Inland Ports: Perspectives for Western Canada

1. Inland Ports: Perspectives for Western Canada Jean-Paul Rodrigue Associate Professor, Dept. of Economics & Geography, Hofstra University, New York, USA Van Horne Researcher in Transportation and Logistics, University of Calgary, Alberta, Canada

2. Global Supply Chains, Global Connections  Global Freight Distribution Commodity Chains as Agents of Added Value Terminals and the Continuity of Supply Chains Container yard, Port of Yantian, China

3. Traffic at the 50 Largest Container Ports, 2005

4. Commodity Chains; Where Value Comes From? High Globalization R&D Sales / Service Marketing Branding Added value Distribution Design Concept Manufacturing Logistics Low Commodity chain

5. Terminals and Supply Chains; Insuring a Continuity Inland Terminal Offshore Hub Gateway Gateway Suppliers DC DC Customers ‘First mile’ ‘Last mile’ Bottleneck Buffer Distribution center DC Inland containerized goods flow Inland non-containerized goods flow Maritime container flow

6. Composition: Pallets waiting to be loaded in a container (APL DC - Shenzhen, China)

7. Interchange: Post-Panamax Containership (Le Havre)

8. Interchange: UPS Willow Springs Distribution Center (Chicago)

9. Decomposition: Unloading “Floor Loaded” Containers and Palletizing Shipments (Antwerp)

10. Transport Terminals and Inland Ports  Freight Terminals The Setting of Inland Ports Free Trade Zones Translisft crane, NS Rutherford yard, PA

11. Freight Transport Terminals: Operations and Added Value

12. Inland Terminals, Different Settings, Different Functions Intermodal / TransmodalFacility Satellite Terminal Port Freight Distribution Cluster

13. Profitability of Inland Terminals: Balancing Volume and Service Area Gateway Port TEU Potential High Profitability High volume potential and low haul costs (Ideal Case) High haul costs compensated by high volume Inland Terminal 20,000 TEU 10 km Bad situation with high haul costs. Limited costumers Low volume compensated by low haul costs Inland corridor Volume 15 km Low Profitability Service Area High 60 km Low Service Area

14. Inland Terminal Life Cycle Traffic Subsidies / Investments Planning Setting Growth Maturity Decline Profit Concept Operationsbegin Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

15. Inland Ports: Different Stages, Different Concerns

16. Free Trade Zones: Setting The Rules

17. Free Trade Zones: “Bending the Rules”

18. North American Freight Transportation: Gateways and Corridors  Fitting in the Global Freight Picture Transpacific Connections The Hinterland Problem Trimodal Container Terminal, Willebroek, Belgium

19. Transportation in North America: Then and Now…

20. Two Major Transpacific Pendulum Routes Serviced by OOCL, 2006 (The Wal-Mart Express)

21. Balance of Containerized Cargo Flows along Major Trade Routes, 1995-2006 (in millions of TEUs)

22. Tokaido Yellow SeaRim Prince Rupert Sunan Delta Taiwan / Fujian Pearl River Delta Puget Sound San Francisco Bay San Pedro Bay Singapore Ensenada Container Traffic at Major Transpacific Container Ports: Mirror Images?

23. The Prince Rupert Equation… Prince Rupert • Increase in fuel prices • Could advantage Prince Rupert. • Fuel (bunker oil) account for 40% of operating costs for maritime shipping. • Forces ships to slow down (10% speed drop linked with 25% reduction in fuel use). • Transpacific crossing times become longer (1 or 2 days). • Closer gateways thus become more attractive for shipping companies.

24. SEZ Corridor Gateways and the Hinterland Effect Pacific Asia North American West Coast Efficient Inland Freight Distribution Inefficient Inland Freight Distribution

25. Main North American Trade Corridors and Metropolitan Freight Centers

27. Perspectives for Western Canada  Inland Ports: Hype or Potential? Containerization of Commodities Chassis waiting to be picked, Corwith Rail Yard, Chicago

28. A Favorable Environment for Inland Ports

29. The Pacific Northwest: Two Main Corridors, but How Many Inland Ports?

30. Containers Handled by the Port of Vancouver, 1997-2006 (in TEU)

31. The Potential of Containerization of Commodities ? Bulk Transport Container Transport • Flow concept; lower transshipment costs. • Its own warehouse unit. • Faster distribution (extending the realm of perishables). • Leveling the playing field. • Handle variety requirements. • Economies of scale. • Low utilization levels (at most 50% due to empty backhauls). • Delays for the assembly of loads. Economics • Imbalanced container shipping rates. • Rise in commodity prices. • Rise in bulk freight rates.

32. Maritime Freight Rates (Nominal USD per TEU), 1993-2007

33. Each System has its own Advantages …

34. … and Will Likely See the Emergence of a Complementarity Bulk Commodity Chain Customer Supplier Port Point-to-Point Consolidationcenter Complementarity Container port Pendulum Services Intermodal terminal Containerized Commodity Chain

35. Commodities are more Containerized than Expected…

36. Several Established Containerized Commodity Chains in Western Canada

37. Challenges for the Containerization of Commodities

38. The Challenge of the Box: Can Local Communities Capture Value? Load center potential (commodities) Intermediacy (limited) The role of public actors Will the boxes remain empty? Container waiting to be loaded, Shenzhen, China

39. Taking Advantage of Local Opportunities, Subtropolis, Kansas City