government of canada, department of foreign affairs and international trade, inland ports...
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Government of Canada, Department of Foreign Affairs and Government of Canada, Department of Foreign Affairs and International Trade, Inland Ports Roundtables, February International Trade, Inland Ports Roundtables, February 20082008
Inland Ports: Perspectives for Inland Ports: Perspectives for Western CanadaWestern CanadaJean-Paul Rodrigue
Associate Professor, Dept. of Economics & Geography, Hofstra University, New York, USA
Van Horne Researcher in Transportation and Logistics, University of Calgary, Alberta, Canada
Global Supply Chains, Global ConnectionsGlobal Supply Chains, Global Connections
Global Freight DistributionGlobal Freight DistributionCommodity Chains as Agents of Added ValueCommodity Chains as Agents of Added ValueTerminals and the Continuity of Supply ChainsTerminals and the Continuity of Supply Chains
Container yard, Port of Yantian, ChinaContainer yard, Port of Yantian, China
Traffic at the 50 Largest Container Ports, 2005Traffic at the 50 Largest Container Ports, 2005
Dubai
Tacoma
Santos
Jeddah
Seattle
Salalah
Oakland
Colombo
Savannah
Melbourne
Long BeachCharleston
Nhava Sheva
Los Angeles
Hampton Roads
New York/New Jersey
Kobe
Tokyo
BusanXiamen
Ningbo
Nagoya
Manila
Dalian
Tianjin
Keelung
Yokohama
Shenzhen Shanghai
Quingdao
Singapore
Kaohsiung
Hong KongGuangzhou
Port Kalang
Ho Chi Minh
Laem Chabang
Tanjung Priok
Tanjung Pelepas
LeHavre
Hamburg
Antwerp
Valencia
Rotterdam
Barcelona
Algeciras
Felixstowe
Gioia Tauro
Bremen/Bremerhafen
Pacific Asia Europe
TEU
Less than 2 million
2 to 4 million
4 to 7 million
7 to 10 million
More than 10 million
Commodity Chains; Where Value Comes From?Commodity Chains; Where Value Comes From?
Commodity chain
Adde
d va
lue
Low
High
Manufacturing
R&D Globalization
DistributionDesign
Branding Marketing
Sales / Service
Concept Logistics
Terminals and Supply Chains; Insuring a ContinuityTerminals and Supply Chains; Insuring a Continuity
SuppliersSuppliers
Gateway
Gateway
Offshore
Hub
Offshore
Hub
Cus
tom
ers
Cus
tom
ers
BottleneckBuffer
DC DC
DC Distribution centerInland containerized goods flowInland non-containerized goods flowMaritime container flow
Inland Term
inal
Inland Term
inal
Gateway
Gateway
‘‘Last mile’Last mile’‘‘First mile’First mile’
Composition: Pallets waiting to be loaded in a Composition: Pallets waiting to be loaded in a container (APL DC - Shenzhen, China)container (APL DC - Shenzhen, China)
Interchange: Post-Panamax Containership (Le Interchange: Post-Panamax Containership (Le Havre)Havre)
Interchange: UPS Willow Springs Distribution Center Interchange: UPS Willow Springs Distribution Center (Chicago)(Chicago)
8
Decomposition: Unloading “Floor Loaded” Decomposition: Unloading “Floor Loaded” Containers and Palletizing Shipments (Antwerp)Containers and Palletizing Shipments (Antwerp)
9
Transport Terminals and Inland PortsTransport Terminals and Inland Ports
Freight TerminalsThe Setting of Inland Ports
Free Trade Zones
Translisft crane, NS Rutherford yard, PATranslisft crane, NS Rutherford yard, PA
Freight Transport Terminals: Operations and Added Freight Transport Terminals: Operations and Added ValueValue
Core Core (Operations)(Operations)
Infrastructure Modal access (dock, siding, road), unloading areas
Equipment Intermodal lifting equipment, storing equipment
Storage Yard for empty and loaded containers
Management Administration, maintenance, access (gates), information systems
AncillaryAncillary(Added Value)(Added Value)
Trade Facilitation Free trade zone, logistical services
Distribution centers
Cross-docking, warehousing, light manufacturing, temperature controlled facilities (cold chain)
Storage depot Container depot, bulk storage
Container services Washing, preparation, repair
Inland Terminals, Different Settings, Different Inland Terminals, Different Settings, Different FunctionsFunctions
PortPort
Satellite TerminalSatellite Terminal
Intermodal / Transmodal Intermodal / Transmodal FacilityFacility
Freight Distribution ClusterFreight Distribution Cluster
Profitability of Inland Terminals: Balancing Volume Profitability of Inland Terminals: Balancing Volume and Service Areaand Service Area
Gateway PortGateway Port
Inland TerminalInland Terminal
10 km
60 kmService Area
Inland corridor
High volume potential and low haul costs
(Ideal Case)
High haul costs compensated by high
volume
Low volume compensated by low
haul costs
Bad situation with high haul costs.
