Economic Development / Ports

Inland Ports Go Deep

To improve supply chain efficiency, go deep into the heartland.

U.S.-based importers and exporters may find their next port choice is not on a coast. It may not even be on the water. Shippers trying to improve the efficiency of their import and export supply chains could find themselves adding inland ports to their network.

This is due in part to the fact that as more (and larger) ships arrive at ports carrying more containers, putting more stress on the U.S. transportation infrastructure, there will be a continued challenge to get product to its final destination in a timely manner.

The potential for a return to more congested or constrained ports is only part of the reason for interest in inland ports. By utilizing an inland port in their supply chain/logistics strategies, manufacturers can quickly offload their product at a coastal port and transport it further inland, closer to their end users – turning the coastal port into a trans-load operation and postponing some of the more labor intensive and value-add steps.

“For many companies not currently utilizing rail or intermodal transportation, inland ports can provide a big opportunity to reduce costs and create a viable alternative to truck transportation,” says Richard H. Thompson, managing director of the Supply Chain and Logistics Solutions practice for Jones Lang LaSalle, a global professional services and commercial real estate firm.

When using an inland port, in most cases, inbound cargo is transferred directly from an ocean carrier at a coastal port to rail cars or trucks and moved to an inland location for further processing and distribution. These inland locations, or intermodal centers, serve as inland ports.


Staying on the Water

Staying on the water is one of the most efficient alternatives, and some inland ports, such as in Lewiston, Idaho, and Front Royal, Va., have direct water connections to coastal ports.

The competitiveness of the Port of Lewiston, which is the furthest inland seaport on the West Coast, is dependent on the Port of Portland, says David Doeringsfeld, manager of the Port of Lewiston.

“Water is the most efficient way to move cargo,” Doeringsfeld says. By utilizing the Port of Lewiston from the Port of Portland, goods stay on the water for another 465 miles, eliminating the need for an Oregon and/or Washington truck permit yet still offering access to multimodal transportation, he points out. The Columbia-Snake River system provides barge service to the Port of Portland and other West Coast ports.

Lewiston is located near two U.S. highways that can provide access to markets in the United States and Canada. A feeder line of the Great Northwest Railroad provides a direct link to the main lines of Union Pacific Railroad and BNSF Railway. Air transportation is available at Lewiston-Nez Perce County Regional Airport.

The port handles oversized and project cargoes, such as wind turbines and oil field modules, destined for the interior of the United States and Canada. Those moves can benefit from avoiding costly highway miles and complex permitting by staying on the water longer.

The East Coast offers similar advantages for cargo transported to the Virginia Inland Port (VIP) from the coastal ports in Newport News, Portsmouth and Norfolk. VIP puts cargo about 220 miles closer to manufacturers’ customers.

VIP contains 17,820 feet of on-site rail serviced by Norfolk Southern Railroad and is within one mile of Interstate 66 (east-west) and five miles of Interstate 81 (north-south). This allows port users to bypass the busy Interstate 95 and congested bridge tunnel at Hampton Roads.

Manufacturers and retailers can bring their cargo into a Virginia coastal port, rail it to VIP, then on to Midwest locations by truck or rail. “This provides a lot of flexibility in a manufacturer’s supply chain,” says Joe D. Harris, a spokesman for Virginia Port Authority. “That flexibility generates savings.”

Near the Gulf Coast, the Port of Vicksburg, located midway between Memphis, Tenn., and New Orleans provides quick access connections and facilities in an inland environment. The annual tonnage imported and exported through the port is between 800,000 and 900,000 tons.

Logistically, more than 165,000 trucks annually carry cargo to and from the port. A rail and road loop allows direct access from barge to truck or rail. The port supplies liquid warehouse facilities, barge fleeting and marshalling services, and barge cleaning and refurbishing services.

Interstate 20 runs through Vicksburg, which is also the location of the only rail bridge across the Mississippi River between Memphis and Baton Rouge, La.

Rail improvements are ongoing at the port; the next phase began in December 2012. On the highway side, the port upgraded the road leading to Business Highway 61 (a main road through Vicksburg), widening it from two to four lanes. Upgrades are also occurring to the port’s terminal warehouse facility.

The upgraded infrastructure, both onsite and off, makes the port more efficient, says Wayne Mansfield, director of the Port of Vicksburg. “With resources becoming scarcer, especially at the federal level, it makes it more difficult [to upgrade facilities],” Mansfield says. “You have to do it in a piecemeal fashion. Every time you can obtain funding, you need to use it the best you can.”


Closer to Customers

Other inland ports are not dependent on coastal ports. As port users at the inland ports in Kansas City, Mo., or Columbus, Ohio, can attest, a direct tie with a coastal port is not necessary.

Companies can realize significant savings by transporting their imported raw materials and components from coastal ports to Kansas City, where product can be manufactured or assembled. Finished goods can reach 95 percent of the country within two days from Kansas City.

“What we try to do is match the inbound and outbound needs [of manufacturers] on the choice of mode,” says Chris Gutierrez, president of KC SmartPort. “This is our advantage. We have competitive transportation rates that are worth considering.”

