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Port Hinterland Divergence along the North American Eastern Seaboard

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Port Hinterland Divergence along the North American Eastern Seaboard Powered By Docstoc
					                            International Congress on Ports in Proximity:
                            Competition, Cooperation and Integration
                            Antwerp / Rotterdam, December 5 – 7 2007




Port Hinterland Divergence along the
North American Eastern Seaboard
Jean-Paul RODRIGUE
Department of Economics & Geography
Hofstra University, Hempstead, New York 11549, USA

Changqian GUAN
Intermodal Transportation & Logistics Program, Department of Marine
Transportation, U.S. Merchant Marine Academy, Kings Point, New York,
USA
Ports in Proximity along the Eastern Seaboard

  A. Globalization, Trade and Port Divergence in North
     America
  B. Cargo Volume Growth and Shipping Services
  C. Port Regionalization and Potential Port Hinterland
     Divergence
  D. Conclusion: From Divergence to Convergence?
A. Globalization, Trade and Port Divergence in
North America
  1. Factors of Port Divergence
    •   What are the main processes behind divergence?
  2. Containerized Traffic Trends
    •   How containerization has evolved along the East Coast in
        recent years?
  3. Traffic Concentration
    •   What is the extent of the divergence taking place?
1. Factors of Port Divergence

  Site             Conventional factor (modal access and
                   accessibility). Reinforced by new generations of
                   containerships.
  Ocean Carriers   Choice of port calls and frequency of service.
                   Choice of network structure.
  Port Operators   Choice of asset allocation. Differences in
                   terminal productivity.
  Policy           Port governance and public funding. Landlord
                   ports and privately developed ports. Shape of
                   private / public partnerships.
  Hinterland       Access to long distance transport corridors.
                   Access to the regional customer base.
  Supply Chain     Production and distribution requirements
  Management       (scheduling, frequency).
2. A Schematic Representation of the Eastern
Seaboard
  St. Lawrence           Upper Range            Mid Range          Lower Range
   “The Funnel”        “The Empty Sink”        “The Full Sink”    “The Filling Sink”
    Direct to the        Weak handles:      Strong handles: New    Strong center:
bottleneck: Montreal   Halifax and Boston    York and Hampton       Charleston /
                                                   Roads             Savannah




                  Upper Range                               Lower Range
                                    Mid Range

  St. Lawrence
2. Container Traffic at Eastern Seaboard Ports,
2006
             St. John's       0.12
       Wilmington(NC)          0.18
               Boston          0.20
           Palm Beach           0.24        4th Tier (Niche ports)
          Philadelphia          0.25
       Wilmington(DE)           0.26
                Halifax             0.53
             Baltimore               0.63
          Jacksonville                 0.77           3rd Tier (Regional Gateways)
       Port Everglades                   0.86
                Miami                      0.98
                                                                            Divergence Threshold
              Montreal                          1.29
            Charleston                                   1.97
                                                                     2nd Tier (Gateways)
       Hampton Roads                                      2.05
             Savannah                                       2.16                     Articulation Gateway
   New York/New Jersey                                                                          5.09
                          0             1            2           3            4            5                6
                                                                                                 Millions
3. Concentration of Containerized Traffic, 1985-
2006
                                                          100%


     Diffusion of Containerization
                                                          80%


                                     Hinterland Effect    60%
                                                                 Other
                                                                 Top 5
                                                          40%


                                                          20%


                                                          0%
     1985       1990        1995       2000        2006
3. Concentration of Containerized Traffic, 1985-
2006 (Lorenz Curve)
                      1

                     0.9

                     0.8

                     0.7
   Cumulative TEUs




                     0.6

                     0.5
                                                                 2006
                     0.4
                                                   Divergence    2000
                     0.3                                         1995
                     0.2                          Convergence    1990
                                                                 1985
                     0.1

                      0
                           0   0.2   0.4          0.6      0.8          1
                                     Cumulative Ports
B. Cargo Volume Growth and Shipping Services

  1. Traffic trend among major East Coast Ports
    •   From convergence to divergence?
  2. The resurgence of All Water Services
    •   What are the underlying factors?
  3. Service routes and transit times
    •   How Landbridge and All Water Services compare?
1. Change in Container Traffic at Eastern
Seaboard Ports
                 0.77 M TEU 8.36 M TEU
                                            7.19 M TEU


   1.31 M TEU




                +0.04 M TEU
                              +3.02 M TEU   +2.01 M TEU

  +0.28 M TEU
1. Strong Divergence: Montreal and Halifax

                                                                                             1,400,000
         Halifax
         Montreal
                                                                                             1,200,000


                                                                                             1,000,000


                                                                                             800,000


                                                                                             600,000


                                                                                             400,000


                                                                                             200,000


                                                                                             0
    82

           84

                  86

                         88

                                90

                                       92

                                              94

                                                     96

                                                            98

                                                                   00

                                                                          02

                                                                                 04

                                                                                        06
  19

         19

                19

                       19

                              19

                                     19

                                            19

                                                   19

                                                          19

                                                                 20

                                                                        20

                                                                               20

                                                                                      20
1. Strong Divergence: Montreal and Halifax

                                                                                              45%

                        Convergence                          Divergence
                                                                                              35%

