Real Estate Logistic Forum Keynote Address

8/1/2019 Real Estate Logistic Forum Keynote Address

1/36

Global Logistics Trends

Real Estate Logistics Forum

Journal of Commerce

June 11, 2007

Curtis Spencer, President

IMS Worldwide Inc.


2/36

The Impact of Global Trade on

Logistics and Distribution China

Global Supply Chains

Ports, Inland Ports

The Logistics Process

Security, Visibility, Predictability Impact on the Real Estate Industry


3/36

Provide information to support the

thesis that overseas trade is

leading to supply chainreconfiguration thus driving port

and inland port real estatedevelopments and opportunities.

Our Discussion Focus


4/36

What is equilibrium in the

International Supply Chain? The Global Supply Chain:

Seeks lower labor content, which

Extends the logistics chain, which

Creates less predictable supplychains, which

Drives demand for MORE inventorythrough MORE ports to MORE DCs

in more locations.


5/36

Typical Global Supply Chain

Very

Complex

Anjo City, Japan

Transmissions areloaded into containers

Container sealed

Transmissions convoyto the Port of Nagoya

Inland Dray Port of Departure

Container moves fromPort of Nagoya to Port ofSeattle

Ocean

Containers are unloadedat APL terminal

Port of Seattle

Drayed (in-bond) viatrucking company toVancouver, Canada

Truck

Containers aretransferred to CanadianNational Railroad (CN)

Vancouver, Canada

Container storage atPort of Nagoya

Inland Dray

Containers are shuttledin a just-in-time and in-sequence process to theGeneral Motors plant

GM Factory CA

CN

Toronto, Canada

Containers areunloaded at a railheadat Toronto, Canada

Containers are drayedfrom railhead to GMinventory yard

Truck

CN

Rail

Containers are drayedvia rail fromVancouver toToronto, Canada

Origin Factory

PackagingStuffing

Consolidation Port of Departure

Container moves fromport to port to dischargeport in US

Ocean

Containers unloaded, outgate process and visibilityat arriving terminal

Port of Discharge Port of Arrival

Drayed (in-bond) fromterminal to rail or direct tofactory

Truck

Containers aretransferred to rail, ingate visibility

Inland Rail

Containers, sealremoved, unloaded,products moved tofactory

Warehouse DCDestination Terminal

Containers areunloaded, out gatedvisibility and status

Containers are drayedfrom rail to factory, DC,Known Partner

TruckRail

Rail transit andvisibility, arrival

Containers are loaded atthe terminal

Gate in Process andvisibility at Terminal

Transfer Custodian fromfactory to terminal,Known Partner

Inspect, StuffingSeal Controls

Containers are moved totruck


6/36

Real Estate Professionals

To be successful in todayscompetitive logistics market, it is

imperative to be situated in frontof new supply chain destinations

that are emerging with land,buildings, and infrastructure.

K i h h i


7/36

Knowing where the containersare coming into the Ports

wont help us..

Until we know where they are going toSTOP!

The real value prop in all of this

logistics business, is in knowing wherethe goods will get off the globalconveyor belt and put into aBUILDING!

But first, lets take a look at China Trade

2006 Chi A


8/36

Total fixedassets up

24% in 2006

Urban areasup 24.5%

Rural areasup 23% Eastern areainvestmentup 19.3%

Western areainvestments up25.5%

Northeastern areainvestment up36.2%

Investment in Real Estate and Development Up 21.8%

2006 China AssetInvestments

Central areainvestment up30.6%


9/36

China Ports Expansion China will need 25 -30 new container

berths each year. Port of Shenzen - adding 3 new

berths each year for the next 5 years.

Pearl River Ports new 15 millionTEU capacity being added between

now and 2009.


10/36

Shanghai International Shipping CenterYangshan Deep Port & Logistics Park

By 2020, capacity willreach 15 20 Million

TEUs at 50 Berths.

Yangshan... It willbe like building

two ports (thesize) of New Yorkover the course of

three years


11/36

Shanghai International Shipping CenterYangshan Deep Port & Logistics Park

Barge operators now movingcontainers from the interiordirectly to Yangshan via theYangtze River using sea goingbarges.


