Kees Ruijgrok
Canada’s Asia-Pacific Gateway and Corridor Research Conference, Vancouver BC, May 2-4, 2007
THE DEVELOPMENT OF INTERNATIONAL FREIGHT TRANSPORT IN EUROPE
AS A RESULT OF DEVELOPMENTSIN INTERNATIONAL TRADE AND LOGISTICS
Cees J. Ruijgrok,TNO Mobility and Logistics &
TIAS Business School at Tilburg University
May 2 , 20076Vancouver 2007 Cees Ruijgrok2
Agenda
• Developments in Transport and Logistics in Europe• In the past • In the future
• Developments in Transport networks• Driving forces• Trade offs• Towards hybrid networks
• Effects of Globalisation on Transport volumes• Harbour developments and containerization• Relative importance of external vs internal relations
May 2 , 20076Vancouver 2007 Cees Ruijgrok3
growth of GDP and EU transport
0
50
100
150
200
250
300
350
1970 1980 1990 2000
tkm
, ind
ex, 1
970
= 10
0
domestic
cross-borderGDP
European Commission, 2004
Transport growth has been staggering
Trade growth with W-Europe 1999-2003
0%10%20%30%40%50%60%70%80%90%
100%N
orthAm
erica
Latin America
Western
Europe
C./E.
Europe/BalticStates/C
IS
Africa
Middle East
Asia
World
IMPORTS
EXPORTS
source: WTO, 2005
May 2 , 20076Vancouver 2007 Cees Ruijgrok4
Will costs continue to fall?
Logistics costs in EU and US
0
2
4
6
8
10
12
14
1985 1990 1995 2000 2005 2010
% o
f GD
P
EUUS
sources: ELA/ATKearney and CSCMP
Trade tariffs
0
5
10
15
20
25
30
35
40
45
1940 1950 1960 1970 1980 1990 2000
perc
ent o
f im
port
val
ue
source: W TO
Costs of transport
0
50
100
150
200
250
300
350
400
1960 1970 1980 1990 2000
cost
inde
x, 1
980
= 10
0 airlandsea
European Commission, 2004
May 2 , 20076Vancouver 2007 Cees Ruijgrok5
What direction for the future?
• Strong globalisation forces
• Cost curves are flattening
• But especially in emerging regions, cost still about to drop
• Let us look into logistics forces…
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AspectAspect
FocusFocus
1 Price1 Price
EfficiencyEfficiency
2 Reliability2 Reliability
1 Price1 Price
QualityQuality
3 3 ResponsivenessResponsiveness
4 4 InnovativityInnovativity
CustomerCustomerServiceService CreativenessCreativeness
2 Reliability: Correct 2 Reliability: Correct Time,PlaceTime,Place, Quantity, Condition , Quantity, Condition 3 Responsiveness: Lead time, Flexibility, Contact frequency3 Responsiveness: Lead time, Flexibility, Contact frequency
Different focusses of logistic servicesdemand different attributes (Vermunt/HIDC)
2 Reliability2 Reliability1 Price1 Price
3 3 ResponsivenessResponsiveness
2 Reliability2 Reliability1 Price1 Price
May 2 , 20076Vancouver 2007 Cees Ruijgrok7
European logistics 20??
Productscustomization
drive
Efficiency focusvia EDC
Servicesresponsiveness
drive
Customized productsvia VAL and Postponed
Manufacturing
Individualized products in a transparent
network
Responsiveness in
Delivery network
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Development Focal Point
Process Process optimisationoptimisation within one companywithin one company
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Development Focal Point
Chain Chain optimisationoptimisation
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Development Focal Point
Network Network optimisationoptimisation: this is really complicated!: this is really complicated!
