CML Roundtable Presentation 8-13

Union League Club, Chicago, IL
June 15, 2016
Mid-America’s Emerging
Multimodal Trade &
Transportation Opportunities
Along the Lower Mississippi River
M. John Vickerman
Williamsburg, Virginia
Copyright © 2016
Vessel Cargo Handling Circa 1955
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Cargo Handling Circa 2010
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US Navy Fast Frigate Circa 2045
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Cargo Delivery 50 Years From Now…
Circa 2070?
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What We Know
Today... Will Surely
Be Different
Tomorrow!
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New State of Marine & Intermodal Competition
Mississippi River
Source: NW Seaport Alliance Strategic Business Plan, May 6, 2015
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What Are The
Future Possibilities
for the Lower
Mississippi River?
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Linking Railroads, Ports, Trucks, and Waterways
The Evolution of
Today’s Global
Shipping Lanes
Copyright © 2016
The Maritime Silk Road Replaced the
Overland Silk Road as the Primary
Trading Route Across Eurasia After
the Tang Dynasties (618 to 907)
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The Marine Silk Road was a Precursor to:
Today’s modern supply chain logistics, distribution
and shipping transportation networks
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The World’s Primary Shipping Route:
The Marine Silk Road
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90% of Global Trade is Carried Out by Shipping
The Majority of Today’s Ocean Trade is
Conducted on the Marine Silk Road
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Indian Ocean Electric Blue Shipping Lane Trails
From the Marine Silk Road
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The World’s Largest Ports Are Connected
Via The Marine Silk Road
Where are the Biggest Ports?
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The
World’sThere
Largest
Connected
On Earth,
ArePorts
MoreAre
People
Living
Via Circle
The Marine
Silk Road
Inside This
Than Outside
the Circle
Copyright © 2016
Global Shipping Routes Plotted by AIS GPS
Today’s Busiest Shipping Routes:
(1) Panama Canal, (2) Suez Canal, (3) Offshore China
Source: Wired Science January 2010 Journal of the Royal Society: Interface
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
International
External Industry
Pressures Driving
Today’s Logistics
Copyright © 2016
More than 98% of everything we
consume, wear, eat, drive and construct
is brought to us via ships through the
North American port system.
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Growth in GDP and World Trade
World trade will grow by 73% in the next 15 years. With merchandise trade
volumes in 2025 hitting $43.6 trillion compared to today’s $27.2 trillion
Source: Oxford Economics 2013
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World Trade’s Share of the Economy
Grows Again
Source: IHS Global Insight – World Trade Service
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Economic Forecast – Annual Growth Rates
“The expansion of the world economy is on a firm footing and the likely
hood of a global recession is extremely low during the next several years.
IHS anticipates that world GDP growth will average 3.6% per year over the
medium term (2016-2010). We are confident that conditions are falling into
place for an extended period of improving global growth.” (Per IHS / ATA)
4.0%
Economic Forecast - Annual Growth Rates in GDP
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
2014
2015
World GDP
2016
2017-2021
Canadian GDP (Real US $)
Source: American Trucking Association Data
2022-2026
US Real GDP
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Long Term GDP Annual Growth Rates
4.5%
Gross Domestic Product - Annual Growth
4.0%
3.0%
2.5%
2.0%
1.5%
World
United States
1.0%
0.5%
Canada
0.0%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Annual Growth Rate
3.5%
Source: OECD Economic Forecast May 2014
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
America’s New Energy
Self Sufficiency:
The Growing Importance of
Liquefied Natural Gas (LNG) and
its Transport
Copyright © 2016
Shale Gas: A Game Changer for US Competitiveness
US oil production recently
hit a 20-year high and
could surpass Saudi
Arabia’s output by 2019.
The US has a 100-year
supply of natural gas, &
will be the world’s largest
natural gas producer by
end of 2015.
Source: US Energy Information Administration, US Department of Energy
Copyright © 2016
LNG The Global Fuel of the Future:
Global energy market trends are set
to transform the maritime industry,
with major investments to be
ploughed into new LNG terminals and
huge projected growth in exports
expected in the coming years.
Consider:
 Globally LNG is Virtually Sustainable, with Approximately
200 Years of Recoverable Supply
 By 2035, USD $2 Trillion per year is Needed to Meet Global
Energy Demand
 Louisiana is One of the US Top Natural Gas Producers
(providing almost 10% of the overall national figure)
 Louisiana’s Haynesville-Bossier Shale Play Alone Holds
Trillions of Cubic Feet of Natural Gas.
