As a freight forwarder, you are no stranger to the unique set of challenges that arise when connecting coastal ports to inland regions. From infrastructure gaps to difficult rate management to outdated standards, there is a lot to tackle. It is crucial to confront these challenges head-on to reach the full potential of your business
Hinterland transports serve as vital links within the supply chain, ensuring the efficient delivery of goods from port terminals to inland destinations. However, as we pursue efficiency and cost-effectiveness, several obstacles arise. By examining each challenge and implementing strategic solutions, you can turn adversity into opportunity.
In this article, we will dive into the topic of hinterland transports, equipping you with valuable insights on how to overcome the main challenges faced in hinterland transports today. The following topics will be addressed in this article:
- What is hinterland transport?
- The importance of hinterland transport
- The main challenges faced in hinterland transport
- Rate Management
To understand the challenges in hinterland transport, you also need to understand what hinterland transport actually is. The term “hinterland” is regularly used, but has been understood slightly differently.
What is hinterland transport?
First, hinterland is a commercial concept from transport geography that refers to the land area over which a port sells its services. This can also be defined as geo-economic space where a port sources its business.
Hinterland transport then simply refers to the transportation of goods between the port and the inland areas served by the port. The focus of this transport process is on the port as the point of origin and destination, moving cargo from port to a terminal or warehouse in its hinterland regions.
Do not think of the hinterland as a static purely geographical area of land, because hinterland areas may overlap and actually often do. Containerization has greatly facilitated transports, and by that, allowed ports to expand their hinterland areas. As a result, many ports now compete over the same market areas. Intermodal transportation has had a similar effect of expanding containerized hinterland areas, especially when transport corridors are involved.
Geopolitical considerations may naturally restrict the hinterland area of a port terminal. Border and trade regulations are the most common restricting factors on the reach of the hinterland served by a port.
The importance of port hinterland connections
Ports are logistic hubs and integral to our modern global transport chains. The efficient movement of cargo to and from ports is therefore crucial in facilitating trade, and supporting economic development. Hinterland transports ensure a smooth supply chain and distribution network.
A good hinterland connection is an important factor in port competitiveness. This means the choice of port is then not only determined by port charges and cargo handling times, but also the efficiency of the entire transportation process.
Given the growing number of shipments arriving in Europe, hinterland transport chains need to be running optimally.
The main challenges faced in hinterland transport operations
The logistics related to the port hinterland transports require intense collaboration and coordination to work efficiently. It goes without saying, the supply chain comes with many trials and tribulations for all the stakeholders. We’ve previously looked at the 3 biggest challenges in transport management in 2023. Let’s now take a closer look at the main challenges affecting hinterland transport specifically today and how to overcome them.
Capacities of inland transport modes and inland terminals have mostly not kept pace with the growth in sea freight. Increased sea vessel sizes and general growth in container volumes are straining port infrastructure and cargo handling capacity. This causes a ripple effect throughout the supply chain, given that increases in port traffic and volumes generate almost proportional increases in hinterland flows.
Current infrastructure is therefore a limiting factor, both in terms of port area, surrounding logistics terminals, and road and rail connections. For many ports, the weakest link in their transportation chains is hinterland links, due to road congestion and inadequate or non-existent rail connections, causing delays and increases in transport costs.
How to tackle infrastructure challenges?
Considering the infrastructural network defines the hinterland development, it is essential to expand port hinterland connections as well as container terminal capacity.
Infrastructure is one of the harder factors to have an impact on your own as alone freight forwarders. Developing new infrastructure requires considerable financial investments, time to build, and, at times, backing from policymakers. Strive to develop strategic partnerships that help you communicate needs through appropriate channels.
Port hinterland services mostly rely on road transport in Europe. This status quo is not feasible to maintain due to increased road transport costs, congestion, and a growing legal framework addressing environmental concerns. The high volume demand for hinterland transports can only be met by using intermodal connections such as rail-road or waterway-road transport.
Intermodality is not without its own challenges, though. Intermodal transportation is a complex system with many moving parts and conditions are very different from one port to another, which means the development of intermodal transport connections and processes varies significantly.
The lack of standardization, particularly in terms of operating procedures, makes it more difficult for businesses to predict costs and ensure consistent service levels. This also affects the coordination between all modes of transport, and by that the coordination of the entire intermodal transport chain. Delays or disruptions in the transfer of cargo between modes can contribute to bottlenecks and capacity constraints.
How to overcome intermodal challenges?
