Container Shipping Services and their Impact on Container ... · PDF fileContainer Shipping Services and their Impact on Container Port Competitiveness Proefschrift voorgedragen tot

Container Shipping Services and theirImpact on Container Port Competitiveness

Proefschrift voorgedragen tot het behalen van de graad vanDoctor in Transport en Maritieme Economie op 3 november 2009 om 15u

Thesis submitted in order to obtain the degree ofPh.D. in Transport and Maritime Economics on 3 November 2009 at 15hOO

Door/by

YAP Wei Yim

B 375099

Doctoraatsjury / Doctoral Jury:

Voorzitter / Chairman:Prof. dr. Bruno De Borger (University of Antwerp)

Promotor / Promoter:Prof. dr. Theo Notteboom (University of Antwerp)

Leden / Members:Prof. dr. Jan Blomme (University of Antwerp)

Prof. dr. Kevin Cullinane (Napier University, Edinburgh)Prof. dr. Wout Dullaert (University of Antwerp)

Prof. dr. Peter de Langen (Eindhoven University of Technology)Prof. dr. Frank Witlox (Ghent University)

Container Shipping Services and Their Impact on Container Port Competitiveness

TABLE OF CONTENTS

Acknowledgements

Abstract

Table of Contents

List of Figures

List of Tables

List of Equations

List of Abbreviations

Chapter 1: Introduction

1.1 Research Objective

1.2 Significance and Role of the Containerised Trade andContainer Shipping Industry

1.3 Foundation of Containerised Trade

1.3.1 Users of Containerised Transportation System

1.3.2 Suppliers of Container Shipping Services

1.3.3 The Container Port

1.4 Organisation of the Thesis

Chapter 2: Review of Literature

2.1 Inferences for Port Competitiveness Offered by

2.1.1 Perspectives Drawn from Literatures Related tothe Container Port

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2.1.2 Perspectives Drawn from Literatures Related to 11Shipping Lines

2.1.3 Perspectives Drawn from Literatures Related to 14Shippers

2.1.4 Perspectives Drawn from Literatures Related to 15the Supply Chain

2.1.5 Perspectives Drawn from Literatures Related to 16Container Terminal Operators

2.1.6 Perspectives Drawn from Literatures Related to 18Container Port Performance

2.1.7 Towards a Broader and Holistic Approach 18

2.2 Going Beyond Port Competition 20

Chapter 3: Demand for Container Shipping Services 25

3.1 Overview of Actualised Demand for Transporting 26Containers by Sea

3.2 Key Developments Affecting Demand for Transporting 27Containers by Sea

3.2.1 Growing Share of Seaborne Trade in 28Containerised Cargoes

3.2.2 Remaining Predominantly as an East-West 29Trade

3.2.3 Substantial Amount of Intra-Regional Trade 30

3.2.4 Increasing Share of Transhipment Traffic 31

3.2.5 Gravity of Traffic Shifting to East Asia 33

3.3 Determinants of Demand for Seaborne Transport of 36Containers

3.3.1 Demand for Container Shipping Services by 36Shippers

3.3.2 Demand for Container Shipping Services by 39Shipping Lines

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3.3.3 Influence Exerted by Ports 40

