Shipping in the Arctic My Arctic your ArcticM.K Afenyo, PhD.docx

Shipping in the Arctic: My Arctic your Arctic
M.K Afenyo, PhD
Introduction
News about the Arctic
What is the Arctic?
Picture courtesy:
https://nsidc.org/sites/nsidc.org/files/images//arctic_map.gif
Regions around the north pole
Second largest area by size (13,985,000 km²)
Area above the Arctic circle (66° 34’ N)
Any area in high latitudes where average daily temperature does
not rise above 10 degree
Canada in the Arctic

Second largest Arctic country
200,000 Canadians live in the Arctic
New Arctic Framework under development
comprehensive Arctic infrastructure
strong Arctic people and communities
strong, sustainable and diversified Arctic economies
Arctic science and Indigenous knowledge
protecting the environment and preserving Arctic biodiversity
the Arctic in a global context
Canada in the Arctic
Applies to
Yukon
Northwest Territories
Nunavut
Inuit Nunangat
the Nunatsiavut region in Labrador
the territory of Nunavik in Quebec
northern Manitoba, including Churchill
Arctic shipping
Taken place since 1978 in the ice-covered western regions of
the Northern Sea Route (between the port of Dudinka on the
Yenisei River and Murmansk).
“We need to save the Arctic not because of the polar bears, and
not because it is the most beautiful place in the world, but

because our very survival depends upon it” --Lewis Gordon
Pugh
YearActivity4th Century B.CUse of Arctic shipping by the
indigenous people for food supplies and
settlement981Discovery of Greenland1490John Cabot makes a
voyage through the NWP1610Hudson expedition by the
Henry1903Roald Amundsen completes the NWP route1935NSR
opens up for Russia traffic1994UN convention on the Law of
the sea1996Formation of the Arctic council2010Russia
Constructs its double hull ice-breaker2012Opening of the Arctic
intensified2013China builds first ice breaker in house2017The
polar code comes into force
The good
Resource deposits: oil, gas and other minerals
Increase shipping saving time and money
Opening up the northern communities
Graphics courtesy: https://www.visualcapitalist.com/energy-
and-mineral-riches-of-the-arctic/
The good
Nordic Orion NWP voyage from Europe to Asia instead of
Panama Canal
Saved 4 days(~4000km) and $200,000
From Shanghai to Rotterdam

Russia currently ahead
5 Arctic ice breakers & 3 nuclear powered ones
Canada now building 1 ice breaker a fleet of 8 patrol boats
RouteDistancePanama Canal25,588 kilometresSuez Canal19,550
kmNorthern Sea Route15,793 kmNorthwest Passage16,100
kmTranspolar Route13,630 km
Ship growth in NWP
2007
9 ships
………….
2012
30 ships
The bad
Shorter lengths of ice free months
Extremely harsh conditions
Risk of accident during oil and gas exploration and production
Accidental release during shipping
The Bad
Source: https://www.visualcapitalist.com/energy-and-mineral-
riches-of-the-arctic/

The ugly
11Vessel/Spill Accident TypeSpillYearATLANTIC EMPRESS
and AEGEAN CAPTAINCollision287,000 tonnes of
oil1979 ABT SUMMERExplosionSlick covering 80
sq.km1991CASTILLO DE BELLVERFire50-60,000 tonnes of
oil1983AMOCO CADIZGrounding223,000 tonnes of
oil1978EXXON VALDEZGrounding37,000 tonnes of oil1989BP
Oil SpillBlowout680,000 tonnes of oil2010
Courtesy: US Coast Guard
Over $50bn spent on BP oil Spill
(after Afenyo et al., 2016)
Oil spill history
Ugly
12
Accidental releases of oil have negative consequences on the
marine environment.
Need to prepare for emergency control and mitigation of oil
spills.
Countermeasures can only be implemented effectively if the fate
and transport is better understood.
Environmental risk assessment: requires fate and transport
models.
Meanwhile the Arctic is an uncertain terrain with many

unknowns
Harsh: very low temperatures
Timely response is a challenge
Darkness
Seasonal variations
The problem of dealing with the ugly
13
Evaporation
Resurfacing of larger oil droplet
Dissolution of water soluble components of oil

Photo-oxidation
Wind
Drifting
Spreading
AIR
Sedimentation
Natural dispersion
SEDIMENTS
WATER
ICE

AIR
WATER
SEDIMENTS
Drift with current
Fixed oil droplet, mobile or being encapsulated in growing ice
Absorption by snow
Oil Pool under snow
Multi-year ice
Lead
Encapsulated oil
Evaporation

