Smart Rivers Conference 14 September 2011

Kevin Knight Economist

Institute for Water Resources U.S. Corps of Engineers 1

Challenges with Evaluating Container Port Projects and the Corps of Engineers

Trends in Containerized Trade Containers on the Inland River System Challenges with Evaluating “Container Gateway Ports” Studies/Products aimed at Reducing the Uncertainties Linkages to the Inland River System

U.S. Navigation System

Presenter

Presentation Notes

Coming back to McLean’s invention, while it is a well established fact that containerization caused a revolution in the world of shipping its introduction did not have an easy passage. Shipping lines, railway (railroad in the US) companies and trade unions vehemently opposed and tried to block the use of containerised ships. It took ten years of legal battles before container ships would be pressed into international service. In 1966, a container liner service from USA to the Dutch city of Rotterdam commenced. Containerization changed not only the face of shipping but it also revolutionised world trade as well. A container ship can be loaded and unloaded in a few hours compared to days in a traditional cargo vessel. This, besides cutting labor costs, has reduced shipping times between points to a great extent, for example it takes a few weeks instead of months for a consignment to be delivered from India to Europe and vice versa. It has also resulted in less breakage due to less handling and there is less danger of cargo shifting during a voyage. As containers are sealed and only open at the destination, pilferage and theft levels have been greatly reduced.

Forecast Total World Container Trade 2000 - 2024

Doubled from 60 million TEUs in 2000 to about 120 million in 2008

Slight decline forecast in 2009

Renewed growth to about 260 million TEUs by 2024

That is down 40 million TEU from earlier forecasts

Source: IHS Global Insight, Inc. Dec 08

Million TEUs

Decline from Previous forecast

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Source: Lloyds Register (2006), “Ultra-large containerships: the green ships of the future?

Pacific Coast

4.5 3.8

14.0

Atlantic Coast

7.4

5.1

17.7

Depth-Constrained Containership Calls in 2020, with and without Planned Harbor Projects (in thousands of ship calls)

Gulf Coast

1.1 1.6 2.5

Construction / Design Funds

Study Funds Under Construction/ Study for Additional Improvements

Authorized – Funds Pending

As of 2009:

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U.S. Waterborne Container Traffic by Port (2009) Rank Port TEUs (Loaded)

1 Los Angeles, CA 4,917,000

2 Long Beach, CA 4,063,000

3 New York/New Jersey 3,761,000

4 Savannah, GA 1,898,000

5 Oakland, CA 1,542,000

6 Norfolk, VA 1,413,000

7 Houston, TX 1,262,000

8 Seattle, WA 1,219,000

9 Tacoma, WA 1,150,000

10 Charleston, SC 941,000

Source: Waterborne Commerce Statistics Center

Containers on the Coastal/Inland System

U.S. domestic COB services began about 30 years ago Initially along Atlantic Coast and Columbia River system in Pacific

Northwest Few major COB services continue today

Columbia Coastal Transport (COB feeder services along Atlantic Coast), vessel capacities of 450 to 912 TEUs—weekly

James River Barge Line “I64 Express” (COB Norfolk-Richmond) - weekly Osprey (Gulf Coast and Inland waterways) Tidewater and Foss (Columbia River/PNW)

Sea Point – (trans-shipment site located at Mile 12 of the Mississippi River at Venice, Louisiana to reach design capacity by 2013)

Columbia-Snake COB (Lewiston, ID to Portland, OR) Illinois-Gulf Marine Highway Initiative

MARAD Marine Highways Program Unveiled in April 2010 18 corridors, 8 named projects and 6 initiatives for more

study Selected based on high freight volume, current truck/rail

congestion, opportunities to improve air quality, and potential for future economic viability

Some Marine Highway Projects James River Expansion Project

Expand frequency of existing COB services between Hampton Roads and Richmond, VA

Gulf-Atlantic Marine Highway Project Support construction of vessels designed to serve COB market,

focus on connecting Gulf and South Atlantic ports Tenn-Tom Freight Project

A new COB service between the Port of Itawamba, MS and the Port of Mobile, AL

East Coast Marine Highway Initiative Use existing and new vessels to provide COB services between

Florida, Maryland and Massachusetts (I-95)

Challenges Associated with Container Port Studies

Panama Canal Expansion Geopolitical Conflict (e.g., near Suez Canal) Global Competition Transhipment Centers Extent of Shipper Behavior Change with a Project

• Multiple Port Calls • Cargo Weight • Empty Containers • Ballast • Vacant Slots • Bunkerage • Vessel Practices (slow steaming) • Trade Routes

Presenter

Presentation Notes

Picture of Debt Crisis…spending gap…Because Corps activities are typically geographically specific in their authorizations and appropriations, Corps funding is part of the debate of Congress on “earmarks”. The

Actions to Reduce Uncertainties & Increase Efficiency Study on Factors which Influence Deployment Guide to Incorporating Risk & Uncertainty in

Container Port Improvement Projects Containership Data and Tools Port Capacity Analysis

Study on Factors which Influence Deployment Analyzed existing container vessel deployment

patterns Identified Specific Deployment Factors:

Customer request Infrastructure (including channel depth) Intermodal connectivity Terminal operations efficiency Port costs Port location Cargo Volume

Guide to Incorporating Uncertainty into Container Port Projects Identifies the key sources of uncertainty and variability

in Various NED Benefits Modeling Components Physical Conditions Commodity Forecasts Fleet Projections Vessel Operating Practices

Provides suggested ways of dealing with uncertainty

Containership Data and Tools

Approach:

Develop the tools and methods to combine available AIS and WCSC data into a the (modified) HarborSym simulation tool.

Develop the ability to identify world wide routes. Conduct empirical studies of vessel operations at ports.

Develop training material and users guides to immediately infuse tools into district studies.

Port Capacity Analysis: Key Questions

What are the near-term and long-term capacities of the major East Coast and Gulf Coast container ports?

What factors constrain the capacities of those ports? How well is capacity currently utilized? How well are the major ports prepared to handle larger

vessels? How do the smaller container ports or terminals fit

into the picture?

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Five Dimensions of Terminal Capacity

DRAFT

BERTH LENGTH

STACKING HEIGHT CY DEPTH (AREA)

OPERATING HOURS

Port Capacity Analysis: Key Findings

Overall, the North Atlantic, South Atlantic, and Gulf ports have substantial inherent capacity for near-term growth.

Most ports can handle larger vessels that the current average; few if any can handle super-post-Panamax vessels.

Growth can be achieved through more intensive use of existing terminals, cranes, and berths.

Reserve capacity is greatest at NYNJ, Charleston, and Savannah, but expansion projects will add terminal capacity elsewhere.

Other Products on the Horizon? Panama Canal Expansion Studies

Toll Structure Analysis Expansion of Port Capacity Analysis Rerouting Cargo/Hinterland Analysis Change in Shipbuilding Practices

Monitoring Manufacturing Centroid

Summary Better understanding of port “gateways” lead to

better decisions over port improvement projects Better predictions of viability and container volume

on inland system Systems approach Acceptability and Transparency

Questions? Kevin Knight Institute for Water Resources US Corps of Engineers 7701 Telegraph Road, Casey Building Alexandria, VA 22315 Ph: 1-703-428-7250 Kevin.P.Knight@usace.army.mil

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