3.4 In Summary 41

Chapter 4: Supply of Container Shipping Services 45

4.1 Overview of Supply of Container Shipping Services 45

4.1.1 Capacity Deployed on Major Trade Routes 46

4.1.2 Constitution of the Liner Fleet: Vessel Type 47

4.1.3 Constitution of the Liner Fleet: Container 48Shipping Companies

4.2 Key Developments Affecting Supply of Seaborne 49Transport for Containers

4.2.1 Potential Doubling of Capacity Within Five 49Years

4.2.2 Increasing Vessel Size on Trade Routes 50

4.2.3 Concentration in the Liner Industry 53

4.2.3.1 Mergers and Acquisitions .53

4.2.3.2 Formation of Shipping Alliances 57

4.2.3.3 Emergence of New Industry Structure 61

4.2.4 Implications from Mounting Bunker Costs 62

4.2.5 Complexity of Maritime Security 65

4.3 Determinants of Supply of Container Shipping Services 66

4.3.1 Factors Influencing Supply of Container 66Shipping Services

4.3.2 Factors Specific to the Cargo 68

4.3.3 Factors Specific to the Trade Route 69

4.3.4 Factors Specific to General Market Conditions 70

4.3.5 Factors Specific to Industry Dynamics 70

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4.3.6 Constituents of Container Shipping Services and 71Network Configurations

4.4 In Summary " ~ 73

Chapter 5: The Container Port 75

5.1 Role and Objective of the Container Port 75

5.2 Relationship with the Containerised Transportation 76System

5.3 Definition of Container Port Competitiveness - 77

5.4 Measuring Container Port Competitiveness 78

5.5 Determinants of Container Port Competitiveness 84

5.5.1 Factor Conditions 88

5.J.2 Demand Conditions 90

5.5.3 Relating and Supporting Industries 90

5.5.4 Firm Strategy, Structure, and Rivalry 91

5.5.5 Role of the Government 91

5.5.6 Chance 92

5.6 In Summary 92

Chapter 6: Implications for Container Port Competitiveness 95

6.1 Challenges Faced by the Container Port 95

6.1.1 Catering to Higher Traffic Volumes 96

6.1.2 Optimise Land Use in Face of Stringent 102Requirements from Port Users and Other Parties

6.1.3 Handling Diverse Range of Cargoes 107

6.1.3.1 Diversity in Geographical Reach 108

6.1.3.2 Diversity in Vessels that Call at 110Container Ports


6.1.4 Dealing with Demands Required by Entire 111Logistics Chain

6.1.5 Addressing Increasing Power Wielded by Large 114Industry Entities

6.1.6 Entrance of Non-Traditional Players in Port 119Sector

6.1.7 Competition with a Wider Range of Ports 120

6.1.7.1 Container Port Competition 120

6.1.7.2 Container Port Complementarity 122

6.1.7.3 Inter-Container Port Relationship for 123the Case of Two Hinterlands

6.1.7.4 Inter-Container Port Relationship for 124Setting with Hinterlands and PortRanges

6.1.7.5 Inter-Container Port Relationship in 125Global Network of Value-DrivenChain Systems

6.2 From Container Port to Container Port Cluster 127

Chapter 7: Research Methodology 131

7.1 Research Objective 131

7.2 Research Approach 131

7.3 Analysis of Container Shipping Services and Their 134Impact on Inter-Container Port Dynamics

7.3.1 Calculating Annualised Slot Capacity 134

7.3.2 Framework for Analysing Inter-Container Port 139Relationships

7.4 Ascertaining Impact of Inter-Container Port Dynamics 142on Container Port Competitiveness (from the SupplyPerspective)

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7.5 Towards a General Framework for Analysing Container 147Port Competitiveness

7.5.1 Demand and Supply Conditions Faced by the 148Container Shipping Line at the Container Port

7.5.1.1 Applicability of the Assumptions to 149the Container Port

7.5.1.2 Elaboration on Characteristics of the 152Supply and Demand Functions

7.6 Issues Relating to Coverage of Research and Data 157

7.6.1 Coverage of Research: Geographical Region 157

7.6.2 Coverage of Research: Time Period 159

7.6.3 Sources of Data 159

7.6.3.1 Data on Container Throughput 159

7.6.3.2 DataonASC 159

7.7 In Summary 161

Chapter 8: Results for Southeast Asia 163

8.1 Container Port Landscape 164

8.2 Major Developments Affecting Inter-Container Port 169Dynamics in Southeast Asia

8.3 Analysis of Inter-Container Port Dynamics 171

8.3.1 Overview of ASC Connected to the Selected 171Ports

8.3.2 Development of ASC Connected to the Selected 174Ports on the Europe-Far East Trade Route: Rank

1 (Share of 32.6%)

