JOC s Inland Port s Session at TPM. Overview and Definition of Inland Ports.

Transcription

1 JOC s Inland Port s Session at TPM Overview and Definition of Inland Ports. Curtis Spencer, President, IMS Worldwide, Moderator Ken Miller, VP Operations, JB Hunt Greg Tuthill, Sr. VP NYK Lines

2 INLAND PORT Definition: Inland port. A rail or a barge terminal that is linked to a maritime terminal with regular inland transport services. An inland port has a level of integration with the maritime terminal and supports a more efficient access to the inland market both for inbound and outbound traffic.

3 What is an Inland Port? The simple definition of an Inland Port is a strategic location inland away from a port that off-loads containers for a large population base. Usually connected to excellent interstate highway crossroads. We define it exclusively as an intermodal facility, the end of the rail-ramp, from a port complex. It is where the box gets unloaded, put on a truck and delivered to the DC or Customer.

4 Commonly Known Inland Ports CHICAGO HARRISBURG KANSAS CITY DFW SAN ANTONIO MEMPHIS FRONT ROYAL/ PETERSBURG ATLANTA HOUSTON

5 Newly Designated Inland Ports CHICAGO HARRISBURG PHOENIX INDIANAPOLIS KANSAS CITY COLUMBUS FRONT ROYAL/ PETERSBURG DFW MEMPHIS ATLANTA SAN ANTONIO HOUSTON WINTERHAVEN

6 Why the Inland Port Discussion is important. 1. The largest issue with All Water is the pricing differential vs. Intermodal. 2. Intermodal shipping + W. Coast port costs are still cheaper than all water to about 300 Miles from the E. Coast!! 3. Nothing indicates that this will change after Panama! 4. As these nodes ie, Inland Ports are created within large population centers, they become excellent DC and E- Commerce locations

7 Shanghai to North American Ports: Slow Steaming Effects 2000 & 2012 Pricing as of Feb 2013 $1,200 $3,610 $2, $3, From China, it takes about 2 Source: weeks ShipmentLink.com to bring cargo (Evergreen) to the west Sailing Schedules coast and about 4 weeks to bring it in on the east coast. (2000)

8 East Coast-West Coast TEU Cost Line Equilibrium- Q Megapolitans Norcal +35% Cascadia +38% z Equilibrium Line Q Great Lakes Horseshoe +10% Atlantic Seaboard +12% Southland +35% Valley of the Sun +81% Sources: Population, employment, and real estate growth forecasts by Robert Lang and Arthur Nelson of the Metropolitan Institute at Virginia Tech and Phil Hopkins of Global Insight; Business 2.0, November 2005 I-35 Corridor +40% Gulf Coast Belt +31% I-85 Corridor +35% Southern Florida +52%

9 Supply Chain Trends in Intermodal Ken Miller VP Operations What s your next move? 9

10 SERVICE REVIEW: MARKET SHARE Market overview (segment specific) Market size: $12 Billion Capacity: 205, foot Containers Industry outlook: Growing at > 7% Our position 25 28% of overall market (revenue and/or capacity) Opportunities Highway Conversion Customer Deliveries New Services Canada/Mexico/Eastern Network Expansion Roadblocks Market Share Competitor Actions What s your next move? 10

11 Intermodal Rail Carrier Industry Comparison INTERMODAL VOLUME 2011 SALES APPROACH EQUIPMENT OWNER Type CAPACITY LARGEST SEGMENT by volume 4.5 M BNSF & Motor Carriers Motor Carriers Trailers & Containers Unlimited Intermodal 3.3 M IMC Rail Owned Containers Limited by fleet size Industrial Products 2.3 M IMC & Motor Carriers Rail Owned Containers Limited by fleet size Industrial Products 3.2 M IMC & Motor Carriers Rail Owned Containers Limited by fleet size Coal What s your next move? 11

12 Estimated 53 Domestic Container Fleet by Owner North American 53' Domestic Container Fleet Size by Owner JBH UMAX EMHU Hub Pacer Schneider Swift CN UPS CSX Crowley COFC Logistics APL Logistics CH Robinson Trailerbridge Universal Logistics Dart USA Truck Matson Marten KCS 8,500 5,000 5,000 4,100 2,000 2,000 1,000 1, ,600 18,000 22,900 31,000 31,000 60,000 Total Fleet Size 205,000 10,000 20,000 30,000 40,000 50,000 60,000 70,000 What s your next move? 12

