ports: competition and competitiveness
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Transcript of ports: competition and competitiveness
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ports: competition and competitiveness ports: competition and competitiveness
professor enrico mussoprofessor enrico mussouniversità di genova università di genova dipartimento di economia e metodi quantitatividipartimento di economia e metodi quantitativiwww.enricomusso.itwww.enricomusso.itenrico.musso@[email protected]
University of AntwerpUniversity of AntwerpITMMA - Institute for Transport and Maritime Management AntwerpITMMA - Institute for Transport and Maritime Management Antwerp
Course in Advanced Port EconomicsCourse in Advanced Port EconomicsAcademic year 2003-2004Academic year 2003-2004
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SummarySummary • Competition and competitiveness: what exactly do we mean?Competition and competitiveness: what exactly do we mean?
• The new port economics: The new port economics: – Changes in the economyChanges in the economy– Changes in the transport industryChanges in the transport industry– Consequences on demand of port servicesConsequences on demand of port services– Consequences on production and supplyConsequences on production and supply– The market structure of port industry: new threats and new opportunitiesThe market structure of port industry: new threats and new opportunities
• Issues in competitivenessIssues in competitiveness– Port selection criteria Port selection criteria – Is there an optimal size for ports and port terminals?Is there an optimal size for ports and port terminals?– Vertical integration: the dedicated terminalsVertical integration: the dedicated terminals– Horizontal integration: port networkingHorizontal integration: port networking
• Micro and macro economic impactsMicro and macro economic impacts
• The role of ports and the agenda for policy makers The role of ports and the agenda for policy makers
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SummarySummary • Competition and competitiveness: what exactly do we mean?Competition and competitiveness: what exactly do we mean?
• The new port economics: The new port economics: – Changes in the economyChanges in the economy– Changes in the transport industryChanges in the transport industry– Consequences on demand of port servicesConsequences on demand of port services– Consequences on production and supplyConsequences on production and supply– The market structure of port industry: new threats and new opportunitiesThe market structure of port industry: new threats and new opportunities
• Issues in competitivenessIssues in competitiveness– Port selection criteria Port selection criteria – Is there an optimal size for ports and port terminals?Is there an optimal size for ports and port terminals?– Vertical integration: the dedicated terminalsVertical integration: the dedicated terminals– Horizontal integration: port networkingHorizontal integration: port networking
• Micro and macro economic impactsMicro and macro economic impacts
• The role of ports and the agenda for policy makers The role of ports and the agenda for policy makers
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Port competitiveness: Port competitiveness: what what exactlyexactly do we mean? do we mean?
• Competition Competition requiresrequires competitiveness competitiveness
• ““Competitive”: Competitive”: whowho vs. vs. whomwhom? ? – Another terminal operator or company in the same port?Another terminal operator or company in the same port?
– Another port?Another port?• In the same “range“ (= same coastline, same hinterland)?In the same “range“ (= same coastline, same hinterland)?
• In another “port range”?In another “port range”?
• Relevant scale / player: Relevant scale / player: – port terminal / stevedoring companyport terminal / stevedoring company
– port cluster / port authorityport cluster / port authority
– port range port range
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Port competitiveness: Port competitiveness: players, competition and trafficplayers, competition and traffic
Companies:TOs
Stevedoring Co.
Intra - ports Inter - ports
One commoditySpecialization
Integrat. in supply ch FIR
MS
Port AuthoritiesPort Bodies
Inter - portsInter - clusters
Many commoditiesLand useServices LO
CA
L
?(Governments?)(“Port systems”?)
Inter - clustersInter - range
All commoditiesOverall performance
Land transp networks
NA
T
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GOVERNANCEMANAGEMENT
Port competitiveness:Port competitiveness:a matter of points of view…a matter of points of view…
Shippers
Forwarders MTOs
Land carriers Portoperators
Shipowners
Portauthority
(local)governmt
Citizens
Lobbies
Businesscomm.
EFFICIENT COMP
EFFECTIVE COMP
SUSTAINABLE COMP
Players / stakeholders have different goalsPlayers / stakeholders have different goals
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Shippers Fotwarders
MTOsCarriers
ShipwonersShipping
companies
Shipyards(building)
Shipyards(demolition)
PORTS
InputsInputs:- space- space- labour- labour- capital- capital- entrepreneurship- entrepreneurship
- networks- networks- “environment”- “environment”
OutputOutput:- throughputthroughput- impact- impact
Which are the inputs and outputs Which are the inputs and outputs
of port industry?of port industry?
