aapa/marad/nawe terminal training program october...
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AAPA/MARAD/NAWE Terminal Training ProgramOctober 16th, 2007Anthony ChiarelloSenior Vice President, Customer Development
© 2007 AMB Property Corporation 2
AMB Property Corporation – Overview
▪ Strategy – Create long-term value through focused investment in facilities that support high-value, trade-based distribution globally
▪ Global Platform – 137 million square foot platform serving 2,800 customers in 44 markets in 13 countries(1)
▪ Assets Under Management – $13.1 billion; with 3rd party committed capacity, platform increases to $15.5 billion(2)
▪ Private Capital Franchise – Supporting global expansion through current co-investment funds in U.S., Mexico, Japan and Europe. Canada Fund expected to close in the second half of 2007
(1) As of June 30, 2007(2) AUM comprises Total Market Cap, AMB’s Share of Debt, Preferred Equity and Co-Investors Share of Fair Market Value of Fund Real Estate as of June 30, 2007
© 2007 AMB Property Corporation 3
By Sea, Air and Land
High growth, high barriers-to-entry markets tied to global trade
▪ Specialized Presence – On-tarmac, on-airport and airport-adjacent real estate
▪ Location Driven Demand – Core real estate operations are optimized to serve the airline, air express carrier, logistics, freight forwarding and shipping industries
▪ Global Driver – Necessary to have a major seaport presence in Europe, Asia and North America, to target the top seaports globally
▪ Rising Demand – Larger vessels, fast turn-around times and increases in volume create new demand at terminals
▪ Major Metropolitan Markets – Population density, proximity to customers, diverse labor pools. Markets have barriers-to-entry
▪ Development – Brownfield and redevelopment opportunities; municipalities increasingly supportive of “green” development practices
AIR
POR
TSSE
APO
RTS
INFI
LL
AMB CDG Cargo Center in Paris
AMB Amagasaki Distribution Center 1 & 2 in Osaka
View of South San Francisco market near SFO airport
© 2007 AMB Property Corporation 4
1.5
2.5
3.5
4.5
5.5
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
00.050.10.150.20.250.30.350.40.450.50.550.60.650.70.750.80.850.90.9511.051.11.151.21.251.31.351.41.451.51.551.61.651.71.751.81.851.91.9522.052.12.152.22.252.32.352.42.452.5
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
0
0.5
1
1.5
2
2.5
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
▪ Declining ratio of inventory to final sales fueled by technology and deregulation
▪ Acceleration of inventories and growth in global trade spur demand for facilities located at ports and airports
Graph 1 Source: World Trade Organization and AMB Property Corporation
World Trade(6.3% /yr)
World GDP(3.0% /yr)
0%
50%
150%
250%
200%
100%
19901986 1988 1992 1994 1996 2000 2002 2004 2006
Graph 2 Source: Bureau of Economic Analysis. Data through March 31, 2007.
Long-Term Global Trends
▪ World Trade far outpacing World GDP by 3x
Cum
ulat
ive
Gro
wth
Mon
ths
1950 19651955 1960 1970 1975 1980 1990 1995 2000 2006
5.5
1.5
2.5
3.5
4.5Interstate Highway
Oil Crisis
EDI
Internet
9/11
1985
Trucking Deregulation
1998
© 2007 AMB Property Corporation 5
0.00
100,000,000.00
200,000,000.00
300,000,000.00
400,000,000.00
500,000,000.00
600,000,000.00
700,000,000.00
800,000,000.00
900,000,000.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Macro Drivers and Trends
0
50
100
150
200
250
300
350
199519961997199819992000200120022003200420052006200720082009201020112012201320142015
2001 2006 2011 2016
200
300
400
500
100
600
History Forecast
RTK
s(B
illio
ns)
TEUs= twenty feet equivalent units Source: Containerisation International
Annual World Air Cargo Growth – Projected 6.1% Annual Container Cargo Growth – Projected 8-10%
100
700
800
900
1996
TEU
s (m
illion
s)
History Forecast
RTKs = revenue tonne kilometers Source: Boeing World Air Cargo Forecast 2006/2007
200
300
350
1996 2001 2006 2011 2016
250
150
50
© 2007 AMB Property Corporation 6
Sourcing Patterns Unlikely to Change
2.12.12.12.01.9Mexico
5.55.45.54.73.5Brazil
Latin America
8.38.06.76.05.2Slovakia
2.72.42.11.71.3Russia
9.08.77.87.16.0Poland
9.99.48.07.56.8Hungary
12.612.010.18.67.6Czech Republic
Eastern Europe
2625.224.523.622.9US
1.51.31.21.10.9India*
1.81.61.41.21.0China
20082007200620052004
2.12.12.12.01.9Mexico
5.55.45.54.73.5Brazil
Latin America
8.38.06.76.05.2Slovakia
2.72.42.11.71.3Russia
9.08.77.87.16.0Poland
9.99.48.07.56.8Hungary
12.612.010.18.67.6Czech Republic
Eastern Europe
2625.224.523.622.9US
1.51.31.21.10.9India*
1.81.61.41.21.0China
20082007200620052004
1.31.51.71.22.3Mexico
1.21.41.4-1.41.7Brazil
Latin America
4.543.93.95.1Slovakia
4.65.25.25.25Russia
3.13.43.213.9Poland
4.13.744.15.2Hungary
4.14.54.74.54Czech Republic
Eastern Europe
2.01.31.41.42.8US
4.654.96.16.1India*
77.38.699China
20082007200620052004