Dissolution and mousse formation
Oil on meltwater in pools in spring
Oil migration up brine channel
First-year ice
Oil pool
Complex
Ice makes it more complicated
(after Afenyo et al.,2015)
Oil ice interaction
Oil spill processes in open water
Modeling oil spill in ice is difficult
Lack of data in the Arctic
comprehensive ecological risk assessment framework needed
Limited knowledge
14
Environment Risk
Ecology (marine) Risk
Socio-economic Risk
Information on such risks are required to make decisions

Soures: Environment Picture:
https://psmag.com/environment/monitoring-coral-habitat-to-
measure-oil-spill-impact
Ecology Picture: https://helpsavenature.com/current-
environmental-issues
Socio-economic activities:
https://keydifferences.com/difference-between-economic-and-
non-economic-activities.html
Elements of ecological risk
15
Source
Fate and transport
Dispersion
Exposure
Risk
Source modeling

Oil could be spilled due to
Ship accidents
Offshore oil installations
Illegal oil discharge
Pipeline rapture
Leak from sunken world war ships
Source modelling for oil spills is challenging as each spill
scenario is unique.
The release scenarios may evolve with time and conditions
16
Oil spill due to ship damage*
*Source: http://www.bunkerist.com/en/?p=40692
Dispersion modeling
Dispersion modeling access how much distance a crude could
travel in a given time.
While modeling dispersion, we need to consider all possible
dimensions to this process in terms of oil
17
Source: Afenyo, M., Khan, F., Veitch, B., & Yang, M. (2017).
A probabilistic ecological risk model for Arctic marine oil
spills. Journal of environmental chemical engineering, 5(2),
1494-1503.
Dispersion of oil after a leakage from a vessel

Partition modeling
The released oil is transported through
Air
Ice
Water
Sediment
18
*Source: Afenyo, M., Khan, F., Veitch, B., & Yang, M. (2016).
Dynamic fugacity model for accidental oil release during Arctic
shipping. Marine pollution bulletin, 111(1-2), 347-353.
Oil transport in air, ice, water and sediments*
Exposure Modeling
Exposure modeling involves assessment of the oil concentration
and its existence in media of contact.
In marine species, pollutant existence could be due to;
Inhalation
Ingestion of contaminated water and food
Absorption of hydrocarbon
19
Output of ecological model
Risk Quotient is defined as
RQ = PEC/PNEC

Where, Predicted Exposure Concentration (PEC) is measured
through fugacity modelling.
And the Predicted No Effect Concentration (PNEC) is obtained
from ecotoxicological studies. PNEC represents ecosystem
response.
A value of RQ > 1 shows condition requiring attention
20
*Source: Afenyo, M., Khan, F., Veitch, B., & Yang, M. (2017).
A probabilistic ecological risk model for Arctic marine oil
1494-1503.
Concentration of pollutant (oil) in water*
How will ships be insured going into the Arctic?
Material ship is made of
Experience of crew
Single hull or double hull
Piracy
Length of Voyage
Speed of vessel
Age vessel
Days expected at sea
Graphical based socio-economic model

Socio-economic Impact factors
Family separation
Lack of thrust
Stress
Loss of income
Loss of tourists
Movement of people in and out of the affected community
Effect on culture
Effect on hunting
Psychological effect on populace
Weakened social connection

Land Claim Agreement
NORDREG
Scenarios matrix & output for socio-economic
modelScenarioSeasonType of oilRecovery methodType of
ship1SummerLightNonesmall2SummerLightNoneLarge3Summer
HeavyNonesmall4SummerHeavyNoneLarge5SummerHeavyDisp
ersantSmall6SummerHeavyDispersantLarge7SummerHeavyInsit
u-burningsmall8SummerHeavyInsitu-burningLarge
Socio-economic impact of scenarios
1 3 13 15 17 19 21 23 88187431 104326960
101022550 108101430 104119470 108126610
105353850 108125960
Sceanarios
Impact ($)
Significance of the output of the SE model
For decision making by governments
Use by insurance companies

Other environmental agencies
What is the Arctic policy of Canada?
"The simple fact is that Arctic strategies throughout my lifetime
have rarely matched or addressed the magnitude of the basic
gaps between what exists in the Arctic and what other
Canadians take for granted. Closing these gaps is what
northerners, across the Arctic, wanted to speak to me about as
an urgent priority."
-Mary Simon, Interim report on the Shared Arctic Leadership
Model
New Arctic Policy Framework
coordinated effort by all levels of government,
Indigenous groups,
industry and other stakeholders
to identify problems and solutions and make great use of the
opportunities in the Arctic.
Comprehensive Arctic infrastructure
Lack of infrastructure in the Canadian Arctic
Internet access is based on satellite and is very expensive
Inaccessible year round

