Foreland and Hinterland-Based Regionalization

Foreland and Hinterland-Based Regionalization

Source: adapted from Notteboom, T. and J-P Rodrigue (2010) “Foreland-Based Regionalization: Integrating Intermediate Hubs with Port Hinterlands”, Research in Transportation Economics, Vol. 27, pp. 19-29.

The concept of foreland-based regionalization refers to integrating intermediate hubs in regional shipping networks, where the maritime foreland of the intermediate hub is functionally acting as a hinterland. For reasons like high deviation, small volumes, and niche hinterland (e.g. agriculture), some ports are not that well-connected to the global long-distance shipping network and show limited opportunities to improve this connectivity. Shipping lines must consider effective network configurations that tend to focus on major gateways and intermediate hubs.

Freight flows on the foreland and hinterland are not taking place with the same momentum, particularly since, on the foreland, economies of scale have been more effectively applied than on the hinterland. In light of an increasing massification of containerized freight loads, and while the ultimate goal remains atomization (individual containers delivered to freight owners), the insertion of an intermediate hub can act as a mitigation strategy. The largest containerships can call intermediate hubs with high capacity and frequency services. Through feedering, ports serviced through the intermediate hub can have smaller feeder ships (e.g. Panamax class) calling at a high frequency.

At a regional level, several small or medium-sized ports may realize that it is in their long-term interests to have a higher level of integration with an intermediate hub, even if it comes at the expense of shorter distance inter-range service calls. Foreland-based regionalization can support export-oriented strategies with better connectivity of more marginal (or early growth stage) ports to global shipping networks and international trade. There are also site constraints, environmental factors, or simple market potentials that may limit the volumes generated by the hinterlands of some ports. On the intermediate hub side, the volatile long-distance transshipment traffic would be complemented by more stable and secure regional traffic. Both the foreland and the hinterland are mutually self-reinforcing, as hinterland stability can anchor the volatility of the transshipment function, particularly in light of footloose operators.

Better integration between forelands and hinterlands would help to ensure that returns on investments are higher, subject to less fluctuation, and improving the competitiveness of maritime ranges.