PORT TYPES

Ports can be described either by geographical features or

by operational activity

GEOGRAPHIC PORT TYPES

The ria

The ria is a drowned river valley, caused by a rise in sea

level at the end of an ice age The deepest water is found
in the narrowest part of the ria where fast-flowing
currents keep the seabed clear

Sydney, Brest, San Francisco and Plymouth harbours are

all examples of ria

Tidal estuaries

Estuaries are located where river meets the sea.

Estuaries are water bodies where the flow of fresh water
from river mixes with salt water transported, by tide,
from the ocean.

An estuary is a semi enclosed coastal body of water with

one or more rivers or streams flowing into it.

It has a free connection with open sea.

Estuaries are formed due to rise in sea level, movement
of sand and sandbars, glacial processes and tectonic
processes.

Estuaries are greatly influenced by tidal action. They are

periodically washed by sea water once or twice a day
based on the number of tides.

Low relief, tidal estuaries, including the Thames estuary

giving access to London and the B Estuary which leads to
the port of Hamburg, can be dredged to provide a
deepwater approach

Delta

A river moves more slowly as it nears its mouth, or end.

This causes sediment, solid material carried downstream
by currents, to fall to the river bottom.

The slowing velocity of the river and the build-up of

sediment allows the river to break from its single channel
as it nears its mouth. The river forms a Deltaic lobe.

As the speed of a river slows on meeting the sea, the silt-

laden water deposits its load. Sandbanks are created. To
maintain access to and from the ports, continuous
dredging of deposited silt is necessary New channels can
easily be through the deposited sit and any dredged
materials can be used to provide new land industrial port
development.
The drowned delta of the Rhine-Meuse-Scheldt basin has
allowed the development of the major European ports
Rotterdam and Antwerp

Fjord

Steep-sided narrow entrance-like feature at the coast

where the stream meets the coast.Fjords are common in
Norway, Greenland and New Zealand.

The shelter and deepwater provided by a mountainous

fjord would lack the dense urban population that
generate cargoes.

Coastal post-glacial submergence

Coastal post-glacial submergence followed by weather

and river erosion has created geographical forms
appropriate for port development

Southampton and New York are examples

Artificial harbours

Artificial harbours can be created by the use of extended

walls into the sea. The walls are known as moles. Moles
are expensive to build and maintain Without regular
dredging there can be a build up of silt. An artificial
harbour may have to be enlarged, or the port abandoned
if it cannot accommodate the growth in ship size
 Dover and Ijmulden, in the Netherlands are successful
artificial harbours.

Non-tidal river ports

The river port is subject to seasonal changes in water

level and shifting channels The river port opens up
opportunities for cheap, environmentally friendly
waterborne transport into the hinterland.

Non-tidal river ports can be found on the systems

including the Rivers Amazon, Mississippi Yangtze and
Rhine.

OPERATIONAL PORT TYPES

Ports can be conveniently defined by their operational

activities. However within a large port a wide variety of
individual activities will be undertaken where each
activity is served by a specialist terminal.

The most important operational port types are the

container port , multipurpose port , bulk port ,
ferry port and cruise port
Container port

There are four main types of container ports

1 The direct call port 2 The hub port,

3 The Transhipment port 4 The feeder port

Direct call port

A direct call port comprises a number of dedicated

container terminals used for handing containers at very
high throughput levels Containers will be moved to and
from the direct cal port by rail, road or barges. Shanghai
is the world's busiest port and the largest container port
in the world . As well as being a direct port of call,
Shanghai serves as a hub port for the hinterland ports of
the Yangtze River Delta regions. JNPT in India is a
direct call port

Hub port

A hub port is a container port which acts as a focus for

container movement, through the use of mainline
container ships and feeder ships. The development of a
hub port may not necessarily have an adjacent industrial
hinterland A hub port allows for container distribution by
sea within a significant geographical area. An example of
a hub port is the port of Algeciras, Spain. That port is
strategically located between the Atlantic Ocean and the
Mediterranean. It has been developed as a hub port
linking West Africa Asia northern Europe, and the
Americas and is one of three European hub ports serving
the needs of Maersk Line, the others being Tanger in
Morocco and Rotterdam in the Netherlands

Mundra Port in Gujarat is a Hub port

Transhipment port

A transhipment port is an interchange point enabling

containers to be transferred between different mainline
containerships. A limited number of containers may move
inland. Singapore is the world's busiest transhipment port
accounting for one-seventh of the world's total
transshipment throughput.

