Four Trends Spurring Growth of Inland Ports
By: Ron Derven, contributing editor, Development.
Inland ports that serve the Midwest and other interior sections of the country should continue to experience strong growth in the future, according to Curtis Magleby, senior managing director and regional head, U.S. Capital Markets West, for Cushman & Wakefield; Michael Berry, president of Hillwood Properties; and Stephen Crosby, president of CSX Real Property, all of whom spoke at NAIOP’s I.con: The Industrial Conference in Los Angeles in June.
What is an inland port? According to a 2011 Jones Lang LaSalle report, Perspectives on the Global Supply Chain, it is “a hub designed to move international shipments more efficiently and effectively from maritime ports inland for distribution throughout the U.S. heartland.”
Not every big intermodal hub away from a major seaport is an inland port. Inland ports feature most or all of the following characteristics: regional multimodal transportation infrastructure; a Class I railroad intermodal hub (port connectivity); a Foreign Trade Zone; a diverse, broadly skilled workforce; land availability (entitled development sites); and economic incentives.
Here are four trends to watch:
1) The price differential between truck and rail is narrowing. Over time, the cost of moving goods by truck has increased because of fuel price hikes, burdensome work rules, environmental requirements, insurance costs, and driver shortages. At the same time, the cost of moving goods by rail has dropped, as railroads have become more efficient. The break-even point for transporting goods by rail rather than by truck is about 1,000 miles today, but should decline to about 500 miles in the future, making more sections of the country viable for intermodal and inland ports.
2) Railroads are speeding up delivery times. This means that goods traveling by rail are reaching interior markets more quickly; it now takes only five days to deliver apples from Washington state to Albany, NY. The speed at which fresh produce now can be transported by rail thus could change the way food is moved in the U.S.
3) Retailers need to be closer to customers. Major retailers are drawn to inland ports because these places allow them to consolidate warehouses into larger hubs that are closer to their customers.
4) Containers are making round trips. Intermodal and inland ports are becoming more viable today because containers are arriving, dropping off cargo, and being refilled for the return trip. Only 10 years ago, a container would arrive at an inland port, be emptied, and then either scrapped or stored for a future return trip. It was generally cheaper to scrap the containers than send them back empty. Today, shipping containers to inland ports is more economically viable because those containers are being sent back overseas filled with agricultural commodities, scrap metal, and merchandise produced in the U.S. for export.
Granddaddy of Inland Ports
The development of Alliance Global Logistics Hub in Alliance, TX, started about 20 years ago, said Michael Berry, president of Hillwood Properties, which worked with the Federal Aviation Administration (FAA) and the city of Fort Worth to build the first industrial airport to be created through a public-private partnership to attract more aerospace and aviation companies to north Texas. Fort Worth Alliance Airport (AFW), which opened in 1989, also is the world’s first 100 percent industrial airport designed entirely for cargo and corporate aviation.
“It was a pure airport play at that time, and we did not understand integrating rail into a large industrial master plan … particularly the concept of intermodal [transportation],” Berry explained to I.con attendees.
As it turned out, the project had all the characteristics needed to become a great inland port. It is strategically located at the juncture of the Burlington Northern Santa Fe (BNSF) and Union Pacific rail lines with Interstate 35, which crosses the U.S. from Canada to Mexico. The airport also is home to FedEx’s Southwest Regional Sort Hub. Further, it is a Foreign Trade Zone, offers additional tax exemptions, and boasts a talented workforce.
For more information:
Selected For You
Employers in Plainfield, Indiana, are helping fund connector bus service that brings employees to local industrial parks.
An assortment of brief facts and figures about new and noteworthy development projects.