Opportunities for inland container terminals. FITAC Conference Bogotà October Marc Pirenne

Opportunities for inland container terminals FITAC Conference Bogotà October 2-3 2014 Marc Pirenne

Presentation outline 1. Inland container terminal: the concept 2. European best practices in inland container operations. 3. Intermodal Rail transportation and inland terminals 4. Key enablers for inland (container) terminals and inland navigation

An Inland container terminal is an integrated part of the logistic chain The total supply chain of goods from production at origin to delivery at destination. A terminal is not a standalone operation. It is part of the logistics chain delivering a door to door service. Inland navigation is sometimes percei ed as a slo ode of transport. Not speed itself but reliability and expected time of arrival matters.

The location of the inland terminal is important The location of the terminal is essential: close to industrial activity in the area (imports or exports). Good accessibility by road, rail. Not close to the city center. Possibility to develop value added activities or container freight station in the neighborhood e.g. stuffing and stripping of containers.

Example of an inland network for the port of Rotterdam in the Netherlands.

Attractivenss/Concentration of Volumes Trucking or barging : dilemma? Truck is the benchmark and the dominating transport mode. Often trucking suffers from congestion on the roads Growth in traffic can be realised in trucking ànd barging. Modal split in the Port of Antwerp Belgium: Truck 56% Barge inland navigation 35% Rail 9%. Comparing commercial speed : barge 12km/hr Train 30km/hr Truck 40km/hr Truck Barge Rail 0 100 200 300 450 Distance km Truck price is the benchmark Is there a distance break-even point between truck and barge?

Comparing costs of trucking and inland navigation : look at the total cost Barge? Terminal handling cost One-Way Barging Gate- Out Local Trucking Empty Back Storage Inland Truck X/km THC Round-trip Trucking Empty Storage Back Port

Sufficient critical mass in containers After an intial build up period, sufficient containers handled to have a viable operation: for the terminal operation for the frequency of the barging service loading rate of the barges. 30,000 Teu annually is in Europe a viable operation with a mobile crane in the terminal. A 1500 tonnes barge can take 90 TEU. The same volume would require 70 road trucks. Barges should have an +80% loading rate to be economically viable.

The Container yard (CY)concept 2 options : carrier haulage or merchant haulage. Overseas Terminal Deep sea Transport Colombia deepsea terminals Inland barging fluvial transport Inland Container Terminal Trucking Final Destination Bill of Loading CY Cartagena Bill of Loading CY inland container port (Container Yard) Carrier haulage Merchant haulage Merchant haulage

The Container yard concept carrier haulage Shipping line arranges transport to free o truck at inland terminal Advantages No delay in the deepsea port (= fast transit) Less administration in the port (=easier to organize) Free time starts only at the inland terminal (shorter free period needed) Receivers responsibility starts at pick up at the inland terminal and ends with returning the empty container to the inland terminal (avoid detention) Possibility to arrange customs simplification (extended gate)

Carbon footprint and security A 1350 tonnes barge consuming four to seven times less fuel per ton-kilometre than a road truck. With consumption of 5 litres of fuel per ton km inland barge can transport one tonne of cargo 500 km train would reaches 333 km truck reaches 100 km airplane only 6,6 km of flight. inland navigation remains by far the safest mode of transport. Sustainable transport solutions are becoming an element in the decision matrix for the customers (6% weight factor)

What do Customers require? Short transit time Containers available 2-3 days after arrival of deepseacarrier. Daily departure of the barges from all terminals No delay On time deliveries van 95 98% (variance of a 20 ) Cost efficiency (competitive rates) Sharp pricing and no extra costs Maximum flexibility Possibility to change planning (24/7) Visibility : At any moment to have an idea of the position of the container ( track and trace)

SWOT analysis of inland navigation transport Strenghts Low average transport costs per tkm Reliable services under predictable weather conditions Comparatively high level of transport safety Comparatively low pollution costs Large capacity available Opportunities Removal of infrastructure bottle necks Improved transport chains will improve on time reliability Organisational cooperation amongst chain members Truck competition Weaknesses Political and commercial preference for trucking Low network density Low line speed Accessibility of the river to build more terminals? Threats Priority of investments in road or rail infrastructure?

Some European successfull examples A. Port de Paris France : container terminal in Gennevilliers on the river Seine. Mixed private, public terminal B. BCTN Meerhout Belgium : inland container terminal alongside the canal. Private terminal. C. Duisburg port Germany : inland container terminals close to the main industrial area in Germany

Port de Paris : Gennevilliers France. Inland terminal in the city of Paris France at the river Seine, 242 km from the deepsea port Le Havre. Terminal annual capacity 600,000 TEU in 2015. Volumes have gradually increased to over 300,00 Teu in 2014

The BCTN terminal is a private terminal in Belgium. Terminal alongside the Albert Canal only 60 km from the port of Antwerp. Handles 300,000 Teu per year. 2 gantry cranes, 24/7 operation. Close to industrial areas

BCTN inland terminal Meerhout Belgium. The Terminal is located close to industrial areas. Containers are delivered by the terminal to the customers : last mile transportation Over a distance of 130 km 3 inland terminals are in operation!

