Canada’s Asia-Pacific Gateway and Corridor Research Canada’s Asia-Pacific Gateway and Corridor Research Consortium, Vancouver, British Columbia, May 2-4 Consortium, Vancouver, British Columbia, May 2-4 20072007

Corridors and the Maritime / Corridors and the Maritime / Land Interface: North America Land Interface: North America and the Pacificand the Pacific

Jean-Paul RodrigueAssociate Professor, Dept. of Economics & Geography, Hofstra University, New York, USA

Email: ecojpr@hofstra.eduPaper available at:http://people.hofstra.edu/faculty/Jean-paul_Rodrigue

Mounting Capacity and Time Pressures in Global Freight Distribution

■ Time is the essence…• Surprising time underperformance:

• Only 63% of transpacific container vessels arrived on time at their scheduled port calls.

• 53% for transatlantic port calls.• The major factor behind delays is port congestion:

• Multidimensional concept.• Physical docking capacity.• Transshipment capacity.• Storage capacity.• Inland capacity.

• Reinforce the importance of the maritime / land interface.

A Hard Pill to Swallow: The Emma Maersk

Logistics and the Acceleration of Freight

■ The velocity of freight• Shipment and transshipment.• No significant speed

improvements in recent decades.

• Intermodal operations; the most important element.

• Logistical threshold:• Time based management of

distribution becomes a possibility.

• From push (supply based) to pull (demand based) logistics.

Push Logistics

Shipment

Transshipment

Pull Logistics

Containerization

Speed barrier

Logistical threshold

Elements of the Maritime / Land Interface

Port System

Foreland (Shipping Network)

Road Rail Coastal / Fluvial

Hinterland (FDC)

Corridors and Hubs

Gateways

Mari

tim

e F

reig

ht

Dis

trib

uti

on

Inla

nd

Fre

igh

tD

istr

ibu

tion

Foreland: Liner Shipping Networks

Conventional liner / break bulk services

Mainline services

Feeder services

First order network

Second order network

Third order network

Regional Port System

Regional Port System

Two Major Transpacific Pendulum Routes Serviced by OOCL, 2006 (The Wal-Mart Express)

Seattle

Oakland

Vancouver

Los Angeles

Kobe Tokyo

Pusan

Nagoya

Shekou

Qingdao

Shanghai

KaohsiungHong Kong

Singapore

Laem Chabang

Ningbo

Source: OOCL Web Site

49 Days

40 Days

Note: Paths are approximate and transit time includes port time

Northwest Express (NWX)

South China Express (SCX)

Largest American Importers of Asian Goods Through Maritime Container Transport, 2004 (in TEUs)

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000

Wal-Mart

Home Depot

Target

Sears (K-Mart)

Ikea

Lowe's

Costco

Ashley Furniture

Payless ShoeSource

Samsung

Matsushita

Toyota

Hamilton Beach

Honda

CVS (Eckerds)

Main North American Trade Corridors and Metropolitan Freight Centers

Miami

Boston

Dallas

Denver

Norfolk

Atlanta

Memphis

Halifax

Detroit

Toronto

Chicago

Houston

Phoenix

Seattle

Calgary

Edmonton

Winnipeg

Montreal

New York

Portland

Baltimore

Charlotte

Cleve land

St. Louis

San Diego

Vancouver

Charleston

Pittsburgh

Cincinnati

New Orleans

Kansas City

Minneapolis

Los Angeles

Philadelphia

Oklahoma Ci ty

San Francisco

Salt Lake City

Hub

Gateway

The Hinterland Effect: Interdependencies and Imbalances

■ Macro-economic and physical imbalances• Globalization has made the economies of the Pacific Rim more

integrated.• These interdependencies however come with acute imbalances.• The core of these imbalances is at start macro-economic:

• Comparative advantages.• Foreign direct investments.• Debt and asset inflation.

• Macro-economic imbalances have an outcome in the physical world of freight flows:

• International trade.• Container flows.• Transportation rates.• Structure of long distance transport services.

The “Perpetual Motion” Machine: The Dynamics of the World’s Most Significant Trade Relationship

Goods

Bonds (IOUs)

Asset InflationDebt

Reserves

Interest RatesUnemployment

$ for goods

$ for bonds

United StatesChina USD

USD

BorrowingInvestment

World’s 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 Kingdom

Italy

Canada

Belgium

Billions of $US

Imports

Exports

Containerized Cargo Flows along Major Trade Routes, 1995-2006 (in millions of TEUs)

4.0

5.2

5.6

7.2

8.8

10.2

12.4

13.9

14.5

3.5

3.3

3.3

3.9

3.9

4.1

4.2

4.3

4.9

2.8

3.5

4.5

5.9

6.1

7.3

8.9

9.9

12.7

2.3

2.7

3.6

4.0

4.2

4.9

5.2

5.6

7.3

1.2

1.3

2.2

2.7

1.5

1.7

1.7

1.8

2.6

1.4

1.7

2.9

3.6

2.6

2.9

3.2

3.3

4.2

0 10 20 30 40 50

1995

1998

2000

2001

2002

2003

2004

2005

2006

Asia-USA

USA-Asia

Asia-Europe

Europe-Asia

USA-Europe

Europe-USA

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 - EuropeEurope - Asia

Kobe

Tokyo

OsakaBusan

Ningbo

Nagoya

Manila

Dalian

Yantian

Tianjin

Keelung

Yokohama

Shenzhen

Shanghai

Quingdao

Singapore

Kaohsiung

Hong KongGuangzhou

Port Kalang

Laem Chabang

Tanjung Priok

Tanjung Pelepas

Tacoma

FraserSeattle

Oakland

Portland

Vancouver

Anchorage

Long BeachLos Angeles

Pacific Asia

North American West Coast

2004 Traffic

Less than 2 million TEU

2 million to 4 million TEU

4 million to 7 million TEU

7 million to 10 million TEU

More than 10 million TEU

Container Traffic at Major Transpacific Container Ports: Mirror Images?