Climate change caused damage to infrastructure in the Arctic
What needs to be done for this region?
Strong Arctic people and communities
Unemployment is higher than Canadian average and can go as
high as 50% in some places
High rate of crowd living
High rate of violence
Assess to health care is a challenge
No university physically in the arctic (not the case for other
arctic countries)
What key actions could increase well-being within arctic
communities?
Strong, sustainable and diversified Arctic economies

Canadian Arctic is mineral rich
What can be done to advance
sustainable economic development,
diversify the Arctic economy,
build capacity/expertise and increase the participation of Arctic
residents in local economies,
grow small-to-medium Arctic businesses and enhance
partnerships?
Arctic science and Indigenous knowledge
The new Canadian High Arctic Research Station campus in
Cambridge Bay (Nunavut),
the Churchill Marine Observatory (Manitoba)
Institut nordique du Québec,

Genice (https://www.genice.ca/)
How can Canada respond more effectively to
local knowledge needs,
collaborate with territorial and provincial institutions and better
integrate Indigenous knowledge into decision-making?
increase the capacity of Arctic residents to participate in Arctic
research initiatives,
Protecting the environment and conserving Arctic biodiversity
Oil spills
Protecting the flora and fauna
Coast guard responsible for any emergency response
How can Indigenous and local experience/knowledge be
incorporated into action on climate change and biodiversity?

The Arctic in a global context
Engage the world through the arctic council
Make the indigenous nations part of this engagement
What domestic interests and priorities should the government of
Canada pursue internationally?
What do you see as the main challenges and opportunities for
Canada's arctic foreign and defense policy in the next 10-20
years?
Progress
Source: https://ca.news.yahoo.com/food-security-top-mind-
inuit-100000741.html
Make your input
There are three ways to participate:
Send a letter to:
Arctic Policy Framework Secretariat
15 rue Eddy, 14th floor
Gatineau QC K1A 0H4

Send an email to: [email protected].
Send a tweet using the hashtag #ArcticTogether.
References
Afenyo,M., Khan,F., Veitch,B., Ng,A.K.Y., Sajid,Z., Fahd,F.
2019. An explorative object-oriented Bayesian network model
for oil spill response in the Arctic Ocean. Safety in Extreme
Environments.
Afenyo, M., Ng, A.K.Y., and Jiang, C., 2018. Climate change
and Arctic shipping: A method for assessing the impacts of oil
spills in the Arctic. Transportation Research Part D,476-490
(Article in press).
Afenyo, M., Khan, F. and Ng, A.K.Y. (2020): ‘Assessing the
risk of potential oil spills in the Arctic due to shipping’. In: Ng,
A.K.Y., Monios, J. and Jiang, C. (Eds.): Maritime Transport and
Regional Sustainability. Elsevier, Cambridge, MA, Chapter 11
(in press).
Afenyo, M., Lin, Y. and Ng, A.K.Y., Jiang, C. (2020): ‘The
opportunities and challenges of developing the Arctic area and
shipping in the Arctic’. In: Lasserre, F., and Faury, O. (Eds.):
Arctic shipping: Climate change, commercial traffic and port
development. Elsevier, Cambridge, MA, Chapter 12.
Lin, Y., Afenyo, M. and Ng, A.K.Y. (forthcoming): ‘Climate
change, a double-edged sword: The case of Churchill on the
northwest passage’. In: Ng, A.K.Y., Monios, J. and Jiang, C.
(Eds.): Maritime Transport and Regional Sustainability.
Elsevier, Cambridge, MA, Chapter 13 (in press).
Afenyo, M., Khan, F., Veitch, B., & Yang, M. (2017). A
probabilistic ecological risk model for Arctic marine oil
1494-1503.
Afenyo, M., Khan, F., Veitch, B., & Yang, M. (2016). Dynamic
fugacity model for accidental oil release during Arctic

shipping. Marine pollution bulletin, 111(1-2), 347-353
Afenyo, M., Khan, F., & Veitch, B., 2016. A state-of-the-art
review of fate and transport of oil spills in open and ice-covered
water. Ocean Engineering. 119:233-248.
https://www.rcaanc-
cirnac.gc.ca/eng/1503687877293/1537887905065
.MsftOfcThm_Accent1_Fill {
fill:#1D9A78;
}
.MsftOfcThm_Accent1_Stroke {
stroke:#1D9A78;
}
SCM2210 TRANSPORTATION Principles
INFRASTRUCTURE PROJECT PLANNING
Dr. Adolf K.Y. Ng
Professor, Dept. of Supply Chain Management
Asper School of Business, University of Manitoba
Source: HMC

