NINTH ORDINARY ME E TING OF THE INTE INTE RAME RAME RICAN - - PowerPoint PPT Presentation

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NINTH ORDINARY ME E TING OF THE INTE INTE RAME RAME RICAN - - PowerPoint PPT Presentation

NINTH ORDINARY ME E TING OF THE INTE INTE RAME RAME RICAN COMMITTE RICAN COMMITTE E E ON PORTS ON PORTS Dr Don Ratliff Executive Director Dr. Don Ratliff Executive Director June 18, 2014 1 Georgia Tech Supply Chain & Logistics


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NINTH ORDINARY ME E TING OF THE INTE RAME RICAN COMMITTE E ON PORTS INTE RAME RICAN COMMITTE E ON PORTS

Dr Don Ratliff Executive Director

  • Dr. Don Ratliff Executive Director

June 18, 2014

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Georgia Tech Supply Chain & Logistics Institute Georgia Tech Supply Chain & Logistics Institute

Education Education Research Research Ind str Collaboration Industry Collaboration

#1 Industrial Engineering program for 24 consecutive years

Global Outreach

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for 24 consecutive years

  • U.S. News & World Report
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Supply Chain & Logistics Research Supply Chain & Logistics Research

Global Transportation Warehousing & Distribution Supply Chain Strategy Resource Scheduling Supply Chain Technology Manufacturing Logistics Health and Humanitarian L i ti Logistics & Trade Research Centers g Logistics Singapore Panama Atlanta

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g p

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Panama Center Research Focus Panama Center Research Focus

  • Integrating Panama’s existing logistics

infrastructure to improve network performance – “one port” concept

  • Establishing Panama as the “Gateway Hub” to
  • Establishing Panama as the Gateway Hub to

Latin America for multi-national companies

  • Predicting future requirements for Panama’s

logistics capabilities logistics capabilities

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Panama network – container ports connected by il d t k rail and truck

T h k

  • To compete the network

should function like a single port

  • Rail connection should

function like a conveyor belt

  • Truck connection should

functions like a parallel p conveyor belt Actual transit time

  • Actual transit time

approximately one hour

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Case # 1: Transshipment trucking service Case # 1: Transshipment trucking service

  • Trucking is currently not competitive with rail

as a mode to move containers from port to port $ across country (estimated truck cost $400 per trip, and rail cost $150).

  • What can be done to make trucking service

What can be done to make trucking service competitive?

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Transshipment trucking service Transshipment trucking service

  • Study Methodology:
  • Workshop with critical stakeholders
  • Map and document process at Balboa and MIT port
  • Identify key issues

y y

  • Compare trucking, rail and transshipment within the

same port same port

  • Validate analysis

Present findings to key stakeholders

  • Present findings to key stakeholders

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BALBOA Process MODE L BALBOA Process MODE L

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TRANSHIPME NT MODE LS TRANSHIPME NT MODE LS

U l d f hi 1 U l d f hi 1

WITHIN SAME PORT RAIL TRUCKING

Unload from ship 1 Unload from ship 1 Unload from ship 1 Store Store

Clear Government & Port Paperwork physically Clear government holds electronically

Store

Load to truck Travel Load to rail

Clear Government & Port Paperwork physically

Travel Unload from truck Unload from rail Store Store

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Load to ship 2 Load to ship 2 Load to ship 2

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TRUCKING SE RVICE TIME LINE TRUCKING SE RVICE TIME LINE

Processing + Travel Time = 4 hours

Clear government and Load to Travel Clear government and

1.5 h 1 h 0.5 h

Unload

0.5 h 0.5 h

Unload from ship 1 Clear government and port paperwork physically Load to truck a e g port paperwork physically Load to ship 2 from truck Unload from ship 1 at port of origin Load to ship 2 at port of destination

Trucking is expensive because trucks can make only one trip per day!

