The role of “Dry Port” in the intermodal maritime transportation network

Concept of Dry port – Why it has emerged?

After 1970 onward, Container shipping or Containerization has revolutionized the mode of maritime freight transportation of the world during the last 40 to 50 years. The dynamics of growth made it possible to ensure supply of goods from shipper’s door to consignee’s door at a cheaper rate, faster speed and more secured way. The prime objective is to provide more exclusive services to the customer by combining rail-road-sea i.e. door to door instead of port to port services.

The pace of continuous growth in the overall environment of world trade and technology, has created rationale for building more container ships of larger capacity, improvement of cargo handling operation in pursuit of greater efficiency, reorient the marketing of port services for strategic positioning within competitive supply chains and upgrading of intermodal network within the hinterland of the economy  to meet growing challenges. But the unabated growth of international trade, poses following major threats for container port to grow further:

     Port unable to develop additional transport corridors and associated infrastructure to facilitate access to port due to limitation of space.

     Non-availability of sufficient container storage space within the port due to shortage of physical space, as most of ports are located within urban or suburban areas. Moreover land acquisition adjacent to port area at extremely high cost does not seem to be viable economically.

Experts are of opinion that the limitation of further expansion of capacity within the existing setup of seaport can be solved by the successful implementation of “Dry Port” concept. The Dry port will take over the additional burden of container handling of both exports and imports including other related off dock activities such as arrangement of custom clearance, warehouse facility, storage, staffing/stripping of cargo from container, transfer/transshipment of cargo as per requirement of shipper/consignee through an integrated transport link with the service port. Dry port is a major component of intermodal transportation network. It integrates the intermodal system from interior part of the country as load centre. As a result, economic activities centering Dry port/Inland port take place in the field of production and distribution of goods within the country which ultimately boost up economic growth & upgrade the intermodal transportation system.

Various interchangeable terms are used to refer to dry ports viz inland ports, inland container depots, freight terminals, freight village, container freight station etc in the literature. The Economic and Social Commission for Asia and the Pacific (ESCAP) proposed the following working definition of dry ports during a regional meeting on dry ports in Asia

“A dry port provides services for the handling and temporary storage of containers, and general and/or bulk cargoes that enter or leave the dry port by any mode of transport, including roads, railways, inland waterways or airports. Full customs-related services and other related services, such as essential inspections for cargo export and import, should be put in place in a dry port whenever possible”.

Development of Dry port/Freight station largely depends on the existing policies, rules and regulation through which the government of a country regulates them. Again Dry port policies are linked with different sectoral policies which are dealt with by Central, Provincial and Local government authorities. Sectoral policies are:

     Transport and Trade Facilitation policy

     Infrastructure policy

     Transport or Multimodal transport policy

     Logistics policy

     Port policy

     Investment policy

     Environmental policy

     Land policy

Therefore proper & healthy coordination among various sectors and different tiers of government machinery is essential to facilitate the development of Dry port. It is very crucial to decide where the Dry port is to be set up.  The following factors/criteria deserve special attention for selecting the location: Proximity to seaports, linkage to other modes of transport, cost of development, cost of operation & transport, potential for modal shift, environmental concern, potential for attracting manufacturing & distribution facilities, stimulus for regional economic development, possibility to set up special economic & free trade zones, inland or state capital, existing and potential agricultural & industrial centers, major intersections of railways, highways & inland waterways and at airports.

In the development of dry port, shift in mode of connection from truck to railways between seaports to dry ports, will bring positive impact on environment in terms of reduction of CO2 emissions and other pollutants produced by long-distance hauling. This is proved by one empirical study made on the implementation of Dry port concept in Sweden. The results of the study highlights the fact that replacement of truck by railways in the freight transportation from seaports to dry port, resulted in reduction of CO2 emissions by 25% & also minimized port congestion.

Scenario and Experience in the development of Dry port in Asia

At present the development of dry ports in Asian countries are at different stages in respect of their functioning as a full-fledged dry port. Now I shall try to project specifically outcome of case studies regarding the development and operation of dry ports in Asia.

Dry port development in China

To accelerate the pace of industrialization and also to encourage investment in the interior part of the country, China has taken ambitious plan to develop18 large inland container rail transfer and logistics distribution centers. The operation of these large inland dry ports will be looked after by the government organization named ‘China United International Rail Container Co, Ltd established by Ministry of Railways in 2007.

Out of above 18 units, the Shijiazhuang dry port, with a design capacity of 205,000 TEU per year, is one of the largest dry ports in China. This dry port has both rail and road access, customs inspection & quarantine facility. It has direct link with Tianjin seaport. It also acts as a feeder port.