Contents
The Study Approach
Canada, Manitoba, Winnipeg and CentrePort
The CCW Project: The Origins and Idea
The CCW Project: Planning and Construction
Conclusion
2
The Study Approach

A very recently completed project (officially opened by Stephen
Harper, the Prime Minister of Canada, in November 2013)
A historical analysis on the idea, and the project’s planning and
development (initiated in 2008, and undertaken in 2009-2013)
Mainly looking from the institutional perspectives (how
institutional and political factors have shaped the planning and
development of the project)
The CCW project prompted (forced) a number of ‘paradigm
shifts’ in infrastructure planning by the Manitoba Provincial
Government (MPG), which were unpredecented in Manitoba
3
Contents
The Study Approach
Conclusion
4

About Canada, Manitoba, Winnipeg and CentrePort
Winnipeg is the centre of Canada
5
6
Among the Manufacturing Sector:
Food processing; Agribusiness Manufacturing; Heavy Vehicles;
Building Products
Source: MPG
12/8/18
7

Source: centreport.ca
8
The Trans-Canada Highway (TCH)
(Source: Transport Canada)
9
Source: maps.google.com

Contents
The Study Approach
Conclusion
10
The traditional industrial district of Winnipeg was concentrated
in the Northwestern part
Since the 1970s, there had been discussions on relieving
congestion and improve mobility for Inkster Blvd. and
Provincial Highway 221 (PR221) which were, by then, the only
access to the Perimeter Highway (PTH101)
This was not surprising, as the idea of establishing CentrePort
Canada (‘CentrePort’) was only initiated by the MPG in 2008,
after the idea of the CCW project began to take root.
The question: why suddenly a change of heart by MPG?

11
The original ideas became obsolete since the mid-2000s…
The Asia-Pacific Gateway and Corridor Initiative (APGCI)
(initiated by the Martin Government through the Pacific
Gateway Act, Bill C-68, October 2005; further promoted by the
Harper Government in 2007)
It was the very first time that the concept has been transformed
from a ‘regional’ (mainly British Columbia and Alberta) to a
‘national initiative’
12
Potential Impacts on Manitoba:
It offers a valuable opportunity to Manitoba to ‘get connected’
with the world through international trade (to transform from an
inland, regional region to an international inland hub in Canada,
or even North America)

How can Manitoba, and not (just) other provinces, gain from
-provincial
competition
This was not helped by the ‘single-location’ strategy undertaken
by MPG and other Canadian provincial governments
13
What did the MPG decide/need to do?
The establishment of ‘CentrePort’ (an inland port)
The rapid installation of infrastructures to connect CentrePort
with the major transport networks in Canada (especially the
TCH and Provincial Trunk Highway 75 (PTH75) connecting to
the US), so as to (1) reduce transport and logistics costs; and
thus (2) enhance the competitiveness of CentrePort
14
15

Inkster Blvd. and PR221 improvement would unlikely achieve
such objectives…
CentrePort
Winnipeg
Airport
Inkster Blvd.
PR221
CCW
Rail Tracks
Grade Separation
with Rail
There were other (secondary) considerations:
The proximity of the Winnipeg airport (as an aviation hub)
Social and environmental issues (like reducing air pollution and
traffic flows along the Saskatchewan Avenue)
The need to construct (more) road-rail grade separations in the
original plan (higher costs for the original plan)

16
17
Source: centreport.ca
A revised proposal would look more appealing to the Federal
Government for funding
The first ‘paradigm shift’: proposed actions (as reflected in the
funding proposal), and later the functional design, were built
upon (sometimes more hypothetical) economic (e.g., forecasts
in regional economic development, figures international trade,
etc.) rather than (empirical) engineering indicators (e.g., traffic
flows, mobility, etc.))
Although the Federal Government was not completely happy
with the proposal (mainly due to the lack of a strategy to
inscribe rail into the project), but they decided to support the
project due to the MPG’s ‘trade-based’ strategy, and willingness

to commit resources on the APGCI.
18
The Federal Government paid nearly 50% of the C$212.4
million
> Build Canada Fund (C$68.35 million, administered
by Infrastructure Canada)
> Asia-Pacific Gateway Fund (C$33.25 million,
administered by Transport Canada)
The second ‘paradigm shift’: after the CCW project, MPG starts
to develop ‘shovel-ready’ proposals dedicated for funding
application from the Federal Government.
It implied that the direction of infrastructure planning in
Manitoba gradually moved upwards towards ‘national
objectives’ (note: the CCW itself was actually a ‘provincial’
project)
19
Contents

