VigoSlides3

la nueva dimension de los puertos en el siglo XXI : 

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 marítimos y gestión portuaria Vigo, 27 de noviembre 2003 Instituto de estudios económicos de Galicia Fundación Pedro Barrié de la Maza

Summary : 

Summary The new port economics: Changes in the economy Changes in the transport industry Consequences on demand of port services Consequences on production and supply The present scenario: new threats and new opportunities The market structure of port industry Competition and competitiveness Port selection criteria Is there an optimal size for ports and port terminals? Vertical integration: the dedicated terminals Horizontal integration: port networking Micro and macro economic impacts The role of ports and the agenda for policy makers

Summary : 

Summary The new port economics: Changes in the economy Changes in the transport industry Consequences on demand of port services Consequences on production and supply The present scenario: new threats and new opportunities The market structure of port industry Competition and competitiveness Port selection criteria Is there an optimal size for ports and port terminals? Vertical integration: the dedicated terminals Horizontal integration: port networking Micro and macro economic impacts The role of ports and the agenda for policy makers

The growth in world seaborne trade (millions of tons) : 

The growth in world seaborne trade (millions of tons) 1950: 100 2000: 1104

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 Speciali sation

Some dramatic changes...: 

Some dramatic changes... In the economy The boost of seaborne trade (from 525 Mt in 1950 to 5800 Mt in 2000) Spatial relocation of production The growing importance of logistics In maritime transport Ships’ size Specialisation Unitisation (containerisation) Transhipment In the industrial organization of transport industry: Cooperation: SAs, M&As, vertical integration, control of intermodal and logistic cycles , logistics outsourcing

Some dramatic changes...: 

Some dramatic changes... Port operations become: more capital intensive labour saving space consuming In port market: more competition between ports, lower tariffs and lower ports times (pressures from liners) risk of overcapacity, decreases in producer’s (terminal operator) surpluses and increases in demand (liners, MTOs) surpluses (caption of port economic rent) In port economies: relocation of formerly port-oriented industries weaker spatial links with the port (intermodality, transhipment...)

…and some of their consequences : 

…and some of their consequences Reduction of transport costs, increase in demand “port costs” (costs of the port node for the transport industry, i.e. port + ship generalised costs) shift from ships to terminals port service inputs shift from labour to capital and to land space consumption and negative externalities are bigger, because of containerisation, overcapacity caused by port competition, dramatic increases in throughputs the positive impact of ports tend to spread from local economy to national/global economy, including the hinterland and the shippers  Changes can cause gaps in spatial distribution of costs and benefits

Slide9: 

The present scenario “Volatility” of lines Hinterland Overlapping Higher market power for shipping lines (M&A, Strategic alliances) Increasing pressures aiming at : reducing costs reducing times in ports increasing flexibility in services enhancing ad hoc contracts Ports/terminals as the weakest contractual part demand-driven planning and development Overcapacity search for short term competitive advantages

Slide10: 

liners Terminal operators (port logistics prov.) PA

Summary : 

Summary The new port economics: Changes in the economy Changes in the transport industry Consequences on demand of port services Consequences on production and supply The present scenario: new threats and new opportunities The market structure of port industry Competition and competitiveness Port selection criteria Is there an optimal size for ports and port terminals? Vertical integration: the dedicated terminals Horizontal integration: port networking Micro and macro economic impacts The role of ports and the agenda for policy makers

Port competitiveness: what exactly do we mean? : 

Port competitiveness: what exactly do we mean? Competition requires competitiveness “Competitive”: who vs. whom? Another terminal operator or company in the same port? Another port? In the same “range“ (= same coastline, same hinterland)? In another “port range”? Relevant scale / player: port terminal / stevedoring company port cluster / port authority port range

Port competitiveness: players, competition and traffic : 

Port competitiveness: players, competition and traffic

Port competitiveness:a matter of points of view… : 

GOVERNANCE MANAGEMENT Port competitiveness: a matter of points of view… 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

Slide15: 

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 INPUTS: - land - labour - capital entrepreneurship networks environment

Slide16: 

Which is the degree of integration? Vertical integration (e.g.: dedicated terminals) Horizontal integration (port networks; stevedoring groups) 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?

Slide17: 

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?