Vallarpadaom Container terminal Kochi is intended

for transshipment terminal
Feeder port

A feeder port is a small or medium-sized port through

which containers are fed to one or more hub ports in the
immediate geographical area. An example of a European
feeder port is Teesport located in the north-east of the
United Kingdom It provides 20 services per week to
major hub ports of Europe including London Gateway

Beypore (Kerala) port Kakinada (Andhra Pradesh) ports

are feeder ports

Multi-purpose and fruit ports

Despite the development of containerisation, other ports

with less sophisticated facilities are found They tend to
serve developing nations and include multipurpose ports
and fruit ports

Multipurpose port

Due to weak hinterland transport infrastructure, some

countries have not been able to take full benefit of
opportunities associated with unitised cargo, particularly
containers. The traditional multipurpose port is found in
the north-south trades where trade volumes are small
and ports cannot afford to build expensive container
terminals The multipurpose port will precede the
development of more specialised port facilities.
Fruit port

Specialist fruit ports and terminals exist for export and

import Handling techniques determine the precise
structure of a fruit port. Palletised and general cargo-
handling techniques in conjunction with chilled
warehouses and storage facilities are used. In recent
years the use of refrigerated or reefer containers has had
an impact on the more traditional fruit-handling systems
Seatrade is the world's largest operator of reefer vessels
and provides services for cool cargoes Examples include
palletised citrus frut from Turky to north-west Europe,
bananas and pineapples from Costa Rica and Colombia to
Europe and palietised apples, pears and kiwi fruit from
Chile to Russia

Specialist fruit terminals are found in north-west

European ports of Rotterdam, Antwerp and Hamburg The
Rotterdam Fruit Wharf is able to discharge and load
specialised reefer ships and containers and provides
storage for up to 22,000 pallets. The Port of Antwerp is
the world's largest banana-unloading port, handling 8
billion bananas from Central America each year
Bulk ports

The movement of dry and liquid bulk commodities in

seaborne international trade is significant Specialist bulk
ports and terminals have been developed to act as the
places of interchange between the sea and land modes of
transport.

Dry bulk commodity ports

There are five large dry bulk commodities which are

transported by sea, namely coal, iron ore,grain,
phosphate and bauxite.

World trade include forest products and cement. Dry bulk

commodity export ports and terminals tend to specialise
in a single commodity, while import ports and terminals
may handle and store more than one commodity, such as
coal and iron ore

Major export players in the dry bulk markets are

Australia, Brazil, Canada, Indonesia, South Africa and the
United States of America. Demand for imports is
dominated by the developing regions of Asia in particular
China, and increasingly, India. Australia and Indonesia
accounts for 64.5% of the total world coal exports of I.
18 billion tonnes. The largest dry import bulk port in the
world is Qinhuangdao, China, China is also the main
market for iron ore exported from Australia and Brazil
and account for two-thirds of the global iron ore trade.

Liquid bulk commodity ports

The most significant liquid bulk commodity ports are

those used for the export and import of crude oil. These
are referred to as oil ports. Export oil ports are found in
areas of oil production such as the Gulf of Mexico and the
Middle East, while import oil ports are found in areas of
consumption close by oil refineries,. Very deep water is
needed for very large crude oil carrers Major changes are
being made in trading patterns due to the development
of fracking technology and renewable energy sources

Liquefied natural gas (LNG) is a growing bulk liquid cargo

type that requires costly speci loading and discharge
terminals and storage facilities South Hook LNG terminal
near Milor Haven, in South Wales, UK is an LNG terminal,
it is the largest LNG termina Europe

Non-oil cargoes handied as wet bulks, including fruit

juices and wine, are normally handed specialised
terminals within a multipurpose port

Coastal bulk ports

 Coastal ports are often specialised to handle a limited
range of specific bulk cargo types including oil products,
china clay fertiliser and scrap metal

Ferry ports

Ferry ports are associated with the movement of

passengers and freight carried on trucks and trailers, and
are integral to road networks Normally fernes operate
between two nations on the shortest sea route. Ferries
are of particular importance to island nations allowing
connectivity with adjacent land areas A ferry port
terminal provides facilities to load and discharge the ferry

in a safe and efficient manner

To do this, the port invests in terminal buildings, ramps

systems port roadways and parking areas.