Port competitiveness and production functionPort competitiveness and production function
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Which is the degree of integration? Which is the degree of integration? •Vertical integration (e.g.: dedicated terminals)Vertical integration (e.g.: dedicated terminals)•Horizontal integration (port networks; stevedoring groups)Horizontal integration (port networks; stevedoring groups)
Competitiveness and competition: Competitiveness and competition: The market structure of port industryThe market structure of port industry
Which is the degree of competition / contestability of the Which is the degree of competition / contestability of the market?market?Is there an “optimal size” for port terminals and ports?Is there an “optimal size” for port terminals and ports?Which is the bargaining power of different players?Which is the bargaining power of different players?
Competion implies competitiveness: Competion implies competitiveness: What about industrial organisation?What about industrial organisation?
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SummarySummary Competition and competitiveness: what exactly do we mean?Competition and competitiveness: what exactly do we mean?• The new port economics: The new port economics:
– Changes in the economyChanges in the economy– Changes in the transport industryChanges in the transport industry– Consequences on demand of port servicesConsequences on demand of port services– Consequences on production and supplyConsequences on production and supply– The market structure of port industry: new threats and new opportunitiesThe market structure of port industry: new threats and new opportunities
• Issues in competitivenessIssues in competitiveness– Port selection criteria Port selection criteria – Is there an optimal size for ports and port terminals?Is there an optimal size for ports and port terminals?– Vertical integration: the dedicated terminalsVertical integration: the dedicated terminals– Horizontal integration: port networkingHorizontal integration: port networking
• Micro and macro economic impactsMicro and macro economic impacts• The role of ports and the agenda for policy makers The role of ports and the agenda for policy makers
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The growth in world seaborne trade The growth in world seaborne trade (millions of tons) (millions of tons)
0
1000
2000
3000
4000
5000
6000
1929 1950 1957 1967 1973 1979 1984 1987 1990 1994 1998 2000
2000
: 110
4
2000
: 110
4
1950
: 100
1950
: 100
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Shipping and the world economy Shipping and the world economy
• The growth of the world economy and the growth in world seaborne trade interact through labour specialisation and widening of markets
shipping Growth of world economy
Enlarging markets
Specialisation
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Some dramatic changes...Some dramatic changes...
• In the economyIn the economy
– The boost of seaborne trade (from 525 Mt in 1950 to 5800 Mt in 2000)The boost of seaborne trade (from 525 Mt in 1950 to 5800 Mt in 2000)
– Spatial relocation of production Spatial relocation of production
– The growing importance of logisticsThe growing importance of logistics
• In maritime transportIn maritime transport
– Ships’ sizeShips’ size
– SpecialisationSpecialisation
– Unitisation (containerisation)Unitisation (containerisation)
– Transhipment Transhipment
• In the industrial organization of transport industry: In the industrial organization of transport industry:
– Cooperation: SAs, M&As, vertical Cooperation: SAs, M&As, vertical integrationintegration, ,
– controlcontrol of of intermodalintermodal and and logistic cycleslogistic cycles , logistics outsourcing , logistics outsourcing
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Some dramatic changes...Some dramatic changes...
• Port operations become: Port operations become:
– more more capital intensivecapital intensive
– labour savinglabour saving
– space consumingspace consuming
• In port market: In port market:
– more more competitioncompetition between ports, between ports, lower tariffslower tariffs and and lower ports timeslower ports times (pressures from (pressures from
liners)liners)
– risk of risk of overcapacityovercapacity, ,
– decreases in producer’s (terminal operator) surpluses and increases in demand decreases in producer’s (terminal operator) surpluses and increases in demand
(liners, MTOs) surpluses ((liners, MTOs) surpluses (caption of port economic rentcaption of port economic rent))
• In port economies: In port economies:
– relocationrelocation of formerly port-oriented industries of formerly port-oriented industries
– weaker spatial linksweaker spatial links with the port (intermodality, transhipment...) with the port (intermodality, transhipment...)
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……and some of their consequencesand some of their consequences
• Reduction of transport costs, increase in demandReduction of transport costs, increase in demand• ““port costs” (costs of the port node for the transport industry, port costs” (costs of the port node for the transport industry,
i.e. port + ship generalised costs) shift from ships to terminals i.e. port + ship generalised costs) shift from ships to terminals
• port service inputs shift from labour to capital and to landport service inputs shift from labour to capital and to land• space consumption and negative externalities are bigger, space consumption and negative externalities are bigger,
because of containerisation, overcapacity caused by port because of containerisation, overcapacity caused by port competition, dramatic increases in throughputscompetition, dramatic increases in throughputs
• the positive impact of ports tend to spread from local economy the positive impact of ports tend to spread from local economy to national/global economy, including the hinterland and the to national/global economy, including the hinterland and the shippersshippers
Changes can cause gaps in spatialChanges can cause gaps in spatialdistribution of costs and benefitsdistribution of costs and benefits
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The present scenarioThe present scenario•““Volatility” of lines Volatility” of lines
•Hinterland OverlappingHinterland Overlapping
•Higher market power for shipping lines (M&A, Strategic alliances)Higher market power for shipping lines (M&A, Strategic alliances)
•Increasing pressures aiming at :Increasing pressures aiming at :• reducing costsreducing costs• reducing times in portsreducing times in ports• increasing flexibility in servicesincreasing flexibility in services• enhancing enhancing ad hocad hoc contracts contracts
Ports/terminals as the weakest contractual partPorts/terminals as the weakest contractual part
•demand-drivendemand-driven planning and development planning and development•OvercapacityOvercapacity•search for short term competitive advantagessearch for short term competitive advantages
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liners Terminal operators (port logistics prov.) PA
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SummarySummary Competition and competitiveness: what exactly do we mean?Competition and competitiveness: what exactly do we mean?