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US Natural Gas Production
(Trillions of Cubic Feet)
By 2020, U.S. is Projected to Be a Net Exporter of Natural Gas
Source: Derived from US Energy Information Administration: EIA AE 02014
Copyright © 2016
US Natural Gas Production
by Source
(Trillion Cubic Feet)
Source: Derived from US Energy Information Administration: EIA AE 02014
Copyright © 2016
US Shale Gas Basins
in North America
There is Enough Recoverable Domestic
Natural Gas to Meet America’s Needs
for at Least 100 years at Current
Consumption Rates.
Source: Derived from US Energy Information Administration: EIA AE 02014
Copyright © 2016
Foreign Investment in US Gas and Oil
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Marcellus/Utica/Appalachian Shale Basins
Marcellus Shale: 1,925 billion cubic feet
Utica Shale: 38.2 trillion cubic feet – 20 Times Larger than Marcellus
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US LNG Exporters Target Marcellus Shale as Feed Gas
(Liquefaction Participants are Now in the Market for Dedicated Pipeline
Supply to Match Their Exporting Needs)
Source: Poten & Partners' in July 2014 LNG in World Markets Research Report
Copyright © 2016
US LNG Exporters Target Marcellus Shale as Feed Gas
(Liquefaction Participants are Now in the Market for Dedicated Pipeline
Supply to Match Their Exporting Needs)
Source: Poten & Partners' in July 2014 LNG in World Markets Research Report
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
World’s Largest Gas
Carriers VLGCs
Coming to the Lower
Mississippi
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Is the Lower Mississippi River Ready
for the Largest VLGCs in the World?
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LNG Tanker Vessel Size Evolution
Copyright © 2016
Maximum Draft for Any LNG Ship is 12 Meters (39 ft)
for LNG Loading and Regasification Terminals
VLGC - LNG Vessel
Dimensions
Length:
345 m (1,132 ft.)
Beam:
53.8 m (177 ft.)
Height
34.7 m (114 ft.)
Draft
12 m (39 ft.)
Capacity
266,000
cubic meters
9,400,000 cu ft.
The first Q-Max LNG carrier, Mozah,
built in November, 2007.
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Largest Gas Ocean Carrier: Q-Max LNG
By 2020 the Lower Mississippi May Experience the
VLGC Design Vessel (Qatar-Max LNG Vessel
Q-Max (Qatar Max)
Gross Tonnage: 164,000 t
Summer DWT: 129,000 t
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Linking Railroads, Ports, Trucks, and Waterways
What Determines
Today’s Logistics
Trade Flows?
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Poll of the Top 1000 “Blue Chip”
Multinational Shipper Priorities
43%
Schedule
Reliability &
Consistency
38%
Competitive
Freight Rate
12%
Transit Time
& Speed
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Today’s Logistics Truth:
“The customer
wants more and
is willing to pay
less for it.”
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Functional Classification of
Global Maritime Cargoes
All Maritime Cargo
General Cargo
Break Bulk
Neo-Bulk
Sacks, Cartons,
Crates, Drums,
Pallets, Bags
Lumber, Paper,
Steel, Autos
Bulk Cargo
Containerized
Liquid Bulk
Dry Bulk
Containers,
Lift On/Lift Off
(Lo/Lo),
Roll On/Roll Off
(Ro/Ro)
LNG, Petroleum,
Molasses,
Chemicals,
Vegetable Oil
Grain, Sand &
Gravel, Scrap
Metal, Coal/Coke,
Clinker, Fertilizer
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The TEU (Twenty Foot Equivalent Unit)
“The Port & Container Shipping
Unit of Measure”
1 TEU = One 20 ft. ISO Container
1 FEU = 2 TEUs = One 40 ft. Container
8 ft. to
9.5 ft
TEU
20 ft
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How Much Can a Single Container Hold?
