A presentation conducted by Mr Shanta Hallock, DRH Logistics. Presented on Wednesday the 2nd of October 2013. A research study identifying the role of ports, a forward timeframe of 30 years in servicing national supply chains is being undertaken. A paradigm shift to ‘water based’ freight solutions by barges and other forms of Short Sea Shipping (SSS proposed in Hallock (2009 and 2010) as well as investigating stakeholder commitment to reducing their carbon footprint will be researched as part of this. Funding and better investment criteria will also be explored. The paper draws on European policy and governance frame works incorporating SSS as a component of the logistics response to sustainability. The green supply chain is now an important determinant of competitive advantage and is commercially acceptable.

1. ENDORSING PARTNERS
Supply chain driven
Intermodal systems
A Decision framework
The following are confirmed contributors to the business and policy dialogue in Sydney:
•
Rick Sawers (National Australia Bank)
•
Nick Greiner (Chairman (Infrastructure NSW)
Monday, 30th September 2013: Business & policy Dialogue
Tuesday 1 October to Thursday, 3rd October: Academic and Policy
Dialogue
Presented by: Mr Shanta Hallock, DRH Logistics
www.isngi.org
www.isngi.org

2. Supply chain driven Intermodal systems
A Decision framework
Shanta Hallock

3. Purpose
• Thinking around long term Supply chain (SC) solutions
involving infrastructure are artificially constrained.
• Solution –Short Sea Shipping(SSS)

4. Cause & Effect
• Options Analysis too narrow
– New paradigms unexplored
• Market inefficiencies
– Allocative -investment
– Distribution costs -congestion

5. How should we approach decisions in respect of Supply chain
driven intermodal systems?
• Progress to date
• Integrate Short sea shipping(SSS) into SC.

6. 4 pillars
•  Value capture
•  Supply Chain(SC)
•  Short Sea shipping(SSS)
• Decision frameworks

7. Traffic intensity

8. Modelled congestion hotspots on arterial roads
in Melbourne, 2021 (am peak)
Source: DOI for the Commission

9. Map motorways of the sea

10. In California

11. Value migration & capture
• Inevitable [Slywotzky 1996]
• Pervasive creating new paradigm [Robinson 2006]
–Integrated 4PL replace terminal and trucking operations
• Value migration
Value capture
–Long term strategic positioning [Porter]
• Collaboration
value creation and value capture
• Value proposition of SC must now meet end user needs

12. Supply Chain -what is it?
•“management of upstream and downstream relationships with
suppliers and customers to deliver superior customer value at less cost
to the supply chain as a whole” Christopher [1998,p15].
•SC is now considered part of a value chain.
•SC decisions require i/d of Value Proposition.
•1)Value proposition = market attractivity, opportunity, org structure
and resourcing
•2) Demand chain processes - customer and stakeholder expectations
•3) Outcome- value capture and value creation
•Walters et al model [2007]

13. SSS definitions vary
•Seaborne flows of all kinds of freight irrespective of the vessel
flag -Marlow et al. (1997)
•Jurisdictional definition i.e. based on state borders
– cabotage
– coastal shipping
–ECMT, 2001
–Australia the Navigation Act (Australia 1912, sec 7)

14. New Paradigm
Value capture SC/SSS
• Economic
• Strategic Marketing
• Operational

15. Value drivers
value capturing in the SC–SSS
• Sustainability
•Minimises economic and environmental disbenefits
• Strategic Marketing
• Sustainability pricing CO2 offsets
• Competitive advantage
• End users want sustainable SC –survey of 44 Fortune 500 Co’s
[Golicic2010]
• value proposition matched to cargo needs
• CONTARGO
• Leverage operational advantages
– It unlocks value using a changed operational paradigm

16. Operational
Ports role value capturing in the SC–SSS
• Ports /cargo interchange embedded in trade supply chains
• Proactive vs Reactive (Agility ) [Bichou & Gray 2004]
• Proactivity enables Value capture, control of alliances
– Terminal operator vs Landlord vs Carrier
• Leverage Value migration Robinson (2006)
– value capture if opportunities are spotted and exploited
– Terminalisation
– SSS