13 Who are the players? Union Pacific Based Providers Hub Group (Red, White, or Green Containers) EMP Rail Owned Equipment (White or Green Containers) UMAX (Blue Containers / Yellow and White Lettering) PACER (Blue Containers) 100 s of IMC Competitors (Intermodal Marketing Company) Largest Mexico Presence BNSF Based Providers Schneider Swift First Priority is Highway Conversion What s your next move? 13

14 Supply Chain Opportunities Transportation is generally the greatest cost in the supply chain. 50% LOGISTICS COST BREAKDOWN Focus on Transportation Collaboration to reduce costs and increase capacity. 22% 10% 8% 4% 3% 2% 1% Transportation Inventory Labor Customer Rent Admin Supplies Other Source: Establish, Inc/Herbert W. Davis and Company 2006 Database What s your next move? 14

15 Today s Supply Chain Landscape Shippers are looking for partners with flexible, comprehensive, value added solutions Steadily increasing freight demand Truckload capacity continues to tighten Supply/demand balance becoming an issue Intermodal volumes continue to rise and take highway share Diesel prices remain elevated CONFIDENTIAL What s your next move? 15

16 Top Supply Chain Challenges (Next 2 5 Years) Tightening driver market Government regulations CSA EOBR mandates Hours of Service CARB Aging equipment leads to replacement at higher cost basis Highway infrastructure congestion and deterioration Access to capital Fuel Managing Budgets CONFIDENTIAL What s your next move? 16

17 Fuel is Gaining Executive Visibility in Freight Costs $5.00 RECESSION $4.50 $4.127/gal 3/31/2012 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Jan 1995 Jul 1995 Jan 1996 Jul 1996 Jan 1997 Jul 1997 Jan 1998 Jul 1998 Jan 1999 Jul 1999 Jan 2000 Jul 2000 Jan 2001 Jul 2001 Jan 2002 Jul 2002 Jan 2003 Jul 2003 Jan 2004 Jul 2004 Jan 2005 Jul 2005 Jan 2006 Jul 2006 Jan 2007 Jul 2007 Jan 2008 Jul 2008 Jan 2009 Jul 2009 Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Source: U.S. Dept. of Energy (EIA) What s your next move? 17

18 Intermodal Remains Attractive 1.30 Yearly Intermodal Traffic Totals Millions JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Source: IANA Intermodal Market Trends and Statistics What s your next move? 18

19 Intermodal Benefits Are Driving Change Shippers, Carriers, Environment Economical Expanding capacity Greener shipping Less congestion Better jobs CONFIDENTIAL What s your next move? 19

20 What Freight Moves Intermodal Today? Types of Intermodal Shipments Import shipments Inbound to DC and Outbound to Store Consolidation Temp Controlled Flatbed CONFIDENTIAL What s your next move? 20

21 So Why Hasn t More Freight Been Converted? Some Shippers Say I had a bad experience with Intermodal 15 years ago. Shipping requirements won t allow Intermodal. Intermodal transit is slow and variable. Won t work for my customers. CONFIDENTIAL What s your next move? 21

22 JOC TPM Panel Intermodal Rail Optimization Inland Import and Export Container Matching Gregory Tuthill, NYK Line - SVP Sales and Marketing 22 March 5, 2013 TPM 2013 Intermodal Rail Long Beach March 5, 2013

23 Areas for Review 1. NYK Overview 2. Export Market Intermodal Market Potential 3. Today s Challenges and Cost Implications 4. Intermodal Imbalanced Flows 5. Load matching optimization concepts TPM 2013 Intermodal Rail Long Beach March 5,

24 The NYK Group - Highlights Nippon Yusen Kaisha- Founded Revenue: $23 Billion 5 Core Businesses TPM 2013 Intermodal Rail Long Beach March 5,

25 NYK Shipping Activities TPM 2013 Intermodal Rail Long Beach March 5,

26 NYK Logistics Activities TPM 2013 Intermodal Rail Long Beach March 5,

27 Export Markets Intermodal Opportunities Modes for Export Cargo Bulk Truck. Box Car Hybrid Box Car Container Transload Container TPM 2013 Intermodal Rail Long Beach March 5,

