1. Pacific Northwest Economic Region (PNWER) 22nd Annual Summit, Saskatoon, Canada, July 15-19 2012 The Containerization of Commodities: Integrating Inland Ports with Gateways and Corridors in Western Canada Jean-Paul Rodrigue Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA Van Horne Researcher in Transportation and Logistics, University of Calgary, Canada

2. Canadian National Railway Canadian Pacific Railway CentrePort Canada Global Transportation Hub Authority Government of Alberta Government of British Columbia Port Alberta Rocky View County http://www.vanhorne.info/Sponsors

3. An Expected Shift in Containerization Growth Factors Derived Economic and income growth Globalization (outsourcing) Fragmentation of production and consumption Substitution Functional and geographical diffusion New niches (commodities and cold chain) Capture of bulk and break-bulk markets Incidental Trade imbalances Repositioning of empty containers Induced Transshipment (hub, relay and interlining)

4. Growth Factors behind the Containerization of Commodities Growing availability of containers Rising demand and commodity prices Fluctuations in bulk shipping rates Imbalances in container shipping rates (export subsidy) Empty containers repositioning

5. IMF All Commodity Index and Average Container Shipping Rates, 2000-2010 (2000=100)

6. The Inland Logistics Funnel: The “Last Mile” in Freight Distribution CapacityFunnelFrequencyFunnel Capacity Gap Economies of scale Frequency Gap FORELAND HINTERLAND Main Shipping Lane Inland Terminal INTERMEDIATE HUB GATEWAY

7. Market Accessibility of Major North American Inland Load Centres

8. Trade Corridors and Inland Load Centers, Western Canada

9. Western Canadian Intermodal Rail System

10. Main Carriers' Operational Constraints Imbalanced trade flows and rates Higher inland freight rates Location and load mismatch Contract terms (volatility) Container weight limitations Slow steaming and schedule reliability

11. Asymmetries between Import and Export-Based Containerized Logistics Many Customers Function of population density. Geographical spread. Incites transloading. High priority (value, timeliness). Few Suppliers Function of resource density. Geographical concentration. Lower priority. Depends on repositioning opportunities. Gateway Inland Terminal DistributionCenter Customer Supplier Repositioning Import-Based Export-Based

12. Containerized Weight for Selected Commodities CommodityPounds per cubic footWeight in a fully loaded 20 foot container Wheat4826 tons* (28 tons) Corn4526 tons Dry peas, beans and lentils 3722 tons Vegetable oil (e.g. canola)6026 tons* (35 tons) Coffee (fresh beans)3521 tons Lumber (2x4s)4526 tons Hay (e.g. alfalfa)148 tons Potash8026 tons* (46 tons) Coal (Anthracite)7026 tons* (41 tons) Paper or wood pulp7526 tons* (44 tons) * Exceeds maximum permissible weight.

13. Rationale of Container Transloading Consolidation Weight compliance Demurrage charges Equipment availability Supply chain management

14. Containerized Imports, Port of Vancouver, 2008- 2011 (in metric tons)

15. Containerized Exports, Port of Vancouver, 2008- 2011 (in metric tons)

16. Containers Handled by the Port of Prince Rupert, 2007-2011 (in TEU)

17. Price of Selected Commodities on Global Markets, 1991-2012 (Jan 2000=100)

18. Monthly Softwood Lumber Shipments to China, 2007-2012

19. From Bulk to Containers: Breaking Economies of Scale Container as an independent load unit. Minimal load unit; one TEU container. Entry Barriers Limited differences in scale economies for a producer. Incremental / linear cost-volume function. Required Volumes New producers (smaller). Product differentiation (more variety). Market Potential

20. Trade and Transactional Facilitation: Functional Pairing of Inland Ports Hinterland Foreland Gateway Corridor Functional Pairing Inland Port

21. Conclusion: Inland Ports as Logistical Platforms for the Containerization of Commodities The last mile remains salient (Gateway gap + inland massification) Co-location as an effective value proposition (inbound / outbound logistics) Promotion of exports and functional pairing of inland ports Look at specific commodity chains (e.g. reefers)