1. The Charthouse Group DRY PORTS IN EUROPEAN AND NORTH AMERICAN INTERMODAL RAIL SYSTEMS: TWO OF A KIND? DRY PORTS IN EUROPEAN AND NORTH AMERICAN INTERMODAL RAIL SYSTEMS: TWO OF A KIND? Jean-Paul Rodrigue Dept. of Global Studies & Geography, Hofstra University, New York, USA Theo Notteboom ITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium 5th Asian Logistics Round Table & Conference Vancouver, Canada, June 14-15 2012

2. The Charthouse Group INTRODUCTION: THE ROLE OF DRY PORTS A Very Dry Port

3. The Charthouse Group Theme setting ‘A dry port is an inland intermodal terminal directly connected to seaport(s) with high capacity transport mean(s), where customers can leave/pick up their standardised units as if directly to a seaport’ (Roso, 2005; Roso et al., 2009) First mention of dry ports: Munford, 1980 Academic research on dry ports has grown exponentially The terminology frenzy: -dry ports, inland terminals, inland ports, inland hubs, inland logistics centres, inland freight villages, inland clearance depots, inland container depots, intermodal freight centers and inland freight terminals

4. The Charthouse Group Dry ports in transport chains Why Hinterland Transportation Matters? FORELAND 90% 10% Distance 20% 80% HINTERLAND Cost Port Example: costs in euro per FEU-km in Europe (Notteboom, 2009) shipping (Asia–N Europe): 0.05 - 0.19 truck: 1.5 - 4 Barge: 0.5 - 1.5

5. The Charthouse Group Dry ports in supply chains The Inland Logistics Funnel: The “Last Mile” in Freight Distribution CapacityFunnelFrequencyFunnel Capacity Gap Economies of scale Frequency Gap FORELAND HINTERLAND Main Shipping Lane Inland Terminal INTERMEDIATE HUB GATEWAY

6. The Charthouse Group Dry ports in supply chains The Massification of Transportation in Inland Systems PortPortPortPort ITIT ITIT ITIT ITIT Inland Port Port-Centric Inland Load Center Network Formation Logistics Support Direct truck End haul Rail / Barge ITIT Intermodal Industrial Park Inland Terminal PortPort Corridor

7. The Charthouse Group Dry ports in supply chains Asymmetries between Import and Export-Based Containerized Logistics Many Customers Function of population density. Geographical spread. Incites transloading. High priority (value, timeliness). Few Suppliers Function of resource density. Geographical concentration. Lower priority. Depends on repositioning opportunities. Gateway Inland Terminal DistributionCenter Customer Supplier Repositioning Import-Based Export-Based

8. The Charthouse Group Inland Ports: Pick Your Challenge Site and situation Repositioning Cargo rotation Trade and transactional facilitation Governance

9. The Charthouse Group Main Governance Models for Inland Ports ModelCharacteristicsImplications Single ownershipA public or a private actor entirely responsible for development and operations. Single vision and conformity to a specific role. Potential lack of flexibility in view to changes (single mandate). Potential conflicts with surrounding communities. Public – Private Partnership Help combine public planning of infrastructures with private operational expertise. Public (local) interests represented Tendency to prioritize public interests over private interests. Landlord modelPublic ownership and private operations (a form of PPP). Long term concession agreements. Managerial flexibility between the owner, the site manager and the operators. Most of the risk assumed by private operators. Source: adapted from Slack & Comtois (2010)

10. The Charthouse Group Aim of the paper Rail accessibility to gateway ports: at the heart of most dry ports Analysis of rail-based dry ports in North America and Europe Function of: -Regional and local governance and regulatory settings -Strategies of stakeholders involved -Spatial and functional relations with adjacent and or distant gateway ports -Dynamics in logistics network configurations -Specific competitive setting (e.g. barges in Europe)

11. The Charthouse Group EUROPEAN AND NORTH AMERICAN RAIL SYSTEMS

12. The Charthouse Group Modal Split at Selected European Container Ports, 2007

13. The Charthouse Group Rail freight corridors in Europe underline the need for scale and concentration (source: Rail Network Europe)

14. The Charthouse Group Increasing corridor-based competition among multi-port gateway regions creates new opportunities for rail … Source: Notteboom (2009)

