Factors Influencing the US Economy
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Transcript Factors Influencing the US Economy
Stephen Fitzroy
Economic Development Research Group, Inc.
www.edrgroup.com
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Vessel Economics and Operations
Suez Canal and US West Coast Competition
Caribbean Transshipments
Competition from Canadian and Mexican Ports
Measures of US Port Capacity
Changes in Landside Logistics
US Energy and Export Policy
What We Should Expect
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Google Maps, April 2014
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All Other Routes
East Coast U.S. Canada-Oceania
East Coast S. America-West Coast…
U.S. Intercoastal
Europe-West Coast U.S./Canada
East Coast U.S.-West Coast C. America
South America Intercoastal
Europe-West Coast S. America
East Coast U.S.-West Coast S. Ameerica
Northeast Asia-East Coast U.S.
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10
20
30
40
50
Tonnes (millions)
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60
70
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90
Lower Relative Costs for Containerized Cargo
Between Northeast Asia and US East Coast
Major shifts of container volumes to US East Coast
Greater Export Opportunities for US Bulk
Commodities
Larger bulk vessels lower US costs
Increased US Container Port Capacity
More surge capacity, more calls
More Demand for Landside Road, Rail and
Distribution Center Capacity
Move containers to inland markets
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Move to larger vessels (13,000 to 18,000TEUs)
driven by operating costs and thin profit margins
Savings can range from 40% to 60% per “slot”
compared to 5000 TEUs and under.
Cascading has already begin – moving larger
vessels into current rotations
New Alliances (P3, G6, CKYH(E) and Chinese
lines) forming quickly
Members will consolidate loads on larger vessels
Fewer calls, but larger volume discharges
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Vessel Operating Costs:
Capital costs
Manning (labor)
Fuel use for main (HFO) and auxiliary (MDO) engines
Stores and lubes
Maintenance
Port costs, insurance, etc.
Maximum Economic Vessel Calls
Three to four after passing through canal
Discharge Rates – Number of TEUs
Loaded/Unloaded
Larger vessels (13k to 18k) discharge 8k to 10k per call
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Source: Mercator International, Panama Canal Expansion Study, June 2012
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Larger vessels (up to 18,000 TEUs) will begin
calling of US West Coast ports this year.
13,000 TEU vessels will begin calling on NY and VA
Ports in 2014Q3
US East Coast will be served by Suez from Asia
Railroad pricing margins for mini-land bridge operations
Pooling of cargoes by alliances will accelerate
this trend
Operating cost will decline well before Panama
Canal expansion is complete
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Canadian ports, especially on West Coast, have
drawn a large share to US-bound Cargo
Productivity and connections to US Midwest are keys
Mexican ports are emerging as low-cost
alternatives
Less congestion and strengthening rail links to Central
US markets
Emergence of manufacturing and “near-shoring
in Mexico may combine with lower labor costs to
stimulate shipment of intermediate goods
through Mexico
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Marine transshipment hubs function in several
ways:
Like the air hub and spoke system – allows for more
efficient operation of larger vessels based on smaller
feeders
Vessel loads can be reconfigured while cargo is in
transit – very important for logistics management
Costs for transfers are low relative to US ports
Locations are directly on routes to/from Panama
Canal and US East Coast or Europe
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Mariel
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Navigational Channel Depth/Vessel Capacity
Only New York, Jacksonville and Houston exceeded
50%
Berth Capacity
Charleston (47%) and Savannah (74%) exceeded 50%
Crane/Lift Capacity
Savannah exceeded 50%
Container Yard Capacity
New York, Virginia Ports, Miami and Houston exceeded
50%
Gate Capacity and Chassis Availability
Source: Container Port Capacity Database, U.S. Army Corps of Engineers, 2010
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Panama Canal Tolls
Transshipment Costs
Port Charges
Terminal Operator Costs
Rail Transportation Costs
Drayage and Chassis Management
“Net” Cost Savings Accruing to Shippers 0 ≤
? ≤ $100
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More On-Dock Rail, Intermodal and Inland Port
Operations Supporting Major Container Ports
Accommodate surge loads and expand market access
Greater emphasis on value-added logistics services
Intensifying Use of Transload Facilities At or
Near Ports
Convert cargo from 40-foot international to 53-foot
domestic loads
Accelerating Trend Towards both Larger and
Smaller Distribution Centers
Larger DCs near ports to redirect imports
Smaller regional DCs to handle same-day fulfillment
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Trade Agreements Affect Volumes and Prices
TPP (Trans-Pacific)
TTIP (Trans-Atlantic)
Bi-Lateral (Columbia, South Korea, Panama)
Commodities Most Likely Affected:
Agriculture
Corn
Soybeans
Energy
LNG
Natural Gas Liquids
Coal
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Likely
Cascading to larger
container vessels
Unlikely
Big savings for shippers
More rapidly than expected, but
not due to the Panama Canal
More competitive US
Exports
Driven by reduced costs for
deep draft bulk vessels and
emerging LNG/Energy
More emphasis on
logistics and supply chain
innovations
To handle container surges in
larger ports)
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Most captured by TSPs
Major Shifts of
Containerized Cargoes
to US East Coast
Re-shoring of
“traditional”
manufacturing
Near-shoring may shorten
supply chains for US
Major highway
investments
Alternatives – Rail/Barge
should be considered
Contact: Stephen Fitzroy
[email protected]
For a copy of this presentation and other EDR Group
Presentations:
http://www.edrgroup.com/ited2014
To access the library of past EDR Group Papers,
Projects and Presentations:
http://www.edrgroup.com/library
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