PORT ECONOMICS,

MANAGEMENT AND
POLICY
Port Economics, Management and Policy provides a comprehensive analysis of
the contemporary port industry, showing how ports are organized to serve the
global economy and support regional and local development.
Structured in eight sections plus an introduction and epilog, this text-
book examines a wide range of seaport topics, covering maritime shipping
and international trade, port terminals, port governance, port competition,
port policy and much more.
Key features of the book include:
• Multidisciplinary perspective, drawing on economics, geography, man-
agement science and engineering
• Multisector analysis including containers, bulk, break-bulk and the
cruise industry
• Focus on the latest industry trends, such as supply chain management,
automation, digitalization and sustainability
Beneftting from the authors’ extensive involvement in shaping the port sector
across fve continents, this text provides students and scholars with a valuable
resource on ports and maritime transport systems. Practitioners and policy-
makers can also use this as an essential guide towards better port management
and governance.
Theo Notteboom is Chair Professor at the Maritime Institute of Ghent Univer-
sity, a part-time Professor at Antwerp Maritime Academy and the University
of Antwerp, and Visiting Research Professor at Shanghai Maritime University.
Athanasios Pallis is Professor in Management of Ports and Shipping at the
Department of Port Management and Shipping, National and Kapodistrian
University of Athens and is President of the International Association of Mari-
time Economists (IAME).
Jean-Paul Rodrigue is Professor of Geography in the Department of Global
Studies and Geography, Hofstra University, New York.
PORT ECONOMICS,
MANAGEMENT AND
POLICY

Theo Notteboom,

Athanasios Pallis and

Jean-Paul Rodrigue
Cover image: Long Beach Container Terminal (LBCT), Port of Long Beach,
Los Angeles, California. Photograph © Jean-Paul Rodrigue

First published 2022

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© 2022 Theo Notteboom, Athanasios Pallis and Jean-Paul Rodrigue

The right of Theo Notteboom, Athanasios Pallis and Jean-Paul Rodrigue to be

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infringe.

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A catalogue record for this book is available from the British Library

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ISBN: 978-0-367-33156-6 (hbk)

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DOI: 10.4324/9780429318184

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 CONTENTS

Preface xxiii
Introduction: a multifaceted approach to seaports xxvii

Part I Ports and maritime shipping 1

Part II Contemporary ports 105
Part III Port terminals 183
Part IV Port governance 281
Part V Port competition 365
Part VI Port performance 415
Part VII Port policies and development 461
Part VIII Port markets 545

Epilog 603
References and suggested readings 609
Index 625
 DETAILED TABLE OF CONTENTS

Part I Ports and maritime shipping 1

Chapter 1.1 Maritime shipping and international
trade 1
1 Maritime shipping as a driver of globalization 1
2 Ongoing growth of international trade 2
3 The containerization of trade 6
3.1 The emergence of the container 6
3.2 Containerized trade networks 7
3.3 Containerized growth dynamics 8
4 The shift in global trade patterns 10
5 International trade and maritime shipping services 15
5.1 Maritime services in dry bulk shipping 15
5.2 Maritime services in the roll-on/roll-off (RoRo)
market 16
5.3 Maritime services in the general cargo market 17
5.4 Maritime services in container shipping 17
Chapter 1.2 Ports and maritime supply chains 18
1 Growing complexity in supply chain management 18
1.1 Customer expectations 19
1.2 Globalization 19
1.3 Technological innovation 20
1.4 Regulation and competition 20
1.5 Sustainability 21
2 Improving competitiveness 22
2.1 Operating margins and cost control 22
2.2 Cost leadership and differentiation strategies 23
3 The role of third-party logistics services 25
4 Functional integration in the logistics industry 27
4.1 Vertical integration 27
4.2 Horizontal integration 28
4.3 E-fulflment and e-commerce 30
5 Information technologies and digital
transformation 30
Chapter 1.3 Ports and container shipping 32
1 An asset-based industry 32
2 Freight rates and surcharges 35
3 Scale enlargement in vessel size 38
viii Detailed table of contents

4 Horizontal integration: operational

agreements and M&A 42
5 Vertical integration: extending the scope of
operations 45
6 Container services and networks 47
6.1 Container service network patterns 47
6.2 The design of container liner services 51
7 The connectivity of container ports in maritime
networks 54
Chapter 1.4 Ports and distribution networks 57
1 Ports as locations for distribution centers 57
2 Warehousing activities in supply chains 59
2.1 Warehouses and fulfllment centers 59
2.2 Main trends in the warehousing sector 61
3 Regional distribution networks 63
3.1 Choice of distribution system 64
3.2 Location selection for distribution centers 65
3.3 Value-added logistics services 66
Chapter 1.5 Ports and cruise shipping 70
1 Evolution of cruise shipping 70
2 Growth drivers 74
3 Upgraded vessels and onboard amenities 75
4 Scale and market 78
5 Globalization of deployment patterns 82
6 Internationalization of source markets 85
7 Market concentration and multi-brand
strategies 87
Chapter 1.6 Interoceanic passages 89
1 Global maritime routes and chokepoints 89
2 The Suez Canal 93
3 The Panama Canal 95
4 The Strait of Malacca 99
5 The Strait of Hormuz 101
6 Other important passages 102

Part II Contemporary ports 105

Chapter 2.1 The changing geography of seaports 105
1 The geography of ports 105
1.1 Geographical considerations 105
1.2 Historical considerations 106
 Detailed table of contents ix

2 The evolution of contemporary ports 108

2.1 Conventional port sites 111
2.2 Containerization 111
2.3 Mega port facilities 112
2.4 Ports on the periphery 113
2.5 Automation 114
3 Port migration 114
4 Maritime regions 116
Chapter 2.2 Port hinterlands, regionalization and
corridors 117
1 The hinterland concept 117
2 The Hinterland as part of the maritime/land
interface 121
3 The hinterland focus of market players 122
4 Port regionalization 125
5 Hinterland accessibility 128
5.1 Defnition in a port context 128
5.2 Stakeholders in hinterland accessibility 129
5.3 Centrality and hinterland accessibility 129
6 Transport corridors 130
6.1 Defnition and performance 130
6.2 Rail corridors 133
6.3 Inland waterways as hinterland corridors 135
7 Cargo bundling in hinterland transport 137
7.1 Cargo bundling options 137
7.2 Cargo bundling in seaport areas 138
7.3 Specifc considerations related to cargo
bundling 139
Chapter 2.3 Dry ports 140
1 A new role for inland terminals 140
2 Driving forces 143
3 Functions within transport chains 145
4 The regional impacts of inland ports 150
4.1 Europe 150
4.2 North America 152
4.3 East and Southeast Asia 154
5 Future prospects 154
Chapter 2.4 Digital transformation 155
1 The digital transformation of ports 155
2 Disruptive ICT innovations for ports 158
x Detailed table of contents

2.1 Automation and innovation 158

2.2 Automation and robotics 159
2.3 The Internet of Things (IoT) and big data
analytics 160
2.4 Simulation and virtual reality 161
3 Port community systems and blockchains 161
4 Digitalization in cruise ports 167
Chapter 2.5 Green supply chain management in
ports 168
1 The greening of supply chains 168
2 Green design, procurement and manufacturing 169
2.1 Eco-design and green process engineering 169
2.2 Green procurement and purchasing 170
2.3 Green production and remanufacturing 170
3 Energy and transportation effciency 171
3.1 Energy effciency in supply chain
management 171
3.2 Green logistics, distribution and
transportation 172
4 Drivers of GSCM and corporate strategy 174
4.1 Green supply chains and environmental manage-
ment systems 174
4.2 GSCM and corporate proftability 174
4.3 Incentives for GSCM 175
5. GSCM and ports 176
5.1 Green shipping 177
5.2 Green port development and operations 179
5.3 Green inland logistics, modal shift and inland
terminals 179
5.4 Seaports and the circular economy 180
5.5 Knowledge development 182

Part III Port terminals 183

Chapter 3.1 Terminals and terminal operators 183
1 Port terminals 183
2 Global terminal operators 185
2.1 Private involvement in port terminal
operations 185
2.2 Typology of port holdings 186
2.3 Global terminal operators 191
3 The strategies of container terminal operators 193
 Detailed table of contents xi

4 Cruise terminal operators 195

4.1 The emergence of cruise terminal operators 195
4.2 Strategies of cruise terminal operators 196
4.3 The internationalization of cruise terminal
operators 197
Chapter 3.2 Terminal concessions and land leases 201
1 Private involvement in port investment and
operation 201
2 Terminal concessions 203
3 The terminal awarding procedure 203
4 The pre-bidding phase 207
4.1 Object of the concession 208
4.2 Main use of the terminal 208
4.3 Splitting and phasing of the terminal site 208
4.4 The division of risks and investments 210
4.5 Duration of the concession period 210
4.6 Concession fees and fee structure 211
4.7 Final asset compensation 211
5 The prequalifcation phase 211
5.1 Dealing with incumbent terminal operators 212
5.2 Experience and fnancial strength 212
6 The selection phase 212
6.1 The technical and fnancial proposal 213
6.2 Price bid 214
7 Post-bidding phase 214
7.1 The concession agreement 214
7.2 Throughput guarantees 215
7.3 Effectiveness of sanctions in concession
agreements 215
Chapter 3.3 Financialization and terminal funding 216
1 The fnancialization of the terminal industry 216
2 Risks and terminal investments 218
2.1 Port terminals as fnancial risk factors 218
2.2 Port specifc risks for terminal operators 220
2.3 Implications for concessions 221
3 Funding and fnancing of terminal development 222
Chapter 3.4 Container terminal design and
equipment 225
1 The design of container terminals 225
2 Container terminal equipment 227
3 Maritime operations 229
xii Detailed table of contents

4 Yard and auxiliary operations 230

5 Hinterland connectivity 232
6 Conventional vs. automated terminal
confguration 233
7 Terminal capacity use and optimization 234
Chapter 3.5 Bulk and break-bulk terminal design and
equipment 236
1 Major dry bulk terminals 236
2 Minor dry bulk terminals 240
3 Liquid bulk terminals 240
4 RoRo terminals 241
5 Break-bulk terminals 242
Chapter 3.6 Cruise terminal design
and equipment 244
1 Cruise terminals 244
2 Maritime infrastructure 245
3 Apron area of the cruise terminal 247
4 Cruise terminal building 248
5 Embarkation and disembarkation processes 249
6 Ground transportation 251
Chapter 3.7 Port labor 252
1 Employment effects of cargo handling 252
2 Dock labor 254
2.1 Market requirements 254
2.2 Productivity 255
2.3 Cost effciency 256
2.4 Qualitative aspects of labor performance 256
2.5 Legal and social conditions and state of
technology 258
3 Meeting market requirements 259
3.1 Deployment of new technology 259
3.2 The legal status of dockworkers 259
3.3 Open and autonomous labor pool systems 260
4 Improving port work conditions 260
4.1 Increased training initiatives and modalities 260
4.2 A push for continuous work 261
4.3 Composition of gangs or teams 261
4.4 Changes in hiring systems 261
4.5 Specialization, categorization and
qualifcation 262
4.6 Enhancing motivation and commitment 262
 Detailed table of contents xiii

Chapter 3.8 Terminal automation 263

1 Automating terminals 263
1.1 Yard automation 264
1.2 Terminal interface automation 264
1.3 Foreland and hinterland automation 265
2 The port automation drive 266
3 Automated container terminals 268
Chapter 3.9 Port terminal construction 271
1 Greenfeld and brownfeld sites 271
2 Nautical access to terminals 272
3 Quay wall construction 275
3.1 Embedded retaining walls 276
3.2 Gravity walls 277
3.3 Suspended deck structures (piles) 279

Part IV Port governance 281

Chapter 4.1 Port governance and reform 281
1 Port governance 281
1.1 Defning port governance 281
1.2 Port governance objectives 283
1.3 Port governance tasks 284
1.4 Port governance confguration 286
1.5 Realignment of port governance 288
2 Towards modern port governance 289
2.1 Waves of port reform 289
2.2 Types of endorsed reforms 293
3 Contemporary port governance models 294
3.1 Public and private roles in port management 294
3.2 Public ownership remains dominant 296
3.3 The extensive use of concessions 297
3.4 Lessons from full port privatization 298
3.5 Governance approaches across port sizes 299
3.6 The role of the institutional setting 299
Chapter 4.2 Port authorities 301
1 Port authority: a defnition 301
2 Functions of port authorities 302
3 Port authority responsibilities 305
3.1 The port authority as a landlord 305
3.2 The port authority as an operator 306
3.3 The port authority as a regulator 307
xiv Detailed table of contents

