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UT Supply Chain-Newsome

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Marion Bull

on 31 March 2016

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Transcript of UT Supply Chain-Newsome

Keeping Freight Moving
U.S Port Industry:
Challenges & Opportunities
Keeping Freight Moving
Agenda:
Global port industry.
Container port customers.
U.S. port issues.
Harbors & other infrastructure.
Port congestion: Normal or solvable?
Conclusions.
Global Container Port Industry Perspective
~200 Million loaded TEU globally.
~700 Million TEU port throughput.
Top 30 World ports handle +30%.
9 of the top 10 ports are in China.
Only 3 of the top 30 are in the U.S.
U.S. Ports: ~7% of global throughput.
Port of Shanghai
Global Port Operating Structure
Global Terminal Operators:
APM Terminals, PSA
Hutchinson, DP World
National Port Operators:
HHLA, ECT, SIPG
Passive Pension/Private Equity:
GCT, Maher Terminals,
Hi-Star/Ports America
State Operating Ports:
SCPA, GPA, VPA, PHA
City Landlord Ports:
Los Angeles, Long Beach,
New Orleans
Container Line/Stevedore:
Trapac, LBCT, YTI, SSA
Port of Singapore
Hallmarks of the Global Port Industry
Widely varying cost & productivity.
Increasing
automation.
Finite waterfront land; competing use.
Long-term
infrastructure
Delays due to permitting process.
Harbor depth/
access matters.
Labor has a
huge impact.
A supply chain
enabler.
Global Container
Shipping Industry
Container shipping is the
Top 20 lines move more than 90% of the volume.
High-capital, low-margin with unreliable profitability.
Commodity behavior.
Driven by scale & debt.
kingpin of globalization.
Major Global Container Trades
Major Container Lines Ranked by 2015 Capacity
Source: Drewry Maritime Research
Source: Drewry Maritime Research
Future Ship Deployments Are Clear...
Asia/USA
8,000 - 14,000 TEU
Asia/Europe
18,000+ TEU
Europe/USA
6,000 - 10,000 TEU
Other Trades
3,000 - 8,000 TEU
Port of Hamburg
Slower growth/end of offshoring.
Large investments
($2 billion/sling).
Widely varying profitability.
Consolidation,
or not.
Standardized product/cost-driven.
Scale is key to profitability.
Port capacity key for working big ships.
Nationalistic
approach.
Container Industry Issues
U.S. Port Issues
Shipping line requirements.
Landlord vs. operating port.
Investment & infrastructure.
Trucking viability & capacity.
Chassis pools.
Productivity & automation.
APMT Los Angeles
Shipping Line Requirements
Ingredients for success are complex, costly, and challenging to deliver.
Vessel access.
Berth space
Productivity.
Trucking.
Chassis.
Rail service.
Infrastructure.
Low-cost.
Courtesy Port of Long Beach
Port of Charleston / SC Ports
Landlord
versus
Operating Ports
Global model is landlord/tenant.
Southeast & Gulf U.S. operating ports.
Operating ports have distinct advantages.
Large landlord ports will need to consolidate.
Investment Requirements
And Timeframe
Nothing worthwhile happens in under 100 acres, $20 million, or 3 years.
Inland Infrastructure
Connectivity is expensive.
Innovation is required.
Last mile.
Trucking.
Intermodal.
Transloading.
Distribution.
E-commerce.
Case Study in Innovation:
South Carolina Inland Port
Trucking Capacity
The most important strategic issue governing the growth of containerization.
Under-appreciated.
Entrepreneurial.
High risk/low reward.
More respect.
Chassis Pools
U.S. is the only country with a
carrier-provided chassis model.
A grey pool is ideal,
but we are not there yet.
Productivity &
Automation
Wide productivity differences between ports.
Terminals can be completely automated.
Investment only with corresponding labor benefit.
Harbor Deepening:
Separating myth from reality.
Myth:
A comprehensive strategy exists.
HMT covers deepening.
Federal gov. pays 100%.
All U.S. harbors need deepening.
US ACE picks winners & losers.
Reality:
No strategy or budget.
States/sponsors pay most of the cost.
A 50-foot harbor is required now.
US ACE does evaluate on merit.
Transportation cost savings model.
6,700 TEU Vessel Fully-Loaded Drafting 48-Feet In Charleston
Charleston Harbor
Deepening
Feasibility study in 4-years (fast!).
$509 Million with 28% contingency (cheap!).
52-Feet. Deepest on the USEC.
Landmark agreement with conservationists.
Deepened by the end of 2019.
Port of Bremerhaven
www.commons.wikipedia.com
Factors Impacting Global Trade
End of large-scale offshoring.
A strong U.S.
dollar.
BRIC growth less than 5%.
Aging population = less consumption.
95% Of global population outside U.S.
Renaissance in U.S. manufacturing.
Courtesy Panama Canal Authority (ACP)
Panama Canal Expansion Impacts
New locks open Q2.2016
Big ships will move via the Suez Canal in the meantime.
New-Panamax = 14,000 TEU.
A fourth set of locks?
Vessels up to 20,000 TEU?
One thing for sure...
Ships will use the cheapest routing.
The new normal? Or solvable?
Big terminals.
Longer gate hours.
Multiple ports.
Truck capacity.
Short-haul rail.
Automation.
Solvable only with active management & creativity!
Conclusions & Summary
Trade to grow, albeit at a slower pace than in the last decade.
Big ships are being deployed faster, ports need to keep up.
Container carrier industry has winners and losers.
Port investment a major challenge. Compensated by earnings.
U.S. harbor depth will guide big ship deployments.
Global logistics is increasingly about cost & diversification.
The Next-Generation
Gateways Are Clear
Only a few ports with the required 50' depth.
50' MLW required for 24/7 vessel access.
Deep ports will draw the big ship services and growing cargo centers.
By 2019 Charleston will be the deepest port on the U.S. East Coast @ 52-feet.
Depths after current deepening projects are completed.
Leading BCOs are looking for a next-generation supply chain.
Maersk
Memphis
2,000 Container lifts.
44.2 Moves/hour/crane.
20 Hours in port (pilot-to-pilot).
Kuala Lampur
Express
2,741 Container lifts.
38.3 Moves/hour/crane.
29.5 Hours in port (pilot-to-pilot).
Texas
2,518 Container lifts.
41.3 Moves/hour/crane.
32 Hours in port (pilot-to-pilot).
Maersk
Turning Ships Faster:
Port of Charleston
Port of Rotterdam
Port of NY/NJ
Jim Newsome
President & CEO
CY2000
U.S. West Coast: 82%
U.S. East Coast: 18%
CY2008
U.S. West Coast: 72%
U.S. East Coast: 28%
CY2014
U.S. West Coast: 68%
U.S. East Coast: 32%
Source:
JOC Port Horizons
Top 10 importers account for 46% of the Top 100 volume.
Top 10 exporters account for 36% of the Top 100 volume.
2013 JOC Top 100
Importers & Exporters
Courtesy: Port of Long Beach
Ultra low sulfur fuel.
Electrified terminal equipment.
Clean truck programs.
Tradeoffs with cost and capacity.

Environmental Initiatives
Partnership gets more done.
Michael Kelley Photography / mpkelley.com
U.S. Ports In The Global Port Context
Source:
Drewry Maritime Research
USWC Ports vs. U.S East & Gulf (All Trades)
2014
USEC: 16.7 Million TEU
USWC: 14.9 Million TEU
U.S. container trade is more than Asia.
Full transcript