There is a shift taking place in manufacturing. A shift that has been underway for some time and is continuing to find the direction it wants to travel. Having access to infrastructure has been and continues to play an important part in manufacturing. The infrastructure of concern is access to railroads for shipping products by land and shipping yards to send goods by water. Communities that have these assets have a prime opportunity to be considered when companies are expanding operations.
Recent geopolitical events along some of the world’s major shipping corridors is accelerating the mindset in manufacturing company decision makers to regionalize operations. Operations that once had one facility servicing a global economy are moving towards smaller facilities that service regions of the world. This regionalism can shorten time to move products to the consumer. It may also help to deal with issues involving the safety of cargo that once was shipped through areas that are now prone to terrorist activities such as hijacking and holding a cargo ship and the crew for ransom. Sometimes these hijackings are driven purely from a financial motive.
Add in the issues that arose from what some called a global health crisis or some other man-made incident and you have a recipe for making changes in how manufactures are thinking about getting products to their customers. On top of all of this, consumers are demanding products faster and faster thanks in part to ordering staples through the internet.
In November of 2021, Congress passed and President Biden signed the Infrastructure Investment and Jobs Act. This wide-ranging piece of legislation that is better known as the Bipartisan Infrastructure Bill was designed to make a major investment in a wide range of infrastructure in the United States.
Over the coming years, a significant amount of funding to the tune of billions of dollars will be poured into modernizing and improving ports throughout the country. These ports are very important in having the ability to move goods both in and out of the interior of the county.
Modernizing ports is crucial for facilitating trade and commerce, as they serve as vital hubs for importing and exporting goods. By improving their efficiency, capacity, and technology, ports can better handle the increasing volume of cargo and contribute to economic growth.
An investment in how ports handle material being shipped and received can allow them to accommodate larger vessels and handle greater volumes of cargo, potentially reducing congestion and delays. Improving the handing of cargo can lead to attracting new business ventures and investment to the surrounding region. The spin off from that port investment will aid in creating jobs and stimulating economic growth in the region.
Well-equipped ports are essential for integrating into global supply chains, allowing businesses to efficiently import raw materials and components and export finished products to international markets.
Shipping by rivers for agriculture firms has long been a way to move large amounts of grains from where it is grown to the global marketplace. River transportation has also been a key asset in receiving shipments of inputs into food growing operations such as fertilizers and other components.
Just outside of Brunswick, Missouri situated on the Missouri River sits Agri-Services of Brunswick, also known as ASB by local agriculture producers. ASB, which has been locally-owned and operated for decades is a significant partner in moving farm products by both rail and river barge.
The facility is serviced by Norfolk Southern Railway that provides access to food processing facilities in the Midwest and the East Coast of the United States. The Missouri River flows on the southside of the facility providing direct access to the Gulf of Mexico through ports in Louisiana. From there, corn, wheat and soybeans grown in Missouri can be shared with the rest of the world through exporting.
Recently the ASB facility has been awarded grant funding to expand its river dock. Expanding this inland riverport will allow for increased outbound shipments of grains. It will also make the receiving of fertilizer easier. Then those farming inputs can be shipped the finial mile by truck directly to the farmer’s field to support growing operations.
Shipping by barge along with Missouri and other rivers such as the Ohio, Illinois, Arkansas, Tennessee, along with several others has another benefit. A group of barges strung together can do the work of over several hundred large semi-trucks. Each barge can hold about sixty semi-truck loads of material depending upon the type of product. This saves wear and tear on the highways.
However, in the past year or so along the Mississippi River the number of products or tonnage shipped on the river has declined to some degree. The decline was not related to the number of products needing to reach customers. It was precipitated in part by a lack of water in the river due to a drought in the midwestern portion of the United States.
Despite last summer’s issues with the amount of water in certain rivers, inland ports along with the navigable river system has a significant impact on the economy locally and on a much larger regional basis.
According to data available from the Inland Rivers and Port Terminals, an industry association, shipping long the riverways has a major impact on the economy. The trade group estimated that over a half a million jobs can be attributed to the effects of shipping on the nation’s river system. From the truck driver starting products moving in the first mile or delivering other goods to customers in the last mile, to all of the other occupations revolving around shipping by port, the value is estimated at $29 Billion throughout the economy. That is a noteworthy impact.
The effects on the economy will hit home in the area surrounding the Baltimore Harbor in Maryland. The recent incident that involved a large container ship that was outbound in the harbor, stuck a bridge that subsequently collapse. The unfolding event will have an untold economic impact. The loss of the bridge that held a major interstate highway which traversed the harbor will impact the local economy.
The collapse of the bridge disrupts local transportation networks, increasing commute times for residents and raising transportation costs for businesses reliant on the affected routes. This could lead to productivity losses for businesses and potential job disruptions for workers.