The Study Approach
Conclusion
20
However, the Federal Government’s funding on the CCW
project would only last for 5 years (in other words, the MPG
would bear all the financial consequences for any delays)
Traditionally, all infrastructure projects in Manitoba were
planned and constructed via the Design-Bid-Build (DBB)
approach (which usually lasted for 6-7 years)
cost of the latter stages, like construction (‘build’), was often
much higher than the ‘design’ stage), was usually higher
The political pressure to get it done as quickly as possible due
to regional competition (must build ‘faster than Regina (SK),
Calgary (AB), etc.’)
21

The third ‘paradigm shift’: the design-build (DB) approach.
The contractors were responsible to design and build the
infrastructure, based on their past experiences, techniques and
know-how.
For instance, quoting Hugh Munro Construction Ltd. (one of the
contractors of the CCW project): “the project involved the
design and build of grade separations for the CCW
transportation corridor.” (source: hmcl.ca)
22
Source: HMC
Given the lack of precedence, the use of DB approach caused
substantial uncertainties on how to proceed, especially in view
of such a tight deadline (5 years).
The interactions between institutions (the Federal Govt. and the
MPG) had created ‘institutional uncertainties’.

Institutions were established to reduce uncertainties and chaos
through the creation of ‘normalities’ and ‘procedures’ (rather
than innovation). In facing uncertainties that an institution
(MPG) had to solve, how did they deal with it?
23
So, what did the MPG (through the Manitoba Infrastructure and
Transportation (MIT) do?
The MIT communicated with Alberta, of which during that time
they were also involved in a DB project, namely the Stony Plain
Road/Anthony Henday Drive Interchange Project
For instance, the MIT actually developed the DB contract for
their project contractors based on a public private partnership
(PPP) contract from Alberta.
The primary approach of solving institutional uncertainties by
institutions was to find alternative ‘certainties’ so as to blanket
such uncertainties.
24

The consequences (the positive side):
The ‘design and bidding’ stage became much quicker (only took
about 12 months from call for proposals to signing contracts
with contractors). Most of the time was used on construction.
The project was indeed completed within 5 years (and opened in
November 2013)
25
The deficiencies and challenges:
Quality assurance (QA) and quality control (QC) became much
more difficult to maintain.
The dilemma from MPG/MIT: how should they impose control
(like closed down the construction at some points), but faced
the risks of delays, and possible claims from contractors later?
26

The deficiencies and challenges:
Clear priorities were placed on the ‘tangible’ items, i.e., the
physical construction, while the ‘soft’ side of the project had
been seriously lagging behind.
In some ways, the MPG retracted from its traditional role as the
focal point of the infrastructure project, sometimes leaving
contractors a bit ‘lost’ on the planning and construction process.
For instance, at the time when the CCW was opened (and
vehicles started to flow), some documents/permits (like the
RTAC and LCV permitted route status) had not been obtained.
ents happen?
27
A matter of political risk calculation?
“Compared to allowing a million-dollar project to be completed
but could not be used, ignoring those ‘silly’ safety standards
and paper works were trivial.”
“Would you allow such ‘silly’ things to trump against the long-
term competitiveness of CentrePort and Manitoba?”

One thing for sure: the planning approach by the MPG became
much more ‘single-target-oriented’, duly forced by institutional
and political pressure.
28
Contents
The Study Approach
Conclusion
29
Conclusion
To a large extent, the CCW project was politically- and
institutionally-driven

Inter-institutional dynamics had created ‘institutional
uncertainties’, which caused a number of ‘paradigm shifts’ in
infrastructure planning in Manitoba
The primary approach was to find alternative ‘certainties’ so as
to blanket such uncertainties.
There were signs that the MPG retracted from the traditional
role as the focal point of the project, and became more ‘single-
target-oriented’ in the planning approach.
30
Conclusion
It has certainly created a new alternative for infrastructure
planning in Manitoba (and likely to increase in the future)
Is it the appropriate approach? How to address the challenges
and deficiencies?
To what extent is the ‘upward direction’ (towards national
initiative) beneficial for Manitoba?
31

