Canadas Asia-Pacific Gateway and Corridor Research Consortium, Vancouver, British Columbia, May 2-4 2007

Corridors and the Maritime / Land Interface: North America and the Pacific
Jean-Paul Rodrigue
Associate Professor, Dept. of Economics & Geography, Hofstra University, New York, USA
Email: ecojpr@hofstra.edu Paper 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
Speed barrier Transshipment

Pull Logistics
Logistical threshold Containerization

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

Elements of the Maritime / Land Interface

Foreland (Shipping Network)
Maritime Freight Distribution

Port System
Inland Freight Distribution

Gateways
Road Rail Corridors and Hubs Coastal / Fluvial

Hinterland (FDC)

Foreland: Liner Shipping Networks

Regional Port System

Conventional liner / break bulk services

Regional Port System

Mainline services

Feeder services

Third order network

First order network Second order network

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

Vancouver Seattle

Qingdao Laem Chabang Shekou Shanghai Ningbo Pusan Kobe Tokyo Nagoya

Northwest Express (NWX)

40 Days

Oakland Los Angeles

Hong Kong Kaohsiung Singapore

49 Days

South China Express (SCX)

Note: Paths are approximate and transit time includes port time

Source: OOCL Web Site

Largest American Importers of Asian Goods Through Maritime Container Transport, 2004 (in TEUs)
CVS (Eckerds) Honda Hamilton Beach Toyota Matsushita Samsung Payless ShoeSource Ashley Furniture Costco Lowe's Ikea Sears (K-Mart) Target Home Depot Wal-Mart

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Main North American Trade Corridors and Metropolitan Freight Centers

Edmonton

Vancouver Seattle

Calgary

Winnipeg

Portland Montreal

Halifax

Minneapolis

Toronto Detroit

Boston

Salt Lake City San Francisco Denver Kansas City

Chicago

Cleveland Pittsburgh Cincinnati

New York Philadelphia Baltimore

St. Louis

Norfolk

Los Angeles San Diego Phoenix

Charlotte Oklahoma Ci ty Memphis Atl anta Dallas Charleston

Hub Gateway
New Orleans

Houston

Miami

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 Worlds Most Significant Trade Relationship
USD

$ for goods Unemployment

Interest Rates

Investment

Goods Bonds (IOUs)

Borrowing

Reserves

$ for bonds

Asset Inflation Debt

China

USD

United States

Worlds 10 Largest Exporters and Importers, 2005

Belgium Canada Italy United Kingdom Netherlands France Japan China United States Germany 0 200 400 600 800 1,000 1,200 1,400

Imports Exports

1,600

1,800

Billions of $US

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

2006 2005 2004 2003 2002 2001 2000 1998 1995 0

14.5 13.9 12.4 10.2 8.8 7.2 5.6 5.2 4.0 3.3 4.1 3.9 3.9 4.5

4.9 4.3 4.2 7.3 6.1 5.9 8.9 9.9

12.7 5.6

7.3 1.8 3.3

2.6 4.2

5.2 1.7 3.2 4.9 1.7 2.9

4.2 1.5 2.6 4.0 2.7 3.6

3.6 2.2 2.9

Asia-USA USA-Asia Asia-Europe Europe-Asia USA-Europe Europe-USA

3.3 3.5 2.7 1.3 1.7 3.5 2.8 2.31.2 1.4

10

20

30

40

50

$1,000

$1,500

$2,000

$2,500

$500

$0
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

Maritime Freight Rates (USD per TEU), 1993-2006

Asia - US US- Asia Asia - E urope E urope - Asia

Container Traffic at Major Transpacific Container Ports: Mirror Images?

Pacific Asia

Yellow Sea Rim Dalian

Tianjin Quingdao

Tokaido
Busan

Anchorage

YokohamaTokyo

OsakaKobe Nagoya

2004 Traffic
Less than 2 million TEU 2 million to 4 million TEU

Shanghai

4 million to 7 million TEU

Prince Rupert

Sunan Delta Pearl River Delta Shenzhen Yantian

Guangzhou

Ningbo

7 million to 10 million TEU More than 10 million TEU

Keelung

Taiwan / Fujian
Kaohsiung

Hong Kong Manila

Puget Sound

Vancouver Fraser Seattle Tacoma

Portland

San Francisco Bay

Laem Chabang
Oakland

Singapore
Port Kalang Singapore Tanjung Pelepas

San Pedro Bay

Los Angeles Long Beach

Ensenada
Tanjung Priok

North American West Coast

Port Holdings as Elements of the Maritime / Land Interface

Horizontal integration using fixed assets
Global Port Terminal Ownership, 2001 Other Private

Port Authorities

Ocean Carriers

Global Port Holdings 0 10 20 30 40 50

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.

Share of global port container throughput Share of global terminal ownership

Major t Por t Holdings, 2007

Dedic ated Mar itime Container Ter minals

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

Port Holdings at Transpacific Container Ports

Pacific Asia
AIG (American International Group)

Yellow Sea Rim 14 (4)

Sunan Delta 6 (2) Pearl River Delta 16 (3)

Tokaido 5 (3)

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)

Taiwan / Fujian 10 (6)

Puget Sound 9 (6)

San Francisco Bay

4 (3)

Singapore 8 (3)

San Pedro Bay

8 (6)

North American West Coast

Gateways and Hinterland Effect

Pacific Asia
SEZ

North American West Coast

Corridor

Inefficient Inland Freight Distribution

Efficient Inland Freight Distribution

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

Land access to final destination (USA) Port handling (USA) Maritime transport Port handling (China) Land access to port (China)

500

1000

1500

2000

2500

Containers Handled by the Port of Los Angeles, 19952006 (in TEU)

Millions

100.0

9 8 7

10.0

6 5 4

1.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

3 2 1

0.1
Loaded (inbound) Loaded (outbound) Loaded Ratio (Outbound / Inbound)

0
Empty (inbound) Empty (outbound) Empties Ratio (Outbound / Inbound)

Port of Los Angeles / Long Beach, Inland Flows

Intra-terminal On-dock rail yards Near-dock rail yards Off-dock rail yards Non-local destination Non-local destination Non-local destination Non-local destination

16% 13%

Alameda Corridor Rail

Off-dock rail yards

Marine Terminal

13%
22%

Transloading facility
Warehouse

Transloading facility
Warehouse

Local destination 34%

Truck

Non-local destination

2%

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

On-dock rail terminal Local & regional distribution

Dedicated Rail Corridor

National rail distribution

Transloading
Local & regional distribution

Port Terminal
Foreland

Inland Rail Terminal

Maritime / Land Interface

Hinterland

Container Port Traffic and Ownership of Major Rail Lines, 2005

Burlington Northern Sante Fe (BNSF) Canadian National (CN) Canadian Pacific (CP) CSX Transportation (CSXT)
Fraser Tacoma Seattle Portland Halifax Montreal Vancouver

Kansas City Southern (KCS) Norfolk Southern (NS) Union Pacific (UP) Other

Ferromex (FNM)

Boston

New York/New Jersey Wilmington (DE) Philadelphia Oakland Baltimore

Hampton Roads

Long Beach Los Angeles

Wilmington (NC) Charleston Savannah Jacksonville Houston Gulfport New Orleans Port Everglades Palm Beach Miami

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

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

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

Calgary Vancouver Seattle Tacoma Montreal Minneapolis Regina Winnipeg

Chicago

New York/New Jersey

Oakland

Kansas City

St Louis Hampton Roads

Long Beach Los Angeles Dallas / Fort Worth

Memphis Charleston Savannah

Houston

Maritime Rail Gateway Transmodal Rail Hub

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

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?