The closure of the Port of Baltimore due to the wreckage further compounds the economic impact. The Port of Baltimore is a crucial hub for global shipping, and its closure disrupts supply chains for businesses both regionally and globally. Shippers accustomed to using the Port of Baltimore may face delays and increased costs as they reroute their shipments through alternative ports.
Companies that relied on the Port of Baltimore for importing and exporting finished goods and components will need to find alternative transportation routes, potentially leading to delays in production and increased costs. The specialized handling capabilities of the Port of Baltimore may not be easily replicated by other ports, exacerbating the challenge for affected businesses.
In response to the closure of the port and transportation disruptions, businesses are currently working to quickly adapt their supply chain strategies. This could involve finding alternative transportation routes, renegotiating contracts with suppliers and customers, and potentially investing in new infrastructure or logistics solutions.
The economic repercussions of the incident extend beyond the local area, affecting regional and national economies. Supply chain disruptions can ripple through various industries, impacting employment, consumer prices, and overall economic growth.
Connecting the ports that service shippers on both America’s riverways and global shipping ports on the east and west coasts as well as the Gulf of Mexico are railroads. The connection by rail to and from the ports is another key asset in the much larger shipping picture. Recently the rail section of the picture went through a bit of a change.
The recent merger of one of Canada’s two major railroads and one the major railroads from America has created an opportunity for shippers by rail to have access to most of North America. The Canadian National Railroad married Kansas City Southern Railroad creating the first network to go from the horn of southern Mexico to the upper reaches of Canada. For the first time in history of railroads, manufacturer can ship finished products north and south and east and west through the Canada, the United States and Mexico.
The CPKC merger is not the only way to send or receive products south of the boarder. The Union Pacific railroad provides a viable alternative for shippers that are in an area west of the Mississippi River to the west coast of the United States.
Not far from Interstate Highway 10 near were southwest Texas turns into southeast New Mexico lies the intermodal railyard Santa Teresa Intermodal Terminal, which is named after the small town near where it is located. This Union Pacific intermodal asset is one of three facilities that are situations along the border between the United States and Mexico. The other two are located in Tucson, Arizona and Laredo, Texas. Only the Santa Teresa and Laredo facilities load and unload cargo twenty-four hours per day.
Intermodal facilities improve connectivity between different regions within a hemisphere, facilitating trade and economic integration while reducing dependence on long-distance supply chains. With the “reshoring” or “near shoring” of manufacturing intended to service the North American market, having the ability to quickly ship finished goods to the end user becomes even more important.
When companies relocate their manufacturing operations closer to their target markets, they aim to reduce transportation times and costs, improve supply chain efficiency, and enhance responsiveness to customer demands.
By shortening supply chains and reducing transportation distances, regional shipping solutions supported by intermodal facilities can lead to cost savings for companies, including lower inventory carrying costs and reduced transportation expenses. Intermodal facilities optimize the movement of goods by integrating various modes of transportation, minimizing transit times and costs. Offering flexibility, resilience, and efficiency in the movement of goods, intermodal transportation helps businesses navigate uncertain times and maintain smooth operations in their supply chains.
Changes in the way consumers shop and obtain the goods they desire has been a portion of the driving force behind how quickly manufactures move finished products. The ability to order an item over the internet and have it delivered to the front doors in a matter of days can play havoc with supply chains with there is a distribution.
With the rise of e-commerce and changing consumer preferences have reshaped supply chains and manufacturing processes, placing a greater emphasis on speed, flexibility, and responsiveness. Manufacturers must continually adapt and innovate to keep pace with these evolving trends and ensure that they can meet the expectations of today’s digital-savvy consumers.
Inland ports and railyards play a critical role in navigating the ever-changing challenges of modern supply chains. These assets are indispensable components of modern supply chains, providing connectivity, resilience, and efficiency in the face of ever evolving trials. As businesses continue to adapt to changing market conditions and consumer demands, inland ports and intermodal railyards will play an increasingly important role in facilitating the movement of goods and supporting economic growth and development.
Having the ability to quickly ship finished goods to end users is a strategic advantage for companies engaged in reshoring or near shoring manufacturing operations, enabling them to better serve their target markets and stay competitive in an increasingly globalized economy.
Intermodal facilities are playing an increasingly important role in providing shipping solutions that address the challenges posed by geopolitical issues, global public health crises, and the regionalization of manufacturing.
David Gaines is the Managing Director of Goldstone Consulting Group, LLC an international site selection and economic development firm partnering with growing companies to develop expansion and location solutions. Goldstone Consulting Group also works with communities in discovering economic opportunities. Mr. Gaines is a frequent panelist on topics relating to economic development and community vitality. In addition, he has authored a variety of articles on economic and business development topics. He can be reached at david@goldstoneconsultnggroup.
