Around the world, the inland port phenomenon is gaining momentum. At the bottom of this article, we list just some of the news articles published over the last few months from around the world, talking about new or proposed inland port projects. This is just a sampling, there are many more. The inland port concept is quite popular right now and we wanted to highlight some critical issues that can impact their ultimate success and the success of their community partners.
Driven by a range of actors: asset investors, railroads, local and regional governments, economic development organizations and seaports- an array of players are pursuing the development of new inland port projects. Interest in such projects is global and this trend is manifesting into new projects in Europe, North and South America, Africa and Asia.
Generally speaking, inland ports have meant the creation of new infrastructure and asset development associated with the intersection of rail and road, in many cases related to a nearby or distant seaport. Less often, air cargo as a fourth mode is blended into an overall inland port-logistics hub product package, although there are some very good examples of this being done with success. We will comment on this later.
The objectives for inland port projects vary considerably with the common expectation of creating new economic efficiencies by providing streamlined logistics intersections along with purpose-designed property and supporting infrastructure. The prospect of enhancing cargo transit time efficiencies with strategic rail-truck intermodal assets is well-understood by logisticians and supply chain managers. Fewer human touches, reduced dwell times, shorter last mile hauls, onsite property assets and access to specialized cargo handling equipment are some of the efficiency factors that can reduce cost and increase reliability. Certainly for inbound consumer products, the operational advantage to harbor inventory at strategic crossroad settings for demand-driven distribution into proximate consumer markets is a fundamental objective for inbound retail supply chains and their inland port partners.
In a less direct way, to their advocates, inland ports are also assumed to have attractiveness in the creation of structured logistics hubs that may also create a competitive advantage for existing regional firms that are importing products into a manufacturing supply chain. The thinking is that new, lower-cost, easier access transportation is created for those firms and due to these advantages these firms may increase their profitability and production. Beyond that, advocates may assume associated new efficiencies for outbound regional shippers, for manufacturers that require easier rail access due to a new or enhanced rail intermodal facility and the better equipment availability, etc. that comes along.
Depending on the setting, this may be quite true at least to one extent or another. From our perspective, to understand the market and the wider economic development opportunity, it is quite important to understand the matter of degree for how competitiveness is enhanced. In this case the details really matter, as conceptual goodness may not exactly translate to a meaningful and direct benefit. For example, it is critical that the inland port and its specific connectivity profile match existing manufacturers’ supply chain origin/destinations, their shipment frequency and cost requirements – as compared to existing supply chain lanes.
We posit that the issue of how an inland port can produce increased competitiveness requires quite significant thought and that the issue of enhanced competitiveness is really the main point – for investors, rail carriers and economic development officials. The delta in terms of distribution versus manufacturing, or scale and use can represent a tremendous difference in project ROI.
We believe that seaport owners have a huge stake in the business planning precision that is necessary for inland ports, even if they are unaffiliated projects. On one hand inland ports can help to support seaport inbound trade, but they can also to be a strategic asset in supporting export volume growth with increased manufacturing occurring in the nominal or extended seaport hinterland.
We believe that in most situations, highly-connected places will have a huge advantage in attracting manufacturing and distribution investment that is supported by increasingly complex and global supply chains. As this refers to companies that produce high-value products and rely on high-velocity supply chains, we think that the integration of air cargo and associated infrastructure and property assets can be vital to some modern inland port business plans. Though there may be few instances of cargo being transferred from a railcar to an airplane, there are definitely instances of inbound raw product movements that input to a high-tech production process that yields an air cargo product. Moreover, in our experience, there are numerous examples of companies that typically utilize ground transportation but will also have out-of-cycle episodic expedited delivery requirements. These instances often represent extremely important client requirements and near-immediate delivery times might be the difference that helps to maintain a client relationship. Lastly, during the site selection process, it will be far easier to justify a facility location decision to a corporate Board of Directors if that site is located in a modern purpose-built global logistics complex.
As manufacturing supply chains become more global and more complex, easier and lower cost transportation is increasingly vital to supply chain managers and corporate executive decision-making. Beyond that, modern manufacturing sites at strategic logistics settings are increasingly valuable and in our opinion, inland ports that can define advantage for both inbound and outbound movements will be hugely successful. From a regional government and economic development perspective, if we can concentrate on how to leverage the inbound to advantage manufactured good for export – this is the ultimate success.
Final thoughts: With a proper business plan, we see inland ports as strategic national and regional assets in supporting a sophisticated international trade and economic development strategy. We think that inland ports that connect ocean carriers to inland destinations should develop structured partnerships with the seaports that they connected to. Projects supported with a business model built solely around inbound consumer goods distribution may well be leaving a lot of potential on the table. Where there is a market need (and a profile for new global tech business opportunity), we strongly advocate for developing inland port projects adjacent to a commercial airport.
We’d enjoy chatting with owners of existing inland port assets with new project developers about their business strategies. GLDPartners | Global Logistics Development Partners
Recent inland port article headlines:
New Inland Port Coming to Manitoba (Railway Age)
SC Ports Authority announced plans Monday for a second inland port in Dillon (Charleston Business)
Inland Port Project Moving Forward (Erie News)
New inland port expected to bring hundreds of jobs to Central New York (WSYR)
Tesla’s Interest In Dallas County Inland Port Brings Attention (NPR)
Editorial: Does Virginia need another inland port? Or two? (Roanoke News)
China’s largest inland port aspires to be NE Asia trade hub (Xinhua News)
Rajasthan government mulls inland port in Jalore (Times of India)
Kampala borrows $48m to build inland port on shores of Lake Victoria (East African)
Tambo Springs to become largest inland port in Africa (Engineering News)
Duisberg, world’s biggest inland port posts double-digit container increase (JoC)
Plans give go-ahead given for Doncaster’s inland port (BBC)