15. The Charthouse Group Modal Split at Selected North American Container Ports, 2007

16. The Charthouse Group

17. Systemic Differences between North American and European Rail Systems North AmericaWestern Europe Market dynamicsFully liberalized since the 1980s. Introduction of double stack technology as key development. Liberalization process since early 1990s. Cross- border operations facilitated by corridor concept and Rail Net Europe. Primary focus of the rail network Freight (dry bulk, containers, TOFC)Passengers GovernancePrivate ownership and operations of infrastructure and rail services Separation of infrastructure management (public) and rail operations (public or private) Market playersConsolidation to a handful of operators.End of monopoly of national railway companies. Consolidation (cf. DB Schenker Rail), but also entry of new smaller players. Service areaEach operator has a specific service area (East, West or Canada). Creation of trans-European railway operations by largest players (DB, SNCF); more niche markets for smaller players. DistancesDouble stack trains cover distances of up to 3000km. Typically between 300 and 1500km, while shorter shuttle trains mainly exist in inter-port traffic. Train capacity300-500 TEU per double stack train40-95 TEU using flat cars Network structure Direct shuttle trains bundled around major interlining hubs (Chicago, Kansas City, St. Louis and Memphis) Direct shuttle trains where possible. Hub-and- spoke network where needed (e.g. in connection to East/Central Europe)

18. The Charthouse Group EUROPEAN AND NORTH AMERICAN DRY PORTS

19. The Charthouse Group Gateway Logistics in North America and Europe North AmericaWestern EuropeTrend Distribution systems for import cargo GDCs often divided per coastEDC (mainly in Benelux) and EDC/RDC configurations are dominant Triple/double EDC for Europe. Gateways – location and function Near major marketsCoastal gateways linked to logistical platforms. Combination of gateway and transshipment function. Some ‘pure’ transshipment hubs (particularly in Med) In general status quo Convergence at level of logistical platforms: increased development of inland logistical platforms in North America Gateway systemConcentrated Concentration level increasing Limited number of gateways Fairly concentrated (particularly in the Hamburg- Le Havre range) Concentration level slightly decreasing: more gateways and entry of new gateway regions (cf. Baltic + Med) Divergence in concentration level Future EU concentration level partly subject to policy debate on infrastructure/corridor development. CorridorsLong distance railShort and medium distance barge and truck. Medium-distance rail Some convergence, but no ‘double stack’ and real landbridges in EU HinterlandsEconomies of scale at terminals Large hinterlands both for gateways and inland ports. Economies of scale at gateways. Inland ports more constrained (thus more of them). Convergence (more contested hinterlands, inland ports) Convergence hindered by ownership regulations (cf. EU: split between infrastructure/operations) GovernancePrivate ownership and operations Low impact of administrative borders Public ownership Private operations Higher impact of administrative borders in gateway logistics development Convergence towards PPPs Reassessment of facilitating role of governments in gateway logistics

20. The Charthouse Group Dry ports in Europe Inland Ports and Logistics Zones Around the Rhine / Scheldt Delta

21. The Charthouse Group Dry ports in Europe Coordination mechanisms (Van Der Horst and De Langen, 2008) and hinterland access regimes (De Langen and Chouly, 2004) Port regionalization processes of port authorities -Rotterdam, Barcelona, Le Havre, Marseille, Antwerp, etc.. Inland terminal concepts by market players -‘extended gates’ and ‘terminal operator haulage’ (Rodrigue and Notteboom, 2009, Veenstra et al., 2012) -‘Push’ strategies of shipping lines -From point-to-point services to network services which rely on routing flexibility

22. The Charthouse Group

23. Main Advantages of Co-location for a Dry Port FactorAdvantages Real estateLower land acquisition costs. Higher acquisition capital. Joint land use planning. SpecializationRail company; terminal development and operations. Real estate promoter; logistic zone development and management. InterdependencyRespective customers. Joint marketing. DrayagePriority gate access. Shorter distances. More delivery trips. Higher reliability. Asset utilizationBetter usage level of containers and chassis. Chassis pools. Empty container depots. Information technologiesIntegration of terminal management systems with inventory management systems.

24. The Charthouse Group Conclusion: The Regional Effect on Dry Ports The setting of dry ports: -Dominant paradigm in hinterland transportation; massification pressures on the inland segment of freight distribution. -Clustering of logistics sites in the vicinity, leading to a process of logistics polarization and the creation of logistic zones.

25. The Charthouse Group Conclusion: The Regional Effect on Dry Ports Observed regional effects: -Risk of overinvestment -Hub-and-spoke vs. direct rail shuttles -Modal opportunity differences (barge & rail). -Initiators (rail operators / real estate developers vs. local governments). -Insertion in supply chains. No two dry ports are the same -Best practices can only be applied successfully if one takes into account the relative uniqueness of each dry port setting. -European and North American dry ports are functionally two of a kind

26. The Charthouse Group Thank you for your attention ! Photo: Dries Verbraeken