2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar...
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Transcript of 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar...
2011 2011 Current Issues & TrendsCurrent Issues & Trends
Affecting IntermodalAffecting Intermodal
Ron Sucik RSE Consulting
CCIBIntermodal Seminar
October 5, 2011
Current Situation and Key Current Situation and Key Facts to Keep in MindFacts to Keep in Mind
Intmdl Intmdl LdLds Up +5.8% over 2010. Down 3.7% to 2006.s Up +5.8% over 2010. Down 3.7% to 2006.
Int’l traffic still more than half of Intermodal loads.Int’l traffic still more than half of Intermodal loads.
40% of Asian imports come through LA/LB.40% of Asian imports come through LA/LB.
31% of Asian imports related to housing industry.31% of Asian imports related to housing industry.
Container trade imports increased 2% in first seven months Container trade imports increased 2% in first seven months of 2011. Exports increased 9%. of 2011. Exports increased 9%.
Containerized imports to rise about 3.6% during 2011.Containerized imports to rise about 3.6% during 2011.
Ron Sucik RSE Consulting
Ron SucikRon Sucik
Selected States Population Change Compared to United Selected States Population Change Compared to United States Population Change 1990 to 2000States Population Change 1990 to 2000
13% 14%
23% 21%
15%
26%
24%
0%
5%
10%
15%
20%
25%
30%
UnitedStates
California Texas NorthCarolina
SouthCarolina
Georgia Florida
RSE Consulting
Geography & DemographicsGeography & Demographics
1997 Import TEUs
West Coast 83.25%LA/LB, Oakland, Seattle, Tacoma, Vancouver
East Coast 16.75%Gulf Coast .25%
NY/NJ/N. East 7.97%
South East 8.53%
RSE Consulting
2008 Import TEUs
West Coast 75%LA/LB, Oakland, Seattle, Tacoma, Vancouver
East Coast 25%Gulf Coast
NY, NJ, N. East
South East
Ron Sucik
Which Route to the Midwest
Ron Sucik RSE Consulting
What What MakesMakes A Location More Favorable A Location More Favorable
Large population or consumption centersLarge population or consumption centers• (LALB, NYC, Florida and the Southeast)(LALB, NYC, Florida and the Southeast)
Deep water for portsDeep water for ports• (Prince Rupert, LALB, Norfolk and Lazaro Cardenas)(Prince Rupert, LALB, Norfolk and Lazaro Cardenas)
Port infrastructurePort infrastructure• (LALB, Norfolk and PANYNJ)(LALB, Norfolk and PANYNJ)
Nearby Rail or Highway infrastructureNearby Rail or Highway infrastructure• (LALB, PANYNJ, Norfolk and the PNW-Vancouver, Seattle & Tacoma)(LALB, PANYNJ, Norfolk and the PNW-Vancouver, Seattle & Tacoma)
Space and/or Central Location for Dist. ComplexesSpace and/or Central Location for Dist. Complexes• (Chicago, St. Louis, Columbus, SEUS including Charleston, Savannah & Jacksonville)(Chicago, St. Louis, Columbus, SEUS including Charleston, Savannah & Jacksonville)
RSE ConsultingRon Sucik
Total Intermodal Loadings
Source: IANA Intermodal Market Trends & Statistics
10.3 10.2
11.2
11.9
12.9
13.6
14.2 14.113.7
11.7
13.413.7
10.0
11.0
12.0
13.0
14.0
15.0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 11
Ron Sucik RSE Consulting
Intermodal Loads by Type
1999 - 2010
Source: IANA ACT Research Co., LLC: Copyright 2011
2.2 2.4 2.5 2.7 3.0 3.1 3.1 3.3 3.6 3.8 4.0 4.5
2.9 2.6 2.4 2.32.4 2.6 2.6 2.4 2.1 2.1 1.6
1.7
4.8 5.3 5.45.9
6.57.1
7.9 8.5 8.3 7.7
6.1
7.2
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0Intermodal Loads (millions)
Dom Cont Dom Trlrs Internatl Cont
Ron Sucik RSE Consulting
TOFC VS COFC
Ron Sucik RSE Consulting
Domestic Intermodal demand continues to show growth versus prior year Domestic Intermodal demand continues to show growth versus prior year comparisonscomparisons..
Domestic Intermodal VolumeDomestic Intermodal Volume
1111 SOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICASOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICA
International Intermodal showed slower inbound US freight volumes in July. International Intermodal showed slower inbound US freight volumes in July. Signs of seasonal pickup are emerging.Signs of seasonal pickup are emerging.
