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The Containerization of Commodities : Integrating Inland Ports with Gateways and C orridors in Western Canada. Jean-Paul Rodrigue Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA - PowerPoint PPT Presentation
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Pacific Northwest Economic Region (PNWER) 22nd Annual Summit, Saskatoon, Canada, July 15-19 2012
The Containerization of Commodities: Integrating Inland Ports with Gateways and Corridors in Western CanadaJean-Paul Rodrigue
Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA
Van Horne Researcher in Transportation and Logistics, University of Calgary, Canada
Canadian National RailwayCanadian Pacific Railway CentrePort CanadaGlobal Transportation Hub AuthorityGovernment of AlbertaGovernment of British ColumbiaPort AlbertaRocky View County
http://www.vanhorne.info/
Sponsors
An Expected Shift in Containerization Growth Factors
Derived
Economic and income growthGlobalization (outsourcing)
Fragmentation of production and consumption
Substitution
Functional and geographical
diffusionNew niches
(commodities and cold chain)Capture of bulk and break-bulk
markets
Incidental
Trade imbalances
Repositioning of empty containers
Induced
Transshipment (hub, relay and
interlining)
Growth Factors behind the Containerization of Commodities
Growing availability of containers
Rising demand and commodity prices
Fluctuations in bulk shipping rates
Imbalances in container shipping rates (export subsidy)
Empty containers repositioning
IMF All Commodity Index and Average Container Shipping Rates, 2000-2010 (2000=100)
Jan-0
0Ju
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IMF All Commodity Index
Container Shipping Rates
The Inland Logistics Funnel: The “Last Mile” in Freight Distribution
CapacityFunnel
FrequencyFunnel
CapacityGap
Economies of scale
FrequencyGap
FORELAND
HINTERLAND
Main Shipping Lane
Inland Terminal
INTERMEDIATE HUB
GATEWAY
Atomization
Massification
Market Accessibility of Major North American Inland Load Centres
Trade Corridors and Inland Load Centers, Western Canada
Western Canadian Intermodal Rail System
Main Carriers' Operational Constraints
Imbalanced trade flows and rates
Higher inland freight rates
Location and load mismatch
Contract terms (volatility)
Container weight limitations
Slow steaming and schedule reliability
Asymmetries between Import and Export-Based Containerized Logistics
Many Customers• Function of population density.• Geographical spread.• Incites transloading.• High priority (value, timeliness).
Few Suppliers• Function of resource density.• Geographical concentration.• Lower priority.• Depends on repositioning
opportunities.
GatewayInland
Terminal
DistributionCenter
Customer
SupplierRepositioning
Import-Based
Export-Based
Containerized Weight for Selected Commodities
Commodity Pounds per cubic foot Weight in a fully loaded 20 foot container
Wheat 48 26 tons* (28 tons)Corn 45 26 tonsDry peas, beans and lentils
37 22 tons
Vegetable oil (e.g. canola) 60 26 tons* (35 tons)Coffee (fresh beans) 35 21 tonsLumber (2x4s) 45 26 tonsHay (e.g. alfalfa) 14 8 tonsPotash 80 26 tons* (46 tons)Coal (Anthracite) 70 26 tons* (41 tons)Paper or wood pulp 75 26 tons* (44 tons)
* Exceeds maximum permissible weight.
Rationale of Container Transloading
Consolidation
Weight compliance
Demurrage charges
Equipment availability
Supply chain management
Containerized Imports, Port of Vancouver, 2008-2011 (in metric tons)
2008 2009 2010 20110
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
OthersPrepared Food ProductsBasic MetalsWood ProductsBeveragesChemicalsProduceMachineryIndustrial, Auto and Vehicle PartsConstruction & MaterialsHousehold Goods
Containerized Exports, Port of Vancouver, 2008-2011 (in metric tons)
2008 2009 2010 20110
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
OthersSheets, Panels & BoardsOther CerealsAnimal FeedPaper & PaperboardWaste PaperChemicalsBasic MetalsMeat, Fish & PoultrySpecialty CropsWood PulpLumber
Containers Handled by the Port of Prince Rupert, 2007-2011 (in TEU)
2007 2008 2009 2010 20110
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Empty (Exports)Empty (Imports)Loaded (Exports)Loaded (Imports)
Price of Selected Commodities on Global Markets, 1991-2012 (Jan 2000=100)
Aug-91
May-92
Feb-93
Nov-93
Aug-94
May-95
Feb-96
Nov-96
Aug-97
May-98
Feb-99
Nov-99
Aug-00
May-01
Feb-02
Nov-02
Aug-03
May-04
Feb-05
Nov-05
Aug-06
May-07
Feb-08
Nov-08
Aug-09
May-10
Feb-11
Nov-11
0
100
200
300
400
500
600
700
800
Rapeseed OilWheatSawn SoftwoodPotash
Monthly Softwood Lumber Shipments to China, 2007-2012
Jan-0
7Apr-
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Millio
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From Bulk to Containers: Breaking Economies of Scale
• Container as an independent load unit.• Minimal load unit; one TEU container.Entry Barriers
• Limited differences in scale economies for a producer.
• Incremental / linear cost-volume function.
Required Volumes
• New producers (smaller).• Product differentiation (more variety).
Market Potential
Trade and Transactional Facilitation: Functional Pairing of Inland Ports
Hinterland
Foreland
Gateway
Corridor
Functional Pairing
Inland Port
Conclusion: Inland Ports as Logistical Platforms for the Containerization of Commodities
The last mile remains salient(Gateway gap + inland massification)
Co-location as an effective value proposition (inbound / outbound logistics)
Promotion of exports and functional pairing of inland ports
Look at specific commodity chains (e.g. reefers)