There is also need to provide administrative space for

the port authority, ferry operators and governmental
organisations associated with customs, health and border
control. Security has become a major issue in operating a
ferry port The world's busiest ferry and passenger port is
Dover
Cruise ship ports

The development of the cruise ship business has brought

with it a need for facilities for ships and passengers in
ports Today there are more than 350 oceangoing cruise
ships.

To service the cruise ships, cruise ports may develop as

ports of call or turnaround port

Turnaround ports provide terminal facilities for

passenger arrival and departure, crew change storing and
bunkering A cruise terminal will consist of a ship berth of
appropriate size and passenger facilities, including the
terminal building coach and tax drop-off points and short
long-term car parking. The cruise terminal buildings may
be purpose-designed or redesigned using old port
infrastructure and will provide a ship-to-shore walkway
check-in desks, passenger lounge, baggage hall, café and
security. The port and terminal will be compliant with the
International Ship and Port Facility Security Code (ISPS
Code) published by the IMO.

The cruise capital of the world is the port of Miami which

has seven terminals catering for more than four million
passengers per year The premier cruise port in the United
Kingdom Southampton which has four terminals
dedicated to individual cruise ship operators The
demands of the cruise ship industry represent significant
investment for a port

Other operational port types

Other operational port types not concerned with either

the transfer of commercial freight or passengers, are
naval ports and fishing ports. Both have specific needs
outside the scope of this book

FUNCTIONS OF PORTS

A port has several core functions. The functions are

described as traditional transport or transit industrial and
network in any analysis of port functions the close
interrelationships between these functions need to be
made clear

Traditional functions of ports

From the broadest perspective the seaport performs an

important link in the total transport chain. The seaport
provides a storage area or facilities for goods until they
are transported to their destination The storage function
ranges from a simple parking area for road vehicles to
tank farms capable of holding millions of barrels of crude
oil Seaports are alternative locations for industry
particularly heavy industry and those associated with
shipping

Transit functions of ports

Not only do ports provide the essential link in the

transport network, but they also provide an opportunity
for the transhipment of goods. Transhipment concerns
the transfer of goods between other modes of transport
allowing goods to move to the final destination which
extends beyond the port Transhipment can take place
from seagoing vessels to barges, railway wagons, road
haulage vehicles or aircraft Increasingly transhipment
occurs between seagoing vessels. The transport function
is characterised by the transport mode used, which in
turn is a function of the type of goods carried, the length
of journey be made and geographic conditions.
The storage function of a seaport is directly related to its
transport function. Seagoing vessels are many times
larger than units of inland transport so for transport
overland, the total cargo carried by the seagoing vessel
has to be split into smaller consignments. These smaller
consignments will be conveyed over a route which is
determined by factors other than those which influence
the need to dispose of the ship's total cargo as quickly as
possible. The provision of storage space provides an
obvious answer for either perishable or non-perishable
goods which do not depend on onward shipping by sea
transport.

Industrial functions of ports

The industrial function of a port is the logical outcome of

its two other functions. The consideration that
transhipment always involves handling costs as well as
onward shipping in smaller generally more expensive
transport vehicles, has induced many industries, notably
those processing raw materials to locate in seaports for a
port to fulfil these various functions, facilities are needed
for ships, waterways, harbour basins berths for inland
transport, canals, roads, railways, storage and industrial
land Such facilities call for large investments with a long
lifetime. which will influence the physical and economic
health of the region

Network functions: hub-and-spoke ports or the

load centre concept

The increased use of containersation in shipping has led

to changes in the way that ports are used. Because of the
need to exploit scale economies, ports serving the liner
trades have become increasingly specialised Two distinct
types of port have emerged, the hub port and the feeder
port, The hub port is sometimes known as the load
centre and acts as the focus for container movement.

A hub port will be at the centre of a local network of

feeder ports creating a syster known a hub-and-spoke
operation Containers are moved to the hub and then
radiate out along the spokes. The importance of location,
as a determining factor for port development, particularly
the container trades is high and will determine a port's
strategic importance to a liner company's route networks.