4 The port authority as a cluster manager 307

4.1 Cluster leaders 307
4.2 Stakeholder relationships management 308
5 Port authorities’ role in cruise ports governance 309
6 Ownership of port authorities 311
Chapter 4.3 Port coordination and cooperation 312
1 Coordination of port activities 312
2 Coordination in container terminal operations 314
3 Cooperation between ports 315
3.1 Emerging cooperation schemes 315
3.2 Port networking 316
3.3 Merging of port authorities 320
Chapter 4.4 Port clusters 328
1 Port cluster formation 328
2 Activities in port clusters 329
2.1 Transport and cargo handling 329
2.2 Logistics 332
2.3 Industrial activities 332
2.4 Energy 334
3 Port-centric logistics 335
4 Port cluster governance 338
Chapter 4.5 Green port governance 339
1 Port authorities and green ports 339
1.1 Sources of environmental pollution in ports 339
1.2 The greening of port management 343
2 Instruments and tools for promoting green ports 344
2.1 Penalty and incentive pricing 344
2.2 Monitoring and measuring 344
2.3 Market access control and environmental standard
regulation 346
3 Challenges to green port governance 348
4 Green port governance and stakeholders 350
5 Green cruise ports 350
5.1 The cruise environmental challenge 350
5.2 Waste management 351
5.3 Emission control 353
5.4 Regulating an emerging industry 355
Chapter 4.6 Port management, governance and
leadership 356
1 Leadership challenges for port directors and executive
staff 356
 Detailed table of contents xv

2 The need for alignment on the port mission 358

2.1 Alignment between the port executive team and
the board members 359
2.2 Alignment of port mission with customer and
stakeholder goals 360
3 The view from the top: the port director
position 361
4 Board relations 363

Part V Port competition 365

Chapter 5.1 Inter-port competition 365
1 The port competition concept 365
2 Geographical and functional levels of port
competition 366
2.1 Intra-port competition 366
2.2 Inter-port competition within a multi-port
gateway region 366
2.3 Inter-port competition within a
port range 367
2.4 Inter-range competition 367
3 Port competitive advantages 367
4 Determinants of port competitiveness 370
Chapter 5.2 Intra-port competition 372
1 Intra-port competition 372
2 Benefts of intra-port competition 373
2.1 Rent-seeking behavior by service providers 373
2.2 Specialization, fexible adaptation and
innovation 377
3 Conditions and effects of intra-port competition 378
Chapter 5.3 Port marketing 379
1 Ports and their customers 379
2 Marketing objectives and actions 381
3 Increasing customer loyalty 386
3.1 Communication with customers 386
3.2 Listening to front-line people 387
3.3 Service failure recovery 387
3.4 Identify potential defectors 388
3.5 Complaint management 388
3.6 Capitalize on positive communication 388
3.7 Usage of exit barriers 389
3.8 Customer differentiation 389
3.9 Pricing strategies 390
xvi Detailed table of contents

Chapter 5.4 Port pricing 390

1 Port pricing strategies 390
2 Pricing and asset utilization 393
3 Pricing and customer management 394
4 Price incentives for port customers 395
4.1 Volume incentives 395
4.2 Service incentives 396
4.3 Utilization incentives 396
4.4 Gain-sharing incentives 397
5 Port pricing by port authorities 397
5.1 General considerations 397
5.2 Port dues 398
5.3 Port concessions/land fees 400
6 Structures of port charges 401
6.1 Charges at container terminals 401
6.2 Cruise terminals 404
Chapter 5.5 Entry barriers in seaports 406
1 Entry barriers in seaports 406
2 Economic entry barriers 408
2.1 Minimum effcient scale of port services 408
2.2 Switching costs 409
2.3 Sunk costs 410
3 Regulatory, institutional and geography entry
barriers 410
4 Policies to reduce entry barriers 411

Part VI Port performance 415

Chapter 6.1 Port performance 415
1 Port performance components 415
2 Performance measurement: industry level
initiatives 416
Chapter 6.2 Port effciency 424
1 Dimensions of port effciency 424
2 Operational effciency 425
2.1 The port effciency continuum 425
2.2 Container terminal effciency 427
2.3 Performance and the upscale of port
operations 428
3 Market capture 428
4 Connectivity performance 430
5 Environmental performance 430
 Detailed table of contents xvii

6 Financial performance 432

7 Port governance performance 434
8 Socio-economic performance 437
Chapter 6.3 Port effectiveness 438
1 Effectiveness component of port
performance 438
2 Evaluation of port effectiveness 439
3 Supply chain approach to effectiveness 441
4 Variation in stakeholders’ perspectives 442
5 Cruise ports performance 444
Chapter 6.4 Port resilience 445
1 Defning resilience 445
2 Shocks and disruptions impacting ports 447
3 Ports and natural disruptions 449
3.1 Extreme weather events 449
3.2 Geophysical disruptions 449
3.3 Climate change 451
4 Ports and anthropogenic disruptions 452
4.1 Accidents 452
4.2 Labor disputes 453
4.3 Economic and geopolitical events 454
4.4 Information technologies 455
4.5 Pandemics 455
5 Adaptation mechanisms 456

Part VII Port policies and development 461

Chapter 7.1 Ports, policies, and politics 461
1 Multi-level port policy making 461
2 National policies for ports 462
2.1 National port policies themes 462
2.2 Competition policies 464
2.3 Port related policies 465
2.4 The Harbor Master 465
3 International port policies 466
3.1 International organizations 466
3.2 Supranational port policies: European Union 470
3.3 Federal port policies: North America 472
3.4 National perspectives: China 472
4 Port policy issues 473
4.1 Emissions control 473
xviii Detailed table of contents

4.2 Port security 475

4.3 International policies for dock labor 477
5 Ports and geopolitics 477
Chapter 7.2 Ports and economic development 482
1 Ports and economic change 482
2 The economic benefts of ports: direct, indirect and
induced effects 485
3 Assessing the economic benefts of port
investments 488
4 Employment effects of ports 490
5 Measuring employment effects 492
6 Global-local mismatch of the economic benefts of
ports 494
Chapter 7.3 Port planning and development 495
1 Strategic Port planning 495
1.1 Port planning in its context 495
1.2 Strategic port planning in a changing market
environment 496
1.3 The strategic port planning process 497
1.4 Approaches to the port planning process 500
2 Data collection in port planning 500
3 Traffc forecasting as part of port planning and
development 501
3.1 Rationale behind traffc forecasting 501
3.2 Forecasting methods 503
3.3 Challenges and pitfalls in traffc forecasting 505
4 Stakeholder involvement in port planning and
development 506
4.1 Who are the stakeholders? 506
4.2 Key principles of effective stakeholder relations
management (SRM) 508
4.3 SRM and the port objective struggle 511
5 Adaptive port planning 511
6 Port infrastructure project evaluation 515
6.1 Procedures and guidelines 515
6.2 Evaluation methods 516
Chapter 7.4 Port–city relationships 517
1 Cities and global hubs 517
1.1 The growing role of megacities in trade 517
1.2 Cities as maritime and logistics hubs 519
2 Port–city interactions: divergence 521
 Detailed table of contents xix

3 Waterfront redevelopment 524

3.1 Waterfront redevelopment as a form of new
urbanism 524
3.2 Waterfront redevelopment and expanding port
activities 525
3.3 Waterfront redevelopment as part of stakeholder
relations management 526
4 Port–city interactions: sustainable cruise
growth 529
4.1 Reversing social perceptions 530
4.2 Expanding in line with local strategies 531
4.3 Sustaining an international agenda 532
5 Port–city interactions: sustainability 533
Chapter 7.5 Representing port interests 535
1 Port and terminal associations 535
2 Trade unions 542
3 Port services providers 543
4 Port users 543

Part VIII Port markets 545

Chapter 8.1 Cruise ports 545
1 An expanding cruise port system 545
2 Typologies of cruise ports 546
2.1 The port element 546
2.2 The tourism element 549
2.3 Cruise port services 549
3 The competitiveness of cruise ports 550
3.1 Port choice and itineraries 550
3.2 Infrastructure upgrade 552
3.3 Relationships with cruise lines 553
3.4 Scale of cruise port calls 554
3.5 Seasonality of cruise activities 555
3.6 Cruise ports: competition and co-opetition 557
4 Home port 558
5 Localization of cruise supply chains 561
Chapter 8.2 Break bulk 562
1 The origins of the break bulk market 562
1.1 The pre-container era 562
1.2 The shift to unit load 563
1.3 The impact of containerization 564
xx Detailed table of contents

2 The current break bulk market 565

3 The break bulk feet 566
3.1 Conventional liner type concepts 566
3.2 Barge carriers 567
3.3 Container ships 567
3.4 Forest product carrier 567
3.5 Heavy lift and project carriers 567
3.6 Conventional reefer ships 568
3.7 Roll-on roll-off vessels 568
4 Major break bulk market segments 569
4.1 Common market developments 569
4.2 The steel market 570
4.3 Fresh fruit 570
4.4 Forest products 571
4.5 Project cargo 572
4.6 Coffee and cocoa 573
5 Break bulk: generating employment and added-value
in ports 574
Chapter 8.3 Ports and energy 575
1 The origin of energy markets 575
2 Main port energy markets 575
2.1 Coal 576
2.2 Petroleum 576
2.3 Natural gas 578
2.4 Bunker fuel 579
3 The maritime shipping of energy 580
4 Energy and ports 583
Chapter 8.4 Containers 585
1 The box market 586
2 Empty container fows 587
3 Repositioning scales 590
4 Repositioning strategies 591
5 The digitalization of containers 593
Chapter 8.5 Port cold chains 594
1 Cold chain logistics 594
2 Refrigerated containers 597
2.1 The reefer market 597
2.2 Technical considerations 599
3 Reefer terminal facilities 600
 Detailed table of contents xxi

Epilog
1 Dealing with volatility and shifts in port demand 603
2 International and regional functions of ports 603
3 Leading the way in environmental and social
challenges 604
4 Agile ports thinking 604
5 The changing face of port competition 605
6 Towards a multi-scalar approach to port
performance 606
7 The search for the right port governance 606
8 Sustaining functional diversity 607
9 A note from the authors 607
 PREFACE

Port Economics, Management and Policy analyzes the contemporary port indus-
try and how ports are organized to serve the global economy and regional and
local development needs.
The economic importance of the port industry would lead to the assump-
tion that an abundance of books already examines the port industry. However,
this number is limited and usually consists of compilations or endeavors dis-
cussing a limited number of issues.
Having collaborated in port research for more than two decades, we
decided to fll the gap by presenting a book that would navigate the reader
across the dimensions of port economics, management, and policy. Over these
two decades, we investigated ports, blending academic research with practical
experience. We did so with a global reach, working with scholars, port authori-
ties, terminal operators, international and regional port associations, and inter-
national organizations. We embarked on this project affliated with Universities
on three different continents: the Americas, Asia, and Europe. The insights
gained throughout this exciting journey of knowledge are worth sharing.
Globalization, containerization, and technological advancements con-
tinue to transform seaports. Throughout centuries ports have been the critical
infrastructure that allowed civilizations to advance themselves. In the twenty-
frst century, this is a multifaceted industry serving the global economy via its
integration to supply chains. Specialized terminals, port authorities with a dif-
ferent but equally important role, and the involvement of private actors have
evolved in the midst of the core pillars of the modern port industry. Thus,
investigating economics, management, and policies related to contemporary
ports have captured the interest of an expanding community of scholars. The
study of ports demands a multifaceted approach covering macro, meso, and
micro levels, and including themes such as the features of world ports, ter-
minals, port markets, and related distribution networks; the economic, logis-
tics, technological, and environmental factors affecting port development and
strategy; port governance strategies; port policies; and port competition and
performance. All these are equally important for stakeholders who strive to
identify ways to secure competitive port development in an economically,
environmentally, and socially sustainable manner.
Port Economics, Management and Policy uses a conceptual background
supported by extensive feldwork and empirical observations, such as analyz-
ing fows, ports, and the strategies and policies articulating their dynamics.
The port industry is comprehensively investigated in this unique com-
pilation with:
• Multidisciplinary perspective on the port industry relying on econom-
ics, geography, management science, and engineering.
• Abundance of graphic elements such as maps, fgures, photos, and tables.
• Focus on the latest trends impacting the industry, such as supply chain
management, automation, digitalization, and sustainability.
• Multisector analysis including containers, bulk, break-bulk, and the
cruise industry.

