5 th Annual Supply Chain Connections Conference,
Winnipeg, February 11, 2009
Jean-Paul Rodrigue
Associate Professor, Dept. of Global Studies &
Geography, Hofstra University, New York, USA
Van Horne Researcher in Transportation and
Logistics, University of Calgary, Alberta,
Canada

Inland Terminals: The Eye of the Storm
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


Containerized
Trade
Trade
Imbalances
Terminalization
Governance
Questioning growth prospects.
Paradigm shift (forecasting…).
Imbalanced flows and shipping rates.
Load centers for empties on backhauls to ports.
Integrating inland terminals, corridors and commodity chains.
Including inland terminals within public policy and regional planning.
Value capture.

Global Containerized Trade: Prepare to be
Disappointed

Container yard, Port of Yantian, China

Impact of Recessions on Consumption and Freight
Rates
Significant
Decline
None
Low
Significant
Decline
Severity
Value of Goods
Consumption
A – Basic Goods
B – Discretionary Goods
C – Durable Goods
D – Capital Equipment
E – Luxury Goods
High
Trade and Freight Rates
1 – Futures Indexes
2 – Income and Spending
3 – Container Volumes
4 – Value of Trade
None
Sequence

Futures Indexes: The Current Trend is Strongly
Deflationary…
12000
10000
8000
6000
4000
2000
Baltic Dry Index
Dow Jones Industrial
0
15000
14000
13000
12000
11000
10000
9000
8000
7000

Annual Light Vehicle Sales, United States, January
2008 – January 2009 (millions)
-36.8%
-42.3%
-22.9%

450 000
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
Port of Los Angeles (Monthly TEUs), 1995-2008:
Peaking … and About to Fall Off a Cliff?
Out Empty
Out Loaded
In Loaded

World Container Traffic, 1980-2008. Reaching Peak
Growth?
Adoption Acceleration Peak Growth Maturity
1000
900
800
700
600
500
400
300
200
100
0
1980
1966-1992
1985 1990
1992-2002
1995 2000
2002-2010(?)
2005 2010
2010(?) -
Divergence
2015 2020

Global Bulk and Container Fleet Partially
Immobilized (Singapore, January 2009)

Cars Accumulating at the Long Beach Port Terminal,
December 2008

Trade Imbalances: Coping with Distortions

NS Rutherford Inland Terminal, Pennsylvania

Containerized Cargo Flows along Major Trade
Routes, 1995-2007 (in millions of TEUs)
2007
2006
2005
2004
2003
2002
2001
2000
1998
1995
0
15.4
15.0
12.4
4.4
4.9
4.7
10.8
2.1
3.8
12.4
10.2
4.1
4.2
7.3
8.9
5.2
4.9
1.7
2.9
1.7
3.2
8.8
7.2
5.6
3.3
3.9
3.9
5.9
6.1
4.2
1.5
2.6
4.0
2.7
3.6
4.5
3.6
2.2
2.9
5.2
4.0
3.3
3.5
2.7
1.3
1.7
3.5
2.8
2.3
1.2
1.4
15.3
17.7
5.5
9.1
10.0
2.7
2.5
4.4
4.5
Asia-USA
USA-Asia
Asia-Europe
Europe-Asia
USA-Europe
Europe-USA
10 20 30 40 50 60

Containerized Cargo Flows along Major Trade
Routes, 2007
Million TEUs Growth (2000-2007)
15.4 (+175%)
19.9
USA
7.6
4.9 (+48%)
14.9
Asia
33.1
10.0 (+178%)
2.7 (+23%)
4.5 (+55%)
Imports (M TEUs)
20.4
Europe
14.5
Exports (M TEUs)
17.7 (+293%)

Maritime Freight Rates (Nominal USD per TEU), 1993-
2008
$2,500
$2,000
$1,500
$1,000
$500
Asia - US
US - Asia
Asia - Europe
Europe - Asia
$0

Geographical Levels of Empty Container
Repositioning
Hinterland
Regional
Repositioning
Inter-Regional
Repositioning
(coastal / fluvial)
Port Depot / Inland terminal Freight Distribution Cluster
Foreland
Cargo Rotation

Main North American Trade Corridors and
Metropolitan Freight Centers
1) Efficient repositioning
2) Cargo rotation
3) Export market

Bulk and Containerized Commodity Chains
Supplier
Bulk Commodity Chain
Customer
Port
Point-to-Point
Consolidation center
Complementarity
Container port
Pendulum
Services Inland Terminal
Containerized Commodity Chain

