The Location of Terminals

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 city’s location in the heart of the most developed part of Britain, as one of the world's most important financial center, as well as Britain’s 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. Also, 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. 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.