The Big Leap 2014: Challenges and Opportunities for Infrastructure in Colombia Upon New flows of International Trade. Cartagena, 16 February 2012 A Big Step or a Small Leap? The Panama Canal Expansion and Global Supply Chains Jean-Paul Rodrigue Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA Ship Happens… Factors Guiding our Steps Elephants Paradigms Funnels Global Trends: The Proverbial Elephant in the Living (Board) Room Multiplying Effects of Derived Demand on Container Transport Peaking? Global Trade and Container Throughput (1970=100) 10,000 Container Throughput (520.4 Millions TEU) Exports in current USD ($15.2 Trillion) GDP in current USD ($63.4 Trillion) 1,000 World Population (6.84 Billions) 100 1970 1975 1980 1985 1990 1995 2000 2005 2010 China: The Largest Bubble in History? Share of the World Commodity Consumption, China and United States, c2009/10 Cattle Oil GDP (PPP) Wheat Population Soybeans Chickens Rice Nickel Aluminum Zinc Copper Lead Steel Coal Pork Eggs Cement Iron Ore 6.1% 6.8% 10.4% 21.7% 13.6% 19.7% 16.6% 4.9% 19.7% Rebalancing in demand 4.5% 24.9% 19.9% 25.2% 11.3% 30.2% China United States 0.9% 31.9% 10.1% 34.6% 8.7% 38.2% 1.8% 39.5% 9.1% 42.1% 13.7% 45.8% 4.8% 46.9% 15.2% 49.6% 8.4% 53.6% 7.8% 53.6% 2.1% 54.4% 0% 10% 20% 30% 1.9% 40% 50% 60% 70% 140 120 20 0 Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 The Third Oil Shock Unfolding West Texas Intermediate, Monthly Nominal Spot Oil Price (19702011) 100 Rebalancing in input costs 80 60 Second Oil Shock 40 Third Oil Shock First Oil Shock Global Trade Stalling? (and diverging) 250.0 CPB World Trade Index, 1991-2011 (volume) 200.0 150.0 100.0 50.0 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06 Jan-05 Jan-04 Jan-03 Jan-01 Jan-00 Jan-99 Jan-98 Jan-97 Jan-96 Jan-95 Jan-94 Jan-93 Jan-92 Jan-91 0.0 Jan-02 World Trade Imports (Advanced Economies) Exports (Emerging Economies) The Usual Suspects Shifting to Lower Gears Monthly Value of Exports or Imports, Selected Traders, 20062011 (Jan 2006=100) 350 325 Japan (Exports) 300 Korea (Exports) 275 Germany (Exports) 250 Canada (Exports) 225 USA (Imports) 200 175 150 125 100 75 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 Jul-07 Apr-07 Jan-07 Oct-06 Jul-06 Apr-06 Jan-06 50 Latin American Traders Shifting to Higher Gear Monthly Value of Exports, Selected Latin American Traders, 2006-2011 (Jan 2006=100) 350 325 Chile (Exports) 300 Peru (Exports) 275 Brazil (Exports) 250 Argentina (Exports) 225 Colombia (Exports) 200 175 150 125 100 75 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 Jul-07 Apr-07 Jan-07 Oct-06 Jul-06 Apr-06 Jan-06 50 The Elephants… Energy and Resources Debt and sovereign defaults Aging & HealthCare Ports and Maritime Shipping in a Paradigm 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) World’s Major Container Ports, 2010 Geography of production and consumption Gateways and intermediary hubs dynamics Gateways and Transshipment Hubs: Different Dynamics Monthly Container Traffic (Jan 2005 =100) Ports and Maritime Shipping in the “Post-Bubble” Period: An Enduring Cognitive Dissonance? Shift in economic geography Financialisation (dumb money) Macroeconomic shifts Changes in shipping network configuration (gateways vs transshipment) Linear inference Paradigm Supply Chain Differentiation: Selective Performance Preferences Costs (38%) Stability of the cost structure. Relation with the cargo being carried. Time (12%) Influence inventory carrying costs and inventory cycle time. Routing options in relation to value / perishability. Reliability (43%) Stability of the distribution schedule. Reliability can mitigate time. Reliability Remains Somewhat Elusive… Schedule Reliability in Container Shipping, 2010 80% 70% Share of Port Calls 60% 50% Total Asia/Europe Transatlantic Transpacific 45.3% 40% 30% 19.3% 20% 0% 9.1% 7.0% 10% 0.4% 1.1% 1.7% -4 -3 -2 -1 0 1 2 5.3% 4.0% 3 4 1.6% 1.5% 1.7% 1.3% 0.5% 0.2% 5 6 Difference from ETA in days (ETA=0) 7 8 9 10 Some Key Issues in Liner Shipping Renewed risk for overcapacity. 18,000 TEU vessels and their ramifications on ports. Slow steaming: using a green argument to hide a green ($) bottom line? Overcapacity absorbing potential is weakening Impact of bunker price evolution and low-sulphur fuel 12,000 6,000 0 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 The Six Flags Index… Baltic Dry Index, Monthly Value, 2000-2012 Enjoy the ride 10,000 8,000 New supply above demand growth 4,000 2,000 The North American East and West Coasts Dominate… Millions … but Growth has Shifted to South America / The Caribbean Million TEUs Panama Canal Expansion: Triangles and Funnels Transshipment Volume and Incidence by Major Ports, 2007-09 Asia – Mediterranean Corridor Caribbean Transshipment Triangle Northern Range East Asia Cluster Transshipment in the Caribbean: From A Triangle to a Funnel 15.6% 16.4% 63.1% Economies of scale involve less tolerance for deviation 4.9% Components of the Logistics Performance Index, Selected Latin American Countries, 2010 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 Emerging Global Maritime Freight Transport System: Changes in Routing and Density?