***
xxiv Preface

The Introduction sets out the considerations that underlay the writing of this
book. Port Economics, Management and Policy is a multifaceted approach to sea-
ports, with the economic, social, and environmental value of seaports provid-
ing the foundations for defning modern ports and analyzing them.
Part I analyzes the aspects of modern maritime shipping that shape con-
temporary seaports. The dynamics of maritime shipping and international
trade, and those of two growing shipping markets, namely containers and
cruises, are investigated. This is followed by the analysis of port-related dis-
tribution networks and the importance of port hinterlands, the development
of hinterland corridors, and the regionalization of port activities. The crucial
role of interoceanic passages for maritime trade networks is also underlined.
Ports in the twenty-frst century are facing a series of new dynamics,
which are investigated in Part II. They are part of a geography with their loca-
tion and operation subject to economic and technological changes. Port hinter-
lands have particularly been an emerging landscape for port-related activities,
leading to their regionalization, the setting of corridors, and logistical plat-
forms such as dry ports. The digital transformation of the industry and green
supply chain management are also trends that have signifcantly impacted
ports in recent years.
Part III focuses on port terminals. Terminals and terminal operators
maintain a complex portfolio that is usually acquired through concessions and
land leases. Forms of terminal funding and the fnancialization of terminal
operations are also a fundamental part of terminal development. The analysis
of terminal design and equipment looks at containers, bulk and break-bulk,
and cruise port terminals. Attention then turns to dock labor and the ongoing
automation of port terminals, particularly container terminals. The concluding
part provides insights on port terminal construction.
Port governance is the theme of Part IV. Starting with an analysis of the
links between governance and performance, this section presents reforms and
models that shape global ports. Attention then shifts to port authorities, high-
lighting how their changing role takes place with the reinforcement of their
centrality in contemporary port management. Their evolving role is evident
through trends such as the coordination of actors along supply chains, port
cooperation, port clusters, and green port management. Port management,
governance, and leadership have evolved to refect a new reality.
Part IV concludes with an invited contribution from Dr. Geraldine
Knatz, who has served as CEO of one of the world’s biggest ports, the Port of
Los Angeles in the United States, providing an insightful contribution to port
management, governance, and leadership.
Part V focuses on ports evolving within a complex competitive environ-
ment with various forms of port competition, such as inter-port and intra-port
completion. Two parameters are crucial for competition, marketing and pric-
ing. While marketing underlines the relationships that a port establishes with
its customers, pricing remains a determining factor. Conditions for enhancing
port competition are of strategic importance, including the potential of lower-
ing entry barriers in port operations.
Part VI underlines that since ports are in a competitive environment,
their performance is subject to careful consideration and monitored through
a series of indicators. Port performance is composed of effciency, performing
tasks to minimize their costs and externalities, and effectiveness, performing
 Preface xxv

tasks that meet the expectations of users. Performance tends to be an opera-

tional criterion, while effectiveness is a market criterion. Ports can be subject
to disruptions impairing their operations, testing their resilience to maintain
operations.
Part VII analyzes port policies and development. Ports are political and
economic tools. A wide array of principles and themes for national and inter-
national port and port-related policies exist, including international initia-
tives, such as emissions control, port security, and port labor, and there is also
the controversial role of geopolitics in port development. The role of ports in
economic development and strategic port planning is a relevant theme. The
relationships between ports and their localities remain a challenge involving
various facets of port–city interactions. To mitigate the political climate, asso-
ciations are formed at different levels and with different priorities to represent
port interests.
Part VIII focuses on ports, like transportation, serving a derived demand
that can be segmented into specifc markets. The most salient markets include
cruise ports and terminals, the break-bulk market, ports as complexes sup-
plying and distributing energy, the provision and management of containers,
and how cold chain technology has allowed ports to play an active role within
these supply chains, particularly with refrigerated containers (reefers).
The Epilog of this book discusses our perspectives on the emerging
issues that will shape the economics, management, and policies of ports.
We hope that this book will support the expanding community of schol-
ars involved in the study of this maturing research feld to identify founda-
tions of knowledge and stimuli for future research. Students will gain an
all-inclusive approach to the port sector and its dynamics. Port professionals
and stakeholders along the maritime supply chains will gain further insights
on the dynamic port environment in which they want to expand their presence
and competitiveness.

***

Conducting research forms a big part of our academic life. We consider this
book as a milestone in our endeavors to share meaningful research with port
enthusiasts from around the world. These endeavors were shaped by count-
less interactions with multiple port professionals, fellow scholars, and stu-
dents. All three of us would like to thank them for enriching our perspectives
of port economics, management, and policy. Special thanks go to our fellows
in the Port Economics initiative and all those who worked with us in joint
research efforts. We also extend special thanks to our colleagues at the Interna-
tional Association of Maritime Economists (IAME) and the Port Performance
Research Network (PPRN). Theo Notteboom would particularly like to thank
his current and former colleagues at the maritime and port-related centers of
the University of Antwerp, Ghent University, Dalian Maritime University,
and Shanghai Maritime University, many of whom have become friends. Spe-
cial thanks to Emeritus Professor Willy Winkelmans from the University of
Antwerp, who not only introduced him to the world of ports, but also opened
many windows of opportunities to grow as a person and port economist. Tha-
nos Pallis would like to thank his colleagues at the University of the Aegean
for providing the environment for developing research in shipping and ports.
xxvi Preface

Special gratitude goes to Costas Chlomoudis, George Vaggelas, Aimilia Papa-

christou, and Evie Kladaki, prominent members of the Greek port studies clus-
ter, who have been long-term partners in many good and challenging moments
of research, and great friends in life. He also extends special thanks to Thomas
Vitsounis, Spiros Tsiotsis, and Stefania Kollia, for the opportunity to supervise
their doctoral research that has expanded his conceptual horizons. He would
also like to thank Mary Brooks and Gordon Wilmsmeier for hosting intellectu-
ally stimulating sabbaticals that expanded horizons and provided opportuni-
ties for most productive research collaborations. Jean-Paul Rodrigue would
like to thank his Port Economics colleagues, many of whom became friends
over the years. Gratitude to Claude Comtois and Brian Slack for their intro-
duction to the world of transportation many decades ago.
This book is dedicated to our families. The writing of this book is an idea
that was conceived during a dinner at the Chart House in New York, United
States. Since then, the ‘ChartHouse team’ embarked on a number of research
trips, and fnally made the long and passionate journey to conclude this book
during pandemic times. Hui, Jayden, Luca, Valia, Gordana, and Nikola sup-
ported us on all of these hard-working days and nights. This book is dedicated
to them.
Theo Notteboom, Thanos Pallis, Jean-Paul Rodrigue
Antwerp–Athens–New York, January 2022
 INTRODUCTION: A MULTIFACETED
APPROACH TO SEAPORTS

A seaport is a node in global supply chains with a strong maritime charac-

ter and a functional and spatial clustering of port-related activities.

1 A COMPREHENSIVE PORT DEFINITION

The seaport has a long history going back to the early days of human endeav-
ors. As soon as civilizations emerged across the world, trade networks sup-
ported by ports emerged as well. Although maritime transport technology has
evolved substantially, the role and function of ports remain relatively similar.
Conventionally, a port is defned as a transit area, a gateway through which
goods and people move from and to the sea. It is a place of contact between
the land and maritime space, a node where ocean and inland transport sys-
tems interact, and a place of convergence for different transportation modes.
Since maritime and inland transportation modes have different capacities, the
port assumes the role of a point of load break where cargo is consolidated or
deconsolidated.
Even if the term port appears generic, it expresses a substantial diversity
of sizes and functions. Ports also have a geographical diversity in terms of
the sites being used for port activities, which can range from rivers, bays, to
offshore locations. They are complex and multifaceted and can be approached
primarily from a supply chain perspective, which leads to the following
defnition:
A seaport is a logistic and industrial node in global supply chains with
a strong maritime character and a functional and spatial clustering of
activities directly or indirectly linked to transportation, transformation,
and information processes within global supply chains.
A modern seaport is not regarded solely as a load breakpoint in various sup-
ply chains but should be considered a value-adding transit point. As nodes
within transportation and logistics networks, ports have a location whose rela-
tive importance can fuctuate given economic, technical, and political changes.
This location tries to capitalize on the advantages of a port site characterized
by fundamental physical features infuencing the nautical profle, such as
water depth, access channels, and the available land.
The following geographical elements help defne a seaport:
• Location. The relative position of the port in relation to other ports ser-
viced through shipping networks and through its hinterland.
• Site. The physical characteristics of the port, such as its nautical profle
(depth, access channel) and the land available for port activities, particu-
larly for terminals.
xxviii A multifaceted approach to seaports

FIGURE I.1 Defning the Seaport

LOCATION

Logistics node

Hinterland PORT Shipping Network

Industrial node

SITE

The following functional elements help defne a seaport (Figure I.1):

• Logistics node. The added value performed by the port’s transportation
function, including handling, consolidation, and deconsolidation.
• Industrial node. Activities depending on the port as a platform to sup-
ply inputs such as raw materials and distribute outputs such as parts and
fnished goods.

2 TYPOLOGIES OF SEAPORTS
An approach to understanding the diversity of ports is their classifcation into
typologies to analyze their specifc role and functions. Conventionally, ports
can be categorized based on a large number of dimensions, such as:
• Scale. Refers to an assessment of port size in terms of its area, annual
cargo throughput, the size of its hinterland, the number of shipping ser-
vices it is connected to, or the number of customers. The scale of a port is
commonly associated with its economic and commercial importance in
the market it serves (Figure I.2).
• Geographical attributes. Refers to the main characteristics of the port
site and situation. Coastal and inland geography conditions create vari-
ety in the locational setting of port sites such as in a bay, along a coast-
line, on a river, or in an estuary. Many sites have natural advantages,
while for others, the site needs to be improved with dredging and land-
flls. Although a port site is fxed in space, its situation is relative to the
main shipping lanes and hinterland, or its proximity to and interactions
with cities or urban conurbations.
• Governance and institutional settings. Refers to the terms of land own-
ership and the roles of institutional arrangements between the public
and private sectors. Many ports are publicly owned but have terminals
operated by private organizations.
• Port functions. Refers to the range of services offered by the port such as
cargo handling, logistics, and distribution, industry, and maritime ser-
vices. They are subject to competitive pressures since the services offered
by a port can be offered by another port.
 A multifaceted approach to seaports xxix

FIGURE I.2 World’s Largest Ports, 2016

xxx A multifaceted approach to seaports

• Specialization. Refers to the cargo handled, such as containers, con-

ventional general cargo, liquid bulk, dry bulk, or roll-on/roll-off cargo.
Some ports are specialized in handling passenger traffc, namely cruise
ships and ferries. Another specialization concerns port-centric indus-
tries such as steel plants, energy plants, automotive, or chemical indus-
tries. Further, logistics activities are an important contributor to port
specialization.
Through generations of port development, port functions have changed and
expanded, responding to technical, economic, and social developments. From
the traffc being generated, functions such as trade, distribution, and indus-
try have emerged in seaports, broadening and deepening their functions. In
recent decades, the main driving forces include containerization, diversifca-
tion of cargo types and equipment, intermodal transport, and information
technologies. Port functions are extended to trade, logistics, and production
centers with an extensive portfolio of operations, including production, trade,
and service industries. Some seaports have grown to become industrial com-
plexes comprising a large number of industrial activities.
Successive stages in port development, in part coordinated by differ-
ent economic opportunities, have favored the establishment of a hierarchy of
ports, ranging from small ports servicing a niche market to large gateways
servicing a vast area composed of an extensive range of economic activities.
Like most hierarchies, there are a small number of very large ports accounting
for a signifcant share of the total traffc and many small ports that account for
limited traffc. For instance, in 2019, the 20 largest container ports accounted
for 44% of the total traffc, refecting a well-established hierarchy (Figure I.3).
This does not imply that small ports are of limited importance for the econo-
mies they serve. Small islands and nation-states have a high dependence on
their ports to access global markets.
From a supply chain perspective, seaports are increasingly functioning
not as individual places that handle ships but as turntables within global
supply chains and global transportation networks. The contemporary port
(labeled fourth-generation port) is characterized as a platform commanding
freight fows and requiring knowledge-intensive coordination activities. A
seaport is not self-contained as port activities contribute to the industrial
and logistics development in the port areas and its hinterland. Thus, ports
act as service centers and logistics platforms for international trade and
transport.
In recent decades ports have been subject to a wave of reforms that
refects the increasing business and market-oriented approach to port man-
agement. From governance and institutional perspectives, many ports have
become independent commercial organizations aiming at proftability, cost
recovery, and customer service.

3 STAGES IN PORT DEVELOPMENT

The widely cited port-type generations of United Nations Conference on
Trade and Development (UNCTAD) and later port generation models
look at port roles and functions, but also at institutional structuring and
operational and management practices. In 1994, UNCTAD coined the term
FIGURE I.3 World’s Major Container Ports, 2016
A multifaceted approach to seaports xxxi
xxxii A multifaceted approach to seaports

‘third-generation port’, to describe a port which has functions dealing with

cargo handling plus other value-added services such as warehousing, pack-
aging, and distribution, providing additional employment and revenue to
the port community. In 1999, UNCTAD defned port-type generations from
the frst to the fourth-generation port based on interfaces of ship and shore
with the operation of cargo types, a higher dependency on capital rather
than labor, the development of containerization and logistics, and changes
in port operators and administration with vertical and horizontal integra-
tion strategies (Figure I.4).
Therefore, ports develop both functionally, in terms of the cargo they
handle, and spatially, in terms of the extent of their infrastructure and position
in shipping networks. Four major generations (or stages) can be identifed,
each corresponding to a specifc era in the commercial geography of ports.
Three main typological factors can articulate the temporal sequence of port
development:
• External environment. A series of external political, economic, and
technological developments impact the role and function of ports. The
most recent driving forces concern globalization, sustainability, and
digitalization.
• Spatial organization. The scale and scope of port activity have substan-
tially expanded with the setting of port networks.
• Organization and strategy. Port authorities have become complex
entities managing the port network communities with the goal of
developing integrated transportation and logistics services for their
hinterland.
Some scholars have proposed a ‘ffth-generation port’ (5GP) with the intro-
duction of a ‘port ladder’ towards customer-centric community-focused ports.
The 5GP involves customer-centric community ports that increasingly look at
market opportunities through the eyes of their customers and adapt to meet
the ever-higher expectations of their host communities.