Port of Duisburg Germany Port of Duisburg handles 1,500,000 containers per year Inland port by rail + inland water transport. Duisburg :at the heart of the Ruhr area, Germany's most important industrial centre. 12 million consumers live and work in a 100-kilometre-radius of the inland terminal. Duisburger Hafen AG owns and operates the Port of Duisburg World s largest inland port, on the confluence of the Ruhr and the Rhine. Complete infrastructure needed for port and logistics operations. Duisburg is a totally integrated extended gate of ECT in Rotterdam

Container railterminals in Antwerp Belgium Continental railterminals Main Hub Zomerweg Combinant Hupac Terminal Antwerp (HTA) 2 3 1 Maritime Railterminals 1 2 3 4 5 Cirkeldyck (MSC Home Terminal) Noordzeeterminal PSA Europaterminal PSA Antwerp Gateway DP World Deurganckdok PSA 5 4

Container railshuttles from and to Antwerp More then 200 containerrail connections to 70 destinations in 19 countries.

Objectives of the modal split for container transport: 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 35 9 56 42 15 43 barge rail road 0% vandaag 2020

Close cooperation between port and inland terminals What? Close collaboration between port and hub to operate a network service Why? Supporting logistic platforms in hinterland e.g. Duisburg Inland hubs create considerable concentrated flows of goods to and from the seaports.

But : railtransport lost in recent years marketshare Spoor volume vs maritiem volume (index 1991=100) 200 180 160 140 120 100 80 60 40 20 0 spoor volume Totaal martiem volume PoA

Evolution of the market: consequences for railtransport in Europe. Important baseloads from a few big customers. Low flexibility requested Limited competition Old situation Small cargo offer from many customers Demand for flexibility Strong competition mainly by road transporters Full block trains of containers operate efficient, New situation Bundling of cargo from different terminals to make full trains is difficult

What are the key enablers for inland navigation container transport to be succesfull? A. Shipping lines B. Inland terminals C. Barging D. Industrial activity E. Authorities F. Partnering

Shipping lines Shipping lines play a key role in the development of inland container operations: release containers for inland transportation Allow drop off at destination. Empty depot at the inland terminal to put equipment available for exports. Through B/L with final destination to the inland terminal. Shipping lines are interested to get early access to the export cargo.

ShIpping Lines Forwarders Shippers Industrial customer often take the decision to use inland navigation transport but the shipping line or the forwarder organises the transport. Industry Import Containers 56% Export Containers 44% Total Containers 100% Key questions : Who decides to go for inland water transportation? 46% Does 13.315 the k shipping 49% line allow for freetime? Are empty conainers available? 12.504 k 46% Volumes full containers 2011 - Revenue split based on Meerhout figures 2011

Inland terminals Inland terminals cannot restrict their offer to pure handling. offer a last mile solutio to be a viable alternative for door- to-door trucking. Value added services make the terminal attractive. Contracts with shipping lines for empty container depot

Additional services : Potential for operators? Next to pure transshipment new activities can be developed inside or outside the terminal: Customs clearance : goods travel in transit to inland gateway. The inland terminal is operated as an extended gateway. container freight station : stuffing and stripping of containers warehousing for imports or exports container inspection, container depot, container repair EDI management system provides an accurate tracking and storage of containers Empty container depots for shipping lines

External costs : Potential for inland navigation? Less external cost for inland watertransport E ter al or social costs can be caused by accidents, noise, pollution, climate change, infrastructure, and traffic jams. Inland navigation by far enjoys the best score. In a EU-comparison of the average external costs : road transport 24,12 per 1000 ton-kilometres. rail transport 12,35 per ton-km inland navigation estimated at a maximum of 5 per ton-km.

Industrial activity Industrial customers are generally the ones making the choice in favour of inland water transportation. They push the shipping lines. But also exporters have an interest to have containers available in inland depots.

Authorities Authorities can play an important role in facilitating the inland transportation e.g. Customs clearance at the destination terminal Infrastructure works to improve the navigation on the river Tax incentives for investors

Customs clearance : Inland container terminals become extended gate a s Extended gateways reduces the container dwelltime at the deepsea terminal shifting the associated customs formalities closer to the consignee. Goods from eg. China no clearance in the deepsea port. Under the 'extended gateways' procedure customs only need to be notified of the arrival of the goods and their onward carriage. The importer can choose to perform the customs formalities in the port or at the inland terminal.

Partnering The total transport chain cannot be built by one single operator. Partnering or alliances to offer total solutions is essential. Co loading of operators on each other barges Trucking solutions for the last mile transportation Additional services operated by subcontractors on the terminals Container freight station for stuffing and stripping of containers

The model in equilibrium Total Quality Performing IT systems Terminals Warehousing barging Skills/ People Transportation Services Combined service offer

Thank you Director Consultant Pirenne & Partners Collaboration in sustainable logistics www.pirennepartners.be marc@pirennepartners.be Belgium