I would like to thank Johan Woxenius and the Chalmers University of Technology for inviting me to give this presentation.
Transport, Logistics and Global Production Networks: A Geographical Perspective Jean-Paul Rodrigue, Hofstra University, New York “ There’s no business like flow business” Email: firstname.lastname@example.org Paper available at: http://people.hofstra.edu/faculty/Jean-paul_Rodrigue
Transportation and the Mobility of Passengers and Freight Intensity Distance Passengers Commuting Shopping Recreation Business Tourism Migration Waste disposal Local distribution Trade Energy & Raw Materials Commodity Chains Freight
Global Production Networks: A Synopsis Global Production Networks Right Product Right Quantity Right Price Right Location Right Time Supply Demand Space Goods Links/Flows
Paradigms of Global Production Networks Region Rent / Value (Creation, Enhancement, Capture) Market Potential (expand) Production Costs (lower) Downward Upward Commodity Chain Functional Integration Geographical Integration
New markets, improved products or more efficient and timely retail distribution.
Growth of global retailing and marketing:
Many products (e.g. technical goods and apparels) have an international reach and recognition.
Optimal production costs (downward move)
Lowest production cost possible in view of global differences in comparative advantages.
Move of labor intensive components of the commodity chain (more technical complexity recently).
Fragmentation of GPNs through a spatial division of production (FDI).
Geographical and Functional Integration Functional Integration Geographical Integration S M D D S M M S Origin / Destination Relationships 1 2 3 4 S M D Supply / Demand Relationships Information Flows Physical Flows Supplying Manufacturing Distribution S M D “ Principle of Flow” “ Principle of Location”
National Semiconductors, Supply Chain, 1993, 2001, 2005 Wafer Fabrication Assembly & Testing Distribution Center South Portland (Maine) Salt Lake City (UT) Santa Clara (CA) Arlington (TX) Greenock (Scotland) Migdal Haemek (Israel) Cebu (Philippines) Bangkok (Thailand) Penang (Malaysia) Melaka (Malaysia) Toa Payoh (Singapore) Santa Clara Swindon (UK) Tokyo Hong Kong South Portland Regional Distribution Centers (1993) South Portland (Maine) Salt Lake City (UT) Santa Clara (CA) Arlington (TX) Greenock (Scotland) Cebu (Philippines) Bangkok (Thailand) Penang (Malaysia) Melaka (Malaysia) Toa Payoh (Singapore) Global Distribution Center (2001) Singapore (GDC) Singapore (GDC) South Portland (Maine) Arlington (TX) Greenock (Scotland) Supply Chain Rationalization (2005) Suzhou (China) Melaka (Malaysia) Toa Payoh (Singapore) Customers
Macro-Economics and Global Freight Distribution
Comparative advantages (global labor arbitrage).
Financial schemes (perpetual motion machine).
Separation between production and consumption.
Divergence in the geography of passengers and freight.
World’s 10 Largest Exporters and Importers, 2004
The Global Labor Cost Arbitrage: Hourly Cost of Wages and Benefits, 2004 ($US)
The “Perpetual Motion” Machine: The Real Dynamics behind the World’s Most Significant Trade Relationship Goods Bonds (IOUs) Asset Inflation Debt Reserves Interest Rates Unemployment $ for goods $ for bonds United States China USD USD Borrowing Investment
Traffic at the 50 Largest Container Ports, 2003
Containerized Cargo Flows along Major Trade Routes, 2000-2004 (in million TEUs)
Value added function of integrated transport systems.
Modal shifts and their complexities.
Integrated Transport Systems: From Fragmentation to Coordination Multiplying effect Consolidation and interconnection Networks Coordination of transportation and production (integrated demand) Globalization Commodity chains Easier contractual agreements; joint ownership Deregulation Alliances and M & A Highs costs and long amortization; Improve utilization to lessen capital costs Returns on investments Capital investments Modal and intermodal innovations; Tracking shipments and managing fleets Containerization & IT Technology Consequence Cause Factor
Value Per Ton of U.S. Freight Shipments by Transportation Mode, 2002
Principles of Modal Shift Maturity Shift Inertia Modal Share (A/B) Time Comparative Advantages Real Modal Share Expected Modal Share Underperformance Over performance
The development of freight corridors and their gateways.
Physical and locational requirement of modern distribution.
Freight clusters and “freight villages”.
Regional distribution strategies.
Freight Distribution Centers along a Corridor Intermodal Corridor Spheres of Distribution (A) Metropolitan (B) Regional / Corridor Transport terminal Distribution / warehousing Agglomeration of distribution Freight Diversion Maritime Interface Emerging Situation Conventional Situation Transport Link 1 2 2 1 Sub-harborization 2 Suburban distribution center Maritime Interface
Characteristics of Large-scale Distribution Centers Less than 48 hours service window. Regional / National Market Sort parcels; Control movements from receiving docks to shipping dock; Management systems controlling transactions. Integration IT Constant movements (pick-up and deliveries) in small batches; Access to corridors and markets. Proximity to highways Accessibility Parking space for trucks; Space for expansion. Large lot Land Sorting efficiency (often cross-docking). One storey; Separate loading and unloading bays Facility More throughput and less warehousing. Larger Size