A Study in Port Planning: The Example of Mina Zayed

The correct number of berths that a port should provide is solved by a model which minimizes the total port usage cost in terms of the costs of berth provision and the costs accruing to ships from time spent in the port. This model is then applied to Mina Zayed in the Arabian Gulf as an aid to future planning, and from different sets of cargo forecasts an optimal stategy is derived using a game-theoretic approach.     

Determinants of container port choice in Spain

For the economic and financial evaluation of port investment projects, it is important to know the demand function of a port's services. The objective of this study is to establish such a demand choice function for the Spanish container port services. The function is derived from the coefficients of a port choice model, for which a multinomial logit model is used and of which the coefficients are estimated with regression analysis. The variables tested concern inland transport cost, ocean transport costs and broad proxy variables for quality of service. Information on container import and export flows for 2007 is obtained from the Spanish Treasury Department. The linear regression analysis is based on differences of utilities of alternative routings of containerised cargoes compared to those routed via the port of Valencia. The obtained results are satisfactory in terms of model fit. The estimated coefficients can be used to assess the impact of changes in costs of container flows routed via a port on a port's market share. A demand choice function for the port can be derived by systematically doing so. An example is presented for the port of Valencia.     

Multicommodity network flow model for Asia's container ports

This paper seeks to develop a multi-commodity network model to analyse the flow of containers within the Asia Pacific context. The model is used to evaluate the impact of container throughput in Asia's port by varying terminal handling charges and turnaround time. The three main regions analysed are north-east Asia, east Asia (Chinese port region) and south east Asia. Using the model, it could be shown that Busan port, which is an important transhipment hub in north-east Asia, could boost the container activities in the north-eastern part of China by improving its service quality. It is also found that the efficiency of the land link between Hong Kong and mainland China plays a crucial role for the future of Hong Kong port. While Singapore port maintains its position as a transhipment hub in south-east Asia, there would be expected competition from neighbouring low costs ports.     

Multicommodity network flow model for Asia's container ports

This paper seeks to develop a multi-commodity network model to analyse the flow of containers within the Asia Pacific context. The model is used to evaluate the impact of container throughput in Asia's port by varying terminal handling charges and turnaround time. The three main regions analysed are north-east Asia, east Asia (Chinese port region) and south east Asia. Using the model, it could be shown that Busan port, which is an important transhipment hub in north-east Asia, could boost the container activities in the north-eastern part of China by improving its service quality. It is also found that the efficiency of the land link between Hong Kong and mainland China plays a crucial role for the future of Hong Kong port. While Singapore port maintains its position as a transhipment hub in south-east Asia, there would be expected competition from neighbouring low costs ports.     

Impact of scale increase of container ships on the generalised chain cost

In recent years, an increase in the size of the container ships could be observed. The question is how these larger ships will influence the total generalised costs from a port of loading to a destination in the European hinterland. The second question is whether a scale increase of the container ships on other loops, such as a loop from the United States to Europe, has the same impact on the generalised chain costs as on the loop from Asia to Europe. A derived question is which element of the total chain has the highest importance, and whether this balance varies as the ship size changes. In this article, a model is developed that allows answering the above research questions. The model is designed to simulate the cost of a complete loop of a container ship and of a chain that uses that same loop. For the chain cost simulation, the maritime part is determined by the loop. From the ports of loading and unloading, the port container handling and the hinterland transportation costs are also integrated. The model also allows calculating the total chain cost from a point of origin (either a hinterland region or a port) to a destination point (also a port or a hinterland region). An actual container loop of a container shipping company can be introduced in the model. An application is made to two existing container loops, namely from Asia respectively the United States to Europe. It turns out that changing ship does indeed lead to economies of scale, but also that the impact is larger on the Asia–Europe connection than on the US–Europe connection. Furthermore, the maritime component has the biggest share in the total chain cost, but as ship size increases, the shares start getting closer to each other. This research contributes to the existing literature in two ways. First of all, it quantifies the impact of the scale increase of container ships throughout the total chain. Second, this is done from a bottom-up engineering modelling approach.     

