6.2 – Transport Terminals and Hinterlands

Authors: Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom

Transport terminals are central and intermediate locations. Their main influence is through their hinterlands, which are the land areas they service.

1. The Relative Location of Terminals

The situation, or relative location, is an essential component of location. This core geographical concept refers to the position of places in relation to other places. Accessibility is relative because the situation of places changes over time, namely if there are fluctuations in trade and economic development. For example, ports in the Mediterranean used to be at the core of the Western world during the Greek and Roman eras, and Genoa and Venice prospered during the Middle Ages. The emergence of the Americas, particularly the United States, as an economic power focused on Atlantic ports and the Mediterranean became more marginal. The opening of the Suez Canal in the 19th century refocused the relative location of the Mediterranean again with increased interactions with Asia. In the second half of the 20th century, the growth of the transpacific trade brought a new impetus to the Panama Canal. More recently, the growth of China has refocused trade flows in Central Asia. Each commercial shift is linked to new transportation networks, connectivity, and terminal investments.

Although the term “terminal” implies a final destination, terminals are typically intermediate locations in the global flows of passengers and freight because they are transfer points. In order to carry out the transfer and bundling of passengers and freight, specific equipment and infrastructures are required. Differences in the nature, composition, and timing of transfer activities give rise to significant differentiation in the form and function between terminals. A primary distinction is between passenger and freight transfers because specific equipment and infrastructures are required to carry out the transfer and bundling of each type. Passenger and freight terminals are substantially different entities and often have other locational attributes.

Spatial relationships between terminals are a vital competitive element, particularly for ports and rail terminals. Landlocked countries do not have direct access to port terminals, and at least one intermediary country must be transited through a corridor. Still, the landlocked status can be relative and linked with the lack of transport infrastructure or services, inciting national trade to transit through a third country. For instance, a large share of the cargo generated by the northern part of France transits through the port of Antwerp instead of Le Havre.

Several concepts exploring the locational features of transport terminals have been developed. One of particular interest concerns the function of centrality and intermediacy.

Centrality. Focus on the terminal as a point of origin and destination. 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 involves a significant amount of intermodal activities.

One of the most enduring concepts in urban geography is the central places theory, which emphasizes centrality as a feature of the urban hierarchy. Cities more centrally located to markets are larger with a broader range of functions. Transport accessibility is equated with size; thus, many large terminals arise out of centrality. Airport traffic is a direct function of the centrality of cities within the global urban system. Examples include Heathrow Airport, whose preeminence is related to London’s location as one of the world’s most important cities and financial centers. The port of New York partly owes its preeminence to the fact that it is at the heart of the largest market area in the United States; the Boston – Washington corridor. A similar observation applies to the port of Shanghai, serving a large market, industrial, and manufacturing base in Central China.

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 locations gaining an advantage because they are between other locations. The ability to handle transshipments has been an important feature of many terminals.

Intermediacy takes form differently within the geography of passengers or freight flows. Anchorage, for example, is a convenient airport located on the great circle air routes between Asia and Europe and the Continental United States and Asia. For many years passengers alighted while the planes refueled. 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, a major market area in its own right (centrality), and lies at the junction of the major eastern and western railroad networks. Ports, too, can exploit the advantages of intermediate locations. One of the largest container ports in the Mediterranean, Tanger Med, is located at the edge of the Strait of Gibraltar. 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 deep-sea ships can transfer containers to smaller vessels for distribution to northern Mediterranean and West African markets, a standard 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 relocation and redevelopment are usually the only alternatives.

2. Hinterlands and Forelands

One of the most enduring concepts in transport geography is the hinterland:

The hinterland is a land area over which a transport terminal, such as a port, sells its services and interacts with its users. 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. Depending on its nature, the terminal serves as a place of convergence for the traffic coming by roads, railways, or sea/fluvial feeders.

The hinterland, or the natural hinterland, refers to the entire area from which it is possible to service through the terminal. Two types of additional hinterlands are noted:

  • First, the fundamental hinterland (or captive) refers to the market area where a terminal is the closest or the easiest to access. It is assumed that most of the traffic will pass through the terminal because of its proximity and the lack of competitive alternatives.
  • Second, the competitive hinterland (or contestable) describes the market areas over which the terminal has to compete more intensively with others for business. It is also called the competitive margin since this hinterland is commonly at the edge of the fundamental hinterland.

Transport terminals are elements of transport chains that include the notions of foreland and hinterland binding import and export activities. Thus, terminals have simultaneously and hinterland and a foreland, with the latter 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 to the level of economic activity as well as the level of competition from other modes not linked to the terminal. Geopolitical considerations can expand or restrict the hinterland of a transport terminal. For instance, a terminal such as a port may have a protected hinterland less accessible to competing terminals due to border and trade restrictions. Inversely, border and trade restrictions may impair the hinterland of a terminal into a nearby but foreign market area. For instance, the setting of the European Common Market area in 1993 enabled ports such as Antwerp, Rotterdam, and Hamburg to substantially expand their hinterlands in areas previously less accessible because of border crossings.

Hinterlands vary significantly for the same location if they 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 activity level is proportional to the population density, the level of income, and the prominence of tertiary activities. For ports, like most freight terminals, the activity level corresponds to the hinterland dynamics they are connected to. It is subject to changes in the nature of its activities and the level of accessibility, including inland corridors. Any change implies either new opportunities to generate additional port traffic, a decline, or a change in the nature and composition of the traffic.

