Inland Ports Help Businesses Tackle Supply Chain Congestion

Explore the ways inland ports are being used and the latest investments in inland port infrastructure

For U.S manufacturers and distributors, the web of congested roadways and seaports across the nation have caused supply chain disruptions. To tackle these issues, businesses are utilizing inland ports at a much higher rate. In addition, federal, and state governments as well as private organizations are investing in inland port infrastructure.

Let’s look at what an inland port is, how inland ports are currently being used, and the latest investments in inland port infrastructure.

What Is an Inland Port?

An inland port is typically located on an inland waterway, such as a river, lake, or canal. These ports may or may not be connected to the ocean by rail or highway. Therefore, they are sometimes referred to as dry ports.

Inland ports have access to multiple modes of transportation, enabling businesses several shipping options. For example, a business that uses an inland port that has rail, truck, and waterway connections can move products via barge during off-peak times to be more cost-effective.

Inland ports are not only growing in number and size, but also flexibility for straight-through shipping. This has led supply chain experts to classify some inland port terminals as “agile ports” because of their ability to accommodate a wide variety of vessels.

Many inland ports are located miles away from ocean ports, in areas that are closer to businesses and consumer markets. They often have an on-site storage warehouse or distribution center. By utilizing inland ports, businesses can reduce transportation and final delivery costs.

Agile Port

Agile ports enable the transshipment of containers between ocean vessels and trains and vice versa directly at the ocean dock or rail yard without a loss in performance.

The Case for Inland Ports

Inland ports are not a new business logistics trend for the modern supply chain. However, the rise in the number of inland ports in the United States is offering strategies for the future supply chain. To address shifting transportation capacity and efficiency issues, inland ports have emerged as a solution to increased demand on supply chain infrastructure. They can not only enable businesses access to larger labor pools but also more effective distribution channels. This can be advantageous during peak seasons.

The growth of global supply chains has led to a reliance on imports and exports. However, supply chain disruptions stemming from COVID-19 as well as geo-political and environmental issues have caused cargo congestion and capacity constraints at ocean ports. In addition, the trucking industry has been affected by:

Higher freight rates
Increased diesel fuel costs
The driver shortage
Reduced container capacity

This means that not only does it cost more to ship, but also that there are fewer drivers available to move products. This has led to delays in getting products to customers, negatively impacting customer experience and customer satisfaction.

Inland ports help move international shipments more efficiently from ocean ports throughout the U.S. mainland. They are not viewed as competition for ocean ports. Instead, supply chain managers use inland ports in their freight distribution strategies as complimentary solutions for ocean ports.

When inbound shipping containers come into ocean ports, they are spread across storage facilities as they are unloaded. If the containers are not moved fast enough from the ocean port, they produce bottlenecks that disrupt subsequent supply chain processes. By using inland ports, businesses can pass ocean cargo through terminals quickly in a more cost-effective manner. This helps to clear docks as other ocean vessels arrive.

Imports of raw materials and exports of final products are necessary supply chain business processes. As shipping prices continue to rise, businesses that offer the best shipping price gain a competitive advantage. Inland ports enable the intermodal flexibility for businesses to move products in the most cost-effective and quickest way possible. For instance, if a highway shuts down, 3PLs and shippers can utilize rail lines or barges.

Companies in time-sensitive industries, such as retail and agriculture, face threats to their profitability the longer products spend awaiting drayage. However, they can gain a competitive advantage using inland ports. This has made inland ports an increasingly viable option for importing, manufacturing, and distribution center operations.

How Inland Ports Work

An example of inland ports at work is the operation in Greer, South Carolina. Imagine that a company located in Memphis, Tennessee imports a container of products from Hong Kong to the Port of Charleston in South Carolina. Instead of transloading the freight to a trailer or draying it from Charleston to Memphis, the company can take advantage of South Carolina’s inland port located in Greer. After utilizing rail to transport the container to Greer, the container can be moved a much shorter distance by truck to Memphis. In addition, the business can also have the container processed for distribution and delivery by a third-party logistics provider while in Greer.

One of the largest companies that uses Inland Port Greer is car manufacturer BMW. The inland port has enabled BMW to increase its production capabilities at its Spartanburg, South Carolina plant.

3PLs Can Enable a Competitive Advantage

As the use of inland ports grows, third-party logistics providers are taking advantage of their expertise with port logistics services. Not only do inland ports intake full containers, but they also have large volumes of empty containers. This creates an opportunity for 3PLs to load empty containers and return them to ocean ports. This is essential for current supply chains, as it helps create a “closed loop” supply network that benefits not only 3PLs but also ports, manufacturers, and consumers.

One of the most beneficial ways that 3PLs contribute is through value-added services. For example, a company that outsources packaging to a business in Mexico would benefit from a third-party logistics provider located at an inland port. Utilizing a 3PL to get items picked, packed, and shipped at or near the inland port can eliminate a stop to a destination in the value chain. This can lower transportation costs as well as enable faster delivery times to consumers.

Advantages of Inland Ports

Increased shipping capacity by rail
Consolidation of importation and distribution
More available warehousing space for storage and distribution
Greater proximity to consumer markets
Reduced shipping costs
Improved speed to market for product

Inland Ports Help Create More Resilient and Sustainable Supply Chains

Today’s consumers are aware of environmental social responsibility and the impact that it has on the world. Businesses that are not committed to forming a sustainable supply chain run the risk of reducing customer retention, which has a direct effect on their profitability.

