major issues and trends facing the port and marine … · 2006-04-24 · • cover some mega-trends...

Major Issues and Trends Facing the Port and Marine Transportation Industry

Major Issues and Trends Facing the Port and Marine Transportation Industry

AAPA MTMTPCharleston, SC

4-24-06

AAPA MTMTPCharleston, SC

4-24-06

ObjectivesObjectives

• Cover Some Mega-trends• Discuss Transportation Industry Challenges• Touch on Some of the Nuts and Bolts• Assess Some of the Implications

• Cover Some Mega-trends• Discuss Transportation Industry Challenges• Touch on Some of the Nuts and Bolts• Assess Some of the Implications

Some Mega TrendsSome Mega Trends

March 21, 2006March 21, 2006

Hemispheric bulk cargo performance has been mixed over the past five years

Hemispheric bulk cargo performance has been mixed over the past five years

2000-2005 Americas' Bulk Cargo Growth

-60,000

-10,000

40,000

90,000

140,000

-4% -2% 0% 2% 4%

5 Year CAGR

5 Y

ear

Ton

nage

Cha

nge

(000

)

United StatesCanadaMexicoCaribbean BasinCentral AmericaSouth America

2000-2005 Americas' Bulk Cargo Growth

-60,000

-10,000

40,000

90,000

140,000

-4% -2% 0% 2% 4%

5 Year CAGR

5 Y

ear

Ton

nage

Cha

nge

(000

)

United StatesCanadaMexicoCaribbean BasinCentral AmericaSouth America

Note: Bubble size indicates 2005 tonnage

Mexico has lead the way in terms of growth in hemispheric container trade

Mexico has lead the way in terms of growth in hemispheric container trade

2000-2005 Americas Containerized Cargo Growth

-10,0000

10,00020,00030,00040,00050,00060,000

0% 10% 20% 30%

5 Year CAGR

5 Y

ear

Ton

nage

Cha

nge

(000

)

United StatesCanadaMexicoCaribbean BasinCentral AmericaSouth America

2000-2005 Americas Containerized Cargo Growth

-10,0000

10,00020,00030,00040,00050,00060,000

0% 10% 20% 30%

5 Year CAGR

5 Y

ear

Ton

nage

Cha

nge

(000

)

United StatesCanadaMexicoCaribbean BasinCentral AmericaSouth America

Note: Bubble size indicates 2005 tonnage

While almost all regions have contributed to overall growth in breakbulk cargoes

While almost all regions have contributed to overall growth in breakbulk cargoes

2000-2005 Americas General Cargo Growth

-1,0001,0003,0005,0007,0009,000

11,00013,000

-5% 5% 15% 25%

5 Year CAGR

5 Y

ear

Ton

nage

Cha

nge

(000

)

United StatesCanadaMexicoCaribbean BasinCentral AmericaSouth America

2000-2005 Americas General Cargo Growth

-1,0001,0003,0005,0007,0009,000

11,00013,000

-5% 5% 15% 25%

5 Year CAGR

5 Y

ear

Ton

nage

Cha

nge

(000

)

United StatesCanadaMexicoCaribbean BasinCentral AmericaSouth America

Note: Bubble size indicates 2005 tonnage

Trade Growth Will Continue to Increase the Pressure on Ports

Trade Growth Will Continue to Increase the Pressure on Ports

• At a 5% CAGR, trade doubles every 15 years

• At a 7.5% CAGR, trade doubles every 10 years

• In 2005, the major North American ports handled a reported 44+ million TEUs

• By 2010, this volume will approximate 60-65 million TEUs

• At a 5% CAGR, trade doubles every 15 years

• At a 7.5% CAGR, trade doubles every 10 years

• In 2005, the major North American ports handled a reported 44+ million TEUs

• By 2010, this volume will approximate 60-65 million TEUs

The next five years will see sustained growth across the hemisphere

The next five years will see sustained growth across the hemisphere

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

2000-2005 2005-2010

Container Dry Bulk Liquid Bulk General Total

II. Define the ChallengesII. Define the Challenges

Motor Carrier ChallengesMotor Carrier Challenges

Several factors have driven productivity gains

Several factors have driven productivity gains

Trucking

• Trailer size increased from 40’ to 53’• Truck engine and maintenance cycles lengthened• Truck engine fuel efficiency increased• Empty miles were reduced• Unionized carriers share down• Improved technology and processes

