Transcript Document 7184069

The Railway Association of Canada (RAC), Annual
Rail-Government Interface (RGI) Meeting, Ottawa,
May 15, 2007
Ten Global Trends Impacting
North American Rail Freight
Distribution
Jean-Paul Rodrigue
Associate Professor, Dept. of Economics &
Geography, Hofstra University, New York,
USA
Email: [email protected]
Paper available at:
http://people.hofstra.edu/faculty/Jean-paul_Rodrigue
A Shift from Derived to Integrated Transport Demand

The nature of distribution has changed
From push to pull logistics
Transportation and distribution jointly planned
Container yard, Port of Yantian, China
Commodity Chains and Added Value
High
Globalization
Added value
R&D
Sales / Service
Marketing
Branding
Distribution
Design
Concept
Manufacturing
Low
Commodity chain
Logistics
From Push to Pull Logistics
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Freight flow
Manufacturer
Manufacturer
3PL
Distributor
Distributor
Customer
Push
Returns / Recycling
Pull
Point-of-sale data
Customer
The “China Effect” has Profoundly Changed Global
Freight Distribution

The location of production has changed
Global production networks
Shift in the world’s commercial balance
APL Distribution Center, Shenzhen, China
Traffic at the 50 Largest Container Ports, 2004
Tacoma
Seattle
Oakland
Los Angeles
New York/New Jersey
Charleston
Dubai
Long Beach
Jeddah
Salalah
Nhava Sheva
Colombo
Traffic 2004 (TEU)
Less than 2 million
2 to 4 million
Santos
4 to 7 million
Durban
7 to 10 million
Melbourne
More than 10 million
Pacific Asia
Tianjin
Laem Chabang
Port Kalang
Guangzhou
Tanjung Pelepas
Singapore
Tanjung Priok
Manila
Hamburg
Bremen/Bremerhafen
Rotterdam
Antwerp
Felixstowe
Dalian
Quingdao
Shenzhen
Shanghai
Yanti an
Ningbo
Hong Kong
Kaohsiung
Keelung
Europe
LeHavre
Busan
Nagoya
Kobe
Osaka Tokyo
Yokohama
Barcel ona
Valencia
Gioia Tauro
Algeciras
Container Traffic at Major North American Ports, 2005 (TEU)
Vancouver
Fraser
Seattle
Tacoma
Halifax
Portland
Montreal
Boston
New York/New Jersey
Wilmington (DE) Philadelphia
Baltimore
Oakland
Hampton Roads
Los Angeles
Long Beach
Wilmington (NC)
Less than 0.5 M
Charleston
Savannah
0.5 to 1 M
1 M to 2 M
Houston
Gulfport
New Orleans
Jacksonville
2 M to 3 M
More than 3 M
Port Everglades Palm Beach
Miami
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Sectors of American Imports of Asian Goods Through
Maritime Container Shipping, 2004 (in TEUs)
Apparel
Textiles
Machinery
Electrical equipment
Toys
Shoes
Tires
Auto parts
Appliances
Electronics
Furniture
Big box retailer
0
300,000
600,000
900,000
1,200,000
1,500,000
1,800,000
Significant Imbalances in Trade and Freight
Distribution

Imbalanced freight flows
The empty container problem
Empty trucks waiting to enter China, Hong Kong
World’s 10 Largest Exporters and Importers, 2005
Belgium
Imports
Exports
Canada
Italy
United Kingdom
Netherlands
France
Japan
China
United States
Germany
0
200
400
600
800
1,000
Billions of $US
1,200
1,400
1,600
1,800
Balance of Containerized Cargo Flows along Major
Trade Routes, 1995-2006 (in millions of TEUs)
0
1995
1996
-2
-4
-6
-8
-10
-12
-14
-16
-18
Europe/USA
Asia/Europe
Asia/USA
1997
1998
2000
2001
2002
2003
2004
2005
2006
100.0
2.4
2.2
2.0
1.8
10.0
1.6
Ratio
1.4
1.2
1.0
1.0
0.8
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
0.6
0.4
0.2
0.1
0.0
Loaded (inbound)
Loaded (outbound)
Loaded Ratio (Outbound / Inbound)
Empty (inbound)
Empty (outbound)
Empties Ratio (Outbound / Inbound)
Millions
Containers Handled by the Port of Vancouver, 19972006 (in TEU)
Private Global Freight Operators

