hsh nordbank2007 jpr
TRANSCRIPT
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Fall Summit, HSH Nordbank, Hamburg, Germany,
November 15, 2007
Logistics and Global
Commodity Chains
Jean-Paul RodrigueAssociate Professor, Dept. of Economics &
Geography, Hofstra University, New York, USA
Email: [email protected]
Paper available at:
http://people.hofstra.edu/faculty/Jean-paul_Rodrigue
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Introduction: Capital on the Move
Trimodal Container Terminal, Willebroek, Belgium
Changes in Global Trade
Global Production Networks andCommodity Chains
The China Effect and Global
Commodity Chains
Integrating Commodity Chains into
Containerized Supply Chains
2
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The Emergence of Supply Chain
Management
Demand Forecasting
Purchasing
Requirements Planning
Production Planning
Manufacturing Inventory
Warehousing
Materials Handling
Packaging
Inventory
Distribution Planning
Order Processing
Transportation
Customer Service Strategic Planning
Materials
Management
Physical
Distribution
LogisticsSupply Chain
Management
Information Technology
Marketing
1980s 1990s 2000s1960sFragmentation Consolidation
Warehousing
Materials Handling
Packaging
Functional Integration Value Capture
3
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Flow
s
Market
Transpo rt Chain
Parts and raw
materials
Manufactur ing
and assemb ly
Distr ibut ion
and the Setting of Commodity Chains
Market
Stag
e
Bulk sh ipp ing Uni t sh ipp ing
High volumesLow frequency
Low volumesHigh frequency
LTL shipping
Average volumesHigh frequency
4
Comm odit ies Final GoodsIntermediate Good s
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Major Factors Driving the Integration of
Transportation with Distribution
Factor Cause Consequence
Technology Containerization & IT Modal and intermodal
innovations; Tracking shipments
and managing fleets
Capitalinvestments
Returns on investments Highs costs and longamortization; Improve utilization
to lessen capital costs
Alliances and
M&A
Deregulation Easier contractual agreements;
joint ownership
Commodity
chains
Globalization Coordination of transportation
and production (integrated
demand)
Networks Consolidation and
interconnection
Multiplying effect5
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Changes in Global Trade
Acute Trade Imbalances
Economic Cycles
Globalization and Production
Container yard, Port of Yantian, China6
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A Changing Trade Environment
Stage Nature Function
Until the 1970s Immobile factors of
production
Cope with scarcity
Late 20thcentury Mobility of factors of
production
Promote economic
efficiency
Early 21stcentury Global production
networks
Added value within
commodity chains
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and the Cycles of International Trade
Changes in the Value Worlds Merchandise Trade, Production and GDP,
1950-2005 (in %)
-10
-5
0
5
10
15
20
25
30
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Total Merchandise Trade
World GDP
World Merchandise Production
8
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The Cycle is Strongly Upward for Latin
America
Latin American Trade (1995-2005) Billions USD
0
50
100
150
200
250
300
350
400
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Exports
Imports
9
Commodities Boom
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as Well as for Eastern Europe
Share of World Trade, Eastern Europe (1995-2005)
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Exports
Imports
10
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International Trade Involves Acute
Imbalances
Worlds 10 Largest Exporters and Importers, 2005
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
Germany
United States
China
Japan
France
Netherlands
United KingdomItaly
Canada
Belgium
Billions of $US
Imports
Exports
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that Resulted in Imbalanced Containerized
Freight Flows
Balance of Containerized Cargo Flows along Major Trade
Routes, 1995-2006
-18
-16
-14
-12
-10
-8
-6
-4
-20 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006
Europe/USA
Asia/Europe
Asia/USA12
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with Imbalanced Freight Rates as Well
Maritime Freight Rates (USD per TEU), 1993-2006
$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
Asia - US
US- Asia
Asia - Europe
Europe - Asia
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Globalization; Changing the Profit Structure
Commodity chain
Added
value
Low
High
Manufacturing
R&D Globalization
DistributionDesign
Branding Marketing
Sales / Service
Concept Logistics
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As Well As Disconnecting Production and
Distribution
Manufacturing Base
Core BaseDistribution Marketing / RetailR&D
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Containerization and Global Commodity
Chains
Containerization
Intermodal Transportation