However, many of these productivity opportunities may be reaching their end

However, many of these productivity opportunities may be reaching their end

• Equipment Gains

• Fuel Efficiency Gains

• Labor Gains

Trucking

• 53’ to 57’ Unlikely

• Environmental Regulations

• Hours-of-Service Regulations

In addition to slower productivity gains, the infrastructure is reaching its capacity

InhibitorArea of Improvement

Highway infrastructure is facing significant constraints

Highway infrastructure is facing significant constraints

Percent of Peak-Period Travel at Congestion Level

1982

Percent of Peak-Period Travel at Congestion Level

2002

Source: Texas Transportation Institute at Texas A&M University

Extreme20%

Uncongested33%

Moderate13%Heavy

14%

Severe20%

Extreme5%

Uncongested70%

Moderate10%

Heavy8%

Severe7%

Rail Industry ChallengesRail Industry Challenges

Note: 1980 and 1981 Salaries & Wages Data reflect AAR’s estimate of 95% of total payroll expenses. In comparison year (1982), this measure differs from the 1975,1982-2002 methodology by 0.4%.Sources: AAR “Railroad Ten-Year Trends.” (various ed.); AAR “Analysis of Class 1 Railroads.” (1981); AAR “Railroad Facts” (various ed.).

$0.000

$0.005

$0.010

$0.015

$0.020

$0.025

$0.030

$0.035

1975

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

1982

$/R

TM

Salaries and Wages/RTM Fuel/RTMOther Materials & Supplies & Misc. Expenses/RTM Loss & Damage, Injuries & Insurance/RTMDepreciation/RTM Hire of Equiptment & Joint Facility Net Rent/RTM

Deregulation

Railroads have more than halved their cost/revenue ton-mile since deregulation

Rail

Railroad Expenditures per Revenue Ton-Mile (1982$)

Productivity gains have contributed to the decreasing cost/revenue ton mile

Productivity gains have contributed to the decreasing cost/revenue ton mile

Rail

• Labor requirements declined• Networks and track were rationalized

following mergers• Engine fuel efficiency increased• Railcars increased to 286,000 lb. gross

rail load• Many railcar types were improved

Productivity Improvements

For railroads, some of these productivity opportunities may have reached their limits

For railroads, some of these productivity opportunities may have reached their limits

• Equipment Gains

• Labor Gains

• Fuel Efficiency Gains

Rail

• 315,000 GTW Unlikely

• Adding Employees

• Future Locomotive Environment Regulations?

In addition to slower productivity gains, the infrastructure is reaching its capacity

InhibitorArea of Improvement

Port Industry ChallengesPort Industry Challenges

Port Region Container Capacity SummariesPort Region Container Capacity Summaries

Southport expansion, terminal reconfiguration, higher density and lower dwell should accommodate growth

South Florida

Bayport, Choctaw and some combination of Tampa, Texas City, Corpus Christi, Brownsville, Millennium Port will likely generate surplus capacity

Gulf

North Atlantic, particularly with the AMPT-Portsmouth terminal should provide adequate capacity. The South Atlantic will need to improve density and reduce dwells. A significant increase in Suez services would pose challenges.

