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Chapter 4 - Transportation Terminals

All spatial flows, with the exception of personal vehicular and pedestrian trips, involve
movements between terminals. Transport modes require assembly and distribution of their traffic, both
passenger and freight. For example, passengers have to go to bus terminals and airports first in order to
reach their final destinations, and freight has to be consolidated at a port or a rail yard before onward
shipment. Terminals are, therefore, essential links in transportation chains with many representing
substantial infrastructure and capital investments. The goal of this chapter is to examine the spatial and
functional characteristics of transport terminals. They occupy specific locations and they exert a strong
influence over their surroundings. At the same time they perform specific economic functions and serve
as clusters of specialized activities.

The Function of Transport Terminals Authors: Dr. Jean-Paul Rodrigue and Dr. Brian Slack 1.
The Nature of Transport Terminals A terminal may be defined as any facility where passengers
and freight are assembled or dispersed. Both cannot travel individually, but in batches.
Passengers have to go to bus terminals and airports first, where they are "assembled" in busloads
or planeloads to reach their final destinations where they are dispersed. Freight has to be
consolidated at a port or a rail yard before onward shipment. Terminals may also be points of
interchange involving the same mode of transport. Thus, a passenger wishing to travel by train
from Paris to Rotterdam may have to change trains in Brussels, or an air passenger wishing to fly
between Montreal and Los Angeles may have to change planes in Toronto. Terminals may also
be points of interchange between different modes of transportation, so that goods being shipped
from the American Mid-West to the Ruhr in Germany may travel by rail from Cincinnati to the
port of New York, put on a ship to Rotterdam, and then placed on a barge for delivery to
Duisburg. Transport terminals, therefore, are central and intermediate locations in the
movements of passengers and freight.
Terminal. Any location where freight and passengers either originates, terminates, or is handled
in the transportation process. Terminals are central and intermediate locations in the movements
of passengers and freight. They often require specific facilities and equipment to accommodate
the traffic they handle.
Terminals may be points of interchange within the same modal system and which insure a
continuity of the flows. This is particularly the case for modern air and port operations with hubs
connecting parts of the network. Terminals, however, are also very important points of transfer
between modes. Buses and cars deliver people to airports, trucks haul freight to rail terminals,
and rail brings freight to docks for loading on ships. One of the main attributes of transport
terminals, international and regional alike, is their convergence function. They are indeed
obligatory points of passage having invested on their geographical location which is generally
intermediate to commercial flows. Thus, transport terminals are either created by the centrality
or the intermediacy of their respective locations. In some cases, large transport terminals,
particularly ports, confer the status of gateway or hub to their location since they become
obligatory points of transit between different segments of the transport system. Three major
attributes are linked with the importance and the performance of transport terminals:
Location. The major locational factor of a transport terminal is obviously to serve a large
concentration of population and/or industrial activities, representing a terminal's market
area. Specific terminals have specific locational constraints, such as port and airport sites.
New transport terminals tend to be located outside central areas to avoid high land costs
and congestion.
Accessibility. Accessibility to other terminals (at the local, regional and global scale) as
well as how well the terminal is linked to the regional transport system is of importance.
For instance, a maritime terminal has little relevance if it is efficiently handling maritime
traffic but is poorly connected to its market areas through an inland transport system (rail,
road or barge).
Infrastructure. The main function of a terminal is to handle and transship freight or
passengers since modes and passengers or cargo are physically separated. They have a
nominal capacity which is related to the amount of land they occupy and their level of
technological, labor and managerial intensity. Infrastructure considerations are
consequently important as they must accommodate current traffic and anticipate future
trends and also technological and logistical changes. Modern terminal infrastructures
consequently require massive investments and are among the largest structures ever built.
A utilization rate of 75 to 80% is considered to be the optimal since above this level,
congestion starts to arise, undermining the reliability of the terminal facility.

The time a vehicle (bus, truck, train, or ship) is allowed to load or unload passengers or freight at
a terminal is usually referred as dwell time. For freight terminals dwell time refers to the amount
of time cargo stays in a terminal yard or storage area while waiting to be loaded. Dwell time can
be operational, which reflects the performance of terminal infrastructures and management,
including the scheduling and availability of transport services. It can also be transactional, which
is usually linked with the performance of clearance procedures (such as customs). Finally, dwell
time can be storage related, implying that the owner or the carrier of the cargo deliberately leaves
the cargo at the terminal as part of a transport or supply chain management strategy.
Intermodalism has incited new relations between transport terminals, which are becoming nodes
in integrated transport chains. This is particularly the case between port, rail and barge terminals.
New forms of integration are also emerging, such as between ports and airports. 2. Passenger
Terminals With one exception, passenger terminals require relatively little specific equipment.
This is because individual mobility is the means by which passengers access busses, ferries or
trains. Certainly, services such as information, shelter, food and security are required, but the
layouts and activities taking place in passenger terminals tend to be simple and require relatively
little equipment. They may appear congested at certain times of the day, but the flows of people
can be managed successfully with good design of platforms and access points, and with
appropriate scheduling of arrivals and departures. The amount of time passengers spend in such
terminals tends to be brief. As a result bus termini and railway stations tend to be made up of
simple components, from ticket offices and waiting areas to limited amounts of retailing.
Airports are of a complete different order. They are among the most complex of terminals
functionally. Moving people through an airport has become a very significant problem, not least
because of security concerns. Passengers may spend several hours transiting, with check-in and
security checks on departure, and baggage pick up and in many cases customs and immigration
on arrival. Planes may be delayed for a multitude of reasons, implying a complex management of
gates and scheduling of flights. The result is that a wide range of services have to be provided
for passengers not directly related to the transfer function, including restaurants, bars, stores,
hotels, in addition to the activities directly related to operations such as check-in halls, passenger
loading ramps and baggage handling facilities. At the same time airports have to provide the very
specific needs of the aircraft, from runways to maintenance facilities, from fire protection to air
traffic control. Measurement of activities in passenger terminals is generally straightforward.
The most common indicator is the number of passengers handled, sometimes differentiated
according to arrivals and departures. Transfer passengers are counted in the airport totals even
though they do not originate there, and so airports that serve as major transfer facilities inevitably
record high passenger totals. This is evident in airports such as Atlanta and Chicago where in-
transit passengers account for over 50% of the total passenger movements. High transfer
passenger activity has been enhanced by the actions of many of the leading airlines adopting hub
and spoke networks. This results in many passengers being forced to change planes at the hub
airports. By selecting certain airports as hubs, the carriers are able to dominate activity at those
airports, thereby controlling most landing and departure slots and the best gates, thus fending off
rival airlines. In this way they are able to extract monopoly profits. A further measure of airport
activity is number of aircraft movements, a figure that must be used with some caution because it
pays no regard to the capacity of planes. A 50 seat regional jet and a 300 seats wide-body aircraft
both count as one movement. High numbers of aircraft movements thus may not be highly
correlated with passenger traffic totals. Still, the number of aircraft movements is an important
variable as it indicates the level of usage of the runways as aircraft take the same landing of
takeoff capacity, irrespective of their size. 3. Freight terminals Freight handling requires specific
loading and unloading equipment. In addition to the facilities required to accommodate ships,
trucks and trains (berths, loading bays and freight yards respectively) a very wide range of
handling gear is required that is determined by the kinds of cargoes handled. Freight transport
terminals have a set of characteristics linked with core (terminal operations) and ancillary
activities (added value such as distribution). The result is that terminals are differentiated
functionally both by the mode involved and the commodities transferred. A basic distinction is
that between bulk, general cargo and containers:

Bulk refers to goods that are handled in large quantities that are unpackaged and are
available in uniform dimensions. Liquid bulk goods include crude oil and refined
products that can be handled using pumps to move the product along hoses and pipes.
Relatively limited handling equipment is needed, but significant storage facilities may be
required. Dry bulk includes a wide range of products, such as ores, coal and cereals.
More equipment for dry bulk handling is required, because the material may have to
utilize specialized grabs and cranes and conveyer-belt systems.
General cargo refers to goods that are of many shapes, dimensions and weights such as
machinery, processed materials and parts. Because the goods are so uneven and irregular,
handling is difficult to mechanize. General cargo handling usually requires a lot of labor.
Containers are standard units that have had a substantial impact on terminal operations.
Container terminals have minimal labor requirements and perform a wide variety of
intermodal functions. They however require a significant amount of storage spaces which
are simple paved areas where containers can be stacked and retrieved with intermodal
equipment (cranes, straddlers and holsters). Depending on the intermodal function of the
container terminal, specialized cranes are required, such as portainers (container cranes).
Intermodal terminals and their related activities are increasingly seen as agents of added
value within supply chains.

A feature of most freight activity is the need for storage. Assembling the individual bundles of
goods may be time-consuming and thus some storage may be required. This produces the need
for terminals to be equipped with specialized infrastructures such as grain silos, storage tanks,
and refrigerated warehouses, or simply space to stockpile, such as for containers.
Containerization, because of its large volumes, has forced a significant modal and temporal
separation at terminals and thus the need of a buffer in the form of storage areas. In addition, a
variety of transloading activities can take place in the vicinity of terminals, particularly if long
distance inland transportation is involved. Transloading, when suitable, enables to reduce
transportation and inventory costs. Measurement of freight traffic through terminals is more
complicated than for passengers. Because freight is so diverse, standard measures of weight and
value are difficult to compare and combine. Because bulk cargoes are inevitably weighty,
terminals specialized in such cargoes will record higher throughputs measured in tons than others
more specialized in general cargoes. This is evident for the world's two leading ports, Singapore
and Rotterdam, which are dominated by petroleum. The reverse may be true if value of
commodities handled is the measure employed. The problem of measurement involving weight
or volumes becomes very difficult when many types of freight are handled, because one is
adding together goods that are inherently unequal. Care must be taken in interpreting the
significance of freight traffic totals, therefore. For container terminals a common measure of
productivity concerns the number of lifts per container gantry crane-hour, which are usually 25-
40 moves per hour for quay cranes and 40-60 for rail cranes. The difficulty of comparing traffic
totals of different commodities has led to attempts to weight cargoes based upon some
indication of the value added they contribute to the terminal. The most famous is the so-called
"Bremen rule". It was developed in 1982 by the port of Bremen and based on a survey of the
labor cost incurred in the handling of one ton of different cargoes. The results found that
handling one ton of general cargo equals three tons of dry bulk and 12 tons of liquid bulk.
Although this is the most widely used method, other rules have been developed by individual
ports, such as the Antwerp and Rotterdam rules. The "Antwerp rule" indicates that the highest
value added is the handling of fruit. Using this as a benchmark, forest products handling requires
3.0 tons to provide the same value added as fruit, cars 1.5 tons, containers 7 tons, cereals 12 tons,
and crude oil 47 tons. The "Rotterdam Rules" are more recent (2009) and relates to common
practices to insure the transport of freight "door-to-door" which a sea transport leg is concerned.
4. Terminal Costs Because they jointly perform transfer and consolidation functions, terminals
are important economically because of the costs incurred in carrying out these activities. The
traffic they handle is a source of employment and benefit regional economic activities, notably
by providing accessibility to suppliers and customers. Terminal costs represent an important
component of total transport costs. They are fixed costs that are incurred regardless of the length
of the eventual trip, and vary significantly between modes. They can be considered as:

Infrastructure costs. Include construction and maintenance costs of structures such as


piers, runways, cranes and facilities (warehouses, offices, etc.).
Transshipment costs. The costs of loading and unloading passengers or freight.
Administration costs. Many terminals are managed by institutions such as port or airport
authorities or by private companies (e.g. terminal operators). In both cases administration
costs are incurred.

