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World Bank Port Reform Toolkit
Module 2
The Evolution of Ports in a Competitive World
Module 22World Bank Port Reform Toolkit
•Overview of the competitive landscape
Evolution of Ports in a Competitive World
•Ports dynamics in the 21st Century
•Challenges and Opportunities
Module 23World Bank Port Reform Toolkit
Threat of New Entrants
Rivalry among Existing Competitors
Potential for Global Substitute
Bargaining power of Service Providers
Bargaining Power of Port Users
Forces governing the competitive landscape
Module 24World Bank Port Reform Toolkit
Rivalry among existing competitors : determining factors
•Hinterland market access
•Ability to service transshipment trade
•Regional port capacity and demand
•Ability to create competition within the port
•Stakes at risk
Module 25World Bank Port Reform Toolkit
Rivalry among existing competitors : determining factors (cont’d.)
•Ability to absorb losses
•Ability to control operations
•Limits on rivalry within ports
•Government willingness to subsidize operations
Module 26World Bank Port Reform Toolkit
Threat of New Competitors : determining factors
•Capital expenditure for new port facilities
•New distribution patterns
•Provisions in operating agreements
•Natural barriers
•Magnitude of switching costs
•Cost advantages and customer loyalties
Module 27World Bank Port Reform Toolkit
Potential for Global Substitutes : determining factors
•Other global sources for products moving through the port
•Substitute products for exports and imports
•Magnitude of switching costs for substitution
•Demand elasticity of exports and imports
•Importance of port costs in total delivered price
Module 28World Bank Port Reform Toolkit
Bargaining Power of Port Users : determining factors
•Concentration of port user power
•Impact of changing business relationships
•Presence of large value adding tenants
•Importance of the port to the economy
•Ability to replicate port services
•Facility investments by ports users
Module 29World Bank Port Reform Toolkit
Bargaining Power of Service Providers : determining factors
•Experience and capabilities of service provider
•Participation in facility financing
•Choke points in the port
•Ability to absorb downtime
•Interrelationships between providers and port users
•Rights and obligations conveyed by contractual agreements
Module 210World Bank Port Reform Toolkit
•Overview of the competitive landscape
Evolution of Ports in a Competitive World
•Ports dynamics in the 21st Century
•Challenges and Opportunities
Module 211World Bank Port Reform Toolkit
Globalization of Production : observed trends
•Vertical specialization
•Focused manufacturing
•Expanded logistics reach
•Increased sourcing alternatives
•Impact of globalization on ports
Module 212World Bank Port Reform Toolkit
Impacts of technological changes (1/4)
•Containerization of world trade
•Future containership designs
•Impact on port operations : reduction of ship’s time in port and at berth, reduction of personnel requirements for cargo handling, raise of berth productivity, increase of capital intensity of port operations.
Module 213World Bank Port Reform Toolkit
Impacts of technological changes (2/4)
•Need for container port productivity improvements
Module 214World Bank Port Reform Toolkit
Impacts of technological changes (3/4)
• Impact of increasing port productivity on voyage cost per TEU
Module 215World Bank Port Reform Toolkit
•Growing role of information technology
Impacts of technological changes (4/4)
•Port requirements for large cruise ships
•Other technology impacting port services : podded drive propulsion systems, self unloading bulk carriers, …
Module 216World Bank Port Reform Toolkit
Shifting Bargaining power
•Consolidation among ocean carriers
•Emergence of global terminal operators
•Potential emergence of other global port service suppliers
•Emergence of global logistics service providers
•Different ways to buy and sell port services
Module 217World Bank Port Reform Toolkit
Changing Distribution Patterns : the Hub and Spoke distribution
•Expected attributes of hubs : strategic location, sufficient depth, extend of terminal facilities, efficiency of container handling operations, availability of frequent feeder services, attractive cargo-handling charges
•Benefits of hub status : increased income, reduced transport time, increased competitiveness of exporters, creation of jobs
•Problems hubs face : competition from other hubs, lower income from terminal services charges
•Inland container terminals are shifting activities away from the port
Module 218World Bank Port Reform Toolkit
Environmental and safety concerns
•Growing environmental concerns : Oily ballast water discharge
Water pollution, air pollution, aesthetics, noise, etc.
•Issue of sub-standard ships
Port State Control
Regional cooperation
Module 219World Bank Port Reform Toolkit
•Overview of the competitive landscape
Evolution of Ports in a Competitive World
•Ports dynamics in the 21st Century
•Challenges and Opportunities
Module 220World Bank Port Reform Toolkit
Transferring Port Operations to the Private Sector
•The need for change : private sector companies have proved their ability…
•Impacts of privatizing operations : success stories and failures•Lessons learned from the past :
•Contingency plan
to improve port efficiencyto transfer their knowledge to the port personnelto bear the financial burden of port expansion and
development.
need for transparency and open competitionneed to plan the transition to private operation and the
future functioning scheme of port after reform
Module 221World Bank Port Reform Toolkit
Opportunities for the Private Sector :available annual revenue
•Terminal operations : $30 to $40 billion
•Tug assist services : $4 to $5 billion
•Maintenance dredging : $4 to $5 billion
•Information technology : $2 to $3 billion
•Environmental facilities and ship safety : $1 to $2 billion
•Other port services : warehousing and storage, port security, pilotage, etc. : $4 to $5 billion
• Total : $45 to 60 billion