Locating dry ports on a network: a case study on Tianjin Port

A mathematical model for optimizing the location of dry ports is developed. The objective is to minimize the sum of the transportation costs and the fixed facility opening/closing costs. Unlike previous research on this subject, the possibility of closing existing dry ports is investigated. The dry port location problem is formulated as an integer programming and it is shown that the CFLP is a special case of our problem. The proposed model is then applied to the port of Tianjin in China and the sensitivity analysis is performed to demonstrate the robustness of the model. Our model suggests that while Tianjin Port should open some new dry ports, it might be better off closing those existing dry ports without enough throughputs. Although all parameters estimated should be uncertain in reality, sensitivity analysis shows that the results returned by the model are quite stable.     

A dynamic model for marginal cost pricing of port infrastructures

ABSTRACT

A dynamic model for marginal cost pricing of port infrastructures links costs to system performance by combining a power-law function with time-dependent queueing analysis. Additionally, the model incorporates the marginal cost of capacity, including the effects of economies of scale. This allows the calculation of the marginal cost price under a dynamic framework. The model accounts for nonlinear behaviour of port demand, which is sensitive to price and service levels. The effects over time of cost and service levels on the port’s operational performance are quantified. The proposed model allows determining the optimal timing for capacity investment. The model is a starting point for the application of marginal cost pricing to ports. However, for practical application of such pricing method it is necessary to apply a system’s approach, as productivity and costs must be assessed at the terminal’s component level. This should allow the derivation of a marginal cost function at the terminal’s component level.     

Competition model of cruise home ports based on the cruise supply chain – based on China cruise market

This paper addresses issues of cruise home port competition based on the cruise supply chain. A pricing model of the cruise market is developed considering the competitive cooperation behaviors of the participants in the cruise supply chain. Furthermore, a model of cruise home port competition is developed to investigate the impacts of subsidy participants in the cruise supply chain on cruise home ports. The results indicate that subsidy policies change the market equilibrium, promote the upstream and downstream integration of cruise supply chain, and enhance cruise home port competitiveness. Subsidies to cruise line increase the payoffs of cruise supply chain and ports’ profit. Subsidies to travel agency decrease passenger costs and improve all ports’ profits. For the long-term development of cruise home port, the consequents can be used as policy suggestions.     

A game theory analysis of port specialization—implications to the Chinese port industry

The fast growth of the Chinese economy and its international seaborne trade has escalated the demand for high-quality and efficient port services. “Decentralization” of the port management regime has given local government greater freedom in port development and operational decision-making. However, major port capacity expansion in coastal areas, coupled with the slowing down of both the economy and trade growth over recent years, has led to overcapacity and excessive competition. Although both port specialization and government regulations are called for to address these issues, few studies have investigated the formation mechanism and economic implications of port specialization. This paper uses alternative duopoly games, namely a Stackelberg game and a simultaneous game, to model port competition, where ports provide differentiated services in the sectors of containerized cargo and dry-bulk cargo. Our analytical results reveal that inter-port competition can lead to port specialization in the following three ways. A port can specialize in a type of cargo (1) for which there is relatively high demand, (2) where it has established capacity first, or (3) for services which require prohibitively high capacity costs. Also, it is seen that overcapacity is likely if strategic port decisions are made simultaneously instead of sequentially. These results suggest that if there is a clear market leader, policy intervention may not be necessary. However, if no port has clear market power, then government coordination and intervention may be needed in order to prevent overcapacity and to encourage specialization.     

An analysis of the overcapacity problem under the decentralized management system of container ports in Japan

This article is concerned with an analytical summary of how the Japanese container ports have been taking place overcapacity problem in a systematic way. It focuses on institutional aspects of the overcapacity problem from the viewpoint of accounting cost and opportunity cost. The first issue arises due to the port authority's accounting system and insufficient disclosures of financial statements of port business to the port users and taxpayers. The second issue is inherently related to resource allocation between the state government and local governments through the budget system and income distribution programmes. Since a proper allocation of economic resources in the port sector as a whole will depend on investment decisions being taken within a coherent framework for ensuring that costs are passed on to port users, these issues are closely related to each other in reality. Although the budget system is completely controlled by the state government, the local governments have authoritative power over port planning, financing, and management, which is assured by the Ports and Harbours Law. The overcapacity problem appears to be an inevitable result.     

