tag infrastructure society logistics presentation by page siplon

Page Siplon Executive Director Georgia Center of Innovation for Logistics

TAG Infrastructure Society

1) Defining the Game 2) Rules of Engagement 3) How to Score and Win

What is logistics?


The Logistics Ecosystem: Users & Providers Logistics Employment – 2010

PROVIDERS: 142,349 + USERS: 884,000 Total: 1,026,349

Logistics Establishments – 2010

PROVIDERS: 11,000 + USERS: 33,000 Total: 44,000

Employment Size

11,000 Logistics Providers in Georgia

10% of TOTAL sales revenue for any company goes to “logistics”

49%

20%

22%

9% Transportation

Warehousing

Inventory Carried

Customer Service

2,364 1,574 2,631

983 1,442 2,604

10,462

0

2,000

4,000

6,000

8,000

10,000

12,000

Employment

32

16 29 30

41 46 50

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 2011 2012

Project Count

$432.0 M

$125.1 M

$304.0 M

$163.5 M $142.7 M $165.2 M

$.0 M

$100.0 M

$200.0 M

$300.0 M

$400.0 M

$500.0 M

$600.0 M

$700.0 M Investment


… Every Supply Chain is unique


And so is every State… Georgia has many “Unfair Advantages” • Roads: Nationally top-ranked highway system • Rail: Most extensive network in South East • Air: World’s busiest passenger airport, #10 for cargo • Services: 90% of top 25 3PL’s operate out of GA • Technology: National core for technology providers • Seaports: Fastest growing and 4th largest in USA

11

• 352,146 full & part-time jobs

• $66.9 billion in sales

• $32.4 billion in gross state product

• $18.5 billion in income

• $2.5 billion in state & local taxes Source: Terry College of Business, University of Georgia, FY2011

THE ECONOMIC IMPACT OF GEORGIA’S DEEPWATER PORTS STATEWIDE

PORT OF SAVANNAH THROUGHPUT TWENTY-FOOT EQUIVALENT CONTAINER UNIT (TEU) VOLUME, 10 FISCAL-YEAR HISTORY

1,000

1,500

2,000

2,500

3,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

TEU

s (in

thou

sand

s)

Source: GPA Mktg. (loads & empties)

2.98 Million TEUs A New Record

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Gro

wth

Inde

x (B

ase

year

FY2

002)

PORT OF SAVANNAH CONTAINER GROWTH 10 FISCAL YEAR HISTORY COMPARED TO NATIONAL AVERAGE

SOURCE: GPA Mktg (loaded only) Port of Savannah

National Average

↑29.2%

↑9.6%

↑5.8%

↑12.3%

↑12.3%

↑14.8%

↑21.2%

↓11.7% ↑8.6%

↑8.6% ↑2.3 %

↑10% ↑8.7% ↑8.6

↑5.1% ↑4.2%

↓13.1% ↑3.2% ↑8.5% ↑1.4%

Savannah accounts for 13.7% of the nation's TEU

growth since 2002

-1.0%

1.2%

5.8%

3.9%

4.5%

3.6%

10.6%

5.2%

3.1%

4.4%

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

TOP 10 U.S. PORTS 10-YEAR COMPOUND ANNUAL GROWTH RATES (CY2002 TO 2011)

