Container Liner Shipping and competition on the Hinterland Rommert Dekker
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1 Container Liner Shipping and competition on the Hinterland Rommert Dekker Erasmus School of Economics, Rotterdam, The Netherlands Erasmus SmartPort
2 Contents 1. Importance of hinterland transport 2. Organisation Intermodal Transport 3. Intermodal transport 4. Terminal - truck interface 5. Cooperation with terminals in same port: interterminal transport
3 Typical Supply chain costs 40 ft container Shanghai Europe: Source Absolute Share CO2 (tonnes) Euro CO2 Euro Deep Sea transportation , % 49.2% DC facility costs % 6.1% Drayage and handling at port % 3.5% Drayage and handling at DC % 1.4% Port-to-DC transportation % 20.2% DC outbound transportation % 19.6% Total ,565
4 Port Competition Many studies done, mainly asking shippers for their preferences Tongzon (2009) states as factors - port efficiency (costs) - shipping frequency, - adequate infrastructure - geographical location w.r.t. hinterland In EU: South EU ports, Rumania, Hamburg-Le Havre range is very successful? Why?
5 Where are my customers? Orange Areas Indicate Economic Activity Oslo Copenhagen London Brussels Paris Berne Madrid Lisbon Helsinki Stockholm Netherlands Bonn Vienna Rome
6 Liner Shipping connections Many liner shipping companies also have terminal companies: Maersk Line and APMT Offers flexibility in making and changing schedules. Ensures berth availability Hinterland integration is diverse. Some have some do not have it.
7 Truck often more reliable & flexible than IM 7/8/2014 R. Dekker 2014 Mode preferences Shortsea ships, barges and trains transport larger quantities economies of scale at lower unit costs trains faster than barges, but all slower than trucks! hence also less CO2 emissions, though NOx is usually better at EURO VI trucks Intermodal transport often requires extra handling: long distances needed Truck often needed for final transport
8 Energy use Energy use and emissions PS-type container vessel (11,000 TEU) S-type container vessel (6,600 TEU) Rail- Electric Rail- Diesel Heavy Truck Boeing kwh/t km Emissions g/tkm PS-type container vessel (11,000 TEU) S-type container vessel (6,600 TEU) Rail- Electric Rail- Diesel Heavy Truck Boeing CO SOx NOx PM n/a n/a Source: Network for Transport and the Environment 7/8/2014 R. Dekker 2014
9 Organisation Intermodal Transport Freight forwarders (e.g. Kuhne & Nagel) manage transports on behalf of customers (consignees) Ocean container carriers (e.g. Maersk Line) bring containers to port by deep sea ship Terminals stevedores (e.g. APMT) (un)load containers from ships Inland carriers train operators (e.g. Deutsche Bahn, SNCF, etc) barge operators (e.g. Contargo) Inland independent terminals (e.g. Brabant Intermodal) all are involved as well as Port Authorities & Port Info Systems.
10 Problems Intermodal Transport Congestion & unreliability long waiting times of trucks, barges at terminals, because deep sea ships get priority Lack of Coordination between all parties, leading to inefficient capacity use: barges visit terminals for a few containers only. Inland terminals compete. (van de Horst & de Langen 2008) Legal issues: different legal regimes exist per mode for liability Bookings are done per mode
11 Which combinations are best? Maersk & APMT & European Railservices: latter sold. In US rail companies operate rail & inland terminals ECT operates a new hinterland network EGS with own terminals and outsourced transport: to compete with other container terminals. Contargo operates barge, trucks and terminals in upper Rhine. So changes all the time!
12 Contargo network 7/8/2014 R. Dekker 2014
13 Environmental targets New terminals in Rotterdam from APMT and from RWG have got modal split targets: 35% by truck and rest by train and barge. Only clean trucks (Euro VI) are allowed at the port from North Sea will become an Emission Controlled Area (ECA) which will shipping lines force to use lowsulphur fuel and implement costly changes to ships (like scrubbers). Will other areas follow?
14 Coordination issues vd Horst & de Langen Possible solutions - setting up incentive schemes - interfirm alliances - changing scope of organisations - collective actions
15 Developments Hinterland Networks Dry Port concept Extended gate concept Competition on hinterland networks Synchromodality
16 Dry Ports & Extended Gates Inland terminal which can act as a virtual port, offering customs activities as well as regular transport to the port (Roso 2009) An inland terminal does not offer custom services. Extended gate is an extension of a particular terminal and the terminal arranges transport.
17 Competition on inland terminals Ports and container terminals are competing on inland terminals. Example: Duisburg central in W Germany with many connections: competition between Antwerp & Rotterdam versus Hamburg & Bremen Inland terminal Venlo: competition between Rotterdam s ECT and APMT terminals Port Authorities like to have public inland terminals, yet container terminals want to have dedicated terminals.