Thank You
Q&A
SCM2210: Transportation Principles
Dr. Adolf K.Y. Ng
Professor, Dept. of Supply Chain Management

Asper School of Business, University of Manitoba
Policy and Management
Lecture Outline
Tradition and New Circumstances
De/Re-centralization
Public Private Partnership
Institutional Reform
What is ‘Port Policy’?
The Role of Government in Ports
Why port policy matters?
Traditionally, government policies often reflected
such a keen interest in port operation, management
and development
National
Regional/Local
(Supra-national was non-existent)
Importance of Ports:
‘Strategic asset’ of a country/region

Many ports were rooted from serving military purpose
e.g. Le Havre, Tianjin
Income Source/‘Cash-Cows’ for the city/
surrounding region
e.g. Venice, Hamburg
Importance of Ports:
Base for infiltrating into raw material sources/colonies
e.g. Hong Kong, Accra, New York
Ports were actually important components in
complementing maritime power
As a big employer, there were a lot of people working
in ports, thus often giving a strong interest group
within the society
Source of Conflict:
Characteristics of Traditional Port Policies:
Strong Public Sector Influence, in both operation
and regulatory functions
Little Consideration to Efficiency & Service Quality
> Manual Cargo Loading/Unloading
> Lack of Port Competition
> Natural Hinterland
> Non-Hub-&-Spoke: large no. of port calls
Heavy Subsidies to Ports (notably in European ports)

Changing Circumstances and Port Policy:
Containerisation
Hub-and-Spoke and Logistical Supply Chain
Intensification of Port Competition
Globalization and Regional Integration
Terrorism and Security Issues
New Demands for Ports:
Efficiency became much more important
Fewer ports being called: competition intensified
Logistical supply chain: changing relation between
port and city/surrounding region
Globalization and Regional Integration: Is national
or regional/local policies alone enough?
Traditional equipment/system became outdated
Bureaucracy and Administrative Inefficiency
Disinvestment on Port Infra/Superstructure
Many ports had become bottlenecks…
Damietta
“The White Elephant”
in Port Development

(1970s – 1980s)
Mis-investment on Port Infra/Superstructure
Can port itself ensure its own competitiveness?
The Betuwe Route &
Port of Rotterdam
Does traditional port management philosophy
violate new principles?
- EU’s principle of Free and Fair Competition
- The Issue of State Aids to Ports
EU Legislative Proposals which can affect Ports:
Maritime Safety (ports of refuge)Protection of Critical
InfrastructureProtection of Maritime Passenger RightsAir
QualityWater (Marine/River) QualityWaste (dredging)Railway
LiberalisationReview Customs Code
The consequence:
The existing operating and management system of
port is not effective enough to tackle new situation
New port policies and reforms are required…

Increasing participation from other levels of government
(national, regional/local and supra-national)
Participation of private sector in port operation and
management
De/Re-Centralization
De/Recentralization
Unlike shipping (which was mainly national) , port
policy was traditionally largely diverse of which
it was carried out by different levels of government
National Government: South Korea, China
Regional/Municipal Government: The Netherlands, US
Construction and Management of
Container Terminals in South Korea
De/RecentralizationUntil
1989Ministry of Maritime Affairs and Fisheries (MOMAF)1990
– 2003Korea Container Terminal Authority (KCTA)
(Since 1997: private sector operated terminals)2004 –
dateBusan Port Authority (BPA)
Private sector operates terminals

Port Policy in the United States
De/Recentralization
Traditional Decentralized System of the US
(at least before the New Deal of the 1930s)
Free Enterprises
State/Regional/Local Control
Laissez-faire
De/Recentralization
Port Preference Clause of the US Constitution
(Article 1, Section 9, Clause 6)
No tax/duties shall be laid on articles (cargoes) exported
from any state
No preference should be given by any regulation/revenue to
the ports of one state over those of another
Vessels shall not be bounded to/from one state be obliged to
enter, clear/pay duties in another
De/Recentralization

Implications:
Federal government should not carrying out
policies/investments
favouring particular port(s)
The exercise of government policy affecting ports was legally
mandated to be free from competitive/discriminatory bias
Traditionally laissez-faire approach in port policies
Highly decentralized and cautious port policies
(to avoid being accused of “federal favouritism”)
De/Recentralization
Dredging of Channels:
Federal Government:
> Only finance major water channels with no clear access to
particular port(s) (technically constructed and maintained
by the US Army Corps of Engineers)
Local Government:
> Berths and immediate water channels surrounding the port
State/Regional/Local Government(s):
> Port’s land infrastructure
> Superstructure usually provided by private sectors
De/Recentralization
A National Port Plan never exists…

