The Korea Transport Institute (KOTI), Seoul,The Korea Transport Institute (KOTI), Seoul,October 7, 2008October 7, 2008

Terminals and Logistics:Terminals and Logistics:The Terminalization ThesisThe Terminalization Thesis

Jean-Paul Rodrigue

Associate ProfessorDept. of Global Studies & GeographyHofstra UniversityNew York, USA

Contemporary Transport TerminalsContemporary Transport Terminals

Role and Function of Transport TerminalsRole and Function of Transport TerminalsTechnical ChangesTechnical Changes

Modal and Temporal Separation at TerminalsModal and Temporal Separation at Terminals

Container yard, Port of Yantian, ChinaContainer yard, Port of Yantian, China

Changing Role and Function of Transport TerminalsChanging Role and Function of Transport Terminals

Conventional ContainerSmall terminal surface Large terminal surface

Direct transshipment possible Indirect transshipment (modal separation in time and space)

Limited mechanization and automation Advanced mechanization and automation

Improvisation in terminal operations Organization and planning

Types of Intermodal TerminalsTypes of Intermodal Terminals

Po

rt Term

inals

Rail T

ermin

alsD

istribu

tion

Cen

ters

Container sea terminal Offshore hub Barge terminal

On-dock and near dock Satelliteterminal

Load centerTransmodalterminal

Transloading Cross-docking Warehousing

Technical Changes in Container Port TerminalsTechnical Changes in Container Port Terminals

Standard Container Port Emerging Paradigm

Stacking density 1,000 to 1,200 TEUs per hectare

2,000 to 4,000 TEUs per hectare

Ship-to-shore gantry crane productivity

About 30 movements per hour

About 50 movements per hour

Dwell time at container yard

About 6 days About 3 days

Truck turnaround time About 60 minutes About 30 minutes

Rail access In port area On dock

Berthing depth 12 to 15 meters (40 to 50 feet)

More than 15 meters (50 feet)

Modal and Temporal Separation at Freight Transport Modal and Temporal Separation at Freight Transport TerminalsTerminals

Modal and Temporal Separation1

1 1

2 3

4

1- Intermodal2- Transfer quay to truck gates3- On dock rail4- Transloading

Modal Separation in Space: Europa Terminal in Modal Separation in Space: Europa Terminal in AntwerpAntwerp

TrucksTrucks

Deepsea servicesDeepsea services

Rail

Barges

World Container Traffic, 1980-2008. Reaching Peak World Container Traffic, 1980-2008. Reaching Peak Growth?Growth?

0

100

200

300

400

500

600

700

800

900

1000

1980 1985 1990 1995 2000 2005 2010 2015 2020

Mill

ion

TE

U

Divergence

Adoption Acceleration Peak Growth Maturity

1966-1992

1992-2002

2002-2010(?)2010(?) -

Terminals and Added ValueTerminals and Added Value

9Trimodal Container Terminal, Willebroek, BelgiumTrimodal Container Terminal, Willebroek, Belgium

Terminal Operations and Added ValueTerminal Operations and Added ValueSupply Chains and Added ValueSupply Chains and Added Value

Freight Transport Terminals: Operations and Added Freight Transport Terminals: Operations and Added ValueValue

CoreCore(Operations)(Operations)

Infrastructure Modal access (dock, siding, road), unloading areas

Equipment Intermodal lifting equipment, storing equipment

Storage Yard for empty and loaded containers

Management Administration, maintenance, access (gates), information systems

AncillaryAncillary(Added (Added Value)Value)

Trade facilitation Free trade zone, logistical services

Distribution centers Transloading, cross-docking, warehousing, light manufacturing, temperature controlled facilities (cold chain)

Storage depot Container depot, bulk storage

Container services Washing, preparation, repair, worthiness certification

Freight Terminal Hierarchy and Added ValueFreight Terminal Hierarchy and Added Value

GatewayGateway

(low

er …

) Add

ed V

alue

(… h

ighe

r)

(low

er …

) Add

ed V

alue

(… h

ighe

r)

FreightFreightDistribution ClusterDistribution Cluster

Inland PortInland Port(load center)(load center)

Satellite TerminalSatellite Terminal

Container TransloadingContainer Transloading

Cause Outcome

Consolidation 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 Handing back containers to owner (maritime shipping or leasing company) by transferring its contents into another load unit (e.g. domestic container).