There are additional challenges that require more commitment from carriers and operators. Better and more infrastructure is, for example, needed, but so is efficient coordination and standardized processes, which freight forwarders can work on together with their shippers and subcontractors.
Seek to improve the internal organization and management of your intermodal hinterland transports, as well as the coordination with your partners. This can be done for example by starting to work with a digital platform that allows automated data sharing and up-to-date shipment tracking, including streamlined communication channels with all your partners.
Ports are under ever-increasing pressure to improve the sustainability of their hinterland transport systems. The demand for sustainable transport has come from a combination of customer demand and regulatory frameworks, as the transport sector is one of the largest polluting industries.
Increasing environmental regulations, such as emissions standards and restrictions on heavy-duty vehicles, can impact the operations of freight forwarders. Compliance with these regulations may require adjustments in fleet management and potentially increase costs.
Ports are what tie global transport systems together, therefore establishing sustainable connections will have a huge impact on the sustainability of the whole system. And to be clear, we cannot have sustainable ports without sustainable hinterland connections.
The topic of intermodal transports are also closely linked with more sustainable transports. On average in Germany, rail freight produces ca 16 grams of greenhouse gases per tonne-km, compared to the 118 grams on average for long-haul truck emissions. By adding a rail or barge leg to your transport chain, there is potential for big CO2-savings. When you are interested to delve deeper into the topic, we have written a dedicated article about the environmental impact of freight transport.
What can we do to achieve sustainable transports?
This is a big question, and not with one single answer. However, we do know that responsibilities will only increase in terms of legal frameworks. Do not wait to create a plan for how your business will move forward. Start transitioning to more environmentally friendly alternatives, like adopting intermodality or working with environmentally conscious carriers, as early as possible.
The earlier you start, the better you will understand how to work with new modes of transport, new partners, new processes, etc. That ensures you stay a step ahead of the competition.
We covered the topic of manual rate management and what it is costing you to not update to a digital system. Achieving transparency in rate management is a common challenge in the logistics industry. It becomes especially pertinent in terms of port hinterland connections.
The lack of rate visibility from carriers and operators, makes it hard to compare rates for different routes when you need to plan a shipment. Without a transparent overview, it becomes almost impossible to quickly find the best buy rate for your needs.
Freight forwarders in return need to provide accurate and detailed pricing information in quotes and offers presented to shippers. Maintaining transparency while accounting for all shipping cost factors, various surcharges and associated fees, can be difficult. Building an accurate quote is now a time-consuming task.
How to reduce rate management challenges?
It may seem that there are few options available to you if you do not want to invest in specific rate management software, but there are other digital solutions available. Adopting digital tools can improve the rate quoting process, streamline data management, and enhance pricing visibility. These systems can also assist in benchmarking rates against market standards and competitors.
Learn more about digital solutions for freight rate management.
When it comes to seaport hinterland transport organization and management, there is no efficient way to go about it today. Sea freight TMS does very well at handling the actual sea freight element, but lacks capability to extend the transport management to hinterland transports with inability to integrate road, rail, and barge carriers.
Management of hinterland transport is therefore very inefficient, requiring complex and manual workflows. It takes up a lot of time to plan, procure and manage transports, having to switch between many Excel sheets and sending hundreds of emails back and forth, but it also leaves room for a higher risk of error.
Inefficiens and errors can quickly become costly. Consider the costs of incorrect quoting, missed opportunities, or simply the time spent on communication and data sharing with partners and different team members. Inefficient workstreams effectively mean higher operational costs for your business.
How to mitigate inefficiencies?
Embrace digitalization and invest in a digital system that automates processes and data flows. Using smarter solutions will free up all that time currently being spent on repetitive and time-consuming tasks, effectively boosting your productivity.
To summarize, addressing the current challenges in hinterland transports requires a multi-faceted approach involving investments in infrastructure development, improved intermodal coordination, adopting sustainable transport solutions, and embracing digitalization. Collaboration among stakeholders, including freight forwarders, port authorities, transport operators, and government agencies, is essential to overcome these challenges and enhance the efficiency of hinterland transport in Europe.
Interested in a digital solution?
If you’d like to get started addressing the challenges outlined, we suggest learning more about our solution rouvia. With rouvia you can integrate your entire network of subcontractors in one single platform. This means you can easily search and compare multimodal rates, as well as book your hinterland transports, without having to send hundreds of emails back and forth or spending your days finding and updating the many disintegrated Excel sheets. Automated processes and data sharing unlocks unprecedented efficiency for you and your team.