Masterclass Port Authorities in International Perspective
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Masterclass Port Authorities in International Perspective

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In recent years port authorities in the Hamburg-Le-Havre range have actively pursued internationalisation strategies, due in no small part to the evolving role of port authorities. ...

In recent years port authorities in the Hamburg-Le-Havre range have actively pursued internationalisation strategies, due in no small part to the evolving role of port authorities.
More and more port authorities consider themselves as network companies aiming to create value for their customers by developing chains, networks and clusters both in Europe and in emerging markets worldwide.

In this masterclass Peter de Langen and Marc Evertse explore the boundaries of the port authority in their quest to add value to their customers’ supply chain and deliver strategic value to their stakeholders at home.

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Masterclass Port Authorities in International Perspective Presentation Transcript

  • 1. STC-Group Netherlands Maritime University
  • 2. Port authority internationalisation October 17, 2013 STC-Group, Lloydstraat 300 Rotterdam
  • 3. Master Class Knowledge platform for young port professionals Platform for knowledge exchange between education, business community and association of young port professionals
  • 4. Port Internationalisation Time 17:00 hrs Speaker Subject Reception 17:20 hrs Maurice Jansen Senior Manager Innovation, Research & Development Peter de Langen Visiting Professor Netherlands Maritime University and Owner Port & Logistics Advisory Opening 17:30 hrs 18:15 hrs 18:30 – 19:15 hrs 19:30 hrs “Beyond the landlord model”, an overview of port authority strategies Break Marc Evertse Port of Rotterdam International Collaboration and participation abroad: a case study Drink in Café Verhip!
  • 5. Netherlands Maritime University Master Shipping and Transport
  • 6. Curriculum of the Master Shipping and Transport Welcome Domain: Maritime management Domain: Logistics Domain: Finance and economics Domain: Shipping management Domain: Law and Policies Courses: AMS; CMS; HRM/ HRD Courses: SCM; COM; HIN, ILO Courses: ECO I; ECO II; FCM-I; FCM-II; FCM-III Courses: SBC; FLM; SBP, ISM Courses: LAW; POL; OCM; SEC Teaching cases in maritime and port related issues Port Case Shipping Case Student counseling /Research and management skills Thesis
  • 7. Outline Port authority case Market analysis Macro analysis on industrial, supply chain, shipping and port development s in a country Supply chain analysis and port competition Analysis of main commodities Throughput drivers Trends and developments Port competition Productmarket mix Future outlook Stake holder analysis Analysis of the stakeholders of a certain area/port Role and influence of the stakeholders Position of PA Institutional framework Vision & Masterplan Draw a masterplan based on: Market analysis Stakeholder analysis Competitive analysis Business plan Analysis of different input elements: Income, cargo flows, tariffs Port management model Final report Compilation of final report Handover to PoRINT Presentation to Port of Rotterdam Master Shipping and Transport applies a case driven approach towards actual port and shipping management topics
  • 8. What’s happening internationally?
  • 9. Theses regarding today’s topic What is a good investment? What is the added value of oversea’s participations? Who’s interested?
  • 10. Speakers Peter de Langen Marc Evertse Prof.dr. Peter de Langen is senior advisor to Port of Rotterdam, and is involved in various strategic renewal projects. He holds a part-time position as professor Cargo Transport & Logistics, at Technical University Eindhoven. Publications on port selection, port policy, and international transport & logistics chains in various scientific journals, provides guest lectures at various universities abroad and participates as speaker/ session chairman, in (industry) conferences. 30 years of experience in several, mostly port related projects abroad. Project Manager in large scale port projects focusing on setting up new, long-term participations with (greenfield) ports worldwide. In addition Project manager for extensive port consultancy projects; recently in the preparation of masterplans and strategic port reform recommendations for the Brazilian port sector and as an advisor to the Indian Government in the preparation of business plans for the 12 major ports. Based in Rotterdam, working experience in 60+ countries.