Equipment availability

Making maritime containers available for exports and domestic containers available for imports. Trade facilitation.

Supply chain management

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.)

Commodity Chains; Where Value Comes From?Commodity Chains; Where Value Comes From?

Commodity chain

Adde

d va

lue

Low

High

Manufacturing

R&D Globalization

DistributionDesign

Branding Marketing

Sales / Service

Concept Logistics

Supply Chains, Transport Chains and Added ValueSupply Chains, Transport Chains and Added Value

Market Potential

Production Costs

DownwardDownward

UpwardUpward

Supply ChainSupply ChainAdded ValueAdded Value

Value Capture / Creation

Value Expansion

Value Retention

HighHigh

LowLow

TransportTransportChainChain

SuppliersSuppliers

CustomersCustomers

SupplierSupplier

CustomerCustomer

Where Distribution EfficiencyHow

Pacific Asia Europe

APM Terminals

Dubai Ports World

Hutchison Port Holdings

Port of Singapore Authority

Eurogate

Stevedoring Services of America

Dedicated Maritime Container TerminalsMajort Port Holdings, 2007

Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University

Commodity Chain

The Value Capture Process along Commodity ChainsThe Value Capture Process along Commodity Chains

Port Holding

Port

Aut

horit

y Maritime Services

Inland Services

Port Services

Horizontal Integration

Vertical Integration

Maritime ShippingMaritime Shipping

Port Terminal Operations

Port Terminal Operations

Inland Modes and TerminalsInland Modes and Terminals

Distribution Centers

Distribution Centers

Offshorehub

InlandPortPort

Inland Terminal Life CycleInland Terminal Life Cycle

TrafficTraffic

Stage 1Stage 1 Stage 2Stage 2 Stage 3Stage 3

Planning Maturity DeclineGrowth

Stage 4Stage 4

Setting

Stage 5Stage 5

Subsidies / InvestmentsSubsidies / Investments

Operationsbegin

Concept

ProfitProfit

Inland Ports: Different Stages, Different ConcernsInland Ports: Different Stages, Different Concerns

Phase Characteristics

Planning Relevance and viability studies. Local support. Attraction of users and investment commitments. High risk and subsidy level.

Setting Construction of terminal and distribution facilities. First users (some can be transitional).

Growth Realization of market potential. Growth of traffic. Capture of additional users. Clustering effect and generation of added value.

Maturity Traffic stabilization. Available space filled and/or few new users. Non-commercial activities (housing). Revenue generation optimal.

Decline Change in market conditions. Departure of users. Reemergence of subsidies.

Supply Chains and their TerminalizationSupply Chains and their Terminalization

The Concept of TerminalizationExport Flows to the Gateways

The Maritime SegmentImport Flows to the Hinterland

Translisft crane, NS Rutherford yard, PATranslisft crane, NS Rutherford yard, PA

Unraveling the Terminalization ConceptUnraveling the Terminalization Concept

■ Terminalization• Growing influence of transport terminals in the setting and

operation of supply chains in terms of location, capacity and reliability.

Type Bottleneck-derived Warehousing-derived

Nature Terminal as a constraint Terminal as a bufferConcept Rational use of facilities to

maintain operational conditions

Incorporating the terminal as a storage unit

Challenge Storage space, port call frequency, gate access

“Inventory in transit” with “inventory at terminal”

Outcome Volume, frequency and scheduling changes

Reduce warehousing requirements at distribution centers

Terminalization in a Supply Chain ContextTerminalization in a Supply Chain Context

GatewayGateway

Offshore HubOffshore Hub

BottleneckBufferDistribution center (outbound / inbound)Inland containerized goods flowInland non-containerized goods flowMaritime container flow

Foreland (First Mile)Foreland (First Mile)

Hinterland (Last Mile)Hinterland (Last Mile)

GatewayGateway

SuppliersSuppliers

CustomersCustomersExtended Distribution Center

Extended Gate

Port regionalization and the creation of a Regional Load Center Network

Inland Inland TerminalTerminal

Supply Chain Terminalization: Export Flows to the Supply Chain Terminalization: Export Flows to the GatewayGateway

■ Bottleneck-derived terminalization• Containerized cargo:

• Logistics zones near the gateway or in a hinterland location connected to the gateway via a multimodal transport corridor.

