33rdrd European Conference and Exhibition on Inland European Conference and Exhibition on Inland Terminals, Paris, October 22-23 2008Terminals, Paris, October 22-23 2008

Transport Trends and Inland Transport Trends and Inland HubsHubs

Jean-Paul Rodrigue

Associate ProfessorDept. of Global Studies & GeographyHofstra UniversityNew York, USA

Type and Function of Inland TerminalsType and Function of Inland Terminals

Satelliteterminal

Load center

Transmodalterminal

Type Function

Satellite terminal Close to a port facility. Accommodate additional traffic and serve functions that have become too expensive at the port. Container transloading.

Freight distribution cluster / load center

Access regional markets (production and consumption). Intermodal, warehousing, and logistics functions. Linked with logistics parks and free trade zones.

Intermodal / Transmodal facility

Link large systems of freight circulation either through the same mode (e.g. rail-to-rail) or through intermodalism (e.g. rail-to-truck).

A Favorable Environment for Inland PortsA Favorable Environment for Inland Ports

Containerized Trade

Strong growth (China effect)Containerization of supply chains.Long distance hinterland transportation.

Trade Imbalances

Imbalanced flows and shipping rates.Load centers for empties on backhauls to ports.

Gateway Congestion

Limitations for terminal expansion.Higher port charges and lower dwell times.Problematic local and terminal gate access.

Governance Terminal operators.Value capture.Environmental constraints (Nimbyism).Political support (policy).

Global Containerized Trade: Prepare to be Global Containerized Trade: Prepare to be DisappointedDisappointed

An Ongoing Intermodal IntegrationAn Ongoing Intermodal IntegrationPotential Divergence: Bubbles, Trade andPotential Divergence: Bubbles, Trade and

ContainerizationContainerization

Container yard, Port of Yantian, ChinaContainer yard, Port of Yantian, China

Intermodal Integration is Moving InlandIntermodal Integration is Moving Inland

Containerization of Maritime Transport SystemsContainerization of Maritime Transport Systems

Containerport

Containerization of Inland Transport SystemsContainerization of Inland Transport Systems

Intermodalterminal

PendulumServices

Intermodal and Transmodal OperationsIntermodal and Transmodal Operations

Corridor

Offshorehub

InlandPort

Gateway

World Container Traffic, 1980-2008. Reaching Peak World Container Traffic, 1980-2008. Reaching Peak Growth?Growth?

0

100

200

300

400

500

600

700

800

900

1000

1980 1985 1990 1995 2000 2005 2010 2015 2020

Mill

ion

TE

U

Divergence

Adoption Acceleration Peak Growth Maturity

1966-1992

1992-2002

2002-2010(?)2010(?) -

The Global Economy is ShockedThe Global Economy is Shocked

West Texas Intermediate, Monthly Nominal Spot Oil Price (1946-2008)

0

20

40

60

80

100

120

140

Jan-

46

Jan-

48

Jan-

50

Jan-

52

Jan-

54

Jan-

56

Jan-

58

Jan-

60

Jan-

62

Jan-

64

Jan-

66

Jan-

68

Jan-

70

Jan-

72

Jan-

74

Jan-

76

Jan-

78

Jan-

80

Jan-

82

Jan-

84

Jan-

86

Jan-

88

Jan-

90

Jan-

92

Jan-

94

Jan-

96

Jan-

98

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

Gold StandardGold StandardFirst Oil ShockFirst Oil Shock

Second Oil ShockSecond Oil Shock

Third Oil ShockThird Oil Shock

A B C

21

The Current Trend is Strongly Deflationary…The Current Trend is Strongly Deflationary…

01,0002,0003,0004,0005,0006,0007,0008,0009,00010,00011,00012,000

Baltic Dry Index, Monthly Value, 2004-2008

Complete BreakdownComplete Breakdown

Coping with ImbalancesCoping with Imbalances

Transport FlowsTransport FlowsTransport RatesTransport Rates

Inland Ports and RepositionningInland Ports and Repositionning

NS Rutherford Inland Terminal, PennsylvaniaNS Rutherford Inland Terminal, Pennsylvania