Inland ports are often built upon former industrial sites. This supports global environmental initiatives for a sustainable supply chain. Additionally, it enables businesses to implement new energy standards without using new materials for construction of railroads or warehouse space.

A recent study by the Association of American Railroads found that loading 100 intermodal rail cars is equivalent to taking 300 trucks off the road. In fact, it was found that rail is four times more fuel efficient than trucks and can reduce greenhouse gas emissions by up to 75%. This means that businesses that utilize inland ports will spend less on fuel and contribute fewer carbon emissions to the environment.

With the use of advanced technology and business partnerships with telecommunications services, inland ports enable a strong digital supply chain infrastructure. This infrastructure enables enhanced cargo tracking and management, providing visibility across the entire supply chain. This enhanced level of visibility helps to produce a more resilient supply chain because the data can be used to mitigate current and future disruptions.

Inland Port Investment Across the Nation

There has not only been an increase in the use of inland ports over the last decade, but also an increase in investment. What does this investment look like? Let us examine some of the most recent investments.

Bipartisan Infrastructure Bill

Enacted in 2021, the Bipartisan Infrastructure Bill designated $16.6 billion over five years to fund inland port and waterway improvements. This enables significant improvements to port facilities on the nation’s coasts, rivers, and Great Lakes. Projects can fall into one of four categories:

Loading and unloading of products at a port
Movement of products into, out of, around, or within a port
Resilience (such as projects addressing rising sea-level, flooding, extreme weather events, natural disasters)
Environmental and emissions mitigation measures (such as projects to reduce or eliminate port-related pollutants or greenhouse gas emissions)

Mojave Inland Port

The Mojave Inland Port is the first part of the $30 billion California Inland Project and will be situated 90 miles from San Pedro Bay. Located on more than 400 acres of land adjacent to the Mojave Air and Space Port, the Mojave Inland Port will have the capacity to manage up to 1 million containers per year. In addition, it will be able to handle 3,600 trucks per day.

By shifting more cargo to rail, the Mojave Inland Port aims to reduce wait times for trucks at the San Pedro Bay Port Complex. This location will enable products to arrive by rail from nearby San Pedro and be sent to their final destinations more efficiently. This will help to reduce congestion at the port and on highways in California’s High Desert, as well as carbon emissions.

Upon completion, the Mojave Inland Port will become one of the only hubs in the world that can offer transportation services by rail, truck, air, and space. The port is expected to be fully operational in 2024.

Barstow International Gateway

Burlington Northern and Santa Fe Railway (BNSF) announced a $1.5 billion investment to build an inland port in California’s High Desert. The Barstow International Gateway is designed to move containers from the ports of Los Angeles and Long Beach. The inland port will include:

A railyard
An intermodal facility
Storage warehouses for transloading freight

To transport containers to the Barstow International Gateway, BNSF will utilize the Alameda Corridor. The new inland port will improve cargo velocity at the ports as well as reduce truck traffic on highways. In addition, the gateway will help move products from San Pedro Bay to consumers, businesses, and manufacturers.

Northeast Georgia Inland Port

The Northeast Georgia Inland Port will enable a link to the Port of Savannah by way of Norfolk Southern Railroad. The inland port will service the manufacturing and supply chain logistics corridor along Interstate 85. It will be able to handle up to 150,000 containers per year and can reduce up to 600 highway miles for each container moved by rail.

Gateway Industrial Center

In 2022, The U.S Department of Transportation gave $46.9 million to the Georgia Ports Authority to construct an inland port in Gainesville, Georgia near I-985. The new port will be located at the Gateway Industrial Center in Hall County and link with the Port of Savannah via a 324-mile rail line. This will reduce highway traffic, cut carbon emissions, and lower shipping costs for cargo owners.

Utah Inland Port

Union Pacific Railroad and the Utah Inland Port Authority have partnered to move containers from the ports of Los Angeles and Long Beach to Salt Lake City, Utah. This direct connection will link two critical points in the supply chain, enabling more efficient importation to and exportation from the Intermountain West region.

The Utah Inland Port will sit on 1600 acres and is designed to attract shippers from the Intermountain West region to utilize the rail system. Currently, only 10% of cargo from the region moves by rail.

Rail shipments to and from the Utah Inland Port will be monitored by the Intelligent Crossroads Network. This network is a private 5G supply chain network that is supported by cloud technologies and artificial intelligence (AI). The network will be utilized to help improve the digital supply chain, enabling logistics businesses to improve efficiency in their supply chain and logistics management.

Other Cities with Major Inland Ports

St. Louis, Missouri

Cincinnati, Ohio

Memphis, Tennessee

Houston, Texas

Chicago, Illinois

Conclusion

Inland ports are fast becoming one of the most effective supply chain solutions to move cargo from ocean ports to manufacturers, distributors, and consumers in the nation’s interior. They have become key to optimizing the supply chain because they not only improve supply chain resilience but also create more sustainable supply chains, positively impacting the environment. By including inland ports into the supply chain model, businesses can meet customer expectations, improving customer satisfaction and customer retention.

Digital technologies such as cloud computing and artificial intelligence are utilized by inland ports to improve efficiency by enabling more effective supply chain management. These technologies can also help mitigate disruptions that many traditional supply chains experience by enabling enhanced transparency in the supply chain.