International Intermodal VolumeInternational Intermodal Volume
1212 SOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICASOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICA
US Import Container Volume GrowthUS Import Container Volume Growth2011 vs. 2010 (January – June)2011 vs. 2010 (January – June)
-10%
0%
10%
20%
Jan Feb Mar Apr May June
Total Imports US WC Imports US EC Imports
Source: Port Websites
WC: LAX, LGB, OAK, PDX, SEA, TAC EC: NYC, BAL, ORF, CHS, SAV
YTD Growth: West Coast = 4.5%, East Coast = 5.3%
Import/Export TEU Projections are StrongImport/Export TEU Projections are Strong
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000 Imports (U.S. TEUs) Exports (U.S. TEUs)
Source: TTX, 06/01/2011
Imports 2014 vs. 2011: +3.2 M TEUs (+18.4%)Imports 2014 vs. 2011: +3.2 M TEUs (+18.4%)
Hub Group’s rail partners have invested nearly $30 billion over the past five Hub Group’s rail partners have invested nearly $30 billion over the past five years improving their overall product and service offerings.years improving their overall product and service offerings.
Railroads Continue to InvestRailroads Continue to Invest
1515
NUMBERS REPRESENTED ARE IN MILLIONSNUMBERS REPRESENTED ARE IN MILLIONS
$2,242 $3,100 $3,100 $2,500 $2,488
$3,300
$2,014
$2,248 $2,167 $1,991 $2,600
$3,500 $1,178
$1,341 $1,558
$1,299 $1,743
$2,200
$1,639
$1,773 $1,740
$1,447
$1,800
$2,000
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2006 2007 2008 2009 2010 2011 EST
RAILROAD CAPITAL EXPENDITURES
UP BNSF NS CSX
Road vs RailRoad vs Rail
PUBLIC INFRASTRUCTURE PRIVATE INFRASTRUCTURE
• Publicly Funded/Maintained• Road Beds Built Beginning 1950’s
• Cost to Improve or Replace?• Minneapolis Bridge ($234M vs
$5M)• Cost to Expand?
• Who Pays (Autos, Commercial Trucks)?
• Private Property of Corporations• No Return = No Investment
• 5-10-20 Year Commercial Plans• Adapting To Economic Changes
• Expanding Capacity• Partnering With Municipal
Authorities
Fast, Reliable SolutionsFast, Reliable SolutionsThe West The West Coast Coast provides the provides the industry’s industry’s fastest fastest transit times.transit times.
Shanghai, China
Atlanta
Columbus Croxton, NJ
DEPARTS DESTINATION IPI (Rail Intact) TRANSLOAD ALL WATER
Shanghai Atlanta 20.5 Days 21.5 Days 26 Days
Shanghai Columbus 18.5 Days 19.5 Days 31.75 Days
Shanghai Croxton, NJ 18.5 Days 19.5 Days 29 Days
Chicago
Cincinnati
Columbus
Pritchard Roanoke
Norfolk
Detroit
Harrisburg
Philadelphia
NY/NJ
MechanicvilleAyer
Titusville
Jacksonville
Atlanta
Charlotte
Lynchburg
Shreveport
Meridian
Birmingham
New Orleans
Memphis
Bethlehem
Corridor Projects
Truck/Rail Intermodal Market ShareTruck/Rail Intermodal Market Share
Mileage Blocks
Truck Rail Intermodal
Total Market Truck Share Rail Share
500 to 749 17.8 1.2 19.0 94% 6%
750 to 999 10.1 2.3 12.4 82% 18%
1000 to 1499 7.7 2.0 9.7 79% 21%
1500 to 2000 3.7 2.1 5.8 63% 37%
>2000 2.8 4.9 7.7 36% 64%
Total 42.1 12.5 54.6 77% 23%
Millions of units
Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample
Truck and Rail Intermodal in Markets 500 Miles and Greater
Ron Sucik RSE Consulting
Truck/Rail Intermodal Market ShareTruck/Rail Intermodal Market Share 2035 Status Quo 2035 Status Quo
Mileage Blocks
Truck Rail Intermodal
Total Market Truck Share Rail Share
500 to 749 22.0 1.5 23.5 94% 6%
750 to 999 12.4 2.8 15.2 82% 18%
1000 to 1499 9.4 2.5 11.9 79% 21%
1500 to 2000 4.6 2.7 7.3 63% 37%
>2000 3.4 6.0 9.4 36% 64%
Total 51.8 15.5 67.3 77% 23%
Millions of units
Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample
Truck and Rail Intermodal in Markets 500 Miles and Greater
Ron Sucik RSE Consulting
Truck/Rail Intermodal Market ShareTruck/Rail Intermodal Market Share 2035 50% Market Share 2035 50% Market Share
Mileage Blocks
Truck Rail Intermodal
Total Market Truck Share Rail Share
500 to 749 14.3 9.2 23.5 61% 39%
750 to 999 8.1 7.1 15.2 53% 47%
1000 to 1499 6.1 5.8 11.9 52% 48%
1500 to 2000 3.0 4.3 7.3 41% 59%
>2000 2.2 7.2 9.4 23% 77%
Total 33.6 33.6 67.3 50% 50%
Millions of units
Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample
Truck and Rail Intermodal in Markets 500 Miles and Greater
One example of the dramatic benefits of shifting to rail intermodal is illustrated by the fact that just one long-distance, double-stack train between Chicago and Los Angeles can save 75,000 gallons of fuel by replacing 300 trucks, each traveling 1,983 miles.Source: Comparative Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors, ICF International, published by the Federal Railroad Administration (2009)
Ron Sucik RSE Consulting
