Case for inland ports is gaining traction, says Jones Lang LaSalle report

A new white paper from global real estate firm Jones Lang LaSalle points to the increasing importance of inland ports as a critical link in the global supply chain.

The white paper, entitled “The emergence of the inland port,” provides an in-depth look at inland ports—or intermodal distribution centers—and the myriad benefits they offer shippers, given their connectivity to major seaports and how they help manufacturers and retailers via cost-effective import distribution.

According to JLL, by definition, an inland port is a hub designed to move international shipments more efficiently from maritime ports inland for distribution throughout the U.S. heartland. The firm added that while the concept of inland ports is not new, where they are located is becoming increasingly critical to the global supply chain and affect logistics decisions ranging from shipping routes to warehouse locations.

Inland ports, according to the white paper, are comprised of the following characteristics:
-market proximity to at least 3 million people within 200 miles;
-a major connection to a North American seaport via a Class I railroad;
-Foreign Trade Zone status and privileges; and
-an abundance of reasonably priced commercial real estate for warehousing and distribution, relative to the East and West coasts, among others.

JLL said the “full-fledged” inland ports are located in Dallas-Fort Worth, Chicago, Kansas City, St. Louis, Atlanta, Memphis, Inland Empire, Columbus, and Charlotte.

“Inland ports are clearly increasing in importance and visibility,” said JLL Executive Vice President, Supply Chain & Logistics Solutions Richard Thompson—Americas, in an interview. “The reason for that is efficiency and effectiveness. Supply chain professionals are all about costs and service, and transportation costs are going up significantly and expected to continue increase over the next several years, regardless of what happens with oil prices.”

Other things driving costs and making the case for increasing inland port usage and development, said Thompson, are regulations for things like drivers’ hours-of-service, and emissions reduction, among others.

And with increased prices, shippers are looking for alternative ways to move freight in a more cost-effective manner. The best alternative to do so, said Thompson is through intermodal and rail transportation.

“Inland ports are essentially multi-modal intermodal terminals connected to major seaports,” he said. “If you have direct Class I rail access, bringing goods from congested ports closer to the customer provides cost advantages in the form of lower labor and real estate rates, there are efficiency advantages because it is not as congested and it is closer to population centers through a transportation mode that is as cheap as you can get.”

This serves as a major benefit for big box retailers that serve as some of the country’s largest importers that are focused on inland ports and intermodal facilities and are building facilities close to inland ports for various reasons.

While there are currently a limited number of U.S.-based inland ports, there is potential for more to enter the market as the Panama Canal expansion nears its 2014 completion date.

“Inland port development is going to evolve beyond where it is, and we are seeing that with projects that are occurring,” said Thompson. “We are going to see twice the economies of scale to bring freight through the Panama Canal after the expansion is completed, which will be attractive to retailers and importers in moving freight around the Gulf and East coast ports. It also attracts the attention of smaller ports close by looking at the expansion as an opportunity for economic development.”