PORTS AND INDUSTRIAL DEVELOPMENT AREAS

Ports are located in areas where industrial and economic

development can be encouraged

There are three recognised terms associated with such

areas namely, the free port. MIDAS ports and
industrial development zones

Free port

A free port, sometimes referred to as a free trade zone or

an export processing zone, is a port or a secure area
within a port, where customs dues are not payable. They
are intended to attract manufacturers and processors
involved in domestic and export markets Goods can be
stored free of customs duty and value can be added
before the goods are re-exported. In a free port. goods
can be purchased duty-free encouraging development.
The Port of Aden was an early example that used its free
port status to attract shipping More recently, the Suez
Canal Container Terminal, which has ambitions to be the
largest container terminal in the Mediterranean has free
port status
Maritime Industrial Development Areas (MIDAS)
ports

Maritime Industrial Development Areas (MIDAS) were a

popular concept in the 1960s in Europe when heavy
industry, intensive use of land and the need for
waterbome transport combined to generate industrial
growth. Teeside in the UK and Botlek in Rotterdam are
examples of MIDAS ports. As heavy industry declined,
the policy moved towards lighter industrial activity.

Industrial development zones

With some heavy industry and manufacturing moving

from traditional industrial nations to Asia. a new MIDAS
in the form of an Industrial Development Zone (IDZ)
linked to an international seaport was created. The IDZ
had a similar function to the MIDAS, that is, encouraging
economic growth in an environmentally sustainable way
IDZs have been established in China, India and South
Africa
CONTAINER TRANSHIPMENT

Economies of scale are used in transport to reduce the

cost per unit carried Container ships have increased in
size since they were first developed The largest
containerships presently operating are capable of
carrying more than 20000Teu

Container shipping companies continue to consolidate

and concentrate their resources and services on few parts
with large terminals leading to the development of the
hub-and-spokt system previously described Hub ports are
the focus of regional container activity

Transhipment of containers is encouraged by the

development of joint ventures between shipping
companies and ports joint ventures help provide the
finance required for large-scale infrastructure
developments. For example, an increase in ship sizes
requires deeper entrance channels, longer berths, larger
gantry cranes strengthened quay structures and
additional yard storage space

Joint ventures can also provide the opportunity to

develop and benefit from the use of dedicated container
terminals. With control of terminal and landside
operations, a container shipping line can ensure that the
cost advantages of very large ships are not lost through
inefficiency at the port

INTERMODALISM

International containersation became possible after a

standard for external dimensions was agreed by the
International Organization for Standardization (ISO) in
1965. The ISO agreed standard internal and external
dimensions and weights for the freight container The
length of the container was based on a multiple of 10ft
The 20ft and 40ft container length was adopted by the
deepsea container ship operators. The external maximum
width was established as 8ft and the height 8ft or 8ft 6
inches

Defining the standard dimensions for the container

allowed manufacturers to develop equipment used for
their movement. The system provided the ability to
transfer a standard container between different transport
modes. This ability combined with the use of standard
documentation and electronic data transmission allowed
a container shipping company to offer a door to-door
service to the customer for the first time. In addition, it
gave an opportunity to track and trace an individual
container throughout its journey

The container terminal is an important transfer point in

the intermodal chain. It is one where delay can occur A
terminal can improve its own efficiency and that of its
customer by minimising dwell time, the time an inbound
or outbound container is stored at the port Dwell time is
created by transport delays, documentary processes,
customs demands and security clearance,

Documentation between exporter, importer, shipping

company port and customs author exchanged in
electronic form, using Electronic Data Interchange (EDI)
Outbound goods receive customs clearance in advance.
Some less developed countries do not have the ability
permit customs processing, except at the port. Customs
activity can create delay, the integrity of the door to-door
concept and reduce port capacity
 PORT OWNERSHIP

Types of port ownership

1 Private port 2 Landlord port

3 Tool port 4 Service port

PORT PORT SUPER SERVICES

INFRASTRUCTURE STRUCTURE

PRIVATE PRIVATE PRIVATE PRIVATE

LAND LORD STATE OWNED PRIVATE PRIVATE
TOOL PORT STATE OWNED STATE OWNED PRIVATE

SERVICE STATE OWNED STATE OWNED STATE

PORT OWNED

A private port is controlled and managed by the private

sector subject to the regulatory and statutory functions
of government. Private ownership provides ports with the
discipline and flexibility to be able to compete in the
market place.

. The aim of port privatisation are

To increase efficiency through competition

Provide freedom to raise money on the open market

● reduce the financal commitment of the public sector

The concept of port privatisation and the role that

venture capital can play by investing in part
infrastructure provides port and terminal managers with
a freedom and responsibility.

