Canada’s Asia-pacific Gateway and Corridor Initiative Workshop
“Towards a Value-Added Strategy” Transport Canada
Vancouver, British Columbia, June 13 2008
Hanging by a Thread?
Transportation Challenges to the
Efficiency of Global Value Chains
Jean-Paul Rodrigue
Associate Professor, Dept. of Economics &
Geography, Hofstra University, New York,
USA
Van Horne Researcher in Transportation and
Logistics, University of Calgary, Alberta,
Canada
A Paradigm Shift in the Making for Global Value
Chains
Hanging by a Thread:
1) Value Chain Debasement
2) Intermodal Transportation: Added Value or
Inefficiency Costs?
3) The Action Takes Place at the Margin
4) The Third Oil Shock
2
Halterm Terminal, Halifax
Commodity Chain Debasement; Where Value Comes
From?
High
Added value
R&D
Low
Globalization
Sales / Service
Marketing
Branding
Design
Concept
Manufacturing
Economies of scale
Distribution Efficiency improvements
Supply chain competition
Logistics
Commodity chain
An Understatement: Containerization and Global
Value Chains
Synchronization of inputs and
outputs (batches)
Flow management (time-based),
warehousing unit
Production
Distribution
Container
Transport
Modes, terminals, intermodal and
transmodal operations
Trimodal Container Terminal, Willebroek, Belgium
Infrastructures, Networks and Value: Mitigating
Inefficiencies
Port Terminals
Container sea terminal
Rail Terminals
On-dock and near dock
Distribution
Centers
Transloading
Offshore hub
Transmodal
terminal
Load center
Cross-docking
Barge terminal
Satellite
terminal
Warehousing
Container Transloading: Basic Value Chain for West
Coast Gateways
Cause
Outcome
Weight compliance
Transferring the contents of heavy containers into loads
meeting national or regional road weight limits.
Palletizing
Placing loose (floor loaded) containerized cargo unto pallets.
Adapting to local load units (e.g. europallet).
Demurrage
Handing back containers to owner (maritime shipping or
leasing company) by transferring its contents into another load
unit (e.g. domestic container).
Consolidation
Transferring the contents of smaller containers into larger
containers (e.g. three maritime 40 foot containers into two 53
foot domestic containers). Cost savings (number of lifts).
Equipment availability
Making maritime containers available for exports and domestic
containers available for imports. Trade facilitation.
The Importance of the Margin…
Infrastructure
Equipment
Core
(Operations) Storage
Ancillary
(Added
Value)
Modal access (dock, siding, road), unloading
areas
Intermodal lifting equipment, storing equipment
Yard for empty and loaded containers
Management
Administration, maintenance, access (gates),
information systems
Trade facilitation
Free trade zone, logistical services
Distribution
centers
Transloading, cross-docking, warehousing, light
manufacturing, temperature controlled facilities
(cold chain)
Storage depot
Container depot, bulk storage
Container
services
Washing, preparation, repair
Knitting Value Chains at the Margin: Terminalization
Hinterland
Suppliers
DC
DC
Customers
Foreland
Extended Gate
Extended Distribution Center
Bottleneck-derived terminalization
Buffer-derived terminalization
Port regionalization and the creation
of a Regional Load Center Network
Distribution center
Inland containerized goods flow
Inland non-containerized goods flow
Maritime container flow
8
Deer in the Headlights; A Third Oil Shock
West Texas Intermediate, Monthly Nominal Spot Oil Price (1946-2008)
140
120
Third Oil Shock
100
80
60
Second Oil Shock
40
20
First Oil Shock
Gold Standard
Jan-06
Jan-03
Jan-00
Jan-97
Jan-94
Jan-91
Jan-88
Jan-85
Jan-82
Jan-79
Jan-76
Jan-73
Jan-70
Jan-67
Jan-64
Jan-61
Jan-58
Jan-55
Jan-52
Jan-49
Jan-46
0
Deer in the Headlights: Potential Impacts of The
Third Oil Shock on Global Value Chains
Usage level
Modal shift
P
Q
A/B
P
Q(A/B)
Price
Service area changes
Price
Gateway / Hub selection
B
R(B)
Cost
A
A
B
2
1
Range
Network configuration
Supply chain propagation
Rail
Road
Raw
Materials
Manufacturing
Distribution
Centers
Retailers