Containerized Cargo Flows along Major Trade Containerized Cargo Flows along Major Trade Routes, 1995-2006 (in millions of TEUs)Routes, 1995-2006 (in millions of TEUs)

4.0

5.2

5.6

7.2

8.8

10.2

12.4

12.4

13.9

3.5

3.3

3.3

3.9

3.9

4.1

4.2

4.4

4.6

2.8

3.5

4.5

5.9

6.1

7.3

8.9

10.8

12.5

2.3

2.7

3.6

4.0

4.2

4.9

5.2

5.5

5.8

1.2

1.3

2.2

2.7

1.5

1.7

1.7

2.1

2.3

1.4

1.7

2.9

3.6

2.6

2.9

3.2

3.8

3.9

0 10 20 30 40

1995

1998

2000

2001

2002

2003

2004

2005

2006

Asia-USA

USA-Asia

Asia-Europe

Europe-Asia

USA-Europe

Europe-USA

Maritime Freight Rates (Nominal USD per TEU), 1993-Maritime Freight Rates (Nominal USD per TEU), 1993-20072007

$0

$500

$1,000

$1,500

$2,000

$2,500

1993-4

1994-2

1994-4

1995-2

1995-4

1996-2

1996-4

1997-2

1997-4

1998-2

1998-4

1999-2

1999-4

2000-2

2000-4

2001-2

2001-4

2002-2

2002-4

2003-2

2003-4

2004-2

2004-4

2005-2

2005-4

2006-2

2006-4

2007-2

Asia - US

US - Asia

Asia - EuropeEurope - Asia

Geographical Levels of Empty Container Geographical Levels of Empty Container Repositioning Repositioning

HinterlandHinterland

ForelandForeland

Inter-Regional Repositioning

(inland)

Global Repositioning

Inter-RegionalRepositioning

(coastal / fluvial)

Port Depot / Inland terminal Freight Distribution Cluster

RegionalRepositioning

Cargo Rotation

Monthly Container Traffic Handled by the Port of Los Monthly Container Traffic Handled by the Port of Los Angeles, 1995-2008 (TEU)Angeles, 1995-2008 (TEU)

Terminalization and Inland PortsTerminalization and Inland Ports

Trimodal Container Terminal, Willebroek, BelgiumTrimodal Container Terminal, Willebroek, Belgium

Economies of Scale: A Hard Pill to SwallowEconomies of Scale: A Hard Pill to SwallowTerminalization and Supply ChainsTerminalization and Supply Chains

Extended Distribution CentersExtended Distribution Centers

The Largest Available Containership, 1970-2007 (in The Largest Available Containership, 1970-2007 (in TEUs)TEUs)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Hinterland Logistics: The Realm of the “Last Mile” Hinterland Logistics: The Realm of the “Last Mile” (or the “First Mile”)(or the “First Mile”)

GatewayGatewayInland Inland

TerminalTerminalDistributionDistribution

CenterCenter

Capacity

Frequency

CorridorCustomerCustomer

“Last Mile”

Segment

GLOBALGLOBAL HINTERLANDHINTERLAND REGIONALREGIONAL LOCALLOCAL

Shipping Network

MassificationMassificationMassificationMassification AtomizationAtomizationAtomizationAtomization

Terminalization in a Supply Chain ContextTerminalization in a Supply Chain Context

GatewayGateway

Offshore HubOffshore Hub

BottleneckBufferDistribution center (outbound / inbound)Inland containerized goods flowInland non-containerized goods flowMaritime container flow

Foreland (First Mile)Foreland (First Mile)

Hinterland (Last Mile)Hinterland (Last Mile)

GatewayGateway

SuppliersSuppliers

CustomersCustomersExtended Distribution Center

Extended Gate

Port regionalization and the creation of a Regional Load Center Network

Inland Inland TerminalTerminal

Supply Chain Terminalization: Import Flows to the Supply Chain Terminalization: Import Flows to the HinterlandHinterland

■ Bottleneck and buffer-derived terminalization• Port regionalization:

• Regional load center network.• Extended gate:

• Development of inland terminals.

• Extended distribution center:• The terminal as a

warehousing unit.

