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  • THIS SEEMS A VERY SIMPLE STARTING POINT YET IT IS A COMPLEX SCENARIO, AND WE SHOULD KEEP IN MIND THIS FUNCTION WHEN WE ADDRESS TOPICS SUCH AS: BENEFITS OF PORTS IMPACT OF PORTS PORT DEVELOPMENT AND INVESTMENTS, C-B ANALYSIS PRICE OF FACTORS, AND SO ON AND SINCE I HAVE BEEN SUGGESTED TO HIGHLIGHT THE “MEDITERRANEAN PERSPECTIVE”, I WOULD START BY SHOWING A POSSIBLE EXAMPLE OF THIS COMPLEXITY
  • THIS COMPARISON SUGGESTS SOME POINT OF DISCUSSION BLA BLA BLA
  • "La nueva dimension de los puertos en el siglo XXI (Vigo, 27 ...

    1. 1. la nueva dimension de los puertos en el siglo XXI professor enrico musso università di genova dipartimento di economia e metodi quantitativi www.enricomusso.it Transportes mar ítimos y gestión portuaria Vigo, 27 de noviembre 2003 Instituto de estudios econ ómicos de Galicia Fundación Pedro Barrié de la Maza
    2. 2. Summary <ul><li>The new port economics: </li></ul><ul><ul><li>Changes in the economy </li></ul></ul><ul><ul><li>Changes in the transport industry </li></ul></ul><ul><ul><li>Consequences on demand of port services </li></ul></ul><ul><ul><li>Consequences on production and supply </li></ul></ul><ul><ul><li>The present scenario: new threats and new opportunities </li></ul></ul><ul><li>The market structure of port industry </li></ul><ul><ul><li>Competition and competitiveness </li></ul></ul><ul><ul><li>Port selection criteria </li></ul></ul><ul><ul><li>Is there an optimal size for ports and port terminals? </li></ul></ul><ul><ul><li>Vertical integration: the dedicated terminals </li></ul></ul><ul><ul><li>Horizontal integration: port networking </li></ul></ul><ul><li>Micro and macro economic impacts </li></ul><ul><li>The role of ports and the agenda for policy makers </li></ul>
    3. 3. Summary <ul><li>The new port economics : </li></ul><ul><ul><li>Changes in the economy </li></ul></ul><ul><ul><li>Changes in the transport industry </li></ul></ul><ul><ul><li>Consequences on demand of port services </li></ul></ul><ul><ul><li>Consequences on production and supply </li></ul></ul><ul><ul><li>The present scenario: new threats and new opportunities </li></ul></ul><ul><li>The market structure of port industry </li></ul><ul><ul><li>Competition and competitiveness </li></ul></ul><ul><ul><li>Port selection criteria </li></ul></ul><ul><ul><li>Is there an optimal size for ports and port terminals? </li></ul></ul><ul><ul><li>Vertical integration: the dedicated terminals </li></ul></ul><ul><ul><li>Horizontal integration: port networking </li></ul></ul><ul><li>Micro and macro economic impacts </li></ul><ul><li>The role of ports and the agenda for policy makers </li></ul>
    4. 4. The growth in world seaborne trade (millions of tons) 1950: 100 2000: 1104
    5. 5. Shipping and the world economy <ul><li>The growth of the world economy and the growth in world seaborne trade interact through labour specialisation and widening of markets </li></ul>shipping Growth of world economy Enlarging markets Speciali sation
    6. 6. Some dramatic changes... <ul><li>In the economy </li></ul><ul><ul><li>The boost of seaborne trade (from 525 Mt in 1950 to 5800 Mt in 2000) </li></ul></ul><ul><ul><li>Spatial relocation of production </li></ul></ul><ul><ul><li>The growing importance of logistics </li></ul></ul><ul><li>In maritime transport </li></ul><ul><ul><li>Ships’ size </li></ul></ul><ul><ul><li>Specialisation </li></ul></ul><ul><ul><li>Unitisation (containerisation) </li></ul></ul><ul><ul><li>Transhipment </li></ul></ul><ul><li>In the industrial organization of transport industry: </li></ul><ul><ul><li>Cooperation: SAs, M&As, vertical integration , </li></ul></ul><ul><ul><li>control of intermodal and logistic cycles , logistics outsourcing </li></ul></ul>
    7. 7. Some dramatic changes... <ul><li>Port operations become: </li></ul><ul><ul><li>more capital intensive </li></ul></ul><ul><ul><li>labour saving </li></ul></ul><ul><ul><li>space consuming </li></ul></ul><ul><li>In port market: </li></ul><ul><ul><li>more competition between ports, lower tariffs and lower ports times (pressures from liners) </li></ul></ul><ul><ul><li>risk of overcapacity , </li></ul></ul><ul><ul><li>decreases in producer’s (terminal operator) surpluses and increases in demand (liners, MTOs) surpluses ( caption of port economic rent ) </li></ul></ul><ul><li>In port economies: </li></ul><ul><ul><li>relocation of formerly port-oriented industries </li></ul></ul><ul><ul><li>weaker spatial links with the port (intermodality, transhipment...) </li></ul></ul>
