understanding national freight system dynamics: state of our...

US Chamber of Commerce National Chamber Foundation

Trade & Transportation: A Study ofNorth American Port and Intermodal Systems

Understanding National Freight

System Dynamics:

State of Our Port and Intermodal Freight Systems


System Dynamics:


John VickermanPrincipal

TranSystems CorporationNorfolk, Virginia



Reliable Cargo Movement: State of Our Port and Intermodal Systems

U.S. Intermodal Freight Transportation System is an essential component of our

national commercial economy… this system is at risk.

U.S. Intermodal Freight Transportation System is an essential component of our

national commercial economy… this system is at risk.


We do not have an “intermodal system” as such. Rather we have an aggregation of multiple,

private and public modes, each of which are “stove-piped” within their own individual areas of

interest with little or no true cross communication and collaboration.


The North American Intermodal Paradox:

The nation’s ports and their inland intermodal linkages are experiencing the “best of times

and the worst of times” in terms of growth and demands on capacity


Ports and their associated intermodal systems can no longer build their way out of capacity problems

The US Intermodal freight transportation system is now being operated in many areas at near the limits

of economically sustainable capacity

We lack a systematic program for freight Transportation planning and development that Focuses our critical scarce resources on key

system problem points.


To Be Competitive Today...Marine/Intermodal

Terminals Must Reduce Throughput Cost &

Increase Cargo Velocity…Securely

To Be Competitive Today...Marine/Intermodal

Terminals Must Reduce Throughput Cost &

Increase Cargo Velocity…Securely


Transportation Deregulation

Transportation Deregulation

Service Integration

and Optimization

Optimization of End to End Distribution and Cost in the Overall Logistics Chain

Service Integration

and Optimization

Optimization of End to End Distribution and Cost in the Overall Logistics Chain

Carrier Regulation

Governmental Limits on Destructive Competition and Sheltering of Emerging Modes

Carrier Regulation

Governmental Limits on Destructive Competition and Sheltering of Emerging Modes

Evolutionary Phases of U.S. Marine/Intermodal Freight Transportation

Evolutionary Phases of U.S. Marine/Intermodal Freight Transportation

Growth and

Diversification

Modal Refinement Dominated by Equipment Types and Infrastructure Development

Growth and

Diversification

Modal Refinement Dominated by Equipment Types and Infrastructure Development

Invention

Modally Oriented Services

Invention

Modally Oriented Services


Poll of the Top 1000 “Blue Chip” Multinational Shipper PrioritiesPoll of the Top 1000 “Blue Chip” Multinational Shipper Priorities

38%Freight Rate

38%Freight Rate

43%ScheduleReliability

43%ScheduleReliability

12%Transit Time

12%Transit Time


The “Port”One of the Many Diverse Constituencies

in the Cargo Transportation Logistics Chain

The “Port”One of the Many Diverse Constituencies

in the Cargo Transportation Logistics ChainPort

Shipping Agents

Shippers

Carriers/NVOCCs

Stevedores/Terminal Operators

Longshore LaborGovernmental Regulation/Compliance

Railroads

Motor Carriers/Truckers

Freight Forwarders/Brokers

Customs Agencies

Warehousing/CFS Operators

Pilotage/Tuggage

PortPortShipping AgentsShipping Agents

ShippersShippers

Carriers/Carriers/NVOCCsNVOCCs

Stevedores/Stevedores/Terminal OperatorsTerminal Operators

Longshore LaborLongshore Labor

Governmental Regulation/Governmental Regulation/ComplianceCompliance

RailroadsRailroads

Motor Carriers/Motor Carriers/TruckersTruckers

Freight Forwarders/Freight Forwarders/BrokersBrokers

Customs AgenciesCustoms Agencies

Warehousing/Warehousing/CFS OperatorsCFS Operators

Pilotage/TuggagePilotage/Tuggage

Objective:A multimodal

“Seamless” integratedworld wide cargo

conveyance system.

Objective:Objective:A multimodalA multimodal

“Seamless” integrated“Seamless” integratedworld wide cargoworld wide cargo

conveyance system.conveyance system.


At Current Productivity and Growth Levels by 2020 North American Ports & Their Associated

Intermodal Systems Will Be Severely Congested


Today’s Logistics Truths:Today’s Logistics Truths:

“The customer wants more and is willing to pay less

for it.”

“The customer wants more and is willing to pay less

for it.”