CS: Future Corridor Volumes Compared to Current CS: Future Corridor Volumes Compared to Current Corridor Capacity (Cambridge/AAR) - Corridor Capacity (Cambridge/AAR) - 20072007
2035 without improvements
Below capacity
Near capacity
At capacity
Above capacity
Ron Sucik RSE Consulting
Truck Transportation EmploymentJanuary 1996 - May 2011 (Seasonally Adjusted)
Sourc e: BLS, ACT Res earc h: Copy r ight 2011
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 111000
1050
1100
1150
1200
1250
1300
1350
1400
1450
1500Employment (000's)
0
10
20
30
40
50
60
70
-10
-20
-30
M-M jobs Chg (000s)
Over 200,000 Drivers Eliminated
During Downturn of
Economy
Ron Sucik RSE Consulting
The Sun Is Setting On The Old The Sun Is Setting On The Old Trucking ModelTrucking Model
PAST (low energy costs)
PRESENT (modest energy costs)
FUTURE (expect higher energy costs)
• Large Company-Driver Fleets with National
Scope and Scale• Company Operated Driving Schools
• Vast Quantity of Independent Truckers for Hire • Less Burdensome Regulatory Environment
(Hours of Service, CSA, Etc)
• Smaller & Regionalized Fleets• Owner-Operator Mix
• Fewer ‘Mom & Pop’ Carriers• Early Intermodal Operations
• Increased difficulty accessing capital. • Fewer Trucks/Drivers on Highway
• Regional Fleets w/Owner Operators• Non-Asset (Brokerage) Clearinghouse
• Requisite Intermodal Operation• Disciplined ‘Surviving’ Carriers
2626
Does Opportunity Still Exist?Does Opportunity Still Exist?
MillionsUNITS
6
4
2
7-11 M
BNSFUnion Pacific
OTR that fitswestern intermodal
networks
4.1 M
International
Domestic
1.5 M
3.3 M
1.8 M
1.9 M
2.2 M
Opportunity
• Demand continues to increaseDemand continues to increase
• Highway capacity continues to decreaseHighway capacity continues to decrease
• Government regulationsGovernment regulations Comprehensive Safety Analysis (CSA)Comprehensive Safety Analysis (CSA) Hours of ServiceHours of Service
• Trucking bankruptciesTrucking bankruptcies Higher fuel costsHigher fuel costs Limited access to creditLimited access to credit Higher equipment costs and lower resale values Higher equipment costs and lower resale values
Marketplace UpdateMarketplace Update
2727
Year-over-year July 2011 Full Year 2010
Domestic Intermodal 2.9% 10.6%
International Intermodal -4.6% 18.5%
For-Hire Truck Tonnage
3.9% 5.7%
SOURCES: IANA, ATA AND BAIRDSOURCES: IANA, ATA AND BAIRD
More People – More FreightMore People – More Freight
2828 SOURCE: U.S. CENSUS BUREAU; FRA’S NATIONAL RAIL PLANSOURCE: U.S. CENSUS BUREAU; FRA’S NATIONAL RAIL PLAN
Americans require a freight system that moves 40 tons of freight per person annually. With current population growth projections, we are looking at moving 4 Billion more
tons of freight in the next 40 years.
With improvements in service and facilities, Intermodal is becoming more With improvements in service and facilities, Intermodal is becoming more competitive in shorter distances, absorbing more of the projected growth in competitive in shorter distances, absorbing more of the projected growth in freight. freight.
Modal Shift OpportunityModal Shift Opportunity
2929 SOURCE: FRA’S NATIONAL RAIL PLANSOURCE: FRA’S NATIONAL RAIL PLAN
Temp-Controlled Intermodal - Phase 1
• C.R. England now operates 300 reefer containers (introduced in late 2010)
• Entire fleet of lightweight daycabs has been purchased
Container On Flat Car (COFC)
Customer ValueCustomer Value
Intermodal is now viable for shippers moving Intermodal is now viable for shippers moving temperature-controlled freighttemperature-controlled freight
Cost savings are a critical factor, but due to the Cost savings are a critical factor, but due to the improved services the rate gap between OTR and improved services the rate gap between OTR and Intermodal is narrowingIntermodal is narrowing
Dependence on “loading trucks” for the driver’s Dependence on “loading trucks” for the driver’s benefit is removed with Intermodalbenefit is removed with Intermodal
We expect the trend in temp-controlled freight We expect the trend in temp-controlled freight toward Intermodal to follow the dry markettoward Intermodal to follow the dry market
Temp-Controlled Temp-Controlled Intermodal ViabilityIntermodal Viability
WHAT TO TAKE HOME FROM CCIBWHAT TO TAKE HOME FROM CCIB Intermodal loadings still below peak of 2006.
Railroads CapEx $40 Billion last 5 years.
Nearly 500,000 truckers left the business.
Western carriers OTR market 7-9 million.
Eastern carriers OTR market 9 million.
Refrigerated and Flatbed Containers enter mkt.
Ron Sucik RSE Consulting
Thank You For Your Time
Ron Sucik
RSE Consulting