Evaluating seaport policy alternatives: a simulation study of terminal leasing policy and system performance

The competitive characteristics of the North American seaport industry have, in theory, been causally linked to excess investment and low terminal throughput productivity. This paper empirically examines the link between seaport authority container terminal leasing policy and throughput productivity. Recent advances in inventory theory applied to service industries suggest the pooling of demand uncertainty can yield lower costs without sacrificing customer service. This concept is applied to a container seaport using simulation. The effort compares key output measures from a realistic base case model of the seaport to those generated by an alternative terminal leasing policy. It is shown that the pooling of demand in a common-user seaport reduces total vessel time in port by 17.1% with no reduction in TEU throughput. Throughput productivity is improved for the highest capacity terminals, while lower capacity terminals are made available for additional users or alternative uses.     

Evaluating seaport policy alternatives: a simulation study of terminal leasing policy and system performance

The competitive characteristics of the North American seaport industry have, in theory, been causally linked to excess investment and low terminal throughput productivity. This paper empirically examines the link between seaport authority container terminal leasing policy and throughput productivity. Recent advances in inventory theory applied to service industries suggest the pooling of demand uncertainty can yield lower costs without sacrificing customer service. This concept is applied to a container seaport using simulation. The effort compares key output measures from a realistic base case model of the seaport to those generated by an alternative terminal leasing policy. It is shown that the pooling of demand in a common-user seaport reduces total vessel time in port by 17.1% with no reduction in TEU throughput. Throughput productivity is improved for the highest capacity terminals, while lower capacity terminals are made available for additional users or alternative uses.     

An analysis of the overcapacity problem under the decentralized management system of container ports in Japan

This article is concerned with an analytical summary of how the Japanese container ports have been taking place overcapacity problem in a systematic way. It focuses on institutional aspects of the overcapacity problem from the viewpoint of accounting cost and opportunity cost. The first issue arises due to the port authority's accounting system and insufficient disclosures of financial statements of port business to the port users and taxpayers. The second issue is inherently related to resource allocation between the state government and local governments through the budget system and income distribution programmes. Since a proper allocation of economic resources in the port sector as a whole will depend on investment decisions being taken within a coherent framework for ensuring that costs are passed on to port users, these issues are closely related to each other in reality. Although the budget system is completely controlled by the state government, the local governments have authoritative power over port planning, financing, and management, which is assured by the Ports and Harbours Law. The overcapacity problem appears to be an inevitable result.     

The impact of port operations on efficient ship operation from both economic and environmental perspectives

Recently, shipping lines have focused on efficient ship operation, which relates to energy efficiency issues in shipping and, particularly, to operational issues such that the minimisation of fuel consumption and resulting greenhouse gas emissions. Efficient ship operation in container lines is closely related to the ship’s time at sea and ship’s time in port. Reduction in port time, thanks to high-quality port operations, allows improvement in the operational efficiency of a liner service by reducing the fuel consumption of a ship at sea and its resulting CO₂ emissions. The main goal of this article is to investigate how time in port affects efficient ship operation in terms of operating costs, CO₂ emissions and externalities. For this, as a methodology, a simulation based upon system dynamics is introduced. Major finding is that less time in port resulting from the improvement of port operations contributes to efficient ship operation in terms of operating costs, amount of CO₂ emissions and external effects in the liner shipping industry. In particular, a sensitivity analysis on efficient ship operation vis-à-vis the quality of port operation shows that bigger ships need to select highly productive calling ports that provide less time in port.     

Maritime security in the European Union—empirical findings on financial implications for port facilities

To address the maritime security issue, the IMO Diplomatic Conference adopted in December 2002 the International Ship and Port Facility Security (ISPS) Code. The European Union fully agreed with its contents; Regulation (EC) No. 725/2004 transposes in Community Law the associated rules, which came into force on 1 July 2004. Interesting questions from an EU-policy point of view are then: What are the additional costs associated with the implementation of security regulations by port facilities (here in particular terminals) in EU-member states? Moreover, how are these additional costs being recovered by port facilities? Another inter-related question is: are there any subsidies involved in the cost recovery? The present paper addresses these questions with the presentation of the main results of an explorative empirical study on maritime security-related costs and their financing in EU-member states. Furthermore, a number of topics are recommended for further study on maritime security costs and financing and associated (EU) regulations.     