World Bank’s 2010 “Global Economic Prospects”

World Bank’s 2010 “Global Economic Prospects”

00

World Output will Increase 33% in 10 yearsWorld Output will Increase 33% in 10 years

Trill

ions

$Tr

illio

ns $

1010

2020

3030

4040

20002000

$ 30 Trillion$ 30 Trillion

20102010

$ 40 Trillion$ 40 Trillion


U.S. Containerized Tonnage ForecastU.S. Containerized Tonnage Forecast

Source: DRI/McGraw HillSource: DRI/McGraw Hill

0

20

40

60

80

100

0

20

40

60

80

100

1990 1995 2000 2005 20101990 1995 2000 2005 2010

CAGRCAGR

NE (Maine to Virginia)SE (NC to Tampa)Gulf (Mobile to El Paso)SW (San Diego to OaklandNW (Oregon to Alaska)

NE (Maine to Virginia)SE (NC to Tampa)Gulf (Mobile to El Paso)SW (San Diego to OaklandNW (Oregon to Alaska)

6.3%

6.6%7.6%

7.2%

6.3%

6.6%7.6%

7.2%

1,00

0,00

0 To

ns1,

000,

000

Tons

Total 79.2 119.5 188.7 236.6 355.6 7.8%Total 79.2 119.5 188.7 236.6 355.6 7.8%

By 2020 Most US Container Port GatewaysWill Double or Triple in Volume…

Just to Maintain Current Market Share

North American Prosperity is Driven by Cargo Imports and Exports


Global Port Terminal Productivity

North American Ports Are Not As ProductiveAs The Most Productive International Ports

By a Factor Of More Than 4 To 1

Discounting Major “Transhipment Ports” The Factor is Almost 2 To 1


North American Intermodal Rail Freight Movement Trends

North American Intermodal Rail Freight Movement Trends

The photo of the chemical train

going over a bridge goes here.

The photo of the chemical train

going over a bridge goes here.

35% less track32% fewer locomotives

27% fewer railcars60% fewer employees

The Railroad Industry…Since the Staggers Act:The Railroad Industry…Since the Staggers Act:

But:well over 50% more freight!


2020 Forecast of US Rail Traffic(By Origins in Millions of Tons)

Source: FHWA Multi-Modal Freight Analysis,Framework Project using Reebie Associates 1998 data

Source: FHWA Multi-Modal Freight Analysis,Framework Project using Reebie Associates 1998 data

00500500

1,0001,0001,5001,5002,0002,0002,5002,5003,0003,000

19801980 19851985 19901990 19951995 19991999 20102010 20202020

48% Increase48% Increase


A 10,000 TEU Mega-Container Vessel Can Produce High Intermodal Rail Volumes (One Weekly Vessel Call)

A 10,000 TEU Mega-Container Vessel Can Produce High Intermodal Rail Volumes (One Weekly Vessel Call)

75% Intermodal Split

Double Stacked TrainsDouble Stacked Trains

EXPORTEXPORTEXPORT

13.4

Vessel Capacity Vessel Capacity 10,000 TEU(5,892 Units)(5,892 Units)

10,000 TEU Vessel10,000 TEU Vessel

IMPORTIMPORTIMPORT

Double Stacked TrainsDouble Stacked Trains13.4


Can North American Marine & Intermodal

Terminals Handle the Forecasted

Freight Volumes ?...

Can North American Marine & Intermodal

Terminals Handle the Forecasted

Freight Volumes ?...


Latin America Trade & Transportation Study (LATTS) – March 2001

Latin America Trade & Transportation Study (LATTS) – March 2001

Predicts that Port and Intermodal Systems for the 13 Southern US States

Will Reach Capacity in 2008 - 2012


Ports of Los Angeles and Long Beach Container and Intermodal 2020 ForecastPorts of Los Angeles and Long Beach

Container and Intermodal 2020 Forecast

0

5

10

15

20

25

1996 2000 2005 2010 2015 20201996 2000 2005 2010 2015 2020

Intermodal RailIntermodal Rail

ContainerContainer

51% IntermodalSplit

51% Intermodal Split57% Imports57% Imports

1996 - 2000 = 4.8% CAGR2000 - 2020 = 6.2% CAGR

“Cargo will quadruple, a 320% change”

1996 - 2000 = 4.8% CAGR2000 - 2020 = 6.2% CAGR

“Cargo will quadruple, a 320% change”

