11

Northwest Ports Northwest Ports and the Gateway Initiativesand the Gateway Initiatives

Anne V. GoodchildAnne V. GoodchildAssistant ProfessorAssistant Professor

Department of Civil and Environmental Department of Civil and Environmental EngineeringEngineering

University of WashingtonUniversity of Washington

22 2

33 3

ResearchResearch

• Port elasticity study with Dr. LeachmanPort elasticity study with Dr. Leachman• Impact of Port of Prince Rupert on Impact of Port of Prince Rupert on

regional traderegional trade• Transportation resilience Transportation resilience

– Analysis of past disruptions at PRAnalysis of past disruptions at PR

• Transloading and warehousingTransloading and warehousing• Cross border researchCross border research• Clean Trucks ProgramClean Trucks Program

44 4

Diversity in West Coast Diversity in West Coast PortsPorts

• Growth patternGrowth pattern

• Discretionary cargoDiscretionary cargo

• Approach to drayage truck emissionsApproach to drayage truck emissions

• CongestionCongestion

• Landside infrastructureLandside infrastructure– Port accessPort access– Urban regionUrban region

55 5

West Coast Container West Coast Container VolumesVolumes

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

TE

U

Fraser

Prince Rupert

Vancouver (BC)

Anchorage

Long Beach

Los Angeles

Oakland

Portland(OR)

Seattle

Tacoma

66 6

Discretionary CargoDiscretionary Cargo

• The cargo that doesn’t have to go through a particular port

• The cargo that is transloaded • Importing via the East Coast is getting more

competitive • Some companies have recently moved to a 4-5 port

strategy– In this case consolidation-deconsolidation is less effective

• With a one port strategy consolidation-deconsolidation is getting more competitive

• $30 would remove transload volume in the Pacific Northwest

• $30 would have very little impact on Southern California

77 7

• The line to Prince The line to Prince Rupert is a spur lineRupert is a spur line

• No alternative No alternative routesroutes

• Required switching Required switching activities in Prince activities in Prince GeorgeGeorge

88 8

Reliability ThreatsReliability Threats

Highway 16 west at Shames Flats and 3 to 4 km west of Shames Flats has opened to single lane alternating traffic as of noon June 10, 2007CN workers begin the long task of rebuilding the rail line between Terrace and Prince Rupert now that the Skeena has started to recede.

99 9

Service Interruption Duration and Delay by Year

0

5

10

15

20

25

30

35

Year

Dura

tion

(day

s)

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

Dela

y (tra

in*d

ay)

Duration

Delay (4 trains/day)

1010 10

Distribution CentersDistribution Centers

• About 33% of Port of Seattle traffic use a About 33% of Port of Seattle traffic use a warehouse in the Green River Valley (2005)warehouse in the Green River Valley (2005)

• 18% of 2007 Port of Seattle traffic is 18% of 2007 Port of Seattle traffic is transloadedtransloaded

• Provide capability to use consolidation-Provide capability to use consolidation-deconsolidation strategydeconsolidation strategy

• Provide economic benefit to importers from Provide economic benefit to importers from inventory management and transportation inventory management and transportation costcost

• Provide regional economic benefitProvide regional economic benefit

1111 11

Unique elements of NW Unique elements of NW PortsPorts

• More price sensitiveMore price sensitive

• More discretionary cargoMore discretionary cargo

• Less transloadingLess transloading

• Relatively weak local demandRelatively weak local demand

• Regional/International competitionRegional/International competition

• Regional/International cooperationRegional/International cooperation

• Servicing Alaska tradeServicing Alaska trade

1212 12

1313 13

Canada’s gateway and trade Canada’s gateway and trade corridor initiativecorridor initiative

• Canada’s strategy has resulted in heavy Canada’s strategy has resulted in heavy investment in a “new” portinvestment in a “new” port– Not all cargo needs to move through a Not all cargo needs to move through a

congested regioncongested region– Has capacityHas capacity

• Consolidation activities in VancouverConsolidation activities in Vancouver• Separation of rehandled/local cargo from Separation of rehandled/local cargo from

discretionary cargodiscretionary cargo• Primarily serving midwest marketsPrimarily serving midwest markets

1414 14

• Currently PR Currently PR serving US midwestserving US midwest– ImportsImports– ExportsExports

• SE Alaska continues SE Alaska continues to be served by to be served by Washington portsWashington ports

1515 15

US PolicyUS Policy

• Growing consensus for a national freight programGrowing consensus for a national freight program• National Surface Transportation Policy and

Revenue Study Commission, AASHTO, ARTBA, NRC, ATA, AAPA, US Chamber, GAO

• GAO recommends “a national strategy to transform the federal government’s involvement in freight transportation projects. This strategy should include defining federal and nonfederal stakeholder roles and using new and existing federal funding sources and mechanisms to support a targeted, efficient, and sustainable federal role.”