    8. 8. … and some of their consequences <ul><li>Reduction of transport costs, increase in demand </li></ul><ul><li>“ port costs” (costs of the port node for the transport industry, i.e. port + ship generalised costs) shift from ships to terminals </li></ul><ul><li>port service inputs shift from labour to capital and to land </li></ul><ul><li>space consumption and negative externalities are bigger, because of containerisation, overcapacity caused by port competition, dramatic increases in throughputs </li></ul><ul><li>the positive impact of ports tend to spread from local economy to national/global economy, including the hinterland and the shippers </li></ul> Changes can cause gaps in spatial distribution of costs and benefits
    9. 9. The present scenario <ul><li>“ Volatility” of lines </li></ul><ul><li>Hinterland Overlapping </li></ul><ul><li>Higher market power for shipping lines (M&A, Strategic alliances) </li></ul><ul><li>Increasing pressures aiming at : </li></ul><ul><ul><ul><li>reducing costs </li></ul></ul></ul><ul><ul><ul><li>reducing times in ports </li></ul></ul></ul><ul><ul><ul><li>increasing flexibility in services </li></ul></ul></ul><ul><ul><ul><li>enhancing ad hoc contracts </li></ul></ul></ul>Ports/terminals as the weakest contractual part <ul><li>demand-driven planning and development </li></ul><ul><li>Overcapacity </li></ul><ul><li>search for short term competitive advantages </li></ul>
    10. 10. liners Terminal operators (port logistics prov.) PA
    11. 11. Summary <ul><li>The new port economics: </li></ul><ul><ul><li>Changes in the economy </li></ul></ul><ul><ul><li>Changes in the transport industry </li></ul></ul><ul><ul><li>Consequences on demand of port services </li></ul></ul><ul><ul><li>Consequences on production and supply </li></ul></ul><ul><ul><li>The present scenario: new threats and new opportunities </li></ul></ul><ul><li>The market structure of port industry </li></ul><ul><ul><li>Competition and competitiveness </li></ul></ul><ul><ul><li>Port selection criteria </li></ul></ul><ul><ul><li>Is there an optimal size for ports and port terminals? </li></ul></ul><ul><ul><li>Vertical integration: the dedicated terminals </li></ul></ul><ul><ul><li>Horizontal integration: port networking </li></ul></ul><ul><li>Micro and macro economic impacts </li></ul><ul><li>The role of ports and the agenda for policy makers </li></ul>
    12. 12. Port competitiveness: what exactly do we mean? <ul><li>Competition requires competitiveness </li></ul><ul><li>“ Competitive”: who vs. whom ? </li></ul><ul><ul><li>Another terminal operator or company in the same port? </li></ul></ul><ul><ul><li>Another port? </li></ul></ul><ul><ul><ul><li>In the same “range“ (= same coastline, same hinterland)? </li></ul></ul></ul><ul><ul><ul><li>In another “port range”? </li></ul></ul></ul><ul><li>Relevant scale / player: </li></ul><ul><ul><li>port terminal / stevedoring company </li></ul></ul><ul><ul><li>port cluster / port authority </li></ul></ul><ul><ul><li>port range </li></ul></ul>
    13. 13. Port competitiveness: players, competition and traffic Companies: TOs Stevedoring Co . Intra - ports Inter - ports One commodity Specialization Integrat. in supply ch FIRMS Port Authorities Port Bodies Inter - ports Inter - clusters Many commodities Land use Services LOCAL ? (Governments?) (“Port systems”?) Inter - clusters Inter - range All commodities Overall performance Land transp networks NAT
    14. 14. Port competitiveness: a matter of points of view… GOVERNANCE MANAGEMENT Shippers Forwarders MTOs Land carriers Port operators Shipowners Port authority (local) governmt Citizens Lobbies Business comm. EFFICIENT COMP EFFECTIVE COMP SUSTAINABLE COMP Players / stakeholders have different goals