4 PORT DIMENSIONS
Four main dimensions help defne the role and function of a port (Figure I.5):
• Location. A port is a location that has convenient physical charac-
teristics (such as a protected bay) and thus supports a more effective
interface between the maritime and land domains than other loca-
tions. Although the location of a port does not change, the site can be
improved through dredging and land reclamation, which requires sub-
stantial capital investments. This allows the port to expand its scale in
terms of its surface and the amount of traffc it can handle. The situation
of a port can also change as it is dependent on large zones of production
and consumption.
• Operations. A port has operational characteristics in terms of the type
of traffc it can handle and related volumes. This is contingent upon
the infrastructure (berths) and the superstructure (cranes and yard
equipment) linking the port foreland (the ports it is connected to) and
the port hinterland (inland market area). With capital investments and
FIGURE I.4 Functional and Spatial Development of a Seaport

First Generation Second Generation Third Generation Fourth Generation

(Before 1960s) (1960s to 1980s) (1980s to 2000s) (Since 2000s)
External Environment
Development factors • Steamships; Rise of nations; Rise of trade • Petrochemistry; Trucks and pipelines; Structural • Multinational corporations; Containerization; • Global economy; Information systems;
prosperity; Industrialization Environmentalism; Globalization. Sustainability; Digitalization

Port functions • Transshipment (1); Storage (2); Trade (3) • (1) to (3) + Industry (4) • (1) to (4) + Distribution (5) • (1) to (5) + Logistics (6)

Nature of production • Cargo flow; Simple services; Low added-value. • Cargo flow; Cargo transformation; Combined • Cargo/information flow; Cargo distribution; • Cargo/information flow; Cargo/information
services; Improved value-added Multiple service package; High value-added distribution; Multiple service package; High
value-added; Chain management
Type of cargo • General cargo and bulk • General cargo, bulk and liquid bulk • Bulk and unitized/containerized cargo • General/containerized cargo; information

Spatial Organization
Port spatial scale • Port city • Port area • Port region • Port network

Port spatial expansion • Quay and waterfront area • Enlarged port area • Terminals and inland corridors • Network-related functional expansion

Location factors • Labor and market access • Access to raw materials; Access to sales market; • Availability of transshipment facilities; Access to • Availability of transshipment facilities; Access to
Availability of capital sales market; Space; Flexibility; and labor costs sales market; Space; Flexibility; and labor costs

Strategy
• Independent activities within port; Informal • Close port / users relationship; Loose port / • Port community; Port / transport chain • Port network community; Close relation between
Organization relationship between port and port users activities relationship; Causal port / city integration; Close relation between port and port network and public authorities on different
relationship municipality; Enlarged port organization levels
Role of port authority • Nautical services (1) • 1 + land and infrastructure development (2) • (1), (2) + Port marketing (3) • (1) to (3) + Network management (4)

Port strategy • Port as changing point of transport • Transport, industrial and commercial center • Integrated transport and logistic center • Integrated transport, logistic and information
complex and network

Source: Adapted from Van Klink (2003).

A multifaceted approach to seaports xxxiii
xxxiv A multifaceted approach to seaports

FIGURE I.5 Port Dimensions

Location Operations Governance Function

Foreland Hinterland

Site and situation Capacity Jurisdiction Cargo handling

Scale Efficiency Management Specialization

management, the operational effciency of a port can be improved with

changes to land, equipment, and management.
• Governance. A port is a well-defned administrative unit that involves
land ownership and a jurisdiction (what a port can legally do). The port
authority is a common administrative framework for a port, and in many
cases, terminal management and operations are leased to private compa-
nies. Port authorities usually have the right to spearhead port develop-
ment projects and secure funding.
• Function. A port adds value to transport and supply chains through
its cargo handling. Historically, heavy industrial activities such as steel
mills and petrochemical plants had a propensity to locate within or
nearby ports. This process is still going on and being complemented by
a large array of freight distribution activities. There is a diversity of port
functions associated with specialization forms, such as ports involved in
minerals, energy, and containers. Large ports tend to be polyfunctional,
while smaller ports tend to be monofunctional.
Port sites have been the subject of geographical considerations, with a
preference for sites combining a good maritime profle with inland accessibil-
ity. There is a vast array of port sites linked to specifc nautical profles, which
are articulated around seaports and mainland ports (Figure I.6):
• Seaports. These ports have direct access to the sea and try to take advan-
tage of a local geographical feature. This can involve (A) bays or direct
coastline, and (B) natural harbors, or protected locations. These sites
are often associated with a lateral expansion of the port facilities, often
towards locations with a deeper nautical profle.
• Mainland ports. These ports are linked to a major river, which often
serves a vast hinterland. There are ports in (C) an estuary, (D) a delta,
and (E) along a river, often at the furthest point of inland navigation.
These sites are associated with an upstream expansion of port facilities.
The most common sites are those in bays or by the coastline (50%), followed
by natural harbors (20%). This underlines the importance of maritime acces-
sibility for the world’s largest ports. The remaining 30% involve ports located
along river systems.
 A multifaceted approach to seaports xxxv

FIGURE I.6 Port Sites

FIGURE I.7 Global Cruise Port Activity, 2012
xxxvi A multifaceted approach to seaports

Source: Data adapted from Cruise Market Watch (www.cruisemarketwatch.com). Cruise port visits based upon the published itineraries of about 90% of the
global cruise shipping capacity.
 A multifaceted approach to seaports xxxvii

Container ports are refective of the world’s commercial geography,

particularly since they predominantly handle fnished and intermediate
goods. Commodities are becoming more prevalent but remain a niche
market. Prior to the 1990s, the world’s most important ports were North
American (e.g. New York) and Western European (e.g. Rotterdam). Glo-
balization, supported by containerization, completely changed the world’s
commercial geography with the emergence of new port locations refecting
changes in the global geography of production, distribution, and consump-
tion. This geography indicates a high level of traffc concentration around
large port facilities, notably Pacifc Asian ports along the Tokyo-Singapore
corridor. As export-oriented economic development strategies took shape,
the number of containers handled in Pacifc Asian ports, notably Chinese
ports, surged.
The comparative size of ports requires caution as several ports can be
considered more as statistical agglomerations than functional entities. For
instance, the port of Shenzhen in the Pearl River Delta is composed of several
large port facilities (e.g. Yantian, Chiwan, Shekou) that act as distinct enti-
ties within their operations and even service different hinterlands. The same
observation applies to Guangzhou and Shanghai that are multiport (and
multi-terminal) entities.
The global cruise port system is characterized by a high level of regional
concentration as well as a clustering of port visits (Figure I.7). The observed
destination patterns clearly underline the prominence of port visits around the
Caribbean and the Mediterranean, in line with the operational characteristics
of seven day cruises calling at three to fve ports. Other clusters of signifcant
activity concern the US Northeast and Atlantic Canada, Alaska, Hawaii, Han-
seatic ports, and the coast of Norway. In the 2010s, Asia has been the most sig-
nifcant growth market for the industry. New cruising clusters are emerging
to serve a latent demand from a growing middle and upper class in Asia, the
Middle East, and South America. With a number of cruise vessels deployed
in the Australian market offering their services in the region, cruise ports are
developing in all parts of the world.

5 PORT SYSTEMS: BEYOND INDIVIDUAL SEAPORTS

Seaports are part of a system with specifc spatial and functional character-
istics, supporting global logistics and transport networks. They interact with
other nodes such as overseas and neighboring seaports, intermodal terminals,
and inland logistics platforms. Seaports are subject to three types of functional
interdependences with other nodes (Figure I.8):
• Chain networks. Ports are nodes, part of a sequence of fows where the
output of one node in the network is the input for another. An example
is a relation between container ports and inland load centers. Rotterdam
services of a chain of inland terminals along with the Rhine river, a role
similarly assumed by Shanghai for inland terminals along the Yangtze
River. Chain networks also apply for trans-ocean relations, including
deep sea liner services such as the Rotterdam–Singapore chain support-
ing the Europe–Far East trade.
xxxviii A multifaceted approach to seaports

FIGURE I.8 Functional Interdependencies of a Seaport

Chain Network
Inland Facility
Port
Port
Foreland Hinterland

Hierarchical Network

Hub Feeder Services

Port
Deepsea Services

Transactional Network

Port

Cooperation Competition

• Hierarchical networks. Ports are nodes, part of different connectivity

levels, implying that some locations can be reached indirectly as opposed
to directly. An example is the hub-feeder port relation in container ship-
ping linking the South Korean container port Busan to smaller feeder
ports in Northeast Asia.
• Transactional networks. Ports are nodes in a system of commercial rela-
tions where they can be competitive or complementary. They use advan-
tages such as location, cost, and productivity to attract or retain shipping
services and traffc.

6 INTERDEPENDENCIES WITH OTHER NODES

Ports rarely operate in isolation from other ports but are part of complex net-
works of interactions. A port system can be defned as a system of two or more
ports located in proximity within a given area. They can relate to a complete
coastline such as the West coast of North America. The port range is one of the
largest consistent port systems.
A port range can be defned as a group of ports situated along the same
seashore and potentially sharing access to a hinterland.
There are many maritime ranges worldwide, each with its inherent geographi-
cal, economic, and functional characteristics. The Hamburg–Le Havre range in
Europe is a typical example, which can be expanded to include the Gdansk–Le
Havre range. An acute intra-range competition can be observed at the multi-
port gateway level.
A multiport gateway region refers to a group of ports in proximity
competing for the same port calls and hinterland. It has a smaller geo-
graphical scale than a container port range. The locational relationship
 A multifaceted approach to seaports xxxix

to nearby identical traffc hinterlands is one of the criteria for grouping

adjacent container ports into the same multiport gateway region. The
port-calling patterns in the maritime service networks and hinterland
connectivity profle can also help group ports to a multiport gateway
region.

FIGURE I.9 The European Container Port System and its Multi-port Gateway
Regions

Source: Rodrigue and Notteboom (2010).

Typical examples include the Rhine–Scheldt Delta (Belgium and the Nether-
lands) and the Yangtze River Delta and Pearl River Delta in China. A port
range can be home to several multiport gateway regions (Figure I.9). For
example, the Gdansk–Le Havre range includes the multiport gateway regions
of the Gdansk Bay in Poland, North-Germany, the Rhine–Scheldt Delta, and
the Seine Estuary in France.
Inland nodes and feeder ports are also considered as part of the
port system. They are competing to attract economic activities associated
with seaports, which leads to functional changes in the port system. These
nodes can also co-operate and coordinate their development by bundling
transport fows and offering land for development. This gives economic
activities such as manufacturing and logistics a range of locational options
for nodes that are the most suitable to their operational and market access
needs.
xl A multifaceted approach to seaports

7 PORTS AS ECONOMIC CATALYSTS

The core value of ports is economic since they support trade fows and the
ecosystem of related activities. As they can represent a substantial economic
investment, ports are expected to provide enough value to justify these invest-
ments. From an economic and public policy perspective, ports are viewed as
economic catalysts for the regions they serve. Two distinct approaches can
be followed when evaluating the strategic and economic signifcance of ports
(Figure I.10). The frst is to measure the economic signifcance of ports via dis-
tinct parameters. There exists a large range of potential indicators. Some are
expressed in absolute fgures, while others are expressed in relative terms. A
non-exhaustive list includes:
• Gross value-added, which provides an insight into the contribution of
port activity to the GDP (Gross Domestic Product) or GRP (Gross Regional
Product) in a given time period (often annually). This added-value can be
complex to evaluate since ports directly impact those activities directly
connected to them and without which the port could not effectively func-
tion. There is also a range of indirect impacts on the whole ecosystem of
economic activities that may interact with the activities directly related
to the port. As international trade grew, the indirect impacts of ports on
national or regional economies became even more important.
• Employment, which is mainly expressed in full-time equivalents (FTEs)
and provides an insight into how port activities contribute to employ-
ment creation. In most cases, a snapshot is taken once a year to provide
the total employment or port activities. Similar to added-value, there is
a whole range of employment that is indirectly related to port activities.
• Trade volumes and values, which provide an insight into the impor-
tance of ports for international trade. Traffc direction can also be con-
sidered since several ports are dominantly export platforms while others
are focused on imports. In these cases, the same volume and trade com-
position can support different economic structures.
• Fiscal revenue, which indicates how port activities contribute to the
taxation income within their jurisdictions, ranging from national to
municipal governments. This is particularly relevant to justify the public
expenses supporting port activities, particularly infrastructure.

FIGURE I.10 The Economic Signifcance of Ports

Economic Significance

Gross Value Added Trade Volumes Employment

Hinterland Port Level Shipping Network

Fiscal Revenue Investments

Financial Significance
 A multifaceted approach to seaports xli

• Investments by the public and private sector in port activities over a

given period. Port superstructure and infrastructure are capital intensive
and require constant maintenance.
The second approach is of a more qualitative nature and tries to evaluate the
signifcance and value of seaports for the economic development and per-
formance of their market. These strategic aspects are diffcult to quantify but
deserve attention.

