M. John Vickerman Principal Norfolk, Virginia

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1 Port & Intermodal Development In the Face of The Impending Tsunami M. John Vickerman Principal Norfolk, Virginia

2 Trends Maritime : Current Course & Direction? Cargo Demands, Capacity, Funding, Productivity & Environmental Concerns North American Ports

3 and Vessel Cargo Handling Circa 1950

4 and Cargo Handling Circa 2005

5 and US Navy Fast Frigate Circa 2035

6 and What We Know Today... Will Be Surely Be Different Tomorrow!

7 and To Be Competitive Today... Marine/Intermodal Terminals Must Reduce Throughput Cost & Increase Cargo Velocity Securely as Environmental Stewards

8 and Functional Classification of Global Maritime Cargoes All Maritime Cargo General Cargo Break Bulk Neo-Bulk Sacks, Cartons, Crates, Drums, Pallets, Bags Lumber, Paper, Steel, Autos Bulk Cargo Containerized Containers, Lift On/Lift Off (Lo/Lo), Roll On/Roll Off (Ro/Ro) Liquid Bulk Dry Bulk LNG, Petroleum, Molasses, Chemicals, Vegetable Oil Grain, Sand & Gravel, Scrap Metal, Coal/Coke, Clinker, Fertilizer

9 Port & Intermodal External Industry Pressures

10 and The North American Freight Paradox: The Nation s Ports and Their Intermodal Linkages are Experiencing the Best of Times and the Worst of Times in Terms of Growth and Demands on Capacity

11 and At Current Productivity and Growth Levels by 2020 North American Ports & Their Associated Intermodal Systems Will Be Severely Congested

12 and We do not have an intermodal system as such. Rather we have an aggregation of multiple, private and public modes, each of which are stove-piped withir own individual areas of interest with little or no true cross communication and collaboration.

13 and Poll of the Top 1000 Blue Chip Multinational Shipper Priorities 38% Freight Rate 43% Schedule Reliability 12% Transit Time

14 and Today s Logistics Truth: The customer wants more and is willing to pay less for it.

15 Southeast Asian Manufacturing Centroid Shift and Current Inbound U.S. Cargo Flow U.S. Intermodal Rail Flow Western Centroid Shift Eastbound: All Water Flow Eastbound: US Intermodal Rail Flow

16 Southeast Asian Manufacturing Centroid Shift and Current Inbound U.S. Cargo Flow Western Western Centroid Centroid Shift Shift U.S. U.S. Intermodal Intermodal Rail Rail Flow Flow Westbound Westbound All All Water/Suez Water/Suez Flow Flow Westbound Westbound Intermodal Intermodal U.S. U.S. Flow Flow

17 and The Suez Canal Back Flow

18 and Ports Ports are are Experiencing Experiencing Dramatic Dramatic Surges Surges in in Seaport Seaport Security Security Costs Costs Port of Miami s Security Costs Today are 600% Higher Than that of 2001

19 International Maritime Cargo Demand Trends

20 and World Bank s 2010 Global Economic Prospects World Output will Increase 33% in 10 years Trillions $ 40 $ 40 Trillion $ 30 Trillion

21 and World Container Forecast to 2024 in TEUs (186% Increase in Next 20 Years) Forecast Growth Rate (CAGR) 1994 to 2004: 8.3 % 243 M 85 M Growth Rate (CAGR) 2004 to 2014: 6.1 % 2014 to 2024: 5.0% Source: Global Insight, 2004

22 and North American International Flows Canada Europe Asia United States China Mexico Africa South America U.S. Major Trading Partners Australia ($ in billions) Canada Mexico China Japan Germany Source: USDOT/Global Insight, 2004 U.K.

23 and Global Market Economic Shifts (Country GDP Rank) 2000 #1 USA Japan USA USA USA USA CHINA #1 Japan CHINA CHINA CHINA USA #2 Japan Japan INDIA INDIA #3 Germany Germany UK UK Germany INDIA Japan Japan France CHINA UK Russia Russia Brazil #5 Italy France INDIA UK Brazil Russia #7 CHINA Italy France Germany UK UK #8 Brazil INDIA Russia France #9 INDIA Russia Italy Brazil France France Russia Brazil Brazil Italy Italy Italy Germany Germany Source: Global Insight, 2005

24 and M M TEUs The World s Top 10 Container Gateway Ports TEUs by by Hong Kong Alone is Equal to the Top 15 US Container Ports POLA + POLB US Ports Hamburg Antwerp 3 Rotterdam 2 Kaohsiung 1 Pusan 0 Rank 5.45 Shanzhen Shanghai 6 S in g a p o re 7.11 Hong Kong TEUs in Millions 13.1 (2004) Source: Port Engineering Management, Vol. 22- Issue 6 - December 2004

25 The Asian Import Challenge

26 and China North American Maritime : Constant Bearing-Decreasing Range The Perfect Storm : Asian/China Imports

27 and China-US: Twin Engines of the World Population: US: 298 million China: 1,307 million (1/5 World) The number of Chinese children in elementary school is equivalent to the total US population.