Atlantic

Tacoma has largest expansion potential although port-rail and continued PSW diversions pose challenges

PNW

LA/LB face significant capacity challenges during the next five years. Environmental regulation, enforcement and associated costs are key drivers. Oakland will likely have adequate capacity

PSW

Comments2010Net

Position

2005Net

Position

The Port Industry challenge is multi-dimensional and modal

The Port Industry challenge is multi-dimensional and modal

• Harbor deepening• Environmental• Labor efficiency and effectiveness• Berth utilization• Reducing dwell times/increasing velocity:

breakbulk as well as container • Port-rail interface• Regional transportation infrastructure

• Harbor deepening• Environmental• Labor efficiency and effectiveness• Berth utilization• Reducing dwell times/increasing velocity:

breakbulk as well as container • Port-rail interface• Regional transportation infrastructure

The ChallengesThe Challenges

Funding shortfalls

Modally focused

Environmental challenges

Maritime visibility

Maritime Industry: Fragmented approach

Finding the Common Ground

Needs are increasing

Cover Some Nuts & BoltsCover Some Nuts & Bolts

The Big Ships-Where Are They Deployed?The Big Ships-Where Are They Deployed?

6,000 + TEU Vessels by Deployment

0%

20%

40%

60%

80%

100%

6,000-6,999 7,000-7,999 8,000-8,999 9,000+

Asia-Europe China-USWC Pendulum SEAsia/China-Europe SEAsia/China-N Europe Asia-Pacific Coast N Asia-Pacific Coast

Note: Analysis includes 80% of all vessels over 6,000 TEU currently deployed

Big Ship Realities in a Load Center PortBig Ship Realities in a Load Center Port

• 6,300 moves• 26+ to 50 berth working hours at 25-40

moves per hour and six cranes• 18 to 32 sorts

– 3 to 4 load ports to 6 to 8 destinations• 2,500 to 3,200 rail moves

– 10 to 13 double stack trains

• 6,300 moves• 26+ to 50 berth working hours at 25-40

moves per hour and six cranes• 18 to 32 sorts

– 3 to 4 load ports to 6 to 8 destinations• 2,500 to 3,200 rail moves

– 10 to 13 double stack trains

TEUs per Gross Terminal Acre for the World’s Top Ports excluding Major Transshipment Ports

2005

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Shenze

n-4

Guangzh

ou-23Qingd

ao-14

Tokyo-17

Ningbo-22

Busan

-5

Port K

lang-12

Tianjin

-21

Tanjung

Pelepas

-16Sha

nghai-3

Dubai-

11

Tanjung

Priok-2

4Man

ila-25

Rotterd

am-8

Bremen

/Brem

erhav

en-18

Laem C

haban

g-19Ham

burg

-9

Los Angele

s-7Antw

erp-10

Long B

each

-13NY/N

J-15

2003

TEU

's p

er G

ross

Ter

min

al A

cre

Port name followed by 2003 world gross throughput rank

Estimated Average TEUs per Gross Terminal Acre by Coastal Range*

Estimated Average TEUs per Gross Terminal Acre by Coastal Range*

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

TEU

s/G

ross

Ter

min

al A

cre

NANA USSA USG USPSW NAPNW Carib ECCA ECSA0

5001,0001,5002,0002,5003,0003,5004,0004,5005,000

TEU

s/G

ross

Ter

min

al A

cre

NANA USSA USG USPSW NAPNW Carib ECCA ECSA

*For a sample of the larger container ports in each coastal range for which comparable data exists

2004

Operating Realities of 3,000 TEUs per Gross Terminal Acre Per Year

Operating Realities of 3,000 TEUs per Gross Terminal Acre Per Year

11

18

27

0

5

10

15

20

25

30

Ave

rage

Dw

ell T

ime

Operating Mode

WheeledToppickRTG_medium

11

18

27

0

5

10

15

20

25

30

Ave

rage

Dw

ell T

ime

Operating Mode

WheeledToppickRTG_medium

Operating Realities if the average dwell time is 7 days

Operating Realities if the average dwell time is 7 days

4,380

7,300

10,950

0

2,000

4,000

6,000

8,000

10,000

12,000

Thr

ough

put p

er G

ross

T

erm

inal

Acr

e

WheeledToppickRTG_medium

4,380

7,300

10,950

0

2,000

4,000

6,000

8,000

10,000

12,000

Thr

ough

put p

er G

ross

T

erm

inal

Acr

e

WheeledToppickRTG_medium

The Port Industry Faces Significant Challenges in Financing Capital Investment

The Port Industry Faces Significant Challenges in Financing Capital Investment

Competition

Buyers’Market

Pace of technological change

Regulatory Requirements

Construction Lead Times

In addition, a significant portion of port capital investments do not generate revenues and have long investment lead times