Ports and Terminal Operators
Container waiting to be loaded, Shenzhen, China16
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Containerization has Integrated Different
Transport Systems
17
Containerization of Maritime Transport Systems
Containerport
Containerization of Inland Transport Systems
Intermodalterminal
PendulumServices
Intermodal and Transmodal Operations
Corridor
Offshorehub
InlandPort
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which Makes the Container more than a
Box
Container
Production Distribution
Transport
Modes, terminals, intermodal and
transmodal operations
Flow management (time-based),
warehousing unit
Synchronization of inputs and
outputs (batches)
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Connecting the Dots: Intermodal Transport
Chain
Composi t ion
Transfer
Interchange
Decomposi t ion
Local / Regional Distribution
National / International Distribution
Transport Terminal
First mile
Last mile
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Composition: Pallets waiting to be loaded in a
container (APL DC - Shenzhen, China)
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Interchange: Post-Panamax Containership (Le
Havre)
I h UPS Will S i Di ib i
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Interchange: UPS Willow Springs Distribution
Center, Chicago
22
D iti U l di C t i d
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Decomposition: Unloading Containers and
Palletizing Shipments (Antwerp)
23
Th W ld L t M iti T d
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The Worlds Largest Maritime Trade
Gateways
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
Pacifi c Asia Europe
TEU
Less than 2 million
2 to 4 million
4 to 7 million
7 to 10 million
More than 10 million
24
Traffic at the 50 Largest Container Ports,
2005
M i l C t ll d b L H ldi
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Mainly Controlled by Large Holding
Conglomerates
Pacific Asia Europe
APM Terminals
Dubai Ports World
Hutchison Port Holdings
Port of S ingapore Authority
Eurogate
Stevedoring Services of America
Dedicated Maritime Container Terminals
25
Major Port Holdings, 2007
Th t F ll i V l C t
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Commodity Chain
That are Following a Value Capture
Strategy
Port Hold ing
Por
tA
uthor
ity
Maritime Services
Inland Services
Port Services
Horizontal Integration / VerticalVertical Integration
MaritimeShipping
Port TerminalOperations
Inland Modesand Terminals
DistributionCenters
26
Wh th G i G t T h Th L t Mil
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Where the Going Gets Tough: The Last Mile
in Freight Distribution
GatewayInland
TerminalDistribution
Center
Capacity
Frequency
CorridorCustomer
Last Mile
Segment
GLOBAL HINTERLAND REGIONAL LOCAL
Shipping Network
Massification Atomization
27
Th Chi Eff t d Gl b l C dit
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Empty trucks waiting to enter China, Hong Kong
The China Effect and Global Commodity
Chains
Debt and the Currency Leverage GameProduction and Distribution Dislocations
Shift in the worlds commercial balance
28
Th Chi Eff t i M i l Ab t L
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The China Effect is Mainly About Low
Manufacturing Wages
Major Components to Price Reductions by the Chinese
Manufacturing Sector, 2005
39.4%
16.7%
16.0%
11.4%
8.6%
3.1%
2.4%
2.3%
0% 10% 20% 30% 40% 50%
Wages
Export Industry Subsidies & Preferences
Industrial Network Clustering
Undervalued Currency
Counterfeiting & Piracy
Foreign Direct Investments
Lax Health & Safety Regulations
Lax Environmental Regulations
29
W ll th L t B Fi i
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as Well as the Largest Buyer Financing
Scheme in History
Goods
Bo nds (IOUs)
Asset InflationDebt
Reserves
Interest RatesUnemployment
$ for goods
$ for bonds
United StatesChina USD
USD
BorrowingInvestment
30
Where Exchange Rates were Used as
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Where Exchange Rates were Used as
Leverage
Yuan Exchange Rate ( per USD) , 1981-2007
0
1
2
3
4
5
67
8
9
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Yuan per USD
Real per USD
31
Discount WindowExport Oriented
Debasement Closing of the
Discount Window
Integrating Commodity Chains into
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Emma Maersk, 12,500 TEU, Rotterdam, Netherlands
Integrating Commodity Chains into
Containerized Supply Chains
Maritime Shipping Networks
Containerized Commodities
Cold Chain Logistics
32
The Three Major Corridors of Maritime
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The Three Major Corridors of Maritime
Circulation
Fos
Tokyo
Genoa
Ningbo
Hamburg
Shanghai
Le Havre
KaohsiungHong Kong
Singapore
Barcelona
Rotterdam
Port Kelang
Southampton
Laem Chabang
OaklandLos Angeles
NorfolkNew York
Charleston
Orig in Dest ination Transi t Ti me (days)
Southampton New York 8
New York Norfolk 2
Norfolk Charleston 2
