cees j. ruijgrok, tno mobility and logistics & tias business

Kees Ruijgrok

Canada’s Asia-Pacific Gateway and Corridor Research Conference, Vancouver BC, May 2-4, 2007

THE DEVELOPMENT OF INTERNATIONAL FREIGHT TRANSPORT IN EUROPE

AS A RESULT OF DEVELOPMENTSIN INTERNATIONAL TRADE AND LOGISTICS

Cees J. Ruijgrok,TNO Mobility and Logistics &

TIAS Business School at Tilburg University

May 2 , 20076Vancouver 2007 Cees Ruijgrok2

Agenda

• Developments in Transport and Logistics in Europe• In the past • In the future

• Developments in Transport networks• Driving forces• Trade offs• Towards hybrid networks

• Effects of Globalisation on Transport volumes• Harbour developments and containerization• Relative importance of external vs internal relations


growth of GDP and EU transport

0

50

100

150

200

250

300

350

1970 1980 1990 2000

tkm

, ind

ex, 1

970

= 10

0

domestic

cross-borderGDP

European Commission, 2004

Transport growth has been staggering

Trade growth with W-Europe 1999-2003

0%10%20%30%40%50%60%70%80%90%

100%N

orthAm

erica

Latin America

Western

Europe

C./E.

Europe/BalticStates/C

IS

Africa

Middle East

Asia

World

IMPORTS

EXPORTS

source: WTO, 2005


Will costs continue to fall?

Logistics costs in EU and US

0

2

4

6

8

10

12

14

1985 1990 1995 2000 2005 2010

% o

f GD

P

EUUS

sources: ELA/ATKearney and CSCMP

Trade tariffs

0

5

10

15

20

25

30

35

40

45

1940 1950 1960 1970 1980 1990 2000

perc

ent o

f im

port

val

ue

source: W TO

Costs of transport

0

50

100

150

200

250

300

350

400

1960 1970 1980 1990 2000

cost

inde

x, 1

980

= 10

0 airlandsea

European Commission, 2004


What direction for the future?

• Strong globalisation forces

• Cost curves are flattening

• But especially in emerging regions, cost still about to drop

• Let us look into logistics forces…


AspectAspect

FocusFocus

1 Price1 Price

EfficiencyEfficiency

2 Reliability2 Reliability

1 Price1 Price

QualityQuality

3 3 ResponsivenessResponsiveness

4 4 InnovativityInnovativity

CustomerCustomerServiceService CreativenessCreativeness

2 Reliability: Correct 2 Reliability: Correct Time,PlaceTime,Place, Quantity, Condition , Quantity, Condition 3 Responsiveness: Lead time, Flexibility, Contact frequency3 Responsiveness: Lead time, Flexibility, Contact frequency

Different focusses of logistic servicesdemand different attributes (Vermunt/HIDC)

2 Reliability2 Reliability1 Price1 Price

3 3 ResponsivenessResponsiveness

2 Reliability2 Reliability1 Price1 Price


European logistics 20??

Productscustomization

drive

Efficiency focusvia EDC

Servicesresponsiveness

drive

Customized productsvia VAL and Postponed

Manufacturing

Individualized products in a transparent

network

Responsiveness in

Delivery network


Development Focal Point

Process Process optimisationoptimisation within one companywithin one company



Chain Chain optimisationoptimisation



Network Network optimisationoptimisation: this is really complicated!: this is really complicated!


(A) Host market production(multinational companies)

Changes in Production and Logistics will continue

I

I

I

I

(C) S ingle s ourc e production( transnationa l c ompanies operating in hub netw ork )

•Hub networks•Focussing activities/locations•Collaborative Planning

May 2 , 20076Vancouver 2007 Cees Ruijgrok

Towards Collaborative Hub Concepts

Direct fragmented flows betweenorigin and destination

Collaborative network withconsolidated flows via hub network

Manufacturing facility Distribution center Hub facility

Direct transportation Interhub link To/from hub

Distribution


Global logistic developments will depend on development of cost differences and logistic trade offs

q

p

DS

I T+HTLC

A B

p(A)

p(B)

TLC

margin

trade

Production and

consumption

Trade based onprice differences & Total Logistics

Costs

Logistics structures based on service and cost trade-offs


Future logistic structures?

market

regionEurope

global

weeks days dayshours

STANDARD STANDARD

INDIVIDUALIZED

lead time lead time

SECTORAL DIMENSION

SPATIAL D

IMENSIO

N

?

?

?


Standard product

Individualizedproduct

Leadtimeshort (< 1day)

Leadtime long(days to weeks)

BTS

VAL

CD

BTOCD

FOP

FOP

global

EU

region

RDC

RFDBTO

BTS

BTO

EDC

CD

BTS – Built to stockBTO – Built to orderFOP – Flexible order productionVAL – Value added logisticsEDC – European distribution centerRDC – Regional distribution centerCD – Cross docking centerRFD – Rapid fulfilment depot

Networks move towards individualized products and services

Source: adapted from Vermunt, 2001


Long term trends in network architectures

fragmentation of flows• direct shipping• vertical disintegration

external collaboration• multi-user hub networks• horizontal bundling

1990 2000 2010 2020

internal rationalization• stock reduction• outsourcing 3PL => 4PL


Intermodality in hybrid networks: “co-modality”

Helsinki

Copenhagen

Southampton Rotterdam

AntwerpLe Havre

Barcelona

Genoa

Hubs

SC Warehouses

Koper

Sony Europe - Proposed Shipping Routes FY01 - 4 Ports

Current Air Cargo Entry Points to WarehouseNetwork - FY98, 13 Entry Points

Hubs

SC Warehouses

Future Air Cargo Entry Points to WarehouseNetwork - FY01, 1 Entry Points

Hubs


Summary

• Reduction of costs of interaction has boosted changes in global supply chain networks

• Firms have succeeded to improve service and product quality dramatically, creating a new competitive playing field

• The quality/price ratio is maintained by consolidation and horizontal collaboration

• Implications for transport systems?