    15. 15. OUTPUTS : - throughput - economic impact Port competitiveness and port’s production function... We have to reconsider the port “production function”: what are the “outputs” and “inputs” of the port industry? PORTS <ul><li>INPUTS : </li></ul><ul><li>- land </li></ul><ul><li>- labour </li></ul><ul><li>- capital </li></ul><ul><li>entrepreneurship </li></ul><ul><li>networks </li></ul><ul><li>environment </li></ul>
    16. 16. <ul><li>Which is the degree of integration? </li></ul><ul><li>Vertical integration (e.g.: dedicated terminals) </li></ul><ul><li>Horizontal integration (port networks; stevedoring groups) </li></ul>Competitiveness and competition: The market structure of port industry Which is the degree of competition / contestability of the market? Is there an “optimal size” for port terminals and ports? Which is the bargaining power of different players? Competion implies competitiveness: What about industrial organisation?
    17. 17. Who are the economic players involved? What is the competitive advantage? Which elements influence the competitive advantage? Does the port/terminal operator control them? Port selection Port competition Which are the criteria for selecting a port?
    18. 18. Port selection: players and criteria <ul><li>PLAYERS: </li></ul><ul><ul><li>shippers </li></ul></ul><ul><ul><li>carriers </li></ul></ul><ul><li>CRITERIA </li></ul><ul><ul><li>“ Product, Price and Promotion decide for Place ” (Kottler) </li></ul></ul><ul><ul><li>Current trend: a shift from “price” (port duties/taxes, handling tariffs, etc.) to “product” ( service time , reliability , service to ships , service to goods ) </li></ul></ul>Handling prices Priority / Time windows Congestion Equipment Ratio of cargo handled <Capacity> Nautical services (pilotage, mooring, towing) Connectivity and accessibility Port planning Services to cargo <Capacity> Hinterland Labour organisation Inland transprt networks Port models terminal port overall
    19. 19. Issues in competitiveness: the 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 terminal Size/capacity Time windows Dedicated terminals
    20. 20. Issues in competitiveness: vertical integration and dedicated terminals Time reduction No queues Vertical integration Concession Dedicated terminals Cooperation Time windows
    21. 21. Effects of dedicated terminals <ul><li>on transit time : </li></ul><ul><li>better scheduling of the service (reduced uncertainty on ship arrivals) </li></ul><ul><li>no or little queueing time </li></ul><ul><li>on quality / reliabity of service </li></ul><ul><li>Service less variable and more reliable (“learning capacity” effect for the terminal operator who manages the “standard” fleet of the specific liner) </li></ul><ul><li>standardisation in loading operations and yards’ management </li></ul><ul><li>Pros: </li></ul><ul><li>Stronger link with main clients </li></ul><ul><li>Securing investments by carriers </li></ul><ul><li>Cons: </li></ul><ul><li>Risk of loosing clients (for other users: increasing queuing times, lower service rates, more congested yards) </li></ul><ul><li>Barriers to entry </li></ul>
    22. 23. Issues in competitiveness: horizontal integration and port networking Increasing size Overcapacity Vertical integration Dedicated terminals <ul><li>economies of scale / network </li></ul><ul><li>Market purposes (geographic penetration) </li></ul><ul><li>shareholders’ interests </li></ul><ul><li>response to concentration in maritime industry </li></ul>Weakness of ports/terminals Horizontal integration as possible reaction
    23. 24. Stevedores consolidation and networking 2001 world container throughput: 260 millions TEUs <ul><li>Hutchison Port Holding: 9,5% </li></ul><ul><li>Port Authority of Singapore: 7,4% </li></ul><ul><li>Maersk (dedicated): 4,9% </li></ul><ul><li>Eurogate: 3,2% </li></ul>4 players, 25% of the market! (top 20 liners, 2000: 55%)
    24. 25. <ul><li>Logistics outsourcing and supply chain integration </li></ul><ul><li>Economies of scale and of networks </li></ul><ul><li>Oligopolistic structure of the market </li></ul>A push toward both competition and cooperation Integrations <ul><li>Between: </li></ul><ul><li>Terminal operators and maritime carriers </li></ul><ul><ul><li>Conceded and dedicated terminal </li></ul></ul><ul><li>Terminal operators and networks </li></ul><ul><li>Terminal operators and inland terminals </li></ul><ul><li>Between terminal operators </li></ul><ul><li>Between port authorities </li></ul>Vertical Horizontal