  • 11. Peter de Langen Dr. Peter de Langen Visiting Professor Netherlands Maritime University and Owner Port & Logistics Advisory
  • 12. Contents • The port development playing field • Conceptually: deterritorialisation of port authorities • Rotterdam credentials • Driving markets
  • 13. The port development playing field • • • Shipping lines – Containers: top 3 about 45% market share. New development: P3 – Other commodities: quite/somewhat concentrated markets (Cars, liquid bulk, dry bulk, LNG). Terminals – Containers, ‘big four’ have > 50% marketshare – Tank storage: highly concentrated. – Other commodities: often increasing concentration, often direct involvement of globally operating end users (ThyssenKrupp, Shell, Vale) Port industries – Energy, refining, chemical industry: increasingly globally operating – Logistics: increasing globalisation, forwarders as well as logistics real estate investors
  • 14. Deterritorialisation of port authorities • In NW Europe: centuries old Hanseatic tradition • Elsewhere: deeply locally rooted. Example: PANYNJ. • Public orientation; often focused on local public benefits (employment, value added) but do these really matter? • Methaphor: school square.
  • 15. Pathways of deterritorialisation • UK: privatisation. Humber estuary: fifth port complex of UK, no active port development approach. ABP manages portfolio of ports & segments, investments where revenue is largest (cruise, housing). • Mergers between ports in proximity. – Best case: CMP (see next slides) – Worst case: Zeeland seaports • Corporatisation. Case Rotterdam.
  • 16. CMP: shareholders 16 22-10-2013 Merger Copenhagen and Malmö is an example of deterritorialised port authorities
  • 17. CMP: organisational structure (around 2008) CMP is organised per business segment, rather than geographical area
  • 18. Post merger performance CMP 18 Financial performance has significantly improved despite stagnating throughput volumes
  • 19. Rotterdam credentials • World Economic Forum indicator ‘quality of port infrastructure’: consistent ranking among top 3 worldwide, currently nr 1. • Widely regarded as global benchmark. • Post corporatisation performance (see next slide). • Performance Oman – Consistent improvement WEF indicator from 70th to 85th percentile. – Private investments around 15 billion US $ (PoR nett revenue <25 million – my rough estimate). – Volume growth from 6 to 43 million ton in 7 years. – Around 30% of FDI in Oman is in Sohar’s port complex.
  • 20. Has performance PoR improved since corporatisation? Port of Rotterdam Authority Variable Units 1997 2003 2005 2011 Total revenue M€ 453 457 486 588 Port dues M€ 246 228 253 291 Land rents M€ 153 197 203 267 Employees N 1165 1304 1268 1220 Turnover per employee M€ 0,389 0,350 0,383 0,482 Operating costs M€ 210 238 245 226 EBITDA M€ 242 219 241 362 Net profit M€ 62 64 81 195 Profit per employee M€ 0,053 0,049 0,064 0,160 Investments M€ 167 127 149 494 NB: 2004 excluded because of huge reservation (would make effects larger) NB2: corrected for inflation NB3: economic growth in 2005‐2011 was lower than in 1997‐2003
  • 21. Results: PoR did significantly improve performance! Table 2: Overview of test results Variable Test Improve statistic Market Share up Mean Mean Rank Turnover up Mean Mean Rank Turnover per Employee up Mean Mean Rank Operating Costs down Mean Mean Rank EBITDA up Mean Mean Rank Net Profit up Mean Mean Rank Profit per Employee up Mean Mean Rank Investments up Mean Mean Rank Real growth percentage Period Period Period (2) (1) (2) (1) -1,33 0,76 2,10 5,43 9,57 4,14 0,21 2,50 2,29 6,14 8,86 2,71 -1,77 3,67 5,43 5,00 10,00 5,00 3,63 -2,81 -6,45 10,00 5,00 -5,00 -2,53 11,77 14,30 4,57 10,43 5,86 5,45 23,03 17,58 6,43 8,57 2,14 3,47 24,52 21,05 6,00 9,00 3,00 -3,00 25,48 28,48 6,00 9,00 3,00 Significant Corrected for GDP growth Period Period Period (2) (1) (2) (1) Significant ++ ++ + no ++ ++ ++ ++ ++ ++ + no + + + + -3,21 -1,36 5,71 9,29 -5,19 -0,19 4,57 10,43 0,21 -6,67 9,86 5,14 -5,95 7,91 4,29 10,71 2,03 19,17 6,29 8,71 0,04 20,66 6,00 9,00 -6,42 21,63 6,00 9,00 ++ (or +) indicates a significant improvement of the second period at the 5% (or 10%) level. 1,85 + 3,57 + 5,00 ++ 5,86 ++ -6,88 ++ -4,71 ++ 13,87 ++ 6,43 ++ 17,14 + 2,43 no 20,62 + 3,00 + 28,04 + 3,00 +
