terminals
Designed for 100% domestic cargo
only – but transshipment is possible
Concession signed in August, 2011
1.2M TEU in Year 1
It’s all about productivity
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Short Sea Shipping in MesoAmerica
will require transshipment.
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US
-PA
NA
MA
Countries
Mexico (south)
Belize
Guatemala
El Salvador
Honduras
Nicaragua
Costa Rica
Panama
Colombia
Dominican Republic
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Supply chains in Latin America need fixing.
Colombia is an example of “early” breakage
in the chain
Over 70% of GDP is in the
mountainous region
Over 80% of cargo moves by
highway
Transportation costs are
much higher than world
averages
For coal and containers,
Colombia needs an expanded
railway and highway network
An inefficient supply chain for
exports will hurt
competitiveness
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Main Topics
Global Economic and Trade Outlook
Latin America, Shipping, & the Expansion
Growth in Transshipment
A word on North America
Conclusions
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Economic outlook for U.S.
US Unemployment Rate
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
%
Nightmare
The future?
• flat
• horizontal
• unchanged
• neither worse
nor better
Source: Congressional Budget Office
Washington DC
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Unemployment is not
THE problem.
Unemployment is a symptom Consumer fear
Investment fear
U.S. Government gridlock Main street, Wall Street, and K Street: uncertainty
Weak savings
Improving exports, but not enough
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CONCLUSIONS
Stronger trade growth is with the emerging markets
North American import growth will be sluggish in 2012
Fixing supply chains in Latin America – the key to strong,
continued growth
Money is not the issue – need well-defined, meaningful projects
Transshipment will grow, as a necessity – getting ready!
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Success!!