Major Issues and Trends Facing the Port and Marine Transportation Industry

Transcription

1 Major Issues and Trends Facing the Port and Marine Transportation Industry AAPA MTMTP Charleston, SC

2 Objectives Cover Some Mega-trends Discuss Transportation Industry Challenges Touch on Some of the Nuts and Bolts Assess Some of the Implications

3 Some Mega Trends March 21, 2006

4 Hemispheric bulk cargo performance has been mixed over the past five years Americas' Bulk Cargo Growth 5 Year Tonnage Change (000) 140,000 90,000 40,000-10,000-60,000-4% -2% 0% 2% 4% 5 Year CAGR United States Canada Mexico Caribbean Basin Central America South America Note: Bubble size indicates 2005 tonnage

5 Mexico has lead the way in terms of growth in hemispheric container trade Americas Containerized Cargo Growth 5 Year Tonnage Change (000) 60,000 50,000 40,000 30,000 20,000 10, ,000 0% 10% 20% 30% 5 Year CAGR United States Canada Mexico Caribbean Basin Central America South America Note: Bubble size indicates 2005 tonnage

6 While almost all regions have contributed to overall growth in breakbulk cargoes Americas General Cargo Growth 5 Year Tonnage Change (000) 13,000 11,000 9,000 7,000 5,000 3,000 1,000-1,000-5% 5% 15% 25% 5 Year CAGR United States Canada Mexico Caribbean Basin Central America South America Note: Bubble size indicates 2005 tonnage

7 Trade Growth Will Continue to Increase the Pressure on Ports At a 5% CAGR, trade doubles every 15 years At a 7.5% CAGR, trade doubles every 10 years In 2005, the major North American ports handled a reported 44+ million TEUs By 2010, this volume will approximate million TEUs

8 The next five years will see sustained growth across the hemisphere 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Container Dry Bulk Liquid Bulk General Total

9 II. Define the Challenges

10 Motor Carrier Challenges

11 Several factors have driven productivity gains Trailer size increased from 40 to 53 Truck engine and maintenance cycles lengthened Truck engine fuel efficiency increased Empty miles were reduced Unionized carriers share down Improved technology and processes Trucking

12 However, many of these productivity opportunities may be reaching their end Trucking Area of Improvement Equipment Gains Inhibitor 53 to 57 Unlikely Fuel Efficiency Gains Labor Gains Environmental Regulations Hours-of-Service Regulations In addition to slower productivity gains, the infrastructure is reaching its capacity

13 Highway infrastructure is facing significant constraints Percent of Peak-Period Travel at Congestion Level 1982 Percent of Peak-Period Travel at Congestion Level 2002 Extreme Severe 5% 7% Heavy 8% Moderate 10% Uncongested 70% Severe 20% Extreme 20% Heavy 14% Uncongested 33% Moderate 13% Source: Texas Transportation Institute at Texas A&M University

14 Rail Industry Challenges

15 Railroads have more than halved their cost/revenue ton-mile since deregulation Rail Railroad Expenditures per Revenue Ton-Mile (1982$) $0.035 $0.030 Deregulation $0.025 $0.020 $0.015 $0.010 $0.005 $ $/RTM Salaries and Wages/RTM Other Materials & Supplies & Misc. Expenses/RTM Depreciation/RTM Fuel/RTM Loss & Damage, Injuries & Insurance/RTM Hire of Equiptment & Joint Facility Net Rent/RTM Note: 1980 and 1981 Salaries & Wages Data reflect AAR s estimate of 95% of total payroll expenses. In comparison year (1982), this measure differs from the 1975, methodology by 0.4%. Sources: AAR Railroad Ten-Year Trends. (various ed.); AAR Analysis of Class 1 Railroads. (1981); AAR Railroad Facts (various ed.).

16 Productivity gains have contributed to the decreasing cost/revenue ton mile Productivity Improvements Labor requirements declined Networks and track were rationalized following mergers Engine fuel efficiency increased Railcars increased to 286,000 lb. gross rail load Many railcar types were improved Rail

17 For railroads, some of these productivity opportunities may have reached their limits Rail Area of Improvement Equipment Gains Labor Gains Fuel Efficiency Gains Inhibitor 315,000 GTW Unlikely Adding Employees Future Locomotive Environment Regulations? In addition to slower productivity gains, the infrastructure is reaching its capacity

18 Port Industry Challenges

19 Port Region Container Capacity Summaries PSW PNW 2005 Net Position 2010 Net Position Comments LA/LB face significant capacity challenges during the next five years. Environmental regulation, enforcement and associated costs are key drivers. Oakland will likely have adequate capacity Tacoma has largest expansion potential although port-rail and continued PSW diversions pose challenges Atlantic South Florida North Atlantic, particularly with the AMPT-Portsmouth terminal should provide adequate capacity. The South Atlantic will need to improve density and reduce dwells. A significant increase in Suez services would pose challenges. Southport expansion, terminal reconfiguration, higher density and lower dwell should accommodate growth Gulf Bayport, Choctaw and some combination of Tampa, Texas City, Corpus Christi, Brownsville, Millennium Port will likely generate surplus capacity

