There are many thousands of ports of all sizes throughout the world performing a wide range of functions or, in many cases, not functioning as ports. Responsible bodies such as port authorities, whether public or private, have a varied set of objectives and employ a wide range of means to achieve their goals. Ports vary widely in their assets, roles, functions and institutional organization, and even within a single port the activities or services performed may cover a broad spectrum.
A port can be as small as a single quay for berthing a ship or as large as a centre with many terminals and a cluster of industries and services. Ports need not necessarily be only seaports.
For example, for legal purposes in the United States the term “port” may include airports (Newman and Walder, 2003). However, this chapter will restrict discussion mainly to seaports, hereafter simply called ports.
The boundary of a port is typically seen as the area under the control of a port authority or similar body, but many developments or policy decisions have an impact beyond the legally delineated area of the port into the port-city or the port hinterland, or along the coastal zone associated with the port. In contrast, some port developments may cover only a small part of a port authority’s property, particularly of very large ports. Decisions to locate at ports raise conflicting demands of spatial, economic and ecological or environmental concerns.
Depending on the context, decision makers are faced with different objectives e.g. improved container movement, modernisation of old industries, regeneration for recreation or tourism (Hershman, 1999).
In broad terms, policy associated with attracting new customers or users of ports is based on two quite different objectives. First, port authorities seek to improve the commercial efficiency of working ports as locations for the transfer of goods or passengers between sea and land transport (Stevens, 1999). This is often known as “port development”. Second, there is policy and development associated with changing the role of ports away from the transfer of goods and people towards using the port as a location usually in a city and suitable for
“waterfront regeneration” (Meyer, 1999). This report is concerned primarily with locational decisions based on the first premise, although there is often an interaction between the two approaches (Hayuth, 1988).
3.2.1 Influences on decisions of enterprises to locate at ports
Major areas of influence are:
Nature of the port organization and structure;
Responsibility for financing port development;
Services offered by ports;
Responsibility for assets and associated services; and
Examples of current practice are provided for each area where appropriate.
3.2.2 Port organization and structure
There are various influences on port structure, organization and management, all of which are likely to also have an influence on the decisions of enterprises to locate at a port (World Bank, 2001).
The socio-economic structure of a country (e.g., market economy, open borders);
Historical developments (e.g., former colonial trading structure);
Location of the port (e.g., within an urban area, in isolated regions);
Types of cargos capable of being handled (e.g., liquid and dry bulk, containers);
Public, private or mixed provision of service;
Local, regional or global orientation;
Ownership of infrastructure (including port land);
Ownership of superstructure and equipment (in particular ship-to-shore handling equipment and warehouses); and
Status of dock labour and management.
The nature of land use in port areas will depend on the nature of control of the port, which is often by a port authority if transport-related port activities predominate. The main objectives of the port authority will be to meet the demands of the shipping and transport sector and it would normally identify unused or neglected resources as potential areas to attract freight- related business. If there is a move away from transport-related port activities into other uses for the port, a local authority or central Government often takes the initiative, followed by control by private commercial undertakings, sometimes unconnected with traditional transport-related port activities. However, even transport-oriented owners of fully private ports may sell port property for “non-port activities”.
3.2.3 Different types of port operators
A number of different types of ownership models are found throughout the world for ports engaged in transport-related activities. The nature of the ownership or port institutional structure will have an influence on how an enterprise will become involved in a port’s activities. The types of port can be differentiated according to the different levels of service that the port authority provides (Stevens, 1999). A widely-used categorisation of port institutions is:
Service ports (state-owned or private): provide infrastructure, superstructure and additional services (e.g. administration of transport, cargo, loading and unloading, etc.);
Tool ports: provide infrastructure and superstructure (e.g. cranes, warehouses but with cargo handling probably undertaken by private firms); and
Landlord ports: provide infrastructure (e.g. berths, parking and loading zones).
State-owned service and tool ports are supposed to operate mainly in the public interest.
Landlord ports often attempt to combine public (port authority) and private (port industry) interests. Fully privatised service ports focus on private (shareholder) interests.1
The landlord port with a mixed public-private responsibility is the prevailing form for larger ports such Rotterdam, Antwerp, New York and Singapore. The port authority acts as landlord, leasing infrastructure to the private sector, which undertakes port operations such as cargo- handling, or operates industrial facilities such as refineries. The private port operators are responsible for their own superstructure (e.g., offices, sheds, warehouses, container freight stations, workshops) and the equipment in their terminal (e.g., cranes, conveyor belts).
However, the private sector may also finance a complete terminal within a port, including infrastructural expenditure such as land reclamation.
The above classification of provision is somewhat simplified and the distinction between port types is not always clear-cut. For example, the autonomous French ports are tool ports, but in newer terminals, equipment such as gantry cranes may be a private investment by private terminal operators. This divided responsibility may create friction between the port authority and terminal operators (Bichou and Gray, 2004). Some tool ports may restrict superstructure assets to cargo handling equipment, while others extend such facilities to warehousing and logistics services. The same applies to the use of manpower in some tool ports where private companies are required to use port authority labour. There is no ideal or standard model of port ownership and institutional structuring, and one can find many different styles of organizational structure throughout the ports of the world. Port organization also changes over time, and a previously desirable model of port ownership can later prove to be outdated and inefficient (Bichou and Gray, 2005).
Over the past few decades since the beginning of the modern era of privatisation, there has been a debate about the appropriate extent of the public or private status of port ownership and administration, and mainly academic commentators have presented various models or frameworks. These include:
Ports controlled by the state, ports controlled by local administrations (both municipal and authority ports), and ports controlled by private enterprises (Beth, 1985);
State ownership, autonomous ownership, municipal ownership, and private ownership (Alderton, 1999); and
Public port, public/private port with the public sector dominant, private/public port with the private sector dominant and private port (Baird, 1995 and 1997; Cullinane and Song, 2002).
1 See World Bank (2001) and Bichou and Gray (2005) for detailed reviews of developments in world-wide port structure
Figure 3.1. Variations of functional roles and institutional models across different port services and facilities
Source: Bichou and Gray (2005)
In practice, there are many models of port ownership covering central or state models, decentralised models, partly or fully private models, and some countries retain a wide range of port ownership models (Bichou and Gray, 2005). In general, most ports lie somewhere between central/local and public/private variations, although with no definitive boundary or recognized best practice about what should be controlled by the public entity and what should be managed by the private sector in ports (UNCTAD, 1995). In Figure 3.1 Bichou and Gray (2005) summarise the variations in institutional and organizational management models across major port assets, facilities and services. The divisions between private and public ownership in Figure 1 are hypothetical but typical.