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The Charthouse Group The Next Box Wave: Can Containerization Reinvent Itself? The Next Box Wave: Can Containerization Reinvent Itself? Theo Notteboom ITMMA.

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Presentation on theme: "The Charthouse Group The Next Box Wave: Can Containerization Reinvent Itself? The Next Box Wave: Can Containerization Reinvent Itself? Theo Notteboom ITMMA."— Presentation transcript:

1 The Charthouse Group The Next Box Wave: Can Containerization Reinvent Itself? The Next Box Wave: Can Containerization Reinvent Itself? Theo Notteboom ITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium Jean-Paul Rodrigue Dept. of Global Studies & Geography, Hofstra University, New York, USA Terminal Operators Conference Europe EXECUTIVE SESSION 4: ACADEMIC PERSPECTIVE, Antwerp, June

2 The Charthouse Group Do you really know me? Innovation Diffusion

3 The Charthouse Group SITUATION REPORT EUROPE: REASONS TO SMILE? Just a partial (topless) recovery. Not a full frontal recovery…

4 The Charthouse Group European port traffic = -5.2% Total European port throughput 2008: 4.26 billion tons 2009: 3.76 billion tons (-11.7%) 2010: 4.04 billion tons (+7.4%)

5 The Charthouse Group Container volumes are bouncing back

6 The Charthouse Group Market shares in the European container port system Med ports are losing market share, mainly due to weaker position transshipment hubs Rising market share Hamburg-Le Havre range mainly due to Benelux ports. Black Sea port system loses ground due to declining volumes at Constantza

7 The Charthouse Group Middle East – Far East Main shipping route Americas Transhipment/interlining port (transhipment incidence >75%) Multi-port gateway region Main shipping route Gateway port Gateway port also handling substantial transhipment flows Market shares in total European container traffic © 2011 T. Notteboom – ITMMA, University of Antwerp UK Germany France Belg. NL Ireland Romania Sweden Spain Croatia Hungary Czech Republic Slovakia Serbia Bosnia& Herz. Alb. Greece Bulgaria Turkey Lithuania Latvia Estonia Norway Finland Ukraine Belarus Russia Portugal Mace. Den. Austria Switz. Italy Poland Morocco AlgeriaTunisia Cyprus Malta 09: 25.5% 10: 26.1% 09: 14.9% 10: 14.9% 09: 0.8% 10: 1.2% 09: 3.0% 10: 2.9% 09: 7.3% 10: 7.4% 09: 1.5% 10: 1.6% 09: 4.3% 10: 4.5% 09: 1.5% 10: 1.6% 09: 0.9% 10: 0.8% 09: 1.2% 10: 1.3% 09: 1.9% 10: 1.9% 09: 7.2% 10: 7.1% Other ports 09: 29.8% 10: 28.6%

8 The Charthouse Group Trade volumes per route to/from Europe: Mixed results Source: based on data EELA and Container Trade Statistics

9 The Charthouse Group Trade volumes per route to/from Europe: geographical shifts

10 The Charthouse Group LOOKING AT THE FUNDAMENTALS Far from being a no- brainer…

11 The Charthouse Group Major Steps in Intermodal Integration Pallets (1930s) TOFC (1950s) Containerization (1956) Standardization (size and latching) (1965) Transatlantic (1966); Containerships (1968) Deregulation (1980s) Doublestacking; IBCs (1985) COFC (1967) Time Intermodal Integration Advanced Terminals Regionalization Advanced Containers Intermodal rail crane (1985) An enduring innovative process. Multiplying effect on an existing technique. An exercise in unintended consequences? From revolution to evolution?

12 The Charthouse Group Some Key Issues in Liner Shipping: Towards a Revolution? Herd behavior or segmentation?

13 The Charthouse Group Containerization as a Diffusion Cycles: World Container Traffic ( ) and Possible Scenarios to 2015 Divergence AdoptionAcceleration Peak Growth Maturity Reference Depression To what extent the growth in 2010 is attributed to transshipment and emerging markets? New (niche) services Productivity gains Network development Productivity multipliers Massive diffusion Network complexities Niche markets

14 The Charthouse Group Container Usage during its Life-Span A lot of waste to improve upon. Challenges for asset management.

15 The Charthouse Group Weighting Out versus Cubing Out: What is a Proper Distribution of Containerized Assets? Balance between retail, intermediate goods and commodities Regions follow standards; they do not set them.

