Moving the Port Inland: The Terminal Intermodal Logística de Hidalgo

By Jean-Paul Rodrigue. Port authorities and terminal operators increasingly look at the hinterland to support their core business, a strategy labeled as port regionalization. This has often led to the setting of inland intermodal facilities, known as "dry ports" or "inland ports". Such a strategy takes different form based upon market conditions (e.g. balance between imports and exports) and the availability of land and infrastructure connecting a port with inland intermodal centers. Terminal Intermodal Logística de Hidalgo (TILH), which opened in 2012, is an inland port facility owned and operated by HPH. It is located in the southern part of the state of Hidalgo, about 50 km north of Mexico City, one of the world's largest metropolitan areas with a population of more than 21 million people. HPH is the dominant container terminal operator in Mexico, handling about 50% of the country's container port throughput in four major terminal facilities (Ensenada, Veracruz, Manzanillo and Lázaro Cárdenas). Mexico City accounts for 40% of all the container cargo handled by HPH, generating about 700,000 TEU per year. In recent years, significant developments have taken place in the northern part of the metropolitan area with several large retailers and manufacturers establishing distribution facilities in the area (e.g. Liverpool, Costco, Home Depot, Wal-Mart, Philips and Diago).

Because of its geography, the Mexico City metropolitan area has a scarcity of large surfaces of flat land, implying that the TILH site required significant modifications to make it suitable for intermodal operations (mostly infill and grade adjustments). The site includes a planned greenfield logistics zone of 123 hectares (Zona de Actividades Logísticas Hidalgo; 80% owned by the Mexican trucking company Unne) co-located with an intermodal terminal facility covering 28 hectares (a total of 53 hectares when the second phase is completed), with an additional 10 hectares allocated to customs (see Figure 1). Securing land was a complex endeavor that took 3 years since the ownership of the rural land was collective and required a process where it was transferred to the state and then sold to private interests (HPH and Unne). Recognizing the potential of such a facility and its logistics zone for employment and regional development, the public sector contributed by building an access road, a bridge and providing utilities (electricity, water and sewage).

Figure 1: The site of Terminal Intermodal Logística de Hidalgo (courtesy of TILH)

TILH is handling import and export cargo from Veracruz and Lázaro Cárdenas, which is conveyed by truck and rail. The initial intermodal capacity of the facility is about 200,000 TEUs, but can be expanded through phases to a capacity above 1 million TEU. In its current setting, the terminal provides 4 rail sidings of 600 meters directly connected to the rail network of two of Mexico's largest railways; Kansas City Southern de México (KCSM) and Ferrosur, placing it in an unique competitive position (Ferromex has also a line nearby). One of the key advantages of the facility is its direct connectivity to both the Pacific and Atlantic maritime ranges where HPH operates port terminals (see Figure 2). Veracruz (through KCSM and Ferrosur) on the Atlantic side is about 500 km away while Lázaro Cárdenas (through KCSM) and Manzanillo (through Ferromex) on the Pacific side are about 600 km away. This distance is at the threshold of commercial competitiveness for rail services. However, since TILH is owned by HPH, it competes with some of the intermodal terminals of KCSM and Ferrosur, implying a level of reluctance from the rail carriers to service TILH.


 Figure 2: Mexican Container Port Traffic and Rail Lines

The main value propositions of the facility are:

  • Modal shift (to rail). Like many developing economies, the share of trucking for inland distribution in Mexico is very high, which is linked with congestion, energy consumption, air pollution and delays. The expectation is that the inland port will favor a modal shift of a share of the cargo bound to Mexico City to rail, thus improving cargo capacity (rail economies of scale) and the use of a more energy efficient mode. 
  • Custom clearance and dwell time. Importers have the option, through bounded deliveries, of having the custom clearance deferred to the inland port instead of at the gateway port. This can lower inspection costs as well as delays. Inland terminals have abundant storage space and can also offer convenient dwell time. This implies that they can partially act as a warehouse for their customers since a container at the inland port can be considered as part of the inventory of a nearby distribution center. 
  • Load center. As a facility integrated to the maritime ports it is linked to, TILH acts as a deconsolidation (for imports) and consolidation (for exports) center. This can be effective to attract and retain customers as well as improving the quality of the transport service since the HPH port terminals and TILH are one functional transport chain. In addition to the inland accessibility from Mexican ports on the Atlantic and Pacific sides, TILH has the potential to become a load center for the NAFTA trade. Its access to the Lázaro Cárdenas - Laredo - Kansas City corridor offers a strategic commercial opportunity. 
  • Metropolitan accessibility. A logistics cluster (intermodal terminal and nearby distribution centers) offers a platform that is better placed to service a metropolitan area (Mexico City) than direct truck services from port terminals, particularly if well connected to an urban highway system. There are also more opportunities to deconsolidate the cargo in loads that are more suitable to urban demand (high frequency) and driving conditions (congestion). This could lead to more efficient forms of urban logistics. 
  • Cargo security. Cargo moving long distance by rail is much less prone to theft, which is a significant concern in Mexico, particularly in its main commercial hinterland. FreightWatch International ranks the cargo theft risk in Mexico as severe with hijacking accounting for more than 80% of all cargo theft incidents. By moving the cargo directly from a secure on-dock rail facility to a secure inland terminal by rail the risk of cargo theft is dramatically reduced. This is linked with lower insurance premiums. 

Since TILH represents a novel intermodal model for Mexico (close integration between the port and the inland terminal), it is facing the challenge of securing regular rail services. Customs operations began in July 2012 and the first train services began shortly after in September 2012. The development of TILH underlines the importance of being proactive in developing hinterland intermodal facilities and the weight major customers can have in inciting the usage of novel approaches in hinterland logistics.

Further Reading

Notteboom, T. and J-P Rodrigue (2005) “Port Regionalization: Towards a New Phase in Port Development”, Maritime Policy and Management, Vol. 32, No. 3, pp. 297-313.

Rodrigue, J-P and T. Notteboom (2012) "Dry Ports in European and North American Intermodal Rail Systems: Two of a Kind?", Research in Transportation Business & Management, Vol. 5, pp. 4-15.

The author would like to thank Miguel Ángel Yáñez Monroy and Diana Tun Humbert for their helpful input.


Jean-Paul Rodrigue. With a Ph.D. in Transport Geography from the Université de Montréal, he has been a professor at Hofstra University (New York) since 1999. Rodrigue's research interests cover the fields of transportation and economics as they relate to logistics and global freight distribution. He is a member of the initiative and of the World Economic Forum’s Global Agenda Council on Advanced Manufacturing (2011-13). He was commissioned by UN-Habitat to write a chapter about urban freight distribution for the 2013 Global Report on Human Settlements.