Because ships have the largest carrying capacities, they incur the largest terminal costs,
since it may take many days to load or unload a vessel. Conversely, a truck or a passenger bus
can be loaded much more quickly, and hence the terminal costs for road transport are the lowest.
Terminal costs play an important role in determining the competitive position between the
modes. Because of their high freight terminal costs, ships and rail are generally unsuitable for
short-haul trips. Competition between the modes is frequently measured by cost comparisons.
Efforts to reduce transport costs can be achieved by using more fuel-efficient vehicles, increasing
the size of ships, and reducing the labor employed on trains. However, unless terminal costs are
reduced as well, the benefits would not be realized. For example, in water transportation,
potential economies of scale realized by ever larger and more fuel-efficient vessels would be
negated if it took longer to load and off-load the jumbo ships. Over the last decades, very
significant steps to reduce terminal costs have been made. These have included introducing
information management systems such as EDI (electronic data interchange) that have greatly
speeded up the processing of information and removing delays typical of paper transactions. The
most significant development has been the mechanization of loading and unloading activities.
Mechanization has been facilitated by the use of units of standard dimensions such as the pallet
and most importantly, the container. The container, in particular, has revolutionized terminal
operations. For the mode most affected by high terminal costs, ocean transport, ships used to
spend as much as three weeks in a port undergoing loading and loading. The much larger ships
of today spend less than a couple of days in port. A modern container ship requires
approximately 750 man/hours to be loaded and unloaded. Prior to containerization it would have
required 24,000 man/hours to handle the same volume of cargo. The rail industry too has
benefited from the container, which permits trains to be assembled in freight yards in a matter of
hours instead of days. Reduced terminal costs have had a major impact on transportation and
international trade. Not only have they reduced over-all freight rates, and thereby re-shaping
competition between the modes, but they have had a profound effect on transport systems. Ships
spend far less time in port, enabling ships to make many more revenue-generating trips per year.
Efficiency in the airports, rail facilities and ports greatly improves the effectiveness of
transportation as a whole. Activities in transport terminals represent not just exchanges of goods
and people, but constitute an important economic activity. Employment of people in various
terminal operations represents an advantage to the local economy. Dockers, baggage handlers,
crane operators and air traffic controllers are example of jobs generated directly by terminals. In
addition there are a wide range of activities that are linked to transportation activity at the
terminals. These include the actual carriers (airlines, shipping lines etc.) and intermediate agents
(customs brokers, freight forwarders) required to carry out transport operations at the terminal. It
is no accident that centers that perform major airport, port and rail functions also important
economic poles.
Transport Terminals and Hinterlands Author: Dr. Brian Slack, Dr. Jean-Paul Rodrigue and Dr.
Theo Notteboom 1. The Relative Location of Terminals Geographers have long recognized
situation, or relative location, as an important component of location. It refers to the position of
places with regards to other places. Accessibility is relative, because the situation of places
changes over time. For example ports in the Mediterranean used to be in the heart of the western
world during the Greek and Roman eras, and Genoa and Venice prospered during the Middle
Ages. The exploitation of the Americas changed the location of these places, since the
Mediterranean became a backwater. The opening of the Suez Canal in the Nineteenth Century
refocused the relative location of the Mediterranean again. So the importance of locations
changes with the fluctuations in trade and growth opportunities. Although the term "terminal"
implies an end, a final destination, because they are transfer points terminals in fact are typically
intermediate locations in the global flows of passengers and freight. In order to carry out the
transfer and bundling of freight and passenger specific equipment and infrastructures are
required. Differences in the nature, composition and timing of transfer activities give rise to
significant differentiations in the form and function between terminals. A basic distinction is
between passenger and freight transfers, because in order to carry out the transfer and bundling
of each type, specific equipment and infrastructures are required. Passenger and freight terminals
are consequently referring to substantially different entities and often have different locational
attributes. Spatial relationships between terminals are a vital element in competition, particularly
for ports and rail terminals, and Geographers have developed a number of concepts to explore
these locational features. One of particular interest concerns the function of centrality and
intermediacy performed by transport terminals.
Centrality. Focus on the terminal as a point of origin and destination of traffic. Thus, centrality
is linked with the generation and attraction of movements, which are related to the nature and the
level of economic activities within the vicinity of the concerned terminal. The function of
centrality also involves a significant amount of intermodal activities.
One of the most enduring concepts in Urban Geography is the central place theory, with its
emphasis on centrality as a feature of the urban hierarchy. Cities more centrally located to
markets are larger with a wider range of functions. Transport accessibility is equated with size,
and thus many large terminals arise out of centrality. Examples include Heathrow Airport,
London, whose traffic preeminence is related to the citys location in the heart of the most
developed part of Britain, as one of the world's most important financial center, as well as
Britains functional centrality to its former empire to a lesser degree. The port of New York owes
its preeminence in part to the fact that it is at the heart of the largest market area in the US; the
Boston - Washington corridor. A similar observation applies to the port of Shanghai serving a
large market, industrial and manufacturing base.
Intermediacy. Focus on the terminal as an intermediate point in the flows of passengers or
freight. This term is applied to the frequent occurrence of places gaining advantage because they
are between other places. The ability to exploit transshipment has been an important feature of
many terminals.
Anchorage, for example, was a convenient airport located on the great circle air routes between
Asia and Europe and Continental USA and Asia. For many years passengers alighted here while
the planes re-fueled. The growth of long-haul jets has made this activity diminish considerably,
and Anchorage now joins the list of once important airports, such as Gander, Newfoundland that
have seen their relative locations change because of technological improvements. It should be
noted, however, that Anchorage continues to fulfill its intermediacy role for air freight traffic.
Other examples include Chicago, the dominant US rail hub, that is not only a major market area
in its own right (centrality) but also lies at the junction of the major eastern and western railroad
networks. Ports too can exploit advantages of intermediate locations. One of the largest container
port in the Mediterranean, Giaoa Tauro, is located on the toe of Italy. A few years ago the port
did not exist, but because of its location close to the main East-West shipping lanes through the
Mediterranean it has been selected as a hub, where the large mother ships can transfer containers
to smaller vessels for distribution to the established markets in the northern Mediterranean, a
classic hub and spoke network. Because of changing markets and technologies many existing
terminal sites are no longer suitable. This applies particularly to rail and port terminals. In
most cases the sites are too small, poorly located, or in other ways inadequate for modern
transport operations. Modernization is usually impractical, and thus redevelopment is usually the
only alternative. 2. Hinterlands and Forelands One of the most enduring concepts in transport
geography is the hinterland:
The hinterland is a land space over which a transport terminal, such as a port, sells its services
and interacts with its clients. It accounts for the regional market share that a terminal has relative
to a set of other terminals servicing a region. It regroups all the customers directly bounded to the
terminal and the land areas from which it draws and distributes traffic. The terminal, depending
on its nature, serves as a place of convergence for the traffic coming by roads, railways or by
sea/fluvial feeders.
The hinterland, or the "natural hinterland", refers to the entire area which is possible to service
from the terminal. Two types of additional hinterlands are often noted.

First, the fundamental hinterland refers to the market area for which a terminal is the
closest. It is assumed that the majority of the traffic will pass through the terminal,
because of proximity and the lack of competitive alternatives.
Second, the competitive hinterland (or competitive margin) is used to describe the
market areas over which the terminal has to compete with others for business.

Transport terminals are elements of transport chains that include the notions of foreland and
hinterland binding imports and exports activities. The concept of foreland is a mirror image of
the hinterland:
The foreland of a terminal refers to the other terminals it is connected to. For a port, this would
represent the other ports it is linked to through maritime shipping services. The foreland of an
airport would represent all the connected airports accessible through regular air services.
The main nature of a hinterland is commercial and its importance is linked with the level of
economic activity as well as the level of competition from other modes not linked to the
terminal. Hinterlands vary significantly for the same location if the flows concern passengers or
freight. For airports, like most passenger terminals, the hinterland is well delimited and
corresponds to a commuting range where customers can access the terminal within a couple
of hours. The level of activity is proportional to the population density, the level of income and
the prominence of tertiary activities. For ports, like most freight terminals, the level of activity
corresponds to the dynamics of the land they are connected to, which is subject to changes in the
nature of its activities and in the level of accessibility. Any change implies either new
opportunities to generate additional port traffic, a decline, or a change in the nature and
composition of the traffic. Inbound hinterland traffic tends to be consumption based, except in
the case when commodities and parts are involved in the fabrication of a product, while
outbound hinterland traffic is an outcome of extraction or production. Hinterlands can further be
discriminated by the type of commodity as each is part of a specific supply chain with its own
spatial relationships:

Bulk products (minerals, chemicals, raw materials, wood, grain, etc.). In this case
distance is one of the most important factors shaping hinterlands. Due to the nature of the
products and the high transport costs involved, hinterlands tend to be small and serviced
by high capacity corridors to the direct location of extraction or production.
Parts and manufactured goods. Mostly concerns containerized traffic. Improvements in
intermodal transportation and globalization have considerably expanded the hinterland
for this type of traffic. In many cases, the hinterland can encompass large economic
regions, particularly if transport corridors are involved.