The new port economics: The new port economics: – Changes in the economyChanges in the economy– Changes in the transport industryChanges in the transport industry– Consequences on demand of port servicesConsequences on demand of port services– Consequences on production and supplyConsequences on production and supply– The market structure of port industry: new threats and new opportunitiesThe market structure of port industry: new threats and new opportunities
• Issues in competitivenessIssues in competitiveness– Port selection criteria Port selection criteria – Is there an optimal size for ports and port terminals?Is there an optimal size for ports and port terminals?– Vertical integration: the dedicated terminalsVertical integration: the dedicated terminals– Horizontal integration: port networkingHorizontal integration: port networking
• Micro and macro economic impactsMicro and macro economic impacts
• The role of ports and the agenda for policy makers The role of ports and the agenda for policy makers
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Who are the economic players involved?Who are the economic players involved?
What is the competitive advantage? What is the competitive advantage?
Which elements influence the competitive Which elements influence the competitive advantage? advantage?
Does the port/terminal operator control them?Does the port/terminal operator control them?
Port selectionPort selection
Port competitionPort competition
Which are the criteria for selecting a port? Which are the criteria for selecting a port?
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Relevant elements in the contract Relevant elements in the contract between shipping liners and stevedoresbetween shipping liners and stevedores
• handling charges handling charges
• rent (price deposit of goods on the yard area / in wharehouses)rent (price deposit of goods on the yard area / in wharehouses)
• extra operations (e.g. repositioning, empty containers, customs, etc.)extra operations (e.g. repositioning, empty containers, customs, etc.)
• Priority berthing / time windowsPriority berthing / time windows
• Guaranteed Performance (minimum standard of performance: e.g. Guaranteed Performance (minimum standard of performance: e.g. n° cranes, total time)n° cranes, total time)
• Hours of working (and / or extra-time work charges)Hours of working (and / or extra-time work charges)
• Volume Discounts (if throughput exceeds the stated minimum)Volume Discounts (if throughput exceeds the stated minimum)
• Inland servicesInland services
• Duration of the contractDuration of the contract
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Elements affecting port performance / productivityElements affecting port performance / productivity
• berth lenghtberth lenght• yard congestionyard congestion• number and performance of cranesnumber and performance of cranes• Labor organizationLabor organization• Istitutional context (i.e. port models)Istitutional context (i.e. port models)• Ships’ arrival rateShips’ arrival rate• Ship size Ship size • ratio of TEUs handled to ship capacityratio of TEUs handled to ship capacity
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14
19,3
24,9
30,4
0
5
10
15
20
25
30
35
0% 25% 50% 75% 100%
teus per hour
% of ship capacity handled% of ship capacity handledSource: Drewry, 1998Source: Drewry, 1998
% of capacity handled justifies up to 100% differences in terms % of capacity handled justifies up to 100% differences in terms of moves/hour between terminals, regardless of ship sizeof moves/hour between terminals, regardless of ship size
Ratio of TEUs handled to ship capacityRatio of TEUs handled to ship capacity::
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Port selection: players and criteria Port selection: players and criteria
• PLAYERS: PLAYERS: • shippers shippers • carrierscarriers
• CRITERIA CRITERIA • “ “Product, Price and Promotion decide for PlaceProduct, Price and Promotion decide for Place” (Kottler)” (Kottler)• Current trend: a shift from “price” (port duties/taxes, handling tariffs, Current trend: a shift from “price” (port duties/taxes, handling tariffs, etc.) to “product” (etc.) to “product” (service timeservice time, , reliabilityreliability, , service to shipsservice to ships, , service to service to goodsgoods))
Handling pricesHandling pricesPriority / Time windowsPriority / Time windows