8.3.2.1 Period 1: Prior to 1999 177

8.3.2.2 Period 2: 1999 to 2002 178

8.3.2.3 Period 3: 2003 to 2005 181

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8.3.2.4 Period 4: After 2005 184

8.3.2.5 In Summary 185

8.3.3 Development of ASC Connected to the Selected 186Ports on the Mediterranean-Far East TradeRoute: Rank 2 (Share of 15.4%)

8.3.3.1 Period 1: Prior to 2001 188

8.3.3.2 Period 2: 2001 to 2002 190

8.3.3.3 Period 3: After 2002 191


8.3.4 Development of ASC Connected to the Selected 194Ports on the Intra-Southeast Asia Trade Route:Rank 3 (Share of 11.8%)

8.3.4.1 Period 1: Prior to 2002 196

8.3.4.2 Period 2: 2002 and after 198

8.3.4.3 In Summary . 200

8.3.5 Development of ASC Connected to the Selected 201Ports on the Far East-Middle East Trade Route:Rank 4 (Share of 11.5%)

8.3.5.1 Period 1: Prior to 1999 203

8.3.5.2 Period 2: 1999 to 2000 204

8.3.5.3 Period 3: 2001 and after 206


8.3.6 Development of ASC Connected to the Selected 208Ports on the Transpacific Trade Route: Rank 5(Share of 8.1%)

8.3.6.1 Period 1: Prior to 2001 210

8.3.6.2 Period 2: 2001 and after 212


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8.4 Summary of Inter-Container Port Dynamics and 215Implications for Port Competitiveness in Southeast Asia

Chapter 9: Results for East Asia (Pearl River Delta) 223

9.1 Introduction 223


9.3 Major Developments Affecting Inter-Container Port 230Dynamics


9.4.1 Overview of ASC Connected to Hong Kong and 231Shenzhen


i 9.4.2.1 Period 1: 1995 to 2002 237

9.4.2.2 Period 2: 2003 to 2006 239


9.4.3 Development of ASC Connected to the Selected 241Ports on the Europe-Far East Trade Route: Rank2 (Share of 24.4%)

9.4.3.1 Period 1: 1995 to 2001 243

9.4.3.2 Period 2: 2002 to 2006 244


9.4.4 Development of ASC Connected to the Selected 246Ports on the Southeast Asia-Far East TradeRoute: Rank 3 (Share of 12.5%)

9.4.4.1 Period : 1995 to 2006 248



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9.4.5.1 Period 1: 1995 to 2003 252

9.4.5.2 Period 2: 2004 to 2006 253


9.4.6 Development of ASC Connected to the Selected 255Ports on the Far East-Middle East Trade Route:Rank 5 (Share of 8.1%)

9.4.6.1 Period 1: 1995 to 1999 257

9.4.6.2 Period 2: 2000 to 2004 257

9.4.6.3 Period 3: 2005 to 2006 258


9.5 Summary of Inter-Container Port Dynamics and 260Implications for Port Competitiveness in the Pearl RiverDelta

Chapter 10: Results for East Asia (Yangtze River Delta) 269




10.3.1 Overview of ASC Connected to Shanghai, 279Busan, Kaohsiung and Ningbo


10.3.2.1 Period 1: Prior to 1998 285

10.3.2.2 Period 2: 1998 to 2001 287

10.3.2.3 Period 3: 2002 and after 289

10.3.2.4 In Summary 293


10.3.3 Development of ASC Connected to the Selected 294Ports on the Europe-Far East Trade Route: Rank2 (Share of 18.4%)

10.3.3.1 Period 1: Prior to 2000 296

10.3.3.2 Period 2: 2000 to 2002 298

10.3.3.3 Period 3: 2003 and onwards 300

10.3.3.4 In Summary 303

10.3.4 Development of ASC Connected to the Selected , 304Ports on the Intra-Far East Trade Route: Rank 3(Share of 13.2%)

10.3.4.1 Period 1: Prior to 1998 307

10.3.4.2 Period 2: 1998 and after 309

10.3.4.3 In Summary 311

10.3.5 Development of ASC Connected to the Selected 311Ports on the Southeast Asia-Far East TradeRoute: Rank 4 (Share of 10.7%)