According to the Report Port Development in the US, written
by Schenker (Chairman of the Panel on the Future Port
Requirements of the US) in 1976, it concluded that a national
port plan was ‘politically unrealistic and economically
unacceptable
in a free, competitive society functioning under the constraints
of the marketplace…’
Port affairs, including investments, financing and subsidies
were all State/Regional/Local affairs
De/Recentralization
The “Yes” Camp:
Destructive Competition and wasting taxpayers’ money, as all
ports would invest their own facilities and create excessive
capacitiesCan local authorities make the right decisions on
issues affecting national interests?
The “No” Camp:
Adaptability and Innovation to new demands of shipping lines
and shippersNational authorities often don’t understand
local/regional needs
With changing circumstances, should the federal government
play a more prominent role (like national port plan)?
De/Recentralization
De/Recentralization
To deal with Increased Port Security, should the Federal
Government controls who operate Ports & Terminals in the US?
De/Recentralization

Public Private Partnership (PPP)
Private Sector Practices or Private Participation?
What type of port activities should public/private
sector be involved in?
How should public-private partnership (PPP) be arranged?
Major Container Terminal Operators in European and
Mediterranean Container Ports, Early 2006 (Source: Ocean
Shipping Consultants)
Public Private PartnershipAPMTRotterdam, Bremerhaven,
Zeebrugge, Dunkirk, Aarhus, Algeciras, Gioia Tauro,
Constantza, East Port Said, TangiersEurogate Hamburg,
Bremerhaven, Gioia Tauro, La Spezia, Livorno, Ravenna,
Cagliari, Lisbon, Rijeka, Ust Luga, TangiersHPHFelixstowe,
Thamesport, Rotterdam, Gdynia, Barcelona,
AlexandriaDPWSouthampton, Tilbury, Shellhaven, Antwerp, Le
Havre, Marseilles, Constantza, YarimcaPSAAntwerp,
Zeebrugge, Flushing, Genoa, Venice, Mersin

Dedicated Terminals of Major Container Carriers in European
and Mediterranean Container Ports, Early 2006 (Source: Ocean
Shipping Consultants)
Public Private PartnershipMaersk (APMT)Rotterdam,
Bremerhaven, Zeebrugge, Dunkirk, Arhus, Algeciras, Gioia
Tauro, Constantza, East Port Said,
TangiersEvergreenTarantoCOSCOAntwerp, Naples, East Port
SaidCMA-CGMAntwerp, Zeebrugge, Le Havre, Marseilles,
Tangiers, MarsaxlokkMSCAntwerp, Bremerhaven, Marseilles,
Las Palmas, Valencia, Tangiers, Genoa, La Spezia, Naples,
Venice, Ambarli
What are the options?
What are the strategies & tools?
What are the implications?
Major Options…

Service Port
Tool Port
Landlord Port
Fully Privatized Port
Service Port: The Port Authority provides/manages all
services to vessels and cargoes, owns and operates every
single port asset and fulfils all regulatory functions.
Examples: Aden (Yemen),
Tool Port: The Port Authority owns the infrastructure,
superstructure and heavy equipment, rents it to operators
and retains all regulatory functions. However, commercial
operation is given to private operators, usually through
outsourcing or management contracts.
Examples: Le Havre
Landlord (Partially Privatized) Port: The Port Authority
owns basic infrastructure, land and access and protection
assets, and leases them out to operators, mostly on a long
term concession basis, while retaining most, if not all,
regulatory functions. Private operators are usually expected
to finance their own superstructure and heavy equipment.
Examples: Rotterdam, Antwerp, Shanghai, Shenzhen,

Fully Privatized Port: The Public Sector does not play any
role in the operation of the port nor ownership of any port-
related assets (most notably land).
Examples: Felixstowe, Hong Kong
Public Private PartnershipOperating StructurePA Owns
InfrastructurePA Owns SuperstructurePA Provides Commercial
100% Public
Involvement
0% Public
Involvement
Service
Port

