Robert West bob.west@worleyparsons.com 10 April 2012 Development of Logistics Infrastructures in the World and its Impact on Latin America: Trends and Perspectives
Main Topics Global Economic and Trade Outlook Latin America, Shipping, & the Expansion Growth in Transshipment A word on North America Conclusions 2
Source: IHS Global Insight The World Economy is still recovering from the nightmare of 2008-09 Cargo trade demand reflects more volatile industrial production 9 6 3 0-3 -6-9 (World GDP, Percent change) Indust. Production, Percent change 10 Nightmare 8 6 4 2 0-2 -4-6 -8-10 2000 2002 2004 2006 2008 2010 2012 2014 Real GDP Industrial Production 3
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8 6 Real GDP (% change) The emerging markets have helped to keep the world from falling into an even deeper recession Gap between and are leading the recovery. emerging and advanced countries will keep shrinking. Nightmare 4 2 0-2 -4 Source: IHS Global Insight & Halcrow World Advanced Countries Emerging Countries Source: Global Insight, Worley Parsons US > Europe, Japan 4
9 6 3 0-3 -6 (Real GDP, percent change) GDP growth rate differences affect the pace of trade growth and volumes by trade route Geography of production / consumption is changing as emerging markets Expensive might be better: grow 6% on average over the next decade vs. 2.3% for advanced countries. World s Largest Museum Aging Being a museum Not Assets much growth with recession! increasing value Stability Public willing to pay -9 NAFTA Lat Am W Europe E Europe Mideast, N Afr Sub- Sahara Afr Japan Other Asia- Pacific 2009 2010 2011 2012 2013-20 Sources: IHS Global Insight, WorleyParsons, IMF, Goldman 5
Source: Jean-Paul Ridrigue Ship Happens
Percetn Share World trade s share of the economy grows again after a temporary decline Globalization trend is long-term and has not reversed or stopped 40 (World imports, percent of GDP) 35 30 25 20 No change This was NOT a reversal of globalization 15 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 7 Source: IHS Global Insight
Main Topics Global Economic and Trade Outlook Latin America, Shipping, & the Expansion Growth in Transshipment A word on North America Conclusions 8
In Latin America, most countries are expected to have solid economic growth in 2012. Fastest-Growing South American Importers from USA 9 7 5 3 US 1-1 -3-5 -7 (Real GDP, percent change) 5.8 US 2009 2010 2011 2012 Source: Data from IHS Global Insight, CIA Factbook, OECD, Moody s, Goldman Sachs, Oxford Economics, BMI 9
World TEUs now exceed the 2008 numbers. However, the years of double digit growth ( 03, 04, 06) are not to be seen again. 5.4% 160,000,000 150,000,000 140,000,000 The Nightmare FULL TEUs 130,000,000 0.0% 120,000,000 110,000,000 100,000,000 90,000,000 8.8% CAGR 2008-10 0.0% 2010-15 6.2% 6.6% 2015-30 5.0% 80,000,000 2008 2009 2010 2011 2012 2013 2014 2015 10
Existing locks' maximum vessel size: 4,400 TEU We intend to deploy the biggest ships as quickly as possible once the locks are open. 33.5 m (110 ) 32.3 m (106 ) 12.4 m (39.5 ) 55 m (180 ) 12.8 m (42 ) 49 m (160 ) 18.3 m (60 ) 15.2 m (50 ) New locks' maximum vessel size: 12,600 14,000 TEU
4000 TEU 8000 TEU On Asia-USEC, the all-water Canal route cost falls when a larger vessel is deployed. Cost per TEU Shanghai to Louisville KY 4000 TEU 8000 TEU Intermodal Panama Intermodal Panama $3,500 Cost Days Cost Days Cost Days Cost Days Ocean $1,302 13.7 $2,085 23.7 $1,155 9.8 $1,830 22.8 $3,000 Inland $2,564 8.3 $1,077 4.2 $2,564 8.3 $1,077 4.2 Total $2,500 $3,865 22.0 $3,162 27.9 $3,719 18.1 $2,907 27.0 $2,000 $1,500 $1,000 All-Water (Current) All-Water after Expansion 12
-1250 - -1000 - -750 - -600 - -250-0 - 250 - NOW For a typical Asia-USEC voyage, shifting to an 8000 TEU ship expands the market reach of the USEC ports. Assumptions Shanghai to Louisville, KY Canal tolls based on current rates Owned ship, financed at current rate Inland move by rail 2015 4000 TEU ship 8000 TEU ship 48%* 61%* 61%* Intermodal Advantage Canal Advantage *Share of the US population reachable by rail 13
The best transshipment options are now becoming clear. FREEPORT CUBA KINGSTON RIO HAINA CAUCEDO SAN JUAN P. CABELLO P. of SPAIN At capacity MOIN COLON/MIT CARTAGENA Caribbean Transshipment Triangle 14
Moín Limón, Costa Rica $992 million by APM Terminals Designed for 100% domestic cargo only but transshipment is possible Concession signed in August, 2011 1.2M TEU in Year 1 It s all about productivity 15
Short Sea Shipping in MesoAmerica will require transshipment. US-PANAMA Countries Mexico (south) Belize Guatemala El Salvador Honduras Nicaragua Costa Rica Panama Colombia Dominican Republic 16 16
Supply chains in Latin America need fixing. Colombia is an example of early breakage in the chain Over 70% of GDP is in the mountainous region Over 80% of cargo moves by highway Transportation costs are much higher than world averages For coal and containers, Colombia needs an expanded railway and highway network An inefficient supply chain for exports will hurt competitiveness 17
Main Topics Global Economic and Trade Outlook Latin America, Shipping, & the Expansion Growth in Transshipment A word on North America Conclusions 18
% Economic outlook for U.S. US Unemployment Rate 12.0 Nightmare 10.0 8.0 6.0 4.0 2.0 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 The future? flat horizontal unchanged neither worse nor better Source: Congressional Budget Office Washington DC 19
Unemployment is not THE problem. Unemployment is a symptom Consumer fear Investment fear U.S. Government gridlock Main street, Wall Street, and K Street: uncertainty Weak savings Improving exports, but not enough 20
CONCLUSIONS Stronger trade growth is with the emerging markets North American import growth will be sluggish in 2012 Fixing supply chains in Latin America the key to strong, continued growth Money is not the issue need well-defined, meaningful projects Transshipment will grow, as a necessity getting ready! 21
Success!! 22