transportation summit 2011: best practices shaping global logistics, vancouver, bc, march 2-3 2011...
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Transportation Summit 2011: Best Practices Shaping Global Logistics, Vancouver, BC, March 2-3 2011
Inland Infrastructure: Bulk to Container
Jean-Paul Rodrigue
Associate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA
Van Horne Researcher in Transportation and Logistics, University of Calgary, Canada
Inland Infrastructure: Bulk to Container
1• How inland ports fit within North
American freight distribution?
2• To what extent commodities can
be containerized?
3• How bulk and containerized
logistics can be reconciled?
The Insertion of Inland Ports in North America: Basic Requirements
Intermodal Rail Terminal Rail Corridor to the Gateway
Logistics Activities
Inland PortCo-location
Real estate
Core Tenants
Drayage
Agglomeration
Main Advantages of Co-location
Factor Advantages
Real estate Lower land acquisition costs. Higher acquisition capital. Joint land use planning.
Specialization Rail company; terminal development and operations.Real estate promoter; logistic zone development and management.
Cargo interdependency Respective customers. Joint marketing.
Drayage Priority gate access. Shorter distances. More delivery trips. Higher reliability.
Asset utilization Better usage level of containers and chassis. Chassis pools. Empty container depots.
Information technologies
Integration of terminal management systems with inventory management systems.
Intermodal Terminals and Recent Co-Located Logistic Zones Projects
Every rail operator involved.Partnership with a major real estate developer.
Containerization Growth Factors
Derived
Economic and income growth
Globalization (outsourcing)
Fragmentation of production and consumption
Substitution
Functional and geographical
diffusion
New niches (commodities
and cold chain)
Capture of bulk and break-bulk
markets
Incidental
Trade imbalances
Repositioning of empty containers
Induced
Transshipment (hub, relay and
interlining)
Growth Factors behind the Containerization of Commodities
Factor Outcome
Rising demand and commodity prices
More commodities in circulation (usage of containerization to accommodate growth).New producers and consumers (marginal markets penetration).
Fluctuations and rises in bulk shipping rates
Decrease in the ratio cargo value per ton shipping rate for commodities.Volatility (rates) and risk (hedging). Search for options to bulk shipping.
Low container shipping rates
Increase in the ratio cargo value per TEU shipping rate for commodities.Relative rate stability.Containerization more attractive as an option.
Imbalances in container shipping rates
Export subsidy for return cargo.
Empty containers repositioning
Pools of containers available for backhauls.
IMF All Commodity Index and Baltic Dry Index, 2000-2010 (2000=100)
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0
100
200
300
400
500
600
700
800
900Baltic Dry Index
IMF All Commodity Index
IMF All Commodity Index and Average Container Shipping Rates, 2000-2010 (2000=100)
Jan-0
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50
100
150
200
250
300
350
400
IMF All Commodity Index
Container Shipping Rates
Bulk and Containerized Commodity Transportation: Dichotomy or Complementarity?
Bulk (Grain, Minerals, Oil) Containerized
Sectors Primary / Transformation Manufacturing / Retailing
Driving force Cost / Volume Time / Flexibility
Mode of shipment Large batches Small shipments
Frequency Low High
Flows One way More balanced
Terminals Dedicated by commodity General container
Seasonality From low (energy) to high (agriculture)
Low (retail cycles)
Exchange Markets Mass (futures / forward) Niche (spot)
Bulk and Containerized Commodity Chains
Bulk Commodity Chain
Containerized Commodity Chain
Consolidationcenter
PortSupplier Customer
Intermodalterminal
Containerport
PendulumServices
Point-to-Point
Complementarity
From Bulk to Containers: Breaking Economies of Scale
• Container as an independent load unit.• Minimal load unit; one TEU container.
Entry Barriers
• Limited differences in scale economies for a producer.
• Incremental / linear cost-volume function.
Required Volumes
• New producers (smaller).• Product differentiation.
Market Potential
Commodity Group and Containerization Potential
Category (SITC) Examples Containerization (Existing or Potential)
Food & Live Animals Meat, Fish, Wheat, Rice, Corn, Sugar, Coffee, Cocoa, Tea
Low (grains) to high (cold chain products)
Beverages & Tobacco Wine, Beer, Tobacco High
Raw Materials Rubber, Cotton, Iron ore Commodity specificFuels & Lubricants Coal, Crude oil, Kerosene, Natural gas Very limitedAnimal & Vegetable Oils Olive oil , Corn oil High
Chemicals Salt, Fertilizers, Plastics Low to averageManufactured Goods
Paper, Textiles, Cement, Iron & Steel, Copper Commodity specific
Machinery & Transport Equipment
Computer equipment, Televisions, Cars Very high (already containerized)
Miscellaneous Manufactures
Furniture, Clothes, Footwear, Cameras, Books, Toys Very high (already containerized)
Challenges for the Containerization of Commodities
Challenge Issues
Container availability Locational and load unit availability.