Charleston Rotterdam 10
Rotterdam Hamburg 2
Hamburg Le Havre 2
Le Havre Southampton 1
Origin Destination Transit Time (days)Tokyo Kaohsiung 4
Kaohsiung Shekou 1
Shekou Laem Chabang 4
Laem Chabang Singapore 3
Singapore Kaohsiung 3
Kaohsiung Los Angeles 11
Los Angeles Oakland 4
Oakland Tokyo 9
Orig in Destination T ransit T ime (d ays)Port Kelang Genoa 14
Genoa Barcelona 2
Barcelona Fos 2
Fos Singapore 15
Singapore Hong Kong 4
Hong Kong Shanghai 2
Shanghai Ningbo 2
Ningbo Shekou 2
Shekou Hong Kong 1
Hong Kong Singapore 4
Singapore Port Kelang 1
Atlantic Express (ATX) European Union / Mediterranean (EUM) South China Express (SCX)
Note: Transit time includes port time
Source: OOCL Web Site
27 Days
49 Days
39 Days
Note: Paths are approximate
Atlantic Express (ATX)
European Union / Mediterranean (EUM)
South China Express (SCX)
33
Three Major Pendulum Routes Serviced by OOCL, 2006
Which Implies the Emergence of Global
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Which Implies the Emergence of Global
Trade Highways
North American Landbridge
Eurasian Landbridge
Circum-Equatorial Maritime Highway
Arctic Routes
34
The Potential of Containerization of
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The Potential of Containerization of
Commodities
For bulk transport Economies of scale confer a net benefit.
Specialization: Low utilization levels and time delays for the assembly of loads.
At most 50% due to empty backhauls, but much lower in reality.
Containerization: Flow concept; lower transshipment costs.
Its own warehouse unit.
Faster distribution (extending the realm of perishables).
Levels the playing field, particularly in view of established commodity
shippers.
Respective benefits for bulk and container carriers.
Handle variety requirements.
Rise in commodity prices makes them increasingly suitable
for containerization.35
Where Each System has its own
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Where Each System has its own
Advantages
Bulk (Grain, Oil) Containerized
Driving force Cost / Volume Time / Flexibility
Mode of shipment Large output Small shipments
Flows Specialized Mixed
Terminals Dedicated General Container
Markets Mass Niche
36
Will Likely See the Emergence of a
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Will Likely See the Emergence of a
Complementarity
Bulk Commodity Chain
Containerized Commodity Chain
Consolidation
center
PortSupplier Customer
Intermodalterminal
Container
port
PendulumServices
Point-to-Point
Complementarity
37
Commodities are more Containerized than
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Commodities are more Containerized than
Expected
US Containerized Trade, 2003
0
5,000
10,000
15,000
20,000
25,000
Total Imports Exports
Thousand
TEU Food
Consumer products
Technology products
Capital equipment
Raw materials
38
Leading to the Setting of New
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Leading to the Setting of New
Containerized Commodity Chains
Shipping Time between Bulk Handling and Containerization (CanadianWheat)
Bulk Handling System Days Container System Days
Farm storage Start Farm storage Start
Local delivery 1 Local delivery 1Primary elevator 40 Intermodal terminal 2
Rail hopper cars 11 Double stack train 2
Export terminal 19 Container port 2
Bulk ship 15 Containership 11
Import terminal 10 Container port 2
Local delivery 1 Local delivery 1
Final customer End Final customer End
Total 97 Total 2139
What Could be the Impacts on Commodity
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What Could be the Impacts on Commodity
Markets?
Containerization and commodity markets Futures / forward contracts are often conditioned by the
capacity for delivery.
What would be the impacts of containerization on this market
structure? A contract could involve the allocation of containers.
What type of price discovery this would entail.
From futures to spot markets?
Transportation flexibility will increase financial flexibility.
40
Cold Chain Logistics is Getting Increasingly
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Cold Chain Logistics is Getting Increasingly
Reliable
Potential integrity breach
Temperature
Temperature Range
Potential integrity breach
Transport
Time
Unloading Warehousing Loading Transport41
Deep Freeze
Frozen
Chill
Pharmaceutical
"Banana"
-30 -20 -10 0 10 20
Deep Freeze
Frozen
Chill
Pharmaceutical
"Banana"
Degrees Celcius
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Conclusion: Commodities on the Move
42
Adapting to a Challenging Environment with many
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Adapting to a Challenging Environment with many
Opportunities
Global trade Imbalances and dislocations.
Global commodity chains Added value and value capture.
The China Effect Trade and financial process.
Containerized commodity chains Opportunities to rectify imbalances.
Setting of new commodity chains.
Global prospects Positive for commodities.
New markets and investment opportunities.