(Example 40 ft. Container) Example
=
1,890
@ $25.50/Case
Cases
=
315
@
20” TVs
=
10,000
Pairs @
=
432,000
@
Packs
=
Value $
$48,195
$299/TV
=
$94,185
$30/pair
=
$300,000
$4.00/Pack
=
$1,728,000
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Linking Railroads, Ports, Trucks, and Waterways
International Maritime
Cargo Demand
Trends
Copyright © 2016
Historical Global Container Market Demand
(Millions of TEUs)
2009
Recession
North American Growth
Lags Other Global Regions
Source: Drewry Shipping Consultants
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2025 World Container Port Market Demand
(Millions of TEUs)
260%
Increase
2009
Recession
Source: Drewry Shipping Consultants October 2011
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A Turning Point in Global Economic History
The Advanced Economies Will Decline From 2/3 share of the Global
Economy to a 1/3 Global Share. The Global Economy Will See Higher
Average Pace of Growth in the Future…
Emerging Markets
(BRIC Countries)
Advanced Markets
(NAFTA Countries)
Source: IMF - Forecast by TD Economics, December 2009
Copyright © 2016
Southeast Asian
Manufacturing Centroid Shift
Current Inbound US Cargo Flow
U.S. Intermodal
Rail Flow
Expanded Asian
Panama Canal
2016 Flows
Western Centroid Shift
Eastbound: All Water Flow
Eastbound: US Intermodal Rail Flow
Copyright
© 2015
Copyright
© 2016
Southeast Asian
Manufacturing Centroid Shift
Current Inbound US Cargo Flow
Western
Centroid
Shift
U.S. Intermodal
Rail Flow
With Manufacturing
Centroid
Shifts
Westbound
All Water/Suez
Flow Into Vietnam
Westbound
U.S. Flow
and/or India, The
NorthIntermodal
American
East Coast will
See Dramatically More Westbound Suez Traffic
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Suez Canal’s $8.5 Billion Expansion Plan
(A New $4 Billion 45-mile-long parallel channel and Global Logistics Park)
3 Daily Convoys:
2 Northern Convoys
1 Southern Convoy
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The Suez Canal’s $8.5 Billion
Expansion of the Canal
Completed September 2015
New 45-mile-long parallel channel cutting
waiting times to transit by 3 hrs. from 11 hrs.
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Dredging 180 Million Cubic Meters
(35-kilometers-long and 24-meters-deep)
Shipping Route in Less than One Year
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Egyptian Jet Fighter Escort Selfie
(Taken with the New Expanded Suez Canal in the Background)
Source: Photo Courtesy of MIRASCO, August 2015
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
The Growing Asian
Import Trade
Challenge
Copyright © 2016
Container Transhipment World Records
Of the 10 busiest ports in the world,
Nine are in Asia, of the top 10, Six
are on the Chinese mainland
The Port of Shanghai is No. 1, and
The Port of Singapore is No.2
These Two Ports are Larger Than All
North American Ports Combined
Copyright © 2016
China-US: Twin Engines of the World
2015 Population:
US:
325 million
China: 1,400 million
(1/5 World – 19%)
The number of Chinese
children in elementary
school is equivalent to
the total US population.
Copyright © 2016
Shanghai International Shipping Center
Yangshan Deep Port & Logistics Park
New Port City
New Logistics Park
20 Mile New Port Access
Bridge Constructed in 3 yrs
54 New Berths
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Shanghai International Shipping Center
Yangshan Deep Port - 20 Mile Bridge Access
“Second Longest Ocean Bridge in the World”
Copyright © 2016
Shanghai Yangshan Deep-Water Harbour
Yangshan Deep Port – 54 Berths East China Sea
Copyright © 2016
Shanghai International Shipping Center
Yangshan Deep Port & Logistics Park
Shanghai Port Set a 2011 Record by Handling over 30 million TEUs
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
Maritime Vessel
Technology
Trends
Copyright © 2016
World Container Ship Evolution
24% increase in the average container ship size
from 2008 to 2012
The Stage is set to Jump again to 22,000 TEU
Mega Container Vessels
9,000 TEUs 12,000 TEUs
15,000 TEUs
18,000 TEUs
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Containership Orders – Country of Build
(Orders Since January 2010)
92%
Source: Alphaliner Newsletter Volume 2011 Issue 21
Copyright © 2016
Maersk’s New 30 Vessels (ordered) are 4 Times the Current Size of the
Panama Canal & 1.5 times the Size of the Expanded Panama Canal
Copyright © 2016
Largest Container Vessel to Call in North America:
( December 26, 2015 APMT POLA - CMA CGM Benjamin Franklin
1,300 ft. LOA and 177 ft. beam, 18,000 TEUs)
The massive Benjamin Franklin was tuned in 56 hours of operations,
averaging 29.1 lifts per crane, per hour, averaging total 200 container moves
against the vessel each hour, for a total of 11,200 lifts. The APM Terminal in
Los Angeles worked as many as nine ship-to-shore cranes simultaneously
against the Benjamin Franklin during its three and one-half day call.