With the emergence of feeder services and hub ports, the concept of foreland has been expanded
as a port can service an hinterland through a maritime link. In recent years the validity of the
hinterland concept has been questioned, especially in the context of contemporary
containerization. The mobility provided by the container has greatly facilitated market
penetration, so that many ports compete over the same market areas for business. Therefore,
hinterland may be overlapping. The notion of discrete hinterlands with well defined boundaries
is questionable since many hinterlands have become discontinuous, a process facilitated by the
development of corridors and inland terminals. The extension and strengthening of hinterlands
follows a vertical or horizontal integration process depending if the port establish more effective
functional linkages with inland intermodal terminals (vertical) or other maritime terminals
(horizontal). Nevertheless, the concept of hinterland is still widely employed, and port authorities
continue to emphasize their port's centrality to hinterland areas in their promotional literature.
The provision of services to a wide range of markets around the world is considered to be an
advantage. With the growth in maritime traffic and congestion in proximity of port terminal
facilities, several port authorities have become more involved in the development of strategies
aiming at better servicing their hinterland. Such strategies and the stakeholders involved are
dependent on the direction of the flows. In academic studies there have been far fewer
assessments of foreland than hinterland, yet in port publicity documents the foreland is usually
one of the elements stressed. Geographers have long criticized the distinction, arguing that
foreland and hinterland should be seen as a continuum, rather than separate and distinct
elements. This point has achieved greater weight recently, with the emergence of door-to-door
services and networks, where the port is seen as one link in through transport chains. In such a
context, the port becomes one element of the maritime / land interface which insures the
continuity of global freight circulation. 3. Traffic Generation Transportation terminals are focal
points of economic activity. Cargo handling and passenger transfers represent an economic
function, just like manufacturing or farming. The inputs and outputs are traffic flows. In some
respects the extent of the activity can be measured easily, such as numbers of passengers
handled, or numbers of trains departing, but in many others, measurement is complicated. In the
case of an airport, measuring the size by counting the number of aircraft movements can be
produce distortions because of differences in the size of the planes. This problem is even more
acute in shipping, where small coastal ships of 500 tons capacity are considered as equal to bulk
carriers of 250,000 tons in simple counts of vessel numbers. Similarly, there are major
discrepancies between different types of cargo - how do we equate a shipment of 1,000 tons of
ore with 1,000 tons of computers? The problems of measuring traffic volumes thus need to be
carefully assessed. However traffic is measured, great variations exist in the volumes of traffic
handled by different terminals. In Canada, for example there are over 300 sea ports. The largest,
Vancouver, handles more than 50 million tons of cargoes per year, while there are dozens of
small ports handling less than 10,000 tons. Similarly, there are enormous differences in the
traffic volume at airports, from Chicago which handles nearly 70 million passengers, to small
towns in the US whose traffic is measured in thousands. Size variations are tending to increase
because of the trend across the modes for traffic to be concentrated in load centers. Certain
terminals are selected as traffic hubs, where passengers and/or freight is assembled for onward
distribution. This is most apparent in passenger air traffic, where many airlines have adopted
hub-and-spoke network structures. Each hub is served by smaller regional carriers/planes for
local service, with the hubs being linked by wide-bodied jets providing long-haul service.
Similar systems have been established in the North American intermodal rail networks, where
trucks provide local pick-up and delivery of containers, and where double-stack trains haul the
containers between the major hubs. The concept of load center is more contentious in maritime
transport, where the evidence using the Gini coefficient is less clear. The origins and
destinations of traffic is of great interest to the transport geographer and of vital concern to the
terminal managers. Serving the hinterland, therefore, is the prime function of a terminal.
Competition between terminals may be seen as a struggle for dominance over particular market
areas. Successful terminals are those that have extended their hinterlands to capture market areas
that were formerly served by a competitor. For much of the Nineteenth Century the ports of New
York, Baltimore, Boston, and Philadelphia sought to control the trade of the developing Mid
West, a battle that New York was able to win, because of its superior rail and canal links.
Maintaining dominance over a hinterland is important, even today, as there are modal options
such as rail that increase competition. This strategy is moving towards a new phase as areas
nearby major terminals, particularly ports, tend to be congested. Attempts at modal shift and
freight diversion are getting increasingly common. 4. Agglomeration, Linkages and Growth The
traffic flowing through terminals and the need to transfer freight between the modes gives
opportunities to other activities to exploit locational advantages. There have been long standing
advantages for certain types of manufacturing to locate near terminals. Raw materials imported
through a port, for example, provide opportunities for processing industries. Oil refineries, flour
mills, sugar refineries, steel processing are examples of industries that are frequently attracted to
port sites. In a similar fashion, firms requiring good access to distant markets for the sale of their
products have sought sites near to rail facilities and airports. The link between manufacturing
and terminals, especially ports, gave rise to the concept of Maritime Industrial Development
Areas. In Japan and Europe, in particular, post-war reconstruction involved the planning and
establishment of new industrial complexes on sites adjacent to new port and rail terminals. The
planning recognized the needs to establish new terminal infrastructures as well as locating new
manufacturing developments to serve as local clients of the facility. With globalization, this went
further as production and consumption became increasingly separated, leading to a greater array
of freight distribution activities. Thus, the link between distribution and terminals has also taken
shape with the emergence of logistics zones. While the relationships between terminals and the
manufacturing sector are evident in the urban landscape, even closer links exist with the service
sector, although the relationships may be not quite as visible. Terminal activity creates demands
for a very wide range of transport services. These include activities as diverse as aircraft
maintenance, locomotive repair, flight kitchens, warehousing, duty free stores, hotels, freight
forwarders, and customs brokers. Together they comprise an important business sector that
contributes to the overall effectiveness of the terminal, while clearly being dependent upon it for
business. This symbiotic relationship is reflected in the locational patterns of these firms. In most
cities these services are highly clustered in two concentrations. Many are located in close
proximity to the terminal itself. Ship chandlers, aircraft kitchens, and hotels, for instance, are
usually sited close to the port or airport. A further cluster is usually found in the central business
district. Forwarders, brokers, insurance or ticket offices are typically in central locations.
According to the growth poles theory, development is not uniform and takes place at specific
locations around which activities agglomerate. By the infrastructures they provide, activities can
improve their accessibility to suppliers and customers. In addition to the linkages with
manufacturing and the service sector, terminals are major employers in their own right. In order
to operate a major terminal requires a wide range of employee skills, from baggage handling and
aircraft refueling, to air traffic controllers and ships' pilots. Terminals, therefore, are economic
forces in their own right, and because they generate links to other sectors of the economy they
become foci of economic activity. They are frequently considered as growth poles. For instance,
a growth strategy for inland terminals revolves around the formation of "freight villages" where
distribution centers share common facilities, including a better access to a transport terminal.
Freight Village. Area within which all activities relating to transport, logistics and the
distribution of goods, both for national and international transit, are carried out by various
operators. These operators can either be owners or tenants of buildings and facilities
(warehouses, break-bulk centers, storage areas, offices, car parks, etc...) which have been built
there. Also, in order to comply with free competition rules, a freight village must allow access to
all companies involved in the activities set out above. A freight village must also be equipped
with all the public facilities to carry out the above mentioned operations. If possible, it should
also include public services for the staff and equipment of the users. In order to encourage
intermodal transport for the handling of goods, a freight village must preferably be served by a
multiplicity of transport modes (road, rail, deep sea, inland waterway, air).
Terminals represent an important category of land use. Frequently, they are the largest
single users of land in a city. Geographers have played an important role in understanding
transport terminal land use and its relationships. Terminals such as ports exert a significant
influence over neighboring land uses. This is due in part because of the intense linkages they
generate with other urban functions, but it is due also to externalities that are frequently
negative. Thus, industrial land is commonly associated with terminal sites, which are among the
most important industrial zones in a city. However, because of noise, pollution and visual blight,
both of the terminals and adjacent industries, terminals are also frequently areas of social,
economic, and environmental degradation. Older port sites and rail terminals, in particular, are
seen as disadvantaged. Docklands areas in many cases are centers of poverty and social
deprivation.

Port Terminals Authors: Dr. Jean-Paul Rodrigue, Dr. Brian Slack and Dr. Theo Notteboom 1.
Ports and Port Sites Ports are points of convergence between two geographical domains of
freight circulation (sometimes passengers); the land and maritime domains. While the maritime
domain can involve substantial geographical coverage related to global trade, the land domain in
related to the port's region and locality. The term port comes from the Latin portus, which means
gate or gateway. Historically, many ports emerged as safe harbors for fishing and those with
convenient locations became trade hubs, many of which of free access and designed to protect
trade. As such, they became nexus of urbanization with many becoming the first port cities.
Today, many of the most important cities in the world owe their origin to their port location.
Ports are bound by the need to serve ships, and so access to navigable water has been historically
the most important site consideration. Before the industrial revolution, ships were the most
efficient means of transporting goods, and thus port sites were frequently chosen at the head of
water navigation, the most upstream site. Many major cities owed their early pre-eminence to
this fact, such as London on the Thames, Montreal on the St. Lawrence River or Guangzhou on
the Pearl River. Ship draft was small, so many sites were suitable. Sites on tidal waterways
created a particular problem for shipping because of the twice-daily rise and fall of water levels
at the berths, and by the 18th the technology of enclosed docks, with lock gates was developed to
mitigate this problem. Because ship transfers were slow, and vessels typically spent weeks in
ports, a large number of berths were required. This frequently gave rise to the construction of
piers and jetties, often called finger piers, to increase the number of berths per given length of
shoreline. The gradual shift from conventional break-bulk terminals to container terminals since
the early 1960s brought about a fundamental change in layout of terminals as well as site
selection. Ports increasingly became impacted by global processes. Containerized transportation
has substantially changed port dynamics to favor the emergence of specialized container ports.
As compared to conventional break-bulk cargo ships containerships did not have onboard cranes,
container terminal facilities had to provide capital intensive cranes and well as ample storage
space to stack containers dockside. Finger piers were no longer adequate and berths were
redesigned to accommodate for quick ship turnaround and more effective dockside operations
between the crane and the container storage areas. Containerization has consequently become a
fundamental function of global port operations and has changed the structure and configuration
of port terminals that tend to occupy more space. While inland port sites (such as at the end of a
bay or along a river) generally have the advantage of being closer to the final market they imply
longer deviations from maritime shipping routes. Therefore the most successful inland ports sites
are those that act as gateways (e.g. Antwerp, Montreal, Constanza). As terminals, ports handle
the largest amounts of freight, more than any other types of terminals combined. To handle this
freight, port infrastructures jointly have to accommodate transshipment activities both on ships
and inland and thus facilitate convergence between land transport and maritime systems. In many
parts of the world, ports are the points of convergence from which inland transport systems,
particularly rail, were laid. Considering the operational characteristics of maritime transportation,
the location of ports is constrained to a limited array of sites, mostly defined by geography. Most
ports, especially those that are ancient, owe their initial emergence to their site as the great
majority of harbors are taking advantage of a natural coastline or a natural site along a river.
Many port sites are constrained by:

Maritime access, which refers to the physical capacity of the site to accommodate ship
operations. It includes the tidal range, which is the difference between the high and low
tide, as normal ship operations cannot handle variations of more than 3 meters. Channel
and berth depths are also very important to accommodate modern cargo ships. A standard
Panamax ship of 65,000 deadweight tons requires more than 12 meters (40 feet) of depth.
However, about 70% of world ports have depths of less than 10 meters and are unable to
accommodate ships of more than 200 meters in length. In view of the construction of
larger ships, namely tankers and containerships, many port sites found themselves unable
to provide maritime access to modern cargo operations. Since container terminals were
constructed much more recently, they have a better nautical profile as depth and available
space were fundamental factors in site selection. There is thus a pressure in increase
channel depth where possible, but this is a costly and environmentally controversial
endeavor. Berths and channel depth have become important constraints for maritime
operations in light of growing ship size. Many ports are also impacted by sedimentation,
particularly ports in river deltas. This requires continuous dredging, which adds to the
costs of port operations. Some river ports may be impacted by periods of flooding and
drought while other ports my be impeded or closed during winter because of ice
conditions.
Maritime interface. Indicates the amount of space that is available to support maritime
access, namely the amount of shoreline that has good maritime access. This attribute is
very important since ports are linear entities. Even if a port site has an excellent maritime
access, namely deep water waterways, there may not be enough land available to
guarantee its future development and expansion. Containerization has expanded the land
consumption requirements of many ports. It is therefore not surprising to see that modern
port expansion projects involve significant capital investments to create artificial port
facilities.
Infrastructures and equipment. The site, to be efficiently used, must have
infrastructures such as piers, basins, stacking or storage areas, warehouses, and
equipment such as cranes, all of which involving high levels of capital investment. In
turn, these infrastructures consume land which must be available to insure port
expansion. Keeping up with the investment requirements of modern port operations has
become a challenge for many ports, particularly in light of containerization which
requires substantial amounts of terminal space to operate. Many terminals are also
becoming increasingly automated, particularly for stacking areas that can be serviced by
automated cranes and vehicles.
Land access. Access from the port to industrial complexes and markets insure its growth
and importance. This requires efficient inland distribution systems, such as fluvial, rail
(mainly for containers) and road transportation. The land access to ports located in
densely populated areas is facing increasing congestion. For instance, the ports of Los
Angeles and Long Beach have invested massively to develop the Alameda rail corridor in
an attempt to promote inland access and reduce truck congestion. A similar trend has
taken place in Europe where ports such as Rotterdam and Antwerp have been involved in
the setting on inland barge and rail shuttle services.