  • 22. Internationalisation of port authorities; models Source: Dooms, Van der Lugt and De Langen (2013)
  • 23. Market driven vs driving markets • There is no ‘market’ for port development. • Initiatives are in most cases public, increasing numbers of private initiatives. • These private initiatives: mostly by terminal operators. • ‘Landlord model’ exception rather than the rule. What does it take to drive markets: long term view, commitment, trust building.
  • 24. Marc Evertse Marc Evertse Project Manager PoRINT Port of Rotterdam
  • 25. Port of Rotterdam International Masterclass for Netherlands Maritime University and Jong Havenvereniging STC, 17th of October 2013 Marc Evertse, Project Manager, Port of Rotterdam International © Copyright - Port of Rotterdam - 2012 1
  • 26. Table of Contents 1. Who we are 2. Vision 3. Objectives & Approach 4. Track Record & Current Projects 5. Paths to Partnerships © Copyright - Port of Rotterdam - 2012 2
  • 27. 1. Who we are 1. A port development company • Develop land/infrastructure to attract cargoes • Business case driven approach to development • Asset management • Strategic stakeholder management 2. A publicly owned business driven company • Financially self-sustaining – no subsidies • Pays out dividends to shareholders • Profitable but not profit maximizing 3. Corporatized non-political organization • Public shareholders but autonomous • Professional management – no political appointees 4. Landlord model • PoR leases 4,000 ha. of land to private companies • Aiming to attract EUR 10 billion in private investments (20112015) • Annual investments in land/infrastructure (> EUR 200 million) 5. Authority as harbor master • Formal authority as harbor master • Harbor master is responsible for safety and security © Copyright - Port of Rotterdam - 2012 5
  • 28. 1. Throughput and revenue growth have improved after corporatization Pre-Corporatization Post-Corporatization Growth (CAGR) Growth (CAGR) Throughput: 1.67% Total Revenue: 0.20% Net Profit: 3.72% Throughput: 3.07% Total Revenue: 3.23% Net Profit: 15.86% * Corrected for inflation © Copyright - Port of Rotterdam - 2012 6
  • 29. Main criteria for our shareholders What we do must be good for Rotterdam (and the Netherlands): • Give Rotterdam clients the opportunity to enter a new market under the ‘umbrella’ of Port of Rotterdam, and/or: • Generate cargo flows to the Port of Rotterdam, and/or: • Attract foreign companies to set up business in Rotterdam. © Copyright - Port of Rotterdam - 2012 7
  • 30. 2. Port of Rotterdam International (PoRInt) is a key component of the PORs corporate strategy © Copyright - Port of Rotterdam - 2012 8
  • 31. 2. Sample Partnership Structure Partner(s) PoR What do we look for in a partnership PoR option to participate in Asset Mgmt. Co. structure?  Owns port land  Gives long-term lease to Port Mgmt. Co.  May be needed where public land is involved 16 oktober 2013 Long-term Concession Port Management Co. Stable, reliable, long-term partner  Asset Management Co.  Substantial shareholding to ensure appropriate mandate to develop/manage the port  Basic infrastructure investment  Leases out land to clients  Port planning, development & management  Stakeholder management  Nautical control/safety © Copyright - Port of Rotterdam - 2012 9