1616 16

Policy SuggestionsPolicy Suggestions

• National strategy for planning & investment

• Merit-based criteria for prioritizing projects

• Predictable, dedicated, sustained funding for freight infrastructure

• Partnership with the private sector to anticipate and meet the needs of system users

• New user fees

1717 17

Growing CoalitionGrowing Coalition

• Coalition for America’s Gateways and Trade Coalition for America’s Gateways and Trade Corridors National Freight Mobility Infrastructure Corridors National Freight Mobility Infrastructure ActAct– Creates National Freight Mobility Infrastructure Creates National Freight Mobility Infrastructure

FundFund• Merit-based distribution criteriaMerit-based distribution criteria

• Multi-modal eligibilityMulti-modal eligibility

• National in focusNational in focus

– Creates New Funding MechanismCreates New Funding Mechanism• 1% tax of the cost of transportation of ALL goods 1% tax of the cost of transportation of ALL goods

(domestic and international; all modes)(domestic and international; all modes)

1818 18

CAGTC ParticipantsCAGTC ParticipantsCoalition for America's Gateways and Trade Corridors

Washington State DOT/ Port of Tacoma

California Air Resources Board

Association of American State and Highway Transportation Officials

ITS America

National Railroad Construction and Maintenance Association

National Industrial Transportation League

Association of American Port Authorities

Agriculture Transportation Coalition

West Coast Corridor Coalition

Mississippi Valley Freight Coalition

National Association of Manufacturers

American Association of Port Authorities

Waterfront Coalition

American Road & Transportation Builders Association

American Public Transportation Association

Owner-Operator Independent Drivers Association

Association of American Railroads

AAA

1919

DiscussionDiscussion

2020 20

Average Annual Delay (container hours per through container)

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

1,000,000 2,000,000 4,000,000

TEU throughput

Cont

aine

r hou

rs d

elay

per

cont

aine

r thr

ough 7 days a week operation

5 days a week operation

2121 21

Open QuestionsOpen Questions

• Being closer to Asia is a significant Being closer to Asia is a significant assetasset

• Significant economic activity will Significant economic activity will occur in Prince Rupertoccur in Prince Rupert

• Transit of containers between Transit of containers between Canada and the US is not a deterrentCanada and the US is not a deterrent

• Container managementContainer management

2222 22

Prince Rupert Container Prince Rupert Container TerminalTerminalPerformance to 11-March-08Performance to 11-March-08

• 19 Vessel Calls

• All vessels arrived & departed on schedule

• Off loading/loading 22 containers/hour

• 35,600 TEUs handled

• 36.5% Backhaul - fully laden containers (less than Seattle, Tacoma, and Vancouver)

• Maximum Dwell Time: 2 Days

• 100% of containers scanned for radiation

2323 23

Container ManagementContainer Management

• Containers imported into Canada must leave the Containers imported into Canada must leave the country within 30 dayscountry within 30 days

• They can only be used for one repositioning moveThey can only be used for one repositioning move– This may favor the delivery of containers to the US, This may favor the delivery of containers to the US,

where laws are less restrictivewhere laws are less restrictive

• Most shipping lines are under contract to balance Most shipping lines are under contract to balance east and westbound moves and are subject to east and westbound moves and are subject to penalties if they are notpenalties if they are not– Unless export potential is exploited, it will be expensive Unless export potential is exploited, it will be expensive

for shippers to return the containers to Prince Rupert, for shippers to return the containers to Prince Rupert, impacting the total costimpacting the total cost

2424 24

TransloadingTransloading

2525 25

Prince Rupert TerminalsPrince Rupert Terminals

Grain Terminal

Coal/Sulphur/Wood Pellet Terminal

CONTAINER TERMINALPhase 1 & 2

CONTAINER TERMINAL 2

WATER DEPTHInner Harbour: 35 - 44 metres

Wharf: 18.7 metres

Ridley

Island

2626 26

11stst CN Container Train Departure Nov. 1 CN Container Train Departure Nov. 1 20072007

