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AAPA Latin America Ports Congress
22-24 June 2011
JW Marriott
Lima, Peru
Position and Consolidation of the WCSA Hub – Vision
and Geostrategic Analysis
2
Main Topics
Economic growth - looking fairly healthy
Shifting trade patterns
WCSA HUB – Which will it be?
Better Logistics – performing like an orchestra
3
A Personal Announcement
4
(World GDP, Percent change)
The World Economy is still recovering
from the nightmare of 2008-09
Source: IHS Global Insight
-9
-6
-3
0
3
6
9
2000 2002 2004 2006 2008 2010 2012 2014
-10
-8
-6
-4
-2
0
2
4
6
8
10
Real GDP Industrial Production
Cargo trade demand reflects more volatile industrial production
Indust. Production, Percent change
Nightmare
5
Source: IHS Global Insight & Halcrow
Source: Global Insight, Worley Parsons
Real GDP (% change)
The emerging markets have helped to keep the world
from falling into an even deeper recession
and are leading the recovery.
-4
-2
0
2
4
6
8
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
World Advanced Countries Emerging Countries
Gap between
emerging and
advanced countries
will shrink slightly.
US > Europe, Japan
6
-9
-6
-3
0
3
6
9
NAFTA Other
Americas
Western
Europe
Emerging
Europe
Mideast-
N. Africa
Sub-
Saharan
Africa
Japan Other
Asia-
Pacific
2009 2010 2011 2012 2013-20
(Real GDP, percent change)
GDP growth rate differences
affect the pace of trade growth and volumes
by trade partner route
Source: IHS Global Insight & WorleyParsons
Geography of production / consumption is changing as emerging markets
grow 6% on average over the next decade vs. 2.3% for advanced countries.
World’s
Largest
Museum
7
Fastest-Growing South American Importers from USA
-7
-5-3
-1
1
35
7
9
Bra
zil
Arg
entin
a
Nic
arag
ua
Ven
ezuel
a
Chile
Colo
mbi
aPer
u
Pan
ama
2009 2010 2011
(Real GDP, percent change)
Source: Data and tables from IHS Global Insight, CIA Factbook, OECD, Moody’s, Goldmand Sachs
In Latin America, most countries
are expected to have solid economic growth in 2011.
The Gadhafi Group
10
World trade depends on the
strength of the global economy
The World Economic Outlook is for Continued Recovery
The U.S. economy has gained some strength - still bumpy – but will grow faster than Europe or Japan in 2011
Emerging markets will slow a little, but still grow much more rapidly than the developed countries
Commodity prices are increasing – inflation will not be a problem in developed economies (there is still lots of slack), but are a growing concern in the emerging market countries
Interest rates will remain low in the developed countries for a while longer, but keep rising in the big developing countries
Shifting Trade Patterns
11
80,000,000
90,000,000
100,000,000
110,000,000
120,000,000
130,000,000
140,000,000
150,000,000
160,000,000
2008 2009 2010 2011 2012 2013 2014 2015
World TEUs will exceed the 2008 numbers this
year. However, the years of double digit growth
(’03, ’04, ’06) are not to be seen again.
The
Nightmare
8.8%
FULL TEUs
2008-10 0.0%
CAGR
0.0%
2010-15 6.6%
2015-30 5.0%
12
Ocean Container Trade Outlook
Asia – North America container TEU volume growth in 2011 of 8.8% eastbound and 9.1 % westbound is forecasted*.
New big ships are going into Asia-Europe trades with displaced ships moving onto other routes such as N. America. With declining vessel utilization, new capacity has seen transpacific and Asia-Europe spot container rates fall 40 % - 50 % or more since the 2010 peak.
Redeployment of large container vessels, ‘cascading’ onto North – South routes and into other services will add supply, and with reduced load factors will continue to provide pressure for containerization of additional trade.
This supply pressure in the containership sector will continue as the orderbook of new containerships for delivery still represents over 25% of world containership capacity already operating.
