Globalization And Freight Movement Alex Bond April 8, 2009
Some Important Terms <ul><li>Twenty-foot Equivalent Unit (TEU) </li></ul>Container Ship Break-bulk Ship No Freight Movemen...
The First Containers <ul><li>1956- Trucking executive Malcolm McLean puts 58 truck trailers on the deck of the S.S. Ideal ...
The First Containers <ul><li>Loading the ship with containers cost $0.16 per ton vs. $5.46 (1956 $) </li></ul><ul><li>Cont...
Intermodal Freight
World Container Ship Evolution TEU Capacity 8,600 TEU 1,700 TEU 2,305 TEU 3,220 TEU 4,848 TEU 5th Generation  (2000 - 2006...
M/V Emma Maersk - 1,300 feet long, 184 feet wide - Holds up to 14,000 TEUs - 18 to 24 crew members
M/V Emma Maersk vs. SS Knock Nevis
<ul><li>Panamax: Largest possible ship for the Panama Canal (~4,800 TEU) </li></ul><ul><li>Suezmax: Largest possible ship ...
GDP vs. TEU Growth
Coping with Freight <ul><li>Technology and globalization have caused freight to grow faster than we can cope with it  </li...
2005 Oceanborne Containerized Freight <ul><li>Trans-Pacific Freight Volume </li></ul><ul><li>Asia to North America: 13.6 m...
Port Improvements <ul><li>Yesterday: Large crews of loaders, long stopovers, cranes shipside, product left on dock </li></...
Top U.S. Container Ports World Rank Name TEUs (millions) 10 Los Angeles, CA 7.48 11 Long Beach, CA 6.71 17 New York/New Je...
Port Capacity <ul><li>The Ports of Los Angeles and Long Beach bring in 1/3 of all containers into the US </li></ul><ul><li...
Virtual Ports <ul><li>Also called ports of pre-clearance </li></ul><ul><li>Freight is inspected and sealed at the source <...
Almost Every TEU  will End up on a Truck <ul><li>5,000 TEUs = 2,400 trucks </li></ul><ul><li>A highway lane can accommodat...
Great Circle
Port of Prince Rupert, BC <ul><li>Being built on speculation that ships will divert from US West </li></ul><ul><li>Is loca...
Air Freight <ul><li>Largest  US freight airports: </li></ul><ul><li>Memphis </li></ul><ul><li>Anchorage </li></ul><ul><li>...
Impacts of the Freight Revolution <ul><li>Falling transportation costs speed the decline of US manufacturing sector </li><...
Investing? Not Enough . . . <ul><li>The US Chamber of Commerce estimates that through 2015, we need: </li></ul><ul><ul><li...
Who Wins?
More Information <ul><li>Marc Levinson.  The Box: How the Shipping Container Made the World Smaller and the World Economy ...
Alex Bond al [email_address] CUTR Room 130
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Freight Guest Lecture

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This is my most popular guest lecture. Which is suprising, since I don't deal with freight much. I guess pictures of ships and trains is more interesting to undergrads than are modeling results and 400 page planning documents.

