Large and ongoing increases in freight traffic to the U.S. are driving the development of a different kind of industrial property: the inland port.
Intermodal traffic is up 400 percent since the 1980s. Containerized traffic has grown 290 percent since 2010. And the U.S. Department of Transportation predicts freight levels will increase another 40 percent in the next 30 years. While that growth continues to drive economic development, it has also increased land costs and congestion around America’s largest ports.
Speakers at the CRE.Converge 2018 session, the “First Mile: Ports and Inland Ports Impact on Distribution,” described how those conditions have driven transportation and supply chain management companies to search for ways to lower the total cost to market for their clients’ products.
BNSF Railway Assistant Vice President of Economic Development Colby Tanner said the 200-year-old technology of rail remains the most cost-efficient way to move freight across the country. Train service can move 1 ton of freight 500 miles on just one gallon of diesel fuel, he said. Furthermore, rail systems can carry freight from West Coast ports to destinations on the Eastern Seaboard in just six days.
Consequently, transportation and supply chain management companies are increasingly turning to inland ports to handle freight traffic. Connected by rail lines and often located in industrial markets, these dry-land “ports” can be positioned hundreds of miles from major sea ports and take advantage of lower land prices and less road congestion. Increasingly, developers are also assessing potential port sites based on tax incentives and the desirability of trucking goods into and out of a specific site
Tanner pointed to the example of one inland port in Kansas City, Kansas. When BNSF began building the facility in 2013, it estimated that building 7 million square feet of warehouse space would satisfy clients for well over a decade. Just five years later, clients now operate 12 million square feet on site.
“Every time we have done one of these [inland ports], we have underestimated how big it would become,” Tanner said.
“We have built two inland ports in the last six years. Most port authorities don’t do that,” said Micah Mallace, Director of Strategic Projects for South Carolina Ports Authority.
Inland ports, he said, also address one major challenge facing the transportation industry currently, namely a shortage of truck drivers. The South Carolina Ports Authority which includes one of only three Post-Panamax ports on the East Coast, developed Port Greer 200 miles inland. In addition to lowering facilities costs, improving transportation efficiency and avoiding labor shortages, the port is showing “for the first time ever that short-haul railroad works,” Mallace said.
Developers and users have come to realize other benefits of inland ports, said Gregg Healy, Executive Managing Director for Supply Chain and Logistics at Colliers International. Rail links lower the cost and improve the efficiency of returning empty shipping containers.
“There is also an environmental win,” he said, noting that this approach to shipping greatly reduces the number of trucks idling at ports while they wait to load.
Transportation innovators are already working to further the efficiency of inland ports. The development of autonomous vehicles and automated freight handling technologies is giving rise to fully automated systems of moving freight from inland ports to clients’ distribution centers without the use of trucks and with minimal workforce. Big data technologies, Healy said, are also enabling supply chain management companies to refine shipping schedules to deliver goods to market in a more strategic, as-needed basis.
This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s CRE.Converge 2018. Learn more about JLL at www.us.jll.com or www.jll.ca.