CongestionCongestionEquipmentEquipment
Ratio of cargo handledRatio of cargo handled<Capacity><Capacity>
Nautical services Nautical services (pilotage, mooring, towing)(pilotage, mooring, towing)
Connectivity and accessibilityConnectivity and accessibilityPort planningPort planning
Services to cargoServices to cargo<Capacity><Capacity>PromotionPromotion
HinterlandHinterlandLabour organisationLabour organisation
Inland transprt networksInland transprt networksPort finance and modelsPort finance and models
terminalterminal portport overalloverall
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Issues in competitiveness:Issues in competitiveness:the optimal size of the terminalthe optimal size of the terminal
High time costs for the ship
Need to reduce port times
High bargaining power of the ship
vs the port terminal
Increase in terminalSize/capacity
Time windowsDedicated terminals
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Issues in competitiveness:Issues in competitiveness:the optimal size of the terminalthe optimal size of the terminal
B A
2 SPUs
1 SPU
N’’N’
N
M
M’
M’’
1 SPU
2 SPUs
Total Port Time
Number of Ships
TotalCosts
O
S
Fig. 1a
Fig. 1b
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Issues in competitiveness:Issues in competitiveness:the “optimal size” of the terminalthe “optimal size” of the terminal
H
K
3 SPUs
2 SPUs1 SPU
TotalCosts
Number of Ships M N
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Issues in competitiveness:Issues in competitiveness:vertical integration and dedicated terminalsvertical integration and dedicated terminals
Time reduction
No queues
Vertical integration
ConcessionDedicated terminals
CooperationTime windows
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T okyo 21 h aYokoham a 15 h aKobe 25 h aT aiw an 13 h a
NYK 74 h a
Tokyo 22 h aYokoham a 10 h aKobe 20 h aO saka 8 h aTaiwan 30 h a
M O L 90 ha
T okyo 21 h aYokoham a 8 h aKobe 12 h aO saka 20 h aT aiw an 14 h a
K L ine 74 h a
Yokoham a 10 h aKobe 9 h aT aiw an 60 h a
APL 79 h a
T okyo 22 h aT aiwan 26 h aHong Ko ng 17 h aY okoham a 22 h aK obe 25 h aY okoham a 18 h aK obe 25 h aT aiwan 13 h a
M aersk-SeaL an d 166 h a
T okyo 11 h aO saka 9 h aT aiwan 20 h a
Everg reen 40 h a
T okyo 12 h aKaohsiu ng 19 h a
Han jin 31 h a
O O CL - T aiw an 45 h a
O O CL 45 h a
Asiaha
S eattle 16 h aLos Ange les 54 h aO aklan d 16 h a
NYK h a
S eattle 15 h aLos Ange les 36 h aO aklan d 14 h a
M O L ha
T acom a 14 h aLong Bea ch 40 h aO aklan d 12 h a
K L in e ha
S eattle 42 h aLos Ange les 52 h aO aklan d 33 h a
APL h a
T acom a 40 h aLong Bea ch 44 h aO aklan d 27 h aNY/NJ 103 h a
SeaL and h a
Tacom a 16 h aLong B ea ch 43 h aO aklan d 19 h aNY/NJ 26 h a
M aersk h a
Tacom a 14 h aLos A nge les 48 h aLong Beac hO aklan dNY/NJ
Everg reen h a
Seattle 43 h aLong B ea ch 61 h a
Hyun d ai h a
Seattle 20 h aLong B ea ch 22 h a
Hanjin ha
North Am ericaha
Rotterdam 56 haA lgecira s 20 h a
SeaL and 76 h a
Algecira s 28 h aRotterdam 75 h aBrem en 30 h a
M aersk 133 h a
M aersk-SeaL an d 209 h a
G enoa 17 h a
M essin a 17 h a
Antwerp
CP S h ip s
Antwerp
M S C
T arentoS ine s
E vergree n
Rotterdam
P &O Ned dlo yd
Europeha
M ain d e dicated te rm in a ls in 2 000
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Effects of dedicated terminalsEffects of dedicated terminals
on on transit timetransit time:: better scheduling of the service (reduced uncertainty on ship arrivals)better scheduling of the service (reduced uncertainty on ship arrivals)
no or little queueing timeno or little queueing time
onon quality / reliabityquality / reliabity of serviceof serviceService less variable and more reliable (“learning capacity” effect for the Service less variable and more reliable (“learning capacity” effect for the terminal operator who manages the “standard” fleet of the specific liner)terminal operator who manages the “standard” fleet of the specific liner)
standardisation in loading operations and yards’ managementstandardisation in loading operations and yards’ management
Pros:• Stronger link with main clients• Securing investments by carriers
Cons: • Risk of loosing clients (for other users: increasing queuing times, lower service rates, more congested yards)• Barriers to entry
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a competitive tool to attract and keep port users?a competitive tool to attract and keep port users?
