The Traffic Club of Chicago

Maersk Line has signed a contract for 10 of the world's largest, most efficient container vessels with an option to buy another 20. The vessels will have a capacity of 18,000 TEU and will be delivered from Korea's DSME shipyard from 2013 to 2015.

By Richard L. Wottrich, Senior Managing Director, International Services 

April 17, 2012, Chicago USA

Richard Wottrich is speaking at The Traffic Club of Chicago on Thursday, April 19, 2012, on the topic of “Macro Trends Impacting Global Transportation & Logistics.”

The Traffic Club of Chicago, founded in 1907, is one of the nation’s oldest and finest transportation associations. The club is dedicated to maintaining the highest standards of the transportation and logistics industry, keeping its members abreast of industry happenings, while at the same time, assuming a responsible role in civic, cultural and charitable activities in the Chicago area.

12 Macro Trends Impacting Global Transportation & Logistics (Black Swan Events)

Nuclear Power – Three major economies, Japan, Germany and Italy, have decided to shut down their nuclear power plants over the next 30 years, as these plants hit their designed life spans. This switch to other power sources will put increased demand on global oil and gas reserves.

Natural Gas & Liquefied Natural Gas (LNG) – The advent of advanced fracking technologies in the US has unlocked vast gas reserves that are changing the economics of energy globally. The massive LNG Gorgon Project in Western Australia will create a global LNG market.

China & India – Despite recent modest slowdowns in growth rates, China and India remain significant factors in global oil and gas consumption.

Consolidation – As global population soars beyond 7 billion, the sheer scale of Transportation and Logistics will drive industry consolidation.

Infrastructure – In 1989 China had just 200 kilometers of expressways. Today China has the second largest super highway system in the world and significant high speed rail capacities. Brazil must built out an entire infrastructure for its offshore oil and gas fields. The US must rebuild ports to meet new super-containership specifications.

Green Energy & Sustainability – Major governments globally will continue to spend stimulus money to encourage the development of solar, wind and other alternative energy sources.

Continued & Accelerating Globalization of Trade –  New markets will be developed. For example Africa is approaching 1 billion in population and a newly emerging middle class is already attracting major multinationals.

IT Advances – Internet applications, multi-modal transportation technology, GPS tracking technologies, electronic documentation, and streamlined customs procedures will continue to stimulate trade.

Competition & Declining Freight Margins – High growth rates in Asia will drive competition to new levels and force rates down globally. As new IT Advances and Consolidation drive down costs, international freight rates will continue to drop – perhaps as much as 40%.

Complex Contracts – As consolidation drives “door-to-door” supply chains, contracts will become more complex. Surcharges and value-added services, value-based agreements, risk and cost-sharing, joint ventures and related risk-sharing vehicles will drive growth and costs.

Developed Nations Sovereign Debt – The Sovereign Public (external) Debt in Developed Nations (including China) exceeds $33 trillion. This continued reliance on printing money acts as a sea anchor on global growth and in turn global trade.

Security – As the March 11, 2011, earthquake and tsunami in Japan demonstrated, integrity of global supply chains, food and water security, and indeed the safety of entire populations depend heavily on the Transportation Industry’s ability to adapt and activate alternatives on demand.

Richard Wottrich, Blog Author –