All these constraints have a significant impacts on port operations and which can be called the
port performance continuum. There is also an array of problems related to port infrastructures.
Ports along rivers are continuously facing dredging problems and the width of rivers is strongly
limiting their capacity since it provides constraints to navigation. Rarely a port along a river has
the capacity to handle to new generation of giant ships, namely Post Panamax containerships,
which have put additional pressures on port infrastructures to accommodate the transshipment
generated by these ships. Ports next to the sea are commonly facing a lateral spread of their
infrastructures. Several ports have growth problems that force them to spread their
infrastructures far from the original port sites. Since ports are generally old, and in several cases
were responsible for urban growth, they are located nearby central areas. This is creating
congestion problems where the transport network has the least capacity to be improved. The city
and the port are often competing for the same land, which can create prioritization problems.
Ports thus have a complex set of relationships, sometimes conflicting, with the cities they
service, often a function of the port and city size. While they are sources of employment of
commercial interactions, ports also generate externalities. The pressure of many ports on their
sites is even more demanding than those of airports because they have to be adjacent to deep
water. Such sites are very limited, and may give rise to conflicts with the city at large that sees
waterfront land as potential park space, or as environmentally sensitive. Many ports are now
constrained by urban and environmental pressures, which did not exist when the existing
facilities were developed. 2. Port Functions and Traffic The main function of a port is to supply
services to freight (warehousing, transshipment, etc.) and ships (piers, refueling, repairs, etc.).
Consequently, it is misleading to consider a port strictly as a maritime terminal since it acts
concomitantly as a land terminal where inland traffic originates or ends. Ports are at start cargo-
oriented facilities. To this significant cargo related function, many ports are also involved in
other activities such as fishing, ferries, cruises (a growing activity) and recreational (e.g.
marinas). Ports are becoming increasingly regional in their dynamics, which represents a new
development from their traditional local function, namely as industrial complexes. For instance,
the port of Hong Kong owes its wealth to its natural site and its geographical position of a transit
harbor for southern China. A similar function is assumed by Shanghai for central China with the
Yangtze river system. Singapore, for its part, has been favored by its location at the outlet of the
strategic Strait of Malacca and is therefore a point of convergence of Southeast Asian
transportation. More than 90% if the traffic it handles is strictly transshipments. New York has
traditionally acted as the gateway of the North American Midwest through the Hudson / Erie
Canal system, a function which Western European ports such as Rotterdam or Antwerp perform
with their access to the Rhine system. A port throughput is linked to a variety of local and
regional industrial activities as the largest ports in the world are all gateways to massive
industrial regions. However, comparing ports on a tonnage basis requires caution as it does not
indicate the nature and the value of the cargo. For instance, a mineral port (e.g. iron ore), an
energy port (e.g. coal or oil) and a commercial port (containers) could handle a similar tonnage
but significantly different value levels. They will also be related to different commodity chains.
In terms of the freight they handle, ports can be classified in two categories; monofunctionnal
ports and polyfunctionnal ports.
Monofunctionnal ports transit a limited array of commodities, most often dry or liquid bulks
(raw materials). The oil ports of the Persian Gulf or the mineral ports of Australia, Africa and in
some measure of Canada are monofunctional ports. They have specialized piers designed to
handle specific commodities and where the flows a commonly outbound, implying that they are
usually load centers.
Polyfunctionnal ports are vast harbors where several transshipment and industrial activities are
present. They have a variety of specialized and general cargo piers linked to a wide variety of
modes that can include containers, bulk cargo or raw materials.
About commercial 4,600 ports are in operation worldwide, but only less than one hundred ports
have a global importance. There are about 500 container ports with 110 handling a traffic of
more half a million TEU. Maritime traffic thus has a high level of concentration in a limited
number of large ports, a process mainly attributed constraints related to maritime access and
infrastructure development. Major ports have established themselves as gateways of continental
distribution systems and have access to high capacity inland freight distribution corridors,
notably rail. Such a position is very difficult to challenge unless a port is facing acute congestion
forcing maritime shipping companies to seek alternatives. Gateways have seen the development
of port-centric logistics activities that support export and import-based activities. The world
container throughput is the summation of all containers handled by ports, either as imports,
exports or transshipment. In 2011, about 563 million TEU were handled by container ports, with
a notable growth in containers transshipped at intermediate locations as well as the repositioning
of empty containers. This means that a container is at least counted twice; as an import and as an
export, but also each time it is handled at the ship-to-shore interface, such as at a transshipment
hub where it will be counted when unloaded and reloaded. Empty containers, most of them being
repositioned, are also counted as they account for about 20% of the world's throughput. Thus,
throughput should ideally be counted in container moves, but for basic commercial and strategic
reasons, both port authorities and terminal operators prefer to communicate throughput figures in
TEU. The world container traffic is the absolute number of containers being carried by sea,
excluding the double counts of imports and exports as well as the number of involved
transshipments. The throughput reflects the level of transport activity while the traffic reflects the
level of trade activity. 3. Port Authorities and Port Holdings Due to the growing level of
complexity of port operations, public port authorities were created at the beginning of the 20th
century. For instance, the London Port Authority, the world's first, was established in 1908 by
consolidating all the existing harbor facilities. Such a management structure became a standard
that was adapted to many other ports. For North America, in 1921, the States of New York and
New Jersey created the Port Authority of New York and New Jersey, which has become one of
the world's most diversified port authority with a portfolio including port facilities, bridges,
airports and public transit systems. Administratively, port authorities are regulating infrastructure
investments, its organization and development and its relationships with customers using its
services.
Port Authority. An entity of state or local government that owns, operates, or otherwise
provides wharf, dock and other marine terminal investments and services at ports.
The main rationale behind the setting of many port authorities was their ability to manage more
efficiently port facilities as a whole rather than privately owned and operated terminals. Since
port facilities were becoming more complex and more capital intensive, it was perceived that
public agencies would be better placed to raise investment capital and mitigate the risk of such
investments. Port authorities tend to be vertically integrated entities as they are involved in most
of the activities related to port operations, from the construction and maintenance of
infrastructure to the marketing and management of port services. Yet, their activities were
limited within their jurisdictions, an attribute that became increasingly at odds with the
transformations of the maritime shipping industry through globalization. In the past ports were
dominantly managed in their entirety by port authorities that were selling transshipment and
other port services. On some occasions, terminals were leased to private companies. Privatization
marks a reversal in the trend of having ports as public entities since many became inefficient,
unable to cope with market pressures (performance, reliability and quality of service) and
provide adequate financing for infrastructure and equipment becoming increasingly capital
intensive. As public agencies, many port authorities were seen by governments as a source of
revenue and were mandated to perform various non-revenue generating community projects, or
at least provide employment. The emergence of specialized and capital intensive container
terminals servicing global trade has created a new environment for the management of port
terminals, both for the port authorities and the terminal operators. Port authorities are gradually
incited to look at a new array of issues related to the governance of their area and are
increasingly acting as cluster managers. For port operations that have conventionally be assumed
by port authorities, a significant trend has been an increase in the role of private operators where
major port holdings have emerged with the purpose to manage a wide array of terminals, the
great majority of which are containerized.
Port holding. An entity, commonly private, that owns or lease port terminals in a variety of
locations. It is also known as a port terminal operator.
A "terminalization" of ports is taking place where different terminals within the same port are
owned (or leased) and operated by different operators. As of 2005, port holdings accounted for
over 58% of container port capacity and 67% of global containerized throughput. In an era
characterized by lower levels of direct public involvement in the management of transport
terminals and port privatization, specialized companies involved in the management of port
terminals are finding opportunities. They thus tend to be horizontally integrated entities focusing
on terminal operations in a variety of locations. The main tool for global port operators to
achieve control of port terminals has been through concession agreements.
A concession agreement is a long-term lease of port facilities involving the requirement that the
concessionaire undertakes capital investments to build, expand, or maintain the cargo-handling
facilities, equipment, and infrastructure to satisfy a minimum level.
A number of issues are involved in the decision of a terminal operator to invest in a particularly
port, namely the transparency of the bidding process and the quality of infrastructures (port and
inland). The market potential however remains one of the determining criteria. The range of port
terminals controlled by port holdings covers several of the largest freight markets. As
globalization permitted the emergence of large multinational corporations managing assets in a
variety of locations, global port holdings are a similar trend concerning the management of port
terminal assets. Yet, regional orientation remains a strong characteristic of container terminal
operators. The emergence of global terminal operators have changed the parameters of port
competition. While ports have always to some extent been competing to service their hinterland,
which is known as inter-port competition. Concessions agreements in larger port have permitted
the setting of more than one terminal operator who are now competing over the port foreland and
addition to the hinterland. This is known as intra-port competition. 4. Port Evolution and
Development The evolution of transport terminal development has been examined most
extensively in port site studies. Port terminals and activities, as documented by Bird's Anyport,
tend to expand away from their original sites towards locations offering better maritime and land
access. The site of the port is thus the object of a process of valorization through capital
investments in infrastructures, the convergence of inland and maritime transport networks with
their flows as well as the complex management of the concerned supply chains. Port
development can be perceived within a sequential perspective, where each phase builds upon the
previous, from port cities of the 19th century to the emerging port logistics network of the 21st
century. Conventionally, port terminals where located close to city cores as many where the
initial rationale for the existence of the city. The proximity to downtown areas also insured the
availability of large pools of workers to perform the labor intensive transshipment activities that
used to characterize port operations. But these activities tended to have low productivity levels as
a stevedoring team could handle 10 to 15 tons per day and a berth could handle 150,000 tons per
year. At their peak in the early 1950s ports such as London and New York each employed more
than 50,000 longshoremen. Containerization had the dramatic impact of lowering the need for
labor for port operations. For instance, the number of longshoremen jobs in the Port of New
York and New Jersey declined from 35,000 in the 1960s to about 3,500 in the 1990s. Over time,
changes in ships and handling equipment gave rise to new site requirements. By the post World
War II period a growing specialization of vessels emerged, especially the development of bulk
carriers. These ships were the first to achieve significant economies of scale, and their size grew
very quickly. For example, the worlds largest oil tanker in 1947 was only 27,000 dwt, by the
mid 1970s it was in excess of 500,000 dwt. There was thus a growing vessel specialization
using semi-automated transshipment equipment and increase in size which resulted in new site
requirements, especially the need for dock space and greater water depths. The mechanization of
cargo handling and the storage requirements because of greater vessel capacities have greatly
extended the space demands for port activities. Many ports, such as Rotterdam and Antwerp
are larger in area than the cities they serve, and even more space-intensive ports, such as
Montreal, are in excess of 500 hectares in area. The expansion of Chinese ports, such as
Shanghai, has required altogether the use of entirely new sites outside central areas. Further,
growing ship sizes have implied several new constraints for port sites such as deeper waterways,
larger terminal space, both for ship handling and warehousing, and more efficient inland road
and rail access. Modern port infrastructures are often intensive in capital and several port
authorities are struggling to keep up with large infrastructure investment requirements. However,
the presence of infrastructures does not necessarily guarantee traffic as maritime companies can
select the ports they service as business opportunities changes. Over this, three recent mega
projects are particularly revealing:

Maasvlatke II (Rotterdam). For decades, the port of Rotterdam, Europes largest port,
has expanded downstream. The growth of container traffic along with continued
expansion of bulk traffic caused the port to consider expansion out in the North Sea. This
led to the construction of an entirely new facility on reclaimed land at Maasvlatke in the
1980s. However, subsequent traffic growth in the 1990s resulted in the port authority
proposing a new facility further out in the North Sea: Maasvlatke II. The project began
construction in 2008 and operations began in 2013 and the project is expected to be fully
completed by 2030. Once completed, this terminal facility would likely mark the end of
geographical expansion for Rotterdam, outside the reconversion of existing terminal sites
into more productive uses.
Deurganck dock (Antwerp). Like Rotterdam, the expansion options of the port of
Antwerp are limited. With the right bank of the River Scheldt, where the bulk of the
ports facilities are located, reaching capacity a new dock complex was built on the left
bank. The Deurganck dock opened in 2005 and can add about 9 million TEUs to the
existing capacity of about 10 million TEUs.
Yangshan container port (Shanghai). A rare case where a completely new facility has
been built from scratch, and this well outside the existing port facilities in the Changjiang
delta to a facility located in Hangzhou Bay, 35 km offshore. It opened in 2005 and was
built for two purposes. The first was to overcome the physical limitations of the existing
port facilities, too shallow to accommodate the latest generation of containerships. The
second was to provide additional capacity to meet traffic growth expectations as well as
room for new terminal facilities if container growth endures. The fully completed port
would have an expected capacity of 15 million TEUs. To link the port to the mainland,
the worlds third longest bridge with a length of 32.5 km was built.
The success of major container ports is jointly the outcome of a shift to containerized shipping in
new industrializing regions (containerized commodity chains), the quality of their infrastructure
and services and an efficient interface with inland transport systems. Still, container traffic is
subject to fluctuations mainly related to seasonal variations in the demand. 5. Regionalization
and Transshipment Hubs The current port development phase underlines that ports are going
beyond their own facilities to help accommodate additional traffic and the complexity of freight
distribution, namely by improving hinterland transportation. Port regionalization is such an
outcome and indicates a higher level of integration between maritime and inland transport
systems, particularly by using rail and barge transportation, which are less prone to congestion
than road transportation. The development of global supply chains increased the pressure on
maritime transport, port operations, and on inland freight distribution, which in turn has incited
active container transloading activities in the vicinity of port terminals. Inland accessibility has
become a cornerstone in port competitiveness since it can be serviced by several road, rail and
barge transportation, notably in Europe. Port regionalization is characterized by strong functional
interdependency and even joint development of a specific load center and logistics platforms in
the hinterland. This leads ultimately to the formation of a regional load center network,
strengthening the position of the port as a gateway. Many factors favor the emergence of this
phase, namely:

Local constraints. Ports, especially large gateways, are facing a wide array of local
constraints that impair their growth and efficiency. The lack of available land for
expansion is among one of the most acute problem. This issue is exacerbated by the deep
water requirements for handling larger ships. Increased port traffic may also lead to
diseconomies as local road and rail systems are heavily burdened. Environmental
constraints and local opposition to port development are also of significance. Port
regionalization thus enables to partially circumscribe local constraints by externalizing
them.
Supply chain management. Global production and consumption have substantially
changed distribution with the emergence of regional production systems as well as large
consumption markets. No single locality can service efficiently the distribution
requirements of such a complex web of activities. For instance, globally integrated
logistics zones, including Free Trade Zones (FTZ) have emerged near many load centers,
but seeing logistics zones as a functionally integrated entity may be misleading as each
activity is part of a specific supply chain. Port regionalization thus permits the
development of a distribution network that corresponds more closely to fragmented
production and consumption systems.

