Impact of Port Efficiency on the Last Mile 9 March, 2017 Tangier, - PowerPoint PPT Presentation

Impact of Port Efficiency on the Last Mile 9 March, 2017 Tangier, Morocco Dr. Walter Kemmsies Managing Director, Economist and Chief Strategist JLL Ports Airports and Global Infrastructure

The big themes • If you have seen one port, you have seen one port • Not all ports serve the same type of markets • Some ports have different expansion opportunities • Ocean carriers and e-commerce retailers are in conflict • Ocean carriers want scale – larger vessels • E-commerce retailers want flexibility – smaller vessels • Re-think the gateway • More on-dock transloading • More intermodal • More re-purposing 3

The “Grey Tsunami” PROPORTION OF POPULATION OVER 55 YEARS OF AGE 60% Japan 50% Typical maturing Europe developed economies China 40% Canada US 33% 30% Brazil Mexico 20% India Highest growth potential 10% economies 0% 1990 2000 2010 2020 2030 2040 2050 Source: Census Bureau , JLL

International labor cost comparisons in 2001 LOCAL MANUFACTURING WAGES CONVERTED INTO USD AT PREVAILING EXCHANGE RATES IN 2001 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Source: Government statistics agencies, Trading Economics. JLL

Global trade growth WORLD REAL GDP AND TRADE INDEXES 1950-2015E 9000 1950 - 2015 CAGR Relative to GDP Growth 8000 GDP 3.7% 1.0 China Manufactured Goods 7.0% 1.9 7000 Fuels and Mining Products 3.8% 1.0 Agricultural Goods 3.5% 1.0 Total Trade 5.8% 1.6 6000 Korea, Taiwan 5000 4000 3000 Japan 2000 1000 0 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 Manufactures GDP Agricultural products Fuels and mining products Source: WTO, JLL

Ships continue to get larger EVOLUTION OF CONTAINERSHIP SIZE Source: Alphaliner, World Shipping Council

Big Ships - 18,000 TEU Up to 460 Container slots per Bay ~900 moves per bay per call 30 STS crane hours per bay 230 positions above deck 230 positions below deck Photo Courtesy POLB 190 ft beam 235 ft tall ~190 feet above water line 200,000 metric tons Need ~55 foot water depth at berth 1312 ft long Source: Moffatt & Nichol

Workload and Traffic Generation for Each 18K TEU Service 530 Total Peak Yard 18,000 TEU Vessel 18,000 TEU vessel 17,800 Lifts per Call Moves per Hour • 17,800 STS lifts (Per Service) • About 39,000 yard crane lifts • 65% truck / 35% on-dock rail 280 Peak Waterside Peak waterside demand 280 mph Moves per Hour Peak landside demand250 mph • Gate 190 mph Need 35,000 TEU Slots • Rail 60 mph Generates 39,000 Yard Generates 14,000 Local Lifts One-Way Truck Trips Traffic generated • About 14,000 local truck roundtrips • About 73,000 train feet each way = 9 – 8,000 ft trains each way 250 Peak Landside Moves per Hour Generates 9 – 8,000 Foot Trains Each Way Source: Moffatt & Nichol

Congestion is a global problem that needs local solutions Annual Local Port Truck Trips per 18 K TEU Service 1,200,000 1,000,000 Local Truck Trips 800,000 600,000 400,000 200,000 0 Canada WC NWSA Oakland LA/LB NY/NJ Norfolk Charleston Savannah West Coast East Coast TRUCK TRAFFIC IN ROTTERDAM PORT TRAFFIC IN SOUTHERN CALIFORNIA PORT OF SHANGHAI, CHINA

Shift in ports’ intermodal market reach EAST COAST PORTS INCREASED THEIR INLAND REACH AT THE WEST COAST PORTS’ EXPENSE NYNJ PNW 600,000 700,000 500,000 600,000 Carloads 400,000 500,000 Carloads 300,000 400,000 200,000 300,000 100,000 200,000 - 100,000 250 500 750 1,000 1,500 2,000 2,500 3,000 4,000 - 250 500 750 1,000 1,500 2,000 2,500 3,000 4,000 - 250 500 750 1,000 1,500 2,000 2,500 3,000 Distance (Miles) - 250 500 750 1,000 1,500 2,000 2,500 3,000 Distance (Miles) 07 14 07 14 LALB CHASAV 2,000,000 160,000 140,000 1,500,000 120,000 Carloads Carloads 100,000 1,000,000 80,000 60,000 500,000 40,000 20,000 - - 250 500 750 1,000 1,500 2,000 2,500 3,000 4,000 250 500 750 1,000 1,500 2,000 2,500 3,000 4,000 - 250 500 750 1,000 1,500 2,000 2,500 3,000 - 250 500 750 1,000 1,500 2,000 2,500 3,000 Distance (Miles) Distance (Miles) 07 14 07 14 Source: Surface Transportation Board, Moffatt & Nichol, JLL

Last Mile Intermodal Capacity May be Difficult to Achieve PORT OF NEW YORK AND NEW JERSEY CONTAINER TERMINALS AND INLAND CONNECTIVITY INFRASTRUCTURE ContainerTerminal Bayonne Bridge Intermodal

International labor cost comparisons – then and now LOCAL MANUFACTURING WAGES CONVERTED INTO US$ AT PREVAILING EXCHANGE RATES IN 2001 AND 2015 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Source: Government statistics agencies, Trading Economics. JLL

The largest global middle class ever WORLD POPULATION AND OECD GLOBAL MIDDLE CLASS PROJECTIONS Source: OECD, US Census Bureau

Selected On-Demand Company Fulfillment Time Estimates Source: Mary Meeker @ KPCB

Supply chain/final delivery evolving and impacting retail strategy ECOMMERCE SERVICE SUPPLIERS • There are many new entrants in the ecommerce market and potentially even more will join. • Significant evolution is the only discernible trend. Source: UPS presentation at Port of Long Beach Pulse of the Port event

Re-think the gateway INTERSTATE CONNECTIVITY Savannah River EASY ACCESS TO NEAR PORT International Trade Park WAREHOUSES Jimmy Deloach Parkway Connector Crossroads (completed) Business Center Gate 8 Grange Road Upgrade Exp. completion: 2018 Savannah International Airport Mason ICTF / HWY 307 Overpass (completed) Jimmy Deloach Parkway Extension to I-16 Brampton Road Connector Exp. Completion: TBD • Reduces traffic • Cuts turn times • GA allows 100K GVW Int’l container drayage

Repurposing a port industrial complex in the ecommerce era

How can Mediterranean ports benefit from these trends? CONTAINER VOLUME TRENDS IN WEST MEDITERRANEAN PORTS 5.0 4.5 4.0 3.5 3.0 Millions of TEU 2.5 2.0 1.5 1.0 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Tanger-Med Algeciras Barcelona Valencia Source: Inchcape Shipping Services

The big themes • If you have seen one port, you have seen one port • Not all ports serve the same type of markets • Some ports have different expansion opportunities • Ocean carriers and e-commerce retailers are in conflict • Ocean carriers want scale – larger vessels • E-commerce retailers want flexibility – smaller vessels • Re-think the gateway • More on-dock transloading • More intermodal • More re-purposing 21

Dr. Walter Kemmsies Managing Director & Head of US Strategy – Port, Airport and Global Infrastructure JLL 500 East Pratt Street Suite 1250 Baltimore, MD 21202 office: +1 443 451 2607 fax: +1 443 451 2601 jll.com/baltimore