17. Operational
value capture Terminalisation
• Trading off time utility vs. space utility
– Unlocking value
– Strategically widened role
• terminal operators & dwell times
• Terminalisation of Supply chains -Rodrigue and Notteboom (2009)
• Terminals can be constrained/ driven by
– Operational bottlenecks
– Warehouse as the buffer
• Encountered elsewhere by author
• Driven by flexible and agile Supply chains

18. Value drivers
Capturing value in the Supply chain –SSS
• Sustainability
•Minimises economic and environmental disbenefits
• Strategic Marketing
• Sustainability pricing CO2 offsets
• Competitive advantage
• End users want sustainable SC –survey of 44 Fortune 500 Co’s
[Golicic2010]
• value proposition matched to cargo needs
• CONTARGO
• Leverage operational advantages
– It unlocks value using a changed operational paradigm

19. Strategic competitive advantage
• Europe, North America and parts of Asia
– JVC Belgium’s Euro distribution centre in Boom (midway AntwerpBrussels)
• Shanghai International Port Group (SIPG) (CI, 2009)
– Yangtze Strategy has barges as key element
– Owns 700 trucks
• Shenzen port complex uses shuttle barges (CI, 2008)
• North America the Great Lakes feeder lines offer 221 TEU
ships (CI, 2008).
• California

20. Marketing themes
Choice
• Reduce transportation costs and manage working capital
• Ease scheduling and equipment shortages
• Create a “green” supply chain
• Bring jobs to the community

21. Value propositions
• Reducing traffic congestion.
• Ecologically sustainable
• Marine Highway,
– eliminate more than a million truck trips
•
•
•
•
Safe
The bottom line and the environment
Planning
Demurrage prevention
– Cost

22. Map motorways of the sea

23. “Motorways of the Sea”
“a motorway of the sea route could be developed along the Atlantic coast to
provide a sea-lane running parallel to motorways” (ECT 2005).
– Funding programme for projects
– Intermodal integration
– Mode shift to sea, rail and inland waterways.
–
–
–
–
–
Sustainable,
Congestion reduced on key bottlenecks
Remote regional access
Structural change in the future
Economic development.

24. “Motorways of the Sea”
• Trans European Transport Networks
• Marco Polo Program
• Policy intervention perceived “Value add”

25. In California

26. Value drivers
Capturing value in the Supply chain –SSS
• Sustainability
• Minimise economic and environmental disbenefits
• Strategic Marketing
• Sustainability pricing CO2 offsets
• Competitive advantage
• End users want sustainable SC –survey of 44 Fortune 500 Co’s
[Golicic2010]
• value proposition matched to cargo needs
• CONTARGO
• Leverage operational advantages
– It unlocks value using a changed operational paradigm

27. SSS fares better European Union (27 states)
Source
CO2-e emissions (million tonnes)
Road
902.0
Rail
7.8
Shipping
Coastal
International
23.4
171.3
Total Shipping
194.6
Air
Domestic
International
Total Air
25.6
129.8
155.4
Other Transport
10.1
Total Transport
1269.9
Total Emissions
4558.7
Source: EEC (2006)

28. Australian evidence is similar
Table 2 – CO2-e emissions by transport mode, 2000 - 2020
Emissions of CO2-e by transport mode (gigagrams)
2000
2020
Car
Road
Freight
Air
40,696
50,110
20,762
31,874
4,996
11,922
Year
Rail
Coastal
Shipping
Other
Total
3,518
4,848
1,505
1,359
1,980
2,292
73,456
102,406
Source: BTRE (2007)
Table 3 – Non CO2 emission projections to 2020
Emissions (gigagrams)
Source
Rail (non-electric)
Coastal shipping
NOx
CH4
NMVOC
CO
N2O
2623.0
28.6
64.40
0.07
0.23
1.16
21.80
2.94
0.08
0.04
Source: BTRE (2007, pp. 213 and 231)