Cargo at ports always required some transshipment to smaller ships used a feeders to smaller
ports. For obvious reasons, it is impossible to connect directly all possible port pairs, so
transshipment is required to insure connectivity within the global trading system. With the
growth of container volumes, many gateway ports were facing the challenge of handling export,
import and transshipment containers. This went on par with the growing share of transshipments
in regard to the totality of maritime containerized traffic, from around 11% in 1980, 19% in
1990, 26% in 2000 to about 29% in 2010. The number of times a container is handled at a port is
also increasing, underlining the setting of complex containerized transport chains as well as the
growing difficulties of transferring cargo into large containerships. An important emerging
function for several container port terminals thus involves transshipments (ship-to-ship).
Maritime shipping companies also elect for transshipment as a way to use more rationally their
networks; more ports are serviced without increasing ship assets. In a conventional pendulum
container service, a maritime range such as the American East Coast or Northern Europe involve
several port calls. If the volume is not sufficient, this may impose additional costs for maritime
companies that are facing the dilemma between market coverage and operational efficiency. This
is particularly the case with the growing size of containerships that forces a lower number of port
calls. By using an intermediate hub terminal in conjunction with feeder shipping services, it is
possible to reduce the number of port calls and increase the throughput of the port calls left.
An intermediate hub (or transshipment hub) is a port terminal used for ship-to-ship operations
within a maritime transport system. These operations do not take place directly, which requires
the temporary storage of containers in the port's yard, usually one to three days. The term
offshore hub has often been used to characterize such locations because the cargo handled at the
port of destination is transshipped at a location commonly in a country different than the country
of origin.
There are several patterns in which intermediate hubs can be inserted by connecting long
distance and short distance (feeder) maritime services, by connecting different long distance
services and by connecting services calling different ports along a similar maritime range. The
most common pattern is hubbing where an intermediate hub links regional port calls to mainline
long distance services. Intermediate hub terminals can thus become effective competitive tools
since the frequency and possibly the timeliness of services can be improved. By using an
intermediate hub terminal in conjunction with short sea shipping services, often organized along
a sequence, it is possible to reduce the number of port calls and increase the throughput of the
port calls left. While in theory intermediate hubs do not have an hinterland, but a significant
foreland, the impact of feedering (mainly by short sea shipping) confers them a significant
indirect hinterland. Feedering combines short sea and deep sea containerized shipping at a hub
where traffic is redistributed. The usage of larger containerships has lead to the concentration of
traffic at terminals able to accommodate them in terms of draft and transshipment capacity.
Smaller ports, particularly those well connected to inland transport systems, become feeders
through the use of short sea shipping. As the transshipment business remains a highly volatile
business, offshore hubs might sooner or later show ambition to develop services that add value to
the cargo instead of simply moving boxes between vessels. The intermediate hub enables a level
of accessibility that incites them to look beyond their conventional transshipment role. This
includes actions to extract more values of cargo passing through and, as such, get more economic
rents out of transshipment facilities. Such strategies have led to some transshipment hubs, such
as Gioia Tauro and Algeciras, to develop inland rail services to capture and serve the economic
centers in the distant hinterlands directly, while at the same time trying to attract port-centric
logistics sites. The multiplying effects of being an intermediate hub in terms of frequency of port
calls and connectivity to the global economy can thus be leveraged for developing hinterland
activities.

Rail Terminals Authors: Dr. Jean-Paul Rodrigue and Dr. Brian Slack 1. Rail Terminals The use
of the transport capacity offered by rail transportation requires purposely designed terminals
where passengers can embark and disembark and where freight can be transferred. Rail
terminals, while not quite as space-extensive as airports and ports, suffer less from site
constraints. This involves two major issues:

Location. An important distinction concerns passengers and freight rail terminals, which
commonly involve very different locations. Many rail terminals were established in the
19th century during the heyday of rail development. While sites may have been on the
edge of urban areas at the time, decades of urban development, including residential and
industrial areas, have surrounded older rail terminals, leaving limited opportunities for
expansion. Passenger terminals tend to occupy central locations and are commonly the
defining element of urban centrality while freight terminals have seen a growing
separation from central locations, with new facilities often built in an exurban location,
particularly for high speed train stations.
Setting. Because of the linear characteristic of the mode they serve, rail terminals are
dominantly rectangular shaped facilities. Their capacity is a function of the number of
track spurs available, which is a characteristic difficult to change once the terminal has
been built. Individually rail terminals may not be as extensive as airports or ports, but
cumulatively the area of all the rail sites in a city may exceed those of the other modes.
For example, in Chicago the combined area of rail freight yards exceeds that of the
airports.

Rail terminals have a unique characteristic related to shunting (or switching), which requires
separate yard facilities often adjacent to the terminal and at times independent facilities. The
wagons composing a train often need to be assembled or broken down in classification yards.
This is particularly the case for freight trains that need to be assembled at their origin, switched
at intermediary locations (if long distance hauling is concerned) and broken down at their
destination. While this is less of an issue for passenger rail, as trains tend to remain assembled
the way they are, shunting remains fundamental to rail operations. Rail terminals have significant
structuring and agglomeration effects that had an impact in urban land markets since their
introduction. This implied related activities such as retail, restaurants and hotels for passenger
terminals or distribution centers for freight terminals. This is in part due to the accessibility they
provide and in part because of the traffic they generate. Before the prominence of the automobile
and trucking, economic activities tended to cluster around their respective rail terminals. Whole
urban districts emerged around rail terminals. However, as the trucking industry matured and
highway infrastructure was expanded and improved, rail terminals lost a great deal of their
primacy. Even if rail transportation is generally more fuel-efficient than other modes, the
mobility of passengers and freight quickly responded to the availability of the ubiquitous
highway infrastructure. Rail terminals were initially developed to complement the shortcomings
of other modes, particularly to service gaps in fluvial (canal) and maritime transportation. In the
second half of the 20th century, as rail passenger traffic declined, the need for many rail stations
diminished, particularly in North America. A rationalization has resulted in the conversion of
many stations to other uses, sometimes with striking effects, such as the Musee DOrsay in Paris
and Windsor Station in Montreal. Rail yard conversion has been less spectacular, partly because
the sites are less interesting from an architectural standpoint, but nonetheless important. Many
former downtown freight facilities have been completely redeveloped in residential
developments (Montreal) or commercially (Toronto). Indeed, the CN Tower-Skydome
complexes in Toronto are on former rail land. In other cases, yards can be converted to related
activities such as warehouses or even urban logistics centers. The current setting of rail systems
underlines an almost complete separation between rail passenger and freight terminals. Although
they can share access to the same rail network they service completely different mobility
requirements. Any proximity between passengers and freight terminals tends to be coincidental.
2. Passengers Terminals Passenger rail terminals tend to be functionally simple facilities and in
their most basic form, they include a quay for passengers to embark or disembark and a common
area for ticket purchase, waiting, and for activities servicing large volumes of passengers (e.g.
retail and restoration). While some are along a line that requires a stop of a few minutes so that
passengers can embark or disembark, others are terminal locations at the head of an intercity
corridor. Like any other terminal facility, rail terminals have a size and complexity directly
related to the amount of passengers they service. There is a hierarchy of the importance of
passenger rail terminals which is illustrated in the rail network structure. It ranges from simple
stops with only a platform available for passengers to embark or disembark to central rail
stations composed of enclosed facilities with multiple piers and amenities. Central railway
stations are typically in the heart of downtown cores and primary elements of national or
regional passenger rail systems. At one time their sites may have been on the edge of the pre-
industrial city, as is the case for London and Paris urban growth and the shift of commercial and
business activity have conferred many with an important central function. These stations are
typically imposing buildings reflecting the power and importance represented by the railway in
the 19th and 20th centuries. For many cities, railway stations are the key elements of urban
centrality and activity and represent an impressive architectural achievement unmatched in any
other type of transportation terminal and occupying a large amount of real estate. Notable
examples include the Grand Central Station in New York, St. Pancras station in London, the
Gare de Lyon in Paris, or the Shinjuku train station in Tokyo, which is the world's busiest with
more that 3.5 million people per day. Since many central rail stations handle large amounts of
commuters, that also tend to be the nexus of public transit systems as subway stations are
directly connected to the terminal facility. Even if in several cases, particularly in North
America, the long distance function has subsided, the imprint of passenger rail terminals on the
structure of urban transit systems has endured. Still, the development of high speed rail systems
has offered new opportunities for rail terminals with the renovation of existing facilities, many of
which central railway stations, or the construction of new facilities in suburban areas. The
centrality of rail stations became a positive factor in the development of high speed rail systems
as it confers a direct accessibility to core business activities. In many cases the high speed rail
station has become a new nexus of activity with co-located real estate development such as
office buildings, retail stores, hotels and parking facilities. An additional level of integration
concerns the design of airport terminals with high speed train stations, such as the case of
Charles de Gaulle (Paris), Schiphol (Amsterdam) and Pudong (Shanghai), which enables to
connect long distance air travel with regional accessibility. Over specific corridors in France,
Spain and Germany, high speed rail stations are effectively competing with airports. Some air
carriers such as Air France and Lufthansa are starting to offer services that include a rail
segment, implying that the train station becomes a proxy for the airport. In some instances such
as Hong Kong, a centrally located public transit station servicing an airport terminal with a rail
connection (light or heavy rail) and offer ticket and luggage check-in services. A better
integration between passenger rail and air transportation therefore enables substitution of air
travel and the possibility to use satellite airport terminals. This is linked with new forms of
airport competitiveness. 3. Freight Terminals Unlike passenger terminals, rail freight yards did
not have to be quite so centrally located, and because they required a great deal of space for
multiple tracks for marshaling they were more likely located on entirely greenfield sites than
passenger terminals. However, rail yards tended to attract manufacturing activities able to use the
distribution capabilities of rail, and thus became important industrial zones. When dealing with
bulk commodities, rail terminals will locate in proximity of the source as they are the main mean
for these commodities to be shipped to markets. They also vary in complexity because of the
different freight markets they service (e.g. grain, coal, cars, containers) which requires
specialized loading/unloading facilities and equipment. Rail freight terminals perform four major
functions:

Bulk. These rail terminals are linked with extractive industries such as agriculture,
mining and wood products. Terminals are generally designed to be commodity specific.
For instance, grain elevators are bulk terminals commonly used to store, mix and load
grain into railcars. Another important characteristic of bulk rail terminals is their
unidirectional flows, implying that they are designed specifically to either load or unload
bulk. Rail terminals doing both are uncommon. This is reflective of the nature of bulk
trades.
Roll on / roll off. Used to transport vehicles such as cars, trucks or construction
equipment where the vehicles are rolled in a railcar using a ramp. Such terminals
commonly require a large amount of parking space to store vehicles, particularly if they
concern cars bound for retail outlets and many serve as storage facilities supplying
regional markets.
Break bulk. Involves the handling of various cargoes that can be bagged, in drums, rolls
or crates. They are commonly related to a specific activity such as a manufacturing plant
or a warehouse handling break-bulk cargo and serviced by dedicated rail spurs.
Containerization has reduced the need for break bulk terminals.
Intermodal. The function of loading and unloading unitized freight from railcars.
Containerization has greatly expanded the intermodal productivity of rail terminals since
it permits quick loading and unloading sequences, but at the expense of more trackside
space available. Depending on the type of operation, specific intermodal equipment will
be used. Intermodal terminal can be part of a port facility (on-dock or near-dock
facilities) or being a stand alone inland terminal.
Shunting. The function of assembling, sorting and breaking of freight trains. Since trains
can be composed of up to about 100 railcars (even more in North America), often of
various nature, origin and destination, shunting can be a complex task performed on
several occasions. Comparatively, unit trains which carry the same commodity, such as
coal, cars or containers, require little shunting. Bailey yard in North Platte Nebraska,
operated by Union Pacific, is the largest classification yard in the world and handles
10,000 railcars per day. Shunting also takes place for passenger trains, but less common
since once a passenger train has been assembled, it will remain as such a period of time.