12/36

China Inland Waterways Chinas inland Chicago - Wuhan

Confluence of the Yangtze and Chongqing RiversIntersection of two of Chinas most important rail

lines Beijing-Kowllon and Shanghai-Chengdu

Wuhan also receives barge traffic from feederbarges on two rivers, the Xiangjiang and Han


13/36

China Rail Expansion

Urumqi

Lanzhou

Chengdu

Kunming

Chongqing

Xian

Wuhan

Zhengzhou

Guangzhou

Shenzhen

Ningbo

Beijing

Tianjing

Shanghai

Qingdao

Dalian

Shenyang

Haerbin

Formed in 2003, China

Railway ContainerTransport Company

(CRCTC) created a systemof 18 major rail hubs and 40mid-sized stations at ports

and inland economiccenters MOR Objective: 62,000 Miles

of Intermodal Rail by 2020


14/36

China to Complete Road Network in 2007

China Spent $1.23 Billion US Dollars between 2001 and 2005 tocomplete half of its national expressway system, a network thatwill eventually surpass that of the U.S.

20,000 miles have already been built with almost 2,500 milesbeing added annually the equivalent of a four-lane U.S. Interstatefrom New York City to Phoenix every year.


15/36

China Trade Impact In 1995, no major liner services called at a

mainland China port. Today, every majorliner service has calls at multiple Chinaports

The number of containers handled atChinas mainland ports has grown 27%ANNUALLY between 1999 and 2004,

Currently at 62 million TEUs/Year

By 2008, Greater China global

throughput will be near 34%


16/36

STRONG GROWTH CONTINUES

Port Capacity China Imports

2005 WORLD RANKING


17/36

RANK PORT COUNTRY TEUs

1 Singapore Singapore 23,192

2 Hong Kong China 22,427

3 Shanghai China 18,084

4 Shenzhen China 16,197

5 Busan South Korea 11,843

6 Kaohsiung Taiwan 9,471

7 Rotterdam Netherlands 9,287

8 Hamburg Germany 8,0889 Dubai United Arab Emirates 7,619

10 Los Angeles United States 7,485

11 Long Beach United States 6,710

12 Antwerp Belgium 6,482

13 Qingdao China 6,307

14 Port Klang Malaysia 5,544

15 Ningbo China 5,208

16 Tianjin China 4,801

17 New York/New Jersey United States 4,785

18 Guangzhou China 4,685

19 Tanjung Pelepas Indonesia 4,17720 Laem Chabang Thailand 3,834

21 Bremen/Bremerhaven Germany 3,736

22 Tokyo Japan 3,593

23 Xiamen China 3,342

24 Tanjung Priok Indonesia 3,282

25 Algeciras Spain 3,180

005 O G

Sources: Shipping Statistics Yearbook 2006; Containerisation International Yearbook

2007;U.S. Army Corps of Engineers, Waterborne Commerce of the United States CY 2005;

AAPA Surveys; various port authority internet sites.

CONTAINER TRAFFIC (TEUs, 000s)


18/36

Expected Growth in Million TEU

Por tCargo

Vol u m e

Ex pect ed Gr ow t h

5 %Gr ow t h

7 %Gr ow t h

9 %Gr ow t h

2 0 0 5 2 0 1 0 2 0 1 5 2 0 2 0 2 0 2 0 2 0 2 0

Los An geles 7.30 9.32 11.89 15.18 20.14 26.59

Long Beach 6.70 8.55 10.91 13.93 18.49 24.40

Seat t l e 2.09 2.67 3.4 4.34 5.77 7.61

Taco m a 2.09 2.67 3.4 4.34 5.77 7.61

NY/ NJ 4.80 6.13 7.82 9.98 13.24 17.48

Savannah1.90 2.42 3.09 3.95 5.24 6.92

Oak land 2.27 2.9 3.7 4.72 6.26 8.27

Vi rg i n i a 1.98 2.53 3.23 4.12 5.46 7.21

Char les ton 1.98 2.53 3.23 4.12 5.46 7.21

Hous ton 1.58 2.02 2.57 3.28 4.36 5.76

Tota l 3 2 .6 9 4 1 .7 4 5 3 .2 4 6 7 .9 6 9 0 .1 9 1 1 9 .0 6


19/36

Global Trade Routes to the USAGlobal Trade Routes to the USA

Hong Kong, China

Singapore

Prince Rupert, Canada

Savannah

NorfolkNew York

Los Angeles

Lazaro Cardenas MX

Punto Colonet MX

North China Ports

Emerging New Mexican Intermodal


20/36

Emerging New Mexican IntermodalGateways & Corridors Nearly 4 Million TEUs

Lazaro Cardenas

Phase I - 700K TEUFut. Phase - 2.0 mil TEU

Lazaro Cardenas

Phase I - 700K TEUFut. Phase - 2.0 mil TEU

Punta Colonet1 mil TEU Throughput

Punta Colonet1 mil TEU Throughput

Guaymus1.0 mil TEU

Guaymus1.0 mil TEU

THE NEWTHE NEW NAFTANAFTA RailRoad (aka Kansas Cit y S )RailRoad (aka Kansas Cit y S )


21/36

VERACRUZVERACRUZ

LAZARO CARDENASLAZARO CARDENAS

ENSENADAENSENADA

LOS ANGELESLOS ANGELES

SAN FRANCISCOSAN FRANCISCO

THE NEWTHE NEW NAFTANAFTA RailRoad (aka Kansas Cit y S.)RailRoad (aka Kansas Cit y S.)