20 The Port Industry challenge is multidimensional and modal Harbor deepening Environmental Labor efficiency and effectiveness Berth utilization Reducing dwell times/increasing velocity: breakbulk as well as container Port-rail interface Regional transportation infrastructure

21 The Challenges Needs are increasing Environmental challenges Funding shortfalls Modally focused Maritime Industry: Fragmented approach Maritime visibility Finding the Common Ground

22 Cover Some Nuts & Bolts

23 The Big Ships-Where Are They Deployed? 6,000 + TEU Vessels by Deployment 100% 80% 60% 40% 20% 0% 6,000-6,999 7,000-7,999 8,000-8,999 9,000+ Asia-Europe China-USWC Pendulum SEAsia/China-Europe SEAsia/China-N Europe Asia-Pacific Coast N Asia-Pacific Coast Note: Analysis includes 80% of all vessels over 6,000 TEU currently deployed

24 Big Ship Realities in a Load Center Port 6,300 moves 26+ to 50 berth working hours at moves per hour and six cranes 18 to 32 sorts 3 to 4 load ports to 6 to 8 destinations 2,500 to 3,200 rail moves 10 to 13 double stack trains

25 TEUs per Gross Terminal Acre for the World s Top Ports excluding Major Transshipment Ports ,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Shenzen-4 Guangzhou-23 Qingdao-14 Tokyo-17 Ningbo-22 Busan-5 Port Klang-12 Tianjin-21 Tanjung Pelepas-16 Shanghai-3 Dubai-11 Tanjung Priok-24 Manila-25 Rotterdam-8 Bremen/Bremerhaven-18 Laem Chabang-19 Hamburg-9 Los Angeles-7 Antwerp-10 Long Beach-13 NY/NJ-15 Port name followed by 2003 world gross throughput rank 2003 TEU's per Gross Terminal Acre

26 Estimated Average TEUs per Gross Terminal Acre by Coastal Range* 2004 TEUs/Gross Terminal Acre 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, NANA USSA USG USPSW NAPNW Carib ECCA ECSA *For a sample of the larger container ports in each coastal range for which comparable data exists

27 Operating Realities of 3,000 TEUs per Gross Terminal Acre Per Year Average Dwell Time Wheeled Toppick RTG_medium 0 Operating Mode

28 Operating Realities if the average dwell time is 7 days 10,950 12,000 Throughput per Gross Terminal Acre 10,000 8,000 6,000 4,000 2,000 4,380 7,300 Wheeled Toppick RTG_medium 0

29 The Port Industry Faces Significant Challenges in Financing Capital Investment Competition Regulatory Requirements Buyers Market Construction Lead Times Pace of technological change

30 In addition, a significant portion of port capital investments do not generate revenues and have long investment lead times Dredge spoil disposal areas Landfill Environmental remediation (cleanup) Mitigation Road and rail connections Grade separations Retention ponds Rail marshaling yards Utility rights of way

31 Port-Rail Interface Challenges Port Productivity Conference

32 The Port-Rail Interface: Mastering Rubik s s Cube Reefers 20s 40s Chicago Ist Generation Memphis 2 nd Generation Dallas 3 rd Generation

33 The Port-Rail Interface: The Choice Challenge Rail Imp 8,000 Rail Ex 2,000 4,000 2,000 Chic 1,000 Mem 700 DFW 300 Chic 1,000 Mem 700 DFW 300 NY 250 ATL 300 Port 250 Reg 650 OH 100

34 The Port Rail Interface: Train Equivalents 8,000' DST Equivalents Chic Mem DFW EB WB

35 The Port Rail Interface: Integrating the Players Needs & Practices Carrier Railroad Port Vessel schedule Vessel stow O/Ds Equipment type Service Requirements Network structure Network capacity Traffic balance by lane Car fleet Domestic traffic Blocking requirements Schedule Landlord or operating Rail terminals On dock Contiguous Centralized or decentralized Load tracks: #, length, config Support tracks: #, length, config

36 Assess Some of the Implications

37 A Systemic Approach is Required What Does It Mean? Focus is on the system, not a link or node The objectives are clearly defined The responsibilities are mutually established Quantifiable measures are established and used What Does It Require? A 3 Information Available Accessible Accurate Cooperation An emphasis on velocity Flexibility to adapt Contingencies

38 What Are Some of the Tools 24/7 for everyone Just in system time Not my time or your time Minimum free time, ideally measured in hours on peak days Peak pricing Chassis pools & gray boxes Virtual CYs Appointment systems Real time information tools across the supply chain An acceleration in adaptation of world class work rules and practices to the U.S. waterfront

39 Major Issues and Trends Facing the Port and Marine Transportation Industry AAPA MTMTP April 24, 2006