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Statewide Logistics Plan for North Carolina

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Statewide Logistics Plan for North Carolina Statewide Logistics Plan for North Carolina An Investigation of the Issues with Recommendations for Action APPENDICES By George F. List, Ph.D, P.E. P.I. and Head, Civil, Construction and Environmental Engineering North Carolina State University Robert S. Foyle, P.E. Co-P.I. and Associate Director, ITRE North Carolina State University Henry Canipe Senior Manager TransTech Management, Inc. John Cameron, Ph.D. Managing Partner TransTech Management, Inc. Erik Stromberg Ports and Harbors Practice Leader Hatch, Mott, MacDonald LLC For the North Carolina Office of State Budget and Management May 13, 2008 Appendices Appendix A: Powerpoint Slide Sets Presentations include: Tompkins Associates North Carolina Statewide Logistics Proposal North Carolina Statewide Logistics Plan Cambridge Systematics Freight Demand and Logistics – Trends and Issues Highway Freight Transportation – Trends and Issues Rail Freight Transportation – Trends and Issues Waterborne Freight Transportation – Trends and Issues State DOTs and Freight – Trends and Issues Virginia Statewide Multimodal Freight Study - Phase I Overview Global Insight Shifts in Global Trade Patterns – Meaning for North Carolina 5/5/2008 North Carolina Statewide Logistics Proposal Presented to: North Carolina State University Project Team Charlotte, NC March 13, 2008 Caveat… This presentation and discussion is from the Shipper’s perspective… ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 2 1 5/5/2008 North American Port Report (1/08) A majority of the Supply Chain Consortium respondents to the North American Port Report survey believe that their supply chain network is not optimal with respect to the ports used for their ocean freight. Significant opportunities exist from getting all aspects of the supply chain aligned to optimizing costs and customer service. ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 3 Consortium’s North American Port Report (1/08) Major points from study 55% of companies expect to shift the ports they use in the next 3to5years3 to 5 years. Ports most often noted for volume gains in the next 3 to 5 years are: – Charleston, SC; New York, NY; Savannah, GA; Seattle, WA; Long Beach, CA; Tacoma, WA; and Houston, TX 64% of respondents indicate that diversifying the number and ltilocation of ocean por ts use did in N orth thA Ameri ca i s i mport ant tt to reduce the possibility of disruption A systematic approach to global supply chains is mandatory ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 4 2 5/5/2008 Agenda for Discussion Macro overview of lessons learned from goods movement studies from CA, OR, WA, TX and NY – Forecasts – GdGoods movemen ttt types an d commo dities – Capacity issues – Financing • Public-private partnerships • User’s fee • State and federal funding – Legislative actions • Environmental • Federal security initiatives (FTZ’s and in-bond) • Infrastructure Discussion on how each item above relates to this study ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 5 Goods Movement Studies General Observations – Forecasts are not gospel – Goods movement is inelastic until $100 +/- per container – All of the studies had a strong political flavor • Jobs, jobs, jobs and economic development • Private interests should fund infrastructure • Create the infrastructure but not in my backyard (NIMBY) • Be careful what you ask for… ¾ SF Bay Area Goods Movement Study ¾ Highest and best use of land led to market imbalance – Existing infrastructure is failing and over-capacity – There are no guarantees ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 6 3 5/5/2008 Goods Movement Lessons Learned Goods Movement Forecasts – Forecasts tend to be optimistic and often misunderstood – Commodityyyp types were not forecasted sep arately nor in sufficient detail – Underlying assumptions for forecasts were not fully understood Capacity Issues – Misused term that didn’t relate to the majority of the stakeholders • Used high level traffic engineering modeling – Quantified road,,,p rail, port and air cap acities but didn’t p rovide trade-offs – Got caught up in the traditional financing structure ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 7 Goods Movement Lessons Learned Financing – Good discussion from all states on Public Private Partnering from a technical perspective – Did no t represen t the pr iva te in teres ts very we ll and b ecame somewh at unidirectional • PierPass- Industry told to fund improvements • WA Stampede Pass crowning- BNSF turned down