Limited costumers
15 km
20,000 TEU
Service Area
TEU PotentialHigh Profitability
Low Profitability
Volume
High
Low
Inland Terminal Life CycleInland Terminal Life Cycle
TrafficTraffic
Stage 1Stage 1 Stage 2Stage 2 Stage 3Stage 3
Planning Maturity DeclineGrowth
Stage 4Stage 4
Setting
Stage 5Stage 5
Subsidies / InvestmentsSubsidies / Investments
Operationsbegin
Concept
ProfitProfit
Inland Ports: Different Stages, Different ConcernsInland Ports: Different Stages, Different Concerns
Phase Characteristics
Planning Relevance and viability studies. Local support. Attraction of users and investment commitments. High risk and subsidy level.
Setting Construction of terminal and distribution facilities. First users (some can be transitional).
Growth Realization of market potential. Growth of traffic. Capture of additional users. Clustering effect and generation of added value.
Maturity Traffic stabilization. Available space filled and/or few new users. Non-commercial activities (housing). Revenue generation optimal.
Decline Change in market conditions. Departure of users. Reemergence of subsidies.
Free Trade Zones: Setting The RulesFree Trade Zones: Setting The Rules
Infrastructures High level of infrastructure, such as land, transport, office space, utilities, logistics services, business services and other facilities.
Regulations Streamlined to improve efficiency, including custom services, labor regulation and permits.
Location High accessibility location, often close to major terminal facilities such as a port, inland terminal or an airport. Location often away from conventional industry.
Trade-oriented Activities operating within the zone produce mainly or exclusively for foreign markets. Alternatively, activities distributing imported goods.
Incentives Low cost land, infrastructures, tax and duty exemptions or various subsidies.
Free Trade Zones: “Bending the Rules”Free Trade Zones: “Bending the Rules”
Custom Clearance
Done inland instead of at the gateway port.Likely faster.Receiver gets further advance notice.
Duties Not paid until the consignment is released and moved out of the FTZ.If transformation is performed in the FTZ, the duty class may change.Select the taxation regime.
Settlement If combined with Warehousing.Vendors often not paid until the freight leaves the terminal for delivery.
North American Freight Transportation: Gateways North American Freight Transportation: Gateways and Corridorsand Corridors
18Trimodal Container Terminal, Willebroek, BelgiumTrimodal Container Terminal, Willebroek, Belgium
Fitting in the Global Freight PictureFitting in the Global Freight PictureTranspacific ConnectionsTranspacific ConnectionsThe Hinterland ProblemThe Hinterland Problem
Transportation in North America: Then and Now…Transportation in North America: Then and Now…
Then Now
Fast growth and diffusion of containerization
Maturity and ubiquity
Excess capacity Running at capacity. Search for alternatives.
New standards and technology (Containerization, unit trains, double stacking, 53 footers)
Established practices. Diminishing returns.
Segmented transportation ownership and integration
Consolidation (Maritime, trucking and rail industries). Emergence of large operators.
