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Dry Ports

They’re the ideal solution to supply chain bottlenecks, and they’re finally catching on.

Credit: Georgia Ports Authority
Credit: Georgia Ports Authority

By Jack O'Connell 12-12-2019 08:07:05

(Article originally published in Mar/Apr 2019 edition.)

Okay, this is not a column about the merits of a certain postprandial libation made in Portugal and known for its sweetness, in case you’re wondering about the title. We’ll save that for another time – although, come to think of it, most of you worldly-wise MarEx readers could probably do a much better job on that topic than I could.

No, this column is about the growing phenomenon of “dry ports,” sometimes referred to as inland container ports or just inland ports. But there’s a big difference between an inland port and dry port: Dry ports are not located on a body of water. In fact, they’re usually hundreds of miles from the nearest ocean or river. And that’s the point: They’re transshipment centers where there are no navigable waterways, hence “dry ports.” But there are rails and interstates.

Inland ports, on the other hand, are “wet ports.” located on a river or lake. There are hundreds of inland ports dotting America’s interior, notably those along our so-called “Marine Highways” – the Mississippi and its tributaries in America’s heartland, the Columbia and Snake rivers out West, the Great Lakes and St. Lawrence Seaway up North. They carry millions of tons of cargo each year, mainly breakbulk items like coal, iron ore, heating oil, gasoline, corn, wheat, soybeans and lumber.

All About Containers

But they don’t carry containers. Or if they do, the numbers are miniscule. That’s where dry ports come in. They’re transshipment points. Containers are offloaded from ships directly onto rail cars and moved inland to the dry port, which is really an intermodal transfer facility, where they’re transferred onto long-haul unit trains or offloaded for pickup by trucks and delivery to nearby factories or warehouses.

The benefits are legion. Dry ports relieve congestion at busy ocean ports by freeing up precious dock and storage space. They take trucks off the road and thereby reduce fuel consumption, air and noise pollution and highway congestion. They speed delivery of goods by avoiding holdups caused by driver shortages or terminal delays or lack of storage space at crowded ports and save money in the process because short-haul rail is a lot cheaper than drayage (truck).

And perhaps most importantly, they spur development in economically depressed areas by spreading inland the wealth generated by large ocean ports. A dry port brings jobs and tax revenues and attracts a host of other businesses ranging from huge distribution centers (think Amazon warehouses) and refrigerated storage facilities to small mom-and-pop operations. It can be an economic godsend for impoverished regions.

Canal Connection

Dry ports are really an East Coast phenomenon – the result mainly of the Expanded Panama Canal, which opened in 2016 and brought increasing volumes of containers from Asia to ports up and down the East Coast. On the West Coast, where the bulk of Asian imports (70 percent) arrive, containers are offloaded directly onto two-mile long unit trains for the long journey inland to places as far away as Chicago and Dallas.

It’s estimated that Asian container cargoes to the East Coast have nearly doubled in the last three years, all due to the Canal. In response, East Coast ports have had to scramble to handle the onslaught, and dry ports emerged as the ideal solution.

Late last year the Georgia Ports Authority announced plans for its third dry port – this one located in Gainesville in northeast Georgia. The Northeast Georgia Inland Port will be built on a 104-acre site roughly 300 miles from the port of Savannah at an estimated cost of $90 million.

“Our inland terminals are bringing our ports and producers closer together, providing new economic opportunities,” commented GPA Board Chairman Jimmy Allgood. “That’s good news for Georgians, who will benefit from increased employment options as more companies expand or locate here. Georgia Ports already support more than 440,000 jobs across every corner of the state.”

Norfolk Southern will provide the rail link between Savannah’s Garden City Terminal and the dry port when completed in 2021. It’s estimated the new facility will take 150,000 trucks off the road each year and ease congestion in and around the Atlanta metropolitan area.

It joins Cordele Inland Port in Cordele, Georgia and Appalachian Regional Port in Chatsworth as one of three dry ports serving Savannah’s fast-growing container business, which grew nearly eight percent last year and now ranks third overall in the U.S. behind LA/Long Beach and New York/New Jersey.

Cordele Inland Port is located in southwest Georgia, 200 miles from Savannah, and offers direct rail service via CSX to both Savannah’s Garden City Terminal and the port of Brunswick, the second largest auto import center in the U.S. Cordele itself is known as the “Watermelon Capital of the World” and anchors a regional center for agriculture including the production and export of cotton, peanuts, peaches and – you guessed it – watermelons.

