CSCMP Cincinnati 2013 February 21st
Georgia Tech Panama Staff Darío Solís, Ph.D. Yuritza Oliver Carlos Gómez Pablo Achurra Managing Director Senior Research Engineer Senior Researcher Research Engineer Lucía Cheung Juan Carlos Peña Danna Ramírez Melissa Sánchez Research Engineer Research Engineer Research Engineer Research Engineer William Vong Mónica Saturno Research Engineer Research Assistant 2 2 2 A Member of the Productivity for Progress Institute
Georgia Tech Faculty and Staff H. Donald Ratliff, PhD Jaymie Forrest Executive Director Managing Director Amar Ramudhin, PhD John Bartholdi, PhD Director Co - Executive Director 3 3 3 A Member of the Productivity for Progress Institute
Gold Rush of 1849 DURING THE GOLD RUSH OF 1849, THOUSANDS OF 49ERS JOURNEYED BY BOAT FROM THE AMERICAN EAST COAST TO PANAMA AND THEN CROSSED THE ISTHMUS TO BOARD SHIPS BOUND FOR SAN FRANCISCO BECAUSE THE MIDDLE AND WESTERN PORTIONS OF THE AMERICAN FRONTIER WERE STILL LARGELY UNSETTLED AND OFTEN HAZARDOUS, THE RACE TO THE CALIFORNIA GOLD FIELDS WENT FASTEST THROUGH PANAMA. IN RESPONSE TO PROSPECTOR DEMAND, A RAILROAD WAS BUILT TO CROSS THE TREACHEROUS ISTHMUS IN THE 1850S. 4 4 4 A Member of the Productivity for Progress Institute
Main Topics Global Economic and Trade Outlook Economic Perspectives in Latin America Implications of larger ships and impact for North America Other Considerations 5 5 5 A Member of the Productivity for Progress Institute
The World Economy is still recovering Cargo trade demand is a reflection of industrial production (World GDP, Percent change) Indust. Production, Percent change 9 10 8 6 6 4 3 2 0 0 -2 -3 -4 -6 -6 -8 -9 -10 2000 2002 2004 2006 2008 2010 2012 2014 Real GDP Industrial Production Source: IHS Global Insight 6 6 6 A Member of the Productivity for Progress Institute
Ship Happens… Source: Jean-Paul Rodrigue 7 7 7 A Member of the Productivity for Progress Institute
The emerging markets fared best and are leading the recovery Gap between emerging and advanced countries will Real GDP (% change) shrink slightly. 8 6 4 2 0 -2 -4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: IHS Global Insight & Halcrow World Advanced Countries Emerging Countries US > Europe, Japan 8 8 8 Source: Global Insight, Worley Parsons A Member of the Productivity for Progress Institute
World’s trade share of the economy grows again after a temporary decline Globalization trend is long-term and has not reversed or stopped (World imports, percent of GDP) Percetn Share No change 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Source: IHS Global Insight 9 9 9 A Member of the Productivity for Progress Institute
World TEU exceeds the 2008 numbers with Moderate growth FULL TEUs 160,000,000 150,000,000 140,000,000 130,000,000 0.0% 120,000,000 CAGR 5.4% 110,000,000 2008-10 0.0% 8.8% 2010-15 2010-15 6.2% 6.6% 100,000,000 2015-30 5.0% 2015-30 5.0% 90,000,000 80,000,000 2008 2009 2010 2011 2012 2013 2014 2015 10 10 10 10 A Member of the Productivity for Progress Institute
Relevant TRADE Implications North American import growth will be sluggish in 2012 Stronger trade growth is with the emerging markets After 2012, things should be more “ normal ” , heading into the Canal expansion opening (2015) Transshipment will grow, as a necessity 11 11 11 11 A Member of the Productivity for Progress Institute
Main Topics Global Economic and Trade Outlook Economic Perspectives in Latin America Impact of larger ships and implications for North America Other considerations 12 12 12 12 A Member of the Productivity for Progress Institute
Solid Economic Growth in South America Fastest-Growing South American Importers from USA (Real GDP, percent change) 9 7 5 3 US US 1 -1 -3 5.8 -5 -7 Nicaragua Peru Panama Brazil Argentina Venezuela Chile Colombia 2009 2010 2011 2012 Source: Data from IHS Global Insight, CIA Factbook, OECD, Moody ’ s, Goldman Sachs, Oxford Economics, BMI 13 13 13 13 A Member of the Productivity for Progress Institute
Important China-Mexico Trade Mexico Trade Partner Shares 30% 25% CHINA EUROPE 20% 15% S. America 10% 5% USA 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USA CHINA SOUTH AMERICA EUROPE 14 14 14 14 A Member of the Productivity for Progress Institute
Diverse Trading Partners: Colombia Colombia Trade Shares 40.0% USA 35.0% 30.0% 25.0% EUROPE 20.0% 15.0% 10.0% S. America 5.0% CHINA 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USA CHINA SOUTH AMERICA EUROPE 15 15 15 15 A Member of the Productivity for Progress Institute
