1. International Congress on Ports in Proximity: Competition, Cooperation and Integration Antwerp / Rotterdam, December 5 – 7 2007 Port Hinterland Divergence along the North American Eastern Seaboard Jean-Paul RODRIGUE Department of Economics & Geography Hofstra University, Hempstead, New York 11549, USA Changqian GUAN Intermodal Transportation & Logistics Program, Department of Marine Transportation, U.S. Merchant Marine Academy, Kings Point, New York, USA

2. Ports in Proximity along the Eastern Seaboard A. Globalization, Trade and Port Divergence in North America B. Cargo Volume Growth and Shipping Services C. Port Regionalization and Potential Port Hinterland Divergence D. Conclusion: From Divergence to Convergence?

3. A. Globalization, Trade and Port Divergence in North America 1. Factors of Port Divergence What are the main processes behind divergence? 2. Containerized Traffic Trends How containerization has evolved along the East Coast in recent years? 3. Traffic Concentration What is the extent of the divergence taking place?

4. 1. Factors of Port Divergence SiteConventional factor (modal access and accessibility). Reinforced by new generations of containerships. Ocean Carriers Choice of port calls and frequency of service. Choice of network structure. Port Operators Choice of asset allocation. Differences in terminal productivity. PolicyPort governance and public funding. Landlord ports and privately developed ports. Shape of private / public partnerships. HinterlandAccess to long distance transport corridors. Access to the regional customer base. Supply Chain Management Production and distribution requirements (scheduling, frequency).

5. 2. Container Volume Handled by Main Maritime Range 88% 95% 46%

6. 2. A Schematic Representation of the Eastern Seaboard St. Lawrence “The Funnel” Direct to the bottleneck: Montreal Upper Range “The Empty Sink” Weak handles: Halifax and Boston Mid Range “The Full Sink” Strong handles: New York and Hampton Roads Lower Range “The Filling Sink” Strong center: Charleston / Savannah Upper Range Mid Range Lower Range St. Lawrence

7. 2. Container Traffic at Eastern Seaboard Ports, 2006 2 nd Tier (Gateways) 3 rd Tier (Regional Gateways) 4 th Tier (Niche ports) Articulation Gateway Divergence Threshold

8. 3. Concentration of Containerized Traffic, 1985- 2006 Diffusion of Containerization Hinterland Effect

9. 3. Concentration of Containerized Traffic, 1985- 2006 (Lorenz Curve) Convergence Divergence

10. B. Cargo Volume Growth and Shipping Services 1. Traffic trend among major East Coast Ports From convergence to divergence? 2. The resurgence of All Water Services What are the underlying factors? 3. Service routes and transit times How Landbridge and All Water Services compare?

11. 1. Change in Container Traffic at Eastern Seaboard Ports 0.77 M TEU 8.36 M TEU 1.31 M TEU +0.04 M TEU +0.28 M TEU +3.02 M TEU +2.01 M TEU 7.19 M TEU

12. 1. Strong Divergence: Montreal and Halifax

13. ConvergenceDivergence Zero-sum game?

14. 1. From Convergence to Divergence: the American East Coast

15. 1. From Convergence to Divergence: the American East Coast (Annual Growth Rates) DivergenceConvergenceDivergence

16. 2. The Resurgence of All Water Services to the East Coast Landbridge Westbound Route Eastbound Route Algeciras Gioia Tauro Jeddah Colombo Singapore Hong Kong Shanghai Pusan Kobe LA/LB Seattle / Vancouver Panama Route “China Effect” West Coast Congestion Landbridge Congestion Growth in the Southeast New Distribution Gateways   

17. 3. Service Routes and Transit Times: Far East to New York +4 +7 +7 +12 +7

18. 3. Service Routes and Transit Times: Far East to Norfolk, Virginia +4 +7 +8 +12 +9

19. 3. Service Routes and Transit Times: Far East to Savannah, Georgia -3 +3 +3 +4 +8 +11