Several Established Containerized Commodity
Chains in Western Canada

Terminalization and Inland Terminals

Trimodal Container Terminal, Willebroek, Belgium

Type and Function of Inland Terminals
Load center
Corridor
Type
Satellite terminal
Freight distribution cluster
/ load center
Intermodal / Transmodal facility
Function
Close to a port facility. Accommodate additional traffic and serve functions that have become too expensive at the port. Container transloading.
Access regional markets (production and consumption). Intermodal, warehousing, and logistics functions. Linked with logistics parks and free trade zones.
Link large systems of freight circulation either through the same mode (e.g. rail-to-rail) or through intermodalism (e.g. rail-to-truck).

The Largest Available Containership, 1970-2007 (in
TEUs)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06

Hinterland Logistics: The Realm of the “Last Mile”
(or the “First Mile”)
Massification
GLOBAL
Shipping Network
Gateway
Atomization
Frequency
REGIONAL LOCAL
Capacity
HINTERLAND
Corridor
Inland
Terminal
Segment
Customer
Distribution
Center
“Last Mile”

Massification of Inland Terminals: Automated
Transfer Management Systems

Supply Chain Terminalization: Import Flows to the
Hinterland
Suppliers
Foreland (First Mile)
Gateway
Offshore Hub
Bottleneck
Buffer
Distribution center (outbound / inbound)
Inland containerized goods flow
Inland non-containerized goods flow
Maritime container flow
Gateway
Inland
Terminal
Customers
Port regionalization and the creation of a Regional Load Center Network
Extended Gate (Inland terminals)
Extended Distribution Center (Terminal as
A warehousing unit)
Hinterland (Last Mile)

Container Transloading: Could it Move Inland?
Cause
Consolidation
Outcome
Transferring the contents of smaller containers into larger containers (e.g. three maritime 40 foot containers into two 53 foot domestic containers). Cost savings (number of lifts). Time delays.
Weight compliance Transferring the contents of heavy containers into loads meeting national or regional road weight limits.
Palletizing Placing loose (floor loaded) containerized cargo unto pallets.
Adapting to local load units (e.g. europallet).
Demurrage
Equipment availability
Supply chain management
Handing back containers to owner (maritime shipping or leasing company) by transferring its contents into another load unit (e.g. domestic container) to avoid charges.
Making maritime containers available for exports and domestic containers available for imports. Trade facilitation.
Terminal and transloading facility as a buffer. Delay decision to route freight to better fulfill regional demands. Perform some added value activities (packaging, labeling, final assembly, etc.)

Governance and Inland Terminals

Uiwang Inland Container Depot, South Korea

The Value Capture Process along Commodity Chains
Horizontal Integration
Maritime Services
Port Services
Inland Services
Vertical Integration
Port
Offshore hub
Port Holding
Inland
Port
Maritime
Shipping
Port Terminal
Operations
Inland Modes and Terminals
Commodity Chain
Distribution
Centers

Inland Terminals: Operations and Added Value
Core
(Operations)
Ancillary
(Added
Value)
Infrastructure
Equipment
Storage
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)
Container depot, bulk storage Storage depot
Container services
Washing, preparation, repair, worthiness certification

Scope
Functional Integration of Freight Clusters
FTZ
Logistic Pole
Logistic Cluster
Logistic Zone
Distribution center
Terminal / Depot
Port
Scale

Free Trade Zones: Setting The Rules
Infrastructures High level of infrastructure, such as land, transport, office space, utilities, logistics services, business services and other facilities.
Regulations Streamlined to improve efficiency, including custom services, labor regulation and permits.
Location High accessibility location, often close to major terminal facilities such as a port, inland terminal or an airport. Location often away from conventional industry.
Export-oriented Activities operating within the zone produce mainly or exclusively for foreign markets.
Incentives Variety of incentives, including low cost land, infrastructures, tax and duty exemptions or various subsidies.

Free Trade Zones: “Bending the Rules”
Custom
Clearance
Duties
Done inland instead of at the gateway port.
Likely faster.
Receiver gets further advance notice.
Not paid until the consignment is released and moved out of the FTZ.
If transformation is performed in the FTZ, the duty class may change.
Select the taxation regime.
Settlement If combined with Warehousing.
Vendors often not paid until the freight leaves the terminal for delivery.

Inland Terminals: The Calm after the Storm (lessons to be learned)
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