Maritime security in the European Union—empirical findings on financial implications for port facilities

To address the maritime security issue, the IMO Diplomatic Conference adopted in December 2002 the International Ship and Port Facility Security (ISPS) Code. The European Union fully agreed with its contents; Regulation (EC) No. 725/2004 transposes in Community Law the associated rules, which came into force on 1 July 2004. Interesting questions from an EU-policy point of view are then: What are the additional costs associated with the implementation of security regulations by port facilities (here in particular terminals) in EU-member states? Moreover, how are these additional costs being recovered by port facilities? Another inter-related question is: are there any subsidies involved in the cost recovery? The present paper addresses these questions with the presentation of the main results of an explorative empirical study on maritime security-related costs and their financing in EU-member states. Furthermore, a number of topics are recommended for further study on maritime security costs and financing and associated (EU) regulations.     

Vertical integration and its implications to port expansion

ABSTRACT

Over the years many shipping lines have established terminal operation companies, with some set up as independent firms. However, port authorities and local governments have not always welcomed external investment and control with open arms. The economic implications and each stakeholder’s best strategies remain unclear. This study develops an analytical model in order to study the effects of vertical integration, with a focus on shipping lines’ investment in ports’ capacity. Modelling results suggest that vertical integration between terminal operator and a shipping line leads to higher port capacity, port charge, market output and consumer surplus. It also reduces delay costs. All these results suggest that vertical integration can be an important source of synergy for the maritime industry. Although vertical integration increases the participating carrier’s output at the expenses of non-integrating rival shipping firms, our numerical analysis suggests that the overall social welfare is likely to increase. Preliminary empirical tests confirm that vertically integrated ports handle more traffic volumes and are associated with better infrastructure and equipment. Therefore, port authorities and government regulators should carefully review the market competition status as well as port expansion plans.     

The container terminal community

This paper is an initial exploration of inter-industry relationships and linkages in the context of automobile imports to the United States. It is our contention that the nature and structure of the engagement between automobile importers and shipping lines is central to understanding the evolution of the car carrier trade. Building on the literature on transactions costs, and supply and value chains, we show that the regimes currently governing car carriage services range from markets to vertical integration via network forms of engagement. We illustrate this through a detailed discussion of Japanese inter-firm networks and an examination of automobile import data to the US from 1980 to 2000. The findings raise important questions for future research on the impact of inter-industry relationships in various strategic decisions of steamship lines, shippers and port authorities including port entry, port choice and routeing, technological and investment choices, and trajectories of supply chain development.     

Inter-firm relationships and shipping services: the case of car carriers and automobile importers to the United States

This paper is an initial exploration of inter-industry relationships and linkages in the context of automobile imports to the United States. It is our contention that the nature and structure of the engagement between automobile importers and shipping lines is central to understanding the evolution of the car carrier trade. Building on the literature on transactions costs, and supply and value chains, we show that the regimes currently governing car carriage services range from markets to vertical integration via network forms of engagement. We illustrate this through a detailed discussion of Japanese inter-firm networks and an examination of automobile import data to the US from 1980 to 2000. The findings raise important questions for future research on the impact of inter-industry relationships in various strategic decisions of steamship lines, shippers and port authorities including port entry, port choice and routeing, technological and investment choices, and trajectories of supply chain development.     

Developing a conceptual model for sharing container terminal resources: a case study of the Gamman container terminal

It is an important matter closely connected with saving logistics costs, as well as encouraging national competitive power, to improve the productivity of container terminals by efficient utilization of container terminal resources. In this respect, this paper tries to suggest a conceptual model for sharing container terminal resources, taking as a case study the Gamman Container Terminal (GCT) in the port of Pusan. In so doing, it identifies what kinds of resources can be systematically shared from the viewpoint of their common use and draws some problems resulting from terminal operation by four operators at GCT. The model does not imply the conception that each terminal has its own resources individually, but recommends that tentatively-called Container Terminal Resource Management Center (CTRMC) should be established and operated in order to save operation and investment costs and improve operational efficiency. In addition, the continuous acquisition and life-cycle support (CALS) concept is imbedded in the model so that it can control the supply and demand of resources efficiently by sharing the database, through which the CTRMC can automatically identify the status of the excess or deficit of a certain resource in each berth at GCT.