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 4th Tier (Niche ports) 3rd Tier (Regional Gateways) Divergence Threshold 2nd Tier (Gateways) Articulation Gateway 3. Concentration of Containerized Traffic, 1985- 2006 Diffusion of Containerization Hinterland Effect 3. Concentration of Containerized Traffic, 1985- 2006 (Lorenz Curve) Divergence Convergence 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. Strong Divergence: Montreal and Halifax Convergence Divergence Zero-sum game? 1. From Convergence to Divergence: the American East Coast 1. From Convergence to Divergence: the American East Coast (Annual Growth Rates) Divergence Convergence Divergence 2. The Resurgence of All Water Services to the East Coast Singapore Colombo “China Effect” Hong Kong Shanghai Kobe Pusan Jeddah Eastbound 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 -1 +4 +7 +7 +12 +7 3. Service Routes and Transit Times: Far East to Norfolk, Virginia -1 +4 +7 +8 +12 +9 3. Service Routes and Transit Times: Far East to Savannah, Georgia -3 +3 +3 +4 +8 +11 3. The Resurgence of All Water Services to the East Coast Zone of Contestability NY Savannah Eastbound Route 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) 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 Gioia Tauro Eastbound Algeciras Route Westbound Route LA/LB Kingston Panama D. Conclusion: Challenges and Opportunity for Arctic Routes 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.