Discrimination between users (horizontal effect)Discrimination between users (horizontal effect)
a way to attract private investments?a way to attract private investments?
Rationalisation of supply chain (vertical effect)Rationalisation of supply chain (vertical effect)
an (obliged) answer to the ship-owners ’ bargaining power?an (obliged) answer to the ship-owners ’ bargaining power?
Trade OffTrade Off
Dedicated terminals - supply sideDedicated terminals - supply side
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Issues in competitiveness:Issues in competitiveness:horizontal integration and port networkinghorizontal integration and port networking
Increasing sizeIncreasing sizeOvercapacityOvercapacity
Vertical integrationVertical integrationDedicated terminalsDedicated terminals
Weakness of Weakness of ports/terminalsports/terminals
Horizontal integration as possible reactionHorizontal integration as possible reaction
•economies of scale / network •Market purposes (geographic penetration)•shareholders’ interests•response to concentration in maritime industry
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Stevedores consolidation and networkingStevedores consolidation and networking
2001 world container throughput:2001 world container throughput:260 millions TEUs260 millions TEUs
• Hutchison Port Holding: 9,5%Hutchison Port Holding: 9,5%• Port Authority of Singapore: 7,4%Port Authority of Singapore: 7,4%• Maersk (dedicated): 4,9%Maersk (dedicated): 4,9%• Eurogate: 3,2%Eurogate: 3,2%
4 players, 25% of the market!4 players, 25% of the market!(top 20 liners, 2000: 55%)(top 20 liners, 2000: 55%)
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Stevedores consolidation and networkingStevedores consolidation and networking
• ECT (R’dam)
• Modern Terminal
• CSX World Terminals
• MAERSK-Sea Land
• HHLA
• EUROGATE
• HESSENATIE Antwerp, Zeebr.
• HPH
• PSA
• P&O Ports
• ICTSI
• SSA
BIG 5drewry, 1998
•CONTSHIP•NOORD NATIE
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Livorno: Eurogate (2001-)
Trieste (molo VII): ECT (1997-2001)Koper (2001-)
Venezia (Vecon): PSA (1998-)
Taranto: Evergreen (2001-)
Gioia Tauro (MCT): Contship Eurogate (1996-)Maersk 10%Cagliari (MITH):
P&O (2001-)
Civitavecchia: PSA/Evergreen (1998-)
La Spezia: Contship/Eurogate (1996-)
Genova (VTE): PSA (1997-)
Ravenna (tcr): Eurogate (2001-)
Big players in the Italian marketBig players in the Italian market
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• Logistics outsourcing and supply chain integrationLogistics outsourcing and supply chain integration• Economies of scale and of networks Economies of scale and of networks • Oligopolistic structure of the marketOligopolistic structure of the market
A push toward both competition and cooperationA push toward both competition and cooperation
Integrations
•Between:•Terminal operators and maritime carriers
Conceded and dedicated terminal•Terminal operators and networks•Terminal operators and inland terminals
•Between terminal operators
•Between port authorities
Vertical
Horizontal
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Hyerachies and networks: Hyerachies and networks: from mainport to brainport to chainportfrom mainport to brainport to chainport
Territorial paradigm
“Isolated“ portsprotected markets Mainport
Competitiveparadigm
Concentration and competition
Ec. of scale Decentralisation
Spatial hyerarchies
Brainport
Cooperativeparadigm
Port networksport/inland terminal netw
Specialization Network cooperation
Chainport
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SummarySummary Competition and competitiveness: what exactly do we mean?Competition and competitiveness: what exactly do we mean?