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(A) Host market production(multinational companies)
Changes in Production and Logistics will continue
I
I
I
I
(C) S ingle s ourc e production( transnationa l c ompanies operating in hub netw ork )
•Hub networks•Focussing activities/locations•Collaborative Planning
May 2 , 20076Vancouver 2007 Cees Ruijgrok
Towards Collaborative Hub Concepts
Direct fragmented flows betweenorigin and destination
Collaborative network withconsolidated flows via hub network
Manufacturing facility Distribution center Hub facility
Direct transportation Interhub link To/from hub
Distribution
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Global logistic developments will depend on development of cost differences and logistic trade offs
q
p
DS
I T+HTLC
A B
p(A)
p(B)
TLC
margin
trade
Production and
consumption
Trade based onprice differences & Total Logistics
Costs
Logistics structures based on service and cost trade-offs
May 2 , 20076Vancouver 2007 Cees Ruijgrok14
Future logistic structures?
market
regionEurope
global
weeks days dayshours
STANDARD STANDARD
INDIVIDUALIZED
lead time lead time
SECTORAL DIMENSION
SPATIAL D
IMENSIO
N
?
?
?
May 2 , 20076Vancouver 2007 Cees Ruijgrok15
Standard product
Individualizedproduct
Leadtimeshort (< 1day)
Leadtime long(days to weeks)
BTS
VAL
CD
BTOCD
FOP
FOP
global
EU
region
RDC
RFDBTO
BTS
BTO
EDC
CD
BTS – Built to stockBTO – Built to orderFOP – Flexible order productionVAL – Value added logisticsEDC – European distribution centerRDC – Regional distribution centerCD – Cross docking centerRFD – Rapid fulfilment depot
Networks move towards individualized products and services
Source: adapted from Vermunt, 2001
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Long term trends in network architectures
fragmentation of flows• direct shipping• vertical disintegration
external collaboration• multi-user hub networks• horizontal bundling
1990 2000 2010 2020
internal rationalization• stock reduction• outsourcing 3PL => 4PL
May 2 , 20076Vancouver 2007 Cees Ruijgrok17
Intermodality in hybrid networks: “co-modality”
Helsinki
Copenhagen
Southampton Rotterdam
AntwerpLe Havre
Barcelona
Genoa
Hubs
SC Warehouses
Koper
Sony Europe - Proposed Shipping Routes FY01 - 4 Ports
Current Air Cargo Entry Points to WarehouseNetwork - FY98, 13 Entry Points
Hubs
SC Warehouses
Future Air Cargo Entry Points to WarehouseNetwork - FY01, 1 Entry Points
Hubs
May 2 , 20076Vancouver 2007 Cees Ruijgrok18
Summary
• Reduction of costs of interaction has boosted changes in global supply chain networks
• Firms have succeeded to improve service and product quality dramatically, creating a new competitive playing field
• The quality/price ratio is maintained by consolidation and horizontal collaboration
• Implications for transport systems?
May 2 , 20076Vancouver 2007 Cees Ruijgrok19
Trends and expectations
• Steady growth of sea and air traffic• Double digit growth in global LSP market• Changes in spatial patterns of flows due to logistics networks• Congestion and fuel price starts to hit developed economies• Reliance on slower modes of transport in Hinterlands• Firms are also looking for consolidation and collaboration options
• New transport systems need to respect trends in logistics:• …directions?
May 2 , 20076Vancouver 2007 Cees Ruijgrok20
Performance by goods transport in billion tonkm 1970-2001 (DG TREN, 2003)
0
200
400
600
800
1000
1200
1400
1970 1975 1980 1985 1990 1995 2000
RoadShort-sea shippingRailInland waterwaysPipeline
Vancouver 2007 Cees Ruijgrok21
TEU-throughput in the Hamburg – Le Havrerange (1975-2005)
0
4.000.000
8.000.000
12.000.000
16.000.000
20.000.000
24.000.000