10.3.5.1 Period 1: Prior to 2001 313

10.3.5.2 Period 2: after 2000 315

10.3.5.3 In Summary 317


10.3.6.1 Period 1: before 2002 319

10.3.6.2 Period 2: 2002 and after 321

10.3.6.3 In Summary 323

10.4 Summary of Inter-Container Port Dynamics and 324Implications for Competitiveness of Ports LocatedAround the Yangtze River Delta

Chapter 11: Results for Northwest Europe 331

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11.3.1 Overview of ASC Connected Rotterdam, 342Hamburg, Antwerp and Bremerhaven

11.3.2 Development of ASC Connected to the Selected 345Ports on the Europe-Far East Trade Route: Rank

1 (Share of 34.3%)

11.3.2.1 Period 1: Prior to 2000 347

11.3.2.2 Period 2: 2000 to 2003 350

11.3.2.3 Period 3: After 2003 353

11.3.2.4 In Summary 357

11.3.3 Development of ASC Connected to the Selected 358Ports on the Intra-Europe Trade Route: Rank 2(Share of 30.1%)

11.3.3.1 Period 1: Prior to 2004 362

11.3.3.2 Period 2: After 2003 365

11.3.3.3 In Summary 367

11.3.4 Development of ASC Connected to the Selected 369Ports on the Transatlantic Trade Route: Rank 3(Share of 20.9%)

11.3.4.1 Period 1: Before 1999 372

11.3.4.2 Period 2: 1999 to 2002 374

11.3.4.3 Period 3: After 2002 377

11.3.4.4 In Summary 380

11.3.5 Development of ASC Connected to the Selected 3 81Ports on the Europe-Mediterranean TradeRoute: Rank 4 (Share of 5.9%)

11.3.5.1 Period 1: Before 2000 385


11.3.5.2 Period 2: 2000 to 2003 387

11.3.5.3 Period 3: After 2003 389

11.3.5.4 In Summary - 391

11.3.6 Development of ASC Connected to the Selected 393Ports on the Europe-Africa Trade Route: Rank 5(Share of 4.7%)

11.3.6.1 Period 1: Before 1997 395

11.3.6.2 Period 2: 1997 to 2002 396

11.3.6.3 Period 3: After 2002 398

11.3.6.4 In Summary 400

11.4 Summary of Inter-Container Port Dynamics and 401Implications for Port Competitiveness in NorthwestEurope

Chapter 12: Summary and Conclusion 409

12.1 Summary of Findings for Inter-Container Port Dynamics 409and Container Port Competitiveness In the Four Regions

12.2 Contribution of Research 413

12.3 Limitations of Study and Recommendations for Future 419Research

Annexes

Annex 1 Porter's 'Diamond' Model Applied to the 423Analysis of Container Port Competitiveness

Annex 2 The Current Value Stream In International 424Logistics

Annex 3 Seaborne Container Trade in Year 2007 425

Annex 4 Evolution of the Top Twenty Container 426Ports (1987-2007)

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Annex 5 List of Mergers and Acquisitions in the 427Liner Shipping Industry (1990 - 2007)

Annex 6 Schematic Representation of Mergers and 430Acquisitions for Top 20 Carriers

Annex 7 Commitment by Container Shipping Lines 431to Their Respective Alliances (1996 -2006)

Annex 8 Example of Integrated Service Network 433Operated by Maersk Line in 2006

Annex 9 Examples of Service Configurations and 434Transhipment Forms Operated by VariousShipping Entities