Deregulation Governance
Two Major Transpacific Pendulum Routes Serviced Two Major Transpacific Pendulum Routes Serviced by OOCL, 2006 (The Wal-Mart Express)by OOCL, 2006 (The Wal-Mart Express)
Seattle
Oakland
Vancouver
Los Angeles
Kobe Tokyo
Pusan
Nagoya
Shekou
Qingdao
Shanghai
KaohsiungHong Kong
Singapore
Laem Chabang
Ningbo
Source: OOCL Web Site
49 Days
40 Days
Note: Paths are approximate and transit time includes port time
Northwest Express (NWX)
South China Express (SCX)
Balance of Containerized Cargo Flows along Major Balance of Containerized Cargo Flows along Major Trade Routes, 1995-2006 (in millions of TEUs)Trade Routes, 1995-2006 (in millions of TEUs)
-18
-16
-14
-12
-10
-8
-6
-4
-2
01995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006
Europe/USA
Asia/Europe
Asia/USA
Container Traffic at Major Transpacific Container Container Traffic at Major Transpacific Container Ports: Mirror Images?Ports: Mirror Images?
Kobe
Tokyo
OsakaBusan
Xiamen
Ningbo
Nagoya
Manila
Dalian
Yantian
Tianjin
Keelung
Yokohama
Shenzhen
Shanghai
Quingdao
Singapore
Kaohsiung
Hong Kong
Guangzhou
Port Kalang
Ho Chi MinhLaem Chabang
Tanjung Priok
Tanjung Pelepas
Tacoma
Fraser
Seattle
Oakland
EnsenadaSan Diego
Anchorage
Long BeachLos Angeles
Portland (OR)
Vancouver (BC)
Pacific Asia
North American West Coast
Container Traffic (2005)
TEU
Less than 2 million
2 million to 4 million
4 million to 7 million
7 million to 10 million
More than 10 million
TokaidoYellow SeaRim
Sunan Delta
Pearl River DeltaTaiwan / Fujian
Singapore San Pedro Bay
San Francisco Bay
Puget Sound
Prince Rupert
Ensenada
The Prince Rupert The Prince Rupert Equation…Equation…
■ Increase in fuel prices • Could advantage Prince
Rupert.• Fuel (bunker oil) account for
40% of operating costs for maritime shipping.
• Forces ships to slow down (10% speed drop linked with 25% reduction in fuel use).
• Transpacific crossing times become longer (1 or 2 days).
• Closer gateways thus become more attractive for shipping companies.
Prince Rupert
Gateways and the Hinterland EffectGateways and the Hinterland Effect
Efficient Inland Freight DistributionInefficient Inland Freight Distribution
Pacific AsiaPacific Asia North American West CoastNorth American West Coast
SEZ
Corridor
Main North American Trade Corridors and Main North American Trade Corridors and Metropolitan Freight CentersMetropolitan Freight Centers
Miami
Boston
Houston
Halifax
Savannah
PortlandMontreal
Gulfport
Vancouver
Baltimore
Palm Beach
Charleston
New Orleans
Philadelphia
Jacksonville
Hampton Roads
Wilmington (NC)
Wilmington (DE)
Port Everglades
New York/New Jersey
Tacoma
Fraser
Seattle
Oakland
Long BeachLos Angeles
Container Port Traffic and Ownership of Major Rail Lines, 2005
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Port Traffic in TEU (2005)
Less than 300,000
300,000 to 500,000
500,000 to 1,000,000
1,000,000 to 3,000,000
More than 3,000,000
Burlington Northern Sante Fe (BNSF)
Canadian National (CN)
Canadian Pacific (CP)
CSX Transportation (CSXT)
Ferromex (FNM)
Kansas City Southern (KCS)
Norfolk Southern (NS)
Union Pacific (UP)
Other
Perspectives for Western CanadaPerspectives for Western Canada
Inland Ports: Hype or Potential?Inland Ports: Hype or Potential?Containerization of CommoditiesContainerization of Commodities
Chassis waiting to be picked, Corwith Rail Yard, ChicagoChassis waiting to be picked, Corwith Rail Yard, Chicago
A Favorable Environment for Inland PortsA Favorable Environment for Inland Ports
Transpacific Trade
Strong growth (China effect)Containerization of supply chains.Long distance hinterland transportation.
Gateway Congestion
Limited possibility for terminal expansion.Higher port charges and lower dwell times.Problematic local and terminal gate access.
Trade Imbalances
Imbalanced shipping rates.Load centers for empties on backhauls to ports.
Regulatory Framework
Environmental constraints (Nimbyism).Labor issues.Political support (APGCI).