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Recommendations to improve transshipment ti competiveness

  • Establish clear performance goals and metrics based on

maximum total transfer times

  • Have performance of all network components monitored by

a neutral party to eliminate finger pointing

  • Establish contingency plans for disruptions

Impro e road infrastr ct re bet een ports

  • Improve road infrastructure between ports
  • Change laws and government processes to make trucking

between ports competitive

  • Reduce government charges for clearing transshipment

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g g g p containers

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Case # 2: Impact of big ships Case # 2: Impact of big ships

  • Current Panama Canal – 4,000 TEU ships
  • Expanded Panama Canal – 14,000 TEU ships

p p

  • Current max size – 18,000 TEU ships
  • Why bigger ships?
  • Why bigger ships?
  • 12,000 TEU ship about twice the cost of 4,000 TEU ship

12 000 TEU ship uses about twice the fuel of 4 000 TEU

  • 12,000 TEU ship uses about twice the fuel of 4,000 TEU

ship

  • 12 000 TEU ship requires about the same crew as 4 000
  • 12,000 TEU ship requires about the same crew as 4,000

TEU ship

  • How will big ships impact Panama?

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  • How will big ships impact Panama?
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Impact on Shipping Lines Impact on Shipping Lines

  • Bigger ships require more volume
  • Volume via Panama Canal is down
  • How can shipping lines increase volume?
  • Reduce rates
  • Reduce rates
  • Shipping lines losing money

Reduce services

  • Reduce services
  • The P3 alliance (Maersk, Mediterranean Shipping and CMA CGM)
  • CKYHE alliance (Cosco, “K” Line, Yang Ming, Hanjin and

CKYHE alliance (Cosco, K Line, Yang Ming, Hanjin and Evergeen)

  • Mergers just announced by Hapag-Lloyd and CSAV

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Panama Canal

Asia - U.S. trade.

Panama 9% of World Suez Canal Canal 3% of World Cargo, 3% touches USA Canal 3% of World Cargo, 66% touches USA

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Impact of Big Ships on Ports Impact of Big Ships on Ports

  • Bigger ships will call on fewer ports
  • Volume will dictate winners and losers
  • Depth and cranes
  • Big ships require more depth

Big ships req ire bigger cranes

  • Big ships require bigger cranes
  • Requires major investments
  • Volume surges
  • Volume surges
  • Requires operational changes
  • Increases daily work imbalances

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  • Increases operational costs
  • Requires more infrastructure to handle surges

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  • A very few “winners” on east coast
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Impact on Shippers Impact on Shippers

  • Inventory increases with transit time
  • Transit time through Suez at least 3 days longer

Additi l ti t l d d l d hi

  • Additional time to load and unload ships
  • Inland transit time may increase

Inventory increases with transit time variability

  • Inventory increases with transit time variability
  • Service frequency
  • Alliances
  • Alliances
  • Transshipment

Many ports cannot service big ships

  • Many ports cannot service big ships
  • Many ports cannot justify volume required by big ships
  • Transshipment will increase

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p

  • Potential for delays
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What are the true supply chain costs of bigger hi ? ships?

  • Shippers
  • Increased inventory

Not obvious decrease in transportation costs

  • Not obvious decrease in transportation costs
  • Ports

Increased investment

  • Increased investment
  • Increased operational costs
  • Increased financial risks
  • Carriers
  • Decreased operational cost per cell (not clear how much)
  • Utilization is a challenge
  • Overcapacity is a huge risk
  • Cost of maintaining alliances to fill ships

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Cost of maintaining alliances to fill ships

  • Competition from smaller ships
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Impact on Panama Impact on Panama

  • Big ships require
  • Few port calls
  • Very large volumes
  • Long hauls
  • Solution seems to be more transshipment
  • Panama has the potential to become a mega

hi h b transshipment hub

  • Becoming a mega transshipment hub increases

ti it hi h i th l f P connectivity which increases the value of Panama as a “gateway hub” for the Americas

  • Recommendation

increase Panama focus on

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  • Recommendation – increase Panama focus on

facilitating transshipment!

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Questions? Comments?

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