28 Export Markets Efficiency is critical Modes for Export Cargo Bulk Truck. Box Car Hybrid Box Car Container Transload Container via rail TPM 2013 Intermodal Rail Long Beach March 5,

29 US Export Goal How are we tracking? $3,000 USD $Billions - US Export Trend in Goods 5 year target for doubling exports from 2009 $2,500 $2,000 Growth Trend Line for 5 years 16.2% $1,500 $1,000 $500 $ F 2013 F 2014 F 2015 Target TPM 2013 Intermodal Rail Long Beach March 5,

30 Export Transpacific Market Efficiency untapped Export growth in US Asia market has been significant in the last three years, However, growth is understated based total potential for what could be moving in containers. 600,000 Export TP TEU Export TP Growth Growth = 13.1% TEU 580, , , , , , , , , ,000 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TPM 2013 Intermodal Rail Long Beach March 5, Source: JOC Piers 1/30/13

31 Cost Implications Reducing empty positioning cost by using network optimization TPM 2013 Intermodal Rail Long Beach March 5,

32 Cost Implications North America Repositioning Estimates Industrial Cost for Empty Repositioning $500 M * $110 M * $60 M * Annual Cost for Empty Rail Moves in North America Annual Cost for Empty Rail Moves in North America Annual Cost for Empty Rail Moves in North America *estimates only based on calculated empty moves using JOC data and estimated rail costs TPM 2013 Intermodal Rail Long Beach March 5,

33 Creating Balance Solutions to Drive Efficiency Many areas are significantly imbalanced but this can be addressed TPM 2013 Intermodal Rail Long Beach March 5, Source: JOC Piers 1/30/13

34 Import Export Imbalances Focus Areas that offer match back or lend to empty load centers Export CHI ,000 TEU Import CHI ,000 TEU Import COL ,000, TEU Export COL ,000 TEU Export HOU ,000 TEU Import HOU 2012 Import MEM ,000, TEU Export MEM ,000 TEU Import ATL ,000, TEU Export ATL ,144 TEU 110,000, TEU TPM 2013 Intermodal Rail Long Beach March 5, Source: JOC Piers 8/30/12

35 Inland Balancing Challenges How can we get equipment in the right place at the right time? LA Basin Surplus Export Demand Regions Ohio Valley & South Surplus Export Demand Regions NY Metro Surplus TPM 2013 Intermodal Rail Long Beach March 5,

36 Here are a few ideas on how to achieve balance Solutions for improving inland port efficiency 1. Continue to build out Transload Infrastructure 2. Domestic Triangulation 3. Equipment Coops using Open Exchange Platforms 4. Import Export Tethered Contracts for equipment matching TPM 2013 Intermodal Rail Long Beach March 5,

37 Transload Facilities Efficient and effective Bringing the cargo to the equipment creates efficiency for some commodity load out scenarios LA Transload Facilities Export Cargo Moves to Transload Facilities via Boxcar or Bulk Movement South Atlantic Transload Facilities NY Metro Transload Facilities TPM 2013 Intermodal Rail Long Beach March 5,

38 Domestic Triangulation Efficient and effective Double Head-haul Moves Offers reduced costs and higher asset utilization PNW Equip Deficit Need boxes for Export Reloads NY Surplus - Move to Seattle ISO Domestic Move TPM 2013 Intermodal Rail Long Beach March 5,

39 Equipment Coops using Exchange Platforms A Web Based Exchange offers ability to exchange equipment to reduce or avoid empty miles and excessive empty drayage costs TPM 2013 Intermodal Rail Long Beach March 5,

40 Matching Importers and Exporters Using Tethered Contracts - Achieving equipment turn efficiency Tethered or Joint Contracts - Importers and Exporters can reduce inland costs, turn equipment faster, and achieve more efficiency by creating tethered contracts that supports equipment supply and return requirements. Options to getting this done include: Associations or Joint Contracts via Third Parties Agreement Contracts using multiple carriers Joint agreements through parent companies TPM 2013 Intermodal Rail Long Beach March 5,

41 Other Ideas for maximizing Load Back Matching Inbound Outbound Incentives Inbound contract incentives for street turns Cost sharing for equipment positioning Round trip pricing for import/export shippers TPM 2013 Intermodal Rail Long Beach March 5,

42 Questions? TPM 2013 Intermodal Rail Long Beach March 5,