28.000.000
32.000.000
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
year
TEU
TEU
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May 2 , 20076Vancouver 2007 Cees Ruijgrok23
# TEU’s to and from China in the port of Rotterdam
Rotterdam: Ontwikkeling aantal beladen TEU's van/naar China per kwartaal
0
50000
100000
150000
200000
250000
300000
2000 2001 2002 2003 2004 Q1 2005
2000-2001:+ 11%
2002-2001:+ 29%
2003-2002:+ 31%
2004-2003:+ 42%
Q1 05 - Q 1 04:+ 42%
Rotterdam: Ontwikkeling aantal beladen TEU's van/naar China per kwartaal
0
50000
100000
150000
200000
250000
300000
2000 2001 2002 2003 2004 Q1 2005
2000-2001:+ 11%
2002-2001:+ 29%
2003-2002:+ 31%
2004-2003:+ 42%
Q1 05 - Q 1 04:+ 42%
May 2 , 20076Vancouver 2007 Cees Ruijgrok24
Rotterdam nr.1 in European container transshipment
9,38,1
6,5
3,72,1 1,4
02
46
810
Rotterdam
HamburgAntw
erpBrem
enLe
Hav
reZee
brugge
Mill
ions
of T
EU20042005
(still)
May 2 , 20076Vancouver 2007 Cees Ruijgrok25
Capacity growth in container transhipment
7,5 7,25,4
3,5 2,00
2
4
6
8
10
12
Rotterdam Hamburg Antwerpen Bremen Le Havre
2003 ext 2004 ext 2005 ext 2006 ext 2007
May 2 , 20076Vancouver 2007 Cees Ruijgrok26
Total capacity utilisation for 5 biggest ports in Le Havre – Hamburg range
20,0
25,0
30,0
35,0
40,0
45,0
50,0
55,0
60,0
2003 2004 2005 2006 2007 2008 2009
mill
ion
TEU
Total forecast (MTEU)
Total capacity (MTEU)
Forecasts from 2004
Forecasts from 2005
May 2 , 20076Vancouver 2007 Cees Ruijgrok27
EU25 exports in 2000, 2010, 2020 in mln tonnes
EU Exports in mln tonnes
01000200030004000500060007000
intra E
U 25
Reurop
e
RoWorld
Asia (C
hina/I
ndia) Tota
l
2000
2010
2020
May 2 , 20076Vancouver 2007 Cees Ruijgrok28
EU25 imports in 2000, 2010, 2020 in mln tonnes
EU Imports in mln tonnes
010002000300040005000600070008000
intra E
U 25
Reurop
e
RoWorld
Asia (C
hina/I
ndia)
Total
2000
2010
2020
May 2 , 20076Vancouver 2007 Cees Ruijgrok29
EU25 imports/exports in 2000, 2010, 2020 in mlntonnes; containerised transport NSTR9
EU Imports and exports summed 2000, 2010, 2020 in mln tonnes of NSTR9
0
1,000
2,000
3,000
200020102020
2000 1,101 125 146 40 1,411
2010 1,216 157 153 127 1,653
2020 1,357 189 165 223 1,933
intra EU 25 Reurope RoWorld Asia Total
May 2 , 20076Vancouver 2007 Cees Ruijgrok30
EU25 imports/exports in 2000, 2010, 2020 of NSTR9 in relation with Asia, by European origin/destination
0.0
50.0
100.0
150.0
200.0
250.0
200020102020
2000 27.0 8.8 4.4 0.3 40.5
2010 87.2 27.9 13.9 1.2 130.1
2020 155.3 47.4 25.5 2.3 230.5
NortWest Europe (nl,b,f,
Germany, Denmark,
Mediterranean
Landlocked Europe
Total
May 2 , 20076Vancouver 2007 Cees Ruijgrok31
European imports/exports in 2020 of NSTR9, by European origin/destination
European imports/exports of NSTR9 by region in 2020
0.0
500.0
1000.0
1500.0
2000.0
2500.0
Asia (China/India)RoWorldREuropeEU
Asia (China/India) 155.3 43.0 25.5 2.0 225.7
RoWorld 91.3 23.5 40.4 10.5 165.7
REurope 21.3 56.1 28.5 92.0 197.9
EU 769.1 362.5 98.2 126.9 1356.7
NorthWest
Europe
Germany,
Denmark
Mediterranean
Landlocked
EuropeTotal
May 2 , 20076Vancouver 2007 Cees Ruijgrok32
Conclusions (1)
Key trends• Customized production• Globalised trade • Responsive supply chains
Drivers of change in transport system • New configurations of global logistics networks • Changing reliance on transport systems
Tasks ahead• Take into account logistics networks in transport policy• Develop analytic capabilities to support logistics policy
May 2 , 20076Vancouver 2007 Cees Ruijgrok33
Conclusions (2):
• Different products ask for different logistic structures• Globalisation emerges• The importance of ICT increases• The control of logistics is more important than the actual
execution