Tool
Port
Landlord
Port
Fully
Privatized
Port
Modernization
Commercialization
Corporatization
Partial
Privatization
Comprehensive
Privatization
Liberalization
Modernization
Commercialization
Better working practice within bureaucratic constraints
No real changes from the original system
Commercial principles (like accountability to own decisions
and performance), more customer-oriented
Public port is NOT transformed into private company
Liberalization/De-regulation
(Partial) elimination of government regulations
Private companies allowed to participate in some port
functions (but not all)
Corporatization
Public port given the legal status as a private company,

although public sector usually retains ownership
Most assets transferred to the private company
Definition of Privatization: the transfer of ownership
of assets from the public to the private sector or the
application of private capital to fund investments in port
facilities, equipment and systems (UNCTD, 1998)
Partial Privatization
Comprehensive Privatization
Superstructure and infrastructure transferred to the
private company (or invested by the company). The company
often also operates the terminal (and reliable for its own
profits/earnings)
Public sector keeps land and public functions (like quay wall)
Public sector, in many cases, also owns the terminal
The sale of entire port to a private company
If the company decides to sell the port to developer with
no interest in port development/management, it can imply
the end of the port
Fully Public
Outsourcing and
Management Contract
Concession
Arrangement
Build, Own,

Operate (BOO)
Divestiture (by
Licensing or Sale)
Fully Private
Liberalization/
Corporatization
Partial
Privatization
Comprehensive
Privatization
The Tools for Private Participation
Modernization/
Commercialization
Outsourcing & Management Contracts:
The government transferred some of its port
activities to private companies
Time period: 3 to 5 years (in some cases, longer)
Operator never owns the terminal (or even super-
and infrastructure)
Contract renewal usually possible, depending on
circumstances and negotiations

Concession Arrangements:
Build, Operate, Transfer (BOT)
Build, Own, Operate, Transfer (BOOT)
Time period: 20 – 50 years
After this agreed period, operator is obliged
to return the terminal to the public sector
Build, Own, Operate (BOO)
Full Privatization (of Terminal):
Terminal owned by the operator
No obligations to return the terminal (and its
facilities) to the public sector
Criticisms of the Port Reform Pendulum:
Focused on enhancing port efficiency
Largely neglect the impacts of port competition
Public sector = only public duties?
How about the commercial tasks about ‘ports’
(apart from ‘terminals’)?

Port authorities share basic public functions but re-assess their
traditional “authority” role in view of common
challenges:Mediating role of port authorities between
commercial interest, local stakeholders and
governmentNetworking capabilities of port authoritiesPort
authorities as active players in the supply chain
Institutional reform takes place in many ports – greater
autonomy and more independence from (central / local)
government
Commercialization and corporatisation of port authorities
Rotterdam Municipal
Port Management
(RMPM) before 2004
Management Board
Corporate Finance
Management Board
Information & Communication Tech.
Strategy & Communication
Commercial Affairs
Infrastructure & Environment
Facilities
Rotterdam Port Authority

Port of
Rotterdam
N.V. (PoR)
after 2004
Non-Executive Board
CEO
Directorate
Commercial Affairs (CCO)
Directorate
Finance & ICT (CFO)
Internal Audit
Human Resources
Corporate Affairs
Corporate Communication
Corporate Development
Harbour Master’s Division
Directorate
Port Infrastructure & Maritime Affairs (COO)

Maasvlakte II Project
Executive Board
The reformed institution usually has a dual responsibility:
Public Functions
(traditional and new ones like security)
Commercial Functions
(e.g. promotion, marketing, strategic planning)
THANK YOU
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
19961997199819992000200120022003
Year
Growth (in %)
AntwerpBremerhavenFelixstoweHamburg
Le HavreRotterdamSouthampton

0%
10%
20%
30%
40%
50%
60%
70%
80%
19961997199819992000200120022003
Year
Growth (in %)
NingboQingdaoShanghaiTianjinBusanDalian
SCM2210: Transportation Principles
1) Using any relevant real-world examples (e.g., port, airport,
highway, etc.), describe and discuss the major factors that can
lead to ‘paradigm shifts’ in the planning of transportation
infrastructure projects. (10 marks)
2) Also, using any relevant real-world example(s), critically
discuss the roles of institutions in influencing the direction of
planning and development of transportation infrastructure
projects. (10 marks)

Shipping in the Arctic My Arctic your ArcticM.K Afenyo, PhD.docx

Recommended

Recommended

More Related Content

Similar to Shipping in the Arctic My Arctic your ArcticM.K Afenyo, PhD.docx

Similar to Shipping in the Arctic My Arctic your ArcticM.K Afenyo, PhD.docx (20)

More from edgar6wallace88877

More from edgar6wallace88877 (20)

Recently uploaded

Recently uploaded (20)

Shipping in the Arctic My Arctic your ArcticM.K Afenyo, PhD.docx