1.31.51.71.22.3Mexico
1.21.41.4-1.41.7Brazil
Latin America
4.543.93.95.1Slovakia
4.65.25.25.25Russia
3.13.43.213.9Poland
4.13.744.15.2Hungary
4.14.54.74.54Czech Republic
Eastern Europe
2.01.31.41.42.8US
4.654.96.16.1India*
77.38.699China
20082007200620052004
Table 1: Projected Labor Costs Per Hour (US$) Table 2: Productivity Growth (%)
Note: *Converted to US$ based on exchange rates provided by EIUSource: EIU, GRD Analysis
Sourcing Patterns Unlikely to Change
Table 1: Projected Labor Costs Per Hour (US$) Table 2: Productivity Growth (%)
Note: *Converted to US$ based on exchange rates provided by EIUSource: EIU, GRD Analysis
© 2007 AMB Property Corporation 7
Infrastructures – North America
▪ Container imports are expected to double by 2020
▪ Rail freight tonnage is expected to increase by 50% by 2020
▪ World air cargo is expected to more than tripleover the next 20 years.
▪ From 1970 to 2003, vehicle travel on highways rose by 161% but road mileage only increased by 6%
▪ Congestion costs US$ 63 billion in wasted time & fuel
▪ Half of the nation’s 257 locks on inland waterways are functionally obsolete
▪ Most ports have not been dredged to handle the 10,000+ TEU jumbo containerships being built
2557
SEATTLE
TACOMA
OAKLAND
LA/LONG BEACH
1,776
4,396
2,0433,382
13,101
59,420
1,4376,165
1,662
9,420
1,0102,152
1,8606,639
1,8095,566
4,47815,835
HOUSTON
MIAMI
CHARLESTON
SAVANNAH
VIRGINIA
NY/NJ
44%
144.5%
65.5%
353.6%
329%
113.1%
466.8%
256.9%
207.7%
253.6%
2004 Volumes (‘000 TEUs)
2020 Volumes (‘000 TEUs)
1,798
2,557
© 2007 AMB Property Corporation 8
Containerized Trade
▪ Global containerized trade growth will continue to outstrip growth in World GDP▪ Demand in US & EU for Asian goods will fuel trade growth▪ Strong Intra-Asia trade among China, India, ASEAN countries will also
contribute to trade growth
▪ Most in the industry hold the view that 2007 is likely the bottom of current cycle
▪ Analyst, research firms and ocean carriers forecast a narrowing supply-demand gap 2007 – 2010
▪ Supply of containerships will be affected by demand in other shipping sectors in 2009 in particular, limiting growth
© 2007 AMB Property Corporation 9
Rail Growth in North America
4
6
8
10
12
14
16
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
Annual Intermodal Volume Figures, 2002-2006
14,234,07413,641,87212,923,03611,903,12111,191,142Total Rail Intermodal Volume
2,432,9282,584,2622,639,5452,424,4072,345,508Trailers
11,801,14611,057,61010,283,4919,472,5188,588,822Containers
20062005200420032002Rail Intermodal Activity
Source: IANA’s Intermodal Market Trends & Statistics Report
Intermodal Growth 1991-2006Container and Trailer Units (millions)
U.S. Intermodal traffic has nearly doubled over the past 15 years. Trend expected to continue
© 2007 AMB Property Corporation 10
Air Trade
▪ Air volume is expected to triple in the next 20 years▪ Greatest growth in markets linked to Asia
▪ Areas in and around international and major gateway airports will continue to grow
▪ Over the next 20 years, the world freighter fleet will nearly double to 3,500+ airplanes
▪ Wide body freighters will dominate the future fleet growing from 27% in 2005 to 34% in 2025
Source: Boeing World Air Cargo Forecast 2006-2007
© 2007 AMB Property Corporation 11
Infrastructures Issues – Viewpoint
Challenges negatively impacting ‘flow’ today will become greater over time
▪ Seaports: Pressure on ocean ports will continue as volume increases
▪ Airports: Significant migration to secondary airports is not expected
▪ Rail: The US will need to spend at least $250 billion over the next 20 years to catch up with development needs. As investment fails to keep pace with volume growth, velocity will continue to slip
▪ Highway: Highway congestion will hamper distribution to major metropolitan areas across the US
▪ It remains to be seen whether actions being taken to stimulate capital investment will increase the pace of development in infrastructure rapidly enough to support trade growth
© 2007 AMB Property Corporation 12
A Fundamental Shift is Required
▪ Supply chain thinking of shippers/consignees will have to changedramatically
▪ New products and services providing greater certainty of delivery in spite of the growing effects of congestion will be required
▪ Public/Private partnerships will become the norm in development and funding of new infrastructure
▪ Environmental regulations will drive R&D to develop new equipment and operating modes that are more environmentally friendly
▪ The U.S. government — administrative and congressional level — must view transportation infrastructure as critical to the nation’s economic well being
© 2007 AMB Property Corporation 13
Align Distribution with Upstream Capabilities
Store
Import warehouse services used to compliment deconsolidation programs & create additional synergies
Reduces ocean cost and demurrage by turning containers close to port