Kansas City has multimodal components that make it a hub for transportation, including:

The largest rail center in the United States by tonnage and infrastructure.

One of the few metro areas in the country to have access to four interstate highways – intestates 35, 70, 29 and 49. Interstate 49 was designated in December, providing a direct connection between Kansas City and New Orleans. Interstate 35 runs from near the Mexican border (at Laredo, Texas) to near the Canadian border (at Duluth, Minn.). As such, it is a significant portion of the logistics network that carries cargo between the North American Free Trade Agreement nations.

Kansas City International Airport, which moves more air cargo each year than any air center in a six-state region. “Manufacturers prefer not to use air cargo because of the cost,” Gutierrez says. “But there are times when they need parts and supplies quickly. We can meet their demands.”

Rail transportation from the Kansas City metro area can put a manufacturer practically anywhere in the country. Kansas City Southern provides direct access to Mexico, and Union Pacific, BNSF and Norfolk Southern have substantial operations in the metro area.

BNSF will open a new intermodal logistics park later this year in Edgerton, Kan. The Kansas Department of Transportation is supporting the project by building a new interchange to the facility off of Interstate 35.

The complex will have 7.1 million square feet of warehousing and distribution space and give manufacturers a direct connection between Long Beach, Calif., and Chicago, providing multimodal transportation for cargo imported from China and the Pacific Rim.

Thanks to its location, Rickenbacker Inland Port in Columbus receives containers from ports on the East, West and Gulf coasts. Logistically, it is much faster to reach most customers from Columbus; companies are within 500 miles, or one day’s trucking drive, of 50 percent of the U.S. population and one-third of the Canadian population.

Rickenbacker Inland Port has multimodal strengths. Rickenbacker International Airport is a key component of the inland port and includes a 48,000-square-foot facility ready for occupancy by air cargo users. There is access to national trucking operations, as well as numerous third-party logistics providers (3PLs), freight forwarders and less-than-truckload (LTL) companies.

The majority of rail freight traveling to Columbus is international and has reached the Ohio Valley via East Coast and West Coast ports. Both Norfolk Southern and CSX Corp. provide extensive rail service to Columbus.

The Norfolk Southern Rickenbacker Intermodal Terminal, which is capable of handling more than 400,000 containers annually, is part of the most extensive intermodal network in the Eastern United States and is also a major transporter of coal and industrial products. Manufacturers can access the Heartland Corridor using Norfolk Southern’s Columbus operations.

CSX provides traditional rail service and the transport of intermodal containers between Columbus and a number of locations in the United States and Canada.

“We have short dray times from the shipping platform to warehouse and distribution facilities within the inland port, which can be a significant financial savings,” says David Whitaker, vice president of business development and communications for Rickenbacker Inland Port.


Benefitting the Supply Chain

An inland port can be a hub designed to move international shipments more efficiently and effectively from a coastal port for distribution throughout the United States, Jones Lang LaSalle’s Thompson says.

He refers to inland ports as one end of the barbell with coastal ports being at the other end. If cargo is not moved quickly enough, the supply chain could become clogged as containers wait longer to be removed from ships, moved to warehouses and distribution centers, and, ultimately, to their final destination. The inland port can provide a counterbalance, allowing the supply chain to move efficiently from beginning to end, Thompson notes.

By using an inland port, manufacturers can reduce supply chain costs because cargo is located closer to the final destination. “The users of VIP have realized those savings,” Harris says. “It is very significant. It can help companies achieve supply chain efficiencies.”

For manufacturers not currently utilizing rail or intermodal transportation, inland ports can provide a big opportunity to reduce costs and create a viable alternative to truck transportation.

“A company can reduce its carbon footprint and significantly reduce nautical and land miles by keeping its cargo on the water as long as possible,” Lewiston’s Doeringsfeld says.

 And companies can get their cargo out of the port and moved efficiently and effectively to their customers in mega population centers. “Companies looking to save money, reduce risk and become more sustainable are going to find intermodal options and inland ports beneficial to their supply chains,” Thompson says. wt 


Sidebar:  The Emergence of the Inland Port

According to a white paper published in 2011 by Jones Lang LaSalle on the emergence of inland ports, two trends have converged to make them a viable option for import distribution:

  • The economics of long- and short-haul rail shipping are steadily improving. Railroads have made major financial commitments to infrastructure and terminal improvements, as well as service, in recent years. Trucking accounts for the vast majority (more than 70 percent) of U.S. freight shipments. However, the fastest growing mode of transportation is intermodal. Rail and intermodal transportation utilization will likely continue to increase as rail’s economies of scale continue to improve with rising fuel costs.
  • While the railroad industry grows, the trucking industry has struggled during the past several years. Major carriers have cut over-the-road capacity by 12 percent to 15 percent, several smaller companies and owner-operators have ceased operations, and diesel fuel prices have skyrocketed. The industry also faces an anticipated shortage of up to 300,000 drivers in the near term.

Recent Articles by Ken Krizner

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