7.1 Ports as generators of added value and employment

The frst approach asserts that ports contribute to the generation of socio-
economic benefts and wealth, particularly direct and indirect added-value
and employment. The external spill-over effects of ports can be substantial.
Simultaneously, the economic effects of seaport activities are no longer limited
to the local environment. They are increasingly spread over a much wider
geographical area and among a large number of international players. In other
words, the economic benefts of port activities are expanding from the local
port system towards a much larger economic system. The geographical disper-
sion of economic effects is apparent when a port does not develop local added
value activities linked to transit cargo or establish a strong local industrial and
logistics cluster. In that case, cargo fows are transiting the port, thereby gen-
erating employment and value-added effects for the local community, mainly
in cargo handling, ship services, and inland transport operations.
The changing distribution of benefts is also illustrated by the develop-
ment of logistics zones in the vicinity of seaports or inland locations along
the main corridors towards the hinterland. This trend has been supported by
growing containerization and intermodal transport systems. In many cases,
these logistics sites and zones generate considerable economic benefts by pro-
viding low-end, high-end value-added logistics services (VALS) to the cargo
and only using ports as a transit point. However, it is unlikely that these sites
and zones would have developed if it were not for seaports.
Policymakers and public authorities typically approach the macro-
economic impacts of ports from a national or regional competitiveness
perspective. Most available reports and fgures on the economic impact of sea-
ports portray the national or regional economic effects. Ports impact the wider
economic space and international trade, with logistics receiving less attention.
While leakages of port-related benefts to regions in the more distant hinter-
land can be substantial, policymakers focus on maximizing the port’s input
payback for the local or regional communities under their jurisdiction. The
main port development objective is to provide infrastructures for the local,
regional, or national interest at the lowest combined cost to the port and its
users.
From a macro-economic perspective, seaports typically are important
generators of employment. The employment effects of a port activity usually
extend beyond the initial round of employment generated by that activity. The
extent of the employment effects of ports is affected by the boundaries of the
economy that is being analyzed. The increasingly international nature of port
and shipping activities and the characteristics of global supply chains make
the employment effects of port activities typically extend beyond the local
xlii A multifaceted approach to seaports

level to a regional or even supranational level. For instance, shipping lines are
operating on a global scale with related employment effects such as for ship
crews. On a local scale, they might generate employment via their liner ship-
ping agencies in the ports of call.
Employment related to ship management, container feet management,
and investment and commercial strategies is usually concentrated in global or
regional headquarters. The same applies to global container terminal opera-
tors such as PSA (headquartered in Singapore), Hutchison Ports (Hong Kong),
DP World (Dubai), or APM Terminals (The Hague). While these companies
generate many operational jobs at the local port level, they keep some activities
centralized in global or regional headquarters, such as equipment purchases
and research and development. Terminal operators might purchase terminal
equipment from foreign suppliers such as Kalmar, Konecranes, or Shanghai-
based ZPMC. For a particular port activity, the fow-on employment effects to
the national or international economy will generally be larger than the fow-on
effects to the regional economy.

7.2 The strategic value of ports

By providing cost-effcient, reliable, and frequent connections to overseas
and inland markets, seaports play an essential role in facilitating trade and
increasing the competitiveness of a nation or region. This strategic value
manifests itself in different ways:
• First, the proximity of effcient seaports can be an important factor in
the location decisions of frms.
• Second, the availability of a competitive seaport system can reduce reli-
ance on foreign ports for trade and can reduce the total logistics costs for
frms located in the region.
• Third, seaports can substantially contribute to the international com-
petitiveness of frms in a region or country, mainly through existing
innovation and advanced business networks and management.
Good infrastructure and high accessibility or connectivity are increasingly
becoming basic requirements for competitiveness. For high-income economies,
innovation and advanced production factors become essential to remain com-
petitive. This also alters the strategic role of seaports. Instead of just ensuring
connectivity to overseas and inland markets, seaports also play a role as innova-
tion centers. A port is no longer a quayside area where cargo is simply shifted
from land to sea. It becomes a vital link in global supply chains and international
transport networks. By striving for competitiveness and effciency improve-
ments, seaports can become drivers of innovation. This sense of innovation is
strengthened by port cluster management that enhances knowledge exchanges
among organizations within and outside the cluster. Through clustering, a
knowledge spill-over is created, increasing innovation and added value.
Ports can be sources for innovation, productivity enhancements, and
strategic cooperation through the presence of large multinational frms, lead-
ing frms, and clusters of related and supporting industries. Ports can also
enhance specialization, innovation, and productivity improvements through
cooperation with ports and other logistics hubs in the region. Finally, ports can
help support the diffusion of competencies and the further gathering of knowl-
edge in port management and logistics. Next to pure economic arguments,
 A multifaceted approach to seaports xliii

these more strategic aspects should be considered when evaluating port devel-
opment plans.
The importance of a port to a regional, national, or supranational econ-
omy is greater than is shown by measures of direct and indirect value-added
and employment. For example, a 2015 study estimated the strategic value of
the seaport system in Belgium at €45 billion, or 60% more than reported in the
annual port economic impact studies of the National Bank of Belgium.

8 FROM CARGO HANDLING TO NODES IN GLOBAL

SUPPLY CHAINS
Next to the macro-economic perspective, seaports can also be analyzed using
a microeconomic approach. Port operations are usually oriented towards the
two traditional components of ships and cargo (Figure I.11).
• Services to ships include those performed at the sea or waterways side
(dredging, pilotage, mooring/unmooring) and the ship/shore interface
(berthing, repair and maintenance, supply, and bunkering).
• Services to cargo can be divided into those performed at the ship/shore
interface (stowing, loading, discharging) and those entirely performed in
landside areas such as consolidation, storage, and distribution.
Key in the micro-perspective approach are the concepts of effciency, perfor-
mance, and sustainability at the operational level (i.e. a company or a termi-
nal). This approach to ports advocates that corporations and their terminals
are the relevant units of analysis when analyzing or assessing port competi-
tion, not seaports.
While the transit, transport, and handling of cargo is the rationale for
ports, seaport functions have become diverse in scope and nature and evolve
over time. The complexity of seaports goes beyond the loading and discharg-
ing of vessels along the quay. Fundamental processes of economic and tech-
nological change have broadened and deepened the functions of seaports.
Seaports added new functions to their traditional role of transshipping and
storing goods. After the Second World War, the industrial function grew rap-
idly. Some seaports have grown out to become industrial complexes com-
prising a large number of related industrial activities, the so-called maritime
industrial development areas (MIDA).
In more recent years, the logistical function of seaports received atten-
tion. The increasing importance of integrating ports and terminals in value-
driven supply chains has increased the focus on creating added value linked

FIGURE I.11 Transport and Cargo Handling Functions of a Port

Services to ships PORT Services to cargo

Industrial complexes

Logistics clusters
xliv A multifaceted approach to seaports

to cargo passing through the port. The gateway position of major seaports
offers opportunities to enhance value-added logistics services (VALS) by inte-
grating the production and distribution chain. By offering VALS, ports aim
to attract a large portion of the value-added creation within product chains.
Modern seaports have evolved from pure cargo handling centers to a function
in a logistics system.
The competitiveness of ports can be better understood by following a
supply chain approach. Ports compete not as individual places that handle
ships but as crucial links within global supply chains. Port and route selection
criteria are related to the entire network in which the port is just one node. The
selected ports are those that will help to minimize the sum of sea, port, and
inland costs, including inventory and quality considerations of shippers. Port
choice becomes more a function of the overall network cost and performance.
A well-coordinated logistics and distribution function of seaports with the
cooperation of various service providers facilitates the integration of ports in
advanced logistical and distributional networks through a new range of high-
quality value-adding services.

9 PORTS AS CLUSTERS OF ECONOMIC ACTIVITY

At the intermediate level, ports are often approached as clusters of companies
and economic activities (Figure I.12). Ports typically consist of geographically
concentrated and mutually related business units centered around transport,
trade, and industrial production. Port clusters exhibit strong scale and scope
advantages linked to physical cargo fows. The concentration of activities
opens more opportunities to the bundling of cargo fows via intermodal trans-
port (shortsea, barge, or rail) and to achieve higher connectivity to the rest of
the world via frequent transport services. Port clusters can be home to a wide
range of activities.
While industrial activities in ports are often associated with negative
effects in terms of emissions and noise pollution, port clusters can exert strong
environmental advantages. For example, ‘ecologies of scale’ are achieved in
the petrochemical industry through which companies utilize waste material
or by-products such as heat. It would be far more diffcult to achieve this if the
concerned plants would be spatially scattered. Ecologies of scale advantages
are increasingly being acknowledged in environmental policy. Successful port
clusters might also face some challenges, mainly in terms of accessibility (con-
gestion) and higher land costs.

FIGURE I.12 Ports as Clusters of Economic Activity

Port Cluster
Transport and cargo handling

Logistics activities
PORT
Industrial activities

Energy activities
 A multifaceted approach to seaports xlv

Seaports interact with other nodes such as overseas and neighboring sea-
ports, intermodal terminals, and inland logistics platforms. They rarely oper-
ate in isolation from other ports.

10 THE PUBLIC IMAGE OF PORTS

The general public often considers port areas as desolate, dangerous, dirty,
and unattractive, characterized by buildings with low aesthetics and large
machinery emitting noise and air pollutants. People might feel disconnected
from ports, particularly in those areas where the port has moved away from
the city. In short, ports cannot take broad public support for granted. This
aspect of port competitiveness will undoubtedly become more important in
the future as resources such as land are becoming increasingly scarce and as
broader social and environmental functions are challenging the economic
function of seaports.
As such, port managers and government bodies nowadays are trying
to make sure that new port developments are socially broadly based. Conficts
of interest among different stakeholders may overshadow the community
of interests. Major socio-economic confrontations related to port development
and operations can occur when community groups perceive a clear imbalance
between the benefts and costs for the local community of having larger ports.
Public support for ports becomes particularly bleak when a large part of the pop-
ulation is unaware of how the port is organized and operated and to what extent
the port contributes to the local economy. The concerns solely focus on potential
negative effects for the local community, such as road congestion, intrusions on
the landscape, noise and air pollution, and the use of scarce land. The potential
erosion of public support for seaports is a real concern to port managers.
Next to pure economic effects, ports increasingly need to be guided by
social and environmental considerations. Public policymakers and port man-
aging bodies are challenged to design effective port-related policies in urban
planning and expansion, safety, security, and sustainability. The economic
value of a port now tends to be taken as a given by some stakeholders, so the
argument concentrates on environmental issues and social issues.
Ports must demonstrate a high level of environmental value to ensure
community support. However, environmental aspects also play an increasing
role in attracting trading partners and potential investors. A port with a strong
environmental record and a high level of community support is likely to be
favored. From an environmental perspective, port planning and management
should ensure sustainable development. The environmental sustainability of
port projects and activities has become as important as economic and fnancial
viability.
Measuring the social value of ports is an extremely diffcult exercise.
Many ports directly support a wide variety of community events and projects
through sponsorship in an effort to attract community support. However, it
is the indirect social contributions that most beneft local communities. For
example, ports might invest in training and education programs. Such forms
of social commitment are an important part of the success of ports, linking
commercial responsibility to social acceptability and accountability.
Ports are challenged to improve their public image, which can be done
by combining several approaches:
xlvi A multifaceted approach to seaports

• External communications policies and public events and festivities in

and around port areas – such as Port Days.
• Convince the general public of the importance of ports by presenting
fgures on employment effects and added value.
• Adopt a green port management strategy that focuses on mitigating
externalities such as energy consumption, the emissions of pollutants,
and waste disposal.
• Stakeholder relations management, such as the development of good
relations with all parties concerned, particularly with respect to port
expansion plans or redevelopment/regeneration plans focusing on older
port areas (i.e. waterfront redevelopment).
Reinforcing the public image of ports is also a matter of attracting a new gen-
eration to work in the port. Ports have to offer attractive careers by offering
good working conditions and the potential for career advancement, and by
stimulating a sense of pride about the port.