Slide18: 

Port selection: players and criteria PLAYERS: shippers carriers CRITERIA “Product, Price and Promotion decide for Place” (Kottler) Current trend: a shift from “price” (port duties/taxes, handling tariffs, etc.) to “product” (service time, reliability, service to ships, service to goods) 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

Issues in competitiveness:the optimal size of the terminal: 

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

Issues in competitiveness:vertical integration and dedicated terminals: 

Issues in competitiveness: vertical integration and dedicated terminals Time reduction No queues Vertical integration Concession Dedicated terminals Cooperation Time windows

Slide21: 

Effects of dedicated terminals on transit time: better scheduling of the service (reduced uncertainty on ship arrivals) no or little queueing time on quality / reliabity of service Service less variable and more reliable (“learning capacity” effect for the terminal operator who manages the “standard” fleet of the specific liner) standardisation 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

Issues in competitiveness:horizontal integration and port networking: 

Issues in competitiveness: horizontal integration and port networking Increasing size Overcapacity Vertical integration Dedicated terminals economies of scale / network Market purposes (geographic penetration) shareholders’ interests response to concentration in maritime industry

Slide24: 

Stevedores consolidation and networking 2001 world container throughput: 260 millions TEUs Hutchison Port Holding: 9,5% Port Authority of Singapore: 7,4% Maersk (dedicated): 4,9% Eurogate: 3,2% 4 players, 25% of the market! (top 20 liners, 2000: 55%)

A push toward both competition and cooperation: 

Logistics outsourcing and supply chain integration Economies of scale and of networks Oligopolistic structure of the market A push toward both competition and cooperation Integrations

Hyerachies and networks: from mainport to brainport to chainport : 

Hyerachies and networks: from mainport to brainport to chainport

Summary : 

Summary The new port economics: Changes in the economy Changes in the transport industry Consequences on demand of port services Consequences on production and supply The present scenario: new threats and new opportunities The market structure of port industry Competition and competitiveness Port selection criteria Is there an optimal size for ports and port terminals? Vertical integration: the dedicated terminals Horizontal integration: port networking Micro and macro economic impacts The role of ports and the agenda for policy makers

Slide28: 

Container throughput in main Northern E.U. ports

Slide29: 

Container throughput in main Southern E.U. ports

Container throughput variation by country (1999 - 2001): 

Container throughput variation by country (1999 - 2001)

Port freight traffic 1980 - 2000 (.000 tons): 

Port freight traffic 1980 - 2000 (.000 tons)

Containerised port traffic 1980 - 2000 (.000 tons): 

Containerised port traffic 1980 - 2000 (.000 tons)

What’s going on beyond traffic data?: 

What’s going on beyond traffic data? Who benefits from port efficiency? Who pays? Ports are still a business? For whom? (is the whole port industry sustainable?)

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 for the port economy the hinterland Micro impact for the port / transport / logistics industry

Demaritimisation or Remaritimisation?: 

Demaritimisation or Remaritimisation? Changes in port and transport industry often bring about: reduced net benefits for port local economies, resulting from positive economic impact and negative impact on land and environment loss of local control and loss of leadership on port industry Geographical unbalance between costs and benefits of ports are a key issue in “sustainable port development” Strategies for port competitiveness must take into account local impact in order to strenghten the link between the port and its city/region

How do changes affect the economy?: 

How do changes affect the economy? Labour per cargo unit dramatically decreases Capital and entrepreneurship shift outside the local control (horizontal and vertical integrations in port industry) Land price for port uses is low since: port competition pushes down prices of stevedoring competition and low prices transfer on input markets land price lowers around the opportunity cost (or even below) Substantial and increasing external costs (road/rail traffic, congestion, marine and air pollution, etc.) Regional multipliers possibly lower  A threat for port local economy?

Slide38: 

Employment and throughput The relationship seems weak! 1991: 288.000 (316.000) 1996: 278.000 (298.000)

Benefits and costs for local economies: 

Benefits and costs for local economies Benefits: Revenue of inputs Multiplier effects Positive externalities Costs: Cost of inputs Negative externalities

Summary : 

Summary The new port economics: Changes in the economy Changes in the transport industry Consequences on demand of port services Consequences on production and supply The present scenario: new threats and new opportunities The market structure of port industry Competition and competitiveness Port selection criteria Is there an optimal size for ports and port terminals? Vertical integration: the dedicated terminals Horizontal integration: port networking Micro and macro economic impacts The role of ports and the agenda for policy makers

A changing role... : 

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:

Deregulation in ports : 

Deregulation in ports Privatisation sale of shares, private capital, sale of assets, management buyout, project financing (BOT) (a problem: hidden financing)

Models of port management...: 

Models of port management...

… and their performance : 

Private ports “Landlord ports” “anseatic” “latin” Tool ports Public ports … and their performance

Equilibrium between different tasks / needs : 

Safeguarding public resources environment - tax yeld Efficiency Equilibrium between different tasks / needs

Issues in port organization and regulation : 

Safeguarding public resources Environment - tax yeld Efficiency Issues in port organization and regulation

la nueva dimension de los puertos en el siglo XXI : 

la nueva dimension de los puertos en el siglo XXI enrico.musso@unige.it www.enricomusso.it Transportes marítimos y gestión portuaria Vigo, 27 de noviembre 2003 Instituto de estudios económicos de Galicia Fundación Pedro Barrié de la Maza Thank you for your attention