logística e infraestructura de transporte: clave de la ...logística e infraestructura de...

Logística e Infraestructura de Transporte:

Clave de la Competitividad Presented to:

XV Congreso Anual Latinoamericano de Puertos

28 de junio, 2006Hilton Colón Hotel

Guayaquil, Ecuador

Presented by:Robert West

Managing DirectorGlobal Trade & Transportation

Global Insight781-301-9078

[email protected]

CIP/OAS

2Copyright © 2006 Global Insight, IncCIP/OAS

Agenda

• Global issues and trends affecting the world and U.S. economic outlooks

• Implications for sea trade in the U.S. and Latin America

• Are we ready – can we compete?

• Conclusions


Key Global Issues and Trends

• Will higher oil prices derail the recovery?

• Will the dollar crash?

• China: Hard or soft landing?

• New and important players?

NO - Not at $70-75

NO, but . . .

SOFT

YES, A FEW . . .


Has world economic growth peaked? - - - yes, but…

0

1

2

3

4

5

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

(Percent change, real GDP)

The world economy is in recession when real GDP growth is below 2%.


Container trade normally grows faster than the world economy. This year should be very healthy.

0

2

4

6

8

10

12

14

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

World TEUs

2006GDP 3.7% TEUs 8.2%

2006GDP 3.7% TEUs 8.2%


While all regions have increased trade, growth is uneven

Trade growth is influenced by factors beyond the underlying demand for consumption goods.

• Global logistics sourcing by industry

• Emergence of global trading blocks

• Growth of regional trade facilitation

• Harmonization of trade and regulatory policies

• Trade security standards and information flows

• Increasing freight traffic and congestion along trade corridors and at ports and border crossings


Trade is linked to real GDP growth - uneven across the world – and emerging markets grow fastest.

0

2

4

6

8

NAFTA OtherAmericas

WesternEurope

EmergingEurope

Japan Other Asia Mideast &Africa

2004 2005 2006 2007


Europe in the long term – a great museum?

… and the visitors will come from China!


Growth is not uniform: Market shifts are coming and will affect U.S. trade and transportation

(Country GDP Rank in Billions of Real (2003) U.S. Dollars)

ItalyItalyItalyBrazilBrazilRussiaFranceFranceBrazilItalyRussiaIndia

GermanyGermanyFranceRussiaIndiaBrazilU.K.U.K.GermanyFranceItalyChina

RussiaBrazilU.K.IndiaFranceItaly

BrazilRussiaRussiaU.K.ChinaFrance

JapanJapanIndiaGermanyU.K.U.K.IndiaIndiaJapanJapanGermanyGermany

U.S.ChinaChinaChinaJapanJapan

ChinaU.S.U.S.U.S.U.S.U.S.

205020402030202020102000

Source: Global Insight World Service


Asia is 2/3 of global container trade.

TRANSTRANS--PACIFIC PACIFIC 19.3 million TEU19.3 million TEU

10.8 % Growth10.8 % Growth

ASIAASIA--EUROPE EUROPE 12.1 million TEU12.1 million TEU

12.2% Growth12.2% Growth

TRANSTRANS--ATLANTIC ATLANTIC 5.4 million TEU5.4 million TEU


INTRAINTRA--ASIA ASIA 26.2 million TEU26.2 million TEU

(including Australia, (including Australia, Indian Subcontinent and Indian Subcontinent and

Middle East)Middle East)


World Container Trade Flow 2005 E-W = 43% Intra Asia = 31%


The U.S. expansion is entering a new phase –a significant slowdown is here.

• The U.S. economy had strong momentum entering 2006.• 5.3% in the first quarter• Just 2.7% in the second!

• Consumer spending growth will slow in response to higher interest rates, high energy prices, and a weak housing market.

• Home sales and construction are declining as affordability deteriorates; hurricane rebuilding will cushion the fall.

• Business investment is now leading the expansion, supported by record profits and global market growth, especially Asia.

• Non-residential construction is poised to grow, at last.• Further dollar depreciation is expected, so exports will

improve.

A Fast Start and A Slow Finish in 2006


(Annual percent change, 2000 dollars) (Unemployment rate - %)

The U.S. economic expansion is slowing quickly.

-2

0

2

4

6

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 20092

3

4

5

6

7

Real GDP Growth Unemployment Rate

Real GDP

2006: 3.4%

2007: 2.6%


A Record U.S. Current Account Deficit – over $800 billion as far as the eye can see.

