Introduction. Assessing The Best Approach For Exporting And Shipping Derivatives And Manufactured Products - What Is The Most Economic Option?

Transcription

1 Introduction Assessing The Best Approach For Exporting And Shipping Derivatives And Manufactured Products - What Is The Most Economic Option? Revealing the comparative logistical economics with regard to shipping between polyethylene and other derivative forms What is the business case for advanced manufacturing to finished products, such as high performance films, to keep production advantage in North America? Your Target Export Market Logistical Specialization Product Specialization

2 Intro Damco Ocean Freight Air Freight Inland Transportation Supply Chain Management Supply Chain Development Warehousing & Distribution Damco s Services Supply Chain Management, Consulting & Development Warehousing & Distribution Customs House Brokerage & trade compliance Freight Forwarding: all modes IT support & Supply Chain reporting Green Logistics 3PL & 4PL operating models Sectors: Chemicals / Retail / Technology / Apparel Global Presence, Individual solutions Company Overview Established 2009, but active for 30+ years Headquartered in The Hague NL US$ 3 Billion Annual Turnover +10,000 Employees worldwide Global Footprint: presence in 115 Countries through 300+ Damco owned offices Financially solid backbone but asset light Social Responsibility

3 Proud member of the A.P.M-M. Group APMM Companies APM Terminals Damco Dansk Supermarked Maersk Container Industries Maersk Drilling Maersk FPSOs Maersk Line, Limited Maersk Oil Maersk Supply Service Maersk Tankers Safmarine Svitzer AP Moller- Mærsk A/S Company Overview Established 1904 Headquartered in Copenhagen, DK US$ 60 Billion Annual Turnover 120,000 Employees 130 Countries Employee Safety & Security Climate & Environment Social Responsibility Community Engagement

4 NAM: The Chemical Output wave Ethane Supply USA COMPOSITION OF NEW CAPITAL INVESTMENT BY CHEMICAL INDUSTRY SEGMENT CHEMICAL INDUSTRY CAPITAL INVESTMENT BY REGION Baseline ($) New Investment ($) % deviation from base % 0.5% 0.9% 2.3% 4.3% 6.1% 7.2% 7.3% 9.0% 265

5 Targeting Export Markets: Production cost vs. Total Landed Cost Global Ethylene production per 01/01/2013 (TPY) LAM 5% WEU 17% APA 30% Estimated Average Supply Chain spent distribution NAM 24% MEA 18% EEU 6%

6 A variety of Logistical Challenges Logistical Agility and Linkage as the key variables in determining and defining our Export competitiveness: -> ultimate goal: find balance in between costs & service levels & flexibility & sustainability Strategically challenges: Reversal in Strategery : Switching a nation s mindset from Overweight Import to an Export focus in a relative short timeframe One sector moving forward too fast? Develop horizontal and vertical integration along the Supply Chain to ensure optimal asset deployment A longer Supply Chain causes increasing complexity: higher logistics costs & pressure on the general transport capacity Shifting powers between Shippers and LSP s due to increasing interdependence Regulatory impact: Emissions, safety & security create sustainable logistics strategies Infrastructural funding gap: Capex or capsize? Increasing importance of Technology & IT: visibility & cost control

7 A variety of Logistical Challenges Infrastructural challenges: Connectivity constraints to foreign markets: Port infrastructure & Oceanic linkage connecting the US market to the world Post Panamex Inland infrastructure: Rail network connectivity and Road transportation: More competition needed and is congestion becoming the new norm? Intermodalism & overheated port competition: weakening the system from within Export Enablers & availability: the capacity challenge: constraints on people, equipment and providers new and abundant production of various goods competing to secure scarcer means of export Changing dynamics of the Global Supply Chains: Near Shoring and geographic production shift: lesser imports vs increased domestic export competition Packaging/handling/warehousing: requirements, restrictions & regulations :at plant versus export port v-a-v End Market product requirements on packaging configurations

8 Equipment imbalance Gulf Region Trade Imbalance TEU 457, , , , , , , , , , , , ,500 Empty containers Surplus 25.34% 34.23% 35.43% 36.29% 37.83% 36.71% 32.70% 32.98% 32.40% 34.61% 40.97% 18.84% 30.23% Import/Export imbalance in TEU: March 2012/2013

9 Considerations Cross vertical collaboration with inbound cargo owners: Develop & maintain reverse flow corridors across sectors and regions Benefits from collaboration & matchmaking process Market distortions/differences & Politics International Trade: Cultural & infrastructural differences Global GDP Geopolitics: US & International: Financial uncertainty and political instability Environmental issues & permitting as determining factors: Environmental inactivity Market distortions: Increased output and international competition disrupting local economies and finally resulting in imposing of trade barriers by local governments The influence and impact of labor Unions Future changes in production & feedstock cost positions Shale gas exploration to develop elsewhere & possible impact on supply and price? Ethane/Ethylene exports as feedstock and feedstock reconversion of old/foreign crackers? Change to Ethane as primary feedstock has dramatic impact on co-product supply > more on-purpose production investments expected! Any other sectors being revolutionized by the Shale bonanza? Impact on export logistics?

10 Conclusions Chemical Output increase still to occur Domestic US market unable to absorb the production increase Severe infrastructural bottlenecks limiting of US export market capabilities Ability of logistics cost differential to support US competitiveness How to about any foreign market import resilience? Changing historical global trade balances: Planning ahead is required The most economic export option: How to sustainably capture the current production cost benefit throughout the supply chain cycle? -> Product abundance vs. scarce feasible export routes and modes: perverse effects on product price & transportation cost ->Increase your value chain connectivity: Supply Chain flexibility & Agility through partnerships on various levels ->Improving the logistical linkage: infrastructural improvements & increasing efficiency leading to competitive export

11 Thank You Kristof Peerlinck Head of Business Development Chemicals North America Mail: Phone: (+1)