Landlord port

The landlord port is one where the port infrastructure is

owned by the port authority The port authority may be a
municipal or state body The superstructure such as
warehouses, bulding and handling equipment is owned
by private firms. The private firms will lease the quay
side and its adjacent area from the port authority Private
enterprise provides services includes stevedoring and
pilotage

Tool port

In a tool port, the port authority owns and maintains the

infrastructure and the superstructure It does not provide
services such as stevedoring or pilotage:

Service port

In a service port, the part authority will own and

maintain all the port facilities. The port authority will also
offer the complete range of services necessary for the
port to operate The majority of ports in the developing
world are service ports
The present worldwide trend is for a state-owned service
port to be replaced by a port containing a mixed public-
private partnership (PPP). There is also a trend for state-
owned functions to be decentralised from government
control in the past, service ports have tended to be
inefficient responding to political rather than commercial
pressure

In the modern global economy, there are fierce

competitive pressures on the ports sector The control of
the immediate port hinterland has been made complex
by the development of motorways, railways, inland
waterways and feeder ships.

Further developments in port ownership have seen

arrangements between parties including

• long-term leases;

• joint ventures,

concessions

Recent involvement of private equity companies in port

finance has encouraged the development of relatively
short-term arrangements concerning the development of
port infrastructure including:

Build-Operate-Transfer (BOT):
• Build-Own-Operate - Transfer (BOOT)

It was generally accepted that a port, being a natural

monopoly, should be in public ownership and operated
for the benefit of the public as a whole. Infrastructure
was built and maintained as a public good with free
public access. In addition, ports are strategic assets
which needed to be under national control. A survey
suggests that while the role of the public sector remains
significant, the influence of the private sector in ports is
growing. Internationally, the form of port ownership
varies widely management contracts.

Public ownership

Ports considered under public ownership are government-

owned ports, autonomous trust ports

Government-owned ports

Government-owned ports are ports in which the national

government will have a direct interest.

There are several different models of government

ownership including Direct government control

Direct control by government allows for the national

planning of ports. While it should result the best use of
limited national resources and avoidance of duplication,
direct government control can result in over manning,
underinvestment and general inefficiency.
Government-owned corporation

While still owned by the national government, a

government-owned corporation under takes to run the
port as a commercial entity. This will allow the port
managers greater flexibility in setting strategy and
decision-making. Government owning the port as a
corporation could be the prelude to a partial or complete
privatisation of the port.

Majority government shareholding

A third model of government ownership is when the

government maintains a majority shareholding,
sometimes known as a golden share, in a private
company

Autonomous trust ports

Private ownership

Public limited company.

Subsidiary of a parent company,

Long-term lease.
PORT DEREGULATTION

The effect of globalisation on ports can be summarised

as:

• increasing world trade leading to increasing demand for

sea transport and port services

• changes in the pattern of world trade due to changes in

manufacturing pattern;

• demand for fast, reliable delivery of goods on a just-in-

time basis, cutting the cost of stocks held in transit and
in buffer warehouses;

• cost-cutting at every point of the supply chain, leading

to increase of ship size, quicker throughput at ports and
more efficient communications;

• an increase in part and terminal competition:

• increased competition between different transport

modes.

• global investment by private terminal operators

resulting in common standard, high qualitylow-cost
services

To meet the challenge of globalisation, ports will have to

increase both capacity and efficiency while reducing
costs. Traditionally, ports were publicly-owned which
prevented the possibility of market failure due to their
monopoly position and lack of competitive discipline. The
result was inefficiency leading to a choking of trade. To
ensure that ports were made more efficient and allow
trade to continue its growth, two possible remedies are
available deregulation or privatisation.

Deregulation

Deregulation is the reduction of the role of the

government in an enterprise. Market forces replace
government regulation as the guarantor of acceptable
industrial performance.

Labour reform in docks is intimately tied up with

problems of government control and efficiency Under
public control, the stated objectives of port management
are often concerned with developing the regional
economy and maintaining employment.