GatewayGateway

Offshore HubOffshore Hub

GatewayGateway

SuppliersSuppliers

CustomersCustomers

Inland Inland TerminalTerminal

11

22

33

Container Transloading: A Strong Vector of Container Transloading: A Strong Vector of TerminalizationTerminalization

Cause Outcome

Consolidation Transferring the contents of smaller containers into larger containers (e.g. three maritime 40 foot containers into two 53 foot domestic containers). Cost savings (number of lifts). Time delays.

Weight compliance Transferring the contents of heavy containers into loads meeting national or regional road weight limits.

Palletizing Placing loose (floor loaded) containerized cargo unto pallets. Adapting to local load units (e.g. europallet).

Demurrage Handing back containers to owner (maritime shipping or leasing company) by transferring its contents into another load unit (e.g. domestic container).

Equipment availability

Making maritime containers available for exports and domestic containers available for imports. Trade facilitation.

Supply chain management

Terminal and transloading facility as a buffer. Delay decision to route freight to better fulfill regional demands. Perform some added value activities (packaging, labeling, final assembly, etc.)

Automated Transfer Management System for Truck-Automated Transfer Management System for Truck-Rail TransfersRail Transfers

Supply Chains and Inland Terminals

■ JVC Belgium (EDC) + TCT Belgium (EG)• Four day rule.• Free time Rotterdam (5 days).• Free time TCT Belgium (21 days).• Full containers at TCT; part of stock to JVC Belgium.

Governance and Inland TerminalsGovernance and Inland Terminals

Terminal Operators and Value CaptureTerminal Operators and Value CaptureOperations and Life CycleOperations and Life Cycle

Containerization of CommoditiesContainerization of Commodities

Uiwang Inland Container Depot, South KoreaUiwang Inland Container Depot, South Korea

Commodity Chain

The Value Capture Process along Commodity ChainsThe Value Capture Process along Commodity Chains

Port Holding

Port

Aut

horit

y Maritime Services

Inland Services

Port Services

Horizontal Integration

Vertical Integration

Maritime ShippingMaritime Shipping

Port Terminal Operations

Port Terminal Operations

Inland Modes and TerminalsInland Modes and Terminals

Distribution Centers

Distribution Centers

Offshorehub

InlandPortPort

Inland Terminals: Operations and Added ValueInland Terminals: Operations and Added Value

CoreCore(Operations)(Operations)

Infrastructure Modal access (dock, siding, road), unloading areas

Equipment Intermodal lifting equipment, storing equipment

Storage Yard for empty and loaded containers

Management Administration, maintenance, access (gates), information systems

AncillaryAncillary(Added (Added Value)Value)

Trade facilitation Free trade zone, logistical services

Distribution centers Transloading, cross-docking, warehousing, light manufacturing, temperature controlled facilities (cold chain)

Storage depot Container depot, bulk storage

Container services Washing, preparation, repair, worthiness certification

Inland Terminal Life CycleInland Terminal Life Cycle

TrafficTraffic

Stage 1Stage 1 Stage 2Stage 2 Stage 3Stage 3

Planning Maturity DeclineGrowth

Stage 4Stage 4

Setting

Stage 5Stage 5

Subsidies / InvestmentsSubsidies / Investments

Operationsbegin

Concept

ProfitProfit

Bulk and Containerized Commodity ChainsBulk and Containerized Commodity Chains

Bulk Commodity ChainBulk Commodity Chain

Containerized Commodity ChainContainerized Commodity Chain

Consolidationcenter

PortSupplier Customer

Inland Terminal

Containerport

PendulumServices

Point-to-Point

ComplementarityComplementarity

26

Inland Terminals: Is the Trend our Friend?Inland Terminals: Is the Trend our Friend?

Intermodal Integration (Positive)Intermodal Integration (Positive)Energy Prices (Somewhat Positive)Energy Prices (Somewhat Positive)

Collapse of Asset Inflation Bubbles (Very Negative)Collapse of Asset Inflation Bubbles (Very Negative)Containerization of Commodities (Positive)Containerization of Commodities (Positive)

Container waiting to be loaded, Shenzhen, ChinaContainer waiting to be loaded, Shenzhen, China