11 THE PORT–CITY INTERFACE

The port–city interface is a core theme in discussing the public image of ports
and the balance between economic, social, and environmental aspects. Ports
and cities worldwide have developed extensive initiatives to (re)establish
mutual links. The redevelopment of older abandoned port areas, also called
waterfront redevelopment, is one of the focus areas.
A waterfront redevelopment program that respects the maritime heri-
tage of the port and re-establishes the link between the city and the port can
revive the public acceptance of ports. It can also bring new jobs to derelict port
areas. In many ports, public and private investments have been channeled to
revitalize older port areas encompassing housing, hotels, maritime heritage
projects, sports, recreation, tourism, and local commerce. Residential, recre-
ational, commercial, retail, service, and tourist facilities are mixed to create
multifunctional areas with a broad range of employment opportunities.
At frst glance, redeveloped docklands all over the world look very much
the same. However, the objectives, approach, and focus of waterfront projects
can differ considerably. For example, in the pioneering London Docklands
scheme, the focus was on the provision of offce accommodation. In Barcelona
(Spain), the waterfront conversion project contributed to an unprecedented
investment, tourism, employment, and population boom with a clear empha-
sis on the creation of leisure and shopping facilities and the rearrangement of
traffc fows. Similar redevelopment initiatives have been taken in other port
cities as well, turning port areas into very attractive places for living, working,
and recreation.
Many waterfront projects bring in a clear cultural component through
museums (e.g. the Guggenheim Museum in Bilbao, ‘Museum aan de Stroom’ in
Antwerp), opera houses, and concert halls (e.g. Elbphilharmonie in Hamburg),
and conference centers (e.g. Dalian International Conference Center in Dalian,
China). The link with the maritime heritage is often enhanced by the establish-
ment of port museums. The new urban waterfront also provides many ser-
vice jobs linked to bars, restaurants, convenience stores, and jobs linked to the
usual range of services expected by the new residents of the waterfront. Hotels
 A multifaceted approach to seaports xlvii

have become a prominent feature of urban waterfronts all over the world.
These hotels are usually accompanied by a cluster of restaurants that look out
over the water and often specialize in seafood. Increased visitor expenditure
through multipliers can create new investment and employment opportuni-
ties. Waterfronts are also recreation areas with facilities for yachting harbors
and marinas, watersport areas, and theme parks. Many ports provide jobs to
people working in marinas, sailing schools, yacht and boat repair and mainte-
nance yards, and similar waterfront operations.
A number of ports have become turntables in the cruise industry, with
most cruise terminals located close to the city center. Cruise vessels near the
city generally reinforce the maritime link between cities and ports and are vis-
ible signs of the touristic attractiveness of the city. Expenditure by passengers
from visiting cruise ships may have a signifcant impact on the regional econ-
omy. This is most likely to occur where the port has relatively frequent visits
by cruise ships, or the region is small. Cruise passengers may also spend time
in the metropolitan area before or after their voyages, generating additional
economic impacts through their visitor expenditures. Cruise vessels calling
at a port also generate jobs at the level of pilotage, tugs, provisions, fuel, crew
shore leave, passenger services, inspections, immigration, hotels, restaurants,
local attractions, and other visitor activities in the port area. Further employ-
ment is provided by inland transportation involving cruise passengers,
including by air, private car, bus, transit, and taxi. Some ports (e.g. Rotterdam,
Amsterdam, and Antwerp in Europe, or Chongqing, Yichang and Shanghai in
China) are regular ports of call for river cruises on major rivers (respectively
the Rhine and Yangtze).

12 THE GREENING OF PORTS

From an environmental perspective, port planning and management should
ensure sustainable development. The environmental sustainability of port
projects and operations has become as important as economic and fnancial
viability. As such, ports, as clusters of economic actors and activities, have
adopted an environmental role and function and thus contribute to the green-
ing of supply chains.
Ports, as nodes in extensive global transport networks, and intersections
of large bundles of supply chains covering a multitude of commodities and
cargo types, create environmental impacts through their various functions.
Terminal activities are one source of the environmental impact of seaports
which can be summarized in several categories, namely:
• Pollution related to port construction and maintenance.
• Air emissions of ships at berth and terminal handling equipment (such
as cranes and yard equipment).
• Noise associated with cargo handling operations.
• The environmental effects and potential congestion associated with
landside operations of barges, rail, and trucks.
Environmental impacts occur at all stages of a terminal’s life cycle, such as
port planning, terminal construction, terminal operation, terminal expansion,
or terminal closure/termination. Regarding landside operations connecting
xlviii A multifaceted approach to seaports

to inland transport, environmental impacts caused by intermodal connec-

tions and congestion lead to adverse effects such as air pollution. Depending
on modal choices and the associated cost and transit time requirements from
shippers, such environmental effects vary. Other port functions also gener-
ate environmental impacts, such as industrial and semi-industrial activities in
ports and warehousing and distribution activities.
Port-related pollution damages the ecological balance of nature and the
urban environment. It causes an adverse effect on global climate change, fur-
ther increasing the risk associated with port operations. The development of a
low-carbon economy is considered to be a fundamental way to solve environ-
mental problems.
The greening of ports is attracting growing attention. In business prac-
tice, it is mirrored in the many green initiatives of individual ports and the
coordinated actions of the wider port community. The emergence of the green
port concept is closely associated with the growing environmental awareness
of seaport actors. The concept of green port (or low-carbon port) was offcially
proposed at the United Nations Climate Change conference in 2009. Based
on an organic combination of port development, utilization of resources, and
environmental protection, the green port concept refers to a development
characterized by a healthy ecological environment, reasonable utilization of
resources, low energy consumption, and low pollution. The green port concept
or sustainable and climate-friendly development of the port’s infrastructure in
a broader sense entails responsible behavior of all stakeholders involved in
port management and operations.
 PART I
Ports and maritime shipping

Chapter 1.1 Maritime shipping and

international trade
Seaports are affected by a wide range of economic, technological, and geo-
political developments. Shifts in global production and international trade
are affecting port activity levels and operations. The demand for port traf-
fc is derived from world trade.

1 MARITIME SHIPPING AS A DRIVER OF GLOBALIZATION

Global economic integration is a key factor behind the rising signifcance of
international trade. Historically, trade was prevalent but set up under con-
straining conditions in terms of the technical means to support it. Trading
over long distances remained slow and expensive, limiting its scale and scope.
By the early twentieth century, transport technologies such as the steam-
ship became ubiquitous and effcient enough to support a complex interna-
tional trade system. Particularly, the steamship enabled economies of scale
that could not be achieved beforehand. However, it was not until the mid-
twentieth century that the global regulatory regime became open enough to
allow an expanded form of globalization.
Global trade is impossible without transportation, making effcient
transport a key trade facilitator. By defnition, almost all the cargo carried
by maritime shipping is considered to be international trade. Transport costs
(both freights costs and time costs) constitute a key component of total trade
costs. These trade costs also include other costs incurred in getting goods to
fnal users, other than the marginal cost of producing the good itself, such
as policy barriers, information costs, legal and regulatory costs. Lower trade
costs contribute to trade growth as it has been underlined that, for developing
economies, a 10% reduction in transportation costs was associated with a 20%
growth in international trade.

DOI 10.4324/9780429318184-1
2 Part I • Ports and maritime shipping

Since the end of World War II, ongoing trade liberalism under the
banner ‘World Peace through World Trade’, has led to gradual removal
of political, regulatory, and cultural obstacles to trade. Integration pro-
cesses took place both at the regional level and at the global level. The
collapse of the Soviet Union and the opening up of China in the 1990s
represented landmark events that incited the entry of close to two bil-
lion consumers as well as the related resources into the global economy.
Regional trading blocs have been formed with differing levels of trade
liberalization, such as NAFTA in North America, the EU Single Market
in Europe, ASEAN in Southeast Asia, Mercosur in South America, and
ECOWAS in West-Africa. An important share of international trade occurs
within economic  blocs,  especially the European Union and NAFTA,
which rely more on land transport modes such as road and rail. The
European Union and NAFTA are considered the world’s most integrated
trade agreements, with 62.3% and 51.2% of their respective trade con-
cerning member nations.  For ASEAN, 75.5% of its trade concerns nations
outside  the  agreement,  implying  a  greater  relative  share  of  maritime
shipping.
The globalization of production is a driver for the globalization of
trade as they are interrelated. The scale, volume, and effciency of interna-
tional trade have continued to improve. The liberalization of global trade
is supported by the continuing evolution of the World Trade Organization
(WTO) and initiatives by organizations such as the United Nations Con-
ference on Trade and Development (UNCTAD), or the World Bank. After
World War II, a number of international corporations sought the support
of intergovernmental organizations such as the United Nations for regula-
tory frameworks that enabled the pursuit of international operations. In
such an environment, multinational corporations assumed growing impor-
tance as investors and traders. As a result, it might be argued that the slo-
gan ‘World Peace through World Trade’ slowly shifted to ‘World Peace for
World Trade’. At present, inter-governmental organizations still play an
essential role in shaping the rules of the game in international competition
and global trade.

2 ONGOING GROWTH OF INTERNATIONAL TRADE

World trade has experienced a signifcant increase since the 1950s and repre-
sents a growing share of global economic output. In 2007, international trade
surpassed 50% of the global Gross Domestic Product (GDP) for the frst time,
a share that was conventionally in the 20% to 25% range in the frst half of the
twentieth century. In the nineteenth century, this share was around 10%. Sev-
eral factors explained this growth:
• Income growth linked with additional consumption of goods and ser-
vices, some of which are traded.
• Falling transport costs allowing more options and opportunities to
trade.
 Part I • Ports and maritime shipping 3

• Trade liberalization and the associated tariff rate reductions, easing

trade transactions.
• Economic convergence of countries around trade agreements and com-
mon commercial policies.
• Increase of intermediate goods trade in the context of global production
chains, outsourcing, and offshoring.
Between 1958 and 1988, income growth explained 67% of the real growth
of world trade, while tariff reductions accounted for about 26% and trans-
port-cost reductions roughly 8%. However, developed and developing
economies might face different economic characteristics, and those play a
different role in the growth of international trade. Low-income economies
tend to have a high reliance on the trade of resources and low added-value
goods; intermediate income economies are oriented around manufactur-
ing; and high-income economies tend to be net importers of products and
services.
The ongoing growth of international trade also impacted frms, many
of which expanded to become multinational corporations. The benefts that
multinational corporations derive from trade are varied:
• Competition. Seeking new resources, markets, and processes in interna-
tional markets increases the competitiveness of corporations.
• Economies of scale. International markets allow frms to produce larger
quantities of goods, which enable lower unit costs.
• Innovation. International markets incite the development of new
products or the adaptation of existing products to different market
characteristics.
As international trade depends on the provision of distribution and trans-
actional services, the demand for these services has increased substantially,
leading to the growth of carriers, cargo owners, terminal operators, third-
party logistics service providers (3PL), freight forwarders, and insurers. Inter-
national transportation and transaction service providers represent a complex
ecosystem aiming at supporting international trade and extracting added
value. The providers of transportation services, like manufacturing frms,
have become large multinational corporations due to the extensive markets
they cover.
International trade requires several types of services assumed by a num-
ber of actors (Figure 1.1):
• Distribution services are related to the function of transportation and
warehousing, which are physical operations performed on trade goods.
A carrier, such as a truck or a maritime shipping company, and a termi-
nal operator provide transportation services while a cargo owner can
have own account transportation and warehousing.
• Transaction services include activities for managing international
trade. Procurement involves fnding suppliers, setting up contracts,
and ensuring continuity in the supply. Customs comprise the regula-
tory compliance so that traded goods meet national standards and duties
are paid. Freight forwarders regularly assume this function on behalf
4 Part I • Ports and maritime shipping

FIGURE 1.1 Services Supporting International Trade

Service Actors

Transportation Cr TO
Distribution Carrier CO Terminal
Warehousing Cargo Owner Operator
Cargo owners
3PL
(manufacturers,
retailers, Procurement
wholesalers) FF Freight Forwarder
Customs 4PL

Transactions Finance IB Investment Bank

Ins
Trade regulations Insurance Insurer

Banking CB Commercial Bank

of their customers. Finance provides capital to invest in trade activities,

such as the purchasing (leasing) of equipment and the construction of
facilities, an activity performed by investment banks. Cargo also needs
to be insured against common risks (delays, theft, damage), a function
assumed by insurance companies, some also involved in fnance. Since
many trade transactions are settled through currency exchange drawn
from corporate deposits, commercial banks are major actors in settling
transactions and letters of credit.
In recent years, actors known as third-party logistics providers (3PLs) have
offered a wider range of trade services to their customers by controlling cru-
cial transportation and transaction services. Several 3PLs are carriers that have
decided for strategic purposes to expand their range of services to provide
added value by combining the physical assets they control (ships, vehicles,
warehouses) with procurement and customs services. Fourth-party logistics
providers (4PLs) have also emerged, mainly focusing on non-physical asset
trade services.
The nature of what is being traded, and the main traders involved, infu-
ence the transportation modes used for international transportation (Figure
1.2). Maritime transportation dominates, handling about 80% of the volume
and 70% of the value of international trade.
Many of the world’s most traded goods require specialized maritime
transport conveyances. Cars are the most traded goods in terms of value,
implying the deployment of a car carrier feet. The second most traded com-
modity is refned petroleum, which is carried in tankers. A wide range of com-
modities is carried in containers, such as vehicle parts.
 FIGURE 1.2 World’s Most Traded Goods and Lead Exporter, 2016

Insulated Wires China

Medical Instruments USA
Delivery Trucks Mexico
Aircraft France
Blood annd Plasma Switzerland
Natural Gas Qatar
Diamonds USA
Broadcasting Equipment China
Telephones China
Crude Petroleum Russia
Gold Switzerland
Pharmaceuticals Germany
Computers China
Vehicle Parts Germany
Integrated Circuits Hong Kong
Refined Pretroleum USA
Cars Germany

0 200 400 600 800 1000 1200 1400 1600

Billions of USD
Part I • Ports and maritime shipping

Source: Observatory of Economic Complexity, Massachusetts Institute of Technology.

