Curtis D. Spencer, President IMS Worldwide, Inc.

Transcription

1 Curtis D. Spencer, President IMS Worldwide, Inc.

2 About IMS Worldwide, Inc. IMSW has completed over 325 FTZ Projects during 45 years. We have conducted 36 Logistics/Drayage studies for Industrial RE firms, RRs, and land-owners. We work with Large Gateway Zones (Houston, LA, Miami, Dallas, Chicago, PHX, El Paso, and NJ) We work with Fortune 1000 companies: Target, The Limited, Dell, Home Depot, Abbott Labs, TJX, Dick s Sporting Goods, CEVA, FedEx, UPS, Yusen, NFI, Nippon Express, etc. We work with the largest REITs in the USA: LPT Prologis, Duke, Majestic, Clarion, USAA, IIT, etc.

3 IMSW Overview of National FTZ and Strategic Development Projects

4 Agenda Trade and Logistics Trends that are Changing Supply Chains Panama Canal Update Global Sourcing and Manufacturing Trends The New Industrial: E-commerce Fulfillment Centers

5 Emerging Trade Patterns and Industrial Uses

6 SLIDE FROM 2010, SHOWING THE CONNECTION BETWEEN GDP AND TRADE Notice 2x to 3x trade volumes to GDP relationship exists + or Real Exports to U.S. in TEUs

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9 Where Did Those Missing TEUs Go? Mexico!

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11 2013 Total TEU Growth YTD Port of Entry Source: Individual Port Websites 2013 YTD TEU Volume % Growth over Same Period TEU Volume LA/LB (Dec) 14,599, % 14,123,376 NY/NJ (Dec) 5,034, % 5,075,895 Savannah (Dec) 3,034, % 2,966,221 Oakland (Dec) 2,346, % 2,344,424 Houston (Dec) 1,950, % 1,922,479 Hampton Roads (Dec) 2,223, % 2,105,887 Seattle (Dec) 1,592,753 9% 1,885,680 Tacoma (Dec) 1,891, % 1,711,133 Charleston (Dec) 1,601,366 6% 1,514,585

12 2014 Total TEU Growth YTD (May-June) Port of Entry Source: Individual Port Websites 2014 YTD TEU Volume % Growth over Same Period 2013 LA/LB (June) 7,355, % NY/NJ (May) 2,257, % Savannah (May) 1,325, % Oakland (June) 1,176, % Houston (June) 960, % Hampton Roads (June) 649, % Seattle (June) 718, % Tacoma (May) 798, % Charleston (June) 872, %

13 Panama Canal Canal operating at capacity today Limited ship sizes that can operate, 110 feet wide max, going to 185 ft wide! $1.7 billion cost override and vendor dispute Completion date moving back into mid-late years late! Main shift will not be in West Coast, vs. East Coast, Asia-traffic market share, but in one ship carrying 12,000 TEUs vs. 3 ships carrying 3,500 TEUs each.

14 THE PROBLEM `

15 THE FIX up to 12,000 TEUs

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17 Brand New Panama Canal Locks

18 Panama Canal: Bottom Line BALANCE: In Asia, Import Market Share after 2014 will be the answer. Approx. 52%-48% today, 50%-50% after Could be a non-event as many carriers have already re-positioned routes through the Suez to utilize larger ships for East Coast and Europe. Could be some re-routing of pricing and trans-shipping with Panama as hub (vs. Miami today). Costs are what move shippers! What is up with the China-Nicaragua canal?

19 Bigger ships mean less vessel port calls per rotation Less vessel calls mean less ports visited by the major carriers Ports must have three essential components to handle large ships: Water depth Terminal equipment matching ship Off-site rail and road enhancements EC Winners: NYNJ and Charleston EC Losers: Jacksonville and Savannah WC Winners: LA/LB, Canadian Ports, Oakland (exports) WC Losers: Portland and SeaTac

20 Shanghai to North American Ports: Slow Steaming Effects 2000 & From China, it takes about 2 Source: weeks ShipmentLink.com to bring cargo (Evergreen) to the Sailing West Schedules Coast and about 4 weeks to bring it in on the East Coast. (2000)

21 Shanghai to North American Ports: Slow Steaming Effects 2000 & 2014 Pricing as of June 20, 2014 $1,200 $800 $3,214 $1, $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)

22 Global Logistics-Ind. RE Bottom Line Panama Canal doesn t change any investment criteria. More important is which ports can handle new ship sizes with all three infrastructure pieces: Water Depth Terminal infrastructure (cranes) Off-site infrastructure (roads, RRs, and crossings) Where will the people live in years?

