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International Congress on Ports in Proximity:Competition, Cooperation and IntegrationAntwerp / Rotterdam, December 5 – 7 2007
Port Hinterland Divergence along the North American Eastern SeaboardJean-Paul RODRIGUEDepartment of Economics & GeographyHofstra University, Hempstead, New York 11549, USA
Changqian GUANIntermodal Transportation & Logistics Program, Department of Marine Transportation, U.S. Merchant Marine Academy, Kings Point, New York, USA
Ports in Proximity along the Eastern Ports in Proximity along the Eastern SeaboardSeaboard
A. Globalization, Trade and Port Divergence in North America
B. Cargo Volume Growth and Shipping Services
C. Port Regionalization and Potential Port Hinterland Divergence
D. Conclusion: From Divergence to Convergence?
A. Globalization, Trade and Port Divergence A. Globalization, Trade and Port Divergence in North Americain North America
1. Factors of Port Divergence• What are the main processes behind divergence?
2. Containerized Traffic Trends• How containerization has evolved along the East Coast in
recent years?
3. Traffic Concentration• What is the extent of the divergence taking place?
1. Factors of Port Divergence1. Factors of Port Divergence
SiteSite Conventional factor (modal access and accessibility). Reinforced by new generations of containerships.
Ocean CarriersOcean Carriers Choice of port calls and frequency of service. Choice of network structure.
Port OperatorsPort Operators Choice of asset allocation. Differences in terminal productivity.
PolicyPolicy Port governance and public funding. Landlord ports and privately developed ports. Shape of private / public partnerships.
HinterlandHinterland Access to long distance transport corridors. Access to the regional customer base.
Supply Chain Supply Chain ManagementManagement
Production and distribution requirements (scheduling, frequency).
2. A Schematic Representation of the Eastern Seaboard
St. Lawrence“The Funnel”Direct to the
bottleneck: Montreal
Upper Range“The Empty Sink”
Weak handles: Halifax and Boston
Mid Range“The Full Sink”
Strong handles: New York and Hampton
Roads
Lower Range“The Filling Sink”
Strong center:Charleston / Savannah
Upper RangeUpper RangeMid RangeMid Range
Lower RangeLower Range
St. LawrenceSt. Lawrence
2. Container Traffic at Eastern Seaboard 2. Container Traffic at Eastern Seaboard Ports, 2006Ports, 2006
5.09
2.16
2.05
1.97
1.29
0.98
0.86
0.77
0.63
0.53
0.26
0.25
0.24
0.20
0.18
0.12
0 1 2 3 4 5 6
New York/New Jersey
Savannah
Hampton Roads
Charleston
Montreal
Miami
Port Everglades
Jacksonville
Baltimore
Halifax
Wilmington(DE)
Philadelphia
Palm Beach
Boston
Wilmington(NC)
St. John's
Millions
22ndnd Tier (Gateways) Tier (Gateways)
33rdrd Tier (Regional Gateways) Tier (Regional Gateways)
44thth Tier (Niche ports) Tier (Niche ports)
Articulation GatewayArticulation Gateway
Divergence ThresholdDivergence Threshold
3. Concentration of Containerized Traffic, 3. Concentration of Containerized Traffic, 1985-20061985-2006
0%
20%
40%
60%
80%
100%
20062000199519901985
Other
Top 5
Diffusion of ContainerizationDiffusion of Containerization
Hinterland EffectHinterland Effect
3. Concentration of Containerized Traffic, 3. Concentration of Containerized Traffic, 1985-2006 (Lorenz Curve)1985-2006 (Lorenz Curve)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 0.2 0.4 0.6 0.8 1Cumulative Ports