The first forms of intermodal application to rail appeared in the late 19th century with
practices dubbed "circus trains" because lorries were rolled in on flatcars using a ramp, a practice
that was pioneered by circuses (Barnum in 1872). This simple ramp-based technique enabled
many rail terminals to become "intermodal" by offering "piggy back" services. By the end of the
20th century many of the industries around rail freight yards had relocated or disappeared, and in
many cities these former industrial parks have been targets of urban revitalization. At the same
time, new intermodal practices emerged, notably lifting trailers or containers directly onto a
flatcar. However, this required capital investments in intermodal equipment as well as paved
terminal surfaces for storage. Only terminals with sufficient size and volume could be profitable.
This has been accompanied by closure of some of the rail yards, either because they were too
small for contemporary operating activities, or because a reduction of the local traffic base. In
spite of a growth of intermodal traffic, the number of intermodal terminals declined, each
covering an extensive market area of about one day of trucking. In North America and Europe
many older rail freight yards have been converted into intermodal facilities because of the
burgeoning traffic involving containers and road trailers, a process which started in the 1960s.
The ideal configuration for these terminals is different from the typical general freight facility
with their need for multiple spurs to permit the assembling of wagons to form train blocks. The
loading and unloading of wagons tended to be a manual process, often taking days, tying up
terminal rail capacity. Retrofitting conventional rail yards for contemporary intermodal
operations proved problematic. Intermodal trains tend to serve a more limited number of cities
and are more likely to be dedicated to one destination. They offer the notable advantage of being
able to be quickly loaded or unloaded, thus tying up less terminal rail capacity. They
however need fewer but longer rail spurs. The configuration typically requires a site over three
kilometers in length and over 100 hectares in area. In addition, good access to the highway
system is a requisite as well as a degree of automation to handle the transshipment demands of
modern intermodal rail operations. One of the important growth factor of rail transportation has
been its closer integration with maritime shipping. This is particularly the case at port terminals
with new on-dock container rail facilities. The term "on-dock" can itself be a misleading since a
direct ship-to-rail transshipment actually rarely takes place (with the exception of the port of
Montreal where containers can be directly unloaded from a ship to a railcar). A dray carries the
container from alongside the ship to alongside the rail track (and vice versa), but frequently the
containers are brought back and forth from a stack. Transloading, the practice of transferring
loads between truck and rail transportation, has also experienced a remarkable growth in recent
years. As long distance trucking is getting increasingly expensive due to growing energy costs
and congestion, many shippers see the advantages of using rail transportation to a location in the
vicinity of their markets. At this location, freight loads are broken down into LTL and then
shipped by short distance trucks to their final destinations. Former rail terminals and port sites
have been among the most important redevelopment areas in most major urban centers. The
redevelopment of old port sites, because of their scale (very large), location (adjacent to
downtown), and sites (waterfront), have been at the forefront of the process. Their renovation has
had a major influence on the surrounding regions. Many cities have experienced significant
benefits from waterfront redevelopment in downtown revitalization and economic revival.
Similar experiences have occurred in the United States (Boston, New York, Baltimore, San
Francisco, Seattle), and Europe (London, Manchester, Bristol, Liverpool, Rotterdam).
Airport Terminals Authors: Dr. John Bowen and Dr. Jean-Paul Rodrigue 1. Airports: Global
Reach, Local Impacts The rapid expansion of air passengers and air freight flows (see Chapter 3,
Concept 5) fostered by globalization is supported by the setting of an extensive system of
airports. They are bigger in the volumes of traffic they handle, their sizes and the distances that
separate them from the cities they serve, their costs and economic impacts, their social
importance, their environmental externalities, and the political controversies they engender. The
very importance of airports globally has exacerbated the local conflicts they provoke in terms of
required land, surrounding commercial and manufacturing developments, the land traffic they
generate and the noise of approaching and departing aircrafts. Indeed, a fundamental feature of
airports is the degree to which they are embedded at several scales:

Regional/National/Global. Airports are the articulation points the circulatory system of


the global economy. They mediate currents of people and goods. The importance of an
airport in this regard is a function of its centrality and its intermediacy. The former term
refers to a nodes role as an origin and destination gateway to a surrounding region, and
the latter term refers to the degree to which a node serves as an interchange between
different regions. The most important passenger and freight airports enjoy either
centrality within one of the worlds foremost city-regions, intermediacy among key
markets, or both. Global outsourcing and offshoring has increased the importance of
intermediacy on a global scale. For example, one factor propelling the growth of Dubai as
an air transport hub is the fact with ultra-long-range aircraft like the B777 and the A340
any two locations on earth can be linked via a stop in Dubai.
Local. Airports, especially large ones, are defining features of the communities in which
they are set. A large airport generates thousands of jobs directly and thousands more via
forward and backward linkages. For Amsterdams Schiphol Airport it is estimated that
60,000 people were employed at the airport itself and that for every person employed
directly, two more were employed in the Greater Amsterdam Area by firms linked to the
airport (e.g. tourist attractions). Airports are not just features of a communitys economic
geography, however. An airport the size of Schiphol is a critically important source of
noise pollution and other local environmental effects, a large consumer of land, and a
signature piece of the built environment. Indeed, the newest airport terminals feature
extremely long roofs and are impressive architectural achievements.

The global and local character of airports cannot be looked at separately. For instance, the
location of large corporate headquarters has a pronounced tendency cluster in cities with good
international air accessibility. A global city is commonly serviced by several large airports within
its metropolitan area. There is a strong correlation, for instance, between the number of
headquarters and the number of airline passengers in US metropolitan areas. To some degree, the
link between accessibility and headquarters underline a reciprocity between the concentration of
headquarters jobs in a city generate the traffic that incites airlines to increase the number of
connecting flights and the influence of better air accessibility in attracting headquarters jobs. The
relationship works in both directions; but it appears that the second direction (i.e. accessibility
drawing jobs) is stronger. The success of cities such as Atlanta and Dallas in attracting
headquarters from other, smaller cities substantiates that finding. Cities with high air
accessibility thus have a higher propensity at attracting activities related to the information
economy. The articulation of airports at several scales creates the potential for significant
conflict. One of the most prevalent concerns airport expansion projects on existing sites. In
Chicago, the USD 7 billion O'Hare Modernization Program promises to significantly reduce
delay in the US air transport system benefiting travelers from throughout the nation (and even
internationally), but the costs will fall heavily on local residents in terms of evictions and the
future externalities the additional air traffic would bring (congestion and noise). 2. Airport Sites
Airports require very large sites; they need space for runways, for terminal buildings,
maintenance hangars and for parking. The runway remains one of the most vital elements of air
transportation as it dictates the capacity of the system. While there are considerable variations in
the scale of different airports, minimum sizes in excess of 500 hectares represent enormous
commitments of urban land. Thus, airports are sited at the periphery of urban areas; because it is
only there that sufficient quantities of land are available. Many airports built in the 1940s and
1950s on the periphery now find themselves surrounded by subsequent metropolitan
development. New site development, in North America and Europe at least, is becoming very
difficult because available sites are frequently so far from the urban core that even if planning
permission could be obtained, it would lead to very significant diseconomies because of the
distance from business and demographic cores. It is significant that there have been few new
large-scale airport developments in North America over the last 30 years, and the examples of
Denver (new airport located far from the city center) and Montreal (second airport than was
eventually abandoned for passenger services) illustrate how difficult and contentious such
developments have been. The result has been that most airports have to adjust to their existing
sites, by re-configuring runways and renovating existing terminal facilities. Suburbanization in
general is the main factor why it has become more difficult to place major airports with each
passing decade. Local site requirements are extremely important for air terminals as its two
major components, the airfields and the terminals. Airport site location involves a wide variety of
considerations:

Air transportation forecast demand. Forecasted demand strongly affects the number
and length of runways and the size of airport terminals, and therefore the physical size of
the airport itself. Larger aircraft generally require longer runways. For example, about
3,300 meters (10,000 feet) are required for a 747 or a A380 to takeoff.
Runway configuration. About 30 to 60 movements (landings and takeoffs) per hour are
possible on a commercial runway depending on the type of plane and weather conditions.
Landings take about 60 seconds, from the moment that the plane has touched touch down
and cleared the runway while takeoffs take between 40 to 60 seconds. However, where
runways intersect, capacity is significantly reduced and this type of configuration is
considered obsolete for modern airport operations. Thus, the trend for the largest airports
is to have parallel runways permitting simultaneous takeoffs and landings. Parallel
runway configurations generally demand more space than crossing runways.
Altitude. At higher altitude, a longer runway is required to achieve the same lift because
the air density is lower.
Meteorological conditions. Local variations in precipitation, prevailing wind,
turbulences, visibility, etc. must be taken in to account. Oaklands less fogbound airport
has gained some business, especially from low-cost carriers, at the expense of San
Francisco International.
Topography. The land upon which runways is built must be flat, with no more than a 1
percent slope. Hilly land can be flattened and swampy land filled, of course, but at a cost.
Environmental considerations. Airports have significant effects on local waterways,
wildlife, and air quality. An important aspect of London-Heathrows new Terminal 5
project is the diversion of two rivers around the site.
Adjacent land uses. Concerns about noise and other airport impacts have encouraged the
setting aside of buffer areas much larger than runways and the supporting terminals,
taxiways, and other infrastructure would require. The new Denver International Airport,
for instance, occupies a parcel of land twice the size of Manhattan. In other cases, such as
Dun Huang in China, specific geographical constraints had to be respected, namely that
the airport could not consume scarce agricultural land.
Local accessibility. At the same time, however, an airport must be accessible to the
communities it serves, making its location relative to highways and passenger rail lines
(both intercity and metro) important. The integration of airports with passenger rail (e.g.
Charles de Gaulle, Schiphol, Hong Kong, Shanghai, New York) is intended to link the
airport terminal with the regional market it serves, thus reinforcing its function as a pole
in the regional economy.
Obstructions. Beyond the airport perimeter, the proximity of mountains, hills, and/or
heavily built-up areas (as in the case of Hong Kongs old airport at Kai Tak) complicates
airport operations. If approach corridors pass over residential zones, pressures can
emerge to restrict operating hours.
Other airports. Nearby airports, especially in the same metropolitan area, may limit the
available airspace and constrain new airport operations. This is particularly the case in
New York where the respective airspace of three major airports, John F. Kennedy,
Newark and LaGuardia, are impeding one-another.

