What is a Dry-Port-to-Dry-Port supply chain?
Figure 1. Dry-Port-to-Dry-Port supply chain concept (Rozic et al., 2016)
With the fast-paced growth of the container shipping industry and globalization, larger flows of containers and bigger vessels have severely affected seaport operations. One of the concepts which has been applied to resolve this issue is the dry port supply chain. It’s not a new concept, but not a lot of people are aware of it. Therefore, the purpose of this post is to guide you through a detailed explanation of the definition of a dry port, a dry-port-to-dry-port (DP2DP) supply chain (see Figure 1), its pros and cons, as well as the development requirements. As shown in Figure 1, a manufacturer exports goods via a seaport to an importer, who uses an inland terminal to handle his goods after they arrive at the seaport.
#1: What is a DP2DP supply chain?
According to Leveque and Roso (2002), a dry port is an inland intermodal terminal directly connected to seaport(s) with high-capacity transport means, where customers can leave/pick up their standardized units. The DPTDP supply chain is when there is an unhindered connection between a dry port in the land of export and a dry port in the land of import (Schipperheijn, 2019). This concept is used to utilize economies of scale in the hinterland corridor and decrease the transit time through the seaport. Economies of scale are the cost advantage when a company increases its level of output. Hence, the more products a company can produce, the lower the fixed cost per product. Due to globalization, international trading has grown flourishingly, which caused seaport congestion. A dry port can disburden the seaport and increase the seaport capacity, therefore seaport congestion and the transit time through the seaport can be reduced.
#2: What are the pros and cons by applying a DP2DP supply chain?
A dry port has an advantageous location and provides access to different supply chain infrastructures. Besides, it offers a wide range of services, such as storage, consolidation, custom clearance, etc. First, the DP2DP supply chain enables companies to ship high volumes at lower cost due to the usage of barge instead of the road, and cheaper custom handling at a dry port than at a seaport. For example, if a vessel is anticipated to arrive at the seaport later than planned, companies can store their containers at the dry port with much lower costs rather than storing them at the seaport while waiting for the late vessel. Besides, it is less harmful to the environment to transport by barge, meaning the greenhouse emission can be reduced substantially. Furthermore, the modal shift from truck to barge helps reduce road and seaport congestion as well as a shortage of drivers in some countries. However, there is a possibility of longer lead times by waterway transport and higher volumes of goods in transit. Hence, this kind of supply chain doesn’t suit fast-moving or expensive products.
#3: What are the criteria for developing a feasible DP2DP supply chain?
Criteria for exporter and importer
- Have a high volume to gain more favorable rates in negotiating with dry port operators as well as favorable demurrage and detention with shipping carriers.
- Have NOOS (Never Out Of Stock) products, which are more flexible in lead time in case of port congestion.
- Have no strict planning to reduce the risk of potential disruptions (e.g. natural disasters, delays, etc.)
- Gain a suitable incoterm with the partner (exporter/importer).
Criteria for a dry port
- Have a direct connection with the ports, and accessibility towards the dry port in terms of road infrastructure, rail, and/or inland water (river). Dry port mist use barge or train, with the truck as the last alternative.
- Obtain strong collaboration and communication with supply chain partners (exporter, importer, shipping carrier, and forwarder).
- Acquire Authorized Economic Operator (AEO)-status, meaning that custom controls can be held at the dry port instead of the seaport. This helps reduce delays significantly.
- Have a bonded warehouse where (potential) customers can store their containers due to a lack of their capacity during peak months/ delays at the seaport.
- Have empty containers depot functions, which allows the exporter/importer to use single trips instead of round trips (more cost-efficient).
- Locate within a close distance of the exporter/importer. The distance from the exporter/importer to the dry port should not be greater than the distance from the exporter/importer to the seaport.
In short, a DP2DP supply chain is an unhindered connection between the dry port of the exporter and the dry port of the importer, which both could connect directly with seaport and other transport means namely rail and/or road. The DP2DP supply chain deserves more attention as it potentially contributes to economic growth, cost-efficiency, and sustainability.
Thank you very much for reading. Please share if you find it useful!
Recommended reading:
Leveque, P., Roso, V., 2002. Dry Port concept for seaport inland access with intermodal solutions. Masters thesis. Department of Logistics and Transportation, Chalmers University of Technology
Rožić, T., Rogić, K., & Bajor, I. (2016). Research Trends of Inland Terminals: A Literature Review. PROMET -Traffic&Transportation, 28(5), 539–548. https://doi.org/10.7307/ptt.v28i5.2090
Schipperheijn, W. (2019) Smart Supply Chain Steve Madden Europe: De toepasbaarheid en toegevoegde waarde van Bundeling at the Source en Dry port to Dry port.
https://www.unescap.org/sites/default/d8files/11.%20tfforum11_c2_rasamit.pdf
https://www.unescap.org/sites/default/d8files/bulletin78_Article-5.pdf
https://porteconomicsmanagement.org/pemp/contents/part2/dry-ports/
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