Cum
ulat
ive
TEU
s
2006
2000
1995
1990
1985ConvergenceConvergence
DivergenceDivergence
B. Cargo Volume Growth and Shipping B. Cargo Volume Growth and Shipping ServicesServices
1. Traffic trend among major East Coast Ports• From convergence to divergence?
2. The resurgence of All Water Services• What are the underlying factors?
3. Service routes and transit times• How Landbridge and All Water Services compare?
1. Change in Container Traffic at Eastern Seaboard Ports
0.77 M TEU0.77 M TEU8.36 M TEU8.36 M TEU
1.31 M TEU1.31 M TEU
+0.04 M TEU+0.04 M TEU
+0.28 M TEU+0.28 M TEU
+3.02 M TEU+3.02 M TEU +2.01 M TEU+2.01 M TEU
7.19 M TEU7.19 M TEU
1. Strong Divergence: Montreal and Halifax1. Strong Divergence: Montreal and Halifax
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000Halifax
Montreal
1. Strong Divergence: Montreal and Halifax1. Strong Divergence: Montreal and Halifax
-25%
-15%
-5%
5%
15%
25%
35%
45%
Halifax
Montreal
ConvergenceConvergence DivergenceDivergence
Zero-sum game?Zero-sum game?
1. From Convergence to Divergence: the 1. From Convergence to Divergence: the American East CoastAmerican East Coast
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Charleston
Norfolk
New York
Savannah
1. From Convergence to Divergence: the 1. From Convergence to Divergence: the American East Coast (Annual Growth Rates)American East Coast (Annual Growth Rates)
-25%
-15%
-5%
5%
15%
25%
35%
45%
Charleston Norfolk
New York Savannah
DivergenceDivergence ConvergenceConvergence DivergenceDivergence
Equa
tor
2. The Resurgence of All Water Services to the East Coast
LandbridgeLandbridge
Westbound Westbound RouteRoute
Eastbound Eastbound RouteRoute
Algeciras
Gioia Tauro
Jeddah
Colombo
Singapore
Hong Kong
Shanghai
PusanKobe
LA/LB
Seattle / Vancouver
PanamaPanamaRouteRoute
““China Effect”China Effect”
West Coast CongestionWest Coast CongestionLandbridge CongestionLandbridge Congestion Growth in the SoutheastGrowth in the Southeast
New Distribution GatewaysNew Distribution Gateways
3. Service Routes and Transit Times: Far 3. Service Routes and Transit Times: Far East to New YorkEast to New York
14
14
16
18
18
24
21
26
23
25
22
23
0 5 10 15 20 25 30
Busan
Tokyo
Shanghai
Kaohsiung
Hong Kong
Singapore
Land Bridge All Water
-1-1
+4+4
+7+7
+7+7
+12+12
+7+7
3. Service Routes and Transit Times: Far 3. Service Routes and Transit Times: Far East to Norfolk, VirginiaEast to Norfolk, Virginia
14
14
16
18
18
24
23
26
24
25
22
23
0 5 10 15 20 25 30
Busan
Tokyo
Shanghai
Kaohsiung
Hong Kong
Singapore
Land Bridge All Water
-1-1
+4+4
+7+7
+8+8
+12+12
+9+9
3. Service Routes and Transit Times: Far 3. Service Routes and Transit Times: Far East to Savannah, GeorgiaEast to Savannah, Georgia
14
16
18
19
18
28
25
24
22
22
21
25
0 5 10 15 20 25 30
Busan
Tokyo
Shanghai
Kaohsiung
Hong Kong
Singapore
Land Bridge All Water
-3-3
+3+3
+3+3
+4+4
+8+8
+11+11
Equa
tor
3. The Resurgence of All Water Services to the East Coast
LandbridgeLandbridge
Westbound Westbound RouteRoute
Eastbound Eastbound RouteRoute
Zone of ContestabilityZone of Contestability
Equilibrium
Equilibrium
(indifference) Point
(indifference) Point
New York (1):75% (2005)60% (2020) New York (2+3):
25% (2005)40% (2020)
NYNY
SavannahSavannah
PanamaPanamaRouteRoute
New Direct LinksNew Direct Links17 (2002)17 (2002)26 (2007)26 (2007)
1
2
3
3. Service Time Reliability to the EC: All Water Services vs. Transpacific / Landbridge
18 days
NY: 22 daysSavannah: 21 days
Port congestionOffshore transshipmentTransloadingUnit train assemblyRail congestionTransmodal operationsRoad congestion
Port congestionOffshore transshipmentPanama / Suez Delays
Transpacific / Landbridge
All Water Services
3. Monthly Inbound Traffic, Port of Los Angeles (TEUs)3. Monthly Inbound Traffic, Port of Los Angeles (TEUs)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Janua
ry
Februa
ryMarc
hApril
MayJu
neJu
ly
August
Septem
ber
Octobe
r
November
Decem
ber
2004
2005
2006
2007
3. Summary3. Summary
Supply chain management• Landbridge is critical for high value cargo from East Asia
due to its short total transit time.
