Global economic and trade trends: game changer for ports?

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1 Global economic and trade trends: game changer for ports? 22 May 2012, Jerusalem Prof. Dr. Theo Notteboom President, ITMMA University of Antwerp President, International Association of Maritime Economists (IAME) The

3 Trade flows: a world of regional trading blocks Source: adapted fromnotteboom (2012)

4 Share of intra-regional merchandise trade in total trade Basis = trade value in billion dollars Asia Middle East Africa Commonwealth of Independent States (CIS) Europe South and Central America North America Source: own compilation based on WTO data

5 Trade flows: a world of global cities 2012 Global Cities Index top 15 cities worldwide Source: The Chicago Council forglobal Affairsand AT Kearney

6 Trade flows: a world of global cities 2012 Global Cities Index future position of emerging cities Source: The Chicago Council forglobal Affairsand AT Kearney

7 Trade flows: share of Asia in total merchandise trade? Basis = trade value in billion dollars Middle East Africa Commonwealth of Independent States (CIS) Europe South and Central America North America Source: own compilation based on WTO data

8 Distribution of European container trade volumes Extra-European European Container trade volumes 2011 basis = TEU Exports from Europe 15.9 mln TEU 1% 4% 21.4 mln TEU Asia 3% 10% 9% 38% 21% 19% Imports to Europe 8% Indian subcon nent and Mi dl e East North America 13% South & Central America 9% Australia and Oceania Sub-Saharan Africa 65% Asia Indian subcon nent and Middle East North America South & Central America Australia and Oceania Sub-Saharan Africa Intra-European 3.7 mlnteu or 9.1% of total European container traffic

9 Asia rising: the top container port regions in the world TEU tho orughput in Millions Pearl River Delta (China) Malacca Straits (Singapore/Malaysia) Yangtze River Delta (China) Bohai Bay (China) Rhine-Scheldt Delta (Bel/Nl) Korean Twin Hub (Korea) San Pedro Bay (US West Coast) Helgoland Bay (Germany) Taiwan Tokyo Bay (Japan) Source: Notteboom (2012)

It is more about how and under which conditions these flows will move

10 Routing of trade flows The future of seaports is not only about expected future trade flows. It is more about how and under which conditions these flows will move globally within a supply chain perspective. => Key role for ports: port activity can not be narrowed down to a derived activity

11 Routing of trade flows: a layered perspective Distribution networks, port choice, modal choice, IT Maritimeservice networks, Intermodal networks Transport infrastructure networks Shipper Customer Logistical Transport Infrastructural Locational

12 Routing of trade flows: key considerations

13 Routing of trade flows: key considerations

(Out-of-pocket andindirect) New standard sizes on mainline routes Cascading of

14 Sustainability Flexibility Resilience Reliability Routing trade flows: the asset management game Lower costs through scale increases in vessel size Cost (Out-of-pocket andindirect) New standard sizes on mainline routes Cascading of vessels to north-south routes Upscaling of feeder vessel sizes Triple E class source: Maersk Line

15 Routing trade flows: cost Low margins are stimulating a focus on cost control Sustainability Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) High Price to cu ustomer Low Low Providing a low cost service Delivering a high value service What the market wants Value creation for customer High Problem: how to secure margins?

16 Sustainability Reliability COST-EFFICIENT ports and port systems As part of cost-efficient chains and networks Flexibility Resilience Cost (Out-of-pocket andindirect) Shift of costburdenfromseasideto landside Gainsmainly to be made in termsof bundling and synchronizingflows Role of ports as information centres PA pricing: cost-based pricing vs. commercial/strategic pricing

17 Routing of trade flows: key considerations

18 Need for SUSTAINABILITY The carbon footprint challenge Sustainability Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Exampleof externali eson origin-des na onroutes Mari me+inlandt ransport (index = 100 is lowestco 2 emissionon route)

Compliance in order to ensure community support & to attract customers.

19 Sustainability SUSTAINABLE ports and port systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Higher regulatory and societal requirements Compliance in order to ensure community support & to attract customers. Environmental management system, toolbox, sustainability report, etc.. Cost of going beyond compliance?