The type of commodity can further discriminate hinterlands as each is part of a specific supply chain with its spatial relationships:

  • Bulk products (minerals, chemicals, raw materials, wood, grain, etc.). In this case, distance is one of the most important factors shaping the hinterlands. Due to the nature of the products and the high transport costs, 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. The hinterland can often 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 that can service a foreign hinterland through a maritime link. 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. Therefore, hinterlands may overlap. The notion of discrete hinterlands with well-defined boundaries is questionable since many hinterlands have become discontinuous, a process facilitated by developing corridors and inland terminals. The extension and strengthening of hinterlands follow a vertical or horizontal integration process depending on whether the port establishes more effective functional linkages with inland intermodal terminals (vertical) or other maritime terminals (horizontal). Nevertheless, the concept of the 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 terminals worldwide is considered to be an advantage. With the growth in maritime traffic and congestion in the proximity of port terminal facilities, several port authorities have become more involved in the development of strategies aiming to better service their hinterland. Such strategies and the stakeholders involved are dependent on the direction of the flows since import and export-based flows usually involve different supply chains. For instance, in North America and Europe, imports are dominated by retail goods bound to major urban markets, while exports have a stronger resource orientation coming from resource-extracting regions.

The foreland and hinterland should be considered a continuum rather than separate and distinct elements. The emergence of door-to-door services and networks, where the port is seen as one link through transport chains, underlines this continuum. In such a context, the port becomes one element of the maritime / land interface, which ensures the continuity of global freight circulation, including expanding connectivity within the hinterland. A form of hinterland connectivity is based on the extended gate concept, where a series of terminals and the related logistics activities are integrated into a single functional and coordinated entity.

3. Traffic Generation

Transportation terminals are focal points of economic activity. Cargo handling and passenger transfers represent an economic function, like manufacturing or agriculture. The inputs and outputs are traffic flows. The extent of the activity can be measured easily, such as the number of passengers handled or trains departing. In many others, measurement is complicated. In the case of an airport, measuring the size by counting the number of aircraft movements can produce distortions because of differences in plane sizes. This problem is even more acute in shipping, where small coastal ships of 500 tons capacity are considered equal to bulk carriers of 250,000 tons. Similarly, there are major discrepancies between different types of cargo, where 1,000 tons of ore cannot be equated with 1,000 tons of electronics. Containerization has further complicated traffic counts, which are measured in volume (TEU; Twenty-foot Equivalent Unit) irrespective if the container is full or empty and irrespective of what is carried. The problems of measuring traffic volumes thus need to be carefully assessed.

Significant variations exist in the volumes of traffic handled by different terminals. Size variations tend to increase because of the trend across the modes for traffic concentration in major load centers. A Pareto distribution of the traffic is apparent in the passenger and freight sectors. For instance, the 25 largest container ports in the world handle about 50% of the traffic, while the 25 largest passenger airports account for 20%. Specific terminals are selected as traffic hubs, where passengers and freight are assembled for onward distribution in intermediate locations. 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 services. Similar systems have been established in the North American intermodal rail networks, where trucks provide local pick-up and delivery of containers, and double-stack trains haul the containers between the major hubs.

The origins and destinations of traffic are a vital concern for terminals since serving the hinterland is their prime function. Competition between terminals may be seen as attempts to retain or capture 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 19th Century, the ports of New York, Baltimore, Boston, and Philadelphia sought to control the trade of the developing Midwest, with New York prevailing because of its superior rail and canal links. Maintaining dominance over a hinterland remains important as modal options such as rail increase competition. This strategy is moving towards a new phase as areas nearby major terminals, particularly ports, tend to be congested. Still, it pans out differently depending on the geographical setting, such as Europe, North America, and East Asia.

4. Agglomeration, Linkages and Growth

The traffic flowing through terminals and the need to transfer freight between the modes gives opportunities for other activities to exploit locational advantages. There have been long-standing advantages for certain types of manufacturing to locate near terminals, resulting in location economies. Raw materials imported through a port provide opportunities for processing industries. Oil refineries, flour mills, sugar refineries, and steel mills are examples of industries that frequently benefit from port locations. In a similar fashion, firms requiring good access to distant markets to sell their products have sought sites near 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 establishing new industrial complexes on sites adjacent to new port and rail terminals. The planning recognized the need 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. This was particularly the case for Chinese development following the Open Door Policy in the 1980s, which strongly focused on port terminals as export platforms for nearby manufacturing and distribution activities. Thus, the link between distribution and terminals has taken shape with the emergence of logistics zones.

While the relationships between terminals and the manufacturing sector are evident, even closer links exist with the service sector, although the relationships may not be quite as visible. Terminal activity creates demands for an extensive range of transport services. These include activities as diverse as aircraft maintenance, locomotive repair, catering, 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 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. For instance, ship chandlers, catering, and hotels are usually situated close to the port or airport. A further cluster is usually found in the central business district with freight forwarders, brokers, and insurance typically located in central urban locations.

Terminals are frequently considered as growth poles. According to the growth poles theory, development is not uniform and takes place at terminal locations around which activities agglomerate. Activities can improve their accessibility to suppliers and customers through the infrastructure terminals provide. 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 labor and skills, from baggage handling and aircraft refueling, to air traffic controllers and pilots. Terminals, therefore, are economic forces in their own right, and because they generate links to other sectors of the economy, they become the focus of economic activity. For instance, a growth strategy for inland terminals revolves around the formation of logistics zones where distribution centers share common facilities, including better access to a transport terminal.

Terminals represent an important category of land use. Frequently, they are the largest single land users in a city and are important in understanding transport terminal land use and its relationships. Terminals 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 also owing 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 the terminals and adjacent industries, terminals can also be areas of social, economic, and environmental degradation. In particular, older port sites and rail terminals are seen as disadvantaged.

Related Topics


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