Taxonomy: BlueWater Reporting Analysis

Shippers leveraging America’s inland ports

Supply chain efficiency is even more important when carriers have the upper hand.

Shippers leveraging America’s inland ports

Supply chain efficiency is even more important when carriers have the upper hand.

Shippers leveraging America’s inland ports

Supply chain efficiency is even more important when carriers have the upper hand.

 
Inland ports are continuing to sprout up across the United States and are playing an increasingly important role in supply chain efficiency throughout the nation.
    Seaports are seeing larger vessels but fewer calls, meaning more cargo is being offloaded at once, but inland ports can help stagger out the flow of this cargo by offering rail service to and from the seaports, thus easing congestion.
    Average containership size on the trades from Asia to the U.S. East and West coasts has steadily increased over the years, as illustrated in the chart below, which was constructed using data from BlueWater Reporting.



    As of September, average containership size on the Asia-to-U.S. East Coast trade totaled 8,666 TEUs and average containership size on the Asia-to-U.S. West Coast trade was 8,185 TEUs, up 10.1 percent and 1.9 percent year-over-year, respectively.
    There was an especially strong increase on the Asia-to-U.S. East Coast trade between the September reporting periods in 2015 and 2016, which was largely fueled by the Panama Canal’s third set of locks opening in June 2016, allowing the canal to handle vessels of over 14,000 TEUs. Prior to the expansion, the waterway could only handle vessels of up to around 5,000 TEUs.
   Average containership size for all U.S. inbound trades combined also has steadily increased over the years, as illustrated in the chart below, which also was built using data from BlueWater Reporting.



    As of September, average containership size for all U.S. inbound trades was 6,331 TEUs, up 3.5 percent from a year earlier and up 7.7 percent from two years prior.
    Although U.S. ports have been making investments to handle larger vessels, such as deepening and widening channels, ordering larger cranes and building more container storage, the nation’s infrastructure outside the ports has not kept up, thus leading to more congestion on roads.
    Inland ports can give shippers more options, which can potentially lead to cheaper transport costs and faster transits. This is especially important in an industry in which a capacity crunch has given carriers the upper hand. Shippers have been left to figure out how to market themselves to become shippers of choice in a carrier’s market in order to even secure capacity.
    In particular, inland ports allow shippers to rely less on the trucking industry, which has been experiencing higher freight rates fueled by increased diesel costs, as well as the driver shortage and capacity crunch.
   The national average line haul spot rate for van, flatbed and reefer cargo increased in September from a year prior, as illustrated in the chart below, which was constructed using data from DAT Solutions.



    As of Oct. 18, U.S. diesel fuel prices averaged $3.298 per gallon, up from $3.184 per gallon a month earlier and $2.727 per gallon a year earlier, according to AAA.
    The chart below, built using data from AAA on Oct. 18, illustrates that average diesel fuel prices increased year-over-year in all 50 states, while on a month-over-month basis average diesel fuel prices rose in all states except Utah and Wyoming.



    The annualized employee turnover rate at large truckload carriers (those with more than $30 million in annual revenues) and less-than-truckload carriers appears to have been steadily increasing over the last few quarters, while the annualized turnover rate at small truckload carriers (those with less than $30 million in annual revenues) has been declining, as illustrated in the chart below, which was constructed using data from the American Trucking Associations (ATA).



    During the second quarter of 2018, the annualized turnover rate at large truckload carriers was the largest since the fourth quarter of 2015, while the annualized turnover rate at LTL carriers was the highest level since the first quarter of 2013, the ATA said. In addition to cutting down on truck miles on the nation’s roads, inland ports often allow exporters to source needed empties from the local inland port rather than at the seaport.

