Module 2
The Evolution of
Ports in a
Competitive World
World Bank Port Reform Toolkit
Evolution of Ports in a Competitive World
•
Overview of the competitive landscape
•
Ports dynamics in the 21st Century
•
Challenges and Opportunities
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Forces governing the competitive landscape
Threat of New Entrants
Bargaining power of
Service Providers
Rivalry among
Existing Competitors
Bargaining Power
of Port Users
Potential for Global Substitute
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Rivalry among existing competitors :
determining factors
•
Hinterland market access
•
Ability to service transshipment trade
•
Regional port capacity and demand
•
Ability to create competition within the port
•
Stakes at risk
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Rivalry among existing competitors :
determining factors (cont’d.)
•
Ability to absorb losses
•
Ability to control operations
•
Limits on rivalry within ports
•
Government willingness to subsidize operations
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Threat of New Competitors : determining factors
•
Capital expenditure for new port facilities
•
New distribution patterns
•
Provisions in operating agreements
•
Natural barriers
•
Magnitude of switching costs
•
Cost advantages and customer loyalties
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Potential for Global Substitutes :
determining factors
•
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
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Bargaining Power of Port Users :
determining factors
•
Concentration of port user power
•
Impact of changing business relationships
•
Presence of large value adding tenants
•
Importance of the port to the economy
•
Ability to replicate port services
•
Facility investments by ports users
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Bargaining Power of Service Providers :
determining factors
•
Experience and capabilities of service provider
•
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
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Evolution of Ports in a Competitive World
•
Overview of the competitive landscape
•
Ports dynamics in the 21st Century
•
Challenges and Opportunities
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Globalization of Production : observed trends
•
Vertical specialization
•
Focused manufacturing
•
Expanded logistics reach
•
Increased sourcing alternatives
•
Impact of globalization on ports
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Impacts of technological changes (1/4)
• Containerization
of world trade
• Future
containership
designs
• Impact on port operations : reduction of ship’s time in port and at
berth, reduction of personnel requirements for cargo handling, raise
of berth productivity, increase of capital intensity of port operations.
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Impacts of technological changes (2/4)
•
Need for container port productivity improvements
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Impacts of technological changes (3/4)
• Impact of increasing port productivity on voyage cost per TEU
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Impacts of technological changes (4/4)
• Growing role
of information
technology
• Port requirements
for large cruise ships
• Other technology
impacting port
services : podded
drive propulsion
systems, self
unloading bulk
carriers, …
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Shifting Bargaining power
•
Consolidation among ocean carriers
•
Emergence of global terminal operators
•
Potential emergence of other global port service suppliers
•
Emergence of global logistics service providers
•
Different ways to buy and sell port services
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Changing Distribution Patterns :
the Hub and Spoke distribution
• Expected attributes of hubs : strategic location, sufficient depth,
extend of terminal facilities, efficiency of container handling
operations, availability of frequent feeder services, attractive cargohandling charges
• Benefits of hub status : increased income, reduced transport time,
increased competitiveness of exporters, creation of jobs
• Problems hubs face : competition from other hubs, lower income
from terminal services charges
• Inland container terminals are shifting activities away from the port
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Environmental and safety concerns
•
Growing environmental concerns :
 Oily ballast water discharge
 Water pollution, air pollution, aesthetics, noise, etc.
•
Issue of sub-standard ships
 Port State Control
 Regional cooperation
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Evolution of Ports in a Competitive World
•
Overview of the competitive landscape
•
Ports dynamics in the 21st Century
•
Challenges and Opportunities
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Transferring Port Operations to the Private Sector
• The need for change : private sector companies have proved
their ability…
 to improve port efficiency
 to transfer their knowledge to the port personnel
 to bear the financial burden of port expansion and
development.
• Impacts of privatizing operations : success stories and failures
• Lessons learned from the past :
 need for transparency and open competition
 need to plan the transition to private operation and the
future functioning scheme of port after reform
•
Contingency plan
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Opportunities for the Private Sector :
available annual revenue
• Terminal operations : $30 to $40 billion
• Tug assist services : $4 to $5 billion
•
Maintenance dredging : $4 to $5 billion
•
Information technology : $2 to $3 billion
•
Environmental facilities and ship safety : $1 to $2 billion
• Other port services : warehousing and storage, port security,
pilotage, etc. : $4 to $5 billion
•
Total : $45 to 60 billion
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