The new port economics: The new port economics: – Changes in the economyChanges in the economy– Changes in the transport industryChanges in the transport industry– Consequences on demand of port servicesConsequences on demand of port services– Consequences on production and supplyConsequences on production and supply– The market structure of port industry: new threats and new opportunitiesThe market structure of port industry: new threats and new opportunities
Issues in competitivenessIssues in competitiveness Port selection criteria Port selection criteria Is there an optimal size for ports and port terminals?Is there an optimal size for ports and port terminals? Vertical integration: the dedicated terminalsVertical integration: the dedicated terminals Horizontal integration: port networkingHorizontal integration: port networking
• Micro and macro economic impactsMicro and macro economic impacts
• The role of ports and the agenda for policy makers The role of ports and the agenda for policy makers
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0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Rotterdam
Hambourg
Anvers
Felixstowe
Breme
Le Havre
Southampton
Zeebrugge
Thamesport
Amsterdam
Container throughput in main Northern E.U. ports
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0
500000
1000000
1500000
2000000
2500000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Gioia TauroAlgecirasBarceloneGenesValenceMasaxlokkLe PiréeLa SpeziaMarseilleLivourne
Container throughput in main Southern E.U. ports
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82,4%76,6% 77,2% 76,1% 75,6% 74,7% 72,2% 70,4% 67,7% 64,5% 65,1% 64,6%
17,6%23,4% 22,8% 23,9% 24,4% 25,3% 27,8% 29,6% 32,3% 35,5% 34,9% 35,4%
0%10%20%30%40%50%60%70%80%90%
100%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Market share Northern Range Market Share Southern Range
Med’ ports will tell you that … Med’ ports will tell you that … Container traffic in TEU: Northern Range vs. Southern range (first 10 ranked ports)
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Container traffic: yearly average growth rate, per port (1992-2000)
35,9%
25,7%
18,0%15,0%
12,5%11,1% 10,8% 10,6% 9,5% 9,5% 9,3% 8,7% 8,5% 7,8% 7,2% 7,2% 6,9%
5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
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Container throughput for some European countriesContainer throughput for some European countries
1999 2000 2001 2001-1999
Germany 5.001.203 6.285.465 6.685.550 33,68%
Netherlands 5.789.918 5.652.500 5.431.400 -6,19%
Italy 4.436.803 5.121.187 5.216.439 17,57%
Belgium 4.130.394 4.636.145 4.690.159 13,55%
Spain 3.234.244 3.608.541 3.903.322 20,69%
United Kingdom 2.426.993 2.573.752 2.525.000 4,04%
France 1.894.525 2.025.416 2.039.912 7,67%
Greece 993.930 1.196.615 1.227.805 23,53%
Sweden 561.761 653.000 680.550 21,15%
Malta 527.711 521.691 588.570 11,53%
Turkey 392.366 426.159 444.003 13,16%
Slovenia 70.384 77.168 83.687 18,90%
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Container throughput variation by country (1999 - 2001)Container throughput variation by country (1999 - 2001)
NL
F
B
I
E
S
EL
D
M
TR
SLO
GB
-10,00% -5,00% 0,00% 5,00% 10,00% 15,00% 20,00% 25,00% 30,00% 35,00% 40,00%
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What’s going on beyond traffic data?What’s going on beyond traffic data?
Who benefits from port efficiency? Who benefits from port efficiency?
Who pays?Who pays?
Ports are still a business?Ports are still a business?
For whom?For whom?
(is the whole port industry sustainable?)(is the whole port industry sustainable?)
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Micro and macro impacts of the port Micro and macro impacts of the port
Competitiveness as efficiency (for the port operator)
and effectiveness (for the port user)
Input demand:• owners of the inputs• local commnunity
Output demand:• Shippers
•(producers, consumers)
Macro impact forMacro impact forthe port economythe port economy
the hinterlandthe hinterland
Micro impact for Micro impact for the port / transport / the port / transport /
logistics industrylogistics industry
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DeDemaritimisationmaritimisation or or ReRemaritimisation?maritimisation?
• Changes in port and transport industry often bring about:Changes in port and transport industry often bring about:– reduced net benefits for port local economies, resulting from positive reduced net benefits for port local economies, resulting from positive
economic impact and negative impact on land and environment economic impact and negative impact on land and environment – loss of local control and loss of leadership on port industryloss of local control and loss of leadership on port industry
• Geographical unbalance between costs and benefits of ports are a Geographical unbalance between costs and benefits of ports are a key issue in “sustainable port development”key issue in “sustainable port development”
• Strategies for port competitiveness Strategies for port competitiveness mustmust take into account local take into account local impact in order to strenghten the link between the port and its impact in order to strenghten the link between the port and its city/region city/region
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How do changes affect the economy?How do changes affect the economy?
• Labour per cargo unit dramatically decreasesLabour per cargo unit dramatically decreases• Capital and entrepreneurship shift outside the local control Capital and entrepreneurship shift outside the local control
(horizontal and vertical integrations in port industry)(horizontal and vertical integrations in port industry)• Land price for port uses is low since:Land price for port uses is low since:
– port competition pushes down prices of stevedoringport competition pushes down prices of stevedoring– competition and low prices transfer on input marketscompetition and low prices transfer on input markets– land price lowers around the opportunity cost (or even below)land price lowers around the opportunity cost (or even below)
• Substantial and increasing external costs (road/rail traffic, Substantial and increasing external costs (road/rail traffic, congestion, marine and air pollution, etc.)congestion, marine and air pollution, etc.)
• Regional multipliers possibly lowerRegional multipliers possibly lower
A threat for port local economy?A threat for port local economy?