  • 32. 2. Why is PoR an attractive partner in port development? • Experience: > 75 years of World class port planning • Commercial Opportunity: a global network of contacts with with key players in transport, logistics, energy, chemical industry, and mining. • Credibility: Track record in port development at home and abroad (the only one!) • Reliability: Port of Rotterdam brand creates trust with all relevant stakeholders (commercial, financial, institutional) • Vision: for PoR development means long-term partnership • Landlord Operating Principle: is key to attracting leading terminal operators © Copyright - Port of Rotterdam - 2012 10
  • 33. 2. What is the benefit of partnering with PoR? Know-how Transfer    Boardroom Consultancy: short-term port management/development advisory Port Management Services Agreement: long-term know-how transfer via PoR experts Port Management Program: yearly training program for port managers offered at PoR (customized programs also available for global strategic partners) Partner with long-term outlook and commitment Direct: equity investments via port partnership JVs Indirect: via investments made by companies in PoR’s commercial network (i.e. terminal operators)  Investment    PoR has a strong brand name among terminal operators, shipping lines, and other maritime companies. Brand name attracts clients and therefore new business Brand Name  © Copyright - Port of Rotterdam - 2012 11
  • 34. The Quality of port infrastructure in the Netherlands is world-class… In the Global Competitiveness Report, a leading study of the competitive strength of various countries conducted by the World Economic Forum, the Netherlands ranks 1 worldwide Global Competitiveness Report (2012 - 2013) © Copyright - Port of Rotterdam 12
  • 35. 3. The market for port development – what projects do we look for? Terminal Operator Single User Port/Terminal Greenfield Industrial Port Complex ? Brownfield Port Landlord Brownfield projects are only considered if: • There’s room for expansion inside or next to existing port • • Is of strategic interests to existing clients • © Copyright - Port of Rotterdam - 2012 Port offers business development opportunities Offers opportunity to create new partnerships 13
  • 36. 4. Track Record: 72 locations in 33 countries analyzed between 2009 and 2012 Countries Visited/Analyzed Past/Current Port Locations 16 oktober 2013 © Copyright - Port of Rotterdam - 2012 14
  • 37. Track Record: Current Key Projects are result of careful selection CONSTANTZA CEYHAN TEDA NANGANG SOHAR BARRANQUILLA JOHOR Focus Areas PORTO CENTRAL Main Projects NACALA Key Prospects 16 oktober 2013 © Copyright - Port of Rotterdam 15
  • 38. 4. Track Record: PoRInt has advised governments and port authorities around the world contributing to better port development/governance Consultancy    Indian Port Association: Business plans for the 12 major ports Brazilian Ministry of Ports: PNLP Project – Port Reform study for the whole Brazilian port sector Port of New York and New Jersey , USA Partnerships & Agreements           Qatar Petroleum , Qatar Port of Constantza , Romania Espirito Santo State , Brazil Suape , Brazil Tianjin Economic Development Area , China Senegal (CSR project) Rosmorport , Russia Vinalines , Vietnam Port of Taranto , Italy Saldanha Bay , South Africa © Copyright - Port of Rotterdam - 2012 16
  • 39. 4. Sohar: Rotterdam’s 1st port development partnership 2000-2002   2000: PoR advises Omani gov. on development and management of Sohar 2002: PoR and Omani gov. establish a 50:50 JV 2003-2007    2004: first vessel arrives 2006: refinery and container terminal begin operations 2007: Concession area expanded from 2,000 ha to 6,400 ha – Sohar Free Zone established 2008-Present      © Copyright - Port of Rotterdam - 2012 USD 14 billion in investments generated since 2004 (30% of inbound FDI in Oman) 1,500 ha. leased out Expansion of liquid and container terminals 60% (CAGR) throughput volume growth since 2007 Paying dividends since 2009 17
