The New Trade Route
Planes, trains, and automobiles, or in Utah’s case… semi-trucks and rail-lines filled with cargo. All of these are critical to the inland port coming to Utah, which will forever affect the way we do business.
International trade is booming, but North American seaports are ill-equipped to handle the massive volumes of cargo, and our infrastructure struggles to keep up with the rising demand. As a result, there are problems with congested docks, container delays, and increasing supply chain costs.
Since 1980, global trade has increased by 600 percent, directly impacting the front of the supply chain―the seaports. And the rise of Amazon and other ecommerce companies have put a squeeze on the other end of the supply chain―the local distribution hubs. Local hubs are under increasing pressure from consumers for faster, cheaper deliveries.
When the Great Recession ended, US imports and exports saw tremendous growth, increasing by 36 percent and 38 percent, respectively. However, while seaport infrastructure has grown, it’s failed to keep up with the cargo volume, leading to congestion on the already-busy docks.
Port congestion is a huge problem facing both the Ports of Los Angeles and Long Beach, the busiest seaports in North America. Due to congestion, it’s now taking longer to “turn” a container due to the increased volume of cargo, leading to bottlenecking, increased fees, and dreaded shipping delays.
There’s a growing urgency to move cargo away from seaports and into distribution, and inland ports like the one planned for Utah can help facilitate this. The faster cargo can be moved and loaded on a train or truck, the faster containers can be loaded onto the dock. Intermodal rail is critical to moving containers quickly and efficiently to an inland port, especially in Utah, where cargo can be distributed quickly and efficiently.
The Anatomy Of An Inland Port
An inland port, or a dry port, is a hub where cargo is received, warehoused, broken down into smaller batches and distributed. A true inland port has direct connection to a seaport through Class I rail and major transportation infrastructure via rail and an interstate highway. Utah has both.
Derek Miller, board chairman of the Utah Inland Port Authority Board said there’s been talk of an inland port in Utah since the 1970s, but a trade mission to Hong Kong in 2015 is what finally got things moving.
The governor, Mr. Miller, and other leaders visited the Port of Hong Kong, giving them a unique perspective of the issues and opportunities that come with a port. That visit was the inspiration for the inland port, something that would make Utah a center of commerce for the western United States, similar to how Hong Kong has become a major hub in the southeast and Asian regions.
In 2017, a feasibility study was conducted and, “after that, the state legislature got very interested and created the Port Authority Board to guide the development along,” says Mr. Miller.
The Crossroads Of The West
Utah has been known as the crossroads of the West since it was settled, says Mr. Miller. It was true during western expansion, the Gold Rush, the building of the continental railroad, and the telegraph line. And because of Utah’s location, it was true when they built the interstate freeway system.
Utah was blessed geographically and now we’re at the next stage of that, says Mr. Miller. “When we talk about inbound and outbound trade, Utah is in a great position. There’s a lot that’s done and made in Utah and goes out around the world. Now we have the opportunity to put in more infrastructure to make sure Utah isn’t just the crossroads of the West, but the crossroads of the world.”
The port will make sure things can get in and out of market quicker. When people order something, they’re counting the minutes not the days. It will solve the issue of cost for Utah’s exporters: the inland port will provide a quicker and cheaper way for their products to get to market, says Mr. Miller.
Bringing Industry To The World
Right now, our West Coast seaports are at max capacity. “Creating an express lane where goods can go off the boat and onto a train to Utah will solve a problem for our West Coast ports and for the country.”
Mr. Miller said that the inland port will affect IT, aerospace, agriculture, the life science industry, and manufactured goods that are exported around the world. But the port is not just about growing Utah’s markets. It will be a benefit to surrounding states including Wyoming, Montana, Colorado, New Mexico, Arizona, Nevada, and Idaho. “Our goal is for this port to act as a catch man for all those outbound exports,” he says.
Lew Cramer, CEO at Colliers International Utah and the state transportation commissioner says, “If you look at shipping, you pretty much have to go through Salt Lake City. We’re a day’s truck ride from the four major ports of the West Coast.”