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0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
Gen
ova
Trie
ste
Tara
nto
Cag
liari
Aug
usta
Ven
ezia
Livo
rno
Rav
enna
Sav
ona
La S
pezi
a
Nap
oli
Civ
itave
cchi
a
Pio
mbi
noP
aler
mo
Anc
ona
Brin
disi
Gio
ia T
auro
Car
rara
Bar
i
Sal
erno
Cat
ania
Mes
sina
tons
/100
0
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
10.000
PEA
Merci (escl.petroliferi) Totale merci Addetti "Aa+Ac" 1996
Employment and throughput Employment and throughput
The relationship seems weak!The relationship seems weak! 1991: 288.000 (316.000)1996: 278.000 (298.000)
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Local economy Local economy vs. vs. hinterland?hinterland?
• The role of ports The role of ports inin local economies: local economies:– macro-economic (welfare):macro-economic (welfare):
• employmentemployment• industrial linkage / induced effectsindustrial linkage / induced effects
– environmentalenvironmental
•The roles of ports The roles of ports outsideoutside the local economy: the local economy:–in the transport industry (microeconomic): in the transport industry (microeconomic):
•reduction in costs (reduction in costs (efficiencyefficiency) ) •increase in transport demandincrease in transport demand
–in the hinterland (macroeconomic):in the hinterland (macroeconomic):•development of international tradedevelopment of international trade
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Benefits and costs for local economiesBenefits and costs for local economies
Benefits:Benefits:• Revenue of inputsRevenue of inputs• Multiplier effectsMultiplier effects• Positive externalitiesPositive externalities
Costs:Costs:• Cost of inputs Cost of inputs • Negative externalitiesNegative externalities
??
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SummarySummary Competition and competitiveness: what exactly do we mean?Competition and competitiveness: what exactly do we mean?
The new port economics: The new port economics: – Changes in the economyChanges in the economy– Changes in the transport industryChanges in the transport industry– Consequences on demand of port servicesConsequences on demand of port services– Consequences on production and supplyConsequences on production and supply– The market structure of port industry: new threats and new opportunitiesThe market structure of port industry: new threats and new opportunities
Issues in competitivenessIssues in competitiveness– Port selection criteria Port selection criteria – Is there an optimal size for ports and port terminals?Is there an optimal size for ports and port terminals?– Vertical integration: the dedicated terminalsVertical integration: the dedicated terminals– Horizontal integration: port networkingHorizontal integration: port networking
Micro and macro economic impactsMicro and macro economic impacts
• The role of ports and the agenda for policy makers The role of ports and the agenda for policy makers
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A changing role... A changing role...
Mode exchangerMode exchanger
Link in the Link in the supply chainsupply chain
Regulator for Regulator for Maritime and Maritime and
IntermodalIntermodaltransporttransport
Hinterland connect.Hinterland connect.Local development Local development Vertical integrationVertical integration
SafetySafetyEnvironmentEnvironment
Fair comp. / antitrustFair comp. / antitrustBetter modal splitBetter modal split
New
/ growing tasks
New
/ growing tasks ::
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More suppliersMore suppliers
Higher efficiency Higher efficiency
Hinterland Hinterland overlappingoverlapping
Hub-and-spokeHub-and-spoke
Deregulation in ports Deregulation in ports
Liberalisation Liberalisation Access to market, competition for Access to market, competition for the market (biddings)the market (biddings)corporatisation, commerccorporatisation, commerc. .
PrivatisationPrivatisation sale of shares, private capital, sale of sale of shares, private capital, sale of
assets, management buyout, project assets, management buyout, project financing (BOT) (a problem: hidden financing (BOT) (a problem: hidden financing)financing)
•““partial”: priv. of services, concession of assets partial”: priv. of services, concession of assets (terminals, yards, infrastr.) coupled with private (terminals, yards, infrastr.) coupled with private
investment; authorisationsinvestment; authorisations
•basically concerning profitable activities basically concerning profitable activities
•accompanied by measures to increase accompanied by measures to increase efficiency (e.g. easier labour reg.)efficiency (e.g. easier labour reg.)
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Models of port management...Models of port management...
Terminal Terminal ManagementManagement
Other Other ServicesServices
Land Land OwnershipOwnership
SafetySafetyEnvironmentEnvironment
Public or Public or service portservice port(corp./ comm)(corp./ comm)
PublicPublic PublicPublic PublicPublic PublicPublic
Tool portTool port PrivatePrivate PublicPublic PublicPublic PublicPublic
Landlord portLandlord port- “anseatic”- “anseatic”- “latin”- “latin”
PrivatePrivate PrivatePrivate PublicPublic PublicPublic
Private port Private port - No P.A.- No P.A.