Main Topics Global Economic and Trade Outlook Economic Perspectives in Latin America Impact of larger ships and implications for North America Other Considerations 16 16 16 16 A Member of the Productivity for Progress Institute
Fact 1: Cargo tonnage growth has greatly outpaced world population Index for World Population (Millions) 7.7 Billion Tons and World Ocean Cargo (Milions of Metric Tons) 75% 350 increase in Tons per 300 Person 2.4 Billion Tons 250 200 6.8 Billion People 150 3.7 Billion People 100 Tons of Ocean Cargo 50 People - 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 U.S. Navy Operational Intelligence Center Quote U.S. Census Bureau and AAPA Data 17 17 17 17 17 17 A Member of the Productivity for Progress Institute
FACT 2 : “ We intend to deploy the biggest ships as quickly as possible once the locks are open. ” Move to Larger Ships 12,600 – 14,000 TEU New locks' maximum vessel size: 18 18 18 18 A Member of the Productivity for Progress Institute
In this context, the Panama Canal is important for U.S. trade. Suez Panama 9% of World Canal Cargo, 3% Canal touches USA 3% of World Cargo, 66% touches USA 19 19 19 19 A Member of the Productivity for Progress Institute
Two thirds of Panama Canal cargo touches the U.S., and container ships are 24% of the flow 2010 Ship Transits Change Ship Type Annual Share Daily vs 2009 40M Tons of U.S. Export Dry Bulk 3,050 24% 8.4 14% Grain Container 3,031 24% 8.3 -10% Tankers 2,233 18% 6.1 -4% Refrigerated 1,718 14% 4.7 -13% Others 893 7% 2.4 -5% Gen Cargo 834 7% 2.3 -4% Auto Carriers 607 5% 1.7 29% Passengers 225 2% 0.6 -5% Total 12,591 100% 34.5 -2% Bulk ships (mostly grain) and Tank ships (no crude oil) carry specific commodities in unscheduled service. Consumer goods move around the world on scheduled routes in 20 to 40 foot containers. Dry Bulk and Container ships push the upper size limits for a significant share or their traffic, unlike other vessels. 20 20 20 20 A Member of the Productivity for Progress Institute
Containerships dominate the discussion, but make up only about 10% of the World Fleet World Fleet Product Ship Type All GT 500 Tanker All Tankers 11,829 Gen Cargo 8,578 All Bulk 8,427 Gen Cargo With Cont. 5,133 Container 4,923 Most consumer RoRo 1,230 goods move in 100% Fit Today Container L P GAS 1,200 Ships. Reefer 1,134 Container RoRo With Pass 866 Vehicle 761 Pass Cruise 430 LNG Carrier 350 RoRo With Cont 148 Full Cell Reefer 18 Sub Total 45,027 68% 99% From Lloyds SeaSearcher extracts on 02 Jan 2011 21 21 21 21 A Member of the Productivity for Progress Institute
A larger share of other vessel types will also be able to make a fully-loaded canal transit. LNG Dry Bulk 10% 90% 55% 80% Vehicles Crude Oil 100% Fit Today Crude Oil 0% 42% 22 22 22 22 A Member of the Productivity for Progress Institute
Forecast East Coast Container Fleet 23 23 23 23 A Member of the Productivity for Progress Institute
Impact of the Panama Canal Expansion? Larger ships, and more of them, can be accommodated — Focus is on Bulk, LNG and Container ships — Not all ship types will increase in size or frequency Potential economic elements — Cost per container decreases if ship size increases — Shippers push to capture the carrier cost savings — East Coast ports invest to handle more trade from all regions — West Coast ports respond competitively — Location of transhipment is key Major questions for an ocean container carrier: — Do I redeploy part of my fleet to the all-water route? — Do I keep the savings, or pass it on to my shippers? 24 24 24 24 A Member of the Productivity for Progress Institute
Potential Impact The potential for reduced cost of the water route through the canal may cause freight traffic to shift from West Coast to East Coast ports. To take full advantage of the very largest vessels that will be able to fit through the expanded canal but may be too large to call at most U.S. ports, a transshipment service in the Caribbean or a large U.S. port may develop. The largest vessels would unload containers at the transshipment hub for reloading on smaller feeder vessels for delivery to ports with less channel capacity. 25 25 25 25 A Member of the Productivity for Progress Institute
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