ALTAMIRAALTAMIRA


22/36


23/36

Container Ship EvolutionCONTAI NER SHIP SIZES

AND PORT REQUIREMENTS


24/36


25/36

All Water USEC

USEC service providesalternative destinationspending USWC laborcontract outcome

Carriers all seek toaggregate volumes toports and inland

destinations to improveefficiency.

ALREADY a $200 price

difference PER FEU, on all-water EC deliveries to inlandports.

East Coast ports are beneficiaries of USWC inland intermodal rateincreases.

New expedited Panama service makes all water EC competitive.


26/36

Suez Canal


27/36

U.S. Ports- Summary East Coast/Gulf Coast Ports growing at

12-15%

West Coast Ports Growing at:So-Cal = 8-10%

PNW = 4%No-Cal = 2%

Punto Colonet, up in 2014 @ 2-4 Million

TEU Lazaro Cardenas, Phase 2 in 2010, @ 2

Milllion TEUs

Prince Rupert, up in 2009 @ .5MillionTEUs growing to 2 Million by 2012


28/36

Inland Load Centers Inland Load Centers (aka intermodal

terminals) are going to continue togrow, diversify and expand

East Coast RRs are getting on board Strategic Alliances with WC and ECRailroads.

More use of intermodal rail, not less.

Long-Haul Trucking will use rail more

as well (Domestic Intermodal)


29/36

Inland Load Centers, contd

What happened to rail-served bldgs?

New Paradigm for Inland Load Centers (akaRail-Served Logistics Centers)

RRs want to aggregate users of boxcar,

bulk cars, etc, just like they aggregatecontainers into one location.

New RSLCs will be springing up in keyregional locations so that the newminimums (rail served requirements for

service) can be met in aggregate.

H tt t NEW I l d P tHottest NEW Inland Ports


30/36

Hottest NEW Inland PortsHottest NEW Inland Ports

INLAND EMPIRE

7.5 MM TEUs

DALLAS

2 MM TEUs

COLUMBUS

3 MM TEUs

KANSAS CITY

1 MM TEUs Front Royal

2 MM TEUs

CHICAGO

4 MM TEUs

MEMPHIS

3 MM TEUs

HARRISBURG

1.5 MM TEUs


31/36

What makes and Inland Port?

Demographics inherent in the

location and 50Million+ population in1 Truck-day (500 miles).

Great Highway infrastructure.

Where the RRs wanna go! Where shippers already have a DC

presence/marketplace. Easy access to 1,000+ acres (rail

and highway access)

$100+ Million!

Supply Chain Network


32/36

Supply Chain Network

Capacity Key deliverables for global networks:

Predictability, flexibility Door to door services, 3PL role in supply

chainCarriers, integrators, forwarders

Network CapacityMaximum flow of containers from an

origin to consignees final destinationconstrained by the node or link withthe smallest amount of capacity whileretaining predictability

Security Visibility


33/36

Security, Visibility,

Predictability Supply Chain Security is part of the

importers compliance requirements,across all custodians in their globalsupply chains

Visibility is being enhanced by usingsystems to link disparate partners inthe supply chain in order to see thefreight + manage/reduce/mitigate risk.

Predictability is the new deliverable for

third party and IT systems providers


34/36

The Take-Away..

LOGISTICS = A Value Propositionthat Real Estate can no longer

ignore or lower its priorityThe value propositions in logisticsbeat rent-differentials (in samequality, same location) EVERY TIME

Keep an eye on:

Port Congestion

New Gateway Markets

Intermodal TerminalExpansions

Trucking (drayage) costs

Conclusion
http://www.cbp.gov/ImageCache/cgov/content/newsroom/photogallery/inspectors_5fseaports/highresimage/cs_5fphoto01_5fhires_2ejpg/v1/cs_5fphoto01_5fhires.jpg


35/36

Conclusion

Security risks, congestion, delays cannot becompletely prevented, thus creating uncertainty!

To be successful in todays competitive logisticsmarket, it is imperative to be situated in front of newsupply chain destinations that are emerging with land,

buildings, and infrastructure.


36/36

Thanks!

Curtis Spencer President,

IMS Worldwide Inc.

Real Estate Logistic Forum Keynote Address

Documents

Transcript of Real Estate Logistic Forum Keynote Address