Module 1 - Introduction and consideration of the purpose, function and type

of ports

 Function of ports
o Industrial zones to support industry hubs and growth.
o Cargo handling, storage and distribution.
o Value adding – where for example minerals are processed into refined products.
o Repairs and maintenance – ship repairs, drydocks,
o Intermodal exchange – ship to road/rail.
o Provision of infrastructure to facilitate cargo transfer.
o Facilitate trade and economic expansion.
o Quarantine and customs inspection.
o Construction sites and handling of specialist equipment and structures.
o Support tourism and people transfer – passenger vessels and ferries.
o Control and safety of shipping.
o Not for profit public infrastructure.

 Types of ports
1. Public Service Ports – These are port authorities that perform the entire range of port
activities. They own the infrastructure, undertake all or most services and are
responsible for the safety of navigation and regulatory controls within the port. They are
generally an arm of government, or a government department, with a government
appointed board. They can also have responsibility for the provision of infrastructure
and services considered to be for the “public good” from which it is unlikely to derive an
income. This type of port structure is generally on the decline due to inefficiencies and
lack of competition. There can also be conflict between commercial and safety
requirements which can be difficult to balance.
An example of a public service port structure in Australia is the Fremantle Port Authority
which is a government trading enterprise under the Port Authorities Act 1999 with a
board of six directors appointed by and responsible to the Minister for Transport. It is an
autonomous body established under the act and operates as a commercial enterprise to
facilitate trade. Further legislative reform is underway where the Department of
Transport's responsibility for Western Australian trading ports will transfer to regional
port authorities thereby strengthening their position as an “Authority.”
2. Corporatised Ports - Ownership of these ports is retained by government however they
are subject to corporation’s law and generally behave as a private port. The board is
appointed by government and an annual return or dividend may be required along with
specified performance criteria. Regulatory responsibilities will be undertaken by a
separate government agency with some form of agreement established to ensure the
port company assumes responsibility for the safety of marine activities.
An example is the Tasmanian Ports Corporation which is wholly owned by the
Tasmanian Government, it is referred to as a State Owned Corporation (SOC). The port
company owns most of the wharf facilities however a number are on long term lease
arrangements to private companies, particularly in relation to the domestic container
 trade across Bass Strait. To ensure the ports comply with regulations and operate at an
acceptable level of safety, a Deed of Agreement between government and the port
company was developed which assigns marine safety functions to the company and
stipulates specific criteria in relation to performance. i.e. providing a specific level of
return on assets or return on investiment.
3. Landlord Port – Once again this type of port is owned by government however, as the
name suggests, it leases areas of the port to private operators. This will commonly be
the long term lease of container terminals, bulk handling facilities and other specialised
cargo operations. The port authority will typically retain some “general user” facilities to
cater for shipping and cargo interests not covered by private operators. Leases will
generally be long term and variable in nature depending on arrangements negotiated
between the port authority and private operator. Rent is commonly a function of the
size and type of the facility as well as the investment required to re-furbish or expand
the terminal. The operator will generally provide all cargo handling equipment such as
cranes, container stacking units, etc. The port authority will retain overall control of the
port area and require individual terminal operators to comply with its overall safety and
security requirements.
An example is the Port of Melbourne which was corporatised in 1996 and is currently
undergoing a sales process which would place its operation in the hands of a private
operator for 50 years. It largely operates as a landlord port with the main container
terminal and trans Bass Strait facilities under lease to private operators. Pilotage, lines,
navigation aids and other services are operated externally which largely leaves the port
company operating as a landlord.
4. Private Ports – The port is taken over and operated as a private entity with all functions
under its control. The private port company is subject to government rules and
regulations with oversight by a government department responsible for port safety.
There will generally be some form of agreement with government to ensure certain
essential marine functions, such as emergency response and port control (VTS) are
implemented to an acceptable standard.
Example – Flinders Ports, which operates in South Australia was formed in 2001 when
the Flinders Ports consortium successfully acquired seven ports that were privatised by
the South Australian Government. In addition to the port infrastructure, Flinders Ports
acquired a 99-year land lease and port operating licence for the Port of Adelaide and six
regional ports. It operates most of the ports services including stevedoring at its
container terminal.

Port types and structures are hugely variable and are generally tailored to meet local trading
requirements and government needs. There is no “one size fits all” and port companies are
continuing to evolve with particular emphasis in Australia and other countries around the world
on private modelling. This provides an initial attractive source of funds for governments which
can be used to support other infrastructure projects, with the prospect of the port returning to
government ownership at some future time. The essential element of such arrangements is to
ensure that an appropriate level of safety is maintained and improved to meet public and
government expectations.
 Port locations
o Originally city centric then progressively moved to large industrial areas close to deep
water.
o Factors that prompted change:
 Larger ships requiring deeper water.
 More space required for cargo storage
 Handling dangerous cargoes
 Environmental considerations
 Urban encroachment
o Some city centre facilities retained, such a passenger transfer.
o Bulk ports require deep water access for very large vessels that is as close as possible to
mine sites, processing plants, etc.

 Port role in the logistics chain

Ports are just one part of the broader logistics chain used to move goods from source to consumer.
The fact that majority of commodities (bulk, unitised, specialised) are moved by sea means that
ports, as an intermodal exchange point, are a vital link in the overall movement of goods and must
continue to function, expand and modernise to meet constantly growing trades. As ships get larger
to take advantage of economies of scale, so ports must make provision for such vessels from an
access requirement and particularly from a cargo handling perspective. For example, container ships
are now able to carry around 18,000 TEU’s which places stress on ports to be able to accept ships of
this size, have the cranes to work them and the space to store such a large quantity of units. Further,
ship time in port must be minimised therefore sufficient equipment is required to maximise
efficiency and ensure containers are moved from ship to storage and to road or rail as fast as
possible.
If road and rail access to the port is ineffective bottlenecks will occur and the movement goods will
be held up in congested traffic areas. It’s therefore clear that if ports don’t operate in an effective
manner the entire logistics chain will be affected.
To assist port efficiency transport connections to and from a ports must integrate with broader
transport networks, including the provision of appropriate corridors through urban areas, to ensure
goods can be moved with minimum delay. It is therefore vital that port authorities involve
themselves in broader transport planning issues as well as ensuring their facilities are meeting the
demands of expending trades.
More generally, ports play the following important roles.

o Provides through transport for commodities. Ex. Iron ore transferring product from mine
to smelter.
o Intermodal exchange - Ports are generally connected to main rail lines and require good
access to trunk road systems. This allows cargo to be moved efficiently and effectively
with minimum delay.
o Storage – Ports provide large storage areas for commodities such as containers and bulk
cargoes. In addition, covered storage areas for storage and distribution of general goods,
including cold storage facilities, are commonly provided.
 References:
1. Port of Darwin Select Committee – Port of Darwin Lease Model -
www.nt.gov.au/.../committees/pod/Port_of_Darwin_Report.
2. Public-Private Infrastructure Advisory Facility (PPIAF) - Port Reform Toolkit -
Module 3 - Alternative Port Management Structures and Ownership Models,
Port Functions, Services, and Administration Models -
ppiaf.org/sites/ppiaf.org/files/documents/toolkits/Portoolkit
3. Public-Private Partnerships for the Provision of Port Infrastructure: An
Explorative Multi-Actor Perspective on Critical Success Factors - The Asian
Journal of Shipping and Logistics, Volume 30, Number 3, December 2014 -
www.sciencedirect.com/science/journal/20925212/30

 Additional Reading
1. Port Privatisation – James Reverley
2. International Ports – G P Wild