Copyright © 2016
2018: Ultra-Large 20.000 TEUs Container Ships
2015: Maersk Planning Orders up to
10 New 20,000 TEU Ships ($1.5 Billion Order),
Evergreen, Seaspan and United Arab Shipping Company (UASC)
are also looking at 20,000 TEUs
Copyright © 2016
A 20,000 TEU Mega-Container Vessel
Can Produce High Intermodal Rail
Volumes For One Weekly Vessel Call)
IMPORT
EXPORT
10,000 TEU Vessel
Vessel Capacity
20,000 TEU
(11,784 Units)
26.8
Double Stacked Trains
Assuming a 75%
Intermodal Rail Split
26.8
Double Stacked Trains
Copyright © 2016
The New Ocean Alliance would bring the World’s 3rd,
4th, 5th and 9th biggest Container Lines Together in a
Vessel-Sharing Agreement…
Forcing the hands of the remaining players to quickly choose their strongest
partners from the remnants of the CKYHE, G6 and O3 alliances
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Linking Railroads, Ports, Trucks, and Waterways
Panama Canal
Expansion:
New Capacity
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Panama Canal Expansion Project
Inauguration on June 26, 2016.
The first ceremony will begin on the Atlantic side at the new Agura Clara
Locks, followed by the new Cocoli Locks on the Pacific side
Copyright © 2016
Panama Canal Route
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Panama Canal Historical Tonnage Traffic
Source: ACP Data
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The Panama Canal Circa 1914
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Panama Canal Today
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Expansion of the Panama Canal: Circa 2016
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Panama Canal Third Lane Expansion
New Lane
Existing Lanes
Copyright © 2016
Panama Canal Third Lane Expansion
Copyright © 2016
Panama Canal Third Lane Expansion
Water-Saving Basin Reservoir System
Copyright © 2016
Panama Canal Third Lane Expansion
Sliding Caisson System
Copyright © 2016
Panama Canal Third Lane Expansion Capabilities
2011:
4,800 TEU
2014-2015:
12,600 TEU
Source: ACP Expansion Project
Copyright © 2016
A Larger Share of Other Vessels Will be
Able to Transit the Canal - Fully Loaded
Crude Oil - 0% to 42%
LNG - 10% to 90%
Dry Bulk - 55% to 80%
Copyright © 2016
Panama Canal Vessel Deployments
Will Determine New US Logistics Patterns
The Distance to
New Orleans
and Savannah Via
the Panama Canal
is
Identical…
But
A Competitive & Robust
Each Port Has Very
Landside Access toDifferent
the Gateway
Access to
Port’s Inland Marketthe
will
a Key
USbe
Heartland.
Success Factor!
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
Emerging New
Caribbean
Transhipment Center
(Large Ship to Feeder Vessel Transfer)
Copyright © 2016
Panama Ports Annual Transhipment Growth
“The Singapore of Latin America”
Proposed New Port
Projects Would Double
the Total in 5 Years
Copyright © 2016
Panama Ports Container Transhipment Growth
6.8 Million TEUs – 18.5 % Growth Rate
Copyright © 2016
The Panama Canal Expansion Will Move the
Caribbean Transhipment Center Point to Panama
Copyright © 2016
New Panama Canal Pacific Entrance Ports
More Capacity than all of
the Port of Los Angeles
Copyright © 2016
New Panama Canal Atlantic Entrance Port
More Capacity than all of
the Port of Houston
Copyright © 2016
North American Vessel Transshipment:
(Globally Transshipment accounts between 25 and 50%
of all container volumes – In the US it’s < 15%)
Feeder
Ship
Feeder
Ship
Mother
Ship
Transhipment
Hub Port
Induced Transshipment/Feeder
Ship Operations
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
North American
Cargo Demand
Trends
(Dé jà vu Experience)
Copyright © 2016
Source: ATA US Freight Transportation 2025 Forecast
Copyright © 2016
Transpacific Container Trade Recovery
(Millions of TEUs)
“Note the 2 to 1 Asian
Import Imbalance”
Source: IHS – Global Insight -The Global Outlook – October 14, 2010
Copyright © 2016
Transatlantic Container Trade Recovery
Source: IHS – Global Insight -The Global Outlook – October 14, 2010
Copyright © 2016
Share of US Containerized Cargo – Imports
(US East Coast vs US West Coast Share)
In 2015 US East Coast ports handled 7.9 million TEU of loaded containers,
up 12.6% year-on-year
US West Coast ports still handle 56% of the inbound loaded containers
arriving in the US in 2015
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
Large Container Vessel
Market Penetration into the
US Midwest & Lower
Mississippi River
Copyright
Copyright ©
© 2016
2016
Today’s US Market Penetration
Panama Canal Economies of Scale with permit
deeper market penetration into the US
Reachable Market:
46% of US
Population
4,000 TEU ship, all-water.