PrivatePrivate PrivatePrivate Private Private PublicPublic
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• Private ports Private ports
• ““Landlord ports”Landlord ports”– ““anseatic”anseatic”– ““latin”latin”
• Tool portsTool ports
• Public ports Public ports
… … and their performance and their performance
““Market” Market”
networking networking
(H and V)(H and V)
““Institutional”Institutional”
Networking Networking
Better for:Better for:
Efficiency Efficiency control of control of
supply chain supply chain Competition Competition
Planning Planning
Land useLand use
Public fundsPublic funds
Purpose:Purpose:
Uncertain Uncertain
local impactlocal impact
No or littleNo or little
marketmarket
Orienteding Orienteding
Risks:Risks:
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The case of ItalyThe case of Italy
Before 1994Before 1994 : public property of land; public planning for land use, infrastructure and
strategic development; public stevedoring activities; public funding of port infrastructure.
Inefficiency of Italian portsInefficiency of Italian ports
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Main reasons for the inefficiency were:Main reasons for the inefficiency were:
Too high labor costs; Scarce or no flexibility in land planning; Lack of strategic planning; High level of bureaucracy; Monopoly of labour supply; Low effectiveness high transit costs; Lack of reliability in transit times; Financial problems; No control on efficiency/effectiveness of supply.
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Independent Port Authorities were established; PAs are responsible for land use, development of port, its
territory, infrastructure, links with land transport networks; PAs are responsible of control of private firms operating
handling services; Cargo handling is developed solely by private firms after
concession or authorisation; The procedure for the concession of a port area should be
public and by bidding; PAs are forbidden to carry out handling activities and to
hold shares in stevedoring companies; Charges for cargo handling are fixed by the market; Technical/nautical services carried out by private companies
under supervision and control of PA.
Port reform of 1994:Port reform of 1994:
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1994: • port reform (l. n.84/1994)• new Genoa-Voltri VTE terminal (f.d.) 1995:• new Gioia Tauro terminal (transship)
Growth rate : 1983/93: 4,2% per year ; 93-00: 13% per year
Dramatic growth of demand and throughput Involvment of private (mainly foreign) investors/companies
Italian reform has proved to be effectiveItalian reform has proved to be effective
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Persisting problems:Persisting problems:
Labor market organization; Extremely long and complicated procedure for port
infrastructure and land planning; Lack of negotiation power of PA facing international
stevedoring groups; Lack of the transparency and free access in the market of
technical/nautical services; Financial problems in funding investments in
building/redeveloping infrastructure and facilities.
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Market failures:Market failures:•Natural monopoliesNatural monopolies•externalitiesexternalities•Public goods Public goods
Port planning and land usePort planning and land use
Competitive environmentCompetitive environment
Non-market failuresNon-market failures
Safeguarding public resources
Safeguarding public resourcesenvironment - tax yeldenvironment - tax yeld
EfficiencyEfficiency
TerritoryTerritoryEnvironmentEnvironment
Port Port spacesspaces
Port Port plantsplants
Public Public servicesservices CommercialCommercial
ServicesServicesServicesServices(pil, tow, moor)(pil, tow, moor)
InfrastructureInfrastructureconstr/manutconstr/manut..
Equilibrium between different tasks / needsEquilibrium between different tasks / needs
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Safeguarding public resources
Safeguarding public resourcesEnvironment - tax yeldEnvironment - tax yeld
EfficiencyEfficiency
TerritoryTerritoryEnvironmentEnvironment
Port Port spacesspaces
Port Port plantsplants
Public Public servicesservices CommercialCommercial
ServicesServicesServicesServices(pil tow moor)(pil tow moor)
InfrastructureInfrastructureconstr/manutconstr/manut
Issues in port organization and regulationIssues in port organization and regulation
Pub
lic p
lann
ing
Pub
lic p
lann
ing
Sel
f pro
duct
ion
Sel
f pro
duct
ion
Com
petit
ion
Com
petit
ion
for t
he m
arke
tfo
r the
mar
ket
Con
cess
ions
Con
cess
ions
rent
rent
Com
petit
ion
Com
petit
ion
in th
e m
arke
tin
the
mar
ket
(ant
i-tru
st c
ontro
l)(a
nti-t
rust
con
trol)
TAXTAX
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ports: competition and competitiveness ports: competition and competitiveness
professor enrico mussoprofessor enrico mussouniversità di genova università di genova dipartimento di economia e metodi quantitatividipartimento di economia e metodi quantitativiwww.enricomusso.itwww.enricomusso.it
University of AntwerpUniversity of AntwerpInstitute for Transport and Maritime Management AntwerpInstitute for Transport and Maritime Management Antwerp
Course in Advanced Port EconomicsCourse in Advanced Port EconomicsAcademic year 2003-2004Academic year 2003-2004
thank you for your attentionthank you for your [email protected]@unige.it