Planes, Trains And Semitrucks: A Look Inside Four Inland Ports | KUER 90.1

Planes, Trains And Semitrucks: A Look Inside Four Inland Ports

Aug 1, 2018


For a project that has yet to break ground, Utah's planned inland port has already accrued enough superlatives to fill a high school yearbook. The port will be the "largest economic engine" ever assembled, state officials say, and the "most significant economic opportunity" in a generation. Moreover, officials promise, the port will deliver well-paying jobs and bring in more tax revenue.

"Having an inland port, like they've done in Kentucky, is something we can really take advantage of," Gov. Gary Herbert said at a press conference last March, announcing his intention to sign the bill creating the Utah Inland Port Authority.

It's a sales pitch that other cities and states are also adopting. With increasing ecommerce and international trade, cluttered seaports, and more states competing for big economic projects — see: Amazon's hunt for a second headquarters — so-called "dry ports" are popping up around the U.S.

"The Northwest Quadrant has unique potential due to the scale of undeveloped land in a location situated adjacent to important transcontinental cargo transport infrastructure," wrote analysts at Cambridge Systematics in a 2017 feasibility study of the port.

Essentially, the area of Salt Lake where the port is proposed doesn't have much built on it, and it's right next to railways, highways, and an expanding international airport. That makes it ripe for the state to jump on the inland port bandwagon.

Inland Port: Defined

Definitions vary, but an 'inland port' usually means a rail-oriented logistics hub through which commodities and goods — anything that needs shipped — can easily move. Many inland ports are connected by some waterway, but others are true "dry" ports — both terms are used interchangeably. Utah's inland port will cover 16,000 acres, or 25 square miles, of northwest Salt Lake City, comprising warehouses, manufacturing facilities and distribution centers.

The area where the Utah inland port will operate in the Northwest quadrant of Salt Lake City.
Credit Utah Inland Port Authority

Logistics, Logistics

In Utah, an 11-member board with appointees by the state, city and some public agencies will oversee the port's development and control taxing authority.

During a special session earlier this summer, lawmakers struck a deal with Salt Lake City Council members to shrink the port's boundaries by 25 percent, clarified land use authority and allowed some of the taxes drawn from the port to go toward affordable housing.

After a rocky start, the Utah Inland Port Authority held its first official meeting this week, electing a chairman, Derek Miller of the Salt Lake Chamber of Commerce, and began laying the groundwork for a regional logistics powerhouse.

But environmental concerns and threats of legal challenges could dog the project, which officials predict will take years to complete.

How Other Ports Are Run

For a look at how other inland ports function, KUER spoke with the directors of three other trading hubs whose ports could offer clues as to what Salt Lake's port could look like.

Port Of Walla Walla

Credit Renee Bright / KUER

Founded in 1952, the Port of Walla Walla is a municipal corporation that also acts as the lead economic development agency for Walla Walla County in the southeastern corner of Washington state, three hours south of Spokane.

"One of the main roles that we play is providing leadership to enhance economic vitality and quality of life," said Pat Reay, executive director of Walla Walla's port.

As an agricultural hotspot, the port's top export commodity is wheat and grain grown near the confluence of the Snake and Columbia rivers. Major trading partners include China, Japan, Taiwan and other Asian countries.

The port essentially functions like a city within its boundaries. It's governed by three elected commissioners and an executive director, and provides sewer service, water and road maintenance. Utah's port will mirror this model at least partially on the administrative side when it comes to land use and infrastructure decisions.

"So we own a lot of properties, several thousands of acres, that we - the port - own and manage." Reay said. "But we also work with private developments that we might be the water or or wastewater provider for the projects."

The port collects close to $2 million in property taxes each year, which supports the local economy. Reay said it's no surprise other states are looking at developing inland ports.

"Like it or not, we're in a global market and ... businesses are looking for the best site with the best incentives with the lowest operational costs," Reay said. "And if the infrastructure is in place and there some synergies with other businesses, that's how site selection occurs."

Port of Tucson

Credit Renee Bright / KUER

The Port of Tucson covers 770 acres in southern Arizona close to the U.S.-Mexico border. Unlike other hubs, including the one under development here in Utah, it's one of the only privately owned and operated ports within the Union Pacific railroad's network.

Mike Levin, executive vice president of the port, oversees its operation with his brother and father, who purchased the property in the mid-90s. The port started operations in 2001 and began rail service a few years after that.

"The concept of an inland port was something that evolved over time because we saw where Tucson was ideal for that type of concept... where there was a lot of goods that were coming through here and with our close proximity to Mexico," said Levin.

Top goods include fertilizer, propane and recycled fuels, in addition to construction material such as lumber and sheetrock. While Mexico is their main trading partner, Levin said they have access to Asian-Pacific markets through their relationship with the Port of Long Beach.

Tucson's port, like Walla Walla's, is a designated foreign-trade zone, or free-trade zone, which allows companies to ship things into the U.S. without having to go through U.S. Customs and Border Protection and pay tariffs. Essentially, a company's goods are treated as though they are not yet within U.S. territory.

"So if they're in a foreign-trade zone, Customs does not require for the tariffs, or the tariffs aren't required to be paid until they leave the foreign trade zone to go to a non-foreign trade zone location," Levin said.

Levin said the benefit of doing this is additional cash flow for companies as they store, assemble or process the good for its final destination.
 

"If a company doesn't have to put the money out when they first get components in from overseas — if they don't have to pay those tariffs off the bat — they don't have to pay the tariffs until they're closer to when they're actually shipping that final product to market."

Utah's port will also be a foreign-trade zone.

Rickenbacker Inland Port

Credit Renee Bright / KUER

Located in Columbus, Ohio, the Rickenbacker Inland Port is an international logistics hub nestled under the Columbus Regional Airport Authority. The port includes the airport itself, which has dedicated cargo ramps, and industrial development offsite.

David Whitaker, the authority's chief commercial officer, said the port is actually looking to rebrand.

"Rickenbacker is a brand we've created to describe the collection of logistics assets in the region and characterize them as a whole," he explained. "We feel like we have a chance to create a more powerful handle for the world-class logistics assets that are in this region."

The North American International Freight Center, as it will soon be known, has two major intermodal facilities and an international airport that sees 100,000 metric tons of cargo go through each year.

"We have the largest reach of any large city in the United States, so we reach nearly half of the U.S. population and nearly a third of the Canadian population in a one-day truck drive from here," said Whitaker.

Their top commodity? Fashion apparel, said Whitaker. With Victoria's Secret and Abercrombie & Fitch headquartered nearby, these companies take advantage of the foreign-trade zone to get clothing to and from Asian-Pacific countries.