He explained how the inland port will enhance Utah’s capacity to be a transshipment point for the entire western United States. Trucks and trains have to come through Utah, says Mr. Cramer. “There are only two places you can take a train. We’re really important for that purpose. Trade follows trade routes and trade brings jobs, innovation, and investment.”
As a UDOT commissioner, Mr. Cramer is a strong believer in simplifying the road systems in Utah. “We [could] not just use the inland port in the northwest quadrant, but if we take some of these opportunities to Fillmore, we can be a lot more helpful in developing the rural parts. Put your big trucks in Fillmore, reduce congestion. You help the rural counties at the same time. There are a lot of good ideas,” he says.
Mr. Cramer says the inland port will equate to a better speed to market for consumers in and outside of Utah. If we use electric vehicles or some other smart way to handle cross shipment, we can make a big difference in terms of efficiencies, he says.
There are so many smart port operators around the world. If we can take advantage of their technology, we’ll provide more jobs and an effective way of handling the transportation of goods, he says.
Mitigating Local Challenges
The congestion between Salt Lake City and Provo is unbearable, he adds. “We need to have smarter ways to use our other rail to handle some of this transport. It may help us get smarter transportation solutions.”
The Utah Inland Port Authority Board is aware of the environmental implications that come with the addition of an inland port. There’s going to be more railroad traffic, which is why electric transport and clean air transportation are key considerations.
“Globalization is not going away. There is so much interconnectivity in business today… international investments in Utah. Something like this is a strong validation that Utah is serious about globalization.”
Lara Fritts, the appointee of the airport advisory board to the inland port board says the inland port will provide opportunities for Utah-based companies, including those in Salt Lake City to export their goods more efficiently. “We are a very fortunate state in that we export a lot of products like hay and alfalfa. Making the trade more efficient is a benefit to the state,” says Ms. Fritts.
“There are manufacturers that haven’t located here yet that need access to an inland port who can benefit from it. The business plan I’m hoping can identify not only existing opportunities, but who are those businesses that should be here, that need the port to be successful. Let’s find the inland industries that can locate here and grow here,” says Ms. Fritts.
Rusty Bollow, an industrial and investment broker at Colliers International calls the inland port a game changer. “It will transfer Utah from a typical Tier II industrial market into a world-class logistics hub and manufacturing center. It will give us the ability to grow in ways that wouldn’t be possible,” he says.
The inland port will make it much easier and efficient for companies to receive port goods from overseas, specifically in regards to customs duties, Mr. Bollow pointed out. The port will allow businesses to take better advantage of the foreign trade zone (FTZ), such as reduced customs duties, taxes, and tariffs.
Attracting An International Audience
There are a lot of companies in Utah that get product from overseas and often products get bogged down at the ports. The inland port will allow cargo to be transported directly from boat to train. It will be a huge expansion of the Union Pacific intermodal hub in Utah, says Mr. Bollow.
“The intermodal hub that we have here has additional capacity. People think, ‘Why do we need this inland port?’ There’s some truth to that but the overall big picture is by creating an inland port, we attract the larger guys. The Amazons of the world or Alibaba, the Amazon of China. What gives life to the inland ports is the large manufacturing companies like BMW. In my opinion that’s what’s going to drive the creation of this port.”
While writing this, I had a special desire to learn about how the Salt Lake International Airport would be affected, and according to Mr. Cramer, our airport can do a better job of helping the surrounding business get, and stay, connected.
“If you go to Dubai, their airports and railroads are seamless. They are a transshipment spot for two billion people. If we are smarter and ensure that the transshipment of goods between airport and rail is much better, the impact will be huge. It will be a positive, and the airport knows that’s coming,” says Mr. Cramer
The inland port will massively increase the air cargo transported in and out of Salt Lake City International Airport. Products will come in from coastal ports, offload into trains and onto trucks, and a lot of those orders are next day, says Mr. Bollow.
The goods will go straight to the warehouse, to the airport, to be delivered the next day. “We’re in the mid of this multi-billion-dollar airport expansion that will make it so we can accommodate that growth,” says Mr. Bollow.
As for the residents anticipating the inland port, Mr. Bollow says we’re moving through the processes. “It’s going to happen. It’s just we need to be patient, it’s not happening tomorrow.”