Source: AAPA

Los Angeles

Long Beach

NY/NJ

Savannah

Oakland

Seattle

Virginia

Houston

Tacoma

Charleston

Percentage Growth

FY2012 TOP 10 U.S. EXPORT PORTS BY CONTAINERIZED TONNAGE

Source: U.S. Dept. of Commerce, Census Bureau, Foreign Trade Division

Millions of Tons

17.18

13.27

12.08

10.87

9.48

7.81

6.42

6.25

5.25

4.14

1. Los Angeles

2. Savannah

3. Long Beach

4. Houston

5. New York

6. Oakland

7. Seattle

8. Norfolk

9. Charleston

10. Tacoma

54% Export/46% Import

Savannah ships 11.6% of U.S. export tons

PORT OF SAVANNAH WEEKLY CONTAINER VESSEL CALLS


What’s Changing? Population &

Demand

The US population is currently over

310 Million People


Gen Y 80-90 Million

TAG Infrastructure Society 70% of consumers live east

of Dallas and Chicago

…by the year 2050

+ 100 Million People in USA ___X 40 Tons/Person___ 4 BILLION TONS IN USA

2011 Georgia Road freight…

$1.7 TRILLION - VALUE

570 MILLION - TONS

46 MILLION - TRUCK MOVES

12 Million!!

Future Georgia Freight Demand Opportunity Curves

25

Port of Savannah Atlanta Metro Through Trucks Medium Growth

Scenario

“Build Out” Current Facilities 2050 = 125%

2.0% annual growth Growth in 1990’s and 2000’s

2050 = 80% increase

2.0% annual growth Growth in1990’s and 2000’s

2050 = 81% increase

High Growth

Scenario

“Build Out” Current Facilities and Develop Jasper Port

2050 = 443% increase





Source: Port of Savannah, 2007 IHS/Global Insight TRANSEARCH data, Consultant analysis.

2.8 6.3 6.3

0

5

10

15

2010 2030 2050

TEU’s (in Millions)

7.3 1.0

15.2

8.9

344 479 618

0

500

1,000

1,500

2010 2030 2050

ATL Truck Tons (in Millions)

832

353

1,322

714

190 267 344

Through Truck Tons (in Millions)

464 197

737

393

2010 2030 2050

Medium Growth High Growth

0

500

1,000

1,500


What’s Changing? Bricks to Clicks

The explosion of multi-channel delivery and the use of “online platforms” including e-commerce, smart-

phone based sales (m-commerce), and the emergence of s-commerce tools leveraging

Facebook, Twitter and other social media outlets are changing the way we need to look at “logistics”.


Today, 91% of all purchases are made at a physical store, but expected to fade to only 76% over the next 5 years.

E-commerce will grow to $280 billion in total sales by 2015 and $2.7 trillion by 2025 representing a full 30% of all retail sales.

30% of growth was attributed to the 5.5 million consumers who shopped online for the first time in 2010.

TAG Infrastructure Society Click to edit Master title style

Source: Logistics Viewpoints Source: IDC Retail Insights

the top ten Facebook brands added

in 2010 115 MILLION FANS


Late 2010, Proctor & Gamble began selling Pampers directly through Facebook…

31,913 fans/month

1,000 orders/day

Source: Logistics Viewpoints Source: IDC Retail Insights

TAG Infrastructure Society Click to edit Master title style I’ll have a medium triple-shot, half-caff,

no whip mocha…

extra hot.

Consumers Expect Personalization


1,000 customizable items online Wal-Mart now

offers over


$100M/year

Their NikeID co-creation platform generates over…


Source: Logistics Viewpoints

Lag Time for Significant Changes in Store Demand to Cascade Across the Extended Supply Chain?

6 Months

Consumer Responsiveness: 1958

Typical Out of Stocks at the Retail Shelf?

8-10% Source: Logistics Viewpoints


Lag Time for Significant Changes in Store Demand to Cascade Across the Extended Supply Chain?

3-6 Weeks

Consumer Responsiveness: Today

Still 8-10% Typical Out of Stocks at the Retail Shelf?

FASTER, BETTER,

CHEAPER ?