• Distribution:• Tends to be synchronized with

terminal handling capacity.

GatewayGateway

Offshore HubOffshore Hub

GatewayGateway

SuppliersSuppliers

CustomersCustomers

Inland Inland TerminalTerminal

Supply Chain Terminalization: The Maritime SegmentSupply Chain Terminalization: The Maritime Segment

■ Buffer-derived terminalization• Intermediate facility (offshore

hubs):• Transshipment, interlining or

relay.• Low cost locations before

entering high distribution costs areas.

GatewayGateway

Offshore HubOffshore Hub

GatewayGateway

SuppliersSuppliers

CustomersCustomers

Inland Inland TerminalTerminal

Supply Chain Terminalization: Import Flows to the Supply Chain Terminalization: Import Flows to the HinterlandHinterland

■ Bottleneck and buffer-derived terminalization1. Port regionalization:

• Regional load center network.

2. Extended gate:• Development of inland

terminals.3. Extended distribution

center:• The terminal as a

warehousing unit.

GatewayGateway

Offshore HubOffshore Hub

GatewayGateway

SuppliersSuppliers

CustomersCustomers

Inland Inland TerminalTerminal

11

22

33

Terminalization and Supply Chain CostsTerminalization and Supply Chain Costs

Intermodal transportation costs

No noticeable effects.Related to higher terminal costs.Cost mitigation through terminal use (e.g. drayage).

In-transit inventory costs Confers additional flexibility.Used as a buffer.

Warehousing inventory costs

Partially transferred to the terminal.Blended with in-transit inventory costs.

Dwell time costs Terminal not always used as a facilitator for synchronization between transport modes.Places for cheap storage of consignments.Could be the result of deliberate actions of actors in supply chains.

Terminalization in PracticeTerminalization in Practice

North America: Long Distance RailNorth America: Long Distance RailWestern Europe: Close IntegrationWestern Europe: Close IntegrationPacific Asia: Outbound LogisticsPacific Asia: Outbound Logistics

Chassis waiting to be picked, Corwith Rail Yard, ChicagoChassis waiting to be picked, Corwith Rail Yard, Chicago

Alameda Corridor

The Extended Gateway of the Ports of Los Angeles / The Extended Gateway of the Ports of Los Angeles / Long BeachLong Beach

Marine Term

inalM

arine Terminal

On-dock rail yards

On-dock rail yards

Near-dock rail yards

Near-dock rail yards

Off-dock rail yards

Off-dock rail yards

Transload facility

Transload facility

WarehouseWarehouse

Transload facility

Transload facility

WarehouseWarehouse

Non-local destinationNon-local

destination

Non-local destinationNon-local

destination

Non-local destinationNon-local

destination

Off-dock rail yards

Off-dock rail yards

Non-local destinationNon-local

destination

Non-local destinationNon-local

destination

Local destinationLocal destination

16%

13%

22%

13%

34%

2%Truck

Rail

Intra-terminal

§̈¦105

§̈¦110§̈¦710

§̈¦405

§̈¦10

§̈¦5

§̈¦605§̈¦105

§̈¦10

§̈¦710

§̈¦710

§̈¦10

§̈¦10

§̈¦710

§̈¦10

£¤101

UV42

UV1

UV19

UV72

UV91

UV22

UV47

UV1

UV22

Alameda Corridor

Ground Level

Trench (30 feet)

0 2 4 6 81Miles

Port of Los AngelesPort of Long Beach

CBD

UP & BNSF Railyards

Mid-CorridorTrench (10 miles)

Alameda Corridor

UP & BNSF Railyards

Port of Los Angeles

Port of Long Beach

Thruport

Port Cluster

Monthly Container Traffic Handled by the Port of Los Monthly Container Traffic Handled by the Port of Los Angeles, 1995-2008 (TEU)Angeles, 1995-2008 (TEU)

North American Rail SystemNorth American Rail System

Major Rail Corridors Improved since 2000Major Rail Corridors Improved since 2000

Average Speed of Class I Railroads, 1945-2004Average Speed of Class I Railroads, 1945-2004