20 Routing of trade flows: key considerations

21 FLEXIBILITY in the global transport system Sustainability Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Routing possibilities on the North Europe - Far East trade NorthwestPassage NorthernSeaRoute East-Westrail corridors a d e c b a Suez Canal Panama Canal route Legend a = Trans-SiberianRailway b = Trans-Manchurian Railway c = Trans-Mongolian Railway d = Baikal Amur Mainline (BAM) e = New Asia-Europe Land-Bridge Cape Route Source: adapted fromnotteboom (2012)

22 FLEXIBILITY in the global transport system Filling the gap? Sustainability Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Freight rate to shipper (gate-to-gate) Impact slow steaming & transshipment Direct services? Fast ships? Air Liner shipping Transit me

23 FLEXIBILITY (and concentra on) in the European port system Gateway port Transhipment/interlining port (transhipment incidence >75%) Gateway port also handling substantial transhipment flows Finland Multi-port gateway region Norway Sweden Main shipping route Estonia Ireland UK Den. Latvia Lithuania Belarus Russia Americas Belg. NL Germany Poland Ukraine Czech Republic Slovakia Americas France Switz. Austria Hungar Romania Croatia Bosnia& Herz. Serbia Bulgaria Portugal Spain Italy Alb. Mace. Turkey Greece Main shipping route Cyprus Algeria Morocco 2011 T. Notteboom ITMMA, University of Antwerp Tunisia Malta Middle East Far East

24 FLEXIBILITY in the European port system Multi-port gateway regions example Rhine-Scheldt Delta Kilometers Seaport Inland Container Terminal (trimodal) Inland Container Terminal (barge/truck) Inland Container Terminal (rail/truck) Growth region European Distribution (outside seaport system) Ostend Dunkirk Logistics corridors Zeeland Seaports Zeebrugge ROTTERDAM Alkmaar Beverwijk Moerdijk ANTWERP Wielsbeke Ghent Willebroek Vilvoorde Kortrijk Avelgem Brussels Mouscron Ghlin Mons Lille Harlingen Leeuwarden Enkhuizen Lelystad Zaandam Amsterdam A. a/d Rijn Utrecht Gorinchem Dordrecht Tiel Haaften Waalwijk Den Bosch Oosterhout Tilburg Belgium Genk Urk Kampen Heerenveen Meppel Netherlands Oss Veghel Eindhoven Deurne Grobbendonk Weert Beringen Muizen Meerhout Herent Liège Valburg Nijmegem Groningen Doesburg Cuijk Emmerich Wanssum Krefeld Born Stein Lanaken Neuss Venlo Dormagen Veendam Coevorden Hengelo Duisburg Germany Duesseldorf Bonn Dortmund Cologne Flexibility Resilience Reliability Sustainability Cost (Out-of-pocket andindirect) Dourges Valenciennes La Louvière Charleroi Sambreville Centre Ardenne Andernach Koblenz France Athus Lux Mertert Bettembourg Source: Notteboom (2012)

25 Sustainability Need for RELIABILITY Schedule reliability in liner shipping -April-June 2010 Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Source: based on data Drewry

26 Sustainability Need for RESILIENCE Calamities, disasters, political changes are affecting supply chains Flexibility Resilience Reliability Cost (Out-of-pocket andindirect)

27 Sustainability RELIABILITY, FLEXIBILITY and RESILIENCE demand VISIBILITY through advanced IT systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Source: DHL

Sustainability FLEXIBLE ports and port systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Seaport choice is likely to become more

28 Sustainability FLEXIBLE ports and port systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Seaport choice is likely to become more flexible Last minute decisions on final port choice? B/L forinland destinations Driven by equipment utilization, liner service synchronization Not all eggs in one basket

Sustainability RELIABLE ports and port systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Ports will increasingly have to offer service guarantees In a

29 Sustainability RELIABLE ports and port systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) Ports will increasingly have to offer service guarantees In a supply chain setting (foreland-port-hinterland) Adopting new partnership models Even in a more volatile business environment Promise to partners, to investors, to the communities

30 Sustainability RESILIENT ports and port systems Flexibility Resilience Reliability Cost (Out-of-pocket andindirect) To support supply chain resilience Redefining the buffer function of seaports in supply chains Implications on land utilization and strategic port planning

bring stronger focus on cost efficiency flexibility, resilience,

31 Conclusion: is the game changing for ports? Higher uncertainties and risks facing ports & port authorities Future will bring stronger focus on cost efficiency flexibility, resilience, reliability sustainability Should PA focus on single port? Foreland-port-hinterland triptych Multi-port gateway region

32 Thank you for your attention!

Dynamics in the Port and Maritime Business: The Same Stage, Different Players, Another Game?

Dynamics in the Port and Maritime Business: The Same Stage, Different Players, Another Game? Prof. Dr. Theo Notteboom President and Professor, ITMMA University of Antwerp President International Association