29. Decision making
• Research will establish non government drivers
• Good practice
– Governance models
– Decision choice
• Wheat from the chaff

30. Governance models
• Gateway
– Transparent & focussed on Value for Money
– Structured
– Used by State treasuries
• Opportunity to think outside square
– Options and business case stage
– Testing of validity of investment proposition

31. Decision processes
• NTC guidelines
• Strategic choices advocate MCA
• Handling long term uncertainty ??
•
•
BCR used ???
Types of investment and rates of return
• Research will consider
•
•
•
•
Real Options
Full blown MCDA
Scenario analysis
Etc

32. Surveys / Investigation
Where will infrastructure decisions be made?
How are decisions currently made
The impact of exogenous factors
Supply chains
Stakeholders attitude to sustainability Paradigm shifts are
required now
• The decision criteria
•
•
•
•
•

33. Recommendations
• Use research to test /investigate
• Competitive advantage perceptions
• Value migration (Robinson)
– Terminalisation model as example (Notteboom)
• Willingness to learn from overseas practice
• EEC’s Motorways of the Sea & other examples
• Predictions in the literature
• Investment Decision basis
• Longer time horizons
• Private and public investment drivers

34. Supplementary
may be used at my discretion

36. Congestion impacts 4 large cities
• Average speed of trucks in peak time
• Within 3 km transport distance from center 14 km/h
(no time guarantee)
• Within 10 km transport distance from center 24 km/h
(no time guarantee)
• Speed inland ships directly into the center: 20 km/h
(plus time guarantee)

37. Capturing value in the Supply chain
-SSS
• Economic
• Externalities
– SSS pollution mitigation potential (Marlow 1997, ECT 2005)
• Evidence of pollutants GHG emissions -BTRE ( 2007), EEC
(2006)
– True cost of Land transport( Musso and Marchese)
• Marginal social opportunity cost
• Evidence

38. Shanghai
•
•
•
Jihai deploys largest container vessel for Wuhan-Shanghai shuttle
4 July 2012
Jihai Shipping, a subsidiary of Shanghai International Port Group (SIPG), has recently
deployed the biggest container barge on the Yangtze for its Yangluo-Yangshan shuttle
service. The 8,000 dwt self propelled barge, 110 metres in length and 19 metres wide,
was built in February and is capable of carrying 518 standard containers.
The Shenda Hexie departs Wuhan once a week and reaches Yangshan terminal in
Shanghai within 72 hours.
Jihai already operates four weekly scheduled services for Yangshan and three weekly
scheduled services for Waigaoqiao terminal, also in Shanghai. It has been operating at
100 per cent capacity since the end of 2010, according to Wang Hui, General Manager
of SIPG Yangtze Logistics in charge of the group’s commercial interests on the Yangtze.
However, the new vessel will not be able to sail all year round due to restrictions on the
waterway.
Jihai’s largest shipper is Foxconn, which is expected to transport 32,000 TEU in 2012, up
from 24,000 TEU last year.

39. Marketing today APL
• “Our transportation services include movement by inland
waterways as part of an integrated logistics offering, providing an
environmentally friendly alternative to truck and rail transportation.
APL Logistics has considerable expertise in managing barge
transportation in Europe and China. Rotterdam, Europe’s largest
container port moves 40% of its container traffic to and from its
hinterland by barge.
• In China, transporting containers by barge is relatively low cost, safe
from pilferage and provides cross-border opportunities.”