                                                      Zero-sum game?
                                                                                              25%


                                                                                              15%


                                                                                              5%


                                                                                              -5%
     82


            84


                   86

                          88


                                 90


                                        92

                                               94


                                                      96


                                                             98

                                                                    00


                                                                           02


                                                                                  04


                                                                                         06
   19


          19


                 19

                        19


                               19


                                      19

                                             19


                                                    19


                                                           19

                                                                  20


                                                                         20


                                                                                20


                                                                                       20
                                                                                  Halifax     -15%
                                                                                  Montreal
                                                                                              -25%
1. From Convergence to Divergence: the
American East Coast
                                                                                                                                                            6,000,000
         Charleston
         Norfolk
         New York                                                                                                                                           5,000,000
         Savannah

                                                                                                                                                            4,000,000


                                                                                                                                                            3,000,000


                                                                                                                                                            2,000,000


                                                                                                                                                            1,000,000


                                                                                                                                                            0
  1985
         1986
                1987
                       1988
                              1989
                                     1990
                                            1991
                                                   1992
                                                          1993
                                                                 1994
                                                                        1995
                                                                               1996
                                                                                      1997
                                                                                             1998
                                                                                                    1999
                                                                                                           2000
                                                                                                                  2001
                                                                                                                         2002
                                                                                                                                2003
                                                                                                                                       2004
                                                                                                                                              2005
                                                                                                                                                     2006
1. From Convergence to Divergence: the
American East Coast (Annual Growth Rates)
                                                       45%


          Divergence   Convergence        Divergence   35%


                                                       25%


                                                       15%


                                                       5%


                                                       -5%
      85
      86
      87
      88
      89
      90
      91
      92
      93
      94
      95
      96
      97
      98
      99
      00
      01
      02
      03
      04
      05
      06
    19
    19
    19
    19
    19
    19
    19
    19
    19
    19
    19
    19
    19
    19
    19
    20
    20
    20
    20
    20
    20
    20
                             Charleston     Norfolk    -15%

                             New York       Savannah
                                                       -25%
2. The Resurgence of All Water Services to the
East Coast
                        Singapore
                                          Colombo


             “China Effect”
                                    Hong Kong
                               Shanghai
                      Kobe     Pusan                           Jeddah




                                                                            E qu
               Eastbound




                                                                             a tor
                 Route
                                                              Gioia Tauro

                                                                Algeciras


                               Seattle / Vancouver
                                                          Westbound
                                                            Route
                           LA/LB
      West Coast Congestion
       Landbridge Congestion Landbridge                       Growth in the Southeast
                                                              New Distribution Gateway
                                                     Panama
                                                      Route                   
3. Service Routes and Transit Times: Far East to
New York

   Singapore                                           23           -1
                                                         24

   Hong Kong                              18
                                                   22               +4

   Kaohsiung                                                25      +7
                                          18

    Shanghai                                           23           +7
                                     16

                                                              26
      Tokyo                    14                                   +12

                                                  21
      Busan                    14                                   +7

               0   5   10      15          20            25        30

                       Land Bridge    All Water
3. Service Routes and Transit Times: Far East to
Norfolk, Virginia

   Singapore                                       23             -1
                                                     24

   Hong Kong                              18
                                                  22              +4

   Kaohsiung                                            25        +7
                                          18

                                                       24
    Shanghai                         16                           +8

                                                            26
      Tokyo                    14                                 +12

                                                   23
      Busan                    14                                 +9

               0   5   10      15          20          25        30

                       Land Bridge    All Water
3. Service Routes and Transit Times: Far East to
Savannah, Georgia

   Singapore                                             25        -3
                                                              28

   Hong Kong                              18
                                                  21               +3

   Kaohsiung                                       22              +3
                                           19

                                                   22
    Shanghai                              18                       +4

      Tokyo                                             24         +8
                                     16

                                                         25
      Busan                    14                                  +11

               0   5   10      15          20           25     30

                       Land Bridge    All Water
3. The Resurgence of All Water Services to the
East Coast
        Zone of Contestability      NY

                         Savannah



                Eastbound




                                                                            E qu
                  Route




                                                                             a tor
                                                                        New Direct Links
                                                                        17 (2002)
                                                                        26 (2007)



             New York (1):                                 3   Westbound
             75% (2005)                                          Route
             60% (2020)
                                             1            New York (2+3):
                                                          25% (2005)
                                         Landbridge       40% (2020)
                                         2            Panama
                                                       Route
3. Service Time Reliability to the EC: All Water
Services vs. Transpacific / Landbridge
                                             Port congestion
        Transpacific /
                                             Offshore transshipment
        Landbridge
                                             Transloading
                                             Unit train assembly
                                             Rail congestion
                                             Transmodal operations
                                             Road congestion
                         18 days

          All Water                          Port congestion
          Services                           Offshore transshipment
                                             Panama / Suez Delays




