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Manufacturers have discovered something about port cities that others are only beginning to realize. Recognizing the strategic edge they offer, manufacturers are anchoring their future closer to ports. According to UNCTAD, over 80% of global trade by volume is carried by sea. This makes proximity to ports more critical than ever as it offers manufacturers tangible advantages. The impact of operating near ports is reflected in faster turnaround times and reduced costs.
Why are manufacturers shifting to port cities and how are they benefiting from it?
1. Reduced Inland Transportation Costs
Transportation from inland factories to ports can account for a sizable portion of a manufacturer’s logistics budget. By operating in port cities, businesses can reduce the need for long-haul trucking or rail transport to coastal shipping terminals. This not only cuts fuel and handling costs but also reduces the risk of damages or delays that often occur during multi-leg transportation.
2. Improved access to global markets
Port cities are natural gateways to international trade as manufacturers gain a direct link to both export and import flows. Being located near a port allows for faster and more cost-efficient movement of goods across borders. It reduces time for international shipments and simplifies customs processes. This advantage can directly influence profitability and scalability.
3. Efficient Multimodal Connectivity
Modern port cities are no longer just maritime transit points. Many are integrated with well-developed multimodal transport infrastructure. This layered connectivity enables the coordinated movement of cargo across multiple modes of transport. In periods of disruption, having the option to switch transport modes quickly helps keep the supply chain running smoothly. This flexibility is especially important in today’s unpredictable trade environment, as being able to respond quickly can give manufacturers a strong competitive edge.
4. Lower Inventory and Storage Costs
Inventory management can be optimised and associated costs can be reduced in port cities. Proximity to ports enables manufacturers to align production and distribution schedules more closely with the arrival of raw materials. It also helps them align with the dispatch of finished goods. This reduces the need for large on-site storage facilities and minimises the risks of stockpiling. Port cities often host bonded warehouses, free trade zones and third-party logistics providers in close proximity. This creates a flexible ecosystem where goods can be temporarily stored without incurring immediate tax. Such infrastructure enables manufacturers to respond quickly to demand fluctuations and minimise delays in the supply chain without incurring significant increases in storage costs.
5. Supportive Policy and Infrastructure Ecosystems
Many port cities are backed by government policies that promote industrial development and export facilitation. Infrastructure investments in roads and terminals around ports further support the efficiency of trade-related activities. Manufacturers in port cities benefit from better transport links, easier regulatory procedures and easier access to support services.
The growing shift toward port cities reflects a broader transformation in how manufacturers approach logistics. By positioning operations closer to major ports, manufacturers can respond faster to market demands, lower operational costs and build greater resilience into their supply chains. Thus, manufacturers operating in port cities are securing a competitive advantage in the logistics world.