28 and China US 25 Year Growth (Billions US $) $40.8 B 1,532 % Increase $2.5 B

29 and China is Leading a Global Economic Rebound becoming the World s Manufacturing Powerhouse Global manufacturing is now centered in China. China will double its GDP by 2010 and quadruple it by By 2008 China will be the second largest global trading country. China s cargo, including Hong Kong loadings accounts for 70% of the total Pacific cargo flows. China s container volumes will increase from 60 million TEUs to over 100 million TEUs by 2010.

30 and Mainland China Container Growth (CAGR) 25.9 % 27.3 % 35.4 % 17.1 % 30.1 % 5 Yr Average = 27.2% Increased Volume

31 and China s Ministry of Railways Signed a 5 year Cooperation Agreement with the US BNSF Railroad for Intermodal Rail Development Develop China s high volume efficient intermodal network $242 billion program to 2020 On-dock & near-dock intermodal transfer yards at ports Ministry to build 18 mega-terminals with 7 at seaports, 40 smaller Intermodal terminals

32 and Shanghai International Shipping Center Yangshan Deep Port & Logistics Park New Port City New Logistics Park 20 Mile New Port Access Bridge 54 New Berths

33 and Shanghai International Shipping Center Shanghai Close-Port New City New Port City LINGANG CITY Yangshan Deep Port Logistics Park New Port City A new city Integrating global freight logistics

34 Shanghai Lingang Logistics Park Intermodal Facility Maximum Annual Capacity = Up to 5.6 Million TEUs (Approx. Equal to 1.5 times current PA NY/NJ Throughput Source: Source: TranSystems TranSystems Data Data

35 and

36 and Major West Coast Mexican Port Developments Planned To Avoid Port of LA/LB Congestion Ensenada Ensenada Punta Punta Colonet Colonet Lazaro Lazaro Cardenas Cardenas $1. 2 Billion in Port Infrastructure

37 and Can North American Marine Terminals Handle the Forecasted Freight Volumes?...

38 and U.S. Containerized Tonnage Forecast Total 100 1,0 0 00,0, To n s CAGR 7.8% 6.3% NE (Maine to Virginia) SE (NC to Tampa) Gulf (Mobile to El Paso) SW (San Diego to Oakland NW (Oregon to Alaska) 6.6% 7.6% By 2020 Most US Container Port Gateways 7.2% Will Double or Triple in Volume Source: DRI/McGraw Hill

39 and U.S. Maritime Container Growth Current and Future 15,835 1,776 2,557 4,478 Seattle NY/NJ 1,798 4,396 1,809 Tacoma 2,043 3,382 5,566 Virginia 59,420 6,639 1,860 Oakland Charleston 13,101 (TEUs in thousands) ,420 1,662 6,165 LA/LB 1,437 Houston Savannah 1,010 2,152 Miami Source: USDOT (Forecast figures based on 6 year linear regression)

40 and 2010 Projected Public Port Capacity Shortfall Capacity Shortfall 75% of the 16 Ports Studied will have Significant Capacity Problems by 2010

41 and Port Authority NY/NJ Long Range Regional Container Forecast (TEUs) 15,000 Low (40' Channels) TEUs 12,000 Base (45' Channels) High (50' Channels) +212% 9,000 6,000 Current Capacity 3, Planning Planning Year Year Source: Source: PANY/NJ PANY/NJ -- TranSystems TranSystems Data Data

42 and ++ San Pedro Bay Ports of Ports of Los Angeles and Long Beach Container Growth Implications: At current growth and per acre productivity, in 18 years the two Ports will require 3,624 new acres of container terminal * * Source: Port of Long Beach

43 and Explosive Southern California Port Container Growth Forecasted 35 million TEUs Source: California Goods Movement Action Plan Jan 2005 Draft

44 and Capacity vs. Demand Bottom Line: Balancing Capacity and Demand is Both a Public and Private Issue ½ ½ E F Capacity E F Demand Our nation s future economic and environmental health is at risk as a result of declining transportation efficiency and reliability.