public $$$ because of strings attached – Every study cited the inelasticity to charge some amount “under $200 per container” to fund infrastructure without the understanding of the impact to the system – Did not study the impact to local/regional economy due to diversion of cargo • California study indicated elasticity breakpoint was closer to $400 per container due to population base ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 8 4 5/5/2008 Goods Movement Lessons Learned Legislative lessons learned – You can’t legislate prosperity – Industry viewed legislation as threat (PierPass) – Private investment slowed as a result of pending or proposed legislation – Security requirements are being funded with the same $200 per container infrastructure fee – Environmental concerns, especially air quality are slowing or stopping projects – Environmental remediation legislation is targeting the same $200 per container ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 9 North Carolina: Forecasts Cargo is coming to the USEC – Panama Canal expansion – Shifting manufacturing and assembly to India – Western intermodal costs are going up 2008-2015 2008 2010 2015 CAGR (%) Transatlantic 9,925 10,895 13,295 4.3 Transpacific 24,615 28,360 39,129 6.8 U.S. Atlantic/Asia 5,380 6,161 8,379 6.5 Europe/Asia 22,287 25,964 35,449 6.9 Intra-Asia 29,255 34,049 46,903 7.0 Total 117,837 137,074 185,120 6.7 Source: Global Insight by permission of author ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 10 5 5/5/2008 What are the Deciding Factors to Move Cargo through a Port? Time to market Service reliability Security of the supply chain Who is the BCO (Beneficial Cargo Owner)? What is effect of trans–loading (local vs. IPI)? International distribution point vs. distribution center Shipping strategies – Intermodal rates and service reliability – All-water routes (Panama Canal expansion 2014) – Mega-vesselil economics ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 11 Southeast Ports Growth Growth rates: 2008-15 Far East 5.8% Latin America 5.2% Europe 3.8% India 8.9% Africa 32%3.2% Rest of World 40%4.0% 7.4 million 5.1 million 8,000,000 8,000,000 7,000,000 7,000,000 6,000,000 6,000,000 5,000,000 5,000,000 4,000,000 4,000,000 3,000,000 3,000,000 2,000,000 2,000,000 1,000,000 1,000,000 0 0 2008 2015 Source: Global Insight by permission of author ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 12 6 5/5/2008 Mega–regions will Continue to Grow Source: Port of Tacoma by permission of author ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 13 Gateways Continue to Grow Source: Port of Tacoma by permission of author ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 14 7 Northeast China to USEC Panama – Suez RouteCostComparison US PortGrowthRates 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 0 Panamá Suez Panamá Suez Panamá Suez Panamá Suez Panamá Suez Panamá Suez 14.5% Fuel costs Fuel - Canal costs provision Ship 50.2 22.9 2001% 2002% 2003 2004 2005 2006 16.7% 47.7% 25.1 % 17.3% 40.2 34.3 % % 18.6% 38.7% 31.0 % ASSO C I ATES ASSO C I ATES 13.2% Source: AAPA and GeorgiaAuthority Ports by permission ofAAPA the author Source: Canal fees - costs Fuel sea 50.5% 30.0 % % 14.3 27.8% 49.0% 10.3% 59.5% 25.1% CONFIDENTIAL— Use or disclosure of this information isrestricted. CONFIDENTIAL— Use or disclosure of this information isrestricted. 11.2% 58.3% 23.0 Source: Global Insight by permission of author % 33.7 9.9% 51.6% Port fees Fuel Costs- Port % 10.4% 11.1% Source: Panama Canal Authority 52.1% 30.3% % 11.1 42.2 41.6 % % 42.5% 38.9% 16 15 5/5/2008 8 5/5/2008 Understanding the Potential Structure/Functional Types – Logistics centers- road, rail and air – International distribution centers – Distribution centers – Warehousing – Value added- manufacturing or assembly – Free trade zone – Bonded – Vendor Managed Inventory (VMI) All keye d to the log is tics st rat egy of th e good s owner ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 17 Where are Georgia’s DC’s Source: AAPA and Georgia Ports Authority by permission of the author ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 18 9 5/5/2008 Where are the Intermodal Population Centers? Source: JOC and CSX by permission of the author ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted. 19 Understanding Capacity • Intermodal (Rail) – North Carolina is not an intermodal state – Primary traffic (rail) is north-south – Many shipper’s moving their port of entry from USWC to USEC don’t understand intermodal differences between NS/CSX and BNSF/UP ASSO C I ATES CONFIDENTIAL — Use or disclosure of this information is restricted.
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