    25. 26. Hyerachies and networks: from mainport to brainport to chainport Territorial paradigm “ Isolated“ ports protected markets Mainport Competitive paradigm Concentration and competition Ec. of scale Decentralisation Spatial hyerarchies Brainport Cooperative paradigm Port networks port/inland terminal netw Specialization Network cooperation Chainport
    26. 27. Summary <ul><li>The new port economics: </li></ul><ul><ul><li>Changes in the economy </li></ul></ul><ul><ul><li>Changes in the transport industry </li></ul></ul><ul><ul><li>Consequences on demand of port services </li></ul></ul><ul><ul><li>Consequences on production and supply </li></ul></ul><ul><ul><li>The present scenario: new threats and new opportunities </li></ul></ul><ul><li>The market structure of port industry </li></ul><ul><ul><li>Competition and competitiveness </li></ul></ul><ul><ul><li>Port selection criteria </li></ul></ul><ul><ul><li>Is there an optimal size for ports and port terminals? </li></ul></ul><ul><ul><li>Vertical integration: the dedicated terminals </li></ul></ul><ul><ul><li>Horizontal integration: port networking </li></ul></ul><ul><li>Micro and macro economic impacts </li></ul><ul><li>The role of ports and the agenda for policy makers </li></ul>
    27. 28. Container throughput in main Northern E.U. ports
    28. 29. Container throughput in main Southern E.U. ports
    29. 31. Container throughput variation by country (1999 - 2001)
    30. 32. Port freight traffic 1980 - 2000 (.000 tons)
    31. 33. Containerised port traffic 1980 - 2000 (.000 tons)
    32. 34. What’s going on beyond traffic data? <ul><li>Who benefits from port efficiency? </li></ul><ul><li>Who pays? </li></ul><ul><li>Ports are still a business? </li></ul><ul><li>For whom? </li></ul><ul><li>(is the whole port industry sustainable?) </li></ul>
    33. 35. Micro and macro impacts of the port Competitiveness as efficiency (for the port operator) and effectiveness (for the port user) <ul><li>Input demand: </li></ul><ul><li>owners of the inputs </li></ul><ul><li>local commnunity </li></ul><ul><li>Output demand: </li></ul><ul><li>Shippers </li></ul><ul><li>(producers, consumers) </li></ul>Macro impact for the port economy the hinterland Micro impact for the port / transport / logistics industry
    34. 36. De maritimisation or Re maritimisation? <ul><li>Changes in port and transport industry often bring about: </li></ul><ul><ul><li>reduced net benefits for port local economies, resulting from positive economic impact and negative impact on land and environment </li></ul></ul><ul><ul><li>loss of local control and loss of leadership on port industry </li></ul></ul><ul><li>Geographical unbalance between costs and benefits of ports are a key issue in “sustainable port development” </li></ul><ul><li>Strategies for port competitiveness must take into account local impact in order to strenghten the link between the port and its city/region </li></ul>
    35. 37. How do changes affect the economy? <ul><li>Labour per cargo unit dramatically decreases </li></ul><ul><li>Capital and entrepreneurship shift outside the local control (horizontal and vertical integrations in port industry) </li></ul><ul><li>Land price for port uses is low since: </li></ul><ul><ul><li>port competition pushes down prices of stevedoring </li></ul></ul><ul><ul><li>competition and low prices transfer on input markets </li></ul></ul><ul><ul><li>land price lowers around the opportunity cost (or even below) </li></ul></ul><ul><li>Substantial and increasing external costs (road/rail traffic, congestion, marine and air pollution, etc.) </li></ul><ul><li>Regional multipliers possibly lower </li></ul><ul><li> </li></ul><ul><li>A threat for port local economy? </li></ul>
    36. 38. Employment and throughput The relationship seems weak! 1991: 288.000 (316.000) 1996: 278.000 (298.000)
    37. 39. Benefits and costs for local economies <ul><li>Benefits: </li></ul><ul><li>Revenue of inputs </li></ul><ul><li>Multiplier effects </li></ul><ul><li>Positive externalities </li></ul><ul><li>Costs: </li></ul><ul><li>Cost of inputs </li></ul><ul><li>Negative externalities </li></ul>? ?