2727 27

DemandDemand

• Shipping lines will decide whether or not to use Prince Shipping lines will decide whether or not to use Prince RupertRupert

• They will choose to use it if meets their needs to They will choose to use it if meets their needs to control cost while maintaining service quality and control cost while maintaining service quality and reliabilityreliability

• There is a complex web of relationships and There is a complex web of relationships and economics that drive these decisionseconomics that drive these decisions

• Demand for shipping line services is driven by shipper Demand for shipping line services is driven by shipper demands, and is a function of costdemands, and is a function of cost

• Shippers will find it more attractive to use Prince Shippers will find it more attractive to use Prince Rupert if they can finance the cost of the return trip Rupert if they can finance the cost of the return trip with exportswith exports

• They will choose to service Prince Rupert first if They will choose to service Prince Rupert first if import demand is of high volume and high priorityimport demand is of high volume and high priority

2828 28

ReliabilityReliability

• Lean supply chains are a source of Lean supply chains are a source of competitive advantagecompetitive advantage

• Increased length, frequency of disruptionIncreased length, frequency of disruption• Shippers are looking for reliability Shippers are looking for reliability

(uncertainty is the enemy of logistics)(uncertainty is the enemy of logistics)• e.g.e.g.

– Port of Seattle 2005 volume increasePort of Seattle 2005 volume increase– Walmart moves to a 5 port US import Walmart moves to a 5 port US import

strategystrategy

2929 29

Prince Rupert Prince Rupert Advantage – Hong KongAdvantage – Hong Kong

VancouverSeattle

Los Angeles

Distance from Hong Kong (Nautical Miles) 5,286

5,777

5,768

6,380

Prince RupertPrince Rupert

3030 30

Prince Rupert Prince Rupert Advantage – KobeAdvantage – Kobe

VancouverSeattle

Los Angeles

Distance from Kobe, JA (Nautical Miles) 4,101

4,554

4,536

5,137

Prince RupertPrince Rupert

3131 31

3232 32

Prince Rupert Container Prince Rupert Container TerminalTerminal

3333 33

100% Radiation Scanning100% Radiation Scanning

3434 34

Edmonton – 39 hrs

Winnipeg – 61 hrs

Halifax

Chicago – 99 hrs

Montreal – 115 hrs

Prince Rupert

Prince George

Toronto – 108 hrs

Vancouver – 61 hrs

New Orleans

Halifax

Memphis – 117 hrs

Saskatoon – 47 hrs

Calgary

Memphis Competition

UP/Los Angeles – 112 hrs

UP/Seattle – 120 hrs

BNSF/Los Angeles – 130 hrs

3535 35

Export/Backhaul Export/Backhaul OpportunitiesOpportunities

Alaska and BC seafood

forest products

pork

soybean

recycled paper

cotton

special agricultural products

- pulses, grains, oilseedsmalt, cubes, pellets, hay

beef

poultrymilk

bottled water Leather/ hides

3636 36

Port of Prince Rupert – Port of Prince Rupert – Export Backhaul Export Backhaul OpportunitiesOpportunities

• Alaska and local Seafood (est. 75,000 – 100,000 TEUs per annum)Alaska and local Seafood (est. 75,000 – 100,000 TEUs per annum)

• Pork (est. 100,000 – 160,000 TEUs per annum) Pork (est. 100,000 – 160,000 TEUs per annum)

• Beef (est. 40,000 – 80,000 TEUs per annum)Beef (est. 40,000 – 80,000 TEUs per annum)

• Forest Products (est. 120,000+ TEUs per annum)Forest Products (est. 120,000+ TEUs per annum)

• Special Agricultural Products (est. 60,000 – 100,000 TEUs per Special Agricultural Products (est. 60,000 – 100,000 TEUs per annum)annum)– PulsesPulses - Grains and Oilseeds- Grains and Oilseeds– MaltMalt - Cubes, Pellets, Hay- Cubes, Pellets, Hay

• Other (originating in Chicago-Memphis area)Other (originating in Chicago-Memphis area)– Cotton (est. 160,000 - 180,000 TEUs per annum)Cotton (est. 160,000 - 180,000 TEUs per annum)– Recycled paper (est. 40,000 - 100,000 TEUs per annum)Recycled paper (est. 40,000 - 100,000 TEUs per annum)– Soybeans (est. 130,000 to 170,000 TEUs per annum)Soybeans (est. 130,000 to 170,000 TEUs per annum)

• Petrochemicals/plastics (to be determined)Petrochemicals/plastics (to be determined)

• Developmental (to be determined)Developmental (to be determined)– Log and modular home manufactureLog and modular home manufacture– Bottled waterBottled water

3737 37

• Prince George Inland PortPrince George Inland Port– 120,000 TEU’s of forest products annually120,000 TEU’s of forest products annually

• Grand Prairie Intermodal Container FacilityGrand Prairie Intermodal Container Facility– $2.5 million of land donated by Alberta Gov’t.$2.5 million of land donated by Alberta Gov’t.

