The Trade Growth Challenge Liner Shipping Responses to the Growth of Global Freight

2003 US International Waterborne Trade (X+M): $807.1 Billion 2003 US Containerized Cargo (X+M): $491.2 Billion million TEUs (13.9 Million Import TEUs, 7.4 million Export TEUs ) 1,040 different containerships made 17,250 entrances at US ports Of America’s largest trading partners in containerized cargo, the top 5 are Asian (China, Hong Kong, Japan, Taiwan, and Korea) and 9 of the top 15 are Asian (Thailand, Indonesia, India, Malaysia)

Foreign Port U.S. Port U.S. EXPORTS U.S. IMPORTS INLANDTRANSPORTATIONINLANDTRANSPORTATION INLANDTRANSPORTATIONINLANDTRANSPORTATION CARGO FLOW: Ports are the Key Nodal Points in the Ocean Transportation System Efficient Container Throughput is Critical Investment in Intermodal Infrastructure Helps Prevent Bottlenecks

The Growth Challenge: Strong Trade Growth (Long-term planning and investment) Trends and Other Challenges: Trade Imbalances (equipment repositioning, service pricing ) Security Measures (container integrity, access control, tracking, and providing advance information) Environmental Concerns (air pollution, ballast water, dredging) Freight Infrastructure Development (esp. intermodal connectors) Logistics Service Expansion (value added services) Note: Security measures, and environmental concerns are not “balanced” against strategies to respond to growth (i.e., not treated as a trade-off), but are integrated into the industry’s long-term efforts to ensure adequate, reliable, innovative, and efficient services.

CARGO GROWTH’S IMPACT ON THE OCEAN TRANSPORTATION SYSTEM Equipment Availability: Containers, Chassis Vessels: Number of Strings, Vessel Sizes, Innovation Route Choices: Destination, Time Sensitivity, Risk, Alternatives Terminal Operations: Organization, equipment, land use, environmental impacts Logistics Services: Services and organizational support Inland Transportation: Truck, Rail, Barge Infrastructure Development: Dredging, Intermodal Connectors To meet the strong growth being forecast, individual liner companies will be making strategic decisions with regard to the services they’ll provide, the resources they’ll need, and their investments priorities.

Individual and Collective Responses: Individual Lines [ Market-driven Decisions ] : Strategic Planning, Investment, Pricing -- each company makes its own decisions on plans, priorities, and individual contracts w/shippers. Business Partners [ Co-ordination, Collaboration, Compromise ]: Operational Alliances, Port Authorities, Terminal Operators Trade Lane Organizations [ Information Sharing ]: Discussion Agreements, Conferences – information exchange (expected demand, supply, vessel utilization) to support company-level planning and pricing decisions Industry Trade Association [ Analysis, Advice, Advocacy ]: Legislative and Regulatory Issues – researches issues and presents liner industry positions to Congress and government agencies, generally in coalitions w/port and shipper associations

For Additional Information: General Information: Click on “Industry Info” Security Issues: Click on “Issues of Interest” and then “Port and Maritime Security” Ballast Water and Air Emissions: Click on “Issues of Interest” and then “Environmental Issues” Infrastructure Issues: Click on “Issues of Interest” and then “Maritime Infrastructure” and scroll down to “Statement”