ifwla - Warehousing and Logistics International

North America 35Access to this U.S. heartland is increasingly importantas population and industry continues to outperformother geographic sections of the United States. The singlelocation for a distribution centre which would reachthe largest U.S. population was Bloomington, IN andnow has shifted further south to Henderson, Ky. Themajority of new auto plants are opening in this region.In other words, the U.S. destinations where PNW portsincluding PMV are competitive are growth markets.Inter-port Competitiveness is ultimatelyMeasured by Total Logistics Cost of the RoutingLocation gets PMV into the competitive area but theactual freight is delivered by the transportation systemsconnecting origins in Asia and the destinations inNorth America. Shippers ultimately choose their routingson based on the door to door logistics costsincurred, the total logistics cost. Total logistics costincludes direct transport costs, inventory costs and thecosts of service failure such as stock out, lost sales anddown time costs. These costs are largely dependent onthe capacity of the transportation and logistics infrastructureand how well the logistics service providers utilizethat capacity.Thus the following factors must be considered:• Port capacity improvements• Panama Canal expansion• Rail capacity improvements• Highway capacity improvements• Cost recovery fees such as Harbor Maintenance Tax• Shipping line scheduling and port strategies (OceanCarrier Service Deployment Strategies)• Transport Chain Management (coordination and collaboration)• Labor and Union industrial relations environment• Environmental and land use constraints• Gateway Related Fees• Security barriersLong Run Competiveness is ultimately determinedby Origin and Destination of TrafficShifting trade patterns may be more significant thanthe initiatives of gateway competitors in determiningthe competitiveness of an individual gateway and corridor.This is because; the Asia Pacific GatewayCorridor’s (APGC) location advantage is positioned forfreight originating in North and South East Asia tonorthern and central North America. If freight growthshifts to other origin–destination trade corridors, theAPGC is disadvantaged in receiving North Americanimports due to its location.Some of the key factors that are going to affectwhere products will be produced for import into NorthAmerica are:• wage rates• exchange rates• fuel/transportation costs.• Export subsidies (China VAT rebate)• Internalization of carbon emission externalities as abusiness cost.• Demand driven supply chain strategyIn fact, the convergence of the first four factors hasresulted in the Total Landed Cost of producing selectedproducts in Mexico and delivering to the U.S. marketlower then manufacturing in China and for other products,lower in India or other South Asian countries thanin China (see box). For the foreseeable future, perhapsmany decades, China will remain the overall low costwww.warehousinglogisticsinternational.comIssue No.3