Union Port
desEconomics
Ports Seminar,
de France
/ of
Association
Advanced
University
Antwerp, Institutepour
of
le Développement
des Ports
Transport
and Maritime Management,
DecemberFrançais
17 2012
December 2 2011
The Terminalization of Containerized
Supply Chains
Jean-Paul Rodrigue
Professor
Dept. of Global Studies & Geography
Hofstra University
New York, USA
1- Contemporary Transport Terminals
2- Supply Chains and their Terminalization
3- The Insertion of Inland Ports
Contemporary Transport Terminals

Role and Function of Transport Terminals
Modal and Temporal Separation at Terminals
Terminals and Added Value
What Drives Supply Chain Management? Control Freaks…
Offshoring
Costs / time /
reliability
Internalize
efficiency
Changing Role and Function of Transport Terminals
Conventional
Small terminal surface
Direct transshipment possible
Limited mechanization and
automation
Improvisation in terminal
operations
Container
Large terminal surface
Indirect transshipment (modal
separation in time and space)
Advanced mechanization and
automation
Organization and planning
Types of Intermodal Terminals
Port Terminals
Container sea terminal
Rail Terminals
On-dock and near dock
Intermediate hub
Transmodal
terminal
Load center
Barge terminal
Satellite
terminal
Distribution
Centers
Transloading
Cross-docking
Warehousing
The Global Gateway System, 2006
39 Gateway Regions
90% of the World’s Freight
Transport
Pearl River Delta: 16.7%
Technical Changes in Container Port Terminals
Standard Container Port Emerging Paradigm
Stacking density
1,000 to 1,200 TEUs per
hectare
2,000 to 4,000 TEUs per hectare
Ship-to-shore gantry
crane productivity
About 30 movements per
hour
About 50 movements per hour
Dwell time at
container yard
About 6 days
About 3 days
Truck turnaround time About 60 minutes
About 30 minutes
Rail access
In port area
On dock
Berthing depth
12 to 15 meters (40 to 50
feet)
More than 15 meters (50 feet)
Modal and Temporal Separation at Freight Transport
Terminals
Modal and Temporal
Separation
1
2
1
3
4
1
1- Intermodal
2- Transfer quay to truck gates
3- On dock rail
4- Transloading
Modal Separation in Space: Europa Terminal in Antwerp
Barges
Trucks
Deepsea services
Rail
Strategies Used by Port Authorities to Coordinate their
Hinterland
Usage of incentives
Coordinate operations of freight actors.
Optimal usage of transport chains.
Inter-firm alliances
Vertical integration (along transport chains).
Horizontal integration (between competitors).
Alliance between a maritime shipping company and a terminal
operator (vertical).
Equipment / container pools (horizontal).
Organisational
scope
Vertical integration where an actor decides to penetrate a new
market.
A maritime shipping company involved in port terminal
operations.
A port authority developing an inland port.
Collective actions
Public / private partnerships to create logistics parks.
Each actor contributes within its realm of expertise.
Development of multiplying effects.
Freight Transport Terminals: Operations and Added Value
Infrastructure
Equipment
Core
(Operations) Storage
Ancillary
(Added
Value)
Modal access (dock, siding, road), unloading
areas
Intermodal lifting equipment, storing equipment
Yard for empty and loaded containers
Management
Administration, maintenance, access (gates),
information systems
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
Rationale of Container Transloading
Consolidation
Weight compliance
Palletizing
Demurrage charges
Equipment availability
Supply chain management
Supply Chains and their Terminalization

The Concept of Terminalization
Export Flows to the Gateways
The Maritime Segment
Import Flows to the Hinterland
Unraveling the Terminalization Concept
■ Terminalization
• Growing influence of transport terminals in the setting and operation
of supply chains in terms of location, capacity and reliability.
Type
Nature
Concept
Challenge
Outcome
Bottleneck-derived
Terminal as a constraint
Rational use of facilities to
maintain operational
conditions
Storage space, port call
frequency, gate access
Volume, frequency and
scheduling changes
Warehousing-derived
Terminal as a buffer
Incorporating the terminal as a
storage unit
“Inventory in transit” with
“inventory at terminal”
Reduce warehousing
requirements at distribution
centers
Terminalization in a Supply Chain Context
Suppliers
Gateway
Offshore Hub
Gateway
Inland
Terminal
Foreland (First Mile)
Bottleneck
Buffer
Distribution center (outbound / inbound)
Inland containerized goods flow
Inland non-containerized goods flow
Maritime container flow
Port regionalization and the creation
of a Regional Load Center Network
Extended Gate
Extended Distribution Center
Customers
Hinterland (Last Mile)
Supply Chain Terminalization: Export Flows to the Gateway
Suppliers
Gateway
Offshore Hub
■ Bottleneck-derived
terminalization
• Containerized cargo:
• Logistics zones near the gateway or
in a hinterland location connected
to the gateway via a multimodal
transport corridor.
