The Railway Association of Canada (RAC), Annual The Railway Association of Canada (RAC), Annual Rail-Government Interface (RGI) Meeting, Ottawa, Rail-Government Interface (RGI) Meeting, Ottawa, May 15, 2007 May 15, 2007
Ten Global Trends Impacting Ten Global Trends Impacting North American Rail Freight North American Rail Freight DistributionDistribution
Jean-Paul RodrigueAssociate Professor, Dept. of Economics & Geography, Hofstra University, New York, USA
Email: [email protected] available at:http://people.hofstra.edu/faculty/Jean-paul_Rodrigue
A Shift from Derived to Integrated Transport Demand
The nature of distribution has changedThe nature of distribution has changedFrom push to pull logisticsFrom push to pull logistics
Transportation and distribution jointly plannedTransportation and distribution jointly planned
Container yard, Port of Yantian, ChinaContainer yard, Port of Yantian, China
Commodity Chains and Added Value
Commodity chain
Adde
d va
lue
Low
High
Manufacturing
R&D Globalization
DistributionDesign
Branding Marketing
Sales / Service
Concept Logistics
From Push to Pull Logistics
Supplier Supplier Supplier
Manufacturer
Customer
Distributor
Supplier Supplier Supplier Supplier
Supplier Supplier Supplier
Manufacturer
Distributor
Customer
3PL
Returns / Recycling Point-of-sale data
Freight flow
Push Pull
The “China Effect” has Profoundly Changed Global Freight Distribution
The location of production has changedThe location of production has changedGlobal production networksGlobal production networks
Shift in the world’s commercial balanceShift in the world’s commercial balance
APL Distribution Center, Shenzhen, ChinaAPL Distribution Center, Shenzhen, China
Traffic at the 50 Largest Container Ports, 2004
Dubai
Tacoma
Santos
Jeddah
Durban
Seattle
Salalah
Oakland
Colombo
Melbourne
Long Beach
Charleston
Nhava Sheva
Los Angeles
New York/New Jersey
Kobe
TokyoOsaka
BusanNingbo
Nagoya
Manila
Dalian
Yantian
Tianjin
Keelung
Yokohama
ShenzhenShanghai
Quingdao
Singapore
KaohsiungHong Kong
GuangzhouPort Kalang
Laem Chabang
Tanjung Priok
Tanjung Pelepas
LeHavre
Hamburg
Antwerp
Valencia
Rotterdam
Barcelona
Algeciras
Felixstowe
Gioia Tauro
Bremen/Bremerhafen
Pacific Asia Europe
Traffic 2004 (TEU)
Less than 2 million
2 to 4 million
4 to 7 million
7 to 10 million
More than 10 million
Miami
Tacoma
Fraser
Boston
Seattle
Oakland
Houston
Halifax
Savannah
PortlandMontreal
Gulfport
Vancouver
Baltimore
Palm Beach
Long Beach
Charleston
New Orleans
Los Angeles
Philadelphia
Jacksonville
Hampton Roads
Wilmington (NC)
Wilmington (DE)
Port Everglades
New York/New Jersey
Less than 0.5 M
0.5 to 1 M
1 M to 2 M
2 M to 3 M
More than 3 M
Container Traffic at Major North American Ports, 2005 (TEU)
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Sectors of American Imports of Asian Goods Through Maritime Container Shipping, 2004 (in TEUs)
0 300,000 600,000 900,000 1,200,000 1,500,000 1,800,000
Big box retailer
Furniture
Electronics
Appliances
Auto parts
Tires
Shoes
Toys
Electrical equipment
Machinery
Textiles
Apparel
Significant Imbalances in Trade and Freight Distribution
Imbalanced freight flowsImbalanced freight flowsThe empty container problemThe empty container problem
Empty trucks waiting to enter China, Hong KongEmpty trucks waiting to enter China, Hong Kong
World’s 10 Largest Exporters and Importers, 2005
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
Germany
United States
China
Japan
France
Netherlands
United Kingdom
Italy
Canada
Belgium
Billions of $US
Imports
Exports
Balance of Containerized Cargo Flows along Major Trade Routes, 1995-2006 (in millions of TEUs)
-18
-16
-14
-12
-10
-8
-6
-4
-2
01995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006
Europe/USA
Asia/Europe
Asia/USA
Containers Handled by the Port of Vancouver, 1997-2006 (in TEU)
0.1
1.0
10.0
100.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Rat
io
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
Mill
ions
Loaded (inbound) Empty (inbound)
Loaded (outbound) Empty (outbound)
Loaded Ratio (Outbound / Inbound) Empties Ratio (Outbound / Inbound)
Private Global Freight Operators
The value capture of global supply chainsThe value capture of global supply chainsGlobal port holdings & 3PLGlobal port holdings & 3PL
Positioning of intermodal assetsPositioning of intermodal assetsGaining a foothold in major gatewaysGaining a foothold in major gateways
““Maersk Sealand” Locomotive, Landers Yard (NS), ChicagoMaersk Sealand” Locomotive, Landers Yard (NS), Chicago
Commodity Chain
The Value Capture Process along Commodity Chains
Port Holding
Port
Aut
horit
y
Maritime Services
Inland Services
Port Services
Horizontal IntegrationVertical Integration
Maritime Shipping
Port Terminal Operations
Inland Modes and Terminals
Distribution Centers
Pacific Asia Europe
APM Terminals
Dubai Ports World
Hutchison Port Holdings
Port of Singapore Authority
Eurogate
Stevedoring Services of America
Dedicated Maritime Container TerminalsMajort Port Holdings, 2007