A9.1 Example of Pendulum Service Operated by 434Grand Alliance in 2006

A9.2 Example of North-South Service Operated 434by MSC in 2006

A9.3 Example of Butterfly Service Operated by 435Samudera in 2006

A9.4 Example of Triangle Service Operated by 435HRC Shipping in 2006

A9.5 Example of Simple End-to-End Service 436Operated by Various Carriers in 2006

A9.6 Example of Inter-Lining Transhipment for 436Services Operated by Grand Alliance in2006

A9.7 Example of Hub-and-Spoke Transhipment 437for Services Calling at Busan in 2006

A9.8 Example of Relay Transhipment for 437Services Operated by CMA-CGM in 2006

Annex 10 Comparison of Capital Expenditure for 438Terminal Development

Annex 11 Measures to Boost Container-Handling 439Capacity with Existing Space

11 .A Port of Hamburg 439

11 .B Port of Long Beach 439

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ll.C

Annex 12

12.A

12.B

12.C

12.D

12.E

12.F

Annex 13

13.A

13.B

13.C

13.D

13.E

Annex 14

14.A

14.B

Annex 15

15.A

Port of New York/New Jersey

Expanding Container-Handling CapacityInto Adjacent Areas

Port of Singapore

Port of Shanghai

Port of Hong Kong

Port of Shenzhen

Port of Port Klang

Port of Tanjung Pelepas

Developing Container-Handling CapacityIn New Areas

Port of Singapore

Port of Shanghai

Port of Busan

Port of Dubai

Port of Guangzhou

Examples of Major Container TerminalOperating Companies Associated WithShipping Lines

Global Investment Locations of APMTerminals

Global Investment Locations of COSCOPacific

Examples of Pure Stevedores

Global Investment Locations of Hutchison

440

441

441

441

442

442

443

443

444

444

444

445

445

446

447

447

448

449

449Port Holdings

15.B Global Investment Locations of PSA 450International

15 .C Global Investment Locations of DP World 451

Annex 16 List of Terminal Buyouts Involving Non- 452Traditional Players in the Port Sector(2006-2007)

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Annex 17

Annex 18

Annex 19

Annex 20

Schematic Summarising Relationship 453Between the Determinants of ContainerPort Competitiveness

Institutional Framework for Container Port 454Cluster Development in Singapore

Model of Demand and Supply of ASC for 455the Case of Non-Linear Supply

Background on the Container PortLandscape of the Largest Container Ports inSoutheast Asia

456

20.A

20.B

20.C

Annex 21

21.A

Port Klang

History

Container Throughput

Market Structure

Future Development

Singapore

History


Market Structure

Future Development

Tanjung Pelepas

History


Market Structure

Future Development

Background on the Container PortLandscape of the Largest Container Ports inthe Pearl River Delta

Hong Kong

History


Market Structure

Future Development

456

456

457

458

459

459

459

460

461

462

462

462

463

464

464

465

465

465

466

467

468

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21.B

Annex 22

22.A

22.B

22.C

22.D

Annex 23

23 .A

Shenzhen

History


Market Structure

Future Development

Background on the Container PortLandscape.of Shanghai, Busan, Kaohsiungand Ningbo

Busan

History


Market Structure

Future Development

Kaohsiung

History


Market Structure

Future Development

Ningbo

History


Market Structure

Future Development

Shanghai

History


Market Structure

Future Development

Background on the Container PortLandscape of the Largest Container Ports inNorthwest Europe

Antwerp

History

469

469

469

471

472

473

473

473

474

475 •

477 \

477

477

478

478

479

480

480

480

481

482

482

482

483

484

485

486

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486

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Container Throughput 487

Market Structure 487

Future Development 489

23 .B Bremerhaven 489

History 489




23.C Hamburg 491

History 491




23 .D Rotterdam 495

History 495


Market Structure' 496


References 499

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Container Shipping Services and their Impact on Container ... · PDF fileContainer Shipping Services and their Impact on Container Port Competitiveness Proefschrift voorgedragen tot