TokaidoYellow SeaRim

Sunan Delta

Pearl River DeltaTaiwan / Fujian

Singapore San Pedro Bay

San Francisco Bay

Puget Sound

Prince Rupert

Ensenada

Port Holdings as Elements of the Maritime / Land Interface

Global Port Terminal Ownership, 2001

0 10 20 30 40 50

Global PortHoldings

Ocean Carriers

Port Authorities

Other Private

Share of global port container throughputShare of global terminal ownership

■ Horizontal integration using fixed assets• Gain a foothold in a wide variety of

markets (strategic positioning).• Capture value added activities

linked with inland distribution.• Financial assets.• Managerial expertise.• Gateway access.• Leverage.• Traffic capture.• Global perspective.

Pacific Asia Europe

APM Terminals

Dubai Ports World

Hutchison Port Holdings

Port of Singapore Authority

Eurogate

Stevedoring Services of America

Dedicated Maritime Container TerminalsMajort Port Holdings, 2007

Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University

Port Holdings at Transpacific Container Ports

Pacific Asia

North American West Coast

AIG (American International Group)

APM (A.P. Moller Group)

DPW (Dubai Ports World)

EVG (Evergreen)

HAN (Hanjin)

HPH (Hutchison Port Holdings)

OOCL (Orient Overseas Container Line)

PSA (Port of Singapore Authority)

SSA (Stevedoring Services of America)

TokaidoYellow SeaRim

Sunan Delta

Pearl River DeltaTaiwan / Fujian

Singapore San Pedro Bay

San Francisco Bay

Puget Sound16 (3)10 (6)

6 (2)

14 (4)5 (3)

8 (3)

9 (6)

4 (3)

8 (6)

Gateways and Hinterland Effect

Efficient Inland Freight DistributionInefficient Inland Freight Distribution

Pacific Asia North American West Coast

SEZ

Corridor

Container Transport Costs from Inland China to US West Coast ($US per TEU)

0 500 1000 1500 2000 2500

Land access to port(China)

Port handling (China)

Maritime transport

Port handling (USA)

Land access to finaldestination (USA)

Containers Handled by the Port of Los Angeles, 1995-2006 (in TEU)

0.1

1.0

10.0

100.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

0

1

2

3

4

5

6

7

8

9

Mill

ions

Loaded (inbound) Empty (inbound)

Loaded (outbound) Empty (outbound)

Loaded Ratio (Outbound / Inbound) Empties Ratio (Outbound / Inbound)

Alameda Corridor

Port of Los Angeles / Long Beach, Inland Flows

Marine Term

inal

On-dock rail yards

Near-dock rail yards

Off-dock rail yards

Transloading facility

Warehouse

Transloading facility

Warehouse

Non-local destination

Non-local destination

Non-local destination

Off-dock rail yards

Non-local destination

Non-local destination

Local destination

16%

13%

22%

13%

34%

2%Truck

Rail

Intra-terminal

The “Agile Port” System (Maritime / Rail Container Terminal Cluster)

On-dock rail terminal

Dedicated Rail Corridor

Local & regionaldistribution

Local & regional distribution

Maritime / Land Interface

National raildistribution

Foreland Hinterland

Port Terminal Inland Rail Terminal

Transloading

Miami

Boston

Houston

Halifax

Savannah

PortlandMontreal

Gulfport

Vancouver

Baltimore

Palm Beach

Charleston

New Orleans

Philadelphia

Jacksonville

Hampton Roads

Wilmington (NC)

Wilmington (DE)

Port Everglades

New York/New Jersey

Tacoma

Fraser

Seattle

Oakland

Long BeachLos Angeles

Container Port Traffic and Ownership of Major Rail Lines, 2005

Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University

Port Traffic in TEU (2005)

Less than 300,000

300,000 to 500,000

500,000 to 1,000,000

1,000,000 to 3,000,000

More than 3,000,000

Burlington Northern Sante Fe (BNSF)

Canadian National (CN)

Canadian Pacific (CP)

CSX Transportation (CSXT)

Ferromex (FNM)

Kansas City Southern (KCS)

Norfolk Southern (NS)

Union Pacific (UP)

Other

Regina

Calgary

Memphis

Chicago

Winnipeg

St LouisKansas City

Minneapolis

Dallas / Fort Worth

Houston

Savannah

Montreal

Vancouver

Charleston

Hampton Roads

New York/New Jersey

Tacoma

Seattle

Oakland

Long BeachLos Angeles

Potential Location of Major Transmodal Rail Facilities:Maritime Gateways and Inland Hubs

Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University

Maritime Rail Gateway

Transmodal Rail Hub

Conclusion: Improving the North American Maritime / Land Interface

■ Transpacific trade• Substantial rebalancing of the global economy.• Emergence of global production networks.• Imbalanced freight flows.

■ The Maritime / land interface• An interaction between maritime shipping networks, gateways

and their corridors.• Improving the velocity of freight from an intermodal and

transmodal perspective.• The throughput of a gateway must be supported by the

throughput of its corridors (vice-versa).• The introduction of a new generation of containerships (above

10,000 TEU) may force solutions.

The Future of the Maritime / Land Interface: Maritime Shipping Companies taking Control of Inland Distribution?