18 Network of inland terminals Use network of train and barge terminals to transfer containers from busy port inland. Issue: how many and where are terminals needed? Example: Heineken exports 100 containers / day via special inland port
19 ECT s Extended Gate Network (2012) 7/8/2014 R. Dekker 2014
20 Dream: Synchromodality Intermodal planning with the possibility of real-time switching between the modes or real-time intermodal planning (Verweij 2011) So far only express carriers switch real-time, not in container transport. Today, in container trainings, mainly planning per mode separately Would allow a large modal shift from truck to train / barge
21 Intermodal Network Design Models Ishfaq and Sox (2010, 2011, 2012) basic well working models for IM network design Meng & Wang (2011) with different stake holders Van Riessen et al (2013) flexible due dates and subcontracting SteadieSeifi et al (2014) overview on models for multimodal transport planning Bouchery and Fransoo (2014) multiple actors
22 Overview SteadieSeifi et al (2014) Most models focus on hub & spoke systems, yet corridor network planning is more appropriate for hinterland transportation Trade-offs between time and costs should be studied: multi-objective approaches Integrate backward flows in design planning Take multiple actors into account
23 Ishfaq & Sox (2011) network design model assumptions For every O/D pair, i,j a flow f ij is given. Transfer flow through two hubs k,m Potential hub locations are given. Open p. Transfer costs are hub and mode dependent Opening costs for a hub k are given: F k A time restriction can be imposed on a connection Transfer between hubs has a cost discount α
24 Ishfaq & Sox model (2011) 7/8/2014 R. Dekker 2014
25 Ishfaq & Sox model (2011) 7/8/2014 R. Dekker 2014
26 Ishfaq & Sox model (2011) Solution approaches: Lagrangian relaxation to determine a lower bound Relax equations with yk and ym variables. Apply sub-gradient optimization. Solve ties by allocating to the largest route. Tabu search heuristic to find a good solution. Start with an initial solution. Change a hub for a local non-hub unless it is in the tabu list. Repeat for a number of starting solutions.
27 Bouchery & Fransoo (2014) Game theoretic analysis of network optimization Objectives of different actors are not aligned Multi-objective optimization useful Inland terminals close to the port are better in terms of utilization, midrange terminals are better from a total cost perspective, and distant inland terminals perform better for modal shift. Overall optimization leads to overly optimistic networks with too high costs.
28 Network operations scheduling Bontekoning and Macharis (2004) review of intermodal planning and scheduling Lacking: reliability, re-scheduling, managing of disruption. Much research is going on in railway and airline research, but extension to intermodal transport is necessary. One example: van Riessen et al (2014) looked at the impact of disturbances
29 Developments in rail (EU) Separation train operators and infrastructure providers in order to allow competition (mainly in UK, NL, hardly in Fr, Be) Attempts for EU train slot allocation Independent cargo operators and cross border mergers (NS Cargo with DB cargo into Rallion), improved productivity. Yet different voltage (power) systems make cross border connections more expensive. Many new High-speed lines, and some cargo lines, Betuwe route (4 bln euro!) 7/8/2014 R. Dekker 2014
30 Problems with rail (EU) Old and expensive infrastructure (shunting yards (take one night), different equipment, no automatic coupling, block safety system, no integrated IT, no double stacking, no GPS on trains), difficult to change Many state companies (monopolies), while rail cargo is attractive over 500 km. All national companies are different: little standardisation (locomotives, safety system, voltage) Very restricted in use (speed differences, competition cargo passenger)
31 Problems with rail (EU) Safety measures limit operations (certifications of train drivers per country Very slow and unreliable e.g. 18 km / hr for Rotterdam Italy, due to restrictions and shunting Shuttles (point-to-point) connections without shunting have been attractive EU situation is quite different from US and from rest of the world.
32 Truck Gate Congestion handling time at a terminal becomes variable: makes truck on short distance less competitive to barge: Rotterdam barge terminal Alblasserdam: 50 km truck appointment systems chassis exchange terminal Road congestion: highways to ports are congested, though container trucks may be only 10-20%, but also trucks terminal workers, and company vans
33 Arrival pattern at ECT s Delta terminal Truckers arrivals are concentrated at some periods of the day (early morning and afternoon). Capacity can not be changed that quickly (personnel works in three shifts in total 24h /day).
34 Truck appointment systems Applied in some ports (Felixstowe, Vancouver, Long Beach) with success Papers by Hyunh, Walton (2008, 2009), Guan & Liu (2009), Chen, Zhou & List (2011) propose & analyse gate appointment systems Problem: truckers also have to adhere to delivery time windows, multiple port / terminal visits difficult.
35 Chassis Exchange Exchange chassis with preloaded containers instead of load / unload containers on demand: shortens turnaround time and reduces capacity requirements applied at APL terminal Long Beach (carrier haulage), proposed system in Rotterdam not realized.
36 7/8/2014 R. Dekker 2014 CET resembles Stack on wheels in Long Beach
37 Inter Terminal Transport For a port with multiple terminals Instead of letting trains and barges visit all terminals, one could also have a common rail / barge service center and transport containers from the terminals to that center. This increases capacity usage of trains and allows IM service to far away low demand destinations. Problem how to do it?
38 ITT papers Van Duinkerken et al (1998) - Automatic Lift vehicles are the best transport option, because they are capacity independent. - AGVs perform good, especially when used from water side. - Multi-Trailers lack flexibility Tierney & Voss (2013) IP based planning model for ITT transport Negenborn et al (2014) comprehensive project on ITT for Port of Rotterdam
39 Conclusions Hinterland connections are very important for port competition Efficient connections are good both in terms of costs but also in terms of CO2 emissions. Congestion however, plays a role in many hinterland connections and smart solutions are needed. Coordination issues need to be resolved.
40
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