Detroit Regional Chamber Tranlinked Presentation


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Excerpts from a Presentation made at Wayne State University
April 24, 2009, by Richard E. Blouse Jr.

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Detroit Regional Chamber Tranlinked Presentation

  1. 1. Excerpts from a Presentation made at Wayne State University April 24, 2009, by Richard E. Blouse Jr.
  2. 2. Excerpts from a Presentation made at Wayne State University April 24, 2009, by Richard E. Blouse Jr. G ood morning, it is good to be here every corner of the world to seek out infrastructure - the roads, railways, water with all of you. I want to thank opportunities for jobs and investment for routes, international border crossings Wayne State University for hosting the Detroit region. We regularly travel to and airports - to become a large center of today’s discussion on an issue the Detroit Europe, Asia, the Middle East, Africa and international commerce. Regional Chamber is very much invested South America to make global connections in – transforming our region into a major for our local economy. We have worked for And just as importantly, we have the center of international commerce. fifteen years to develop these relationships. intellectual capacity and human capital to be a hub of global trade. Our workforce is Now you may be asking yourself - what A robust trading infrastructure is absolutely well equipped to move goods around the is TranslinkeD? This is what I am here to crucial to help support these relationships globe effectively and efficiently. discuss with you today. and connections to create jobs and attract We have been doing it for generations as investment for our region. And, this is why the automotive capital of the world. TranslinkeD is the chamber’s vision to we our leading the TranslinkeD initiative. leverage the Detroit region’s assets into Is there an opportunity to capitalize on a global logistics hub for moving people, REGIONAL ECONOMIC global trade? Absolutely! Prior to the goods and ideas around the world. It is part OPPORTUNIT Y recession, global volumes were increasing of our economic development strategy to year over year. put southeast Michigan back on a path to Regional economies grow by being globally prosperity. If we do this right, TranslinkeD connected and unified. There is a direct correlation between the has the potential to grow hundreds of amount of TEU’s – twenty-foot equivalent thousands of new jobs and billions in When talking about this vision for becoming unit - a measurement used in intermodal investment for the Detroit region. a global logistics hub, we are referring to a transportation - a region can process and its larger region than just Detroit. This larger GDP The more TEU’s that move through a . The chamber, as an organization region includes Windsor, Port Huron, Flint, region, the greater the economic impact on representing over twenty thousand Ann Arbor and Toledo. Detroit is at the that region. Trade volumes directly affect a businesses from across the Detroit region, heart of this larger region has an interesting perspective because so and therefore is the most many of our members are plugged into critical component of the global economy. They understand the creating a global logistics importance of open trade and the economic hub. Our region is what benefit that comes from nations freely ties this concept of a global exchanging goods and services. We hear logistics hub together. from our members all the time about how best to tap into increasing global trade. To visualize it, you can see not only the ideal geographic Enhancing our global links will help us position, but also see the strengthen our economic base. Our transportation assets within region needs an infrastructure system that each component that are supports a positive transformation. more valuable in the greater regional context. Building a system for future investment and a more diversified economy are two very Detroit is ideally suited to important imperatives for our region. capitalize on the way global commerce is conducted in The chamber’s economic development today’s fast-paced world. team leads business missions into We have the transportation 2
  3. 3. local economy. It’s this simple - the more the moment. However, once we get past the United States and the Far East, while trade, the better the economy. these formidable obstacles, we will be well movements between Europe and the west on our way to having global trade resume coast of the United States and Canada Projections for the logistics industry its natural growth rate of four to eight comprise the second highest volume of estimate a three-fold increase from three percent annually. trade through the canal. trillion annually to fourteen trillion by 2020. Global insight predicts a 250 percent So, our focus should be on the future. China has become the biggest player in increase in North American truck traffic Whether it’s 2009 or 2012 where we see trade along the North American east coast. because of the increases in trade and the recovery, our strategy needs to look at China’s volume of container trade through logistics industry. volumes and opportunities in five, ten, north Atlantic ports grew three times faster fifteen and twenty years from today. than any other region between the years A logical question that arises from all of 2001 to 2003. This trend is expected to this talk about tapping into the benefits of The question we need to ask ourselves is continue, especially as expansion of the global trade is – what about the economic where do we want to be in that same time Panama Canal will allow more Pacific to recession? It’s a good question and one frame and how do we take advantage of Atlantic trade to occur. that is worth spending a little bit of time those opportunities? discussing. Global trade has certainly slowed in Europe to Asia to East Coast recent months because of the world-wide West 3 recession - but this is cyclical in nature and Coast 1 4 trade will rebound. So, we should not be discouraged from implementing a plan to “Silk Road” SE Asia and turn the Detroit region into a logistics hub. MENA via Suez Canal to 2 North America According to World Trade Organization, the Asia through collapse in global demand has caused a Panama Canal roughly nine percent contraction in exports to East Coast worldwide. This began in late 2008 and has continued into 