freight guest lecture
DESCRIPTION
This is my most popular guest lecture. Which is suprising, since I don't deal with freight much. I guess pictures of ships and trains is more interesting to undergrads than are modeling results and 400 page planning documents.TRANSCRIPT
Globalization And Globalization And Freight MovementFreight Movement
Alex BondAlex BondApril 8, 2009April 8, 2009
22
Some Important TermsSome Important Terms
Twenty-foot Equivalent Unit Twenty-foot Equivalent Unit (TEU)(TEU)
Container ShipContainer Ship
Break-bulk ShipBreak-bulk Ship
No Freight Movement =
No International Trade
33
The First ContainersThe First Containers 1956- Trucking executive Malcolm McLean 1956- Trucking executive Malcolm McLean
puts 58 truck trailers on the deck of the puts 58 truck trailers on the deck of the S.S. Ideal XS.S. Ideal X
McLean forms Sea-Land Corporation, McLean forms Sea-Land Corporation, which will become the industry leader and which will become the industry leader and standardstandard
44
The First ContainersThe First Containers
Loading the ship with containers cost Loading the ship with containers cost $0.16 per ton vs. $5.46 (1956 $)$0.16 per ton vs. $5.46 (1956 $)
Containerships are an overnight Containerships are an overnight success. DoD awards $450 million in success. DoD awards $450 million in contracts for Vietnam war to SeaLandcontracts for Vietnam war to SeaLand
1,200 TEUs/month to Vietnam in 1,200 TEUs/month to Vietnam in 1965-19731965-1973
Other shippers lose DoD business, Other shippers lose DoD business, adaptadapt
55
Intermodal FreightIntermodal Freight
66
World Container Ship EvolutionWorld Container Ship Evolution
8,600 TEU8,600 TEU8,600 TEU8,600 TEU
1,700 TEU1,700 TEU1,700 TEU1,700 TEU
2,305 TEU2,305 TEU2,305 TEU2,305 TEU
3,220 TEU3,220 TEU3,220 TEU3,220 TEU
4,848 TEU4,848 TEU4,848 TEU4,848 TEU
5th Generation (2000 - 2006)5th Generation (2000 - 2006)5th Generation (2000 - 2006)5th Generation (2000 - 2006)
Super Post PanamaxSuper Post PanamaxSuper Post PanamaxSuper Post Panamax
1st Generation (Pre-1960 - 1970)1st Generation (Pre-1960 - 1970)1st Generation (Pre-1960 - 1970)1st Generation (Pre-1960 - 1970)
2nd Generation (1970 - 1980)2nd Generation (1970 - 1980)2nd Generation (1970 - 1980)2nd Generation (1970 - 1980)
3rd Generation (1985)3rd Generation (1985)3rd Generation (1985)3rd Generation (1985)
4th Generation (1986 - 2000)4th Generation (1986 - 2000)4th Generation (1986 - 2000)4th Generation (1986 - 2000)
Ideal XIdeal XIdeal XIdeal X
PanamaxPanamaxPanamaxPanamax
Post PanamaxPost PanamaxPost PanamaxPost Panamax
Full CellularFull CellularFull CellularFull Cellular
TEU CapacityTEU CapacityTEU CapacityTEU Capacity
6th Generation (2006-2012)6th Generation (2006-2012)6th Generation (2006-2012)6th Generation (2006-2012)
Ultra Post PanamaxUltra Post PanamaxUltra Post PanamaxUltra Post Panamax 12,000+ TEU12,000+ TEU12,000+ TEU12,000+ TEU
77
M/V Emma MaerskM/V Emma Maersk
- 1,300 feet long, 184 feet wide- 1,300 feet long, 184 feet wide- Holds up to 14,000 TEUs- Holds up to 14,000 TEUs- 18 to 24 crew members- 18 to 24 crew members
88
M/V Emma Maersk vs. SS M/V Emma Maersk vs. SS Knock NevisKnock Nevis
99
Panamax: Largest possible ship for Panamax: Largest possible ship for the Panama Canal (~4,800 TEU)the Panama Canal (~4,800 TEU)
Suezmax: Largest possible ship for Suezmax: Largest possible ship for the Suez Canal (~8,500 TEU)the Suez Canal (~8,500 TEU)
1010
GDP vs. TEU GrowthGDP vs. TEU Growth
1111
Coping with FreightCoping with Freight
Technology and globalization have Technology and globalization have caused freight to grow faster than we caused freight to grow faster than we can cope with it can cope with it • Import/export is doubling every 10 yearsImport/export is doubling every 10 years• Trucks will accommodate most of the growth Trucks will accommodate most of the growth
(75% increase)(75% increase)• Containerized cargo will increase 350% by Containerized cargo will increase 350% by
20202020• Building a new highway takes a minimum of 5 Building a new highway takes a minimum of 5
years and hundreds of millions of $$years and hundreds of millions of $$
1212
2005 Oceanborne 2005 Oceanborne Containerized FreightContainerized Freight
Trans-Pacific Freight VolumeTrans-Pacific Freight VolumeAsia to North America: 13.6 million TEUsAsia to North America: 13.6 million TEUs
North America to Asia: 5.7 million TEUsNorth America to Asia: 5.7 million TEUs
TOTAL: 19.2 million TEUsTOTAL: 19.2 million TEUs
Trans-Atlantic Freight VolumeTrans-Atlantic Freight VolumeEurope to North America: 3.5 million TEUsEurope to North America: 3.5 million TEUs
North America to Europe: 2.4 million TEUsNorth America to Europe: 2.4 million TEUs
TOTAL: 5.9 million TEUsTOTAL: 5.9 million TEUs
1313
Port ImprovementsPort Improvements