-1,000

-800

-600

-400

-200

0

200

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010-8

-6

-5

-3

-2

0

2

Current Account Deficit Deficit as % of GDP

(Billions of dollars)


The U.S. dollar will depreciate further – steady declines through 2008, due to huge current account deficits.

(2000=1.00)

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Industrial Countries Developing Countries

This could be 10-30% drop in the dollar.


The U.S. was the engine of growth, but in 2006 this will shift to Asia. Asia is supporting world growth.

• Inflation remains under 4% in most Asian economies — exceptions include Indonesia, India, and the Philippines.

• High saving rates mean these economies will continue to be capital exporters - investors in ports and transportation infrastructure (even Canals?).

• China will have a soft landing.

• Exchange rates across Asia will rise as part of a global trade adjustment.


U.S. TEU imports will still grow by 8% in 2006, and by 6.2% in 2007. Chinese imports will grow fastest.

China

Other Far East

US TEU Imports

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

European Union Latin Amer (Not Mexico) China + HK Other Far East Middle East + ISC

China was 1/3 of US imports in 2000 and will be ½ by 2010. China

Other Far East


India could align with China and create a powerhouse from toys to high tech.

$800 billion GDP8%/year total TEU growth to 20106.8% GDP growth this year (2006)1.1 billion population is growing 1.5% annually

India and China Real GDP Growth Rates

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

India Real GDP China Real GDP


China’s momentum is hard to slow down, but the government is trying - - - soft landing most likely.

1980 2004Real Per Capita GDP (2004$) $171 $964Real GDP as $ of US Level, 2004$ 3% 14%Real GDP growth in previous 20 years 5.3% 8.6%Population (millions) 981 1,300Trade's share of GDP 15% 85%Number of Supermarkets 0 70,000Current Account Surplus ($ billions) 1 266Agriculture's share of GDP 30% 15%Urbanization 20% 33%


As China expands its markets, the U.S. becomes less important.

US Share of China Exports

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

TEU

s

29.0%

30.0%

31.0%

32.0%

33.0%

34.0%

35.0%

36.0%

37.0%

38.0%

39.0%

40.0%

US

Sha

re

World Total United States United States Share of Ch Exp

Source: Global Insight World Trade Model


Market penetration in some sectors is reaching saturation …

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Footware Electrical Appliances and Houseware Textiles

Footwearr Electrical Appliances

Textiles


But look at China’s penetration of new market segments.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Semi-conductors, Electronic Tubes,etc Office and Computing Machinery

Office and Computing Equipment

Semi-conductors, Electronic parts, etc.


China Economic Summary

• There appears to be little risk at the macro-economic level. Even with a “soft landing’ we will see growth in excess of 8% GDP through 2010.

• The exchange rate will revalue smoothly.• The financial markets, although not exactly stable,

are also not seriously in danger of toppling.• So long as Foreign Direct Investment continues, we

will see the continuation of an export driven economy.


Agenda




• Conclusions


China’s container exports continue to grow at double-digit rates – NAFTA’s share has hit 45%.

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

NAFTA World Total

TEU exports climb by 14.3% in 2006.



Mexico joins China’s million-TEU club

2010 2006-10United States 12,084,640 9.8%Japan 3,778,186 9.1%Mexico 2,798,144 15.5%South Korea 1,862,507 11.4%Germany 1,554,331 10.1%United Kingdom 1,447,126 11.2%

China/HK - Largest Export Markets

Mexico already imports 1.5 million full TEUs from China (2006).

Mexico is the fastest-growing large market for China/HK. Is Mexico prepared for this?


Punt

a C

olon

et

Some Mexican alternatives are being discussed – to serve the US market. Even more attention if the Panama Canal is not expanded.

Lazaro Cardenas

Manzanillo

Alfa-Omega Line

• Container volumes will continue to grow.

• USWC port and rail congestion could return – 5 years?

• All-water service costs may go up.• There are wrinkles to iron out.


Latin America’s sea trade is expected to grow in line with general world sea trade growth. Imports will outpace exports.

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Latin America Imports Latin America Exports

2006 Cr% 06 2005-10 2005-20Imports 4,429,737 6.1% 4.9% 4.4%Exports 6,811,160 6.3% 3.9% 3.3%


When Mexico is added, the growth is enormous in the future. Imports from the Far East – shown below.