TEU

s (0

00s)

(Loa

ded

& E

mpt

y)TE

Us

(000

s) (L

oade

d &

Em

pty)

(Worse Case: Asian Crisis Steady-State)(Worse Case: Asian Crisis Steady-State)

CurrentCapacityCurrentCapacity

2X2X


San Pedro Bay Ports ofPorts of Los Angeles and Long Beach

Container Growth Implications:

San Pedro Bay Ports ofPorts of Los Angeles and Long Beach

Container Growth Implications:

“At current growth and per acre productivity, in 18 years the two Ports

will require 3,624 new acres of container terminal”*

“At current growth and per acre productivity, in 18 years the two Ports

will require 3,624 new acres of container terminal”*

* Source: Port of Long Beach* Source: Port of Long Beach


NY/NJ Regional Container Forecast (TEUs)By Channel Depth (40ft, 45ft, 50ft)

NY/NJ Regional Container Forecast (TEUs)By Channel Depth (40ft, 45ft, 50ft)

0

3,000

6,000

9,000

12,000

15,000

0

3,000

6,000

9,000

12,000

15,000

1995 2000 2010 2020 2030 20401995 2000 2010 2020 2030 2040

Low (40' Channels)Base (45' Channels)High (50' Channels)

Low (40' Channels)Base (45' Channels)High (50' Channels)

Source: PANY/NJ, Source: PANY/NJ

Planning YearPlanning Year

4X4X

CurrentCapacityCurrentCapacity

TEU

sTE

Us


00 5050 100100 150150 200 DAYS200 DAYS

Current DOD Target: 75 Days

Combat power ~ 6 Divisions

(~ 2 Corps)

Combat power ~ 6 Divisions

(~ 2 Corps)

Combat power~ 5 Divisions

Combat power~ 5 Divisions

Gulf War: 180 Days

Chief of Staff’s Goal: 30 Days

Source: Adapted from briefing by William Lucas, MTMC, to TRB Annual Meeting, Jan. ‘00

Source: Adapted from briefing by William Lucas, MTMC, to TRB Annual Meeting, Jan. ‘00

The USDOD Logistics Mandate: Army’s Strategic Mobility Requirements

(The Military’s Goal is to Reduce Deployment Time by 80 Percent…Without Disrupting Commercial Ports)

The USDOD Logistics Mandate: Army’s Strategic Mobility Requirements

(The Military’s Goal is to Reduce Deployment Time by 80 Percent…Without Disrupting Commercial Ports)


Container Ship EvolutionContainer Ship EvolutionTEU CapacityTEU Capacity

1st Generation (Pre-1960 - 1970)1st Generation (Pre-1960 - 1970)1,700 TEU1,700 TEU

2nd Generation (1970 - 1980)2nd Generation (1970 - 1980)2,305 TEU2,305 TEU

3rd Generation (1985)3rd Generation (1985)3,220 TEU3,220 TEU

4th Generation (1986 - 2000)4th Generation (1986 - 2000)4,848 TEU4,848 TEU

5th Generation (2000 - 2005)5th Generation (2000 - 2005)

7,598 TEU7,598 TEU


Mega Container Vessel TrendsMega Container Vessel Trends

The Reality:

Regina Maersk 6,000 TEU

Sovereign Maersk 6,600 TEU

20-Wide Planned 8,000 TEU

The Reality:

Regina Maersk 6,000 TEU

Sovereign Maersk 6,600 TEU

20-Wide Planned 8,000 TEU

1970 Industry Prediction: “3,250 TEU”1970 Industry Prediction: “3,250 TEU”

Near Term Possible: 10,000 – 15,000 TEU(Suez-Class)


The 15,000 TEU ContainershipThe 15,000 TEU ContainershipLOA. = 400 m (1,312 ft.)Draft = 14 m (46 ft.)LOA. = 400 m (1,312 ft.)Draft = 14 m (46 ft.)

6-7 above deck

10-11 below deck

6-7 above deck

10-11 below deck

28Across

28Across

BEAM = 69 m (226 ft.)BEAM = 69 m (226 ft.)

Panamax DimensionsPanamax Dimensions

28 Wide28 Wide 13 Wide13 Wide


Emerging Viable Container On Barge Inland Intermodal Port Potential

Emerging Viable Container On Barge Inland Intermodal Port Potential


High-Speed, Low Wake, Intermodal Float Technology

USDOD Agile Port Information Technology

(IT) Developments

USDOD Agile Port Information Technology

(IT) Developments


The Agile Port Concept is not a new technology…

The Agile Port Concept is not a new technology…

…It is a way of managing and organizing information to reduce container port terminal dwell time

& increase terminal capacity.