Weight Limitations to about 30 tons (40 footer).20 footer the preferable load unit (26-28 tons).
Container preparation Pre-use and post-use cleaning (avoid contamination).Dedicated containers?
Container loading, unloading and transloading
Bulks difficult to load horizontally.Vertical loading / unloading (equipment).Transloading issues.Source loading.
Weight distribution Containership load (10-14 tons per TEU).Trade imbalances create mitigation strategies.
Land consumption at port terminals
Space consumption (4 times more than bulk) mitigated by velocity.
Existing distribution channels
Considerable accumulated investments.Established distribution practices.Modal shift inertia.
Containerized Cargo Flows along Major Trade Routes, 1995-2009 (in millions of TEUs)
1995
1998
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0 10 20 30 40 50 60
4.0
5.2
5.6
7.2
8.8
10.2
12.4
12.4
15.0
15.2
14.5
11.5
3.5
3.3
3.3
3.9
3.9
4.1
4.2
4.4
4.7
5.0
5.6
6.9
2.8
3.5
4.5
5.9
6.1
7.3
8.9
10.8
15.3
17.2
16.7
11.5
2.3
2.7
3.6
4.0
4.2
4.9
5.2
5.5
9.1
10.1
10.5
5.5
1.2
1.3
2.2
2.7
1.5
1.7
1.7
2.1
2.5
2.7
2.9
2.5
1.4
1.7
2.9
3.6
2.6
2.9
3.2
3.8
4.4
4.5
4.3
5.3
Asia-USA
USA-Asia
Asia-Europe
Europe-Asia
USA-Europe
Europe-USA
Maritime Freight Rates (Nominal USD per TEU), 1993-2009
1993
-419
94-2
1994
-419
95-2
1995
-419
96-2
1996
-419
97-2
1997
-419
98-2
1998
-419
99-2
1999
-420
00-2
2000
-420
01-2
2001
-420
02-2
2002
-420
03-2
2003
-420
04-2
2004
-420
05-2
2005
-420
06-2
2006
-420
07-2
2007
-420
08-2
2008
-420
09-2
2009
-4
$0
$500
$1,000
$1,500
$2,000
$2,500
Asia - US
US - Asia
Asia - Europe
Europe - Asia
American Foreign Trade by Maritime Containers, 2009 (in TEUs)
Wal-MartTarget
Home DepotDole Food
Sears HoldingLowe's
Costco WholsaleLG Group
PhilipsHeinekenChiquita
Ashley FurnitureIkea Intl.
SamsungJC Penney
JardenGeneral Electric
Red BullNike
Whirlpool
0 200,000 400,000 600,000 800,000
684,000
441,800
278,900
225,500
216,300
195,000
166,100
149,300
127,200
118,100
116,700
90,900
90,800
81,100
79,000
77,100
76,700
74,000
72,300
60,900
Importers
America Chung NamKoch Industries
International PaperWeyerhaeuser
Newport Ch IntlDow Chemical
CargillPotential Industries
Denison Intl.Procter & Gamble
DupontJC Horizon
ExxonMobilCedarwood-Young
ShintechDelong
Sims Metal ManagementMeadwestvaco
Genesis Resource EnterprisesCellmark Group
0
200,0
00
400,0
00
600,0
00
800,0
00
259,000
120,600
120,100
112,500
110,900
103,000
90,300
90,000
86,900
78,000
74,300
72,400
70,700
68,800
66,900
65,100
60,700
58,100
54,800
51,300
Exporters
The Complexities of Inland Logistics: The “Last Mile” in Freight Distribution
GatewayInland
TerminalDistribution
Center
Capacity
Frequency
CorridorCustomer
“Last Mile”
Segment
GLOBAL HINTERLAND REGIONAL LOCAL
Shipping Network
Massification Atomization
21
2Inventory in transit1 Inventory at terminal
Distribution based on RDCs Distribution based on two gateways
Distribution based on tiered system Distribution based on local DCs
Asymmetries between Import and Export-Based Containerized Logistics
Many Customers• Function of population density.• Geographical spread.• Incites transloading.• High priority (value, timeliness).
Few Suppliers• Function of resource density.• Geographical concentration.• Lower priority.• Depends on repositioning
opportunities.
Gateway
Inland Terminal
DistributionCenter
Customer
Supplier
Repositioning
Import-Based
Export-Based
Conclusion: The Flipside of Reverse Logistics
A• Inland ports as key strategic infrastructures.• Principle of co-location appears the most effective.
B• Containerization of commodities a powerful niche trend.• Emerging complementarity between container and bulk.
C
• Container and bulk are asymmetric distribution systems.
• Inland ports as platforms reconciling inbound / outbound logistics.
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