16 The Charthouse Group The Main Driving Forces of Containerization

17 The Charthouse Group DERIVED: ORGANIC GROWTH IN THE PIPELINE?

18 The Charthouse Group Monthly Value of Exports or Imports, Selected Traders, (Jan 2006=100) Trade has bounced back. Americas consumption engine sputtering. Yes, but at what cost?

19 The Charthouse Group CRB Index (CCI), Monthly Close, Paradigm shift in input costs… Reaping the consequences of monetary policy. Could be positive for containerization…

20 The Charthouse Group Business Cycles and Misallocations ExpansionRecession Peak Trough Expansion Credit-Driven Boom Credit-Driven Bust Depression Normal Cycle Credit-Driven Cycle When organic growth is using a lot of chemicals… Second phase of the credit-driven bust.

21 The Charthouse Group SUBSTITUTION: STUFFING THE BOX WITH SOMETHING DELICIOUS

22 The Charthouse Group Looking Inside the Box: Accept all Substitutes…

23 The Charthouse Group The Usual Suspect: Chinas Share of the World Commodity Consumption, c2009

24 The Charthouse Group Bulk and Containerized Commodity Chains: An Emerging Complementarity Bulk Commodity Chain Containerized Commodity Chain Consolidation center Port Supplier Customer Intermodal terminal Container port Pendulum Services Point-to-Point Complementarity Cost / volume driver Low frequency Dedicated terminals One way flows Time / flexibility driver High frequency General terminals More balanced flows

25 The Charthouse Group Continuous Commodity Index and Baltic Dry Index, (2000=100)

26 The Charthouse Group Continuous Commodity Index and Average Container Shipping Rates, (1994=100)

27 The Charthouse Group From Bulk to Containers: Breaking Economies of Scale

28 The Charthouse Group The Cold Chain: A Highly Constrained Niche

29 The Charthouse Group Equal but Separate… The Reefer Ghetto (Away from Containers of Color…)

30 The Charthouse Group INDUCED: TRANSSHIPMENT (THE GREAT SHUFFLE)

31 The Charthouse Group The Global Transshipment Market

32 The Charthouse Group How the Main Actors in Global Freight Distribution Influence Routing? Top ten terminal operators: 65% of the worlds total container handlings Container Terminal Portfolio of the Four Main Global Terminal Operators, 2010

33 The Charthouse Group Sea-sea transshipment plays a role, particularly in Med and in relation to UK and Baltic… Algeciras Sines Cagliari Gioia Tauro Malta Taranto Piraeus Le Havre Rotterdam Antwerp Zeebrugge Bremerhaven Hamburg Valencia Barcelona Influences on North Europe (1)Maasvlakte 2 effect + JadeWeserPort, capacity in UK (2)Direct deepsea calls in Baltic (cf. Gdansk) Influences on South Europe (1)Direct calls in gateway ports (cf. NAPA, Spain, etc..) (2)Competition Tanger Med Transhipment incidence: North Europe = 24.2% Eastern Europe = 16.2% South Europe = 44.6%

34 The Charthouse Group Pure transhipment hubs in West Med lose market share

35 The Charthouse Group Major ports and future terminal developments in non-EU Med ports: impact of a changing political landscape? Container throughput in million TEU, capacity extensions in million TEU Ambarli (Turkey) Traffic: 2.26 (2008) Mersin (Turkey) Haifa (Israel) Traffic: 1.39 (2008) Beirut (Lebanon) Traffic: 0.95 (2008) Port Said (Egypt) Traffic: 3.2 (2008) Capacity: +2.5 (2011) Damietta (Egypt) Capacity: +4 (2012) Misurata (Libya) Initial plans cancelled? Enfidha (Tunisia) Capacity: +1 (2011) +2.5 (period ) +2 (period ) Rades (Tunisia) Traffic: 0.3 (2007) Djendjen (Algeria) Capacity: +2 (DP World) Bejaia (Algeria) Traffic: 0.15 (2008) Capacity: +2.5 (>2010) Algiers (Algeria) Traffic: 0.5 (2007) Capacity: +0.8 (2010) Tanger Med II APMT/Akwa: + 3 mln TEU (2012) PSA: +2 mln TEU (2012) Tanger Med APMT: mln TEU Eurogate: +1.5 mln TEU

36 The Charthouse Group Pushing Atomization in the Hinterland and Massification in the Foreland PORT FORELAND PORT HINTERLAND Different momentums Economies of scale Functional Integration Hinterland-Based Regionalization Foreland-Based Regionalization CapacityFrequency Capacity Gap Economies of scale Frequency Mitigation

37 The Charthouse Group INCIDENTAL: LIVING IN AN ASYMMETRIC WORLD…

38 The Charthouse Group Containerized Cargo Flows along Major Trade Routes, (in millions of TEUs) Empties; a breath of fresh air…