…It is a way of managing and organizing information to reduce container port terminal dwell time

& increase terminal capacity.


IT Freight Data/Information IntegrationIT Freight Data/Information Integration

Data/InfoManagement

Data/InfoManagement

Consist DataConsist Data Consist DataConsist Data

Major Terminal & Systems BenefitsMajor Terminal & Systems Benefits

Container Vessel

Container Vessel

Double Stacked Train

Double Stacked Train


USDOD Agile Port Technology Full Scale IT Demonstration Project

USDOD Agile Port Technology Full Scale IT Demonstration Project

Hyundai TerminalWashington United Terminals

Port of Tacoma22-29 June 2003

Potential: Doubling the Terminal Capacity without

Building Anything


Study Approach & RecommendationsStudy Approach & Recommendations


USCOC Target Ports

USCOC Target Ports

1. Vancouver, Canada2. Tacoma, Washington3. Seattle, Washington4. Oakland, California5. Los Angeles, California6. Long Beach, California7. Houston, Texas8. Mobile, Alabama9 Galveston, Texas10. New Orleans, Louisiana11. Halifax, Canada12. New York/New Jersey13. Norfolk, Virginia14. Philadelphia, Pennsylvania15. Port Everglades, Florida16. Charleston, South Carolina

1. Vancouver, Canada2. Tacoma, Washington3. Seattle, Washington4. Oakland, California5. Los Angeles, California6. Long Beach, California7. Houston, Texas8. Mobile, Alabama9 Galveston, Texas10. New Orleans, Louisiana11. Halifax, Canada12. New York/New Jersey13. Norfolk, Virginia14. Philadelphia, Pennsylvania15. Port Everglades, Florida16. Charleston, South Carolina

West CoastPorts

West CoastPorts

Gulf CoastPorts

Gulf CoastPorts

CanadianPorts

CanadianPorts

East CoastPorts

East CoastPorts


North American Port & IntermodalPublic Policy Themes

North American Port & IntermodalPublic Policy Themes


Projected Capacity Shortfall


Theme #1: Although we currently have a semblance of an intermodal system of freight transport in North America, there is substantial room for improvement in our Port & Intermodal Transportation System Efficiency and Productivity.

Theme #1: Although we currently have a semblance of an intermodal system of freight transport in North America, there is substantial room for improvement in our Port & Intermodal Transportation System Efficiency and Productivity.

• On a national basis, we need to develop a better near real-time freight data tracking system and make rational “system” decision based on this data.

• We must develop a consistent measurement of “system” performance to prioritize our intermodal transportation system improvements.

• On a national basis, we need to develop a better near real-time freight data tracking system and make rational “system” decision based on this data.

• We must develop a consistent measurement of “system” performance to prioritize our intermodal transportation system improvements.


Theme #2: Port & Intermodal Transportation System Security has become a public/private national priority issue.

Theme #2: Port & Intermodal Transportation System Security has become a public/private national priority issue.

• Improved productivity and transportation system security are not mutually exclusive.

• Promising emerging Information Technologies (IT)could play a key role in enhancing cargo security. The deployment of these technologies could have significant system performance benefits for the intermodal transportation system as a whole.

• Improved productivity and transportation system security are not mutually exclusive.

• Promising emerging Information Technologies (IT)could play a key role in enhancing cargo security. The deployment of these technologies could have significant system performance benefits for the intermodal transportation system as a whole.


Port Productivity & Port Security

Are Not Mutually Exclusive

Port Productivity & Port Security

Are Not Mutually Exclusive


Theme #3: Funding for needed Port & Intermodal Freight Transportation Infrastructure should be contingent on finding Smart IT Solutions with both community and environmental benefits and support.

Theme #3: Funding for needed Port & Intermodal Freight Transportation Infrastructure should be contingent on finding Smart IT Solutions with both community and environmental benefits and support.

• Congress must renew & extend our national freight policy mandate & vision – They must take a leadership role in defining a new national freight agenda.

Ports and Intermodal terminals are no longer able to build their way out of congestion & capacity problems

• Expansion of ALL federal aid program eligibility for freight.