The value capture of global supply chains
Global port holdings & 3PL
Positioning of intermodal assets
Gaining a foothold in major gateways
“Maersk Sealand” Locomotive, Landers Yard (NS), Chicago
The Value Capture Process along Commodity Chains
Port Authority
Maritime Services
Port Services
Inland Services
Port Holding
Vertical Integration
Maritime
Shipping
Port Terminal
Operations
Horizontal Integration
Inland Modes
and Terminals
Commodity Chain
Distribution
Centers
Majort Port Holdings, 2007
Dedicated Maritime Container Terminals
APM Terminals
Dubai Ports World
Hutchison Port Holdings
Port of Singapore Authority
Eurogate
Stevedoring Services of America
Pacific Asia
Europe
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Container Port Traffic and Ownership of Major Rail Lines, 2005
Fraser
Burlington Northern Sante Fe (BNSF)
Kansas City Southern (KCS)
Canadian National (CN)
Norfolk Southern (NS)
Canadian Pacific (CP)
Union Pacific (UP)
CSX Transportation (CSXT)
Other
Ferromex (FNM)
Vancouver
Tacoma
Seattle
Halifax
Portland
Montreal
Boston
New York/New Jersey
Wilmington (DE) Philadelphia
Baltimore
Oakland
Hampton Roads
Long Beach
Los Angeles
Wilmington (NC)
Charleston
Savannah
Jacksonville
Houston
Gulfport
New Orleans
Port Traffic in TEU (2005)
Less than 300,000
300,000 to 500,000
500,000 to 1,000,000
Port Everglades Palm Beach
1,000,000 to 3,000,000
Miami
More than 3,000,000
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Redefinition of the Maritime / Land Interface

Port regionalization
Inland terminals
Rail integrated with port operations
“Emma Maersk”, 12,500 TEU, Rotterdam, Netherlands
Port Inland Distribution Network and Freight
Clusters
Intermodal Integration is Still in its Early Stages

Expansion and diffusion to new markets
Advanced containers
Container waiting to be loaded, Shenzhen, China
World Container Traffic, 1980-2005, and Guesses for
up to 2020
1000
900
800
Million TEU
700
600
500
400
300
200
100
0
1980
1985
1990
1995
2000
2005
2010
2015
2020
Higher Costs for Inland Freight Distribution

Peak oil
Congestion
Modal shift
Chassis waiting to be picked, Corwith Rail Yard, Chicago
World Annual Oil Production (1900-2005) and Peak
Oil (2010 scenario)
30
Billions of barrels
25
Actual
2010 Peak
20
15
10
5
0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
The World’s Largest Oil Fields, 2005
Oil Field
Output (MBD) % of national
output
Status
Ghawar (Saudi Arabia)
4.5
40%
Possibly declining
Cantarell (Mexico)
2.0
60%
Declining
Burgan (Kuwait)
1.7
68%
Declining
DaQing (China)
1.0
40%
Possibly declining
Level of Congestion of the Interstate Highway
System
Transmodal Operations: The Next Frontier in North
American Rail Distribution

Advanced rail terminals
Higher throughput
Translisft crane, NS Rutherford yard, PA
Number of Lifts at Major Intermodal Rail Terminals, Chicago, 2005
Other
CN (Canadian National)
Bensenville (CP)
CPRS (Canadian Pacific)
BNSF (Burlington Northern Santa Fe)
CSXT (CSX Transportation)
Global II (UP)
NS (Norfolk Southern)
Number of Lifts
UP (Union Pacific)
Global I (UP)
Less than 40,000
Cicero (BNSF)
40,000 to 200,000
Canal Street (UP)
Corwith (BNSF)
200,000 to 350,000
Lake Michigan
47th/51st Street (NS)
59th Street (CSX)
350,000 to 500,000
Bedford Park (CSX)
Willow Springs (BNSF)
63rd Street (NS)
Landers / Hanjin (NS)
More than 500,000
Calumet (NS)
Yard Center (UP)
Moyers Gateway (CNIC)
Joliet (BNSF)
0
Source: US National Transportation Atlas
5
10
20 Miles
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Simulation of a Direct Transmodal Rail Operation
Thruport: Full and Hybrid Configurations
CRANE #1
Full
Hybrid (2-1)
CRANE #1
Potential Location of Major Transmodal Rail Facilities:
Maritime Gateways and Inland Hubs
Calgary
Vancouver
Seattle
Regina
Winnipeg
Tacoma
Montreal
Minneapolis
Chicago
Oakland
Kansas City
New York/New Jersey
St Louis
Hampton Roads
Memphis
Long Beach
Los Angeles
Dallas / Fort Worth
Houston
Charleston
Savannah
Maritime Rail Gateway
Transmodal Rail Hub
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Time Factors more Embedded Within Rail
Operations

Improving the velocity of freight
Rail distribution as an element of supply chains
UPS Willow Springs Distribution Center, Chicago
Logistics and the Acceleration of Freight
Speed barrier
Transshipment
Pull Logistics
Logistical threshold
Containerization
Push Logistics
Shipment
Logistical Improvements, Manufacturing Sector,
1960s to 2000s
20
40
Logistics Costs (% GDP)
18
Cycle Time Requirements (days)
% of GDP
14
12
30
25
25
10
20
8
15
6
10
4
7
2
0
1960s
1970s
1980s
5
4
3
1990s
2000s
0
Days
16
35
Inventory Costs (% GDP)
35
The American Economy is Essentially Bankrupt

Debt and asset inflation
Misallocation of capital
Currency leverage
Future growth expectations compromised
“Flipper Central”, Phoenix, Arizona (or any neighborhood near you)
The “Perpetual Motion” Machine: The Dynamics of
the World’s Most Significant Trade Relationship
USD
$ for goods
Unemployment
Investment
Goods
Interest Rates
Borrowing
Bonds (IOUs)
Reserves
China
$ for bonds
USD
Asset Inflation
Debt
United States