Pacific Northwest Economic Region (PNWER) 22nd Annual Summit,
Saskatoon, Canada, July 15-19 2012
The Containerization of
Commodities: Integrating
Inland Ports with Gateways
and Corridors in Western
Canada
Jean-Paul Rodrigue
Professor, Dept. of Global Studies & Geography, Hofstra
University, New York, USA
Van Horne Researcher in Transportation and Logistics,
University of Calgary, Canada
Sponsors
Canadian National Railway
Canadian Pacific Railway
CentrePort Canada
Global Transportation Hub
Authority
Government of Alberta
Government of British Columbia
Port Alberta
Rocky View County
http://www.vanhorne.info/
An Expected Shift in Containerization Growth
Factors
Derived
Substitution
Incidental
Induced
Economic and
income growth
Globalization
(outsourcing)
Fragmentation of
production and
consumption
Functional and
geographical
diffusion
New niches
(commodities
and cold chain)
Capture of bulk
and break-bulk
markets
Trade
imbalances
Repositioning of
empty containers
Transshipment
(hub, relay and
interlining)
Growth Factors behind the Containerization of
Commodities
Growing availability of containers
Rising demand and commodity prices
Fluctuations in bulk shipping rates
Imbalances in container shipping rates
(export subsidy)
Empty containers repositioning
IMF All Commodity Index and Average Container
Shipping Rates, 2000-2010 (2000=100)
400
IMF All Commodity Index
350
300
250
200
150
100
50
Container Shipping Rates
The Inland Logistics Funnel: The “Last Mile” in
Freight Distribution
Capacity
Funnel
Frequency
Funnel
Inland Terminal
HINTERLAND
Capacity
Gap
Frequency
Gap
GATEWAY
FORELAND
Economies of scale
Main Shipping Lane
INTERMEDIATE HUB
Market Accessibility of Major North American
Inland Load Centres
Trade Corridors and Inland Load Centers,
Western Canada
Western Canadian Intermodal Rail System
Main Carriers' Operational Constraints
Imbalanced trade flows and rates
Higher inland freight rates
Location and load mismatch
Contract terms (volatility)
Container weight limitations
Slow steaming and schedule reliability
Asymmetries between Import and Export-Based
Containerized Logistics
Gateway
Distribution Customer
Center
Inland
Terminal
Import-Based
Many Customers
•Function of population density.
•Geographical spread.
•Incites transloading.
•High priority (value, timeliness).
Repositioning
Supplier
Export-Based
Few Suppliers
•Function of resource density.
•Geographical concentration.
•Lower priority.
•Depends on repositioning
opportunities.
Containerized Weight for Selected Commodities
Commodity
Pounds per cubic foot
Wheat
Corn
Dry peas, beans and
lentils
Vegetable oil (e.g. canola)
Coffee (fresh beans)
Lumber (2x4s)
Hay (e.g. alfalfa)
Potash
Coal (Anthracite)
Paper or wood pulp
48
45
37
Weight in a fully loaded
20 foot container
26 tons* (28 tons)
26 tons
22 tons
60
35
45
14
80
70
75
26 tons* (35 tons)
21 tons
26 tons
8 tons
26 tons* (46 tons)
26 tons* (41 tons)
26 tons* (44 tons)
* Exceeds maximum permissible weight.
Rationale of Container Transloading
Consolidation
Weight compliance
Demurrage charges
Equipment availability
Supply chain management
Containerized Imports, Port of Vancouver, 20082011 (in metric tons)
14,000,000
12,000,000
Others
10,000,000
Prepared Food Products
Basic Metals
Wood Products
8,000,000
Beverages
Chemicals
6,000,000
Produce
Machinery
Industrial, Auto and Vehicle Parts
4,000,000
Construction & Materials
Household Goods
2,000,000
0
2008
2009
2010
2011
Containerized Exports, Port of Vancouver, 20082011 (in metric tons)
14,000,000
12,000,000
Others
Sheets, Panels & Boards
10,000,000
Other Cereals
Animal Feed
8,000,000
Paper & Paperboard
Waste Paper
Chemicals
6,000,000
Basic Metals
Meat, Fish & Poultry
4,000,000
Specialty Crops
Wood Pulp
2,000,000
Lumber
0
2008
2009
2010
2011
Containers Handled by the Port of Prince Rupert,
2007-2011 (in TEU)
450,000
Empty (Exports)
400,000
350,000
Empty (Imports)
Loaded (Exports)
Loaded (Imports)
300,000
250,000
200,000
150,000
100,000
50,000
0
2007
2008
2009
2010
2011
700
600
500
Aug-91
May-92
Feb-93
Nov-93
Aug-94
May-95
Feb-96
Nov-96
Aug-97
May-98
Feb-99
Nov-99
Aug-00
May-01
Feb-02
Nov-02
Aug-03
May-04
Feb-05
Nov-05
Aug-06
May-07
Feb-08
Nov-08
Aug-09
May-10
Feb-11
Nov-11
Price of Selected Commodities on Global
Markets, 1991-2012 (Jan 2000=100)
800
Rapeseed Oil
Wheat
Sawn Softwood
Potash
400
300
200
100
0
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
350
Jul-07
Apr-07
Jan-07
Millions of board feet
Monthly Softwood Lumber Shipments to China,
2007-2012
400
United States
Canada
300
250
200
150
100
50
0
From Bulk to Containers: Breaking Economies of
Scale
Entry Barriers
• Container as an independent load
unit.
• Minimal load unit; one TEU container.
Required
Volumes
• Limited differences in scale economies
for a producer.
• Incremental / linear cost-volume
function.
Market
Potential
• New producers (smaller).
• Product differentiation (more variety).
Trade and Transactional Facilitation: Functional
Pairing of Inland Ports
Functional Pairing
Hinterland
Corridor
Gateway
Foreland
Inland Port
Conclusion: Inland Ports as Logistical Platforms
for the Containerization of Commodities
The last mile remains salient
(Gateway gap + inland massification)
Co-location as an effective value
proposition (inbound / outbound logistics)
Promotion of exports and functional
pairing of inland ports
Look at specific commodity chains (e.g.
reefers)