Alashankou is the second largest border freight station in China in terms of movement of cargo volume. The port is connected with Dostyk freight station in Kazakhstan. It has the capacity to handle all types of cargo such as containers, break-bulk, oil etc. On average, this dry port handles about 20 freight trains per day. The volume of containers handled by Alashankou dry port has shown growth of 36% between 2006 and 2007.

An international free trade economic zone (FTEZ) is being established in Horgos, located near the border between China and Kazakhstan. It aims at attracting major manufacturing factories to be set up at this place. A logistic center is also going to be constructed within FTEZ. Currently cross country trade is conducted between Horgos & Kazakhstan by using road transportation. Around 75 – 100 trucks cross the border each day from China to Kazakhstan and similar number of trucks travel from Kazakhstan to China. In order to improve the rail freight efficiency, China has been running double-stack container train services to and from the main coastal ports to the selected routes, using new specialized wagons and powerful locomotives.

Dry port development in India

India has an extensive network of 59 ICDs, out of which 49 units are involved with the transportation of export & import. These inland dry ports provide services related to custom clearance, warehousing, container storage, stuffing/striping of container cargo, repair of container etc. Terminals are linked by rail services provided by Indian railway network. The operation of ICDs is handled by Container Corporation of India, Ltd. (CONCOR) – a subsidiary of Indian Railway. The volume of containers handled by CONCOR is continuously increasing. The overall performance of ICDs shows an upward increase of volume from 60% in 1996/97 to 81% in 2008/9.

Another important dry port of North India is the Tughlakabad ICD, located 17km to the southwest of Delhi. It is well linked with the Mumbai and Jawaharlal Nehru ports through the Delhi-Mumbai arterial trunk corridor and national highways. It has a handling capacity of 400,000 TEU per year. The ICD is equipped with completely modern facilities that include EDI, export & import warehouses, radio-frequency identification container tracking and custom clearance. In 2009/10, Tughlakabad ICD handled 413,384 TEU. It is worthwhile to mention that India is implementing a project with an investment cost US$10 billion under Japanese government assistance, in order to develop Mumbai-Delhi freight corridor. This will help develop basic infrastructural facility for further growth of Dry ports in India.

 Dry port development in the Republic of Korea

The rapid growth of exports and imports of Korean economy could not be accommodated by the relatively slower expansion of port facility which created deadlock in handling additional flow of container traffic with existing facilities within the port. The leading gateway ports such as Busan, Gwangyang & Inchon, handling lion’s share of foreign trade, faced the above problem tremendously which needed an immediate solution. To combat this problem, Korean Government in 1980, adopted a policy on priority basis to develop inland logistics centers.

The “Uiwang ICD is the largest dry port in Korea, having a capacity of 1.3 million TEU and land area of 417.000 m2. The ICD is located 25km from Seoul and was developed by public- private partnership (PPP) in 1993. The Korean Railroad Company and private transportation companies have invested in the Uiwang ICD. It is built up with all necessary functionalities to meet the requirements of trade. It utilizes rail capacity of 36 trains per day along with road transportation. The capacity utilization shows that the road mode and rail mode share of throughput handled by the ICD was approximately 75% and 25% respectively.

The Ministry of Land, Transport and Maritime Affairs (MLTM) is the regulatory authority responsible for the planning, construction and management of dry ports in the Republic of Korea. The Public and Private Infrastructure Investment Management Center (PIMAC) is another regulatory body which  reviews large-scale infrastructure project proposals submitted by private sector and determines whether the projects are consistent with government’s long-term plans & priorities. In short, government and PIMAC jointly supervise the development of dry ports under the existing government logistics policies and extend their supportive role.

Development of Dry port in Thailand

The Lat krabang ICD was developed by the State Railway of Thailand (SRT) and the operation started in 1996. It is located about 27km east of Bangkok and 118km north of ‘Laem Chabang’ port. The ICD utilizes both railway and road for freight transportation to Chabang port. Terminal operations are managed by six private-sector concessionaires who provide services related to cargo consolidation, distribution, warehousing, custom clearance and empty container storage. 

Thailand is giving priority to the development of dry ports in order to help shift the movement of freight from road-based transport to intermodal transport. The ICD has full electronic data interchange (EDI) link and already handled around 1.7 million TEU in 2008 which has surpassed the initial design capacity. The performance indicates continuous increase of volume of containers handled by Krabang ICD. Although it was primarily designed to put more emphasis on rail-based transport but targeted rail share could not be achieved due to limited rail link capacity. The rail mode share of the throughput handled by the ICD was about 25% in 2009 and thereby contributing to an overall reduction of congestion and emissions.

SRT is planning a future expansion of the Lat Krabang port facility in addition to the construction of new dry ports. The Government of Thailand is working to enhance the country’s logistics capabilities through the development of intermodal facilities in order to encourage a model shift from road transport to more environmentally friendly rail and water transport.