Trends and expectations

• Steady growth of sea and air traffic• Double digit growth in global LSP market• Changes in spatial patterns of flows due to logistics networks• Congestion and fuel price starts to hit developed economies• Reliance on slower modes of transport in Hinterlands• Firms are also looking for consolidation and collaboration options

• New transport systems need to respect trends in logistics:• …directions?


Performance by goods transport in billion tonkm 1970-2001 (DG TREN, 2003)

0

200

400

600

800

1000

1200

1400

1970 1975 1980 1985 1990 1995 2000

RoadShort-sea shippingRailInland waterwaysPipeline

Vancouver 2007 Cees Ruijgrok21

TEU-throughput in the Hamburg – Le Havrerange (1975-2005)

0

4.000.000

8.000.000

12.000.000

16.000.000

20.000.000

24.000.000

28.000.000

32.000.000

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

year

TEU

TEU


# TEU’s to and from China in the port of Rotterdam

Rotterdam: Ontwikkeling aantal beladen TEU's van/naar China per kwartaal

0

50000

100000

150000

200000

250000

300000

2000 2001 2002 2003 2004 Q1 2005

2000-2001:+ 11%

2002-2001:+ 29%

2003-2002:+ 31%

2004-2003:+ 42%

Q1 05 - Q 1 04:+ 42%

Rotterdam: Ontwikkeling aantal beladen TEU's van/naar China per kwartaal

0

50000

100000

150000

200000

250000

300000

2000 2001 2002 2003 2004 Q1 2005

2000-2001:+ 11%

2002-2001:+ 29%

2003-2002:+ 31%

2004-2003:+ 42%

Q1 05 - Q 1 04:+ 42%


Rotterdam nr.1 in European container transshipment

9,38,1

6,5

3,72,1 1,4

02

46

810

Rotterdam

HamburgAntw

erpBrem

enLe

Hav

reZee

brugge

Mill

ions

of T

EU20042005

(still)


Capacity growth in container transhipment

7,5 7,25,4

3,5 2,00

2

4

6

8

10

12

Rotterdam Hamburg Antwerpen Bremen Le Havre

2003 ext 2004 ext 2005 ext 2006 ext 2007


Total capacity utilisation for 5 biggest ports in Le Havre – Hamburg range

20,0

25,0

30,0

35,0

40,0

45,0

50,0

55,0

60,0

2003 2004 2005 2006 2007 2008 2009

mill

ion

TEU

Total forecast (MTEU)

Total capacity (MTEU)

Forecasts from 2004

Forecasts from 2005


EU25 exports in 2000, 2010, 2020 in mln tonnes

EU Exports in mln tonnes

01000200030004000500060007000

intra E

U 25

Reurop

e

RoWorld

Asia (C

hina/I

ndia) Tota

l

2000

2010

2020


EU25 imports in 2000, 2010, 2020 in mln tonnes

EU Imports in mln tonnes

010002000300040005000600070008000

intra E

U 25

Reurop

e

RoWorld

Asia (C

hina/I

ndia)

Total

2000

2010

2020


EU25 imports/exports in 2000, 2010, 2020 in mlntonnes; containerised transport NSTR9

EU Imports and exports summed 2000, 2010, 2020 in mln tonnes of NSTR9

0

1,000

2,000

3,000

200020102020

2000 1,101 125 146 40 1,411

2010 1,216 157 153 127 1,653

2020 1,357 189 165 223 1,933

intra EU 25 Reurope RoWorld Asia Total


EU25 imports/exports in 2000, 2010, 2020 of NSTR9 in relation with Asia, by European origin/destination

0.0

50.0

100.0

150.0

200.0

250.0

200020102020

2000 27.0 8.8 4.4 0.3 40.5

2010 87.2 27.9 13.9 1.2 130.1

2020 155.3 47.4 25.5 2.3 230.5

NortWest Europe (nl,b,f,

Germany, Denmark,

Mediterranean

Landlocked Europe

Total


European imports/exports in 2020 of NSTR9, by European origin/destination

European imports/exports of NSTR9 by region in 2020

0.0

500.0

1000.0

1500.0

2000.0

2500.0

Asia (China/India)RoWorldREuropeEU

Asia (China/India) 155.3 43.0 25.5 2.0 225.7

RoWorld 91.3 23.5 40.4 10.5 165.7

REurope 21.3 56.1 28.5 92.0 197.9

EU 769.1 362.5 98.2 126.9 1356.7

NorthWest

Europe

Germany,

Denmark

Mediterranean

Landlocked

EuropeTotal


Conclusions (1)

Key trends• Customized production• Globalised trade • Responsive supply chains

Drivers of change in transport system • New configurations of global logistics networks • Changing reliance on transport systems

Tasks ahead• Take into account logistics networks in transport policy• Develop analytic capabilities to support logistics policy


Conclusions (2):

• Different products ask for different logistic structures• Globalisation emerges• The importance of ICT increases• The control of logistics is more important than the actual

execution


Thank you for your attention!

[email protected]

cees j. ruijgrok, tno mobility and logistics & tias business

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