• The 7 day difference is quite critical. Inland areas cargo (e.g. Chicago) • Landbridge still has an overall advantage.
Hong Kong and Singapore• Points of equilibrium between landbridge and all water
service has a slight advantage in terms of transit time. South Atlantic ports• All water service is very competitive.
• South Atlantic ports are in a good position to compete with North-Mid Atlantic ports for hinterland markets.
C. Port Regionalization and Potential Port C. Port Regionalization and Potential Port Hinterland DivergenceHinterland Divergence
1. Port Infrastructure Development and Intermodal Services• What are the major infrastructure projects?
2. The reemergence of the “hinterland factor”• How the maritime / land interface is being modified?
3. Port regionalization strategies• How specific gateway ports are improving their regional
hinterland access?
1. Port Infrastructure Development and Intermodal Services
New YorkNew YorkDredging (50’)On-dock rail
PIDN
Hampton RoadsHampton RoadsAPM TerminalCraney Island
Terminal (2017)Heartland Project
CharlestonCharlestonNew Terminal
(2013)Terminal upgrade
Dredging (47’)
SavannahSavannahNew berth
Improved rail yards
2. The Reemergence of the “Hinterland Factor”: Rail Gateways and Metropolitan Freight Centers
New York• 85% are local cargo• 14% is distributed by rail• Less than 1% is distributed by water
Hampton Roads• Over 47% of cargo originates or is destined for locations within Virginia• 53% of cargo are hinterland bound
2. The Reemergence of the “Hinterland Factor”: Inland Corridors
2. Heartland Corridor Project, Virginia / Chicago
Current Double Stack RouteCurrent Double Stack Route(1,264 miles to Chicago)(1,264 miles to Chicago)
Heartland CorridorHeartland Corridor(1,031 miles to Chicago)(1,031 miles to Chicago)
Virginia Inland PortVirginia Inland Port
28 Tunnels Modified 28 Tunnels Modified to a 20’ 3” Clearanceto a 20’ 3” Clearance
D. Conclusion: Challenges and Opportunities of the New Panama Canal (New Panamax – 12,000 TEU)
Equa
tor
Westbound Westbound RouteRoute
Eastbound Eastbound RouteRoute
Algeciras
Gioia Tauro
Jeddah
Colombo
Singapore
Hong Kong
Shanghai
PusanKobe
LA/LB
Kingston
PanamaPanama
SuezSuez
D. Conclusion: Challenges and Opportunity for Arctic Routes
Russia
ChinaCanada
Un
ited
Sta
tes
Kazakhstan
Mongolia
New York
Vostochny
Lianyungang
Archangel'sk
Brest
Druzhba
Zabaykalsk
Oulu
Lokot
Perm'
Astana
Harbin
Urumqi
Beijing
IrkutskLanzhou
VologdaVainikkala
Ulaanbaatar
Novosibirsk
Yekaterinburg Presnogorkovka
Halifax
MoscowSt. Petersburg
El Paso
Chicago
Kansas CIty
Minneapolis
Salt Lake CityTacoma
Oakland
Houston
Savannah
Montreal
Vancouver
Long Beach
Haparanda/Tornio
New York
Rotterdam
Maritime Segment
Rail Main Trunk (Broad Gauge)
Rail Main Trunk (Standard Gauge)
Port
Gauge Change
Rail Terminal
Azimuthal Equidistant Polar Projection
Arctic Bridge
Northern Sea Route
Northwest Passage
D. Conclusion: From Divergence to D. Conclusion: From Divergence to Convergence?Convergence?
There is a divergence favoring a specific number of ports• Site: Limited number able to accommodate larger ships.
• Ocean carriers: Emergence of all water services as a new dimension of standard port calls.
• Port operators: Allocation of capital investment.
• Policy: Ongoing privatization, albeit at a slower pace.
• Hinterland: Development of rail corridors, particularly towards the Chicago hub.
• Supply chain management: A stronger factor than accounted.