20. 3. The Resurgence of All Water Services to the East Coast Landbridge Westbound Route Eastbound Route Zone of Contestability Equilibrium (indifference) Point New York (1): 75% (2005) 60% (2020) New York (2+3): 25% (2005) 40% (2020) NY Savannah Panama Route New Direct Links 17 (2002) 26 (2007) 1 2 3

21. 3. Service Time Reliability to the EC: All Water Services vs. Transpacific / Landbridge 18 days NY: 22 days Savannah: 21 days Port congestion Offshore transshipment Transloading Unit train assembly Rail congestion Transmodal operations Road congestion Port congestion Offshore transshipment Panama / Suez Delays Transpacific / Landbridge All Water Services

22. 3. Monthly Inbound Traffic, Port of Los Angeles (TEUs)

23. 3. Summary  Supply chain management Landbridge is critical for high value cargo from East Asia due to its short total transit time. The 7 day difference is quite critical.  Inland areas cargo (e.g. Chicago) Landbridge still has an overall advantage.  Hong Kong and Singapore Points of equilibrium between landbridge and all water service has a slight advantage in terms of transit time.  South Atlantic ports All water service is very competitive. South Atlantic ports are in a good position to compete with North-Mid Atlantic ports for hinterland markets.

24. C. Port Regionalization and Potential Port Hinterland Divergence 1. Port Infrastructure Development and Intermodal Services What are the major infrastructure projects? 2. The reemergence of the “hinterland factor” How the maritime / land interface is being modified? 3. Port regionalization strategies How specific gateway ports are improving their regional hinterland access?

25. 1. Port Infrastructure Development and Intermodal Services New York Dredging (50’) On-dock rail PIDN Hampton Roads APM Terminal Craney Island Terminal (2017) Heartland ProjectCharleston New Terminal (2013) Terminal upgrade Dredging (47’)Savannah New berth Improved rail yards

26. 45 Navigation Channel Control Depth (feet) Intermodal Terminal Container Port (proposed) Major Highway Proposed rail tunnel 45 30 37 45 40 43 40 45 40 37 Ambrose Channel Main Ship Channel Raritan Bay Channel Arthur Kill Channel Kill Van Kull Channel Newark Bay Channel Upper Bay Channel Hudson River East River 45 The Narrows Brooklyn Staten Island New Jersey N 2 1 Howland Hook Red Hook South Brooklyn 3 1- Port Newark 2- Port Elizabeth 3- Global Marine Albers Equal-Area Conic Projection 1. Intermodal Facilities and Navigation Channels of the Port of New York, 2006

27. 1. Expressrail Lifts, 1991-2006 and Projections to 2030

28. 2. The Reemergence of the “Hinterland Factor”: Rail Gateways and Metropolitan Freight Centers New York 85% are local cargo 14% is distributed by rail Less than 1% is distributed by water Hampton Roads Over 47% of cargo originates or is destined for locations within Virginia 53% of cargo are hinterland bound

29. 2. The Reemergence of the “Hinterland Factor”: Inland Corridors

30. 2. Heartland Corridor Project, Virginia / Chicago Current Double Stack Route (1,264 miles to Chicago) Heartland Corridor (1,031 miles to Chicago) Virginia Inland Port 28 Tunnels Modified to a 20’ 3” Clearance

31. 3. Port Inland Distribution Network and Freight Clusters

32. D. Conclusion: Challenges and Opportunities of the New Panama Canal (New Panamax – 12,000 TEU) Westbound Route Eastbound Route Algeciras Gioia Tauro Jeddah Colombo Singapore Hong Kong Shanghai Pusan Kobe LA/LB Kingston Panama Suez

33. D. Conclusion: Challenges and Opportunity for Arctic Routes

34. D. Conclusion: From Divergence to Convergence?  There is a divergence favoring a specific number of ports Site: Limited number able to accommodate larger ships. Ocean carriers: Emergence of all water services as a new dimension of standard port calls. Port operators: Allocation of capital investment. Policy: Ongoing privatization, albeit at a slower pace. Hinterland: Development of rail corridors, particularly towards the Chicago hub. Supply chain management: A stronger factor than accounted.