Yesterday: Large Yesterday: Large crews of loaders, crews of loaders, long stopovers, long stopovers, cranes shipside, cranes shipside, product left on dockproduct left on dock
Today: Loading crew Today: Loading crew of 4, 48 hours in of 4, 48 hours in port, cranes port, cranes landside, cargo landside, cargo placed directly onto placed directly onto trainstrains
1414
Top U.S. Container PortsTop U.S. Container Ports
World World RankRank
NameName TEUs TEUs (millions)(millions)
1010 Los Angeles, CALos Angeles, CA 7.487.48
1111 Long Beach, CALong Beach, CA 6.716.71
1717 New York/New JerseyNew York/New Jersey 4.794.79
3737 Oakland, CAOakland, CA 2.262.26
4444 Seattle, WASeattle, WA 2.092.09
4646 Tacoma, WATacoma, WA 2.072.07
4848 Norfolk, VANorfolk, VA 1.991.99
4949 Charleston, SCCharleston, SC 1.981.98
5252 Savannah, GASavannah, GA 1.901.90
5858 Houston, TXHouston, TX 1.581.58
1515
Port CapacityPort Capacity
The Ports of Los Angeles and Long The Ports of Los Angeles and Long Beach bring in 1/3 of all containers Beach bring in 1/3 of all containers into the USinto the US
LA/Long Beach are already over LA/Long Beach are already over capacitycapacity
All of these solutions are needed:All of these solutions are needed:• Better efficiency by longshoremenBetter efficiency by longshoremen• Development of new portsDevelopment of new ports• More rail capacityMore rail capacity• More highway capacityMore highway capacity
1616
Virtual PortsVirtual Ports
Also called ports of Also called ports of pre-clearancepre-clearance
Freight is inspected Freight is inspected and sealed at the and sealed at the sourcesource
Crosses the border Crosses the border w/o inspectionw/o inspection
Trans-shipmentTrans-shipment Largest virtual port Largest virtual port
is in Kansas Cityis in Kansas City Major rail hubMajor rail hub
1717
Almost Every TEU Almost Every TEU will End up on a Truckwill End up on a Truck
5,000 TEUs = 2,400 5,000 TEUs = 2,400 truckstrucks
A highway lane can A highway lane can accommodate 1,500 accommodate 1,500 cars per hourcars per hour
One ship would take up One ship would take up all of I-75 northbound all of I-75 northbound for a full hourfor a full hour
Shippers depend on Shippers depend on reliable deliveryreliable delivery
1818
Great CircleGreat Circle
1919
Port of Prince Rupert, BCPort of Prince Rupert, BC
Being built on Being built on speculation that speculation that ships will divert ships will divert from US Westfrom US West
Is located 1,000 Is located 1,000 miles closer to miles closer to AsiaAsia
Excellent rail Excellent rail connections to US connections to US
2020
Air FreightAir Freight
Largest US freight airports:• Memphis• Anchorage• LAX• Louisville• Miami
Airbus 380 can:• Carry 200,000 lbs• Travel 8,600 miles• Fly at 0.9 mach
www.iata.org
2121
Impacts of the Freight Impacts of the Freight RevolutionRevolution
Falling transportation costs speed the Falling transportation costs speed the decline of US manufacturing sectordecline of US manufacturing sector
Just-in-Time delivery reduces the Just-in-Time delivery reduces the importance of wholesalers and importance of wholesalers and middlemenmiddlemen
New, unintended demands on New, unintended demands on highwayshighways
Economic InterdependenceEconomic Interdependence Union influence: high paying jobsUnion influence: high paying jobs
2222
Investing? Not Enough . . .Investing? Not Enough . . .
The US Chamber of Commerce The US Chamber of Commerce estimates that through 2015, we estimates that through 2015, we need:need:• $42 billion more to maintain the system$42 billion more to maintain the system• Another $91 billion to improve the Another $91 billion to improve the
systemsystem• Currently, we are spending $1.5 billion Currently, we are spending $1.5 billion
per yearper year• Difficult to find new sources of fundingDifficult to find new sources of funding
2323
Who Wins?Who Wins?Who Wins?Who Wins?
2424
More InformationMore Information Marc Levinson. The Box: How the Shipping Marc Levinson. The Box: How the Shipping
Container Made the World Smaller and the World Container Made the World Smaller and the World Economy Bigger. Princeton University Press, 2006Economy Bigger. Princeton University Press, 2006
American Association of Port Authorities www.aapa-American Association of Port Authorities www.aapa-ports.orgports.org
Coalition for America’s Gateways and Trade Coalition for America’s Gateways and Trade Corridors www.tradecorridors.orgCorridors www.tradecorridors.org
Intermodal Association of North America Intermodal Association of North America www.intermodal.org www.intermodal.org
Global Insight (Economics Consultant) Global Insight (Economics Consultant) www.globalinsight.comwww.globalinsight.com
Federal Highway Administration Freight Office:Federal Highway Administration Freight Office:
http://www.ops.fhwa.dot.gov/freight http://www.ops.fhwa.dot.gov/freight