                         NY: 22 days
                         Savannah: 21 days
3. Monthly Inbound Traffic, Port of Los Angeles (TEUs)


    450,000

    400,000

    350,000

    300,000
                                                                   2004
    250,000                                                        2005
                                                                   2006
    200,000
                                                                   2007
    150,000

    100,000

     50,000

         0
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3. Summary

  Supply chain management
    • Landbridge is critical for high value cargo from East Asia
      due to its short total transit time.
    • The 7 day difference is quite critical.
  Inland areas cargo (e.g. Chicago)
    • Landbridge still has an overall advantage.
  Hong Kong and Singapore
    • Points of equilibrium between landbridge and all water
      service has a slight advantage in terms of transit time.
  South Atlantic ports
    • All water service is very competitive.
    • South Atlantic ports are in a good position to compete with
      North-Mid Atlantic ports for hinterland markets.
C. Port Regionalization and Potential Port
Hinterland Divergence
  1. Port Infrastructure Development and Intermodal
     Services
    •   What are the major infrastructure projects?
  2. The reemergence of the “hinterland factor”
    •   How the maritime / land interface is being modified?
  3. Port regionalization strategies
    •   How specific gateway ports are improving their regional
        hinterland access?
1. Port Infrastructure Development and
Intermodal Services

     New York       Hampton Roads          Charleston          Savannah
   Dredging (50’)     APM Terminal        New Terminal         New berth
    On-dock rail      Craney Island          (2013)        Improved rail yards
       PIDN          Terminal (2017)    Terminal upgrade
                    Heartland Project    Dredging (47’)
2. The Reemergence of the “Hinterland
Factor”: Rail Gateways and Metropolitan
Freight Centers




  New York                                 Hampton Roads
  • 85% are local cargo                    • Over 47% of cargo originates or is destined for
  • 14% is distributed by rail             locations within Virginia
  • Less than 1% is distributed by water   • 53% of cargo are hinterland bound
2. The Reemergence of the “Hinterland
Factor”: Inland Corridors
2. Heartland Corridor Project, Virginia /
Chicago


                                        Current Double Stack Route
                                         (1,264 miles to Chicago)




                                    Virginia Inland Port
           Heartland Corridor
        (1,031 miles to Chicago)


            28 Tunnels Modified
            to a 20’ 3” Clearance
D. Conclusion: Challenges and Opportunities
of the New Panama Canal (New Panamax –
12,000 TEU)     Singapore
                                     Colombo
                            Hong Kong
                          Shanghai
               Kobe       Pusan                          Jeddah
                                                         Suez




                                                                      E qu
                                                                       a tor
                                                        Gioia Tauro


           Eastbound                                      Algeciras
             Route


                                                      Westbound
                                                        Route

                  LA/LB


                                           Kingston
                                  Panama
  D. Conclusion: Challenges and Opportunity for
  Arctic Routes

                                                                                                                                                       Vostochny

                                        Oakland
                               Long Beach                                                                                                                       Harbin
                                                                                                                                                                                            Lianyungang
                                                                                                                                                                                  Beijing
                                               Tacoma         Vancouver                                               Port
                             Salt Lake City
      s




                                                                                                                      Gauge Change
   S tate




            El Paso
                                                                                                                                                Zabaykalsk
                                                                                                                      Rail Terminal

                                                                                                                                                                    Ulaanbaatar
                                                                                                                                                                                            China
                                                                Canada     Arctic Bridge                                                                                                         Lanzhou
      d




                                                                                                                                                      Irkutsk
Un ite




                                                                           Northern Sea Route                                                                            Mongolia

                                                                           Northwest Passage
              Houston
                             Kansas CIty
                      Minneapolis                                                                                              Russia
                          Chicago
                                                                                                                                                                                    Urumqi
                                                                                                                                              Novosibirsk
                                                                                                                                                                             Druzhba
                                                                                                                                                                     Lokot

                  Savannah

                                        Montreal                                                                                                                  Astana
                                  New York
                      New York                                                                                               Yekat erinburg           Presnogorkovka
                                                                                                                                                            Kazakhstan
                                                                                                                                         Perm'

                                      Halifax
                                                                                           Haparanda/Tornio        Archangel'sk
                                                                                                     Oulu                  Vologda
                                                                                                              Vainikkala
                                                                                                                 St. Petersburg
                                                                                                                        Moscow

                  Maritime Segment
                  Rail Main Trunk (Broad Gauge)
                  Rail Main Trunk (Standard Gauge)                                Rotterdam           Brest



                                  Azimuthal Equidistant Polar Projection
D. Conclusion: From Divergence to Convergence?

   There is a divergence favoring a specific number of
    ports
     • Site: Limited number able to accommodate larger ships.
     • Ocean carriers: Emergence of all water services as a new
         dimension of standard port calls.
     •   Port operators: Allocation of capital investment.
     •   Policy: Ongoing privatization, albeit at a slower pace.
     •   Hinterland: Development of rail corridors, particularly
         towards the Chicago hub.
     •   Supply chain management: A stronger factor than
         accounted.

				
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