Main Co-Location Advantages for Dry Ports

Main Advantages of Co-location for Dry Ports

Most of the dry ports initially developed were intermodal facilities acting as nodes of convergence for regional freight distribution, enabling a modal shift away from road and freight diversion away from congested areas. These two key paradigms have been expanded with a more comprehensive approach leaning on the principle of co-location. As a dry port project becomes increasingly capital intensive and prone to risk because of its size, required equipment, and infrastructure, the need for a higher value proposition is now set on the principle of co-location, many of which are public-private partnerships. The most common actors in a typical co-located dry port project involve a railway operator, a commercial real estate developer, or a local public development office. Therefore, co-location expands the market opportunities of the intermodal terminal through a set of value propositions:

  • Real estate. Logistic zone projects occupy a large amount of space to accommodate existing and anticipated freight distribution activities. Most co-located projects occupy at least 250 acres, and several projects are well above 1,000 acres. Larger projects tend to have lower land acquisition costs. Also, since co-located projects involve at least two large players, a commercial real estate developer, and a railway company, they can tap into capital pools with better conditions than a smaller actor (e.g. interest rates). For instance, CenterPoint Properties is owned by the pension fund CalPERS (California public employees’ retirement fund), enabling access to long-term capital pools. Another important aspect is that a co-located logistic project enables the joint planning of facilities.
  • Specialization. A co-location project enables both actors involved to focus on their core competencies, creating multiplying factors. For instance, the rail company can focus on terminal development and operations while the real estate promoter can develop and manage the freight distribution facilities.
  • Interdependency. Both the terminal operator and freight distribution activities at the logistic zone are their respective customers, implying that both partners have vested interests in the efficiency of their operations. The possibility of joint marketing where the logistic zone is promoted as a single intermodal package is also common since the terminal is sold as a value proposition to potential customers.
  • Drayage. A co-location project offers notable operational advantages for drayage, not just because of proximity but because trucks can have priority access through the terminal’s gates (e.g. pre-registration, advance notification, RFID). Drivers can perform more deliveries per day, and the reliability of these deliveries improves.
  • Asset utilization. Intermodal transportation assets are capital intensive, and there are pressures to increase their utilization level to achieve better returns on investments. Containers and chassis tend to be the assets that are the most prone to such strategies, namely through the setting of chassis pools and empty container depots.
  • Information technologies. A co-location project offers the possibility to jointly plan information systems for terminal operations and the related supply chains, creating a community system where users can have access to real-time information about the status of their shipments. Both terminal operations and their related supply chains benefit.

One drawback is that co-located logistics activities depend on the performance of the terminal and the level of service offered by the rail operator. If the rail operator has other priorities within its network, then the efficiency of the co-located logistic zone is compromised.