• Distribution:
Gateway
Inland
Terminal
Customers
• Tends to be synchronized with
terminal handling capacity.
Supply Chain Terminalization: The Maritime Segment
Suppliers
Gateway
Offshore Hub
Gateway
Inland
Terminal
Customers
■ Buffer-derived terminalization
• Intermediate facility (offshore
hubs):
• Transshipment, interlining or relay.
• Low cost locations before entering
high distribution costs areas.
Liner Shipping Port Calls, 2009
18.6%
2.2%
62.0%
Direct
One Transshipment
17.2%
Two Transshipments
Three Transshipments
Factors behind Transshipment
Factor
Substitution
Small ships instead of large ships (better asset utilization).
Water instead of land (modal shift).
Network
expansion
More links and wider coverage (more traffic and throughput).
Intersection and relay (transit between long distance services).
Imposed
Lack of port infrastructure (capacity unavailable for large ships).
Congestion (potential delays for large ships).
High port costs (port call charges versus volume).
Cost trade off
Savings in ship cost vs. additional port handling (advantages of
‘offshore’ locations).
Level of service
Transit Time (varied; depend on the port pairs).
Frequency (higher; more port calls).
Reliability (less; more potential for delays).
Appeal
Lead to surges in traffic (additional revenue).
Limited externalities (hinterland connections).
The Advantages of Intermediate Hub Terminals
Location
• Proximity to major shipping
routes (low deviation)
• Intermediary locations
Depth
• Greater depth (>13.5 meters)
• Accommodate post-panamax
ships
Land
• Large yard area
• Available land for expansion
Costs
• Lower costs and less
regulations
• Fast throughput
Hinterland
• Limited investment required
Ownership
• Commonly managed by a
(single) global private
operator
The Insertion of Intermediate Hub Terminals
85% of Transshipment Traffic
15% of Transshipment Traffic
Gateways and Transshipment Hubs: Different Dynamics
Monthly Container Traffic (Jan 2005 =100)
Transshipment Volume and Incidence by Major Ports, 200709
Asia – Mediterranean Corridor
Caribbean
Transshipment
Triangle
Northern Range
East Asia Cluster
Supply Chain Terminalization: Import Flows to the Hinterland
Suppliers
■ Bottleneck and buffer-derived
terminalization
1.
Gateway
Port regionalization:
•
Regional load center network.
2. Extended gate:
•
Offshore Hub
Development of inland terminals.
3. Extended distribution center:
1
Gateway
2
Inland
Terminal
Customers
3
•
The terminal as a warehousing
unit.
Asymmetries between Import and Export-Based
Containerized Logistics
Gateway
Inland
Terminal
Distribution
Center
Customer
Import-Based
Many Customers
•Function of population density.
•Geographical spread.
•Incites transloading.
•High priority (value, timeliness).
Repositioning
Supplier
Export-Based
Few Suppliers
•Function of resource density.
•Geographical concentration.
•Lower priority.
•Depends on repositioning opportunities.
Impacts of Terminalization on Supply Chain Costs
Intermodal transportation
costs
No noticeable effects.
Derived from higher terminal costs.
Cost mitigation through terminal use (e.g. drayage).
In-transit inventory costs
Confers additional flexibility.
Used as a buffer.
Warehousing inventory
costs
Partially transferred to the terminal.
Blended with in-transit inventory costs.
Dwell time costs
Terminal not always used as a facilitator for
synchronization between transport modes.
Places for cheap storage of consignments.
Could be the result of deliberate actions of actors in
supply chains.
The Insertion of Inland Ports

Inland Ports: Governance and Added Value
Inland Ports in North America
The Containerization of Commodities
The Inland Logistics Funnel: The “Last Mile” in Freight
Distribution
Capacity
Funnel
Frequency
Funnel
Inland Terminal
HINTERLAND
Capacity
Gap
Frequency
Gap
GATEWAY
FORELAND
Economies of scale
Main Shipping Lane
INTERMEDIATE HUB
Basic Requirements for Inland Ports
Intermodal Rail
Terminal
Logistics
Activities
Rail Corridor to
the Gateway
(Massification)
(Agglomeration)
(Massification)
Functions of Inland Terminals
Port
B
A
Corridor
C
Access regional
markets;
Intermodal,
warehousing,
and logistics
functions; Linked
with logistics
parks and
foreign trade
zones.
C – Transshipment
Close to a port
facility; Handle
traffic and
functions that
have become
too expensive at
the port,
Container
transloading.
B – Load Center
A – Satellite Terminal
Drayage
Link systems of
freight
circulation either
through the
same mode (e.g.
rail-to-rail) or
through
intermodalism
(e.g. rail-totruck).
Modal Shift and Inland Freight Diversion
A
Road
Gateway
Flows
Relations
Satellite
Terminal
Rail
Inland Port
Gateway
B
The Massification of Transportation and Land Use in Inland
Systems
Inland Load Center Network Formation
Port
Supporting Land Use
Port
Port
IT
IT
IT
Inland
Terminal
Corridor
Port-Centric
IT
IT
Intermodal
Industrial
Park
Direct truck
End haul
Rail / barge service
Inland
Port
Main Governance Models for Inland Ports
Model
Characteristics
Implications
Single Ownership
A public or a private actor entirely
responsible for development and
operations.
