1. Canada’s Asia-pacific Gateway and Corridor Initiative Workshop “Towards a Value-Added Strategy” Transport Canada Vancouver, British Columbia, June 13 2008 Hanging by a Thread? Transportation Challenges to the Efficiency of Global Value Chains Jean-Paul Rodrigue Associate Professor, Dept. of Economics & Geography, Hofstra University, New York, USA Van Horne Researcher in Transportation and Logistics, University of Calgary, Alberta, Canada

2. A Paradigm Shift in the Making for Global Value Chains 2 Hanging by a Thread: 1) Value Chain Debasement 2) Intermodal Transportation: Added Value or Inefficiency Costs? 3) The Action Takes Place at the Margin 4) The Third Oil Shock Halterm Terminal, Halifax

3. Commodity Chain Debasement; Where Value Comes From? Commodity chain Added value Low High Manufacturing R&D Globalization Design Branding Marketing Sales / Service Concept Logistics Distribution Economies of scale Efficiency improvements Supply chain competition

4. An Understatement: Containerization and Global Value Chains Container Production Distribution Transport Modes, terminals, intermodal and transmodal operations Flow management (time-based), warehousing unit Synchronization of inputs and outputs (batches) Trimodal Container Terminal, Willebroek, Belgium

5. Infrastructures, Networks and Value: Mitigating Inefficiencies Port Terminals Rail Terminals Distribution Centers Container sea terminal Offshore hub Barge terminal On-dock and near dock Satellite terminal Load center Transmodal terminal Transloading Cross-docking Warehousing

6. Container Transloading: Basic Value Chain for West Coast Gateways CauseOutcome Weight compliance Transferring the contents of heavy containers into loads meeting national or regional road weight limits. Palletizing Placing loose (floor loaded) containerized cargo unto pallets. Adapting to local load units (e.g. europallet). Demurrage Handing back containers to owner (maritime shipping or leasing company) by transferring its contents into another load unit (e.g. domestic container). Consolidation Transferring the contents of smaller containers into larger containers (e.g. three maritime 40 foot containers into two 53 foot domestic containers). Cost savings (number of lifts). Equipment availability Making maritime containers available for exports and domestic containers available for imports. Trade facilitation.

7. The Importance of the Margin… Core(Operations) Infrastructure Modal access (dock, siding, road), unloading areas Equipment Intermodal lifting equipment, storing equipment Storage Yard for empty and loaded containers Management Administration, maintenance, access (gates), information systems Ancillary (Added Value) Trade facilitation Free trade zone, logistical services Distribution centers Transloading, cross-docking, warehousing, light manufacturing, temperature controlled facilities (cold chain) Storage depot Container depot, bulk storage Container services Washing, preparation, repair

8. Knitting Value Chains at the Margin: Terminalization 8 Suppliers Gateway Offshore Hub Customers Extended Distribution Center Bottleneck-derived terminalization Buffer-derived terminalization ForelandHinterland DC Distribution center Inland containerized goods flow Inland non-containerized goods flow Maritime container flow Extended Gate Port regionalization and the creation of a Regional Load Center Network Inland Terminal Gateway

9. Deer in the Headlights; A Third Oil Shock Gold Standard First Oil Shock Second Oil Shock Third Oil Shock

10. Deer in the Headlights: Potential Impacts of The Third Oil Shock on Global Value Chains Price Supply chain propagation Modal shift Gateway / Hub selection Usage level Service area changes Network configuration P Q Price A/B P Q(A/B) A B Range R(B) 1 2 B A Rail Road Raw Materials Distribution Centers Retailers Manufacturing Cost