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Freight Guest Lecture

  1. 1. Globalization And Freight Movement Alex Bond April 8, 2009
  2. 2. Some Important Terms <ul><li>Twenty-foot Equivalent Unit (TEU) </li></ul>Container Ship Break-bulk Ship No Freight Movement = No International Trade
  3. 3. The First Containers <ul><li>1956- Trucking executive Malcolm McLean puts 58 truck trailers on the deck of the S.S. Ideal X </li></ul><ul><li>McLean forms Sea-Land Corporation, which will become the industry leader and standard </li></ul>
  4. 4. The First Containers <ul><li>Loading the ship with containers cost $0.16 per ton vs. $5.46 (1956 $) </li></ul><ul><li>Containerships are an overnight success. DoD awards $450 million in contracts for Vietnam war to SeaLand </li></ul><ul><li>1,200 TEUs/month to Vietnam in 1965-1973 </li></ul><ul><li>Other shippers lose DoD business, adapt </li></ul>
  5. 5. Intermodal Freight
  6. 6. World Container Ship Evolution TEU Capacity 8,600 TEU 1,700 TEU 2,305 TEU 3,220 TEU 4,848 TEU 5th Generation (2000 - 2006) Super Post Panamax 1st Generation (Pre-1960 - 1970) 2nd Generation (1970 - 1980) 3rd Generation (1985) 4th Generation (1986 - 2000) Ideal X Panamax Post Panamax Full Cellular 6th Generation (2006-2012) Ultra Post Panamax 12,000+ TEU
  7. 7. M/V Emma Maersk - 1,300 feet long, 184 feet wide - Holds up to 14,000 TEUs - 18 to 24 crew members
  8. 8. M/V Emma Maersk vs. SS Knock Nevis
  9. 9. <ul><li>Panamax: Largest possible ship for the Panama Canal (~4,800 TEU) </li></ul><ul><li>Suezmax: Largest possible ship for the Suez Canal (~8,500 TEU) </li></ul>
  10. 10. GDP vs. TEU Growth
  11. 11. Coping with Freight <ul><li>Technology and globalization have caused freight to grow faster than we can cope with it </li></ul><ul><ul><li>Import/export is doubling every 10 years </li></ul></ul><ul><ul><li>Trucks will accommodate most of the growth (75% increase) </li></ul></ul><ul><ul><li>Containerized cargo will increase 350% by 2020 </li></ul></ul><ul><ul><li>Building a new highway takes a minimum of 5 years and hundreds of millions of $$ </li></ul></ul>
  12. 12. 2005 Oceanborne Containerized Freight <ul><li>Trans-Pacific Freight Volume </li></ul><ul><li>Asia to North America: 13.6 million TEUs </li></ul><ul><ul><li>North America to Asia: 5.7 million TEUs </li></ul></ul><ul><ul><li>TOTAL: 19.2 million TEUs </li></ul></ul><ul><li>Trans-Atlantic Freight Volume </li></ul><ul><li>Europe to North America: 3.5 million TEUs </li></ul><ul><li>North America to Europe: 2.4 million TEUs </li></ul><ul><li>TOTAL: 5.9 million TEUs </li></ul>
  13. 13. Port Improvements <ul><li>Yesterday: Large crews of loaders, long stopovers, cranes shipside, product left on dock </li></ul><ul><li>Today: Loading crew of 4, 48 hours in port, cranes landside, cargo placed directly onto trains </li></ul>
  14. 14. Top U.S. Container Ports World Rank Name TEUs (millions) 10 Los Angeles, CA 7.48 11 Long Beach, CA 6.71 17 New York/New Jersey 4.79 37 Oakland, CA 2.26 44 Seattle, WA 2.09 46 Tacoma, WA 2.07 48 Norfolk, VA 1.99 49 Charleston, SC 1.98 52 Savannah, GA 1.90 58 Houston, TX 1.58
  15. 15. Port Capacity <ul><li>The Ports of Los Angeles and Long Beach bring in 1/3 of all containers into the US </li></ul><ul><li>LA/Long Beach are already over capacity </li></ul><ul><li>All of these solutions are needed: </li></ul><ul><ul><li>Better efficiency by longshoremen </li></ul></ul><ul><ul><li>Development of new ports </li></ul></ul><ul><ul><li>More rail capacity </li></ul></ul><ul><ul><li>More highway capacity </li></ul></ul>
  16. 16. Virtual Ports <ul><li>Also called ports of pre-clearance </li></ul><ul><li>Freight is inspected and sealed at the source </li></ul><ul><li>Crosses the border w/o inspection </li></ul><ul><li>Trans-shipment </li></ul><ul><li>Largest virtual port is in Kansas City </li></ul><ul><li>Major rail hub </li></ul>
  17. 17. Almost Every TEU will End up on a Truck <ul><li>5,000 TEUs = 2,400 trucks </li></ul><ul><li>A highway lane can accommodate 1,500 cars per hour </li></ul><ul><li>One ship would take up all of I-75 northbound for a full hour </li></ul><ul><li>Shippers depend on reliable delivery </li></ul>
  18. 18. Great Circle
  19. 19. Port of Prince Rupert, BC <ul><li>Being built on speculation that ships will divert from US West </li></ul><ul><li>Is located 1,000 miles closer to Asia </li></ul><ul><li>Excellent rail connections to US </li></ul>
  20. 20. Air Freight <ul><li>Largest US freight airports: </li></ul><ul><li>Memphis </li></ul><ul><li>Anchorage </li></ul><ul><li>LAX </li></ul><ul><li>Louisville </li></ul><ul><li>Miami </li></ul><ul><li>Airbus 380 can: </li></ul><ul><li>Carry 200,000 lbs </li></ul><ul><li>Travel 8,600 miles </li></ul><ul><li>Fly at 0.9 mach </li></ul><ul><li>www.iata.org </li></ul>
  21. 21. Impacts of the Freight Revolution <ul><li>Falling transportation costs speed the decline of US manufacturing sector </li></ul><ul><li>Just-in-Time delivery reduces the importance of wholesalers and middlemen </li></ul><ul><li>New, unintended demands on highways </li></ul><ul><li>Economic Interdependence </li></ul><ul><li>Union influence: high paying jobs </li></ul>
  22. 22. Investing? Not Enough . . . <ul><li>The US Chamber of Commerce estimates that through 2015, we need: </li></ul><ul><ul><li>$42 billion more to maintain the system </li></ul></ul><ul><ul><li>Another $91 billion to improve the system </li></ul></ul><ul><ul><li>Currently, we are spending $1.5 billion per year </li></ul></ul><ul><ul><li>Difficult to find new sources of funding </li></ul></ul>
  23. 23. Who Wins?
  24. 24. More Information <ul><li>Marc Levinson. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton University Press, 2006 </li></ul><ul><li>American Association of Port Authorities www.aapa-ports.org </li></ul><ul><li>Coalition for America’s Gateways and Trade Corridors www.tradecorridors.org </li></ul><ul><li>Intermodal Association of North America www.intermodal.org </li></ul><ul><li>Global Insight (Economics Consultant) www.globalinsight.com </li></ul><ul><li>Federal Highway Administration Freight Office: </li></ul><ul><li> http://www.ops.fhwa.dot.gov/freight </li></ul>
  25. 25. Alex Bond al [email_address] CUTR Room 130

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