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

TEUs to Latin America - West Coast

West Coast South America Central America & Caribbean Mexico


Agenda




• Conclusions


Why do countries fail? 3 main reasons

1. DICTATORS• They cannot manage everything, especially people’s desire to eat

and be free

2. SHUTTING THE DOORS TO REST OF THE WORLD• Domestic costs grow out of proportion• Cannot take advantage of better products, lower prices, from

abroad• Customers are not satisfied – product selection is limited• Lack of foreign competition causes industries to stagnate• Investments from outside disappear

3. DISEASE

Source: U.S. Government, Central Intelligence Agency


Keys to competitiveness

• Open all the doors to trade –• The more open, the better

• The ports and inland infrastructure must be made more productive and expanded in some cases.

• Asian ports have increased productivity much faster than European or U.S. ports.

1999 2004 CAGRAsian Ports 9,272 16,595 12.3%European Ports 4,284 6,396 8.3%U.S. Ports 2,894 4,018 6.8%

Source: John Vickerman, TransSystems, CI Database, Seaports of the Americas

TEUs/acre/year


Container vessel wait time at LA/LB – a short interruption of service, affecting productivity, can cause . . .

0

50

100

150

200

250

Jan-0

4Feb

-04

Mar-04

Apr-04

May-04

Jun-04

Jul-0

4Aug-04Sep

-04

Oct-04

Nov-04Dec-0

4

Jan-0

5Feb

-05Mar-

05

Apr-05

May-05

No. o

f Ves

sels

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Avg

Day

s at

Anc

hor

No of Container Ships at LA/LB that had to anchor awaiting a berth Average No. of Days at anchor

Source: John Vickerman, TranSystems, derived from data from Marine Exchange of Southern California


… a fast shift by carriers to alternate routes. Here, carriers shifted to the US East Coast through the Panama Canal.

US Coastal Shares, from China, Japan, Taiwan, and S. Korea

46.0%

47.0%

48.0%

49.0%

50.0%

51.0%

52.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

USEC USWC

62% of the growth in US imports from North Asia shifted to the USEC in 2002 – fairly elastic.

And a $13 billion impact on the U.S. economy, in 10 days



Ports are potential bottlenecks in the supply chain.

ProveedorProveedor FabricanteFabricante PuertoPuerto PuertoPuerto AlmacénAlmacén Distr. FinalDistr. Final

Información

ProveedorProveedor FabricanteFabricante PuertoPuerto PuertoPuerto AlmacénAlmacén Distr. FinalDistr. Final

Información


There is a severe need to expand port capacity and throughput capability.

• By 2010, there will be a shortfall of 4.1 million TEUs just in the U.S.*• LA/LB is headed for a capacity crunch

• If port productivity remains unchanged, we will need 405 Ha of new container terminals.*

• Even if the Panama Canal is expanded, we will hit the capacity crunch before 2014.

* A. Scioscia, APM Terminals


If more capacity is not provided in the ports in all of the Americas,

• Cost of containerized goods will rise.• “Just in time” will become a term used in

textbooks only.• Shippers and carriers will look for new

routes.• There will be winners and losers in the

port sector.


What can we do?

• Ports should expand the terminals and yards.• This is difficult in many in-city ports

• Productivity should be improved, to reach the levels already achieved in Asia.

• New technology should be introduced in the yards.• At the berth• In the storage yard• At the gate – better information and weighing technology

• Labor and management should work together to allow new technology to be used in the ports.


All of the stakeholders should come together . . .

Freight Stakeholders CoalitionFreight Stakeholders Coalition

Inland Rivers Ports & Terminals Assoc.

American Trucking Assocs..

Association of American Railroads

Coalition for America’s Gateways and Trade Corridors.

Intermodal Association of North America (IANA)

Waterfront Coalition

International Mass Retailers Assoc.

National Assoc. of Manufacturers

US Chamber of CommerceWorld Shipping Council


Agenda



• Are we ready – and can we compete?

• Conclusions


Bottom Line

• World economic growth will remain robust in 2006, but will slow by year end. Enjoy it now.

• Emerging markets of Asia and Europe will experience the strongest growth; the Eurozone and Japan will lag behind.

• Enormous growth in container traffic within the next 5 years will push many ports to their full capacity limits.

• The key to competitiveness is to expand port and inland infrastructure and make it more efficient.

• If the Panama Canal is not expanded, the entry points may expand to Canada and Mexico.

• Latin America’s competitiveness starts, and ends, with efficient infrastructure to move the containers that are coming . . .and, they are coming!!!!!


Logística e Infraestructura de Transporte:

Clave de la Competitividad Presented to:

XV Congreso Anual Latinoamericano de Puertos

28 de junio, 2006Hilton Colón Hotel

Guayaquil, Ecuador

Presented by:Robert West

Managing DirectorGlobal Trade & Transportation

Global Insight781-301-9078

[email protected]/OAS

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