• Congress must renew & extend our national freight policy mandate & vision – They must take a leadership role in defining a new national freight agenda.

Ports and Intermodal terminals are no longer able to build their way out of congestion & capacity problems

• Expansion of ALL federal aid program eligibility for freight.


Theme #4: New Cross-Cutting Systemic Planning & Implementation Strategies are needed to guide the future of port and intermodal transportation freight development.

Theme #4: New Cross-Cutting Systemic Planning & Implementation Strategies are needed to guide the future of port and intermodal transportation freight development.

• Rising social costs, heightened environmental concerns and evolving mitigation strategies necessitate national leadership on freight transportation issues.

• The nation’s failure to accommodate the growing volume of freight transportation needs, will negatively impact all levels of our economy and national collective quality of life… Jobs, Wages, Taxes

• Rising social costs, heightened environmental concerns and evolving mitigation strategies necessitate national leadership on freight transportation issues.

• The nation’s failure to accommodate the growing volume of freight transportation needs, will negatively impact all levels of our economy and national collective quality of life… Jobs, Wages, Taxes


Study RecommendationsStudy RecommendationsA National Freight Policy is Needed:A National Freight Policy is Needed:

No longer can freight transportation programs of “national significance”be relegated solely to local authority

or focused at the MPO level. We must take a systemic view of the

intermodal freight system.

No longer can freight transportation programs of “national significance”be relegated solely to local authority

or focused at the MPO level. We must take a systemic view of the

intermodal freight system.


Study RecommendationsStudy RecommendationsClearly Define the Freight Program Within the USDOTClearly Define the Freight Program Within the USDOT

The USDOT Office of Intermodalism must be given the mandate, the

authority, and the funding to function as a unifying element between the modal

administrations.

The USDOT Office of Intermodalism must be given the mandate, the

authority, and the funding to function as a unifying element between the modal

administrations.


Study RecommendationsStudy Recommendations

Create a National Intermodal Planning and Development Initiative

Create a National Intermodal Planning and Development Initiative

A Federal Freight Advisory Committeecomprised of private freight industry

executives, appointed by the President, to provide regular and informed interaction

between USDOT and the freight community.

A Federal Freight Advisory Committeecomprised of private freight industry

executives, appointed by the President, to provide regular and informed interaction

between USDOT and the freight community.


Study RecommendationsStudy RecommendationsA Coherent Environmental

Regulatory Process is EssentialA Coherent Environmental

Regulatory Process is Essential

• Streamlined Permitting

• Brownfields Conversion

• Freight Land Banking

• Streamlined Permitting

• Brownfields Conversion

• Freight Land Banking


Study RecommendationsStudy RecommendationsLabor Must Be Integrated Into

National Freight PolicyLabor Must Be Integrated Into

National Freight Policy

In March 2003 The ILWU President and The ILWU Coast Committee

Agreed to become a Key Stakeholder in and active participant of:

The Agile Port Demonstration ProjectPort of Tacoma

In March 2003 The ILWU President and The ILWU Coast Committee

Agreed to become a Key Stakeholder in and active participant of:

The Agile Port Demonstration ProjectPort of Tacoma

Representatives from the major transportation unions must be engaged in the Cooperative Freight Research Program

Representatives from the major transportation unions must be engaged in the Cooperative Freight Research Program

… to ensure that new technologies can be implemented by the existing work force.… to ensure that new technologies can be implemented by the existing work force.


North American Competitive Freight Transport MandatesNorth American Competitive Freight Transport Mandates

• Ports & intermodal linkages must change the current costversus value relationship in the logistics chain. Become Value Added Multipliers... Through Innovative Public Private policy initiatives, expanded funding options and inspired labor & management partnering.

• Successful ports & intermodal terminals in the next decade must invest in and leverage technology to improve terminal productivity, cost, effectiveness and reliability for all modes of transportation…securely.

• Ports & intermodal linkages must change the current costversus value relationship in the logistics chain. Become Value Added Multipliers... Through Innovative Public Private policy initiatives, expanded funding options and inspired labor & management partnering.

• Successful ports & intermodal terminals in the next decade must invest in and leverage technology to improve terminal productivity, cost, effectiveness and reliability for all modes of transportation…securely.

US Chamber of Commerce National Chamber Foundation

Trade & Transportation: A Study ofNorth American Port and Intermodal Systems


System Dynamics:



System Dynamics:






understanding national freight system dynamics: state of our...

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