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Miami
Boston
Houston
Halifax
Savannah
PortlandMontreal
Gulfport
Vancouver
Baltimore
Palm Beach
Charleston
New Orleans
Philadelphia
Jacksonville
Hampton Roads
Wilmington (NC)
Wilmington (DE)
Port Everglades
New York/New Jersey
Tacoma
Fraser
Seattle
Oakland
Long BeachLos Angeles
Container Port Traffic and Ownership of Major Rail L ines, 2005
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
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
Burlington Northern Sante Fe (BNSF)
Canadian National (CN)
Canadian Pacific (CP)
CSX Transportation (CSXT)
Ferromex (FNM)
Kansas City Southern (KCS)
Norfolk Southern (NS)
Union Pacific (UP)
Other
Redefinition of the Maritime / Land Interface
Port regionalizationPort regionalizationInland terminalsInland terminals
Rail integrated with port operationsRail integrated with port operations
““Emma Maersk”, 12,500 TEU, Rotterdam, NetherlandsEmma Maersk”, 12,500 TEU, Rotterdam, Netherlands
Port Inland Distribution Network and Freight Clusters
Intermodal Integration is Still in its Early Stages
Expansion and diffusion to new marketsExpansion and diffusion to new marketsAdvanced containersAdvanced containers
Container waiting to be loaded, Shenzhen, ChinaContainer waiting to be loaded, Shenzhen, China
World Container Traffic, 1980-2005, and Guesses for up to 2020
0
100
200
300
400
500
600
700
800
900
1000
1980 1985 1990 1995 2000 2005 2010 2015 2020
Mill
ion
TEU
Higher Costs for Inland Freight Distribution
Peak oilPeak oilCongestionCongestionModal shiftModal shift
Chassis waiting to be picked, Corwith Rail Yard, ChicagoChassis waiting to be picked, Corwith Rail Yard, Chicago
World Annual Oil Production (1900-2005) and Peak Oil (2010 scenario)
0
5
10
15
20
25
30
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Bill
ions
of b
arre
ls
Actual
2010 Peak
The World’s Largest Oil Fields, 2005
Oil Field Output (MBD) % of national output
Status
Ghawar (Saudi Arabia) 4.5 40% Possibly declining
Cantarell (Mexico) 2.0 60% Declining
Burgan (Kuwait) 1.7 68% Declining
DaQing (China) 1.0 40% Possibly declining
Level of Congestion of the Interstate Highway System
Transmodal Operations: The Next Frontier in North American Rail Distribution
Advanced rail terminalsAdvanced rail terminalsHigher throughputHigher throughput
Translisft crane, NS Rutherford yard, PATranslisft crane, NS Rutherford yard, PA
Calumet (NS)
Global I (UP)
Joliet (BNSF)
Cicero (BNSF)
Global II (UP)
Corwith (BNSF)
Bensenville (CP)
Yard Center (UP)
59th Street (CSX)
Bedford Park (CSX)
Moyers Gateway (CNIC)
Willow Springs (BNSF)63rd Street (NS)
Canal Street (UP)
Landers / Hanjin (NS)
47th/51st Street (NS)
Number of Lifts at Major Intermodal Rail Terminals , Chicago, 2005
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra UniversitySource: US National Transportation Atlas
Other
CN (Canadian National)
CPRS (Canadian Pacific)
BNSF (Burlington Northern Santa Fe)
CSXT (CSX Transportation)
NS (Norfolk Southern)
UP (Union Pacific)
Lake Michigan
Number of Lifts
Less than 40,000
40,000 to 200,000
200,000 to 350,000
350,000 to 500,000
More than 500,000
0 10 205 Miles
Simulation of a Direct Transmodal Rail Operation
Thruport: Full and Hybrid Configurations
CRANE #1
CRANE #1
Full
Hyb
rid (2
-1)
Regina
Calgary
Memphis
Chicago
Winnipeg
St LouisKansas City
Minneapolis
Dallas / Fort Worth
Houston
Savannah
Montreal
Vancouver
Charleston
Hampton Roads
New York/New Jersey
Tacoma
Seattle
Oakland
Long BeachLos Angeles
Potential Location of Major Transmodal Rail Facilities:Maritime Gateways and Inland Hubs
Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Maritime Rail Gateway
Transmodal Rail Hub
Time Factors more Embedded Within Rail Operations
Improving the velocity of freightImproving the velocity of freightRail distribution as an element of supply chainsRail distribution as an element of supply chains
UPS Willow Springs Distribution Center, ChicagoUPS Willow Springs Distribution Center, Chicago
Logistics and the Acceleration of Freight
Push Logistics
Shipment
Transshipment
Pull Logistics
Containerization
Speed barrier
Logistical threshold
Logistical Improvements, Manufacturing Sector, 1960s to 2000s
35
25
7
4 30
2
4
6
8
10
12
14
16
18
20
1960s 1970s 1980s 1990s 2000s
% o
f GDP
0
5
10
15
20
25
30
35
40
Days
Logistics Costs (% GDP)
Inventory Costs (% GDP)
Cycle Time Requirements (days)
The American Economy is Essentially Bankrupt
““Flipper Central”, Phoenix, Arizona (or any neighborhood near you)Flipper Central”, Phoenix, Arizona (or any neighborhood near you)
Debt and asset inflationDebt and asset inflationMisallocation of capitalMisallocation of capital
Currency leverageCurrency leverageFuture growth expectations compromisedFuture growth expectations compromised
The “Perpetual Motion” Machine: The Dynamics of the World’s Most Significant Trade Relationship
Goods
Bonds (IOUs)
Asset InflationDebt
Reserves
Interest RatesUnemployment
$ for goods
$ for bonds
United StatesChina USD
USD
BorrowingInvestment