(West, East or Gulf Coasts)
Reduces shipping & handling by mixing productto updated allocation, building DC ready loads &other value-added servicesImproves domestic efficiency by
Transloading to 48’/53’ equipment
Postpone allocation to meet demand reroute & expedite product more efficiently
By-pass DCs with customerready loads where feasible
InternationalTransportation
DECON
DECONCompany
DC
Intermodal Equipment
StoreDECON
DECON
Supply chain leaders are complementing origin activities with deconsolidation & transloading activities in strategic import gateways
© 2007 AMB Property Corporation 14
Domestic Distribution Changes
Distribution Centers located to take advantage of multiple gateways will be required to alleviate congestion
© 2007 AMB Property Corporation 15
Supply Chain Redesign Example 1
National Department Store Chain▪ Challenge
▪ FOB volume increasing and sourcing areas diversifying ▪ Supply chain costs were rising▪ Productivity in domestic distribution network declined
▪ Solution▪ Streamline origin operations through origin consolidation and cargo
management program▪ Exit many of the company-owned distribution centers▪ Outsource domestic distribution through crossdock programs on
West and East Coasts▪ Results
▪ Vendor compliance exceeded defined standards▪ On-time performance increased significantly for in-store deliveries▪ Reduce distribution network costs for investments and operations
© 2007 AMB Property Corporation 16
Supply Chain Redesign Example 2
Global Beverage Brand Importer▪ Challenge
▪ Import volume increasing▪ Dwell time on-dock increasing ▪ Declining product quality▪ Loss of market share
▪ Solution▪ Drayage program developed with warehouse & distribution providers
to pull ocean containers from terminal before free-time expiration▪ First-in-First-Out (FIFO) tracking system implemented in warehouse
providers’ facilities▪ Results
▪ Significant reduction of demurrage charges paid to ocean carriers▪ Product quality improved and returns from distributors reduced▪ Market share increased in the U.S.
© 2007 AMB Property Corporation 17
Supply Chain Redesign Example 3
National Footwear Distributor▪ Challenge
▪ Acquisitions and licensing agreements expand product portfolio▪ Increase in FOB volume and sourcing locations▪ Multiple handling of products within distribution network causing
significant rise in supply chain costs▪ Solution
▪ Allocation of product at origin to the store/customer level to by-pass distribution centers
▪ Holding inventory at a 3rd party warehouse for direct to customer shipments via parcel and less-than-container-load providers
▪ Results▪ By-pass operation significantly reduced the number of touch points,
lowering handling costs▪ Direct to store/customer shipments reduced transportation costs
© 2007 AMB Property Corporation 18
Concluding Thoughts
▪ EDC’s (Export Distribution Centers) will continue to be developed at origin points, in many various configurations▪ Value Added Services of providers will drive these variations
▪ IDC’s (Import Distribution Centers) will continue to be developed in and around major import hubs▪ Size will vary but expected in the 500K SF – 750K SF range
▪ Transloading is here to stay. Configurations will vary but narrow/long configurations with significant trailer parking (5 slots/door minimum) will be required
▪ Inland transload facilities, on or in close proximity to major Intermodal hubs, will continue to be developed to support the higher volumeimporters
© 2007 AMB Property Corporation 19
Concluding Thoughts - Continued
▪ East Coast hubs will see significant growth over the next 1-3 years
▪ Mexico/Canada alternatives will become more viable, but with limited short term capacity
▪ Facility location and design is directly tied to product type and client specific supply chain networks. One size does not fit all!
▪ Multi-story development is a better use of land and has been proven inAsia. U.S. multi-story sites will come as land values continue to grow and supply becomes more constrained
Customers:
Port of TokyoAMB Ohta Distribution Center ~ 790,000 SF
© 2007 AMB Property Corporation
This document contains forward-looking statements such as the size, completion and total investment in development projects which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements involve numerous risks and uncertainties and should not be relied upon as predictions of future events. The events or circumstances reflected in our forward-looking statements might not occur. We assume no obligation to update or supplement forward-looking statements. For further information on factors that could impact AMB and the statements contained herein, reference should be made to AMB’s filings with the Securities and Exchange Commission, including AMB’s annual report on Form 10-K for the year ended December 31, 2006.