• Access improvements to CN Intermodal in SaskatoonAccess improvements to CN Intermodal in Saskatoon– $20 million from the APCGI.$20 million from the APCGI.

• Access improvements to CPR Intermodal in EdmontonAccess improvements to CPR Intermodal in Edmonton– $75 million from the APCGI.$75 million from the APCGI.

• CN Edmonton Grain Distribution CentreCN Edmonton Grain Distribution Centre– $4 million facility opened Nov. 16, 2006$4 million facility opened Nov. 16, 2006– Handling high-value specialty cropsHandling high-value specialty crops

• Gap Analysis-identified OpportunitiesGap Analysis-identified Opportunities– Container Services: refrigeration, stuffing, storage & repairContainer Services: refrigeration, stuffing, storage & repair– Bonded warehousingBonded warehousing– Ridley Island Logistics ParkRidley Island Logistics Park

Port of Prince Rupert – Port of Prince Rupert – Sample Initiatives to Stimulate Sample Initiatives to Stimulate Export TrafficExport Traffic

3838 38

PR—Prince George,PR—Prince George,British ColumbiaBritish Columbia

3939 39

International Intermodal International Intermodal FreightFreight

• West Coast handles the vast majority West Coast handles the vast majority of Asian importsof Asian imports

• Moved via landbridge to midwest and Moved via landbridge to midwest and East Coast (double stack trains)East Coast (double stack trains)

• Rapid growth in container volumes Rapid growth in container volumes as Asian imports have grownas Asian imports have grown

4040 40

Port of SeattlePort of Seattle

• 4 container terminals, 25 cranes4 container terminals, 25 cranes

• Natural deep water harborNatural deep water harbor

• 4 RR routes to inland markets (2 major RR 4 RR routes to inland markets (2 major RR hubs within 1 mile)hubs within 1 mile)

• 10 container berths up to 50 ft (15 m)10 container berths up to 50 ft (15 m)

• Vessel calls: 1,221 (2007)Vessel calls: 1,221 (2007)

• TEUs (2007): 1,973,504TEUs (2007): 1,973,504

• Containerized metric tons (2007): Containerized metric tons (2007): 14,584,81614,584,816

4141 41

Port of TacomaPort of Tacoma

• 5 container terminals5 container terminals

• 4 dockside intermodal rail yards4 dockside intermodal rail yards

• Upland infrastructure with road Upland infrastructure with road network & easy access to interstate network & easy access to interstate systemsystem

• Natural deep water portNatural deep water port

• Available land for expansionAvailable land for expansion

4242 42

Port of VancouverPort of Vancouver

• TEUs (2007): 2,307,289 (increase to TEUs (2007): 2,307,289 (increase to 4 million by 2012)4 million by 2012)

• Million tons/cargo (2007): 82.7Million tons/cargo (2007): 82.7

• 17 bulk terminals, 25 marine cargo 17 bulk terminals, 25 marine cargo terminalsterminals

• Linked to 3 RR with double stack Linked to 3 RR with double stack capacitycapacity

4343 43

Prince Rupert PortPrince Rupert Port

• > 98% marine to rail intermodal > 98% marine to rail intermodal

• Annual capacity: 500,000 TEUsAnnual capacity: 500,000 TEUs

• 360 metre container quay360 metre container quay

• 18.7 metre berth depth18.7 metre berth depth

• 3 Ultra Post Panamax Cranes3 Ultra Post Panamax Cranes

• 7 working tracks (5,500m), 6 storage 7 working tracks (5,500m), 6 storage tracks (6,100m)tracks (6,100m)

4444 44

LeachmanLeachman

•For direct inland movement of marine boxes, the break point in declared value at which it is cheaper to import via the West Coast instead of all-water movement to Eastern markets fell from $46 to $40 per cubic foot.

4545 45

4646 46

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Average Interruption Duration