45 and A Sustainable Intermodal Transport Network can only be Achieved Through True Partnerships on a National Perspective Now is the time for a National Balanced Port Planning Policy Including: Comprehensive Economic & Goods Movement Cost/Benefit & Growth Analysis Using Real Data Comprehensive Environmental & Public Health Mitigation Planning

46 International Port Productivity Comparisons

47 and Global Port Terminal Productivity North American Ports Are Not As Productive As The Most Productive International Ports By a Factor Of More Than 4 To 1 Source: Source: TranSystems TranSystems Data Data

48 and Global Marine Terminal Productivity Growth (Circa 1995 to 2003) (Throughput measured in TEUs/Acre/Year) YR CAGR Asian Asian Ports Ports European European Ports Ports United United States States Ports Ports 8,834 18, % 2,974 6, % 2,144 3, % US US West West Coast Coast Ports Ports US US Gulf Gulf Coast Coast Ports Ports US US East East Coast Coast Ports Ports 3,567 2,816 1,281 1,281 4,300 4,000 3, % 3.7% 10.3% Source: 1995 & 2003 CI Yearbooks, Seaports of the Americas, Port Data

49 and 2003 International Port Productivity Top 10 Ports in Millions of TEU Throughput Source: Computed from Seaports of the Americas 2003, Containerization International Yearbook and port-provided data bases/interviews

50 and 2003 US Port Productivity Top 10 Ports (in TEUs of Throughput) Source: Source: Computed Computed from from Seaports Seaports of of the the Americas Americas 2003, 2003, Containerization Containerization International International Yearbook Yearbook and and port-provided port-provided data data bases/interviews bases/interviews

51 Maritime Vessel Technology Trends

52 and April 26, 1956

53 and World Container Ship Evolution TEU Capacity 1,700 TEU Ideal Ideal X X 1st Generation (Pre ) 2,305 TEU Full Full Cellular Cellular 2nd Generation ( ) 3,220 TEU Panamax Panamax 3rd Generation (1985) Post Post Panamax Panamax 4th Generation 4,848 TEU ( ) Super Super Post Post Panamax Panamax 5th 5th Generation Generation 8,600 8,600 TEU TEU (2000 ( ) 2005) Source: Source: TranSystems TranSystems Data Data

54 and Madison Maersk (3,928 TEUs) Panama Canal (Current Max Panamax = 5000 TEUs)

55 and Today s Mega Ships - Measuring Up Eiffel Tower 990 feet Regina Maersk 1043 Ft, 140 Ft wide, TEUs Source: Source: TranSystems TranSystems Data Data

56 and Today s Mega Ships - Measuring Up How Wide, How Deep? Pre ,305 TEU 3,220 TEU 4,848 TEU 8,600+ TEU Containers Wide Containers Wide Containers Wide Containers Wide 1,700 TEU <10 Containers Wide SEA LEVEL Source: Source: TranSystems TranSystems Data Data

57 and 2003 New Build Orders Expansion of World Post-Panamax Container Fleet 63% Mega Ships 5,000+ TEUs 4,000 4,999 TEUs 3,000 3,999 TEUs 2,000 2,999 TEUs 1,000 1,999 TEUs <1,000 TEUs Number of Orders 200 Source: 2004 Containerisation International Yearbook

58 and Mega Container Vessel Trends 1970 Industry Prediction: 3,250 TEU The Reality: Regina Maersk 6,000 TEU Sovereign Maersk 6,600 TEU 20-Wide Planned 8,000 TEU Near Term Possible: 12,000 15,000 TEU (Suez-Class)

59 and 2005 COSCO Orders Four 10,000 TEU Vessels LENGTH OVERALL BREADTH MAX. DRAFT OPERATING SPEED 349 M (1145 FT.) 45.6 M (149.6 FT.) 17.2 M (56.4 FT.) 25.8 KNOTS Source: ss Register, Lloyd Source: Lloyd Lloyd Register, February February

60 and The 15,000 TEU Containership the ship is a flight of fancy but such a ship is with current state of the shipbuilder s art R. G. McLellan, P&O Containers

61 and The 15,000 TEU Containership LOA. = 400 m (1,312 ft.) Draft = 14 m (46 ft.) BEAM = 69 m (226 ft.) 6-7 above deck below deck Wide Wide 28 Across Wide Wide Panamax Dimensions Source: Source: TranSystems TranSystems Data Data

62 Potential Loading Strategy for a 15,000 TEU Containership and 28-Wide Vessel Source: Morris Cranes and P&O Containers Copyright 1997

63 and Container Ship-in-a-Slip Concept Source: Source: TranSystems TranSystems Data Data

64 and The 18,000 TEU Malaccamax Reported Predictions/Benefits By 2010 on Asia-Europe Route 30% Cheaper than 4800 TEU Panamax Vessel, primarily due to Economies of Scale US$40/TEU Savings Source: Source: Dynamar Dynamar Consultancy, Consultancy, Rotterdam Rotterdam

