What’s New

Philip Davies New Research: Does environmental compliance impact port competitiveness? Presentation at METRANS International Urban Freight Conference in Long Beach on October 18, 2017

Relative Shipper Costs Los Angeles/Long Beach
and New York/New Jersey IPI to ChicagoMr. Davies presented a paper addressing the question: Does environmental compliance impact port competitiveness? at the METRANS International Urban Freight Conference in Long Beach California on October 18, 2017. The paper was the subject of an extensive review in the Journal of Commerce (“LA-LB warned fee hikes could accelerate share loss”, Bill Mongelluzzo, Senior Editor Oct 20, 2017 https://www.joc.com/port-news/us-ports/port-los-angeles/la-lb-warned-fee-hikes-could-accelerate-share-loss_20171020.html )

The Southern California Air Quality Management District recently approved a new Air Quality Management Plan (AQMP) which is estimated to result in $15.7 billion in incremental costs between 2017 and 2031. However, it is assumed 93% or $14.6 billion of the total costs of the AQMP will be funded directly by government spending. Container fees have been suggested as a means of financing the necessary government contributions. These proposals have generated opposition from port stakeholders due to their potential impact on the competitiveness of Southern California as a container gateway.

The paper addressed the question: Does environmental compliance impact port competitiveness? This required examination of two issues: the impact of relative transportation costs on the volume of containerized imports through the Ports of Los Angeles and Long Beach (i.e. the demand elasticity), and the portion of costs attributable to environmental initiatives.

Based on the model results, POLA/POLB import traffic is inelastic, with an average elasticity of .26 (i.e. a 10% increase in costs would result in a 2.6% decline in traffic). Current cost estimates were developed for the three major environmental/congestion mitigation user pay programs in place at POLA/POLB (the Alameda Corridor, PierPass and the Clean Trucks Program). The programs are estimated to reduce annual traffic by approximately 196,000 TEUs or 1.3%. Implementation of a $100 per container fee as recommended by the SCAQMD Legislative Committee would result in a decline of 277,000 TEUs or 1.8%.

The analysis provides an early indication of the impact of the Panama Canal expansion on POLA/POLB traffic. The shift in liner services from the Suez Canal to the shorter Panama Canal route results in lower weighted average transit times for the all-water routes, and ocean rates to East/Gulf Coast ports have fallen more rapidly than rates to the West Coast.

The full research paper is available here.

DTCI Completes Regional Goods Movement Study for Halifax

Halifax goods movementDavies Transportation Consulting Inc. recently completed a Regional Goods Movement Scoping Study for Halifax Regional Municipality. The study was undertaken in the context of development of a new Integrated Mobility Plan which will expand the focus of regional transportation planning. The project team included James Frost of MariNova Consulting, Thomas McGuire of Group ATN and Steve Hayto of S5 Services.

The scope of the project included a literature review; analysis of case studies in North America, Europe and Australia/New Zealand; an overview of the Halifax goods movement system; and extensive consultations with commercial, public agency and community stakeholders to gather information on the goods movement system and identify issues. The majority identified port-related truck traffic in downtown Halifax as the major problem, with perceptions of traffic congestion, safety and environmental impacts. Previous related studies were reviewed, and priorities for future exploration of potential solutions were identified. Recommendations for integrating goods movements into regional transportation planning were also provided.

DTCI Completes Shipping and Logistics Study for Columbia Basin Trust

columbia basin studyDTCI was engaged by the Columbia Basin Trust to conduct a Regional Shipping and Logistics Analysis to identify constraints and challenges to efficient logistics operations and make recommendations for improvements. The project was undertaken in collaboration with Darryl Anderson of Wave Point Consulting Ltd. and Steve Hayto of S5 Services.

The Columbia Basin Trust was created by the Columbia Basin Trust Act (British Columbia) in 1995 to benefit the region most adversely affected by the Columbia River Treaty (CRT), in the Canadian province of British Columbia. The Trust serves the region consisting of all the watersheds that flow into the Columbia River in Canada, encompassing 76,147 square km in the southeast corner of British Columbia, and extending north as far as Valemount on the Yellowhead Highway (Highway 16).

The project team undertook extensive consultations with businesses and other agencies within the Columbia Basin. An online Transportation and Logistics Survey of businesses was undertaken to gather information about their current shipping practices and challenges. Three hundred and eighteen businesses participated in the survey, providing a broad overview of the current state of freight logistics and the challenges facing firms in managing their supply chains.

Challenges to efficient logistics in the region include a relatively low population density, long distances from major urban centres, and mountainous terrain and variable climate. The results of the analysis and the survey findings strongly suggest that existing businesses have aligned their operations to the strengths of the transport and logistics system that serves the region. Among those businesses that have developed a strategy, shippers employ a variety of best practices such as consolidating shipments to reduce transportation costs, collaborating with other shippers, bulk purchases from a single supplier, the use of freight brokers to obtain lower rates, warehousing, and other solutions. In general, the transport and logistics system was not found to unduly restrict businesses’ ability to scale their operations and growth.

Specific areas for improvement were identified, including cold chain logistics and courier services and recommendations for potential initiatives for improvements in regional logistics services were provided. The full study report is available on the Columbia Basin trust website.