Source: Logistics Viewpoints

Supply Chain Priority List: 1) Faster 1) Better 1) Cheaper

Supply Chain Priority List: 2) Faster 2) Better 2) Cheaper


Rise in E-Commerce and Mobile Technology Is Fueling Complexity and Opportunity in

LOGISTICS:

Increasing need for fulfillment operations and regionalized distribution hubs Continued growth in outsourcing logistics operations to 3PL’s that can ADD value Increased demand and frequency for small package delivery Shortage of capable and well-rounded supply chain management talent


Value Added Logistics Services Will Continue to Grow in Demand

The 3PL Industry is expected to grow to $141 Billion in gross revenue in 2011

From 2009-2010 the increase in 3PL net revenues was 4.7x the rate of U.S. GDP growth

77% of the Fortune 500 and all of the Fortune 100 use at least one 3PL. (Walmart = 32)

90% of the Top-25 3PL’s operate out of GA


What’s Changing? Global Trade Routes

of the world’s population will achieve middle class by 2020

40% Source: McKinsey Quarterly

cross the threshold to the middle class each year, and virtually all are in emerging economies

70 Million People

Source: Goldman Sachs


`


100 YEARS LATER!

Center of Innovation for Logistics

Cargo Origin = CHINA Cargo Destination = ATLANTA

Cargo Origin = CHINA Cargo Destination = ATLANTA

ALL WATER ROUTES TO E.C.

LAND BRIDGE

FROM W.C.

Actual Market Share by Route 2009-2011

ALL WATER ROUTES TO E.C.

LAND BRIDGE

FROM W.C.

40

42

44

46

48

50

52

54

56

58

60

Source: U.S. Army Corps of Engineers, Dec. 2010

Major Port Depths

Feet

at M

LW

SHEP TIMELINE

Tier I 1996 – Reconnaissance Study Completed 1998 – Feasibility Study Completed 1999 – WRDA Authorization requires a “Tier II” EIS and GRR

Reconnaissance Study

1996 1997

Feasibility Study

1998

Tier I EIS & Feasibility Report Issued

1999

WRDA Authorization

Tier II 2011 – Tier II EIS/GRR Completed – 64 individual studies 2012 – SHEP Plan Finalized and Approved $5.50 of benefits for every $1.00 in project cost $181M in state funds approved* $600,000 in President’s FY12 Budget


1996 1997

Feasibility Study

1998


1999

WRDA Authorization

11/10

Draft Tier II EIS/GRR Released & Public Comment

4/12

Final Tier II EIS Released & Public Review

8/12

Final Chief’s Report & Agency Approval Released

64 Individual Studies

SHEP TIMELINE

SHEP TIMELINE

What Happens Next? Record of Decision – Fall 2012 Construction Begins –2013 Target Completion – Late 2016


1996 1997

Feasibility Study

1998


1999

WRDA Authorization

11/10

Draft Tier II EIS/GRR Released & Public Comment

4/12

Final Tier II EIS Released & Public Review

8/12

Final Chief’s Report & Agency Approval Released

64 Individual Studies

Fall 2012

Record of Decision

2013

Begin Construction

2016

Target Completion

Source:

MIN

IMAL

IMPO

RTAN

CE

C

RITI

CAL I

MPO

RTAN

CE

NON-COMPETITIVE VERY COMPETITIVE

LOCAL ASSETS

- Regulatory environment - Market access - Labor relations - Container/bulk port access - Business climate - Highway access - Air cargo and passenger access - Telecommunications - Rail access - University presence and quality - Workforce availability/quality - Logistics service providers - Utility services - Quality of life - Cost of living - Weather/Climate

Source:

MIN

IMAL

IMPO

RTAN

CE

C

RITI

CAL I

MPO

RTAN

CE

NON-COMPETITIVE VERY COMPETITIVE

LOCAL COST FACTORS

- State Incentives - Local Incentives - Electrical power - National Logistics costs - Regional logistics costs - Property taxes - Construction costs - Corporate income taxes - Workforce wages

Source:


INDUSTRY VOLUME VELOCITY VISIBILITY

INFRASTRUCTURECAPACITY

CAPABILITY CONNECTIVITY

Opportunity is missed by most because it is dressed in overalls and looks like work.

- Thomas Edison


Thinking Globally, Acting Locally… Annual Georgia Logistics Summit: Over 1,600 attended from 28 states and 7 nations in 2012; 85% from private industry

63

MARCH 19 – 20, 2013

tag infrastructure society logistics presentation by page siplon

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