Dryport Conference:Intermodal Strategies for Integrating Ports & Hinterlands, Edinburgh, Oct 21-22 2010

Inland Ports and Freight Regionalization in North America

Jean-Paul Rodrigue

Associate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA

What Drives Supply Chain Management? Control Freaks…

Added Value Efficiency Control

OffshoringCosts / time /

reliabilityInternalize efficiency

North American Intermodal Transportation: Emerging Paradoxes

Geographical and functional diffusion of containerization.Massive investments.

Rationalisation (corridors and sites).

New standards, practices and technologies.Increasing returns.

Revolution

Growth Maturity

Incremental changes.Decreasing returns.

Evolution

Consolidation (maritime, rail and trucking). Emergence of large operators.

DeregulationPPP. Supply chain control. Added-value-capture.

Governance

The Insertion of Inland Ports in North America: Basic Requirements

Intermodal Rail Terminal Rail Corridor to the Gateway

Logistics Activities

Inland PortCo-location

Real estate

Core Tenants

Drayage

Agglomeration

Northwest Ohio Intermodal Terminal, CSX 2011; An Inland “Port”

The Complexities of Inland Logistics: The “Last Mile” in Freight Distribution

GatewayInland

TerminalDistribution

Center

Capacity

Frequency

CorridorCustomer

“Last Mile”

Segment

GLOBAL HINTERLAND REGIONAL LOCAL

Shipping Network

Massification Atomization

21

2Inventory in transit1 Inventory at terminal

Functional Relations between Inland Terminals and their Hinterland

InlandTerminal

Logistics activities

Retailing and manufacturingactivities

I II III

Tier I Tier II Tier III

FLOWS & INTEGRATION

Logistics Pole

Freight Region

American Foreign Trade by Maritime Containers, 2009 (in TEUs)

Wal-MartTarget

Home DepotDole Food

Sears HoldingLowe's

Costco WholsaleLG Group

PhilipsHeinekenChiquita

Ashley FurnitureIkea Intl.

SamsungJC Penney

JardenGeneral Electric

Red BullNike

Whirlpool

0 200,000 400,000 600,000 800,000

Importers

America Chung NamKoch Industries

International PaperWeyerhaeuser

Newport Ch IntlDow Chemical

CargillPotential Industries

Denison Intl.Procter & Gamble

DupontJC Horizon

ExxonMobilCedarwood-Young

ShintechDelong

Sims Metal ManagementMeadwestvaco

Genesis Resource EnterprisesCellmark Group

0

200,0

00

400,0

00

600,0

00

800,0

00

Exporters

Asymmetries between Import and Export Containerized Logistics

Many Customers• Function of population density.• Geographical spread.• Incites transloading.• High priority (revenue).

Few Suppliers• Function of resource density.• Geographical concentration.• Lower priority.• Depends on repositioning

opportunities.

Gateway

Inland Terminal

DistributionCenter

Customer

Supplier

Repositioning

Import-Based

Export-Based

Distribution Network Configurations for Containerized Import Cargo

Type Supply Chain

Gateway-based Few mass market goods (economies of scale in distribution).Few very specialized goods (economies of scale in warehousing).Little if any transformations.Transloading.

Tiered-based Mix of retail goods coming through a few gateways.Some customization.Large suppliers and large retailers (Big Box).Transloading, Postponement and Cross-docking.

Regional distribution centers

Complex set of goods coming from numerous suppliers (e.g. automotive parts).Regional variation of the nature and extent of demand.

Local distribution centers Time sensitive bulky cargo (e.g. perishables).Low lead times.City logistics.

Distribution based on RDCs Distribution based on two gateways

Distribution based on tiered system Distribution based on local DCs

Optimal Location and Throughput by Number of Freight Distribution Centers

Intermodal Terminals and Recent Co-Located Logistic Zones Projects

Every rail operator involved.Partnership with a major real estate developer.

Main Advantages of Co-location

Factor Advantages

Real estate Lower land acquisition costs. Higher acquisition capital. Joint land use planning.

Specialization Rail company; terminal development and operations.Real estate promoter; logistic zone development and management.

Cargo interdependency Respective customers. Joint marketing.

Drayage Priority gate access. Shorter distances. More delivery trips. Higher reliability.

Asset utilization Better usage level of containers and chassis. Chassis pools. Empty container depots.

Information technologies

Integration of terminal management systems with inventory management systems.

The North-American Container Port System and its Multi-Port Gateway Regions

1

2

6

5

4

3

7

Multi-port gateway regions1. San Pedro Bay2. Northeastern Seaboard3. Southwestern Seaboard4. Puget Sound5. Southern Florida 6. Gulf Coast7. Pacific Mexican Coast

BNSF Logistics Park

CenterPoint-KCS Intermodal Center

Rickenbacker Global Logistics Park

BNSF Logistics Park, Chicago (Extended Gateway of LA / LB)

BN

SF In

term

odal

Yar

d

Distribution Centers

Wal-Mart

Mae

rsk

CaliforniaCartage

Chic

ago

(60k

m) ►

CenterPoint-KCS Intermodal Center, Kansas City (Extended Gateway of Lazaro Cardenas)

KC

S In

term

odal

Yar

d

Ret

ail

Phase 1

Phase 2

Phase 3Phase 4

Phas

e 5

Kan

sas

City

(25

km) ►

Rickenbacker Global Logistics Park, Columbus Ohio (Extended Gateway of Hampton Roads)

NS Intermodal Terminal

Col

umbu

s (1

5km

)►

Ricken

backe

r Inter

national

Airport

Intermodal Campus

Rail Campus

Air Cargo Campus

North Campus

Gateway Campus

Share of the Northeast Asia – U.S. East Coast Route by Option

1999 2000 2001 2002 2003 2004 2005 2006 20070%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

85.7% 82.8%77.2%

71.8%64.6% 60.9% 58.1% 56.0% 55.0%

11.3% 15.1%20.8%

23.6% 33.8% 38.2% 40.1% 42.0% 43.0%

3.0% 2.1% 2.0% 4.6% 1.5% 0.9% 1.8% 2.0% 2.0%

Suez CanalPanama CanalIntermodal

Transit Times from Shanghai and North American Routing Options (in Days)

28

25

26

25

19

13

14

12

13

22

5

5

5 3

4

8

8

5

Vancouver

Seattle / Tacoma

Prince Rupert

Oakland

Los Angeles

Lazaro Cardenas

Panama

Houston

Savannah/Charleston

Norfolk

New YorkChicago

DallasAtlanta

TorontoLower aggregate demand.The “curse” of economies of scale.Response from West Coast ports.Response from railways (East vs. West).New gateways (Canada: CN, Mexico: KCS).Response from terminal operators.Response from Caribbean transshipment hubs.Costs (fuel prices and Panama Canal toll rates).Competition from Suez and the Mediterranean.Regionalization of production.

Extending the Gateways and Inland Ports

1- Functional Integration of Supply Chains (Gateway + Corridor + Inland Port)2- Regional Division of Distribution(Asymmetries + Co-location as a filter)3- Challenges(Competing gateways + Corridors)