5
6 Part I • Ports and maritime shipping

3 THE CONTAINERIZATION OF TRADE

3.1 The emergence of the container
The container and the associated maritime and inland transport systems have
proved to be instrumental to the consecutive waves of globalization and global
trade growth since the 1970s. The launching of the frst containership by Mal-
colm McLean in 1956, the Ideal X, marked the beginning of containerization.
The frst transatlantic container service between the US East Coast and North-
ern Europe in 1966 marked the start of long-distance containerized trade. The
frst specialized cellular containerships were delivered in 1968, and contain-
erization expanded over maritime and inland freight transport systems. Con-
tainer shipping developed rapidly due to the adoption of standard container
sizes in the late 1960s. The cost savings resulting from faster vessel turnaround
times in ports, the reduction in the level of damages and associated insurance
fees, and the integration with inland transport modes such as trucks, barges,
and trains became acknowledged as clear containerization advantages.
The container offered a standard around which physical distribution sys-
tems could operate. Hence, emerging container shipping networks allowed
changes in the economic and transport geography as they signifcantly
reduced maritime costs between production and consumption centers across
the world. Container shipping also became an essential driver in reshaping
global supply chains allowing sourcing strategies of multinational enter-
prises and developing global production networks. New supply chain prac-
tices increased the requirements on container shipping in terms of frequency,
schedule reliability/integrity, global coverage of services, rate setting, and
environmental performance. The outcome has been an ongoing growth of the
global container throughput (Figure 1.3).
The large-scale adoption of the container combined with the globaliza-
tion process drove the global container port throughput from 36 million TEU
(Twenty Foot Equivalent Unit) in 1980 to 237 million TEU in 2000, 545 mil-
lion TEU in 2010, and more than 740 million TEU in 2017. Global container
throughput reached approximately 802 million TEU in 2019, increasing by

FIGURE 1.3 World Container Throughput, 1980–2019

 Part I • Ports and maritime shipping 7

2.3% compared to 2018, including full and empty containers. Container traf-
fc, the absolute number of loaded containers being carried by sea (excluding
empties), has grown from 28.7 million TEU in 1990 to 152 million TEU in 2018.
The ratio of containerized trade over container port throughput shows that a
container on average is loaded or discharged multiple times between the frst
port of loading and the last port of discharge.
The container has evolved from a transport unit to a supply or commod-
ity chain unit. Containerization is inherently linked to the transport of load
units (containers) across several transportation modes. It is more than a box
as it acts as a vector for production and distribution. Containerization has led
to various changes in the geography of transport, trade, and distribution, par-
ticularly in how production and physical distribution interact. The container
can be considered revolutionary, as new practices have taken place after its
introduction. It has become a ubiquitous transport product servicing mobility
requirements at almost all stages of supply and commodity chains and is able
to be carried virtually everywhere there are transport infrastructures.

3.2 Containerized trade networks

Before containerization, many goods subject to trade had to be handled manu-
ally. Emerging worldwide container shipping networks allowed changes in
the economic and transport geography as they signifcantly shortened the
maritime cost distances between production and consumption centers around
the world. Container shipping also became an essential driver in reshaping
global supply chain practices, allowing global sourcing strategies of multina-
tional enterprises, pull logistics solutions, and the development of global pro-
duction networks.
Containerization has been the most dynamic physical component of
globalization, far exceeding the growth of the value of exports and the GDP
(Figure 1.4). As globalization developed, each new individual, GDP, or export

FIGURE 1.4 Global Trade and Container Throughput 1970=100

Sources: Population and GDP from World Bank, World Development Indicators. Exports
from World Trade Organization. Container port throughput compiled from Containerization
International.
8 Part I • Ports and maritime shipping

unit was associated with a higher level of container fows. While up to 1980,
the growth of container port throughput was on a par with the growth of the
value of exports, a divergence is noted afterward with container fows grow-
ing faster than trade fows. Containerization entered the acceleration phase
of its diffusion cycle as the fundamental support of export-oriented strategies
pursued by Asian economies.
The composition of international trade goods carried in containers is
impressive in its diversity. The 20 most important SITC (Standard Interna-
tional Trade Classifcation) categories accounted for 65% of the global con-
tainerized trade, underlining that the container has been used to carry any
possible good that could be ftted in. However, many of the most signifcant
categories of containerized trade are the outcome of comparative advantage
factors, namely labor, that can be temporary and subject to change. If these
advantages were to shift because of technological changes (e.g. automation),
then a notable share of the containerized trade could be impacted.
About one out of every ten containers handled worldwide is handled
in ports of the Yangtze River Delta. In East Asia, export-oriented industri-
alization policies undertaken by Hong Kong, Taiwan, and South Korea sus-
tained the strong growth in container throughput handled by these economies
from the 1980s. China developed similar strategies in the late 1980s, result-
ing in elevated growth frst in the Pearl River Delta and then in the Yangtze
Delta port system and the Bohai Bay region. In the past ten years, Shanghai,
Guangzhou, Shenzhen, Qingdao, and Ningbo joined Hong Kong, Busan, and
Singapore as the world’s busiest container ports. The Rhine-Scheldt Delta (Bel-
gium/the Netherlands) was the world’s number one container handing region
in the world till the mid-1990s when south China took the lead. While the
dynamics of containerization and container fows are well known, much less
is known about what is being carried by containers, particularly as it concerns
commodities.
Several growth factors are at play to explain the substantial growth of
containerization and, more interestingly, how the contribution of these fac-
tors varies in time. While additional traffc resulting from organic economic
growth is the most salient factor, imbalanced trade fows (empty containers)
and the confguration of shipping networks relying on transshipment hubs
(double counting) have also contributed to additional containerized fows and
port handlings. As economies of scale are applied to maritime shipping, trans-
shipment becomes more salient. The number of containers being transshipped
increased from around 11% of all cargo handled by container ports in 1980 to
about 30% in 2015, which is also a notable factor in the growth of containerized
traffc.

3.3 Containerized growth dynamics

The conventional growth dynamics of containerization have mainly relied on
an array of drivers, which include (Figure 1.5):
• Derived growth. Often labeled as organic growth, derived growth is an
economic development outcome with greater quantities of containerized
cargoes being traded. Globalization also implies a growth of the average
distance over which containerized freight is being carried. In both cases,
 Part I • Ports and maritime shipping 9

FIGURE 1.5 Containerization Growth Factors

FACTOR Volume Growth Volume Decline

Derived • Economic and income growth • Economic recessions
• Outsourcing and offshoring • Trade protectionism
• Complex supply chains • Automation

Substitution • Capture of bulk and break-bulk markets • Peak substitution

• New niches (commodities and cold • Composition of container fleet
chain)

Incidental • Trade imbalances • Trade protectionism

• Repositioning of empty containers • Automation

Induced • Transshipment (hubbing, relay and • Changes in shipping networks (more

intersection) direct services)

greater containerized capacities are required, average voyage days per

vessel increase, and the number of vessel roundtrips per year decreases.
The dynamics based on derived demand may have reached maturity in
containerization potential as many global supply chains are now fully
containerized.
• Substitution-based growth. Initially, substitution was the main factor
behind containerization with the gradual capture of the breakbulk cargo
market. This process has been particularly visible in many ports, as illus-
trated by rising containerization degrees (the ratio between containerized
throughput of the port and the total general cargo volumes). Since almost
all break-bulk cargo that could be containerized has been containerized,
this substitution process is essentially near completion in developed
economies. It is also rising rapidly in emerging economies and develop-
ing countries. This leaves the possible further containerization of niche
markets, namely commodities and temperature-sensitive cargo.
• Incidental growth. Production and trade imbalances in the global econ-
omy are refected in physical fows and transport rates and lead to spe-
cifc container repositioning strategies. Containerized fows are rarely
balanced, implying that empty containers must be repositioned to loca-
tions where export cargo is available.
• Induced growth. The growth of deep-sea services and the use of larger
containerships has led to the setting up of intermediary hubs connect-
ing different systems of circulation via transshipment. Intermediary
hubs emerge in locations offering clear advantages over direct port
calls at mainland ports. The setting up of intermediate hubs occurs
around specifc regions ideally suited for maritime hub-and-spoke
distribution patterns. Transshipment has proven to be a major driver
for global container port throughput, with substantially higher growth
rates than observed for gateway traffc. The worldwide transshipment
incidence has steadily increased from around 18% in 1990 to around
35% in 2018.
10 Part I • Ports and maritime shipping

FIGURE 1.6 Global Containerized Trade by Main Cargo Category (in TEU)
Office Machines 2.0%
Paper & Paperboard 2.1%
Fish & Fish Preparations 2.2%
Specialised Machinery 2.2%
Cork & Wood 2.2%
Telecom & Recording Equipment 2.3%
Pulp & Waste Paper 2.4%
Clothing & Accessories 2.4%
General Industrial Machinery 2.4%
Textile Fibres 2.6%
Plastics In Primary Forms 2.8% 2005
Road Vehicles Parts 3.2% 2015
Furniture 3.4%
Metal Manufactures 3.5%
Mineral Manufactures 4.1%
Rubber Manufactures 4.3%
Textiles & Made-Up Articles 4.5%
Vegetables & Fruit, Nuts 4.8%
Electrical Machinery 5.6%
Miscellaneous Manufactures 5.6%
0 10,00,000 20,00,000 30,00,000 40,00,000 50,00,000 60,00,000 70,00,000 80,00,000
Trade in TEU

Source: MDS Transmodal, World Cargo Database. Note: Groups are at the SITC 2 digits level.

It is estimated that in 2015, 135.5 million TEU of trade was carried in

containers, compared to 88.5 million TEU in 2005 (Figure 1.6). The composi-
tion of global containerized trade shows an extensive diversity of the goods
being carried, with no particular category (SITC two digit level) dominating.
The four most important categories accounted for 20.6% of the containerized
trade volumes in 2015:
• Miscellaneous manufactures (SITC 89) include articles made of plastics
(e.g. bags), toys, sporting goods, or offce supplies. The manufacturing
of these goods has been highly impacted by outsourcing and offshoring
since it requires signifcant labor input.
• Electrical machinery (SITC 77) includes machines powered by electricity,
such as electric cables, appliances, batteries, and integrated circuits. The
production of these goods has also been substantially internationalized,
particularly for electronics.
• Vegetables and fruits (SITC 05) compose an important segment of trans-
portation by refrigerated containers. This sector has been the object of
notable growth with more reliable cold chain logistics.
• Textiles and made-up articles (SITC 65) include yarn, woven fber, blan-
kets, linen, curtains, and carpets. The textile industry has been the object
of internationalization for several decades.

4 THE SHIFT IN GLOBAL TRADE PATTERNS

The recent decades have seen important changes in international trade
fows. Prior to the 1970s, global trade fows were dominated by three major
poles, North America, Western Europe, and the developing economies
of East Asia (Japan, South Korea, and Taiwan). A trade dichotomy was
observed between developed and developing economies as raw materials
were mainly fowing north and fnished goods were fowing south. This
 Part I • Ports and maritime shipping 11

situation can mainly be explained by differences in development levels, bet-

ter economies of scale in developed economies, and unequal trade relations
set up during the colonial era.
From the 1970s, this situation changed as economic development took
place across a range of nations in Latin America (Mexico), Southeast Asia
(Malaysia, Thailand, Indonesia), and East Asia (China, South Korea, Taiwan)
(Figure 1.7). Many manufacturing activities that had emerged in developed
economies were relocated to lower input cost locations, because of cheaper
labor. Emerging multinational corporations were actively involved in this pro-
cess. Such a structural shift is well illustrated by the variation in the share
of developing economies in seaborne trade, which used to be highly imbal-
anced with much more cargo being loaded than unloaded. Economic develop-
ment resulted in a growing share of developing economies as a destination for
cargo. Consequently, global trade is now characterized by signifcant fows of
cargoes (raw materials, intermediate and fnished goods) from developed to
developing economies.
A growing share of international trade occurs within regions (and par-
ticularly economic blocs) even if long-distance trade has increased in absolute
numbers. Trade predominantly takes place within Europe, North America,
and East Asia, commonly referred to as the triad. Still, a shift in trade rela-
tions between the northern and southern hemispheres, particularly between

FIGURE 1.7 Changes in Global Trade Flows

Before 1970 After 1970

Developed Economies

Developing Economies

Participation of Developing Economies in Global Seaborne Trade (% of World Tonnage)