2009. It explains the approximate ten percent decline in cargo throughput most ports have experienced over the last year. Adding to that is the expansion of the The WTO is predicting global trade will Panama Canal where Chinese shipments continue to weaken for the next few GLOBAL TR ADE ROUTE will be even more capable on larger ships, quarters. However, it will resume its carrying more TEU volume and by-passing normal annual upward trajectory - which Let’s look at Atlantic shipments. Consider congested west coast ports. was approximately at a six percent growth how cargo travels between the Atlantic rate in 2007- once the global economic and Pacific oceans. Where you’d expect China continues to lead the world in crisis subsides. the greatest movements is from South economic expansion with its GDP America, Europe and northern Africa. What increasing about nine percent a year, Whether this growth in global trade will you might not expect is the tremendous despite the current economic mess most occur at the end of 2009 or sometime in Chinese increases. Chinese trade made of the rest of the world finds itself in today. 2010 is entirely dependent upon when the greatest year over year increases in This growth is expected to continue well the economic recovery finally takes hold. Atlantic trade, growing significantly faster into the near future. But, all the historical data and economic than trade from any other region of the forecasting indicate global trade will world. Increasing Atlantic shipments even more is eventually be on the rise again. the growth of Indian trade through the Suez According to the Panama Canal authority, Canal. The development of the new “Silk Certainly, turning the global economy the majority of the traffic through the Road” includes greater imports and exports around is the largest obstacle we face at canal moves between the east coast of out of India into the western hemisphere. 3
  4. 4. Also, India is not far behind China in terms Kansas City has of population so that market will continue to implemented the grow as well. Smartport, which In fact, there is continued economic growth connects BNSF rail in Asia as booming middle-class populations to the west coast with increasing disposable income sprout in of the U.S. and to many nations in that part of the world. The Lazaro Cardenas Port in Mexico national intelligence council has calculated the world’s population will increase to over Columbus, Ohio seven billion by the end of 2010. Ninety- has connected with five percent of this growth will occur in the port of Virginia developing nations such as China and India. via Norfolk southern This presents many new markets to sell rail through the and buy goods within the world economy. Hartland Corridor. This relationship allows shippers a direct distribution point into the Midwest and a closer connection to their end users. Further, CSX is looking at a project called the national gateway to build their inland and ocean port connections. So what is our opportunity? The real question is: where isn’t our CAPACIT Y SHORTFALL Now that we’ve looked at the greater THE SOLUTION: THE INL AND PORT opportunity? hemispheric movements, let’s see how trade is moving into the U.S. An inland port, which is ultimately what THE DETROIT INL AND PORT Seventy-five percent of ports along the east we are trying to accomplish for the Detroit and west coasts will encounter significant region, is a physical site located away from Despite the absence of such activity in our capacity problems in the next few years traditional coastal borders. Inland ports region, Detroit already has the makings and ahead. By 2024, these ports will be well may also be referred to as dry ports or structure of an inland port. Our region has over their capacity. intermodal hubs. been the inland port for the auto industry A number of regions throughout the for over 100 years. In fact, ports at Oakland, Los Angeles, Long country have Beach, Charleston, Virginia and New Jersey implemented will begin experiencing capacity constraints vast infrastructure as early as 2012. investments, alliances with ocean ports and This shrinking capacity issue has brought strategic economic about a solution: the inland port development plans. 4
  5. 5. As I stated earlier, the Detroit region is are still present today. If fact, they are corridor. This is a major north-south artery uniquely situated to take advantage of more important than ever considering how in nation’s highway system. In addition, all growing global trade. We are geographically much trade has grown and is expected the key east-west roads are connected to positioned well to plug into existing trade to grow in the coming decades. Not only i-75 in some fashion. routes - from the “Silk Road” that moves are we integrally connected to the great The I-75 corridor feeds a production through the middle east to the trade that lakes waterways, but to major railways pipeline, if you will, that runs along eastern moves between the Atlantic and Pacific and roadways that span out across the quadrant of the United States. A lot of oceans via the Panama Canal. continent as well. factories, plants and distribution centers rely on i-75 because of their proximity to The best connection from those trade A lot of times, moving goods through this important roadway. routes to the industrial Midwest is our Detroit via Canada is faster and less On top of cargo arriving by water and region. expensive than using other ports. rail, we have three airports – Willow Run, Detroit Metro and Bishop International. We are blessed with the good fortune of For example, the travel time from These add an important and necessary air being located near the source of the Saint Rotterdam, which is the second busiest component to TranslinkeD. Lawrence Seaway. This river is Mother port in the world after Nature’s entrance way for the heartland of Shanghai, to Halifax is five North America. It is no accident that Detroit days while Traveling from has been a historically important location for Rotterdam to New York would more than three hundred years. take seven days. Then there is the cost advantage. Moving Fort Detroit, first established by the French goods through Canada is less in the early 1700s and later controlled expensive than anywhere on by the British up until the war of 1812, the east coast. was considered a strategic post for both facilitating trade and military dominance Using the advantage