39 The Charthouse Group Geographical Levels of Empty Container Repositioning Hinterland Foreland Inter-Regional Repositioning (inland) Global Repositioning Inter-Regional Repositioning (coastal / fluvial) Regional Repositioning Port Depot / Inland terminal Freight Distribution Center Cargo Rotation

40 The Charthouse Group Asymmetries between Import and Export-Based Containerized Logistics Many Customers Function of population density. Geographical spread. Product customization. Incites transloading. High priority (value, timeliness). Few Suppliers Function of resource density. Geographical concentration. Lower priority. Depends on repositioning opportunities. Gateway Inland Terminal DistributionCenter Customer Supplier Repositioning Import-Based Export-Based

41 The Charthouse Group Slow Steaming: What Hath You Brought Us?

42 The Charthouse Group TERMINAL OPERATOR STRATEGY: IN SEARCH OF UNIQUE FEATURES?

43 The Charthouse Group Going Green: Hypocrisy? Low emission vessel Carbon neutral Green supply chain

44 The Charthouse Group Going global Regional Share in the Terminal Portfolio of the Twelve Largest Global Terminal Operators (Hectares, 2010) Changes in regional orientation?

45 The Charthouse Group Building partnerships Complexity in terminal ownership structures Example for the Rhine-Scheldt Delta DP World PSA HUTCHISON PORT HOLDINGS APM Terminals (AP Moller Group) ANTWERP Antwerp Gateway PSA (Antwerp/ Zeebrugge) MSC Home terminal CHZ APM Terminal ZEEBRUGGE ROTTERDAM Rotterdam World Gateway (Maasvlakte 2) Operational by 2013 ECT APM Terminal Maasvlakte CMA-CGM MSC NYK Terminal 1 (Maasvlakte 2) Operational by 2014 Minority Shareholding Waal- and Eemhaven Delta Terminal Euromax phase 1 Majority shareholding ZIM Line DP World Delwaidedock North Sea Terminal Europe Terminal Deurganck Terminal New World Alliance CYKH Alliance Antwerp International Terminal (AIT) Shipping Line (Global) Terminal Operator Terminal Shanghai International Port Group (SIPG) Albert II-dock north (under construction) Cosco Pacific 100% 20% 50% 100% 50% 60% 30% 10% 100% 50% 100% 42.5% 10% 20% 10% 35% 100% 65% 75% 25% PORT Financial Holding Source: Notteboom & Rodrigue (2010)

46 The Charthouse Group Filling the gap? Intermodal Performance (Speed, Reliability, Flexibility) Liner shipping Truckload Air LTL Freight rate to shipper (gate-to-gate) Impact slow steaming & transshipment Polar routes Direct services Fast ships Trans-Siberian rail

47 The Charthouse Group Filling the gap? Fast end-to-end services? Multi-container platform for fast roro handling Bron: Kvaerner Masa-Yards Technology

48 The Charthouse Group Extended Gate concept of ECT (Hutchison Port Holdings) Terminal Operator Haulage concept of DP World Impact -Optimize capacity use at deepsea terminals -Lower environmental footprint and road congestion in/around port -Create a streamlined logistics solution for customers Going inland Active involvement of terminal operators

49 The Charthouse Group Going inland Active involvement of shipping lines: Push strategy x B/L seaport X y x Second move by rail, barge or truck B/L inland port z Rail, barge (or truck) x y Multi-port gateway region CONTAINER PUSH STRATEGY Source: Notteboom (2011)

50 The Charthouse Group Core of Blue Banana + EDC effect Immediate hinterlands remain the backbone of ports gateway traffic.... but gateway regions increasingly vie for distant contestable hinterlands Flexibility is key

51 The Charthouse Group Going intermodal Modal split targets of terminals Source: Notteboom (2011)

52 The Charthouse Group Rail or barge pricing Rail or barge service level Port pricing Port service level Going intermodal Linking pricing and non-pricing levers across transport nodes and modes Inland port pricing Inland port service level Non-pricing leversPricing levers Pricing linkages Service level linkages Pricing/service level linkages between modes/nodes Pricing/service level linkages at same mode/node Source: Notteboom (2011)

53 The Charthouse Group THE NEXT BOX WAVE OR THE NEXT BOX CRASH? Ay caramba! Can I handle the load?

54 The Charthouse Group Conclusion: Which Growth for Which Box? DerivedSubstitution Incidental Induced

55 The Charthouse Group Thank you for your attention !


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