US Shippers Expand Port-to-Inland Connectivity to Diversify Supply Chain Risks

Source: APM Terminals

Maintaining a smooth flow of goods gives shippers greater flexibility in transport planning. According to Brian Harold, Executive Director of APM Terminals Mobile, port-to-inland transit is increasingly being used as a way to improve supply chain resilience.

“I think for shippers what we’re seeing now is more about diversification. They don’t want to put all their eggs in that one basket,” Harold said.

The strategy aims to spread supply chain risks. When cargo depends on a single ocean route or port, any disruption along that route can affect the entire transportation plan.

According to Harold, connections between seaports and inland destinations can help reduce transportation costs, cut down on empty truck miles and make better use of rail capacity, particularly as some ocean freight corridors face disruption and congestion.

Expanding Capacity at the Port of Mobile

At the Port of Mobile in Alabama, APM Terminals currently operates the only container terminal. The facility began operations in 2008, and in 2016, APM Terminals added a rail terminal. Before that, the Mobile area did not have an intermodal rail connection serving port operations.

The port currently handles around 600,000 TEU per year, while its gateway capacity could be expanded to 2.5 million TEU.

“We’re investing a lot of money in the gateway right now, along with the state, deepening and widening the ship channel, and then we’ve expanded the terminal five times within the past 10 years, and invested over a billion dollars,” Harold said.

Reducing Transportation Costs and Empty Truck Miles

One of the benefits of port-to-inland connectivity is the ability to reduce trucking distances. Instead of using trucks for the entire journey, containers can be moved a short distance from the port to an inland connection point and then continue by rail.

This model reduces the number of long-distance truck movements that do not directly contribute to cargo transportation. For example, a truck may have to haul a container 300 miles and then travel another 300 miles to return the chassis. In another case, after delivering a container to its destination, the operator may still have to return the empty container to the port.

“If you can have a shipper that instead of trucking 300 miles each way, can now just have the truck move … about a mile or two to an inland port site, and then the railroad takes it from there, that’s a huge win and usually a very good positive impact to their overall supply chain cost,” Harold said.

When choosing a mode of transport, shippers must weigh the costs of trucking against rail, as well as rail against barge transportation. In addition to direct costs, state-level regulations can also influence the choice of transport.

According to Harold, in some cases, moving overweight cargo by truck can result in fines and additional costs. Hours-of-Service regulations also limit the number of hours drivers are permitted to operate vehicles, affecting the ability to carry out long-distance trucking journeys.

Port of Mobile and the Automotive Supply Chain

Despite having only one container terminal, the Port of Mobile plays an important role in connecting Alabama’s automotive industry, which has an extensive manufacturing and supply network.

An automaker may need to coordinate with numerous Tier 1 and Tier 2 suppliers, involving large cargo volumes and tight delivery schedules. This makes managing cargo flows across the entire supply chain increasingly complex.

“It requires flexibility within a port to really be able to cater to the needs of automotive manufacturers,” Harold said.

For the automotive manufacturing industry, late deliveries can have a direct impact on assembly line operations.

“If a shipper can just basically expedite their cargo when it comes off a vessel within 24 hours to an inland site, right next to their distribution center or their manufacturing center, then that’s a huge plus for the stability of their supply chain,” Harold said.

Advantages of a Class I Rail Network

Connectivity to the Class I railroad network at Mobile also gives shippers additional transportation options.

One example is Canadian National (CN). CN’s network does not connect directly with container ports on the US East and West coasts, but access to Gulf Coast ports provides the railroad with additional opportunities to handle containerized cargo.

According to Harold, when considering capacity on rail corridors connecting to the East and West coasts, utilization levels on these routes are typically high.

“There’s not a lot of additional capacity there on a regular basis. Whereas from the Gulf for containerized cargo, there’s a tremendous amount of capacity available on these rail lines,” he said.

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Source: Phaata.com (According to Supply Chain Dive)

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