Many cities around the world are serviced by more than one airport, usually within a range of
100 to 150 km. Cities such as London, San Francisco, Paris, New York, Seoul, Tokyo, Shanghai
or Washington all have more than one airport within commuting range. The increasing physical
size of airports and the difficulty of fitting in with neighboring land uses have encouraged the
development of airports at increasingly remote locations. Indeed, the more recently an airport
was constructed, the more likely it is to be located far from the center of the metropolitan area it
services. In the most extreme cases, land has been reclaimed from the sea to make space for
airports. Chek Lap Kok (Honk Kong) and Changi (Singapore) are likewise built on land
reclaimed from the sea. Asia is, in fact, home to several of the most extreme examples of airport
"terraforming". More distinctive that Kansais roof, for instance, is its location on a man-made
island in Japans Inland Sea. The island, which was a prime contributor to the stratospheric cost
of Kansai, is an extreme example of the lengths to which airport-builders have had to go to meet
the spatial requirements of key hub airports. Overall, the four most expensive new airports in the
world (Chek Lap Kok, Osaka-Kansai, Nagoya-Central Japan, and Seoul-Incheon) share three
characteristics: their location in fast-growing Asia, the proximity to densely populated
metropolitan areas, and their construction atop land reclaimed from the sea. The Asian airport
building boom has a long way yet to run as air transport demand in the region continues to
increase. In 2005, China had only 196 airports certified to handled transport aircraft. By
comparison, the US had 14,000 such airports and Australia 444. India, too, is likely to require the
construction of new airports. Conversely, few new airports have been built in North America or
Europe recently. In the US, Denver International is the only large airport to open in the past
quarter century. Airports are political lightning rods, and the examples Denver illustrates how
difficult and contentious such projects can be. The result has been that most airports have to
adjust to their existing sites, by re-configuring runways and building new terminal, as for
example in OHare and Heathrow. These projects have hardly been free of controversy, however,
and are themselves very expensive. 3. Keeping Pace: Airports and Delay About 6,000 passengers
per minute are taking off from a runway across the world, underlining the intense of these
terminal facilities. There are two main types of delays experienced by air transport. There are
runway delays related to the capacity to have flights take off and land under various weather
conditions. During peak hours this capacity is strained and may require some inbound flights into
a waiting pattern for an available landing slot. There are also land delays where planes are
impaired by taxiing time and the unavailability of gates. Nevertheless, the expansion of air traffic
ensures that the building of new runways, new terminals, and new airports will continue. The US
Federal Aviation Administration estimates that six large American airports will require
additional capacity beyond what is currently planned by 2015 and an additional eight airports
will need fall short of required capacity by 2025. There are a variety of means other than new
runways and terminals to meet the needs of the future, including better use of information
technology to wrench more capacity out of the sky; but it seems inevitable that at many of these
airports, the cranes and bulldozers will be put to work. In fact, the FAA suggests that four
metropolitan areas in the US may each need new commercial airports by 2025: Atlanta, Chicago,
Las Vegas, and San Diego. Europe faces a similar dilemma. China probably represents the most
acute situation. With a limited number of airports and a traffic doubling every four years,
terminals are hard pressed to handle the growth in air traffic. Restrictions for the number of
flights and the creation of new services are even starting to be implemented by the Chinese
government. Failing to keep pace with demand will mean worsening congestion and the risk of
delay in many parts of the global airline industry, inciting many airlines to adapt their schedule.
Expansion projects will help but the lack of additional capacity in many parts of the system (e.g.
LaGuardia where almost every available takeoff and landing slot is scheduled for use) mean that
there are many chokepoints from which delays can propagate. This has become a particular
vulnerability within air transportation, notably in systems strongly developed around the hub-
and-spoke structure. Delays at highly congested hub airports quickly propagate within the whole
system. For instance, if a congested airport is forced to shut down for a short period of time due
to meteorological conditions (e.g. thunderstorm), delays increase exponentially. Once the airport
reopen, the priority is to have the inbound flights that were waiting in standby patterns land
(some may be getting low in fuel), which delays outbound flights. The outbound queue can
become so substantial that gate access for inbound flights can be impaired, which again
exacerbate delays since delayed inbound flights will become delayed (or cancelled) outbound
flights. The point is that the lost capacity cannot be effectively recovered. The matter obviously
gets worst when a longer weather disruption such as a blizzard impairs whole systems with
across the board cancellations if a hub shuts down. Additionally, airport labor, such as baggage
handlers, is often unionized and disruptive strikes can be used to pressure for additional benefits
and compensation. It remains to be underlined that like international trade, the growth pattern in
air transportation is cyclical and subject to phases of growth and even decline. Commercial and
industrial location may change, airlines may decide to change their hubbing strategies and the
price of fuel may rise. Assumptions that were made in terms of traffic expectation may thus not
be realized. Since air transportation has experienced half a century of almost continuous growth
the public assumes that this process will endure. Even in the case of China, there has been
evidence that there is an overcapacity of regional airports. 4. Airports and Regional Development
Airports are substantial engines of economic activity that have attracted investments to support
passenger and cargo flows. This nexus can be referred as an "aerotropolis"; the airport terminal
becomes the hub of a cluster of airport-related activities, all of which closely integrated in a
transport system composed of highways and transit corridors linking the airport with the central
urban district. Three major types of activities are readily identified:

Aeronautical activities. Represent the standard operational support of the airport where
services to passengers (checking in, security, boarding), cargo (loading and unloading)
and planes (gate access, refueling) are undertaken. This can be a frequent source of
delays. For instance, due to the propensity of passengers to bring carry-on luggage, flight
boarding times have significantly increased. While in the 1970s, it could take about 15
minutes to board a 140 passengers domestic flight, this figure has increased to 30 to 40
minutes in the 2000s.
Direct airport activities. Concern the functional support of the airport with distribution
centers for air cargo, retail, restoration and hospitality (hotels). The revenue these
activities generate is a direct function of the airport's traffic..
Indirect airport activities. Relate to a whole range of activities who do not directly
service the airport, but would not be present without the large amount of available real
estate. They can concern convention centers, office space, shopping and entertainment
areas, and residential districts.

Much as the airline industry has been transformed by liberalization in recent decades, the
airport business, too, has been buffeted by its own dramatic changes some of them stemming
from the airlines. A few decades ago most major airports and most major airlines were state-
owned, run as public utilities, and somewhat insulated from competition. That is no longer the
case in either industry. Although the airport business has changed to lesser degree as many are
still managed by airport authorities, there are important instances of privatization and
globalization. For instance BAA, which operates Londons three main airports and several
others, is now owned by a Spanish construction company. More importantly, airports compete
more fiercely for business than in the past. In this regard, the rise of the low-cost carriers (LCCs)
is important because one dimension of some LCCs business model is service via lower cost
secondary (alternative) airports. In Belgium, for instance, Ryanair and other LCCs have made
Charleroi South Brussels Airport a real alternative gateway to the region surrounding the EU
capital. By 2012, Ryanair served 60 regular destinations from Charleroi with the airport handling
about 5.9 million passengers in 2011 while Brussels National handled 18.8 million passengers.
The carrier was originally attracted to the airport by a variety of subsidies and other financial
inducements from the local and regional government. While the European Commission later
ruled that some of those arrangements violated European competition policy, the stakes are so
high in attracting and retaining air services that governments are sure to continue to aggressively
promote their airports. Charleroi is hardly the only airport put on the map by an airline. This is
particularly true in the air cargo business. The importance of Memphis and Louisville, for
instance, in cargo flows is almost entirely attributable to the hubs operated there by FedEx and
UPS, respectively. The benefits to the two cities have been enormous and so are the incentives
for those cities to keep their hubs and for other cities to try to attract one. Memphis, for example,
has become "Americas Distribution Center" as manufacturers and retailers have set up
sophisticated warehousing operations there to take advantage of the hub. In Europe, airport cities
such as Liege and Leipzig have also become freight hubs.

Transport Terminal Governance Authors: Dr. Jean-Paul Rodrigue, Dr. Brian Slack and Dr. Theo
Notteboom 1. The Nature of Governance in Transportation Governance is associated with an
effective usage of existing resources as well as a better allocation of new resources. Like all
sectors of activity, transportation has a unique set of characteristics about its governance as both
the public and private sectors are actively involved.
Governance is the exercise of authority and institutional resources to manage activities in
society and the economy. It concerns the public as well as the private sectors, but tends to apply
differently depending if public or private interests are at stake. In both cases a significant concern
is performance, which is how effectively available resources are used.
The governance of transport infrastructure is particularly relevant because of the strategic,
economic and social importance of transportation and the cross-jurisdictional character of
many infrastructures such as highway, rail and telecommunication networks. Transport is not of
mere convenience, but a fundamental infrastructure that must systematically and constantly be
available to its users. Effective governance is complex to assess since it is not linked with a
specific governance structure, but generally conveys several advantages:

Confidence. Provides a level of confidence that an activity, such as a terminal or a


logistics zone, is effectively managed. This can involve daily operations as well as the
planning, design and funding of new infrastructure. Effective governance is linked with
consistent and reliable services as well as a good level of responsiveness and feedback
when an unexpected issue arises.
Capital costs. Lowers capital costs as investors and financial institutions have confidence
that the allocated capital will be effectively used in the development and expansion of
productive assets generating returns.
Competitiveness. Improves the capability to compete through the retention of existing
users and the attraction of new ones. This can take many forms such as lower costs, but
factors such clear expectations and transparency are also significant. Keeping market
considerations constant, organizations with better governance are usually able to be more
competitive than organizations having a less effective governance.
Stability. Confers a long term resilience of the organization, which provides a level of
stability in capital markets and the financial institutions supporting them.

For transport infrastructure such as port terminals, airports, inland ports or logistics zones, many
different forms of governance are in place which shape modes of financing, operations,
functioning and external relationships. This is particularly important as large terminal
infrastructure involved in global flows of passengers and freight are complex, capital intensive
and of strategic importance to the economic welfare of whole regions. There are two main
components of terminal governance; ownership and operations. Ownership involves who is the
owner of the terminal site and facilities (including equipment):
Public ownership is common because of the economic and strategic importance of many
types of terminals. In several countries passenger railroads are owned by the national
government, and the passenger stations are thus under the control of the state-owned
railway company, such as is the case in China, Europe and North America. Public
ownership of airports is also prevalent, although in the United States this takes place at
the State or municipal levels of government. Under public ownership, investment in
infrastructure and planning future expansion is carried out by the public authority using
public monies or public guarantees for capital subscribed on private markets. The private
sector is then offered leasing opportunities which terms and duration can be negotiated.
Private ownership is less evident in transport terminals. There are numerous exceptions
for certain modes, such as road freight (distribution centers), rail freight transport in
North America (terminals and rights of way), and where privatization has taken place, as
for example in ports and airports in the United Kingdom and New Zealand. Here, private
capital is used to provide infrastructure.

Operations involve the day-to-day management and carrying out of terminal activities:

Public control of operations is typical in many ports, such as Singapore and Hampton
Roads, in many state-controlled railroads such as China, and at publicly owned airports
such as in the United States. Here the public authority provides the handling equipment,
contracts with the labor force, and operates the rail, airport and port terminals.
Private companies manage and carry out operations in privately owned terminals. They
are also active as operators in many publicly owned facilities under a concession
agreement. The latter is a growing trend in ports and airports, where facilities are leased
to terminal operators for fixed terms. The types of concession vary considerably, in terms
of duration and conditions. Some are short term, a few years or so; more typically they
are long-term concessions of 15 to 30 years. In some the owner provides some
equipment, such as gantry cranes in ports, in others the concession holders are expected
to invest in equipment. In some they are required to use public employees, while in others
they may use their own workers. In Canada a half-way private/public system of
governance of major airports and ports is in place. The airports and ports are leased to
locally-managed non-profit corporations that have to operate the facilities commercially,
without access to public funds. Surpluses have to be re-invested.