In addition, a significant portion of port capital investments do not generate revenues and have long investment lead times

• Dredge spoil disposal areas• Landfill• Environmental remediation

(cleanup)• Mitigation• Road and rail connections• Grade separations• Retention ponds• Rail marshaling yards• Utility rights of way

• Dredge spoil disposal areas• Landfill• Environmental remediation

(cleanup)• Mitigation• Road and rail connections• Grade separations• Retention ponds• Rail marshaling yards• Utility rights of way

Port-Rail Interface ChallengesPort-Rail Interface Challenges

Port Productivity ConferencePort Productivity Conference

Chicago

Memphis

Dallas

40s20s

Reefers

Ist Generation

2nd Generation

3rd Generation

The PortThe Port--Rail Interface: Mastering RubikRail Interface: Mastering Rubik’’s Cubes Cube

The Port-Rail Interface: The Choice ChallengeThe Port-Rail Interface: The Choice Challenge

OHOH100100

8,0008,000

2,0002,0002,0002,000

ChicChic1,0001,000

MemMem700700

DFWDFW300300

NYNY250250

ATLATL300300

4,0004,000

Rail ImpRail Imp Rail ExRail Ex

ChicChic1,0001,000

PortPort250250

RegReg650650

MemMem700700

DFWDFW300300

The Port Rail Interface: Train EquivalentsThe Port Rail Interface: Train Equivalents

00.5

11.5

22.5

33.5

4

8,000' DST Equivalents

Chic Mem DFW

EBWB

The Port Rail Interface: Integrating the Players’Needs & Practices

The Port Rail Interface: Integrating the Players’Needs & Practices

Carrier

• Vessel schedule• Vessel stow• O/Ds• Equipment type• Service Requirements

Railroad

• Network structure• Network capacity• Traffic balance by lane

• Car fleet• Domestic traffic• Blocking requirements

• Schedule

Port

• Landlord or operating

• Rail terminals– On dock– Contiguous– Centralized or decentralized

• Load tracks: #, length, config

• Support tracks: #, length, config

Assess Some of the ImplicationsAssess Some of the Implications

A Systemic Approach is RequiredA Systemic Approach is Required

What Does It Mean?• Focus is on the system,

not a link or node• The objectives are clearly

defined• The responsibilities are

mutually established• Quantifiable measures are

established and used

What Does It Mean?• Focus is on the system,

not a link or node• The objectives are clearly

defined• The responsibilities are

mutually established• Quantifiable measures are

established and used

What Does It Require?• A3 Information

– Available– Accessible– Accurate

• Cooperation• An emphasis on velocity• Flexibility to adapt• Contingencies

What Does It Require?• A3 Information

– Available– Accessible– Accurate

• Cooperation• An emphasis on velocity• Flexibility to adapt• Contingencies

What Are Some of the ToolsWhat Are Some of the Tools

24/7 for everyoneJust in system time

Not my time or your timeMinimum free time, ideally measured in hours on peak days Peak pricingChassis pools & gray boxesVirtual CYsAppointment systemsReal time information tools across the supply chainAn acceleration in adaptation of world class work rules and practices to the U.S . waterfront

24/7 for everyoneJust in system time

Not my time or your timeMinimum free time, ideally measured in hours on peak days Peak pricingChassis pools & gray boxesVirtual CYsAppointment systemsReal time information tools across the supply chainAn acceleration in adaptation of world class work rules and practices to the U.S . waterfront

Major Issues and Trends Facing the Port and Marine Transportation Industry

AAPA MTMTP

Major Issues and Trends Facing the Port and Marine Transportation Industry

AAPA MTMTP

April 24, 2006April 24, 2006