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Transcript of 2004 Conference of the Association of American
2004 Conference of the Association of AmericanGeographers, Philadelphia
Challenging the Derived Transport Demand: Geographical Issues in Freight Distribution
Jean-Paul Rodrigue, Hofstra University, New YorkA. Challenges to Derived Transport DemandB. Integrated Transport DemandC. Disciplinary Concerns
Email: [email protected] available at:http://people.hofstra.edu/faculty/Jean-paul_Rodrigue
A – Challenges to Derived Transport Demand
■ Derived Demand• Core concept in transport and economic
geography.• Demand for transportation of a product is
derived from:• Supply at the origin.• Demand at the destination.
• Classic issue of complementarity:• Between locations.• Within the transport chain.
• Direct and Indirect demand.• Induced (or latent) demand is the
phenomenon that after supply increases, more of a good is consumed.
■ Concept being challenged.■ Paradigm shift?
A
B
Supply/Origin
Demand/Destination
A
B
Transport(Derived)
Transport(Integrated)
A – Challenges to Derived Transport Demand
1) Operational scale Global flows; local hubs
2) Supply / Demand Relationships
Demand-driven system
3) Functional integration Growing level of functional integration in supply chains
4) Distribution centers Core element of the supply chain
5) Time component Time often a more important component than costs
1 – Operational Scale
Introduction(isolation / proprietary) Integrated demand
Op
era
tion
al S
cale
MP
Number of hubs
Log
Time
Expansion andinterconnection
Standardizationand integration
A B C D
Local
Regional
GlobalNational/Continental
1 – Operational Scale
■ Global space of flows• Multi-scale transport systems:
• A reflection of globalization.• Large platforms / hubs regulating
flows:• Network effect (convergence).• Intermediacy.• Connectivity.
• Corridors.■ Scale effect challenges derived
demand• The higher the scale, the less derived
demand applies.• Intermediate locations.• Global convergence, local
divergence.
2 – Supply / Demand Relationships
■ Changes in freight distribution• More intermediate activities.• More demand-driven.• Service increasingly subject to
market forces.• Emergence of a logistics industry
(3PLP).■ Paradoxical situation
• The more demand-driven, the less derived demand applies.
• Manufacturing and mobility are much more embedded.
• Reinforce the induced demand of transport.
Changes in the Relative Importance of Logistical Functions
0% 20% 40% 60% 80% 100%
Inventory
Transport System
Information System
Demand Driven
Supply Driven
Percentage of Manufacturers Using 3PLP, United States
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
3 – Functional Integration of Supply Chains
■ Functional integration• Many intermediate steps in
the transport chain removed.• Mergers and acquisitions.• Development of economies
of scale in distribution.• Enabled by technology:
• Modal and intermodal.• Control.
• Emergence of megacarriers.• Maritime and land distribution
closely integrated.■ Control of the supply chain
challenges derived demand
Shipping Line
ShippingAgent
Stevedore
CustomAgent
FreightForwarder
Rail / Trucking
Depot
Trucking
Megacarrier
Econ
omie
s of
sca
le
Land DistributionMaritimeDistribution
Level of functional integration
4 – Distribution Centers
■ Distribution centers• Fundamental link between production
and consumption.• Simple to complex manufacturing /
value added activities performed.• Packaging, labeling, assembly,
returns. • Have their own locations.
■ Derived demand being challenged by a new geography of distribution
DC
Suppliers
Customers
Industrial Geography
Commercial / Retail Geography
Geography of Distribution
National Semiconductors, Supply Chain, 1993-2001
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Regional Distribution Centers (1993)
Global Distribution Center (2001)
Wafer Fabrication Assembly & Testing Distribution Center
Singapore
Portland
Salt Lake City
Santa Clara
Arlington
Greenock
Swindon
Midget Haemek
Tokyo
Hong Kong
Cebu
Bangkok
Penang
MalaccaToa Payoh
5 – Time Component
■ Time value• Pressure from manufacturing
and retailing.• As transport costs drop, the
value of time increases.• Time: from an exogenous
(derived) to an endogenous component (integrated).
■ Challenge• Timing, sequence ,
synchronization of freight flows.Tran
spor
t Cos
ts (T
C)
Time (T)
T1 T2T
TC
Valu
e of
tim
e (V
T)
VT
Time and Cost of Transport Activities Involving Moving a 40 Foot Container between the American East Coast and Western Europe
0 20 40 60 80 100 120 140 160
Moving container from loading ramp to storage
Container waiting for pickup after stuffing
Loading container on road trailer
Road transport to port terminal
Waiting for admission to port terminal
Transfer from road trailer to stack
Waiting in stack
Unstacking and transfer to terminal trailer
Transfer/loading onto ship
Containership travel time (NY-Rotterdam)
Tranfer/unloading off ship
Transfer to stack
Waiting in stack
Tranfer from stack to road trailer
Clearance and inspection
Road transport, port terminal to inland depot
Unloading container at inland depot
Storage at inland depot
Moving container to consignee
0 200 400 600 800 1000 1200 1400 1600 1800 2000
Time (hours)
Cost ($US)
Cumulative Cost and Time of Moving a 40 Foot Container between the American East Coast and Western Europe
0
500
1000
1500
2000
2500
3000
3500
0 100 200 300 400 500
Cumulative time (hours)
Cum
ulat
ive
cost
(US$
)
B – Integrated Transport Demand
■ Integrated transport demand• Transport activities are
concomitantly planned with activities occurring at the origin and destination.
• Control / anticipation:• Multi scale networks.• Demand.• Supply chain.• Distribution centers.• Time component.
• Geography of logistics
Integrated Demand
Multi-scale networks
Demand
Supply chain
DCs
Time component
B – Level of Derived Demand
Energy / Raw materials Semi-finished products Manufactured goods
Extraction
TransferProcessing
Intra-industrial linkages
ManufacturingRetailing
Distribution
High Average to Low Low
C – Disciplinary Concerns
■ Economic Geography• Greater importance of distribution as a factor of production and
consumption.■ Transport Geography• Distribution more than a space of flows; also an economic
process.■ Supply chain• Where economic and transport geography meet.• Space / time relationships in supply chains.