The role of dry ports in logistics: towards a terminalization of supply chains.

Theo NotteboomITMMA - University of Antwerp

www.itmma.ua.ac.betheo.notteboom@ua.ac.be

Conference ‘Site assessment’ - Brugge, 8 mei 2009

The logistics environment

• Transport costs have increased from 30-40% of total logistics cost up towards 60% in the last two decades

• Delivery within 24h will become the rule: inventory ! - 27% of logistics service providers comply today

- 44% will comply in 3 years time (Prologis-CapGemini, 2006)

• Pressure on (infrastructural) capacity (current crisis = reflection moment), reliability and rate stability

• Environmental and security issues are omnipresent

source: BCI

From

Shipper ConsumerDC

EDC

To

Shipper ConsumerRDC

Rapidfulfillment center

CrossDock

The logistics environment Chains become networks

Distribution based on RDCs Distribution based on one EDC

Distribution based on tiered system (EDC+RDCs) Distribution based on local DCs

© ITMMA 2009

The logistics environment Logistics sites group to become logistics zones

LAND

SEA

Multimodal transshipment center

Logistics site

Primary

logistics zone

Secondary

logistics zone

LAND

SEA

Source: Notteboom & Rodrigue (2004)

FROM TO

Places which combine central location with gateway function are likely to be chosen

Bron: Notteboom & Rodrigue (2005)

0 50 100 150 20025Kilometers

France

Belgium

Lux

Germany

Netherlands

ROTTERDAM

Zeeland Seaports

ANTWERPZeebrugge

Ghent

Ostend

Brussels

LilleLiège

WielsbekeGenk

DuisburgEmmerich

Nijmegem

Avelgem

Born

Venlo

Valenciennes

Grimbergen

Willebroek

DeurneMeerhout

Duesseldorf

Cologne

Krefeld

Neuss

Bonn

Andernach

Dortmund

Amsterdam

Alkmaar

BeverwijkZaandam

HarlingenLeeuwarden

Veendam

Meppel

GroningenDrachten

Kampen AlmeloHengelo

ZutphenEde

HillegomUtrecht

A. a/d Rijn

TilburgOosterhout

Helmond

Gorinchem

MoerdijkDen Bosch

Oss

Valburg

Stein

Gennep

Mertert

Koblenz

Dormagen

Seaport in Extended Rhine-Scheldt Delta

Logistics corridors

Inland Container Terminal (barge

or multimodal)

Growth region European

Distribution (outside seaport system)

Dunkirk

The logistics environmentLogistics sites group to become logistics zones

Source: Cushman & Wakefield, Healey & Baker

The logistics environment

Middle East – Far East

Main shipping route

Americas

Americas

Transhipment/interlining port

(transhipment incidence >75%)

Logistics core region

Multi-port gateway region

Inland corridor

Main shipping route

Gateway port

Gateway port also handling

substantial transhipment flows

Multi-port gateway regions

1. Extended Rhine-Scheldt Delta

2. Helgoland Bay

3. UK SE Coast

4. Spanish Med

5. Ligurian Range

6. Seine Estuary

7. Black Sea West

8. South Finland

9. Portugese Range

10. North Adriatic

11. Gdansk Bay

12. Kattegat/The Sound

1

2

11

6

5

10

4

9

7

3

8

12

Increased interest in hinterland issues

• Market players:

- Cost balance is shifting to inland costs

- Competition carrier haulage/merchant haulage

- Vertical integration by market players in view ofrevenue-making, cost savings and creation of value-added to customers

- Coordination actions among market players and portauthorities to streamline inland logistics

The ‘terminalization’ concept

• Terminalization

- Growing influence of transport terminals in the setting and operation of supply chains in terms of location, capacity and reliability.

9

Type Bottleneck-derived Warehousing-derived

Nature Terminal as a constraint Terminal as a buffer

Concept Rational use of facilities to

maintain operational

conditions

Incorporating the terminal as

a storage unit

Challenge Storage space, port call

frequency, gate access

“Inventory in transit” with

“inventory at terminal”

Outcome Volume, frequency and

scheduling changes

Reduce warehousing

requirements at distribution

centers

• Fight ‘atomization’ with inland ports:

vessel vessel

= direct truck = barge/rail shuttle

= endhaul truck

Seaport

terminal

Inland

terminal

Inland

terminal

Inland

terminal

Seaport

terminal

The ‘terminalization’ conceptBottleneck-derived terminalization

Gateway Port

Low dwell time High dwell time

Inland Terminal

DC

On call delivery

Inland corridor

Extended Distribution Center

Satellite Terminal

High

Low

Deg

ree

of

Ga

tew

ay

s S

yn

chro

niz

ati

on

11

The ‘terminalization’ conceptWarehouse-derived terminalization

Logistics zones• The concept of logistics zones in the hinterland is now well-advanced

in Europe:

- ‘platformes logistiques’ in France

- Güterverkehrszentren (GVZ) in Germany

- Interporti in Italy

- Freight Villages in the UK

- Zonas de Actividades Logisticas (ZAL) in Spain

Policy development

• Logistics network development:

- Strong focus on link between gateways and logistics

Antwerp

Brussels

Ghent

Zeebrugge

OstendGenk

Site selection

source: BCI

• Focus on costs, quality and transit time

• Personal factors and amenities

• Labor costs

• Transportation costs

• Occupancy costs

• Incentives (government)

Cost factors +

• Labor quality/flexib.

• Labor regulations

• Customs

• Transport situation

• Facilities & utilities

• Sites (prime location, high accessibility)

Quality factors

• Inbound transit time

• Outbound transit time

• Buffering at terminals

Time factors+

Supply chains differ

• Product and firm characteristics influence logistics attractiveness of port and inland sites (Kuipers and Eenhuizen, 2004)

- Value density

- Delivery frequency

- Economies of scale and scope in production

- Country-specific product or packaging requirements

- Service-oriented distribution (versus cost-orientation)

- Share of transport costs in total distribution costs

- Share of distribution costs in total production costs

- Technological dynamism related to product

Ports as habitats for logistics sites

The following logistics activities typically find a good habitat in ports :

• High dependency on short-sea shipping.

• Considerable reduction in the transported volume;

• Big volumes of bulk cargoes, suitable for inland navigation and rail;

• Companies which have a site in the port area;

• Cargo that needs flexible storage to create a buffer (products subject to season dependent fluctuations or irregular supply);

• Distribution centers in a multiple import structure (tiered) and as a consolidation centre for export cargo.

Concluding remarks

• Inland terminals and dry ports have become indispensable in accommodating supply chains

• New dynamics in port/hinterland relations:

- Competition but also complementarity

- Creation of large logistics pole

- Terminalization process is unfolding

• A sound approach to location issues:

- Avoid an imperious approach: cargo flows can not be forced to opt for certain routes/locations

- Aim for a ‘flexible’ approach: routing alternatives build upon network qualities

Thank you for your attention !theo.notteboom@ua.ac.be