* Drewry
13
After the BRICs, it’s the CIVETS
Moderate size, dynamic governments open
to foreign investment, looking for free trade
agreements, building on an “export model”
Colombia
Indonesia
Vietnam
Egypt
Turkey
South Africa
14
Colombia - China has the money
China has increased world trade volumes Now China intends to
change the logistics, too
Lower import costs
Improved logisitcs
China
Colombia
$7.6 billion
A new city near Cartagena
Chinese Development Bank
Operator – China Railway Group
Length – 221km (shorter than
Nica)
A new railway in Colombia?
15
There will have to be more inland infrastructure
to connect the mines with the railway.
16
Short Sea Shipping in MesoAmerica
WorleyParsons is a subcontractor to INECON (Santiago, Chile) to study:*
The demand for “transporte maritimo de corta distancia”
Existing port infrastructure in the ports in the region
The optimal routes and ships - to be developed
Streamlining the procedures: customs, port tariffs, etc. among the nine countries
* Subject to successful contract negotiations
17
WCSA container trade should be
in line with world TEU growth
WCSA Container Trade
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2008 2009 2010 2011 2012 2013 2014 2015
TE
Us
Imports Exports
2011 2011-15
Imports 6.1% 5.5%
Exports 5.3% 3.6%
18
Shifting trade patterns –
Asia becomes #1 for WCSA
Share
2011 2015 2015 Vol
Asia 25.3% 28.3% 1,025,213
North America 30.0% 28.7% 1,040,069
Latin America 18.4% 17.9% 646,899
Europe 19.3% 18.3% 661,473
Rest of World 4.2% 4.1% 147,534
India 1.0% 1.1% 39,354
Australia 0.4% 0.4% 13,178
Middle East 0.7% 0.7% 24,777
Africa 0.7% 0.6% 22,922
3,621,420
Partner share of
total full TEUs
19
New transpacific services to WCSA
In May 2011, capacity on direct services Asia-WCSA jumped by 20%
New: CSAV, CMA CGM, and CSCL Replace 3 services 2500 – 4500 TEU
New: 4200 to 6500 TEU ships
Maersk is re-activating its AC-3 service
20
Callao is halfway between Balboa and San Antonio
1,346
NM
1,346
NMSAN ANTONIO
– Serves a large and growing
domestic market
– Well-positioned to be the
preferred transshipment hub on the
WCSA
21
10,132 NM direct voyage
Economies of scale from bigger ships
Source: www.netpas.net and WorleyParons and Princeton Consultants Route Costing Model
4000 TEU $731
8000 TEU $590
Saving $141
Cost per TEU
Assumes:
Bunker $400/MT
Charter rate: current
22
A Transshipment call in Callao
500NM more
TS Charge = $240
Additional cost of
calling Callao = $163Assumes:
Bunker $400/MT
Charter rate: current
8000 TEU to Callao
4000 TEU feeder
8000
4000
Source: www.netpas.net and WorleyParons and Princeton Consultants Route Costing Model
23
Multiple calls adds 1,200 NM to the voyage
= 11,327 NM
Source: www.netpas.net and WorleyParons and Princeton Consultants Route Costing Model
4000 TEU $770
8000 TEU $633
Saving $137
Cost per TEU
Assumes:
Bunker $400/MT
Charter rate: current
8000 TEU to Callao
4000 TEU feeder
24
Transshipping in Callao makes sense
for a number of reasons
1. Can load the ship in Asia with multi-destination cargo
(improve utilization)
2. Can attract cargo from Colombia, Ecuador, Peru, and Chile
for the backhaul (improve utilization)
3. Take advantage of the long-haul trans-pacific using large
vessels (PPX).
4. An additional transshipment call in Panama provides a link
to USEC and Europe markets.
25
P. CABELLOP. of SPAIN
RIO HAINA
SAN JUAN
CAUCEDO
Caribbean Transshipment Triangle
FREEPORT
COLON/MIT
KINGSTON
CARTAGENA
Some of the Caribbean hubs
are almost at full capacity.
25
At capacity LIMON
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Better Logistics –
performing like an orchestra
ORCHESTRATE
COMMUNICATEBuy – Make – Ship - Sell
COLLABORATE
A Vision Without Execution –
Final thought
is just a Hallucination !
Position and Consolidation of the
WCSA Hub –
Vision and Geostrategic Analysis
28
Success!!