The Case for Economic Development Corridors

Prepared By: RJ T&L Consulting Ltd.

Prepared For:Eastern Trade Corridor – Forum

March 4 & 5, 2015

Agenda

• Introduction,• The Case For Economic

Development,• Network Thinking,• Defining Supply Chain,• The Start of A Plan.

Introduction

The Van Horne Institute is recognized within Canada and internationally as a leading institute of public policy, education, and research in transportation, supply chain and logistics, and regulated industries.

The Van Horne Institute assists industry, government, and the public in addressing issues affecting transportation, supply chain management and logistics and regulated industries in all areas of relevant to the well-being and growth of industry and commerce.

• Formed in 1991• Affiliated with:

• University of Calgary, • University of Alberta, • Athabasca University, • and SAIT Polytechnic.

www.vanhorne.info

Introduction

Reg Johnston is an independent consultant and a professional engineer. Strong technical knowledge and a large network within the Supply Chain sector are leveraged to deliver high quality research and business development campaigns to his clients.

These clients include:

• The Calgary Regional Partnership (CRP);• The County of Grande Prairie No. #1;• Palliser Economic Partnership (PEP);• Logistics Zone for Progreso, Merida, Mexico.

Mr. Johnston helped in the development of both airport, rail and truck based logistics trade parks -four logistics parks in total (ranging from 100 – 280 acres in size).

The Case For Economic DevelopmentCorridor development leads to investment attraction.

Businesses make investment decisions based on goods movement costs, and performance of corridors/infrastructure systems.

Source: http://www.bloomberg.com/slideshow/2014-01-21/best-countries-for-business-2014.html

The Case For Economic DevelopmentCanada ranks 2nd in the world behind Hong Kong and ahead of the US.

The Case For Economic DevelopmentBloomberg’s methodology includes 4 cost criteria. At least 20% of rank relates

to corridor development. All costs (60 – 80% of ranking) are arguably included in Supply Chain Total Landed Cost calculations.

• Degree of economic integration (weighting of 10%),

• Cost of setting up a business (20%),

• Cost of labour & materials (20%),• Cost of moving goods (20%),• Less-tangible costs (20%),• Readiness of the local consumer

base (10%).

Defining A Logistics NetworkA network is a collection of links and nodes. The goal of a Logistics Network is

to deliver goods to the customer.

DC

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Inbound Links Outbound Links

Nodes: Re-Load, IMS Terminal, Cross Dock, Distribution Center, etc.

Mode Selection

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Supply Chain - Definition

Supply Chain

Logistics

Transportation

A network is a collection of links and nodes. The goal of a Logistics Network is to deliver goods to the customer.

What you include in that network helps define industry terms.

A Corridor is a Collection of Supply ChainsCorridors that reduce the total landed cost of a product are selected for use and

investment.

Source: Calgary Regional Partnership eBook: www.landedcost.ca

North American Corridor Examples

NASCO_OUTLOOK_2014 February 5, 2014 | By Rachel Connell | Page 1 :http://www.flipsnack.com/9988E6CF8D6/fd15bm9n.html

North American Corridor Examples

NASCO_OUTLOOK_2014 February 5, 2014 | By Rachel Connell | Page 1 :http://www.flipsnack.com/9988E6CF8D6/fd15bm9n.html

1) LA to Chicago Corridor not included on the Map.

2) Canadian Asian Pacific Gateway and Corridor goes all the way to Toronto.

Success Measures – Freight Movements

• Top 8 Asia• Rotterdam 11th• LA 19th (9th?)• Vancouver 47th

• No Mexico

Source: http://www.joc.rsvp1.com/port-news/top-50-world-container-ports-2013.html?mgfromtag=form&mgf=1

Success Measures

http://www.avisonyoung.com/fileDownloader.php?file=files/content-files/Research/Links/2014/AYSpring14CanadaUSIndustrialMay13_14.pdf

Economic Development success is measured in GDP, square feet, and jobs.

1. Understand the volumes for products, markets, businesses etc. in your region,

2. Understand the value the region brings to the market place (TLC),3. Do build a plan and business case to support the inland port,4. It’s okay if you don't make it all the way through the plan in one 

process (it will be iterative).

Calgary Hub conference - how to build an inland terminal? Advice from Arènso Bakker at Msc MRICS (Netherlands and international expert in

corridor and inland port development).

The Start of a Plan

The Start of a Plan – What You Are Doing Well

• One major consumption point in Northern East Alberta,

• That is capital projects and energy sector related activity.

• South to North sourcing,• Truck centric,• Outbound products are in a pipe.

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Tips For Finding Your Story

• Note that balance of inbound and outbound flow helps support business case for infrastructure, and keep an eye on diversification,

• Success is already in your communities.

C

1. Is everyone using the same definitions for corridor, supply chain, and other ideas within the discussion?

2. Are you more than an energy sector sourcing supply chain?  3. It’s a good story ‐ are you telling the full story?  4. Do you have data to support and define the market?5. Do you understand the value the region brings to the market place 

(Total Landed Cost, for what shipper/supplier combinations)?6. Do you have a plan to complete a business case?7. It’s iterative, so forums like this are important.

Potential Future Work