Labor Toolkit

The Evolution of Ports in a Competitive World

The port sector has radically changed over the past two centuries. During the 19th century and first half of the 20th century, ports tended to be instruments of state or colonial powers and port access and egress was regarded as a means to control markets. Competition between ports was minimal and port-related costs were relatively insignificant in comparison to the high cost of ocean transport and inland transport. As a result, there was little incentive to improve port efficiency.

How times have changed! Most ports today are competing with one another on a global scale and, with the tremendous gains in productivity in ocean transport achieved over the past several decades, ports are now perceived to be the remaining controllable component in improving the efficiency of ocean transport logistics. This has generated the drive today to improve port efficiency, lower cargo handling costs, and integrate port services with other components of the global distribution network. Because of the capital intensity of such efficiency improvements, these have also generated the drive to unbind ports from the bureaucratic control of public entities and encourage private sector operation of a wide range of port-related activities.


The Evolution of Ports in a Competitive World

Overview of the Competitive Landscape

Rivalry among Existing Competitors

Hinterland Market Access

Ability to Service Transshipment Trade

Regional Port Capacity and Demand

Ability to Create Competition within the Port

Stakes at Risk

Ability to Absorb Losses

Ability to Control Operations

Limits on Rivalry within Ports

Government Willingness to Subsidize Operations

Threat of New Competitors

Capital Expenditure for New Port Facilities

New Distribution Patterns

Provisions in Operating Agreements

Natural Barriers

Magnitude of Switching Costs

Cost Advantages and Customer Loyalties

Potential for Global Substitutes

Other Global Sources for Products Moving through the Port

Substitute Products for Exports and Imports

Magnitude of Switching Costs for Substitution

Demand Elasticity of Exports and Imports

Importance of Port Costs in Total Delivered Price

Bargaining Power of Port Users

Concentration of Port User Power

Impact of Changing Business Relationships

Presence of Large Value-Adding Tenants

Importance of Port to the Economy

Ability to Replicate Port Services

Facility Investments by Port Users

Bargaining Power of Service Providers

Experience and Capabilities of Service Providers

Participation in Facility Financing

Choke Points in the Port

Ability to Absorb Downtime

Interrelationships between Providers and Port Users

Rights and Obligations Conveyed by Contractual Agreements

The Bottom Line

Port Dynamics in the 21st Century

Globalization of Production

Vertical Specialization

Focused Manufacturing

Expanded Logistics Reach

Increased Sourcing Alternatives

Impact of Globalization on Ports

Changing Technology

Containerization of World Trade

Future Containership Designs

Impact on Port Operations

Need for Container Port Productivity Improvements

Growing Role of Information Technology

Port Requirements for Large Cruise Ships

Other Technology Affecting Port Services

Shifting Bargaining Power

Consolidation among Ocean Carriers

Emergence of Global Logistics Service Providers

Changing Distribution Patterns

Becoming a Hub

Benefits of Hub Status

Hub Problems

Inland Container Terminals Shifting Activities from the Port

Environmental and Safety Concerns

Growing Environmental Concerns

Recent Environmental Article

Issue of Substandard Ships

Impact of Changing Dynamics on Ports

Challenges and Opportunities

Transferring Port Operations to the Private Sector

The Need for Change

Impact of Privatizing Operations

Lessons Learned from Past Privatizations

Contingency Plan

Opportunities for the Private Sector

Terminal Operations

Towage Services

Maintenance Dredging

Information Technology

Environmental Facilities and Ship Safety

Other Port Services


Box 1: The Competitive Landscape

Box 2: Checklist of Key Questions for Positioning in the Global Port Market

Box 3: Load Centers Competing for the Gulf Market

Box 4: Intraport Competition in the European Union

Box 5: Reebok Logistics Center in the Maasvlakte Distripark

Box 6: Enlarging Venezuelan Export Markets of Coal and Crude Oil

Box 7: Suppliers to Container Terminal

Box 8a: Evolution of Containerized Shipping

Box 8b: Evolution of Containerized Shipping (continued)

Box 9: Development of Container Vessel Sizes as a Percentage of the Global Fleet

Box 10: Ships on Order as of September 2005

Box 11: Evolution of Cellular Fleet

Box 12: Future Containerships Require Increasingly Larger Cranes

Box 13a: Impact on Port Productivity of Unit Voyage Cost of Large Containerships

Box 13b: Impact of Port Productivity...(continued)

Box 14: Ceres Paragon Terminal in Amsterdam, the Netherlands

Box 15: Port User Information Network

Box 16: Felixstowe Cargo Processing System (FCPS)

Box 17: Physical Requirements to Accept Cruise Ships

Box 18: Podded Electric Drive Impact on Requirements for Ship Assist in Port

Box 19: Top 10 Container Carriers as of June 2006

Box 20: Worldwide Container Traffic

Box 21: Global Terminal Operators 2005 Throughput League Table

Box 22: Key Milestones of Hutchison Port Holdings in the 1990s

Box 23a: Hub and Spoke Container Distribution

Box 23b: Hub and Spoke Container Distribution (continued)

Box 24: Hub Options on the Asia–Europe Route

Box 25: Duisburg Inland Container Terminals

Box 26: How a Major Transshipment Terminal and Pretty Bay Beach Coexist

Box 27: The Green Award Initiative

Box 28: Estimated Available Market in the Port Sector

Box 29: The Port of Hong Kong—Why is it so Successful?

Box 30: Ballast Water Treatment Plant in the Port of Portland

Box 30b: Ballast Water Treatment Plant...(continued)

Box 31: Middle East Navigation Aids Service

Box 32: Checklist for Negotiating a Terminal Privatization

Box 32b: Checklist...(continued)


How To Use The Toolkit


Framework for Port Reform

The Evolution of Ports in a Competitive World

Overview of the Competitive Landscape

Port Dynamics in the 21st Century

Challenges and Oppurtunities

Alternative Port Management Structures and Ownership Models

Legal Tools for Port Reform

Financial Implications of Port Reform

Port Regulation:
Overseeing the Economic Public Interest in Ports

Labor Reform and Related Social Issues

Implementing Port Reform


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