Single vision and conformity to a
specific role.
Help combine public planning of
infrastructures with private
operational expertise.
Public (local) interests represented.
Public ownership and private
operations (a form of PPP).
Long term concession agreements.
Potential lack of flexibility in view to
changes (single mandate).
Potential conflicts with surrounding
communities.
Public – Private
Partnership
Landlord Model
Tendency to prioritize public interests
over private interests.
Managerial flexibility between the owner,
the site manager and the operators.
Most of the risk assumed by private
operators.
Added Value Activities Performed at an Inland Port
Activity
Functions
Consolidation /
Deconsolidation
Inventory management practices.
Cargo consolidated (or deconsolidated) into container loads
(paletization).
Attaining a batch size (group of containers) fitting a barge or a
train shipment.
Breaking down batches so that they can be picked up by trucks.
Transloading
Change in to load unit (Maritime / Domestic).
Consolidation, deconsolidation and transloading commonly
mixed.
Postponement
Opportunity to route freight according to last minute and last mile
considerations (dwell time).
Buffer within a supply chain.
Light transformations
Forms of product and package transformations (packaging,
labeling).
Customization to national, cultural or linguistic market
characteristics.
Market Accessibility of Major North American Inland Load
Centers
American Foreign Trade by Maritime Containers, 2010 (in
TEUs)
Importers
Whirlpool
Nike
Red Bull
General Electric
Jarden
Ashley Furniture
Costco Wholsale
JC Penney
Ikea Intl.
LG Group
Samsung
Chiquita
Philips
Heineken
Dole Food
Sears Holding
Lowe's
Home Depot
Target
Wal-Mart
Exporters
64,100
72,300
74,000
76,700
77,100
77,300
83,000
89,900
95,700
101,900
109,100
117,100
127,200
129,000
211,200
212,800
221,600
296,700
455,500
696,000
0
200,000 400,000 600,000 800,000
Eastman Chemical
Scoular
Cargill
Sims Metal Management
SDDC
Cedarwood-Young
Meadwestvaco
BASF
Delong
ExxonMobil
Potential Industries
Allenberg Cotton
Shintech
JC Horizon
Newport CH Intl
Dupont
Dow Chemical
Weyerhaeuser
Koch Industries
America Chung Nam
48,100
50,200
51,200
52,200
60,200
60,400
63,700
70,200
75,300
75,500
78,600
78,700
79,800
82,700
93,100
93,600
109,300
113,900
122,400
300,800
0
400,000
800,000
Main Container Ports, Trade Corridors and Distribution Hubs
in North America
Two growth dynamics:
1) Coastal shift / rebalancing
2) Commodities
Main Advantages of Co-location: Multiplying Factors for the
Last Mile
Factor
Advantages
Real estate
Lower land acquisition costs. Higher acquisition capital.
Joint land use planning.
Specialization
Transport 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.
BNSF Logistics Park, Chicago
Distribution Centers
BNSF Intermodal Yard
Maersk
Wal-Mart
California
Cartage
An Expected Shift in Containerization Growth Factors
Derived
Substitution
Incidental
Induced
Economic and
income growth
Globalization
(outsourcing)
Fragmentation of
production and
consumption
Functional and
geographical
diffusion
New niches
(commodities and
cold chain)
Capture of bulk and
break-bulk markets
Trade imbalances
Repositioning of
empty containers
Transshipment (hub,
relay and
interlining)
Growth Factors behind the Containerization of Commodities
Growing availability of containers
Rising demand and commodity prices
Fluctuations in bulk shipping rates
Imbalances in container shipping rates
(export subsidy)
Empty containers repositioning
Containerized Weight for Selected Commodities
Commodity
Pounds per cubic foot
Wheat
Corn
Dry peas, beans and
lentils
Vegetable oil (e.g. canola)
Coffee (fresh beans)
Lumber (2x4s)
Hay (e.g. alfalfa)
Potash
Coal (Anthracite)
Paper or wood pulp
48
45
37
Weight in a fully loaded
20 foot container
26 tons* (28 tons)
26 tons
22 tons
60
35
45
14
80
70
75
26 tons* (35 tons)
21 tons
26 tons
8 tons
26 tons* (46 tons)
26 tons* (41 tons)
26 tons* (44 tons)
* Exceeds maximum permissible weight.
From Bulk to Containers: Breaking Economies of Scale
Entry Barriers
• Container as an independent load
unit.
• Minimal load unit; one TEU container.
Required
Volumes
• Limited differences in scale economies
for a producer.
• Incremental / linear cost-volume
function.
Market
Potential
• New producers (smaller).
• Product differentiation (more variety).
Loading Coffee into Containers
Loading Coking Coal into Containers