1. International Workshop on New Generation Port Cities and Global Supply Chains The University of Hong Kong, 12-14 December 2005 New Port-Hinterland Relationships: Experiences from North America Jean-Paul Rodrigue, Hofstra University, New York Email: ecojpr@hofstra.edu Paper available at: http://people.hofstra.edu/faculty/Jean-paul_Rodrigue

2. Integration Forces Shaping Hinterlands Geographical IntegrationFunctional Integration Spatial fragmentation of production and consumption. Exploitation of comparative advantages. Logistics & SCM. Integration between maritime and inland transport systems. S M D Origin / Destination Relationships D SM 123 123 SMD SMD Supply / Demand Relationships Information Flows Physical Flows SupplyingManufacturingDistribution Global Production Networks

3. A “New” Geography of Port Hinterlands: The Three Hinterlands of Port Regionalization ■Phase of port regionalization Expansion of the hinterland through inland freight transportation strategies. Port development at a higher geographical scale. ■Macro-economic hinterland Which factors shape transport demand? ■Physical hinterland What is the transport supply from a modal and intermodal perspective? ■Logistical hinterland How flows are organized considering the macro-economic and physical hinterlands?

4. The New Port Hinterlands: The “Regionalized Port” Consumption Production Terminal / DC Link (mode) Interest rates, exchange rates, prices, savings, production, debt Trade Balanced flows Imbalanced flows

5. Types of Hinterland Macro-economicPhysicalLogistical ConceptTransport demandTransport supplyFlows ElementsLogistical sites (production and consumption) as part of GPNs Transport links and terminals Mode, Timing, punctuality and frequency of services ChallengeInternational division of production and consumption Additional capacity (modal and intermodal) Supply chain management

6. The New Port Hinterlands ■Macro-economic port regionalization in North America Tremendous growth in transport demand. Shifting comparative advantages; less production but more consumption. De-industrialization, relocation and re-industrialization: The automotive industry is collapsing (GM, Ford, Delphi, etc). Platform companies; emerging organizational/logistical structure. Artificially induced demand; financial leverage; asset inflation and debt.

7. The “Perpetual Motion” Machine: The Real Dynamics behind the World’s Most Significant Trade Relationship Goods Bonds (IOUs) Asset Inflation Debt Reserves Interest Rates Unemployment $ for goods $ for bonds United States China USD Borrowing Investment

8. World’s 10 Largest Exporters and Importers, 2004

9. Containerized Cargo Flows along Major Trade Routes, 2000-2004 (in million TEUs)

10. The Physical Hinterland ■Physical port regionalization in North America Capacity demands from long distance trade. Port ranges; lateral corridors of port competition / cooperation. Gateways; logistical platforms. Inland freight corridors.

11. Traffic at the 50 Largest Container Ports, 2003

12. Traffic at Major North American Container Ports, 2003

13. Cargo Handled by the Top 5 US Container Ports, 1984- 2004 (in TEUs) Deconcentration Regionalization

14. Major Modal US Gateways, 2003

15. The Three Main Gateways of North America Gateway System GatewaysTotal share (%) Imports / Exports ($ billions) 2003 Southern California Port of Los Angeles, Port of Long Beach, Los Angeles International Airport, Otay Mesa (Port of Entry) 15.2226.574.8 New York / New Jersey JFK International Airport, Port of New York / New Jersey 10.7142.270.9 DetroitDetroit (Port of Entry), Huron (Port of Entry) 8.386.977.2

16. Trucking Corridors and Major Metropolitan Freight Centers (more than 3,000 trucks per day)

17. Major Road Traffic Bottlenecks

18. Number of North American Ports by Channel Depth (feet)

19. The Logistical Hinterland ■Logistical port regionalization in North America Empty containers repositioning; coping with imbalances. Modal shift; coping with congestion and costs. Corridor flows; coping with the existing spatial structure along the Boston – Washington corridor.

20. The Logistical Hinterland ■Causes of the empty containers problem Global trade imbalances: A worsening of these imbalances in the US. Imbalances above 8.6 million TEU per year. 150,000 TEU per week. Repositioning costs: From surplus to deficit areas. East Coast to Asia: about $1,200 per TEU (2004). Manufacturing and leasing costs: Comparative differences. Used to be about $1,300 per TEU (2004). Recent increase to about $2,000 per TEU.

21. Container Repositioning Scales Repositioning Distance (TEU – KM) Repositioning Costs Local Regional International Container manufacturing cost Reshuffling Storage depots High imbalance Low imbalance Gateways as reverse logistics centers

22. Containers Handled by the Port of New York, 2001-2004

23. The Logistical Hinterland ■Inertia in modal shift Does not occur as fast as expected. Transport economics hint at a gradual process. Reasons for inertia: Accumulated investments / stakes in modes and terminals. Management preferences. Proven reliability. ■North American hinterlands and modal shift Particularly takes place at the fringe. A port competition through regional modal cooperation.

24. Maturity Shift Inertia Principles of Modal Shift Modal Share (A/B) Time Comparative Advantages Real Modal Share Expected Modal Share Underperformance Over performance

25. Costs of Shipping a 40 foot Container to New York: Towards a $100 per Barrel Logistics?

26. Some Short Sea Shipping Systems in North America East Coast Port Inland Distribution Network (New York, Boston, Albany). Columbia Coastal; Several East Coast ports linked, new Philadelphia – Baltimore container barge service. Great Lakes Detroit-Windsor Truck Ferry. Rochester-Toronto Fast Ferry. Gulf Coast Teco Ocean Shipping; bulk commodities. Osprey Lines; container-on-barge services in Texas, Mississippi River service (Baton Rouge to New Orleans). West Coast Totem Ocean Trailer Express (Ro/Ro), Horizon Lines and Lynden Transport (Alaska and Washington).

27. The Boston / Washington Port Hinterland

28. Conclusion ■What’s next for North American hinterlands? Anticipated growth of freight flows: Both in tons and tons-km. Additional demands on the capacity of modes and terminals to handle them. Unlikely to take place. Imbalanced freight flows: Disequilibrium in the division of labor, trade, production and consumption. Short/medium term: additional pressures to manage the disequilibrium (e.g. empties). Long term: rebalancing the flows and the hinterlands. Regionalization of hinterlands: Ports adapting to the freight flows reality. Attempt at re-balancing by offering a wider hinterland range.

29. The Northern East-West Freight Corridor