65 and Emergence of North American Fast Feeder Short-Sea Coastal Vessels Lo : r s e b i t u n H o t r n F e w m e ip N h e s Th rans T s c i t s i g 3,000 TEU Feeder Ship 10,000 to 15,000 TEU Mega Ship

66 and Emerging Viable Container On Barge Coastal Shipping Concepts & Inland Intermodal Port Potential

67 and High-Speed, Low Wake, Intermodal Float Technology

68 North American Domestic Truck Growth

69 and Future US Truck Traffic Growth Today 2020 Source: Source: USDOT USDOT FHWA FHWA Freight Freight Analysis Analysis Framework Framework

70 and 2020 Truck Freight Flows High-Value & Time Sensitive Products Source: Source: USDOT USDOT FHWA FHWA Freight Freight Analysis Analysis Framework Framework

71 and 2020 NAFTA US Truck Traffic Flows US/Mexico Truck Traffic US Highway Network (Tons) US/Canada Truck Traffic US Highway Network (Tons) Source: USDOT FHWA Freight Analysis Framework

72 and Source: Source: Port Port of of Portland, Portland, Oregon Oregon

73 North American Class I Rail & Intermodal Growth

74 and North American Intermodal Rail Freight Movement Trends

75 The Railroad Industry Since the Staggers Act: The photo of the chemical train going over a bridge But: goes well over 50% here. more freight! 35% less track 32% fewer locomotives 27% fewer railcars 60% fewer employees

76 and Future US Rail Traffic Flows Today 2020

77 and 2020 Forecast of US Rail Traffic (By Origins in Millions of Tons) 3,000 2,500 2,000 48% Increase 1,500 1, Source: Source: FHWA FHWA Multi-Modal Multi-Modal Freight Freight Analysis, Analysis, Framework Framework Project Project using using Reebie Reebie Associates Associates Data Data

78 and Weekly Eastbound Double-Stack Services April 1984 (1 Set) 1 Chicago LA/Long Beach Source: Source: Mercer MercerManagement ManagementConsulting Consulting

79 and Weekly Eastbound Double-Stack Services April 1993 (241 Sets) Seattle/Tacoma/ Portland Montreal 51 New England Toronto Detroit 34 New York Chicago Salt Lake City Oakland 62 Kansas City Cincinnati Columbus St. s St Loui Louis Charlotte LA/Long Beach 45 Memphis 44 Dallas Hampton Roads Charleston Savannah New Orleans 5 Atlanta Baltimore Jacksonville Houston Mexico City Miami Source: Source: Mercer MercerManagement ManagementConsulting Consulting

80 and Emerging New North-South Double Stack Intermodal Rail Corridors 2.2 Seattle Boston 0.1 Salt Lake City 1.4 Oakland 4.1 Los Angeles/ Omaha Chicago Chicago St. Louis Kansas City Dallas/ Dallas/ Ft. Ft. Worth Worth Existing Port Intermodal Volumes 4.1 Millions of TEUs Atlanta CN/IC Atlanta New Houston Orleans 0.4* Existing Rail Flow * for the region Hampton Hampton Roads 0.9 Memphis Long Beach New York/ York/ Baltimore Baltimore 2.1 Charleston/ Charleston/ Savannah Savannah 0.8 Miami/ Miami/ Everglades Everglades 0.3 NS/CSX/CONRAIL Source: Double-Stack Container Systems: Implications for U.S. Railroads and Ports, U.S. DOT/VZM/TranSystems

81 and U.S. Double-Stacked Train System East-West 10,000 ft Train Bypass

82 and A 10,000 TEU Mega-Container Vessel Can Produce High Intermodal Rail Volumes (One Weekly Vessel Call) EXPORT IMPORT 10,000 10,000 TEU TEU Vessel Vessel Vessel Capacity 10,000 TEU (5,892 (5,892 Units) Units) 13.4 Double Stacked Trains Double Stacked Stacked Trains Trains 13.4 Double 75% Intermodal Split

83 Container Dwell: The Average Length of Time an Average Container Remains on the Terminal U.S. Marine Container Terminal Dwell: 6 to 8 Days (Average)

84 U.S. Intermodal Rail Terminal Dwell: 1 1/2-2 Day (Average) When You Reduce Terminal Dwell by One Half You Double the Terminal Throughput without Building!

85 and Port Competitive Mandates Ports & intermodal linkages must change the current cost versus value relationship logistics chain. Become Value Added Multipliers... Successful ports & intermodal terminals next decade must invest in and leverage technology to improve terminal productivity, cost, effectiveness and reliability for all modes of transportation securely as environmental stewards.

86 Port & Intermodal Development In the Face of The Impending Tsunami Thank You