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The Higher ED Blog: Does your city have what it takes to be an inland port? The key ingredients to success for logistics hubs

Ian Dunlop / March 16, 2015 /

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The Higher ED Blog: Does your city have what it takes to be an inland port? The key ingredients to success for logistics hubs

The rise of airports and freeway interchanges as cargo shipping points, and availability of inexpensive land in their vicinities, has drawn logistics services away from traditional mainports. This has allowed inland cities to engage in the transportation and warehousing industries like never before. Perhaps your city is poised to join the movement, but what does it take to be successful?

Before getting to that, it’s important to understand what an inland port is. Inland ports provide coordinated logistics-related services, usually some distance away from the main continental points of entry, (known as mainports). A port is simply a location where bulk freight is transferred from one vehicle to another, so it is not necessary for all port activities to take place in a single location.  The facilities of inland ports themselves can also be dispersed across regions, connected by transportation and information links that function together.  The goal is to enable shipping in bulk as far as possible before breaking up a load.

There are 4 key ingredients in making an inland port successful: strategic location, the ability to process trade goods, developable land, and hard and soft infrastructure.

A strategic location along existing trade corridors is critical. These corridors, anchored by mainports, tend to offer rail, truck, and, sometimes, air modes of shipment, with multiple inter-modal and regional distribution centres located along them.

The NASCO trade network is one of the major continental corridors. Winnipeg’s Centreport, and Kansas City’s Smartport are key inland ports along this route, with trans-continental linkages as shown on the map below.

North American Strategy for Competitiveness (NASCO) Trade Network (Source: http://www.americansov.org/images/naipn_nasco_corridor.jpg)

North American Strategy for Competitiveness (NASCO) Trade Network (Source: http://www.americansov.org/images/naipn_nasco_corridor.jpg)

Both of these facilities include a Foreign Trade Zone (FTZ), one of the keys to turning the inland port into an inland trade processing centre. A FTZ enables goods to remain in duty-free status, even though they have been transported between domestic shipping points. FTZs are large, multimodal compounds with a secured perimeter, sometimes thousands of acres in size, housing numerous different service providers, bonded warehouses, and competing shippers.

Value-add processes, such as product assembly, can also be performed within the FTZ. This approach allows duties to be paid incrementally on components rather than on the final product. It also avoids payment of duties on imported goods that are ultimately destined for export in finished products.

Shipments can cross international borders pre-cleared to minimize trans-border delay. For example, a shipment bound for Canada could go through a bonded customs broker in Kansas City and arrive at Windsor, Ontario pre-cleared. The broker ensures applicable tariffs, such as HST, are collected and remitted. This process does not completely avoid possible inspection at the border, as spot checks are still necessary to ensure compliance and security.

The next key to success is the availability of developable land for the inland port and future expansion. Large scale inland ports are very land-hungry, potentially consuming thousands of acres of greenfield land on the outskirts of their host cities. However, inland port development can also be a catalyst to revitalize brownfields, since those sites are often in close proximity to existing seaport or rail infrastructure.

Finally, hard infrastructure provides the physical services for transportation, water, electricity, and telecommunications. Hard infrastructure also serves the local community and labour force, which is essential for regional vitality. External links are the multi-modal transportation infrastructure connecting to suppliers and markets. Soft infrastructure for information technology is vitally important, to connect the local actors involved in the inland port activities. These actors include customers, shippers, government agencies, service providers and vehicles, with external links via the internet to regional and international actors.

Setting up the infrastructure and providing ongoing coordination and support is a complex task, given the competitive nature of business communications and the number of agencies involved. Establishing an arms-length trade port authority can provide over-arching, inter-jurisdictional support, marketing, and investment.  With this coordination, it is not necessary for inland port facilities to be located in a single location—they can be clustered across a region to maximize economic benefit and stimulate both inter-regional trade and intra-regional economic development.

About the author

Ian Dunlop is a graduate of the Local Economic Development Master’s program at the University of Waterloo (2013). He is currently completing a second Master’s degree in Transportation Engineering at Waterloo. This article is based on a transport logistics research paper Ian wrote, titled Inland Ports: Definitions, required infrastructure, and their effective use in international supply chains. Ian is also a consultant in transportation planning, mapping and graphic design with his firm, Strategic Interchange. Contact: ian@strategicinterchange.ca

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Higher ED: Insights for the Next Economy is a platform for students, guest speakers, staff and faculty of the University of Waterloo’s professional and graduate economic development programs to share knowledge with the field at large. The series takes works destined for an academic audience and reworks them into a fresh, easy-to-digest blog article.

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