  • 40. 4. Sohar: a diversified industrial port complex built through partnerships with world class Rotterdam clients Tank Storage Dry Bulk “After Vale’s successful inauguration of its new iron ore transport hub in Oman…other dry bulk shippers are now flocking to the Port of Sohar” - Lloyd’s List Mar. 2012 Containers Breakbulk “Hong-Kong based global operator Hutchinson Port Holdings signed an agreement with Sohar port authority to expand its joint venture” - Lloyd’s List Jan. 2013 16 oktober 2013 © Copyright - Port of Rotterdam - 2012 18
  • 41. Nangang 16 oktober 2013 © Copyright - Port of Rotterdam - 2012 19
  • 42. 4. Porto Central: Greenfield port development project in Brazil • 1,500 ha greenfield being developed into a deep water port and industrial complex • Centrally located to the offshore, mining and agri-bulk production sites • Expected cargo throughput of up to 200 million tons • Project is being developed with local partner – TPK Logistica 16 oktober 2013 © Copyright - Port of Rotterdam - 2012 20
  • 43. 4. Porto Central: scheduled start of operations in 2016 Unique Selling Points 1. Location: centrally located to offshore oil fields and major economic centers in undeveloped rural area 2. Management: professional private sector management 3. Concept: varied economic activities clustered to generate synergies 4. Accessibility: 24/7 port with deep draught (23m.) and multimodal hinterland access 5. Port Infrastructure: state of the art infrastructure and low environmental impact 16 oktober 2013 © Copyright - Port of Rotterdam - 2012 21
  • 44. 5. Paths to Partnership: 2 track partnership process Fast Track:  Port Analysis/boardroom consultancy identifies strengths, weaknesses, opportunities, and threats of prospective partner port.  Business case is drafted and if positive JV establishment processes begin Slow Track:  After port analysis PoR and prospective partner port sign a Port Management Services Agreement (“PMSA”)  Through PMSA PoR transfers know-how allowing partners to assess attractiveness of a JV  Go/No Go Decision Point Initial Track If partners wish to continue, a business case is drafted and JV establishment processes begin Fast Track Slow Track © Copyright - Port of Rotterdam - 2012 22
  • 45. 5. Partnership process can result in different types of partnerships Partnership Types Different paths, different partnerships Private Port JV  Fully private port development co.  Owns, develops, and manages port land Port JV w/ Concession  Land owned by government  Port development co. receives long-term concession to develop and manage the port Know-how Transfer 16 oktober 2013 Examples  Via boardroom consultancy or port management services agreement (“PMSA”)  technical, managerial, market expertise  Business development assistance © Copyright - Port of Rotterdam - 2012 23
  • 46. Thank you for your Attention Questions? © Copyright - Port of Rotterdam - 2012 24
  • 47. Photo impression
  • 48. Master class organiser Maurice Jansen Maurice was the first head of Netherlands Maritime University of Applied Sciences (STC-NMU) and responsible for the Master Shipping and Transport program at STCGroup's main campus in Rotterdam as well as at STC-Korea. Currently at STC-Group’s Innovation and R&D department he’s working as a researcher and thesis supervisor to Master students in the field of port strategy, port governance and supply chain management. Previously he was a supply chain solutions engineer and consultant at UTi Worldwide and KPMG Consulting. More information: Maurice Jansen MSc, m.jansen@stc-r.nl / T. +31 10 4486000
  • 49. How to stay in contact? @STCGroupNL www.stc-nmu.eu Netherlands Maritime University Email: info@stc-nmu.eu
  • 50. full speed ahead… with your career!