April 2006 | How-To | Ten Tips

Evaluating Inland Ports

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Are you considering using an inland port instead of the usual coastal port? That's a decision many companies are analyzing as they face high fuel and transportation costs, as well as congestion at larger ports. Choosing an inland port may not work for every company, but it can help achieve greater supply chain management success through the use of multiple transportation modes, according to Jim McConoughey, interim executive director, TransPORT (Heart of Illinois Regional Port District). Here are his 10 tips for evaluating inland ports.

1. Consider your transportation needs. How do you ship your product? Do you use rail, road, water, air, or a combination? See if the inland ports are well-connected to these transportation modes. For instance, consider how far the port is from the airport or railway. Align your needs with the port's location.

2. Do a transportation analysis. Calculate what you spend now, then project what it would cost to use barge in an inland port system. Moving inland and shipping via barge could save money in the long run. In addition, check out the carrier service offered at the inland port. What kind of barge lines or short-line railroad carriers operate from the port you are considering? Evaluate the carrier service the port offers, whether you have contracts with those carriers, and if they can meet your freight handling needs.

3. Analyze the port's location. Understand the markets you serve and if the port is within close proximity to those markets. Get to know how the port's location can offer both north-south and east-west transportation options. If the port is located along the Inland Waterway System, for example, does it provide access to both the Gulf and the Great Lakes? Does it offer access via road and/or rail to the increasingly popular north-south NAFTA corridor? The inland port could also offer important east-west connections that give your business access to booming coastal freight activity.

4. Check out the financial incentives. Many inland ports are attracting business through incentives. Find out if the city or port offers attractive lease rates, bonding ability, or Foreign Trade Zones. Such incentives might make choosing an inland port a good business decision.

5. Make sure the inland port can meet your delivery needs. If you run a just-in-time inventory operation, you need to be particularly sensitive to the fact that it could take additional efforts to schedule product inflow and outflow, especially if you use barge transportation. Shipping via barge means you most likely will use several lock and dam systems, which will translate into slower transportation times, despite cost savings. Carefully plan your inbound and outbound transportation. Consider how critical timing is for your operations. How will your delivery method affect your supply chain? Can you meet your customers' needs efficiently? How often will you need expedited freight to handle emergency situations? Will an inland port be the best area from which to service customers and distribute product?

6. Consider the port's capabilities. Check if the inland port has the ability to expand and the manpower to execute your logistics needs—onloading and offloading products, for instance. Ports are often landlocked. Find out if the inland port can offer adequate space to expand if necessary. Know what freight handling options are available at the port, and their costs. What type of cranes or onloading/offloading capabilities, for example, does the port have? Can the equipment already in place easily be used to handle your products? What will it cost? If equipment is not in place, will the port allow you to use the necessary equipment? At what cost? It is vital to know how you can leverage the freight handling system the port currently uses.

7. Enlist the help of trade associations. Utilize existing networks to find help and best practices. The place to start is a trade association or port-focused organization. Check out Inland Rivers, Ports, and Terminals Inc.; the National Waterways Conference; the American Association of Port Authorities; or the Upper Mississippi, Illinois, and Missouri River Association. These organizations offer insight into the port industry and can help you stay abreast of current issues.

8. Review port management and operations. Take time to fully assess the port's lease rates and terms. Also determine if the port favors short-term or long-term leases, or if you can purchase property at the port and build to your specifications. Investigate what types of shared services—trucking/rail lines, large conference rooms—might be available to your company. Check to see if the port includes you in its marketing materials, and/or gives you a presence on its web site.

9. Evaluate the region where the port is located. Fully examine the business climate—cost of doing business, available workforce, and quality-of-life issues—that you and your employees will find valuable.

10. Examine the companies currently operating at the port. Are they satisfied with the port and its operations? Note which companies could complement your business, and vice versa. Having a location in a port, which is often an industrial maritime development park, could serve as a catalyst for your company.

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