15

20

25

30

35

40

1945 1955 1965 1975 1985 1995 2005

Kilo

met

ers

per h

our

Average Freight Train Length, United StatesAverage Freight Train Length, United States

0

20

40

60

80

100

120

140

160

180

Auto Bulk GeneralMerchandise

Intermodal

Eastern Railroads (CSX, NS)

Western Railroads (BNSF, UP)

Container Dwell Times at BNSF Rail TerminalsContainer Dwell Times at BNSF Rail Terminals

Departure Return Free Dwell Time (Days)

Additional Charge (per day)

Loaded Loaded (same shipper)

6 $25

Loaded Loaded (different shipper)

3 $25

Empty Loaded 3 $25

Loaded Empty 1 $25/$50 (after 10 days)

Empty Empty 0 $25/$50 (after 10 days)

BNSF’s Three Tier Terminal System, 2007BNSF’s Three Tier Terminal System, 2007

Facility Group

Facility Free Dwell Time (days)

Charge (per day)

1 Kansas City, KSLos Angeles, CAMemphis, TN

1 $150

2 Alliance, TXAtlanta, GA (Fairburn)Chicago (Cicero), ILHouston, TXOakland Intl. Gateway, CA

San Bernardino, CASeattle, WA (SIG)St. Louis, MOSt. Paul, MNStockton, CA

2 $150

3 Albuquerque, NMAmarillo, TXBillings, MTBirmingham, ALChicago (Corwith), ILChicago (Willow Springs), ILDenver, CODilworth, MNEl Paso, TX

Fresno, CAHarvard, ARLogistics Park Chicago, ILNew Orleans, LAOmaha, NEPhoenix, AZPortland, ORSouth Seattle, WASpokane, WA

2 $100

Automated Transfer Management System for Truck-Automated Transfer Management System for Truck-Rail TransfersRail Transfers

Average Dwell Times at Major European Container Average Dwell Times at Major European Container Terminals (in days)Terminals (in days)

Characteristics Bremen Hamburg Rotterdam Antwerp La Spezia Gioia Tauro

Import dwell vessel – truck

6.4 6.4 6.4 6.4 7.4 7.4

Export dwell truck – vessel

4.6 4.6 4.6 4.6 5.6 5.6

Import dwell vessel – train

6.5 6.5 6.5 6.5 7.5 7.5

Export dwell train – vessel

4.7 4.7 4.7 4.7 5.7 5.7

Import dwell vessel – barge

4.1 4.1 4.1 4.1 5.1 5.1

Export dwell barge – vessel

4.3 4.3 4.3 4.3 5.3 5.3

Transshipment dwell - - - - - 5.3

TCT VenloExtended gate (rail-based)

for ECT/HPH

Container transferiumExtended gate (satellite)

Initiated by POR

Case Studies Europe – Rhine-Scheldt DeltaCase Studies Europe – Rhine-Scheldt Delta

Outbound Logistics: Port Regionalization Clusters in Outbound Logistics: Port Regionalization Clusters in Pacific AsiaPacific Asia

Foreland-based regionalization

Hinterland-based regionalization

Two Major Transpacific Pendulum Routes Serviced Two Major Transpacific Pendulum Routes Serviced by OOCL, 2006 (The Wal-Mart Express)by OOCL, 2006 (The Wal-Mart Express)

Seattle

Oakland

Vancouver

Los Angeles

Kobe Tokyo

Pusan

Nagoya

Shekou

Qingdao

Shanghai

KaohsiungHong Kong

Singapore

Laem Chabang

Ningbo

Source: OOCL Web Site

49 Days

40 Days

Note: Paths are approximate and transit time includes port time

Northwest Express (NWX)

South China Express (SCX)

Conclusion: Terminalization and the Integration of Conclusion: Terminalization and the Integration of Supply ChainsSupply Chains

■ Terminalization• Terminals are getting more embedded in supply chains.• Constraint or buffer.• Extended gateways and extended distribution centers.

■ Is there a distinct North American, European or Pacific Asian terminalization?• Due to externalities (congestion, environment) Europe shows

a more advanced terminalization.• Dwell time pressures indicate a more constraining

terminalization in North America.• Pacific Asia dominantly as export gateways based

terminalization.