Dry port development in Nepal

The Birganj ICD was developed by Government of Nepal with the support of World Bank. Although the ICD was commissioned in July 2004 but the actual operation started after two years. After commissioning, the operational responsibility of ICD has been leased to the private sector. The ICD is connected with Raxaul railhead located near the border of India, with a rail link of about 12km. From Raxhaul railhead, the rail link is further extended to connect the Kolkata/Haldia ports of India. The distance to be covered upto Kolkata is about 926km by road and 704km by railway. The ICD provides facilities of a broad gauge railway yard with six full-length lines, a container stacking yard, a covered container freight station and automated system for customs data (ASYCUDA). Since majority portion of rail link is situated in India, so the Government of Nepal had to conclude rail service agreement with the Government of India for the smooth operation of their dry ports. It now handles containers, tank wagons for liquid cargoes and flat wagons for bilateral break-bulk cargo.

The Nepal Intermodal Transportation Development Board (NITDB), is the regulatory body with representatives from the public and private sectors, which supervises and regulates the overall activities of all ICDs in Nepal. Another government body named the Nepal International Transport Development Authority (NITDA) has been established to regulate operational issues like issuance of licenses for the development and management of dry ports, container freight stations and integrated customs points in the country.

There was sharp increase of volume of break-bulk and container cargo from 2004/5 to 2005/6 as bilateral trade through the dry port & use of covered wagons was allowed under new provisions of railway service agreement. The volume of container/break-bulk cargo dropped during 2009/10 due to global economic recession. Birgunj ICD handled 16928 TEU (equivalent to 406,272 MT3) and 237,104 MT cargoes during 2008/09. There are other dry ports in Nepal viz Biratnagar, Bhairahawa, and Kakarbhitta which are located near Indian border and Chinese border at Kodari.

The above detail analysis highlights the fact that the development of dry ports plays a significant role in the integration of intermodal transportation system, which led to the growth of international trade and development of a country. The scenario of development of dry port in Asian countries is very encouraging as reflected in the above case studies. For sustained growth of dry port and the integrated inter-modal infrastructure in Asia, it is essential that both Government and private sectors need to work together under close coordination.

Dry port/Inland port development in Europe & North America

The geographical setting, structure, governance and ownership of inland port system are the important factors to determine how to develop and integrate the inland port with the maritime port terminals. This is connected with port regionalization strategy which supports an extensive hinterland. In Western Europe, the establishment of inland terminals is at most advanced stage with close integration of port terminals with rail shuttles and barge services. Rail-based dry ports are found throughout Europe and same is often linked to the development of logistics zone. Europe is supporting the development the real pan-European rail services as one-stop basis. Rail terminals in Europe are mostly built and operated by large railway ventures. The largest rail facilities have bundles of 10 rail tracks with lengths of maximum 800m per track. Rail hubs are equipped to perform simultaneous batch exchanges (direct transshipment) through the use of rail-mounted gantry cranes that stretch over the rail bundles. Barge transport is taking up more prominent role in dealing with gateway traffic. Barge container transport has developed originally between Antwerp, Rotterdam, and the Rhine basin. In the last decade, it has also developed along the north-south axis between the Benelux and northern France. Antwerp and Rotterdam together handled nearly 5 million TEU of inland barge traffic during 2010. A growth in international trade has necessitated the setting of intermediary locations of inland ports in order to accommodate larger flows between ports and their hinterland. A large concentration of inland terminals has taken place around the Rhine/Scheldt delta which handled a total container throughput of 22 million TEU in 2010.

Since late 19th century, the development of continental railway system, has led to the growth of large number of inland terminals in NorthAmerica. The inland terminals were developed in a natural process which corresponded to large inland market areas within metropolitan zone and the same worked as regional manufacturing base and distribution system. With globalization and intermodalism two main categories of inland terminals have emerged in North America. The first category is related to where inland terminals are an extension of a maritime terminal located on one of the three major ranges load centers (Chicago or Mexico). The second category concerns inland terminals mainly connected to NAFTA trade and act as custom pre-clearance centers. The ‘Kansas City’ is considered to be the most advanced inland port venture in North America, as it combines intermodal rail facilities from four different rail operators, foreign trade zones and logistics parks at various locations through the metropolitan area. Compared to Europe, North American dry ports tend to be larger but covering much more substantial market area. It is an undeniable fact that setting of dry ports (inland ports) is a necessity for both Europe and North America, as the growth of maritime transportation and its economies of scale have placed pressures on the inland segment of freight distribution. Moreover since North America and Europe have large continental markets, they need to rely on the network of satellite terminals and load centers as a fundamental structure to support hinterland freight movements.

Dry port