    38. 40. Summary <ul><li>The new port economics: </li></ul><ul><ul><li>Changes in the economy </li></ul></ul><ul><ul><li>Changes in the transport industry </li></ul></ul><ul><ul><li>Consequences on demand of port services </li></ul></ul><ul><ul><li>Consequences on production and supply </li></ul></ul><ul><ul><li>The present scenario: new threats and new opportunities </li></ul></ul><ul><li>The market structure of port industry </li></ul><ul><ul><li>Competition and competitiveness </li></ul></ul><ul><ul><li>Port selection criteria </li></ul></ul><ul><ul><li>Is there an optimal size for ports and port terminals? </li></ul></ul><ul><ul><li>Vertical integration: the dedicated terminals </li></ul></ul><ul><ul><li>Horizontal integration: port networking </li></ul></ul><ul><li>Micro and macro economic impacts </li></ul><ul><li>The role of ports and the agenda for policy makers </li></ul>
    39. 41. A changing role... Mode exchanger Link in the supply chain Regulator for Maritime and Intermodal transport Hinterland connect. Local development Vertical integration Safety Environment Fair comp. / antitrust New / growing tasks :
    40. 42. Deregulation in ports <ul><li>Privatisation </li></ul><ul><li>sale of shares, private capital, sale of assets, management buyout, project financing (BOT) (a problem: hidden financing) </li></ul>More suppliers Higher efficiency Hinterland overlapping Hub-and-spoke Liberalisation Access to market, competition for the market (biddings) corporatisation, commerc . <ul><li>“ partial”: priv. of services, concession of assets (terminals, yards, infrastr.) coupled with private investment; authorisations </li></ul><ul><li>basically concerning profitable activities </li></ul><ul><li>accompanied by measures to increase efficiency (e.g. easier labour reg.) </li></ul>
    41. 43. Models of port management... Public Public Public Public Public or service port (corp./ comm) Public Private Private Private Private port - No P.A. Public Public Private Private Landlord port - “anseatic” - “latin” Public Public Public Private Tool port Safety Environment Land Ownership Other Services Terminal Management
    42. 44. <ul><li>Private ports </li></ul><ul><li>“ Landlord ports” </li></ul><ul><ul><li>“ anseatic” </li></ul></ul><ul><ul><li>“ latin” </li></ul></ul><ul><li>Tool ports </li></ul><ul><li>Public ports </li></ul>… and their performance “ Market” networking (H and V) “ Institutional” Networking Better for: Efficiency control of supply chain Competition Planning Land use Public funds Purpose: Uncertain local impact No or little market Orienteding Risks:
    43. 45. Equilibrium between different tasks / needs <ul><li>Market failures: </li></ul><ul><ul><li>Natural monopolies </li></ul></ul><ul><ul><li>externalities </li></ul></ul><ul><ul><li>Public goods </li></ul></ul><ul><li>Port planning and land use </li></ul>Competitive environment Non-market failures Safeguarding public resources environment - tax yeld Efficiency Territory Environment Port spaces Port plants Public services Commercial Services Services (pil, tow, moor) Infrastructure constr/manut .
    44. 46. Issues in port organization and regulation Safeguarding public resources Environment - tax yeld Efficiency Public planning Self production Competition for the market Concessions rent Competition in the market (anti-trust control) Territory Environment Port spaces Port plants Public services Commercial Services Services (pil tow moor) Infrastructure constr/manut TAX
    45. 47. la nueva dimension de los puertos en el siglo XXI [email_address] www.enricomusso.it Transportes mar ítimos y gestión portuaria Vigo, 27 de noviembre 2003 Instituto de estudios econ ómicos de Galicia Fundación Pedro Barrié de la Maza Thank you for your attention

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