The Appalachian Regional Port (ARP) in the northwest corner of the state near Chatsworth opened just last year with an initial capacity of 50,000 container movements per year via the CSX Railroad. That means 50,000 fewer trucks on the road, and because it’s located nearly 400 miles from Savannah it provides a significant reduction in both air pollution and traffic congestion. Container-handling capacity at ARP is expected to double in the next ten years to 100,000 containers per year.

Competing for Cargoes

In neighboring South Carolina, the port of Charleston is another fast-growing container port that competes with Savannah’s for Asian cargoes. Charleston has its own network of dry ports including Inland Port Greer and Inland Port Dillon.

Opened in 2013 and 212 miles from Charleston, Inland Port Greer is nestled in the industrial heartland of the Upstate region centered around Greenville/Spartanburg where BMW, Michelin and other international manufacturers already operate. It’s serviced by Norfolk Southern’s main line and is strategically located on the I-85 corridor between Atlanta and Charlotte with easy access to 100 million consumers within a 500-mile radius.

Containers arriving in Charleston move from ship to rail to Inland Port Greer where they are loaded onto trucks for the proverbial “last mile,” which generally means no more than a one-day drayage. Ship to rail to truck – that’s the magic formula for intermodal. But it’s the rail portion that saves money and reduces the carbon footprint once the container is offloaded from the ship.

The value of using Inland Port Greer for our intermodal needs is a savings of approximately $150 per container,” says Shivakumar Basavanahally, Director of Supply Chain Operations for Himatsingka America in Spartanburg. Headquartered in India, Himatsingka is a major international manufacturer of home textile products like linens, draperies and upholstery.

Inland Port Dillon opened last April and is 160 miles from Charleston, giving cargo owners and especially shippers of refrigerated cargo a new supply chain option. In close proximity to I-95, it has rail service provided by CSX and is expected to take 45,000 containers off the road annually.

CSX is pleased to be a key link in extending the South Carolina Port Authority’s reach from the Port of Charleston to the Pee Dee Region of South Carolina through establishment of Inland Port Dillon,” said Dean Piacente, CSX Vice President of Intermodal, at the dedication. [Editor’s note: “Pee Dee Region?” Okay, it’s in the northeast corner of the state along the Pee Dee River, named after the Pee Dee Indians.]

Piacente added: “CSX is proud of our role working together with the port in converting the movement of containers from highway to rail, reducing highway congestion and providing environmental benefits to the citizens of South Carolina while promoting economic growth and commerce.”

Along with Inland Port Greer, the facility will handle the growing volume of container cargo traveling to and from the port of Charleston via intermodal rail, which has increased 180 percent since 2011. Today, nearly 25 percent of the port’s container volume moves by rail.

South Carolina and Georgia are not the only states with dry ports. Virginia opened what may be the first U.S. dry port way back in 1989. Located in Front Royal, the Virginia Inland Port (VIP) brings the port of Virginia 220 miles closer to inland markets through direct rail service from the terminals in Hampton Roads. Intermodal rail cars arrive at VIP and gain access via Norfolk Southern to markets in the Baltimore/Washington area, Pennsylvania, New York/New Jersey and portions of the Midwest.

Well-known companies such as Home Depot, Kohl’s, Rite Aid and Red Bull have opened distribution centers in Front Royal to utilize VIP, bringing jobs and economic benefits to the region. VIP also consolidates and containerizes local cargo for export.

How to Play It

The growing popularity of dry ports means more business for Class 1 railroads – in this case, CSX and Norfolk Southern, which sorely need it due to the decline in coal shipments from the Appalachian region. Short-haul lines like Florida East Coast and Patriot Rail will also benefit by providing the critical link between ports of entry and the Class 1 carriers.

On the retail side, the big box retailers and supermarkets – Walmart, Target, Lowe’s, Kroger’s – are worth a look as is, of course, Amazon. Amazon is really in a class by itself, flush with cash and opening huge, largely automated fulfillment centers at a torrid pace nationwide. These will invariably be located near major rail depots or interstate highways. Other possibilities include freight forwarders and trucking outfits like XPO.

As for the container lines themselves, why bother when there is so much opportunity elsewhere? There’s too much risk involved, too much cyclicality in maritime. Stick with dry ports!

 

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.