Earlier the dock work was casual. There was no security

or continuity of employment. To improve working
conditions, dock labour became organised through the
dock workers unions. Acting collectively, the unions
would organise strikes, which in tum, created unrest and
disruption. Dock strikes, particularly undertaken on a
national basis, are damaging to a country

Moving any business from the public to the private sector

is claimed to increase efficiency Deep inefficiencies in
state-run ports in developing countries contrast badly
with the performance of privately operated terminals in
the developed world. In the state sector, port managers
are hired on contracts which offer job security, but
without performance incentives Port management of
state ports can develop a consensus with the workforce
such that no-one has to work too hard to keep their jobs.
In the private sector, management have to go to the
capital markets to finance investment where they
compete for funds with other businesses. If funding
cannot be self financed, they have to be able to convince
the financial institutions that they can run the business
profitably. In addition, market discipline is enforced by
shareholders who will sell up if the company is
unprofitable. The share price will fall and the company
will be in danger of being taken over and the managers
sacked.

There are difficulties in introducing private management

at ports in many parts of the world in countries such as
Thailand and India, central port administrations and
labour unions have fought against the loss of their
privileges
Port Privatisation

Privatisation defined as the the process of transferring

ownership of a business or public service from the public
or state sector to the private sector It may also mean the
outsourcing of services or functions to private firms. Full
privatisation can take place in one of three ways

Stock market flotation

Stock market flotation clearly specifies that the objective

of the firm is to make profits. It introduces the threat of
bankruptcy and replaces political involvement with
financial markets monitoring the commercial outcomes.

Management and/or employee buy-out

In a management or employee buyout, debt and quasi-

debt instruments are used to enable management or
employees and their financial backers, to purchase a
controlling equity in the company. The management or
employees have an incentive to make profits, the
financiers provide external oversight and employees are
involved in monitoring and possibly raising efficiency.
Third party or trade sale

A sale aimed at third parties or the trade is the final way

of privatising a port. Initially the port may not be
profitable but economies of scale or gains from vertical
integration within the same sector can be achieved.

Port privatisation the sale of state ports to the

private sector

The sale of national assets to the private sector has not

been without its conflicts. Arguments for the sale of
state-owned ports are

1 Expansion of ports is difficult as state-owned facilities

cannot raise money on the financial markets

2 Private management is more efficient

3 Ports trust are unable to diversify or utilise idle land

and resources:

4 Competition is increased leading to greater

productivity.

5 Management /employee buyouts give employees a

stake in their own business

6 Money is raised to fund other public activities

7 Political interference is eliminated.

Arguments against the sale of state-owned ports

1 Profits should be re-invested in the ports, not handed

out to shareholders:

2 State-owned and trust ports have access to cheap

capital from local authorities and government

3 The dock labour reforms which took place was the most
important factor in improving port efficiency Dock labour
reform is independent of privatisations

4 Port diversification could be permitted by a small

change in the law without the need for full port
privatisation

5 Valuation of ports is difficult, particularly if it includes

the seaward port approaches Prices paid for state-owned
ports were little more than guesswork and generally too
low

6 Income received by the state for a port sale is too small

to make the exercise worthwhile ports have an
environmental and public-good role to play which is more
appropriate for the public sector

7 Governments have no right to sell ports which belong

to a local community
Deregulation with partial privatisation

The basic model allows a public port to maintain

ownership of the port but its commercial operation is
released from political control The commercial operation
will be exposed to market forces

Partial privatisation of a port may use one or more of

the following methods

Concessions:

Joint ventures

Corporatisation:

Build-operate-transfer

Management contracts

Concessions
A concession is defined as a contractual arrangement in
which government retains the ultimate ownership of
assets and transfers some or all of the commercial risk of
operating the asset to a private concessionaire. The
contract will have defined terms and agreements which
exist to describe the objectives and risk allocation of
the concession

Concession risks. Risk allocation is the core of a

concession agreement and concerns commercial risk,
country risk and exchange rate risks.
Commercial risk is caused by uncertainty over future
traffic levels. It is lower in a concession where existing
facilities are taken over. The construction of a new
terminal poses a higher level of uncertainty but, in this
case, concessions often include a shipping line which can
guarantee to bring in trade from its own ships.

Country risk arises from uncertainty about the security

situation of a country or uncertainty about the
commitment of a government to a project. Where a
government has a history of demanding changes in the
face of public pressure, financing will be harder to obtain

Exchange rate risk is rarely a problem with ports as

tariffs are normally paid in dollars. However, the foreign
concessionaire will demand guarantees that it can
repatriate profits.

Exclusive rights are an important issue in a concession

Where there are several terminals in a port competition
will exist between the terminal operators. It is usually a
condition that the concessionaire for a new terminal does
not already operate in the port There will then be no
problem about giving the operator exclusive rights for
their line to use their own terminal. In other cases, it is
intended for a terminal to be a common-user facility, and
safeguards for this must be carefully written in to the
contract.