The Pacific Northwest: Two Main Corridors, but How The Pacific Northwest: Two Main Corridors, but How Many Inland Ports?Many Inland Ports?
Containers Handled by the Port of Vancouver, 1997-Containers Handled by the Port of Vancouver, 1997-2006 (in TEU)2006 (in TEU)
0.1
1.0
10.0
100.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Rat
io
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
Mill
ions
Loaded (inbound) Empty (inbound)
Loaded (outbound) Empty (outbound)
Loaded Ratio (Outbound / Inbound) Empties Ratio (Outbound / Inbound)
The Potential of Containerization of CommoditiesThe Potential of Containerization of Commodities
Bulk TransportBulk Transport Container TransportContainer Transport•Economies of scale.•Low utilization levels (at most 50% due to empty backhauls).•Delays for the assembly of loads.
•Flow concept; lower transshipment costs.•Its own warehouse unit.•Faster distribution (extending the realm of perishables).•Leveling the playing field.•Handle variety requirements.
EconomicsEconomics
?
•Imbalanced container shipping rates.•Rise in commodity prices.•Rise in bulk freight rates.
Maritime Freight Rates (Nominal USD per TEU), 1993-Maritime Freight Rates (Nominal USD per TEU), 1993-20072007
$0
$500
$1,000
$1,500
$2,000
$2,500
1993
-4
1994
-2
1994
-4
1995
-2
1995
-4
1996
-2
1996
-4
1997
-2
1997
-4
1998
-2
1998
-4
1999
-2
1999
-4
2000
-2
2000
-4
2001
-2
2001
-4
2002
-2
2002
-4
2003
-2
2003
-4
2004
-2
2004
-4
2005
-2
2005
-4
2006
-2
2006
-4
2007
-2
2007
-4
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Asia - US
US - Asia
Baltic Dry Index
Each System has its own Advantages …Each System has its own Advantages …
BulkBulk ContainerizedContainerized
Driving force Cost / Volume Time / Flexibility (3 times faster)
Mode of shipment Large output Small shipments
Flows Specialized Mixed
Terminals Dedicated General Container
Markets Mass Niche (spot)33
… … and Will Likely See the Emergence of a and Will Likely See the Emergence of a ComplementarityComplementarity
Bulk Commodity Chain
Containerized Commodity Chain
Consolidationcenter
PortSupplier Customer
Intermodalterminal
Containerport
PendulumServices
Point-to-Point
ComplementarityComplementarity
34
Commodities are more Containerized than Commodities are more Containerized than Expected…Expected…
US Containerized Trade, 2003
0
5,000
10,000
15,000
20,000
25,000
Total Imports Exports
Thou
sand
TE
U Food
Consumer products
Technology products
Capital equipment
Raw materials
35
Several Established Containerized Commodity Several Established Containerized Commodity Chains in Western CanadaChains in Western Canada
Main Containerized Exports, Western Canada
25%
31%
21%
5%
6%
12%Pulps, paper &paperboardAgricultural products
Lumber & wood producs
Chemical products
Waste & scrap
Other
36
Challenges for the Containerization of CommoditiesChallenges for the Containerization of Commodities
Challenge
Container preparation Pre-use cleaning (avoid contamination). Post-use cleaning. Dedicated containers?
Container loading, unloading and transloading
Bulks difficult to load horizontally. Vertical loading / unloading (equipment). Transloading issues. Source loading (integrity).
Weight Limitations to about 30 tons (40 footer). 20 footer the preferable load unit (26-28 tons).
Weight distribution Containership load (10-14 tons per TEU). Trade imbalances create mitigation strategies.
Land consumption at port terminals
Space consumption (4 times) mitigated by velocity.
Existing distribution channels
Considerable accumulated investments (modes & terminals). Established distribution practices. Inertia.
The Challenge of the Box: Can Local Communities The Challenge of the Box: Can Local Communities Capture Value?Capture Value?
Load center potential (commodities)Load center potential (commodities)Intermediacy (limited)Intermediacy (limited)
The role of public actorsThe role of public actors
Will the boxes remain empty?Will the boxes remain empty?
Container waiting to be loaded, Shenzhen, ChinaContainer waiting to be loaded, Shenzhen, China