Rodney Goulet, Vice President, Supply Chain Strategy and Infrastructure, Colliers International (November 2010)
New Routings for Maritime and Containerized Cargo - John Martin, Ph.D., Founder and President, Martin Associates
Underlying the growth in all-water containerized service activity at the Atlantic and Gulf coast ports, as well as the investment in distribution center activity, is the expansion of the Panama Canal to be completed by 2014, and the increased deployment of vessels via the Suez Canal, particularly to serve the growing trade with ports located to the south of Singapore. But it is unclear that the expanded Panama Canal will alone actually increase the share of containerized cargo moving via the East and Gulf coasts at the expense of the West Coast ports.
As a result of the shifts in all-water services that have occurred since 2002 due to the West Coast port shutdown; the changes in distribution center geographic locations and logistics supply-chain patterns of importers; development of new container terminals on the Atlantic and Gulf coasts; and intermodal pricing by the railroads that shifted cargo away from West Coast ports; the dynamic changes in all water vs. intermodal services may be over, or at least slowing. The West Coast ports have come to realize that the demand for their usage is not inelastic, and, in fact, substitute port routings via the all-water services are viable.
Similarly, the railroads have also found that pricing of intermodal serv ices do impact importers/exporters port choice decisions, and the higher intermodal rates of the early 2000s actually did impact the West Coast port routings in favor of all-water services. What the expanded Panama Canal will most likely impact is the size of ships that will call at U.S. Atlantic and Gulf Coast ports.
As far as the Suez Canal, dimensions don't limit the size of the container ships that can transit, but there is concern over the region's political instability and piracy incidents. The Suez routing from Asia to the East Coast is longer than via the Panama Canal, but as production centers shift to South Asia and India, this routing can, in some cases, provide very competitive transit times to the use of the transpacific routings and intermodal moves from the West to the East coasts. In addition, ocean carriers are increasing India-Europe express services, with the use of Mediterranean ports for transshipment centers for cargo destined for the United States and Europe.
Changing Times for Air Cargo - Dan Muscatello: Managing Director, Cargo and Logistics, Landrum & Brown
The August 2010 imposition of the new TSA mandate for 100 percent belly screening of air cargo, on the surface, appears to have had little impact on the air cargo industry. Nevertheless, industry finds itself looking at an accelerating growth curve built on a potentially tenuous foundation. Despite the encouraging numbers for international cargo, we need to be mindful of several things as follows:
Despite the recent growth in certain world markets, the drop in volumes in 2009 brought many airports to tonnage levels last seen in the 1990s. The early 2010 growth of 25 percent quoted for many airports has slowed, and the reality is that number reflects recovery from a 30 percent drop in 2009. Much of the activity reflected a temporary surge to increase depleted inventory levels and the increased use of freighter aircraft as ocean vessels are slower to come back on line. A review of the holiday shipping season will give us a better picture of the state of the industry.
In China, the emerging giant, the middle class has grown from 30 million to 300 million in the past 10 years. This dramatic surge, along with the growth of markets in India, is creating a seminal shift in global distribution. The increased purchasing power in China and India, their rising labor costs, combined with higher fuel costs and security surcharges, are pushing many companies to reexamine their distribution strategies. The result is an emerging trend to shift manufacturing (and distribution) back to Europe and North America. Continuation of this pattern may very well impact the phenomenal growth experienced in the Middle East, where the cargo levels are driven by an aggressive transfer strategy to move goods between Asia, Europe, and Africa.
Truck and Intermodal - Charles Clowdis Jr., Managing Director-North America Global Commerce & Transport, IHS Global Insight
As diesel fuel increases, expect fuel surcharges to increase, driving overall transport costs upward. Likewise, as the economy improves, lessened truck capacity, exacerbated by an evolving "driver shortage," will be a challenge not only as a result of rate increases, but also because of the ability to source truckers with the capacity to move freight on a timely basis.
New truck sales are finally growing as aging truck fleets are being replaced. But the keys continue to be the price of fuel and the growth of the economy. As either occurs, the cost for moving goods will rise.
Inland ports, especially those with good rail and road connections, are an evolving addition to supply-chain efficiencies. As the rail corridors improve, more and more container traffic will find its way to rail-intermodal transport. The "environmental issue" of clean port initiatives, as begun in LA/Long Beach, will impact the availability to source adequate drayage providers to move containers.
On August 1, CenterPoint Properties' 3,600-acre Intermodal Center in Joliet, Illinois, opened as an inland port for Union Pacific. The success of Burlington Northern Santa Fe Corp.'s 2,500-acre intermodal center in nearby Elwood, Illinois, also developed by Centerpoint, triggered interest from Union Pacific as the real estate practices at the Elwood site demonstrated significant savings. Combined, these sites rival the Alliance Global Logistics Hub in Alliance, Texas. The intermodal developments allow retailers and distributors to cut down on shipping costs by locating warehouses much closer to railyards.