Length of the concession. The length of the concession

varies with the type: If the concessionaire is simply
operating an existing facility it will normally be between
five and 15 years in length if capital investments are
required as a repair-operate-transfer or build-operate
transfer arrangement the company operating the
concession must be able to recoup its investment. The
length of the concession may be between 30 and 50
years. The shorter the concession, the more competitive
pressure there will be on the firm. Governments can
make concession less than the economic life of an
investment if they guarantee to buyout assets at the end
of the concession period.

This encourages good maintenance to keep up the value.

Long concessions run the risk of regulatory capture in
which the private operator and regulators will develop a
relationship that interferes with proper regulation.

Ending a concession. Ending a concession can be done

in several ways but costs are involved. A premature
ending of a concession will need to be undertaken with
particular care. Costs will be involved in the government
calling for new bids and there will be risks in losing
trained and experienced staff. If performance by the
concessionaire has been acceptable, automatic renewal
of the concession is likely to be granted. Competitive
pressure can be maintained simply by the process of re-
negotiating the contract: If a new bidding process is put
in place, the old concessionaire may be bought out, or
may receive the value of their own bid from the
successful bidder, with the balance of the bid going to the
government

Problems with concessions usually arise through a lack of

preparation or over-optimistic traffic forecasts.
Restructuring by incorporation, labour reform and the
creation of an adequate regulatory system needs to be
completed in advance of tendering process

Joint ventures.
A joint venture is an arrangement between the port
authority and a port operating company to be jointly
involved in the operation of the port. The joint venture is
a 50-50 agreement, with preferential development rights
for new deepwater terminals.
Joint ventures can include the provision of management
expertise such matters as dredging and other port-
related services, environmental management and safety

Corporatisation

The first step to a full or part-private sale of the port It

may also be used where there is an intention to keep a
port under state ownership but arrange concessions for
terminal operation. Regulatory functions may be split off
from the port company to a new state body.

Build-operate-transfer (BOT) or Build-own-operate-

transfer (BOOT)

Build-operate-transfer (BOT) or build-own-operate-

transfer (BOOT) leases are a relatively new approach to
direct private sector investment in large-scale port
development projects. This involves the development of
a new container terminal. Another type of ownership
arrangement is the repair-own-transfer (ROT) lease,
which is used where facilities have fallen into disrepair,
as at the port of Maputo.

Management contract

The use of a management contract creates a degree of

partial privatisation by an outside operator providing
management expertise to the port.
Competition Between Ports

Over the last four decades, competition among world

ports has increased in both scope and nature

Recent development due to the growth of

containerization have led to the need for large capital
investment in port and supporting infrastructure

The economic theory of competition is based on

assumption that all organizations sek to maximize the
profit

Until the late 1970s, most ports in the world were run
and managed within a relatively limited competitive
environment. Geographical location of the port and the
depth of its national channels were enough to provide the
port with a competitive advantage The combination d the
transport system and organisational structure of ports
favoured a situation where ports enjoyed a certain
degree of monopoly within a defined and limited
hinterland

The near monopoly position was reinforced by the

structure of liner shipping Liner shipping companies were
organised into conferences which charged similar freight
rates to the different destinations located in the same
spatial range. Companies were distinguished by quality of
service. At the same time, ports were controlled and
managed by corporate public institutions that not only
provided substantial financial resources and subsidies,
but also secured regulatory protection against non-local
and foreign port competition.

Increased competition has occurred due to several

factors, including:

1 The globalisation of world trade

2 Privatisation of ports
3 Unitisation of general cargo
4 Developments in transport technology
5 Application of cargo-handling technology

As competition between ship operators, intermodal

transport organisations and global logistics providers has
increased, so has rivalry between pOrts.