Source: PB Consultants - CSX Transportation May 12, 2011 - Director of Strategic Analysis
Copyright © 2016
Dramatic US Market Penetration after 2016
Panama Canal Economies of Scale with permit
deeper market penetration into the US
Reachable Market:
63% of US
Population
8,000 TEU ship, all-water.
Source: PB Consultants - CSX Transportation May 12, 2011 - Director of Strategic Analysis
Copyright © 2016
Dramatic US Market Penetration after 2016
Panama Canal Economies of Scale with permit
deeper market penetration into the US
The Midwest & the Mississippi
River Valley Could be the Real
Beneficiaries!
Source: ACP Expansion Project – Rodolfo Sabonge AAPA January 24, 2013
Copyright © 2016
Dramatic US Market Penetration after 2016/17
Panama Canal Economies of Scale with permit
deeper market penetration into the US
West Coast
Cost Advantage
East/Gulf Coast
Cost Advantage
The Panama
CanalArea
will prove to be a strong
Cost Advantage
West of
theAsian
MS River
contender
for
trade serving not only
the US East Coast, but ALL of the Gulf and
the Most of the Midwest by late 2016 – 2017.
Source: Potential Effects of the Panama Canal Expansion on the Texas
Transportation System, Texas DOT, Cambridge Systematics October 2011
Copyright © 2016
2016-17 Regional Competitive Inland
Port & Distribution Center MS River Region
Copyright © 2016
Can Mega Container Vessels Physically Call in the
Lower Mississippi River Region?
Copyright © 2016
Mississippi River Mega
Container Design Vessel: 20,000 TEUs
Length
400.0 m 1312.34 ft
Breadth
58.8 m
192.49 ft
Load Draft
16.0 m
52.49 ft
TEU Capacity 20,150
Copyright © 2016
Largest Container Vessel to Call in the Lower
Mississippi River was 8,000 TEUs with a
Controlling Vessel Draft at 45 ft.
With a Controlling Depths at 50ft. - 52 ft. the
Largest Container Vessel Could Easily Reach 20,000
TEUs in the Lower Mississippi River
Copyright © 2016
It Is Not Inconceivable that by 2020 the Lower
Mississippi Design Vessel May Well be a
20,000 TEU Container Ship
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
Alternatives to the
Panama Canal
Copyright © 2016
The $ 40 Billion Nicaragua Wet Canal
HK Nicaragua Canal Development Investment Co., the Hong
Kong-based company is funding the 173-mile canal and will
start in December 2014 and completed in 2019.
754 feet to 1,706 feet wide and 90 feet deep, starts from the
mouth of the Brito River on the Pacific side, passes through Lake
Nicaragua (107 feet above sea level), and ends in the Punto
Gorda River in the Caribbean
Copyright © 2016
Alternative “Dry Canal” Proposals
to Counteract Anticipated Canal Fees/Costs
Dry Canal Proposed Routes
APM Terminals announced $1
billion Container Port in Costa Rica
China’s proposal: 136-mile “dry canal”
(Pacific Port of Buenaventura & Atlantic
Coast Port of Cartagena in Colombia.
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
Inland Ports Defined:
A Convergence of
Logistic Trends
Copyright © 2016
Inland Ports Defined
A Convergence of Logistics Trends
Short Sea Shipping Technology
Logistics
Automation
Intermodal Rail
Distribution Center
Copyright © 2016
Emerging Major Inland Port Logistics Centers
Throughput Capacities in Millions of TEUs
Copyright © 2016
BNSF Logistics Park, Joliet. IL
A New Model For Freight Logistics Centers
Wal-Mart’s New 3.4 million SF (78 acres
under roof) Import Distribution Center
The Cost of This Import Distribution
Center was Paid for by the Savings in
Truck Drayage Between the Warehouse
& the Intermodal Rail Terminal
Copyright © 2016
The Inland Port:
“With Integrated JIT Delivery:
The Inland Port Can Greatly
Increase a Regions Freight
System Capacity”
Copyright © 2016
International Gross Fixed Capital
Formation as a Percent of GDP
(US is 32nd in the World - Below OECD Nations)
Organization for Economic Co-operation and Development (OECD)
Copyright © 2016
Linking Railroads, Ports, Trucks, and Waterways
Thank You
Copyright © 2016