miércoles, 28 de marzo de 2012

New transhipment terminal project in the Caribbean

In the past, the shipping transportation was characterized for using direct call ports where goods were delivered by vessels which originally loaded the cargo from one origin to the destination without shifting the cargo enroute. Since globalization, free trades and open markets opportunities, the shipping industry have evolved and new models of transportation have been proposed.
One of the proposed models is the transhipment or hub and spoke system which consists in the transfer of goods from the origin to the destination using a hub or intermediate point where the cargo pauses and it is handled. However, traditional maritime economists, port and shipping lines have considered container transhipment to be more expensive than direct call services, mainly by virtue of the extra feeder costs and container lift charges involved. Notwithstanding, increase in ship size has affected the decisions as to whether direct call multiport or hub and spoke services schedules assigned due to the technical requirement of new bigger ships.
According to the lecture transhipment can offer substantial operating and capital cost advantages compared with multiport direct call services: the explanation for transhipment advantages relates to diseconomies both at sea and in port associated with multiport styles itineraries, coupled with container handling costs and productivity advantages pertaining to pure transhipment terminals added to enhance feeder ships economies of scale.
One reason for increased interest in hub and spoke networks is the trend towards bigger ships. The major world trades are now dominated by post panamax ships of 4,000 – 6,000 TEU and above. Due to the Panama Canal Expansion project panamax vessels will pass through the canal impacting the global freight distribution.  
While East Asia has been a driver for global economic growth for decades, it is the Chinese economy that has the most deeply impacted the global structure for production and trade. Therefore, US East Coast ports see the expansion of the Panama Canal as an opportunity to increase cargo volume and gather a greater share of the transpacific trade, which was the dominant growth factor in containerized transportation.  
In terms of network configuration, it is a hard decisions for the maritime shipping companies and terminals operators the impact of the Panama Canal. In the Asia-US East Coast route several configurations are possible, ranging from direct point to point calls from Pacific Asia to the usage of transhipment hubs in the Caribbean. According to Rodrigue (2010) in his study “Factors Impacting North American Freight Distribution in view of the Panama Canal Expansion” suggests potential shipping configuration of all-water routes serving the East Coast, post Panama Canal Expansion.
The figure 1 shows two network configurations. In the Direct route the East Coast can be served by three or more different direct services, each focusing on a specific sub range as the North Atlantic, Central Atlantic and South Atlantic / Gulf coast. In the Transhipment route is very similar to Direct route but with the insertion of a transhipment hub where deviation from major shipping lanes is reduced. The regional services become feeder loops with smaller ships but higher frequencies. When the transhipment hub offers a strategic location that significantly reduces mainline vessel deviation time and costs and the small number of routes lead to more efficient transportation use of resources, there is no penalty for vessels. Therefore, the transhipment option is better than the direct call to serve US East Coast because of the connectivity and the feeder routes established. 

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Figure 1. Two network configurations; Direct and Transhipment


The figure 1 shows two network configurations. In the Direct route the East Coast can be served by three or more different direct services, each focusing on a specific sub range as the North Atlantic, Central Atlantic and South Atlantic / Gulf coast. In the Transhipment route is very similar to Direct route but with the insertion of a transhipment hub where deviation from major shipping lanes is reduced. The regional services become feeder loops with smaller ships but higher frequencies. When the transhipment hub offers a strategic location that significantly reduces mainline vessel deviation time and costs and the small number of routes lead to more efficient transportation use of resources, there is no penalty for vessels. Therefore, the transhipment option is better than the direct call to serve US East Coast because of the connectivity and the feeder routes established. 

Logistics Services Platform in the Panama Canal


INTRODUCTION
Just as the shipping industry experience a similar evolution of world economic, the dynamic of global supply chain is also influenced by natural disasters, political unrest, higher oil prices, global energy insecurity and economic downturn that redesign its distribution networks[1].
On the other hand, The Panama Canal is an important passageway for containership and bulk freight as they move cargo between The Atlantic and The Pacific oceans and has always been an integral part of the global supply chain.
SCENARIOS
1.      Financial crisis: Financial crisis has reinforced a shift in the world flow trade, influencing from North and West to South and East routes, due to the emerging of developing economies and their corresponding transition to a new economic status that are the new variables which redesign the supply chain and alter the shipping industry´s landscape.
2.      Panama Canal Expansion: The Panama Canal Expansion Plan was developed in a period before the 2008-2009 Financial Crisis and global economic downturn, taking for granted continuous  growth  container movement  as a pillar for the success of the project and with some busiest routes such as East Cost US – Asia and West Cost US – EU in the general cargo segment. But as noticed in the figure 1, the Financial Crisis hit the container traffic through the Panama Canal diminishing from 13 million TEU (2007) to 11.9 million TEU (2009) although it maintained a growth in toll revenue in the same period (see figure 2).  
3.      Bulk cargo: South America is an important exporter of all four major bulk commodities entering ocean trade such as Brazil (crude oil, LNG, iron ore), Colombia (Coal), Chile, Peru and Argentina (LNG).[2] In this segment, Panama Canal has a growing potential due to the discovery of new oil reserves detected Brazil for instance and permanent routes from East Cost US to Asia.
4.      Emerging Markets: Growing urbanization in enormous emerging developing countries such as China and India, that import large quantities of iron ore and coking coal a result of the gradual transition of this economies from export driven economies to consumer driven economies, with their concomitant consumption needs and their shift towards the consumption of more diversified foods (meat and related products), drives the huge grain shipments as a feedstock from abroad. According to UNCTAD 2011, one study finds that China will dominate global trade in 2030 creating three key routes: (a) Intra-Asia-Pacific trade, developed-developing region trade (e.g. China and Germany);  (b) intra-emerging economies trade (e.g. China- Latin America); and (c) China-Africa trade.   However, China’s wages are rising as well as manpower costs making the total landed costs less attractive for foreign investors looking to outsource their production making them go to lower cost countries for their activities. A trend towards moving manufacturing activities closer to the Western markets is to be expected within the next few years not only due to the cost but for the risks associated with having such a long supply chain and exteneded lead times.    
LOGISTICS SERVICES PLATFORM
These scenarios indicate that the container segment the Panama Canal expected, will not reach the projected container market. On the other hand, with large emerging economies such as the BRIC (Brazil, Russian, Indian and China) being the main engine of growth and trade expansion, there will be a new shift in the maritime seaborne trade that could decrease the passage of ships due to the concentration of trade in the Asia-Pacific region.
But as Panama plays an important role in the global supply chain, The Hub for the Americas could offer lowest logistics costs in the region. Gartner[3] (2012) projects that by 2014, 20% of Asia-sourced finished goods and assemblies consumed in the US will shift to the Americas, which of course can mean Mexico, Honduras, Costa Rica and other nearby sourcing locations. The reason is because most companies underestimated the true total cost of long supply chains offshored to Asia, miscalculating inventory costs, greater issues with product quality, lost sales due to long lead times, theft and more.
This opportunity represents for The Panama Canal the chance to generate and recover profits through the diversification of business activities, not only focused in the transfer of ship but also to provide added value to the cargo with a Logistic Activity Zone, taking advantage of spacious areas close to Balboa´s Maritime Terminal for instance (see figure 3), reducing the transport cost, lead time because proximity to the port and also close to the demand (US Market).   
Figure 3
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Figure 2
ACP1
Figure 1

ACP2


References
[1] UNCTAD Review of Maritime Transport 2011.
[2] Fleming, D. (2002). Patterns of international ocean trade.
[3] Gartner is an information technology research and advisory company headquartered in Stamford, Connecticut, United States.