Across the Nation.
Looking at some of the nation’s new and notable inland ports, the Appalachian Regional Port (ARP), operated by the Georgia Ports Authority (GPA), just opened in August. Situated in northwest Georgia near I-75 and U.S. 411, ARP is served by CSX, which provides a direct, 388-mile route to and from the Port of Savannah’s Garden City Terminal. GPA said ARP is expected to remove 50,000 trucks and 15 million truck miles from local highways each year.
   Cordele Inland Port, through Cordele Intermodal Services, a privately owned logistics provider that specializes in container handling and over-the-road trucking, was Georgia’s first inland port. Cordele Inland Port is located in south central Georgia and is less than a mile from I-75 and Georgia Highways 300 and 280. The inland port offers a direct, 200-mile rail route to and from the Port of Savannah’s Garden City Terminal.
    The South Carolina Ports Authority (SCPA) owns and operates Inland Port Greer, which opened in October 2013, and Inland Port Dillon, which opened this April.
    Situated in Greer, S.C., along I-85, Inland Port Greer is 212 miles inland from Charleston and about halfway between Atlanta and Charlotte, N.C. Norfolk Southern provides rail service between the Port of Charleston and Inland Port Greer in both directions. Volumes have been surging at Inland Port Greer since it opened. The inland port handled 124,817 rail moves in 2017, up from 103,639 rail moves in 2016, 75,111 in 2015 and 42,555 in 2014, according to statistics provided by SCPA.
    “The inland port has been a valuable partner for BMW,” Max Metcalf, BMW Manufacturing manager of government and community relations, said in October. “They have handled over 180,000 containers for us over the past five years and created a much more efficient system for moving containerized product to and from the Port of Charleston. This success is likely replicated for suppliers and numerous other companies that use this facility.”
    In Dillon, S.C., at Inland Port Dillon, which is in close proximity to I-95 and U.S. 501, CSX provides rail service in both directions between the inland port and the Port of Charleston. SCPA said in April that Inland Port Dillon was expected to convert 45,000 container movements from truck to rail in the first year of operation.
   Although many inland ports exist within a couple of hundred miles of prominent seaports, some inland ports exist in areas farther away from the coast. The Midwest Inland Port, which is about 160 miles southwest of Chicago in Decatur, Ill., allows shippers to avoid Chicago’s congestion and tolls. Midwest Inland Port features an intermodal ramp; direct access to CSX, Canadian National and Norfolk Southern; toll-free access to Interstates 72, 55, 74 and 57 and U.S. 51; and an airport. Although the railroads and airport have been operating in Decatur a long time, grain producer and shipper ADM built an intermodal ramp there five years ago and opened it to other companies’ freight in 2015, Nicole Bateman, executive director at Midwest Inland Port said earlier this year. Turn times at the ADM Intermodal Ramp are holding strong at 24 minutes, Bateman said in October.
    Although there is no official inland port nearby, the Port of Los Angeles has an extensive and modern network of on-dock and near-dock rail services, connecting cargo that flows through the port to regions across North America. The Port of Los Angeles claims to be the busiest seaport in the Western Hemisphere and has ranked as the No. 1 container port in the United States each year since 2000.
    The port said its rail network includes one near-dock rail yard and five on-dock rail yards that serve its container terminals. The network links to the Alameda Corridor, a dedicated rail expressway that connects the docks to the transcontinental rail system for cargo to flow nonstop between the port and markets throughout North America. The port’s rail network also consists of the near-dock Intermodal Container Transfer Facility (ICTF) and five off-dock mainline rail yards, three of which are operated by Union Pacific and two that are operated by BNSF. The ICTF is operated by Union Pacific and supports the relay of marine cargo containers between the ports of Los Angeles and Long Beach and major rail yards near downtown Los Angeles.
    The city of Dallas also plays a huge role in the nation’s intermodal operations with its International Inland Port of Dallas (IIPOD), an intermodal and logistics district that encompasses 7,500 acres and five municipalities. The City of Dallas Office of Economic Development noted that the Dallas-Fort Worth area is at the confluence of three major Class I railroad networks — Union Pacific, BNSF and Kansas City Southern — and that the Dallas-Fort Worth International Airport is the nation’s ninth-largest cargo airport and the only airport with the capacity to double operations in its existing footprint.
    IIPOD is served by thee major interstates (I-35 E, I-20 and I-45) and a Union Pacific intermodal terminal. Major manufacturing tenants at IIPOD include American Textile, Pioneer Frozen Foods, Niagara Bottling and Serta Dormae. Major corporate logistics and distribution tenants include Amazon, Conn’s, Home Depot, L’Oreal, National Tire & Battery, RR Donnelley & Sons and Thermo Fisher Scientific, while major 3PLs include FedEx Supply Chain and NFI Industries.
   Looking ahead, an inland port is being planned in Salt Lake City. The inland port authority’s board was created by the Utah Legislature during the 2018 general session, which ran from Jan. 22 to March 8. However, the board has faced heat over a lack of transparency, and the project also has raised concerns from environmental groups.
    The board held a public hearing Thursday to accept public comments and consider adopting an annual budget. Following the meeting, the board issued a press release saying that it “approved a budget to procure a search firm for an executive director, hire an interim administrator and facilitate a process for public engagement and input for the scope of the project.” The board also said it “approved a statement of work to develop a business plan that includes, among other things, economic and environmental impact studies.”
    “In addition to the adoption of a budget, the board established a technical committee to advise the board on issues relating to economic impact, environmental considerations, transportation planning and other issues related to the planning efforts,” it added.
Given the smoldering trade conflicts, especially between the U.S. and China, and economists’ expectations that the global economy could cool down, it is not entirely surprising that trade momentum has weakened slightly.
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