70
60
50
40 Loaded
30
Unloaded
20
10
0
1970 1980 1990 2000 2005 2010 2015

Source: Seaborne trade data adapted from UNCTAD, Review of Maritime Transport.
12 Part I • Ports and maritime shipping

developed and developing economies, has occurred. The structure of global

trade has become much more complex in its relations and diversifed in what
is being traded. The pattern of trade relations is mainly explained by the fol-
lowing factors:
• Geographical proximity. The intensity of trade relations is commonly
a function of proximity unless notable advantages can be found fur-
ther away. The European Union has signifcant trading linkages with
adjacent areas in Eastern Europe, North Africa, and the Middle East.
North America also maintains important trade linkages with Latin
America, notably Mexico, as part of the USMCA (United States–
Mexico–Canada Agreement). Shorter distances have an important
impact on the modes used for trade, with maritime shipping less suit-
able outside short sea shipping. Still, a key advantage of maritime
shipping is that it substantially attenuates the negative effects of long
distances on trade, as the development of containerized shipping
underlines.
• Resources availability. The scarcity and availability of resources have
shaped maritime networks for close to two centuries and remain the
main component, ton-wise, of maritime shipping. Energy, mineral, and
agricultural trades have distinct shipping networks and specialized port
facilities designed to handle bulk cargoes such as petroleum, natural gas,
coal, grains, alumina, and iron ore.
• History and culture. The trade networks established during the colonial
era have endured in relations such as those between Europe and Africa
or between the United States and Latin America. China has commercial
historical ties with Central Asia and Southeast Asia which have been
recreated and expanded in recent decades. Irrespective of the political
context, trade networks tend to endure because of the reciprocal systems
of supply and demand on which they depend.
Another characteristic of the contemporary commercial setting concerns
imbalances in trade fows. For instance, China exports more than it imports
with partners such as the United States and the European Union. Trade imbal-
ances directly refect imbalances in shipping fows. For bulk trade such as
energy and minerals, it is common that a return trip will be empty. For con-
tainerized trade, the load factors of return trips are lower, and the share of
empty containers higher. The imbalanced trade structure is also refected in
the composition of container imports and exports that differs substantially.
Further, trade imbalances imply the repositioning of empty containers that
accounts for about 20% of global container moves.
Geographical and economic shifts in international trade are directly
observable in the evolution of the level of trade intensity by ocean, as
the Trans-Pacifc trade has grown faster than the Trans-Atlantic trade.
The most signifcant trade fows are between Asia and North America
(especially the United States), between Europe and North America, and
between Europe and Asia. The associated maritime routes are the most
commercially used with sizeable trade going through chokepoints such
as the Strait of Malacca (30% of global trade transiting), the Suez Canal
(15%), the Strait of Gibraltar, and the Panama Canal (5%). These bottle-
necks allow connection between the major systems of maritime circulation
 Part I • Ports and maritime shipping 13

where the transatlantic, the transpacifc, and the Asia–Europe routes domi-
nate. north-south fows are complementing these east-west routes, many of
which interact at major transshipment hubs around Singapore, Dubai, and
the Caribbean (Panama, Cartagena, Kingston). The evolution of interna-
tional trade shapes the structure of maritime shipping networks and port
development as shipping lines tend to organize their services to connect
the dominant trade fows directly, and the less dominant trade fows indi-
rectly through transshipments.

Box 1.1 World seaborne trade by cargo type, 1970–2018

Weight-wise, raw materials dominate maritime trade as they are ponderous and
carried over long distances (Figure 1.8). Oil, iron ore, coal, and grain accounted
for 28% of the ton-miles carried by maritime shipping, while other dry cargoes,
which include containers, accounted for 40%. Oil is the most signifcant com-
modity, with 25% of ton-miles in 2018, but this share is signifcantly lower than
in 1970 when it accounted for 60% of global ton-miles.

FIGURE 1.8 World Seaborne Trade by Cargo Type, 1970–2018

70,000

60,000

50,000

Other
Ton-miles (billions)

40,000 Major dry bulks

Container
30,000 Oil
Gas
Chemicals
20,000

10,000

0
1970 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: UNCTAD Review of Maritime Transport, various years.

Since the 1980s, a signifcant rebalancing of the intensity of trade by ocean

has taken place, particularly over containerized trade (Figure 1.9). As the inter-
national trade taking place over the Pacifc Ocean increased, the Atlantic Ocean
experienced a relative decline of its share. While the Atlantic accounted for 46%
of global trade activity in 1980, this share decreased by more than half to 21%
in 2010. The share of the Indian Ocean doubled to 10%, but this fgure does
not account for the substantial traffc transiting along the Asia/Mediterranean/
European trade route.
14 Part I • Ports and maritime shipping

FIGURE 1.9 Trade Intensity by Ocean, 1980–2010

1980

1990
Atlantic Ocean
Pacific Ocean
Indian Ocean
Mediterranean
2000

2010

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% © PEMP

Note: Measured by port TEU activity along oceanic ranges.

Box 1.2 American foreign trade by maritime containers

American containerized trade is characterized by an asymmetry between the
nature of its imports and exports (Figure 1.10). North American retailers account
for a substantial share of containerized imports, mostly involving fnished con-
sumption goods bound to major inland freight distribution centers. The largest
importers, such as Wal-Mart, Home Depot, Target, Costco, Ikea, and Lowe’s, are
all mass (Big Box) retailers relying on high volume and low margin goods, which
are predominantly produced in China. It is worth mentioning that about 60%
of all Chinese trade surplus with the United States is the outcome of American-
owned frms operating in China and importing their output to the United States.

FIGURE 1.10 American Foreign Trade by Maritime Containers, 2017 (in

TEUs)
Importers Exporters
Heineken Sims Metal Management
Whirlpool Domtar
Ashley Furniture Potential Industries
General Electric Eastman Chemical
JC Penney JC Horizon
Sears Holding Cargill
Costco Wholesale BMW of North America
Newell Brands Newport CH Intl
Nike ExxonMobil
Chiquita JBS USA
Ikea Intl. WestRock
Philips Louis Dreyfus Commodities
LG Group Shintech
Family Dollar Stores WM Recycle America
Samsung Delong
Dole Food International Forest Products
Lowe's Koch Industries
Home Depot Ralison International
Target International Paper
Wal-Mart America Chung Nam
0 2,00,000 4,00,000 6,00,000 8,00,000 10,00,000 0 2,00,000 4,00,000 6,00,000 8,00,000 10,00,000

Adapted from Journal of Commerce, US top 100 importers and exporters. Data from PIERS.
 Part I • Ports and maritime shipping 15

Exporters show a completely different profle. A major category of contain-

erized export concerns recycles with exporters such as America Chung Nam, Ral-
ison International, WM Recycle America, or Potential Industries. Other major
exporters include diversifed resource-based (Koch Industries) forest and paper
products (e.g. International Paper, International Forest Products), agribusi-
ness (e.g. Cargill, Archer Daniels Midland), or chemicals (e.g. Shintech, Dow,
DuPont). Yet, a signifcant containerized trade imbalance remains.
The trade asymmetry being depicted is refected in the relative value of
imports and exports. While the average value of American imports is about $4.75
per kilogram, the value of exports stands at $2.50 per kilogram. This has also
had signifcant impacts on North American logistics. The import-driven segment
involves a series of stages to reach a multitude of outlets with a freight density
correlated with population density. Since the retail trade is essentially unidirec-
tional, many retail goods are transloaded at gateways into domestic containers
while the maritime (ISO) containers are re-exported empty. The export-driven
segment relies on the massifcation of shipments at major gateways and inland
ports.

5 INTERNATIONAL TRADE AND MARITIME SHIPPING

SERVICES
International trade relies volume-wise for about 80% on maritime transporta-
tion, which involves several markets such as dry bulk, roll-on/roll-off, general
cargo, and containers.

5.1 Maritime services in dry bulk shipping

The maritime transport of major bulks such as iron ore and coal typically
relies on end-to-end services between a port of loading (connected by rail to
mines) and a port of discharge. Economies of scale in vessel size are signif-
cant in dry bulk shipping, so operators will try to maximize vessel size on
the end-to-end tramp service. The nautical accessibility in the port of loading
and port of discharge, the charter price level, and the availability of vessel
types play a decisive role in vessel size choice. Inland transport costs per
ton-kilometer are typically 20 to 30 percent higher than sea transport costs
per ton-kilometer.
Consequently, market players make a trade-off between, on the one
hand, the minimization of inland transport costs by routing the bulk fows via
the ports that are closest to the fnal destination and, on the other hand, maxi-
mizing the scale economies in vessel size by calling at the ports that offer the
best nautical accessibility. This exercise in some cases leads to multiple calls
whereby a large Capesize vessel will frst call at a deepwater port to discharge
part of the cargo and then proceed to the second port of call with a less favor-
able nautical access to discharge the remainder (e.g. a call sequence starting
in Dunkirk and ending in Antwerp). Another practice consists of lightening
deepsea vessels on stream, whereby foating cranes discharge part of the load
16 Part I • Ports and maritime shipping

to barges given decreasing vessel draft (e.g. lightening operations on River

Scheldt to access the Canal Ghent-Terneuzen).
The vessels deployed in the minor bulk segments (grain, fertilizers, min-
erals) are generally much smaller, so that vessel operators have a much wider
range of potential ports of call at their disposal. The eventual call patterns will
be determined by factors such as proximity to the market, the specifcities of
the distribution network (centralized or decentralized), the number of cargo
batches on the vessel, and the need for dedicated terminal facilities (e.g. grain
silos).

5.2 Maritime services in the roll-on/roll-off (RoRo) market

The operational characteristics of maritime services in the RoRo segment
depend on the submarkets considered:
• Intra-regional RoRo and ropax services are typical of the end-to-end
type with a port of call at either side of the route. The shipping services
follow a fxed schedule with medium to high frequencies (sometimes
several times a day). The ferry capacities tend to vary greatly with the
cargo density on the route and the one-way distance. For example, in
Europe, large units are deployed on the English Channel and parts of the
Baltic (e.g. 120 trucks per voyage on the Dover-Calais link and several
hundreds of passengers between Travemünde and Finland). In contrast,
vessel capacities on services in smaller markets (e.g. the Irish isles) tend
to be much smaller. Trucks using ferry services can have a long pre- and
end haul by road (for instance, a truck driving from Dortmund to Zee-
brugge to catch a ferry to Hull and onward by road to the fnal destina-
tion, Manchester).
• The market for unaccompanied RoRo transport is based on end-to-end
services with dedicated RoRo freight vessels, which often have reserve
space for containers.
• The deepsea and shortsea car carrying trade is another submarket
in the RoRo market. On intercontinental routes, the operators deploy
Pure Car and Truck Carriers (PCTC) with capacities of up to 8,000 CEU
(car equivalent unit), resulting in signifcant cost savings on the sea leg
(economies of scale). The number of ports of call is kept to a strict mini-
mum as shipping lines aim for a short port time and they face a short-
fall in the number of ports that have the infrastructure to accommodate
large quantities of new cars. As a result, a signifcant part of the market
is concentrated in large car handling ports. The port of Zeebrugge in
Belgium is a good example, with 2.96 million units handled in 2019. The
position of the main ports is strongly entwined with their proximity to
the main buyer markets and the spatial concentration of car assembly
plants. A number of large car ports have successfully combined deepsea
services with intra-regional shortsea services. The resulting hub-and-
spoke network confguration is combined with growing local clusters of
automotive logistics companies. While road haulage is by far the dom-
inant mode of inland transport to/from car terminals, rail and barge
play an ever more important role in securing inland access for the larger
car ports, particularly in Belgium, the Netherlands, and the Rhine and
Yangtze river basins.
 Part I • Ports and maritime shipping 17

5.3 Maritime services in the general cargo market

The diversity in maritime service confgurations is probably highest in the market
of conventional general cargo. In contrast to the bulk cargo market, where parcel
sizes are usually big enough to fll an entire ship, the general cargo market deals
with the shipment of consignments smaller than a ship or hold size. Given the
enormous variety of different cargoes involved, there are several ways in which
breakbulk cargoes can be shipped. The most common is the conventional liner-
type concept of weekly fxed-day services, characterizing the liner shipping indus-
try, which is something the deepsea trade of conventional cargo has never really
been able to achieve. Instead, the following service/schedule options can be dis-
tinguished in the case of breakbulk shipping (the typology is based on Dynamar):
• Services of a specifc frequency operated with dedicated ships.
• Services offering sailings within a certain period, deploying trip charters.
• Services operated on inducement but still within a more or less defned
trade lane.
• A mixture of two or three of the above options.
• ‘Parcelling’, such as tramping, whereby a vessel is chartered (usually on
a trip-out basis) once a specifc cargo volume is available.
The conventional general cargo market includes many specialized ships
designed to carry specifc cargo loads. For example, heavy-lift vessels do not
operate on fxed routes, but they are attracted to those areas where large invest-
ments in the oil and gas industry are being made. Conventional reefer ships
mainly carry high-value foodstuffs that require refrigeration and atmosphere
control on an end-to-end service (e.g. bananas from a port of loading in Latin
America to a specialized terminal in Europe). Examples of reefer cargoes include
fresh and frozen fruit (e.g. bananas, deciduous and other citrus fruits), vegeta-
bles, fsh, meat, poultry, and dairy products. Reefer shipping is a prime example
of a one-way (and for some products seasonal) business with cargoes mainly
exported from the southern hemisphere to the rest of the world. The reefer ship-
ping sector is increasingly being put under pressure from container shipping.

5.4 Maritime services in container shipping

The most advanced structures in maritime services are found in container
shipping. Shipping lines design the networks they fnd it convenient to offer,
but at the same time they are bound to provide the services their customers
want in terms of frequency, direct accessibility, and transit times. In the last
two decades, increased cargo availability has made carriers and alliances
reshape their liner shipping networks by introducing new types of liner ser-
vices on the main east-west trade lanes.
Observing recent developments in liner shipping, productivity has been
improved by using larger ships and devising new operational patterns and
co-operation between shipping lines. Since the 1990s, a great deal of attention
has been devoted to larger, more fuel-economical vessels, and this indeed has
produced a substantial reduction in the cost per TEU of capacity provided.
Alliances and consolidation have created multi-string networks on the major
trade routes, and both shippers and liners have adapted. The networks are
based on traffc circulation through a network of specifc hubs. A more detailed
analysis of the container shipping market is provided later in this book.