MEDLOG 2011, Tangier, Morocco, March 31April 2, 2011 Last Mile Logistics and Port Regionalization in Global Freight Distribution Jean-Paul Rodrigue Associate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA Last Mile Logistics and Port Regionalization in Global Freight Distribution 1 • What are the differences between first mile and last mile logistics? 2 • How port regionalization supports last mile logistics? 3 • Does last mile logistics matters for transshipment hubs? “All-Miles” Logistics: Global Maritime Freight Transport System Container Terminal Portfolio of the four Main Global Terminal Operators, 2010 Top ten terminal operators: 65% of the world’s total container handlings Supply Chains: Alternating First and Last Miles Logistics Chain 1 Extraction LC 2 Processing Transport Chain 1 LC 3 Fabrication TC 2 Logistics Chain 4 Assembly TC 3 Distribution TC 4 Retailing TC 5 Containerization Growth Factors Derived Substitution Incidental Induced Economic and income growth Globalization (outsourcing) Fragmentation of production and consumption Functional and geographical diffusion New niches (commodities and cold chain) Capture of bulk and break-bulk markets Trade imbalances Repositioning of empty containers Transshipment (hub, relay and interlining) The “Terminalization” of Logistics Terminalization BottleneckDerived • • • • Terminal as a constraint Rational use of facilities to maintain operational conditions Storage space, port call frequency, gate access Volume, frequency and scheduling changes WarehousingDerived • • • • Terminal as a buffer Incorporating the terminal as a storage unit “Inventory in transit” with “inventory at terminal” Reduce warehousing requirements at distribution centers The Complexities of Inland Logistics: The “Last Mile” in Freight Distribution Massification Atomization Frequency Capacity Shipping Network 1 Gateway 1 REGIONAL LOCAL HINTERLAND GLOBAL Inventory in transit Corridor 2 Segment Inland Terminal 2 Distribution Center Customer “Last Mile” Inventory at terminal Pushing Atomization in the Hinterland and Massification in the Foreland Inland Terminal Hinterland-Based Regionalization HINTERLAND GATEWAY Economies of scale Functional Integration FORELAND Main Shipping Lane INTERMEDIATE HUB Foreland-Based Regionalization The Governance Setting of Gateways and Corridors: Many Actors Supporting Functional Integration Maritime Freight Distribution Transport Actors Maritime shipping companies (Private). Waterways and navigation channels (Public). Gateways Corridors and Hubs Inland Freight Distribution Terminal operators (Private). Port operations (Port Authority). Land ownership (Public and Private). On-dock rail (Port Authority and terminal operators). Near-dock rail (Rail companies). Trucking and barging (Private). Roads and highways (Public). Rail lines (Rail companies; ownership or right-of-way). Asymmetries between Import and Export-Based Containerized Logistics Gateway Inland Terminal Distribution Customer Center Import-Based Many Customers •Function of population density. •Geographical spread. •Incites transloading. •High priority (value, timeliness). Repositioning Supplier Export-Based Few Suppliers •Function of resource density. •Geographical concentration. •Lower priority. •Depends on repositioning opportunities. American Foreign Trade by Maritime Containers, 2009 (in TEUs) Importers Whirlpool Nike Red Bull General Electric Jarden JC Penney Samsung Ikea Intl. Ashley Furniture Chiquita Heineken Philips LG Group Costco Wholsale Lowe's Sears Holding Dole Food Home Depot Target Wal-Mart Exporters 60,900 72,300 74,000 76,700 77,100 79,000 81,100 90,800 90,900 116,700 118,100 127,200 149,300 166,100 195,000 216,300 225,500 278,900 441,800 684,000 0 200,000 400,000 600,000 800,000 Cellmark Group Genesis Resource… Meadwestvaco Sims Metal Management Delong Shintech Cedarwood-Young ExxonMobil JC Horizon Dupont Procter & Gamble Denison Intl. Potential Industries Cargill Dow Chemical Newport Ch Intl Weyerhaeuser International Paper Koch Industries America Chung Nam 0 51,300 54,800 58,100 60,700 65,100 66,900 68,800 70,700 72,400 74,300 78,000 86,900 90,000 90,300 103,000 110,900 112,500 120,100 120,600 259,000 200,000 400,000 600,000 800,000 Distribution based on RDCs Distribution based on tiered system Distribution based on two gateways Distribution based on local DCs World’s Main Intermediate Hubs and Markets, 2008 Factors behind Transshipment Substitution Small ships instead of large ships (better asset utilization). Water instead of land (modal shift). Network expansion More links and wider coverage (more traffic and throughput). Intersection and relay (transit between long distance services). Imposed Lack of port infrastructure (capacity unavailable for large ships). Congestion (potential delays for large ships). High port costs (port call charges versus volume). Cost trade off Savings in ship cost vs. additional port handling (advantages of ‘offshore’ locations). Level of service Transit Time (varied; depend on the port pairs). Frequency (higher; more port calls). Reliability (less; more potential for delays). Possible Options in the Development of a Transshipment Hub Pure Transshipment Hub • Location and costs advantages • Dependent on shipping companies and global terminal operators Hinterland Gateway • Logistic zones and inland load centers Foreland Gateway • Port-centric logistics zones • Gateway to a regional freight system Governance Changes in Port Authorities: Competing over the Hinterland Conventional Port Authority • Planning and management of port area. • Provision of infrastructures. • Planning framework. • Enforcement of rules and regulations. • Cargo handling. • Nautical services (pilotage, towage, dredging). Expanded Port Authority Port Elizabeth Intermodal Complex, New York Main Advantages of Co-location: Multiplying Factors for the Last Mile Factor Advantages Real estate Lower land acquisition costs. Higher acquisition capital. Joint land use planning. Specialization Transport company; terminal development and operations. Real estate promoter; logistic zone development and management. Cargo interdependency Respective customers. Joint marketing. Drayage Priority gate access. Shorter distances. More delivery trips. Higher reliability. Asset utilization Better usage level of containers and chassis. Chassis pools. Empty container depots. Information technologies Integration of terminal management systems with inventory management systems. Conclusion: Transshipment Hubs at the Forefront of Last Mile Logistics 1 2 3 • Last mile logistics functionally and geographically complex • Terminalization increasingly part of last mile-logistics • Development of hinterland and foreland-based regionalization • Reconciling massification and atomization in freight distribution • Last mile logistics influence the development options of a transshipment hub.