Today, competitive advantage between ports is

established by the provision of high-quality value-added
services and port infrastructure

VARIOUS FORMS OF PORT COMPETITION

The identification of port competitors and the
development of competitive strategies require detailed
study of the port's competitive environment. Relevant
updated and reliable formation covering domestic and
international port competitors should continuously be
gathered and analysed. It needs to cover domestic and
international port competitors addition, any analysis must
consider other potential competitors involved in intermodi
transport and logistics

Ports face competition from within and outside the port

sector

If port organisation is considered as a unified and

aggregate economic activity competition will occur
at two levels

Horizontal or inter-port competition

Interport competition takes place in the form of direct

competition between ports situated within a given spatial
range, as well as indirect competition which normally
involves organisations from outside the part sector, such
as inland transport modes freight forwarders and mult
modal transport operators. The development of new
trade and logistics pattems involving sea land and air
transport with network and transhipment ports can
create competition from ports located outside the
immediate spatial range. Inter-port competition does not
need to concern al port activities. A port can compete
with others for a specific niche of the market such as
cargo or commodity. Competition does not necessarily
have to include all martime traffic in the region.

Vertical and cross competition (or intermodal port

competition)

This is initiated by competition between different modes

of transport and does not recessarily originate from
ports. A port may lose its market share when its
waterway or mandime traffico replaced by air or road
transport, such as land bridges Conversely it will gain
more trafik F2 vests in inland facilities that are efficiently
linked to an intermodal transport.systemt

If a port organisation is considered as a platform bringing

together several activities and factors then the
competition will be centred within the port itself Two
forms of competition can be dentified, segmented
competition and aggregate competition:

Segmented form (or intra-port competition)

Intra-port competition concerns competition between
different components of a port organisation. This can
either be horizontal, involving port operation within the
same core of activity such as stevedoring companies
competing with each other, or vertical, involving different
types of port operation and operators such as a
stevedoring company competing with a logistics provider)

Aggregate form of competition

Aggregate competition is a structure which drives every

component of the port community into indirect, inter- or
cross-port competition. The competitiveness of the port
as a whole depends on the efficiency of all operations
within the port community. If a port operation does not
perform well, the efficiency of the whole port will be at
stake. It follows that every member of the port
community should work in a collaborative spirit and be
aware of competition onginating from outside the port
and through other transport modes.
 THE MAJOR PORT AUTHORITIES ACT, 2021
With a view to promote the expansion of port
infrastructure and facilitate trade and commerce, the
Major Port Authorities Act 2021 aims at decentralizing
decision making and to infuse professionalism in
governance of major ports. It imparts faster and
transparent decision making benefiting the stakeholders
and better project execution capability. The Act is aimed
at reorienting the governance model in central ports to
landlord port model in line with the successful global
practice. This will also help in bringing transparency in
operations of Major Ports.This will empower the Major
Ports to perform with greater efficiency on account of full
autonomy in decision making and by modernizing the
institutional framework of Major Ports.

The salient features of the Major Port Authorities Act

2020 are -

The Act is more compact in comparison to the Major Port

Trusts Act, 1963 as the number of sections has been
reduced to 76 from 134 by eliminating overlapping and
obsolete Sections.

The Act has proposed a simplified composition of the

Board of Port Authority which will comprise of 11 to 13
Members from the present 17 to 19 Members
representing various interests. A compact Board with
professional independent Members will strengthen
decision making and strategic planning. Provision has
been made for inclusion of representatives of State
Government in which the Major Port is situated, Ministry
of Railways, Ministry of Defence and Customs,
Department of Revenue as Members in the Board apart
from a Government Nominee Member and a Member
representing the employees of the Major Port Authority.

The role of Tariff Authority for Major Ports (TAMP) has

been redefined. Port Authority has now been given
powers to fix tariff which will act as a reference tariff for
purposes of bidding for PPP projects. PPP operators will
be free to fix tariff- based on market conditions. The
Board of Port Authority has been delegated the power to
fix the scale of rates for other port services and assets
including land.

An Adjudicatory Board has been proposed to be created

to carry out the residual function of the erstwhile TAMP
for Major Ports, to look into disputes between ports and
PPP concessionaires, to review stressed PPP projects and
suggest measures to review stressed PPP projects and
suggest measures to revive such projects and to look into
complaints regarding services rendered by the ports/
private operators operating within the ports.

The Boards of Port Authority have been delegated full

powers to enter into contracts, planning and
development, fixing of tariff except in national interest,
security and emergency arising out of inaction and
default. In the present MPT Act, 1963 prior approval of
the Central Government was required in 22 instances.

The Board of each Major Port shall be entitled to create

specific master plan in respect of any development or
infrastructure.

Provisions of CSR & development of infrastructure by Port

Authority have been introduced.

Provision has been made for safeguarding the pay &

allowances and service conditions including pensionary
benefits of the employees of major ports