of the on the continent. The reason is simple. Saint Lawrence Seaway, Detroit is a major gateway into and out of Detroit is a viable alternative North America. for moving goods from Europe to the Midwest of the U.S. This would allow ships to THE NORTH AMERICAN GATEWAY bypass the congested and costly ports Toledo is an important part of the equation along the east coast. too. It has numerous transportation assets, At the base of the St. Lawrence Seaway that when tied to ours, makes our case for system, our region connects directly to the Likewise, goods arriving on west coast of a global logistics hub for this region even Halifax and Montréal container ports by the U.S. from Asia that are to be distributed stronger. road, rail and water. throughout North America could use the Those characteristics that made Detroit Halifax Detroit route via the Panama Canal. In addition to our land connections, Detroit so attractive for the past three centuries This allows shippers to sidestep the equally metro airport provides our region with clogged and expensive enviable national and global access. You ports along the west coast. may have heard of aerotropolis – an effort You save time and money, to connect Detroit metro and willow run two critical elements in into a new economic development corridor. a fast-paced international The idea behind an aerotropolis is to economy. leverage a region’s airport, or in our case airports, to attract jobs and investment from I -75/I - 9 4 CORRIDOR the logistics industry. Which leads me to another Other regions around the nation and important factor that world, such as Louisville and Frankfort are benefits Detroit as a major successfully using this concept to create logistics hub - the I-75 thousands of new jobs and businesses. 5
  6. 6. Aerotropolis is a pivotal piece of TranslinkeD Yes! by supporting our vision for creating a Our state and local leaders will need to broader global logistics hub for the entire Other regions modeling themselves as demonstrate they can work together region. inland ports have brought all of the pieces towards a unified goal and vision. together. So while other regions are building capacity To get where we need to go with to attract trade, we have a natural trading Detroit has all the right pieces – TranslinkeD, we will need to change the advantage through our multi-modal international roads, transcontinental actors involved. We need a broader, global geographic region. railroads, international airports and abundant approach and to include more people in the waterways - to be a global logistics hub dialogue. This will require educating the You can see a heavy concentration of but we have never put them together in general public about the needs and benefits NAFTA-based trade centered around the such a way to take full advantage of their of this plan. Only then can we bring the base of the great lakes connecting into economic impact. If we can arrange these TranslinkeD vision to fruition. Mexico through Texas. pieces to fit together properly, we will improve and increase our capacity and Time is of the essence because Detroit It is no accident that the international border connectivity to quickly move cargo around has global competitors. If we do not do crossings between Detroit and Windsor the world. Thus, we will have achieved our this other regions will – and the jobs and comprise the largest trade passage in the goal of becoming a global logistics hub and investments we hope to have here will world in terms of the net worth of cargo. on international gateway inland port. flow to those regions that have their acts Over two hundred billion of trade moves together. Kansas, Virginia, South Carolina through the region each year – much of this Improving and connecting our waterways, and Georgia already have plans on the due to NAFTA. Three hundred million of railroads and roads is also vital to advancing table to become centers of global trade. just-in-time deliveries alone pass through our ability to move goods effectively. It is a race against the clock to be the first the Detroit Windsor region every day. It to cross the finish line as a leading hub of is because of our location and connection, We also need to increase our warehouse international activity. through water, rail and roads, to the rest of capacity. the continent. You can see we have our work cut out We will need this increased storage ability for us. It is not going to be easy, but it is These multiple connections translate into once trade picks back up, especially if we absolutely necessary if we want to diversify hard numbers. plan on being a center of international our economy, create new jobs and attract commerce. more investment for the Detroit region. Detroit ranked fifth in national exports We need to put ourselves on the map as in 2008 - behind Los Angeles, Seattle and Finally, we need to draw this responsibility a major global logistics hub. TranslinkeD is New York, but ahead of Chicago. And the under an authority or governance structure the road map to do this and to get us back trade is going out of the region is in good that can market and administer a logistics on a path to prosperity. balance with the trade coming in – key hub. for shipping companies to maximize their This is the message the chamber is working movement. While the Detroit region has all the on delivering to help educate the public as components for being an epicenter of well as business, community and political This does not only apply to trade, Michigan international commerce, we lack a unified leaders. We all need to be on the same moves more commodity value than any vision and voice from our business, page working towards the same goal if we other state. community and political leadership. All hope to achieve this ambitious plan. too often, our region is caught up in petty, The opportunity and efficiency offered by parochial politics. Such provincial histrionics the region is ideal for companies in any will only hold our region back. We need mode of transportation and at any level of our entire community working towards the supply chain. the same goal of putting all the pieces of the global logistics hub together. Our So, is this it? We already have a robust congressional legislators should have the trading network. Do we need to do single focus of securing as many federal anything? resources as possible for investing in our roads, waterways, rail lines and borders. 6