40. Marketing this today- Barges(1)
Advantages of barge services
• Cost – Barge shipping offers a cost-effective means of transporting
bulk and container cargoes where navigable waterways – directly
linked to main sea ports and customs bonded warehouse –
penetrate to interior markets.
• Planning – Once delivered by barge to a local inland canal or river
depot, customers have more flexible control over when the
container is called off, reducing warehouse planning requirements.
• Demurrage prevention – Moving containers away from inbound
main sea ports can eliminate or reduce demurrage at the main sea
port. Detention and storage costs at inland canal and river depots
can often be cheaper than demurrage.
• Avoid road traffic congestion – The road network infrastructure
from many deep sea ports is becoming more congested. The use of
barge transport would help customers alleviate this problem

41. Marketing this today- Barges (2)
• APMT offers Rotterdam barge service to avoid road congestion
• “APM TERMINALS, in partnership with Delta Marine Terminal, is to
offer a barge shuttle service from its Moerdijik harbour at
Rotterdam into the Dutch interior and Europe hinterland to avoid
road congestion ahead of extensive construction work between
2011 and 2015.
The shuttle service will be operated by Moerdijk-based Barge Line
and will run between the extended gateway at its Moerdijk terminal
allowing priority to containers transhipment service reducing
storage costs and transport rates. It will also allow eight days ahead
of cut-off times with priority scheduling at the depot.”

42. Capturing value in the Supply chain SSS
• Operational
• SSS integrates into a buffer terminalisation model
• Replaces other land side transfers
– Unlocks time utility and place utility

43. Capturing value in the Supply chain
• Ports embedded in trade supply chains
• Value capture strategies -Robinson (2002)
– higher levels of productivity and efficiency
– Strategies for a regional port to –Magala (2008)
• Market access
• Perceived benefits (economic & non economic)
• Resource availability
• Value migration Robinson (2006)
– Integrated 4PL replace terminal and trucking operations
– value capture if opportunities are spotted and exploited

44. Decision processes
Where will infrastructure decisions be made?
Nodal interchange points(ports, distribution centres)
Principal and peripheral
Transport modes (air, sea, rail, road)
Where will value creation be most likely to occur?
Who makes them(Private enterprise, States, Federal)?
What are the criteria?
How are decisions currently made
How may this be improved
The impact of exogenous factors such as :
Trading partners and buyer preferences
Carbon pricing
Economic efficiency
costs, environmental costs
Supply chains
What decisions do they drive?
The nodal and modal relationship
Stakeholders commitment to sustainability choices:
reducing their carbon footprint
appetite to adopt sustainable transport practices such as Short Sea Shipping (SSS) and long distance
rail?
Urban and interstate congestion and amenity trends
What decisions or paradigm shifts are required now to meet these requirements?
The decision criteria (see below)

45. Getting SSS on the map
• Conclusion
•SSS is viable because :
•Works elsewhere
•Addresses Sustainability -congestion and externality
issues
•Captures Value in the Supply Chain

46. Supply chains
What decisions do they drive?
The nodal and modal relationship
Stakeholders commitment to sustainability choices:
reducing their carbon footprint
appetite to adopt sustainable transport practices such as Short
Sea Shipping (SSS) and long distance rail?
Urban and interstate congestion and amenity trends
What decisions or paradigm shifts are required now to meet these
requirements?
The decision criteria (see below)

47. Themes in the SSS literature
• Key factors –
• Shipper requirements
– Transit time
– Price
• Cost
• Image
• Externalities
• State policy/funding

48. Shipper requirements -Transit times &
Price
• Slower but less expensive mode acceptable (Brooks and Trift 2008)
• Distance
– Overlapping
– Economic
• Price –mode choice (Garcia-Menéndez et al. (2009)
– Changes in relative price of road transport
– Mode change by an ECOTAX on road transport
• 35% differential for change (EC 1996)
• Sustainability pricing CO2 offsets
– CONTARGO
– value proposition matched to cargo needs

49. SSS literature –Image & Externalities
• Image /Awareness
– Central America -Sánchez (2005)
– N/America Service Characteristics -Brooks and Trifts (2008)
– EC –Marlow (2007)
• Externalities
– SSS pollution mitigation potential (Marlow 1997, ECT 2005)
– True cost of Land transport( Musso and Marchese)
– Evidence of pollutants GHG emissions -BTRE ( 2007), EEC (2006)