New Port-Hinterland Relationships: Experiences from North America

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New Port-Hinterland Relationships Experiences
from North America

• Jean-Paul Rodrigue, Hofstra University, New York

Email ecojpr_at_hofstra.edu Paper available
at http//people.hofstra.edu/faculty/Jean-paul_Ro
drigue
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Integration Forces Shaping Hinterlands
Geographical Integration Functional Integration
Spatial fragmentation of production and consumption. Exploitation of comparative advantages. Logistics SCM. Integration between maritime and inland transport systems.

Global Production Networks
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A New Geography of Port Hinterlands The Three
Hinterlands of Port Regionalization

• Phase of port regionalization
• Expansion of the hinterland through inland
  freight transportation strategies.
• Port development at a higher geographical scale.
• Macro-economic hinterland
• Which factors shape transport demand?
• Physical hinterland
• What is the transport supply from a modal and
  intermodal perspective?
• Logistical hinterland
• How flows are organized considering the
  macro-economic and physical hinterlands?

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The New Port Hinterlands The Regionalized Port
Consumption Production
Balanced flows Imbalanced flows
Terminal / DC Link (mode)
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Types of Hinterland
Macro-economic Physical Logistical
Concept Transport demand Transport supply Flows
Elements Logistical sites (production and consumption) as part of GPNs Transport links and terminals Mode, Timing, punctuality and frequency of services
Challenge International division of production and consumption Additional capacity (modal and intermodal) Supply chain management
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The New Port Hinterlands

• Macro-economic port regionalization in North
  America
• Tremendous growth in transport demand.
• Shifting comparative advantages less production
  but more consumption.
• De-industrialization, relocation and
  re-industrialization
• The automotive industry is collapsing (GM, Ford,
  Delphi, etc).
• Platform companies emerging organizational/logist
  ical structure.
• Artificially induced demand financial leverage
  asset inflation and debt.

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The Perpetual Motion Machine The Real Dynamics
behind the Worlds Most Significant Trade
Relationship
USD
for goods
Interest Rates
Unemployment
Goods
Borrowing
Investment
Bonds (IOUs)
Asset Inflation Debt
Reserves
for bonds
United States
China
USD
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Worlds 10 Largest Exporters and Importers, 2004
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Containerized Cargo Flows along Major Trade
Routes, 2000-2004 (in million TEUs)
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The Physical Hinterland

• Physical port regionalization in North America
• Capacity demands from long distance trade.
• Port ranges lateral corridors of port
  competition / cooperation.
• Gateways logistical platforms.
• Inland freight corridors.

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Traffic at the 50 Largest Container Ports, 2003
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Traffic at Major North American Container Ports,
2003
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Cargo Handled by the Top 5 US Container Ports,
1984-2004 (in TEUs)
Regionalization
Deconcentration
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Major Modal US Gateways, 2003
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The Three Main Gateways of North America
Gateway System Gateways Total share () Imports / Exports ( billions) 2003 Imports / Exports ( billions) 2003
Southern California Port of Los Angeles, Port of Long Beach, Los Angeles International Airport, Otay Mesa (Port of Entry) 15.2 226.5 74.8
New York / New Jersey JFK International Airport, Port of New York / New Jersey 10.7 142.2 70.9
Detroit Detroit (Port of Entry), Huron (Port of Entry) 8.3 86.9 77.2
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Trucking Corridors and Major Metropolitan Freight
Centers (more than 3,000 trucks per day)
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Major Road Traffic Bottlenecks
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Number of North American Ports by Channel Depth
(feet)
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The Logistical Hinterland

• Logistical port regionalization in North America
• Empty containers repositioning coping with
  imbalances.
• Modal shift coping with congestion and costs.
• Corridor flows coping with the existing spatial
  structure along the Boston Washington corridor.

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The Logistical Hinterland

• Causes of the empty containers problem
• Global trade imbalances
• A worsening of these imbalances in the US.
• Imbalances above 8.6 million TEU per year.
• 150,000 TEU per week.
• Repositioning costs
• From surplus to deficit areas.
• East Coast to Asia about 1,200 per TEU (2004).
• Manufacturing and leasing costs
• Comparative differences.
• Used to be about 1,300 per TEU (2004).
• Recent increase to about 2,000 per TEU.

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Container Repositioning Scales
Repositioning Costs
High imbalance
Container manufacturing cost
International
Regional
Low imbalance
Local
Gateways as reverse logistics centers
Storage depots
Reshuffling
Repositioning Distance (TEU KM)
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Containers Handled by the Port of New York,
2001-2004
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The Logistical Hinterland

• Inertia in modal shift
• Does not occur as fast as expected.
• Transport economics hint at a gradual process.
• Reasons for inertia
• Accumulated investments / stakes in modes and
  terminals.
• Management preferences.
• Proven reliability.
• North American hinterlands and modal shift
• Particularly takes place at the fringe.
• A port competition through regional modal
  cooperation.

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Principles of Modal Shift
Real Modal Share
Comparative Advantages
Over performance
Modal Share (A/B)
Expected Modal Share
Underperformance
Inertia
Maturity
Shift
Time
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Costs of Shipping a 40 foot Container to New
York Towards a 100 per Barrel Logistics?
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Some Short Sea Shipping Systems in North America
East Coast Port Inland Distribution Network (New York, Boston, Albany).
East Coast Columbia Coastal Several East Coast ports linked, new Philadelphia Baltimore container barge service.
Great Lakes Detroit-Windsor Truck Ferry. Rochester-Toronto Fast Ferry.
Gulf Coast Teco Ocean Shipping bulk commodities.
Gulf Coast Osprey Lines container-on-barge services in Texas, Mississippi River service (Baton Rouge to New Orleans).
West Coast Totem Ocean Trailer Express (Ro/Ro), Horizon Lines and Lynden Transport (Alaska and Washington).
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The Boston / Washington Port Hinterland
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Conclusion

• Whats next for North American hinterlands?
• Anticipated growth of freight flows
• Both in tons and tons-km.
• Additional demands on the capacity of modes and
  terminals to handle them.
• Unlikely to take place.
• Imbalanced freight flows
• Disequilibrium in the division of labor, trade,
  production and consumption.
• Short/medium term additional pressures to manage
  the disequilibrium (e.g. empties).
• Long term rebalancing the flows and the
  hinterlands.
• Regionalization of hinterlands
• Ports adapting to the freight flows reality.
• Attempt at re-balancing by offering a wider
  hinterland range.

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The Northern East-West Freight Corridor