23 East Coast-West Coast TEU Cost Line Equilibrium- Summer 2014 Megapolitans Norcal +35% Cascadia +38% Great Lakes Horseshoe +10% z Equilibrium Line Q 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%

24 Global Sourcing and Manufacturing Trends

25 Manufacturing Grows in the U.S. New U.S.-Domestic manufacturing that is made competitive by new resources Natural Gas: New technologies unlocking new sources of product, which provides lower cost feed stocks for plastics-pe and PP specifically but PVC as well. Now U.S. is competitive with the world s producer. New production capacity announced in North America, 9 billion pounds of new production through 2018, some will be online as early as Not all about re-shoring but about new industry and manufacturing.

26 U.S. Dollar Mexico vs. China Wage Rate Since 2003, wages in Mexico have risen only 25% compared to 218% in China WSJ SOURCE: International Labour Organization, U.S. Bureau of Labor Statistics 26

27 E-Commerce Fulfillment

28 2013 E-Commerce Review Online spending grew 22% over 2012, for the five days following Thanksgiving to Cyber Monday. Some retailers saw revenue on Thanksgiving Day increase 132% over Black Friday saw 74% in revenue per store. Total online transactions up 46% over 2012 holiday season. Cyber Monday consumers spent $2.29 billion, the biggest sales day in e-commerce history.

29 In Billions of 4,000 Originally Projected Online U.S. Retail Sales as a Portion of Total U.S. Retail Sales ,500 3,000 2,500 6% 7% 7% 7% 8% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 2,000 1,500 1, Total US Retail Store Sales Total US Online Sales

30 Accelerated Growth of the Global Internet Population and E-Commerce Outside the U.S. Will Drive U.S. Retailers to Engage in Cross-Border Internet Trade

31 E-Commerce Key Criteria for Site Selectors Avoidance of Nexus tax (may get mitigated, but not yet) Proximity to major markets Inexpensive land UPS and FedEx truck hubs nearby Ample seasonal/surge labor pool Reasonable proximity/access to interstates Local incentives: Tax breaks FTZ!

32 Supply Chain Structure

33 Carters.com 1 Million Sq. Ft. FTZ Building Size: 1,061,237 SF Parking: 1,000 auto spaces 400 trailer spaces Highway Access: I-85 exposure 1,000 Auto spots! Cross-Dock 32 Clear Height 175 Truck courts

34 Amazon TN Site

35 U.S. Locations

36 What Does All of this Mean for Your Supply Chain? Growth in e-commerce will lead the retail and logistics industries to re-define DC-NETWORKS more fulfillment centers, and less brick and mortar retail space. Growth markets for the next 5-10 Years = NY/NJ, LA/IE, PHX, HOU, DFW, ATL, MIA, COL, EASTERN PA, DC-BALT. The DC Models are getting more sophisticated to look inside the 50 mile radius selection and to find the best in-bound flow location tied to the best outbound location! Getting local will be critical to same-day.

37 What Do We See as the Hottest Markets Not on Our Radar? Houston Gulf Coast: Resin, Medical, Manufacturing - insane levels of investment over the next 10 years. E-com facilities in dense population clusters; reworking value added space, cold, cooler, reefer space, for e-com same-day delivery. The entire cold-chain is growing. Target, WM, and others want to take control back to the farms. Panama, Costa Rica, India, and Vietnam overseas.

38 Bottom Line for Supply Chain Decisions Key markets will be based on population growth. Invest where people are going to be! 10- and 20-year demographics are changing. E-com hubs are emerging: PHX, Columbus, Atlanta, Dallas, SoCal, Louisville, PA. Look for where the demographic trends are likely to emerge in 10 year segments and plan accordingly.

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40 Prepared By: Curtis D. Spencer, President IMS Worldwide, Inc.