Public ownership and operations has been important in many modes because of the strategic
importance of transport and the long term investments required that the private sector may be
incapable or unwilling to make. In this way the terminals can be owned and operated as public
goods, and can be integrated with public regional and national economic policies. On the other
hand, public facilities are seen by some as slow to respond to market conditions, with a
propensity to over-invest in non-economic developments, and with high costs to the users. There
is a growing tendency towards privatization in transport as a whole, particularly with
deregulation. Transport terminals increasingly became an attractive form of investment for
private equity firms seeking valuable assets and a return on their investments. This is manifested
in the sale of ports and airports in some countries such as the UK, and in the break-up of state
rail monopolies, as in the EU. Privatization is most evident, however, in the awarding of
operational concessions to private companies. The trend towards concessions is warranted in part
by the belief that the private sector is more efficient than the public in operating terminals, and
that this form of governance keeps the ownership still under public control. It is also seen as a
mean of reducing public expenditures at a time when states are becoming less willing (or able) to
make large investments. Thus, the setting of public / private partnerships is seen as a dominant
trend in the governance of transport terminals. 2. Port Devolution and Global Terminal Operators
Even as late as the 1980s, ports around the world were the types of terminal most dominated by
public ownerships and operation. While the forms of port governance differed greatly, from the
municipally-owned ports in Northern Europe and the US, to the state owned ports in France,
Italy and much of the developing world, public ownership was dominant and publicly managed
port operations were prevalent. This contrasted with the shipping industry, where private
ownership was almost universal. The development of containerization particularly underlined
how operationally deficient public port authorities were to growing time and performance
requirements intermodalism imposed on transport chains. The changes, slow at first, came from
two directions:

First, there was the belief, promoted in the UK by Prime Minister Thatcher, that the
transport industry as a whole should be divested to the private sector to promote
competition. Ports were among the many sectors thus targeted. New Zealand actually
carried out this policy before it was finally implemented in the UK. In both countries the
state has relinquished control over the port industry.
Second, there was a policy recommendation from the World Bank that developing
countries would do well to free their highly controlled port industry, by issuing
concessions to companies capable of modernizing their port industries and better manage
operations. To facilitate the changes required, the World Bank created a Port Reform
Tool Kit to demonstrate to States how to go about affecting the reforms.

These developments helped create what has become a global snowball of port reform, commonly
known as port devolution since the public sector was relinquishing its role from a function it
formerly assumed. It made governments around the world more open to considering reforming
port governance and offering better conditions to ensure privatization. The growing demands for
public and private investment in ports, precipitated by the growth in world trade, and the limited
abilities of governments to meet these needs because of competing investment priorities, were
key factors. Thus, while few were willing to go as far as the UK in the total privatization of
ports, many countries were willing to consider awarding concessions as an intermediate form of
privatization, leading to various forms of public-private partnerships. The result has been an
almost global trend towards the award of port operational concessions, especially for container
terminals. If the opportunities to award operational concessions can be seen as an increase in
demand, growth has also been greatly affected by an increase in the supply of companies seeking
concessions. In Northern Europe and the US many ports had already operated through
concessions, awarded to local terminal handling companies. Because they were relatively small
and locally-based with only few exceptions, they did not participate in the global growth of
opportunities for concession awards. The exceptions were Stevedore Services of America (SSA)
that was already active in several US West Coast Ports, which obtained concessions to operate
facilities in Panama and several other smaller ports in Central America, and Eurogate, a joint
company formed by terminal handling companies from Bremen and Hamburg, that obtained
concessions in Italy and Morocco. Over a short period a few companies were able to become
major global terminal operators controlled a multinational portfolio of terminal assets. They
mostly came from Asia with four large companies dominating, three coming from a stevedore
background and one from a shipping line:

Hong Kong-based firm, Hutchison Port Holdings (HPH), part of a major conglomerate
Hutchison Whampoa.
Port of Singapore Authority (PSA), the government owned operator of the port of
Singapore.
Dubai Ports World (DPW), which is mainly part of a sovereign wealth fund created to
invest the wealth derived from oil trade.
AP Moller Terminals (APM), as a parent company of the world's largest shipping line;
Maersk.

HPH, which originated as a terminal operator in Hong Kong, first purchased Felixestowe, the
largest UK container port, and today has a portfolio of 51 terminals around the world, including
in Rotterdam and Shanghai. PSA has been active securing concessions in China and Europe,
including Antwerp. These two terminal operators take their origin from globally oriented ports
offering limited local terminal expansion opportunities. The local operators were thus incited to
manage the constrained assets efficiently and to look abroad for expansion opportunities. DPW
has grown through purchases, such as P&O Ports and CSX World Terminals, and by securing
concessions elsewhere. Shipping lines have also participated in terminal concessions, but to a
lesser extent. The most important is the in-house terminal operating company of Maersk; APM
Terminals. In addition, Evergreen, COSCO, MSC, NYK, and CMA-CGM hold port terminal
leases. Between the dedicated terminal operating companies and the shipping lines, a global
pattern of concessions is evident. 3. Significance and Consequences of Terminal Operators The
rapid expansion of terminal operating companies reflects two economic forces. First, the entry of
former terminal operators into the global system represents a process of horizontal integration,
in which the companies, constrained by the limits of their own ports, seek to apply their expertise
in new markets and seek new sources of income. Second, the entry of shipping lines into
terminal operations is an example of vertical integration, in which the companies seek to extend
their control over other links in the transport chain. Several other factors explain the growth of
global terminal operating companies:

Profitability. By modernizing port operating systems, mainly through better equipment,


information systems and management, port holdings are able to increase the profitability
of their terminal assets. For instance, HPH achieved a 35% per year return on investment
in the early 2000s. Port management was very lucrative, inciting others to expand
existing assets and new players to enter the field.
Financial assets. Port holdings have the financial means to invest in infrastructures as
they have a wide variety of assets and the capacity to borrow large quantities of capital.
They can use the profits generated by their efficient terminals to invest and subsidize the
development of new ones, thus expanding their asset base and their operating revenues.
Most are listed on equity markets, giving the opportunity to access global capital, which
realized in the last decade that the freight transport sector was a good source of returns
driven by the fundamentals of a growth in international shipments. This financial
advantage cannot be matched by port authorities even those heavily subsidized by public
funds. In other cases, terminals became financial assets per se which can become more
valuable as the traffic they handle increases (additional revenue). Financial holdings,
such as retirement funds, are thus considering transport terminals and port terminals in
particular, as valuable assets to own in a portfolio.
Managerial expertise. Port holdings excel in establishing procedures to handle complex
tasks such the loading and unloading sequence of containerships and all the intricacies of
terminal operations. Many have accumulated substantial experience in the management
of containerized operations in a wide array of settings and are therefore able to transfer
managerial expertise to new terminals. Being private entities, they tend to have better
customer service and have much flexibility to meet the needs of their clients. This also
includes the use of well developed information systems networks and the capacity to
quickly comply with legal procedures related to customs, clearance and security.
Gateway access. From a geographical standpoint, most port holdings follow a strategy
aimed at establishing privileged positions to access hinterlands. Doing so they secure a
market share and can guarantee a level of port and often inland transport service to their
customers. It can also be seen as a commercial strategy where a stronghold is
established, limiting the presence of other competitors and a situation of monopoly.
Gateway access thus provides a more stable flow of containerized shipments. The
acquisition of a new port terminal is often accompanied by the development of related
inland logistics activities by companies related to the port holding.
Leverage. A port holding is able to negotiate with maritime shippers and inland freight
transport companies favorable conditions, namely rates, access and level of service. Some
are subdiaries of global maritime shipping lines (such as the A.P. Moller group controlled
by the shipper Maesrk) while others are directly controlled by them (such as Hanjin or
Evergreen) so they can offer a complete logistical solution to international freight
transportation. They are also better placed to mitigate pressures from port authorities to
increase rents and port fees. The footloose character of maritime shippers has for long
been recognized, with a balance of power more in their favor than of the port authorities
they negotiate with.
Traffic capture. Because of their privileged relationships with maritime shipping lines,
port holdings are able to capture and maintain traffic for their terminals. The decision to
invest is often related to the knowledge that the terminal will handle a relatively secure
number of port calls. Consequently, a level of traffic and revenue can be secured more
effectively.
Global perspective. Port holdings have a comprehensive view of the state of the industry
and are able to interpret political and price signals to their advantage. They are thus in
position to influence the direction of the industry and anticipate developments and
opportunities to offer global solutions to terminal requirements in ports around the world.
Under such circumstances they can allocate new investments (or divest) to take
advantages of new growth opportunities and new markets.

The growth of multi-national terminal operating companies has resulted in a concentration of


power. In 2008 the top five global terminal operators accounted for 28% of global container port
activity in terms of equity based throughput. What is perhaps most important is that they now
dominate at the most important container ports in the world. They are able to wield monopoly
power in many parts of the world. The consequences of this power remain to be analyzed, but
there is growing evidence of dissatisfaction in many ports about the actions of these companies
that possess long term leases. Thus, in Genoa there is concern about the lack of performance of
the port since PSA took over the main container terminal. In Antwerp, there are concerns about
the imposition of Singapore-based management systems on a European operation. In China there
is opposition to HPH and how it is increasing terminal handling costs to enhance profitability,
which is seen as undermining China's competitiveness on global markets. On the other hand,
there is strong evidence to suggest that port performance has improved in most ports as a result
of the award of concessions to international terminal companies. The question will be whether to
regulate further concentration of power leaving several maritime ranges having to deal with a
limited number of terminal operators in position to impose oligopolistic price settings. 4. Cluster
Governance Deregulation, port devolution, the growing role of global terminal operators and the
changes imposed by intermodalism and global supply chain management are challenging the role
and function of port authorities, or any agency overseeing regional transportation assets. The
governance of hinterland access regimes is linked with cluster formation. It refers to the
agglomeration effects and the degree of internal cohesion and competition within a hinterland.
This governance concept not only applies to ports, but can also be inferred to airports, inland
ports and logistical zones, or any freight distribution construct where a closer integration of the
involved actors could lead to performance improvements. An emerging paradigm concerns the
consideration of the city as a terminal and a hub, which means it acts as a functional freight
region. This paradigm is particularly important because:

1. A metropolitan area is the origin, destination and point of transit of large volumes of
passengers and freight. They are embedded within their respective supply chains with a
wide array of flows.
2. All regional transportation assets are interrelated and contribute to the regional, national
and global economy. They are embedded within their respective transport chains with an
array of modes and terminals.
3. Existing governance and regulatory structures are ill-placed to reflect this jurisdictional,
functional and operational reality.

Cluster governance is a business strategy that relates to the mix of, and relations between,
organizations and institutions that foster coordination and pursue projects that improve the
cluster as a whole through regional strategies and the coordination of their hinterland. The main
advantages of cluster governance are a better access to competencies and innovative ideas, a
better access to suppliers and customers, a better access to capital and an overall reduction of
transactional costs. Although there is no single cluster governance model, as each port (or
terminal) region has a different set of geographical, economic, regulatory and operational
characteristics, the following four issues tend to be common to all clusters:

Service efficiency. Concern a series of initiatives to improve the quality and the
reliability of terminal assets. This goes beyond infrastructural issues, as it involves some
operational commitments to standard levels of service, often through certification by
external agencies. An emerging strategy in this direction involves the development of
port community systems that are making available information helping the management
of terminal-related supply chains, commonly through a web portal. Service efficiency can
also involve technical and managerial training to improve the labor quality. A standard is
thus set among the terminal users in terms of what level of quality and efficiency is
expected. In turn, this promotes the marketability of all the terminal users.
Logistical integration. Concern strategies that aim at better embedding terminals within
their regional supply chains. For a port, this can involve the setting of satellite terminals
or inland ports that are accessed through dedicated corridors. The setting of co-located
logistics zones is also a common strategy both in proximity to the port, rail or airport
terminal facilities.
Infrastructure and growth management. Although both infrastructure and growth
management have conventionally be undertaken by port authorities, the emerging
paradigm concerns a higher level of intermodal integration with for instance on-dock rail
facilities. Infrastructure development also takes place more in a public-private partnership
form with the involvement of terminal operators and other private stakeholders such as
rail operators and logistical firms.
Terminal-city integration. Concern various strategies that help mitigate the commonly
significant environmental and social externalities that terminals have on their surrounding
communities. As terminal facilities, notably ports, tend to be in proximity to high density
urban areas, environmental management and corporate responsibility are perceived as
tools helping promote a better coordination and avoid possible conflicts. On the other
end, airport terminals are typically located away from central areas implying that their
integration can lean on the setting of transit corridors and adjacent retailing, office and
housing activities.

The full implications of cluster governance remain to be assessed, particularly to what


extent they generate added value to the terminal region and if such strategies are linked with the
attraction, or at least the retention of customers and the traffic they generate. There are also
impacts on competition within the cluster as firms undertake collaborative strategies aiming at
improving their respective efficiencies. It can be expected that a better access to international
markets can be achieved, which would indirectly promote the globalization of the companies
within the cluster. This also has an impact on competition between clusters over discretionary
traffic, namely transshipment.