Port Governance

Models
Public And Private Roles In Port Management

There are five main models based upon

the respective responsibility of the public
and private sectors in port management:

• Public service ports.

• Tool ports.
• Landlord ports.
• Corporatized ports.
• Private service ports.
Public Service
Ports

• Public service ports. The port authority

of public service ports performs the
whole range of port-related services and
owns all the infrastructure. They are
commonly a branch of a government
ministry, and most of their employees
are civil servants. Some ancillary services
can be left to private companies.
Because of the related inefficiencies, the
number of public service ports has
declined.
 • Tool ports. Like every aspect of a public
service port, the tool port differs only in the
private handling of its cargo operations,
Tool ports albeit the port authority still owns all or part
of the terminal equipment. In several cases,
a tool port is a transitional form between a
public service port and a landlord port.
 Landlord ports
• Landlord ports. Represents the most common management model where
infrastructure, particularly terminals, is leased to private operating
companies with the port authority retaining control of the land where the
port develops either by owning it or via retaining the rights for exclusive
exploitation (as granted by the competent public authority). The most
common form of lease is a concession agreement where a private company
is granted a long-term lease in exchange for a rent that is commonly a
function of the size of the facility as well as the investment required to
build, renovate or expand the terminal. Private port operators provide and
maintain their superstructure, including buildings (e.g., offices, sheds,
warehouses, container freight stations, workshops), and private terminal
operators employ dock labor. The private operator is also responsible for
providing terminal equipment so that operating standards are maintained.
Today this is the dominant port model in larger and medium-sized ports.
The popularity of the model, particularly within Europe and the Americas,
is undoubted. Still, it has a number of variants, depending upon the level of
decentralization and autonomy of the port authority involved, the cultural
disposition of the country considered, the division of infrastructure
investments (such as quay walls, terminal surface, etc..) between the PA
and the private terminal operators, or the level of involvement of the
landlord in furthering and enhancing port activities.
Corporatized ports
• Corporatized ports. This concerns ports that
have almost entirely been privatized, with
the exception that ownership remains public
and is often assumed as a majority
shareholder. The port authority essentially
behaves like a private enterprise. This
management model is unique since it is the
only one where ownership and control are
separated, which lessens the “public good”
pressures landlord port authorities face and
the “shareholder value” pressures private
ports face.
Private • Private service ports. This is the outcome of complete
privatization of the port facility with a mandate that the
Service facilities retain their maritime role. The port authority is
entirely privatized, with almost all the port functions under
Ports private control, with the public sector retaining a standard
regulatory oversight. Still, public entities can be
shareholders and thus gear the port towards strategies
deemed to be in the public interest.
Port
Governance
Objectives
Governments or other relevant policymakers impose structures of port
governance with particular policy objectives in mind. The strategic
objectives that may drive the choice of port governance model involve
maximizing:

• Traffic throughput.

• Return on investment.

• Profits for shareholders.

• Traffic throughput subject to a maximum allowable operating

deficit.

• Economic development prospects at the local or national levels.

• The full range of objectives varies across the world as ports are as
much interested in economic development as they are in serving
commercial and trading interests. Most ports see their roles as
complex, with multiple objectives, and as having national and
regional, and local impacts. They serve more than just their
customers or their communities. They are in the business of
balancing multiple roles and expectations. Ports determine their
objectives to cope with government regulators (or owners),
customers, local community stakeholders, and managers (or
shareholders).
Optimising Economic
Development

• Prospects is the objective most frequently chosen by

major ports, as well as by small ones with ambitions to
grow.
• Ports owned and managed by the government most
commonly seek “to enhance the contribution of the
port and shipping related activities to the economy”
(i.e., Hong-Kong) or “to advance and safeguard the
country’s strategic maritime interests” (i.e.,
Singapore).
• Private ports focus on profit, sale, and development
opportunities or on increasing financial value for their
shareholders. Yet, even private ports consider the
economic value they may generate for their local
community.
Cooperation
Between
Ports
Cooperation between port authorities governing different
ports, as well as cooperation between terminal operators and
between other service providers, does not exclude intense
competitive behavior. Since the 1990s, cooperation has been
increasingly common, aiming at more flexible traffic distribution
patterns. An early example includes Rotterdam and Baltic
Region ports that began cooperating in the early 1990s to
strengthen their competitive positions. Cooperation expanded
to a strategy including a broad spectrum of initiatives aiming to:
• Better use assets in terms of efficiency, scale, and scope.
• Improve competencies.
• Gain a positional advantage by offsetting the undesirable
effects of competition.
All these societal gains were made primarily through increased
efficiencies. As in other businesses, cooperation between ports
might be multi or single function and might even reach the
form of coopetition, defined as cooperation with competitors to
reach decisive benefits that cannot be reached otherwise.
Cooperation Between Ports

Port cooperation is a strategy to improve port performance. Due to port For larger ports, cooperation might facilitate landside coordination of
regionalization, imbalances in port capacity and the competition in broader hinterland connections through neighboring load centers. The centrally
geographical regions form the key drivers of cooperation between ports, located load center ports may face difficulties maintaining their competitive
especially between those in proximity. Port cooperation sustains existing position.
maritime links or establishes new services integrated into door-to-door
logistics chains. It is also perceived to lead to specialization in cargo or ship
types, and organization and pooling of hinterland transport facilities, and, in
many cases, to an improvement in output.
National Port Policies
• National-level authorities are involved in developing
national port policies aiming to advance the
establishment, planning, development, and
organization of ports to ensure that the
development of the industry serves the public
interest.
• Such responsibilities lie with regional authorities
(e.g., municipal or state level) or city authorities.
This depends on the traditions of each country as
regards both the organization of ports and the
formation of the policy.
• Federal states tend to delegate such control to the
state or municipal level, while more centralized
governments create national regulatory agencies
having direct oversight.
 Governmental agencies develop initiatives to reach
different targets:
• The contribution of ports to the local, regional, and
national economy, as well as to social cohesion.
• The minimization of any externalities produced by
National Port ports, and environmental protection in line with
the applicable legislation.
Policies • The uninterrupted availability and provision of
reliable and quality services to ships, passengers,
cargoes, the users of the port, and the general
public without discrimination.
• The presence of any exemptions foreseen within
the applicable legislation.
International Port
Policies
• Policies decided by policy actors go well beyond the
boundaries of a single country.
• Ports serve international maritime transportation and are
embedded in global supply chains. Thus, ports share
several similar concerns and challenges, and addressing
them locally can be ineffective or distort competition.
• An indicative list of these concerns and challenges would
include safety, security, labor issues, customs and
operational standardization, and competition between the
actors involved.
• International intergovernmental organizations (including
United Nations (UN) agents) intervene, taking actions
falling within their competence in these areas. Their
regulatory decision and other initiatives are, or at least
entail the potential to be, more effective than action taken
at the national, regional, or local level.
Role of Port
Authority
• Development and maintenance of the infrastructure and
superstructure in the Ports.
• Establishing the necessary rules for the administration
and operation of the Ports.
• Stipulate functions and activities which users are
allowed to perform in the Ports.
• Establishment of offices and appointment of
representatives in and outside the State for promotion
of the Ports.
• ​Render all kinds of services to the users of the Ports.
• Impose and collect the tariffs and fees in return for the
services provided by the authority.
The function and duties
of a port authority

• To regulate and control navigation within the limits and the approaches to the port.
• To disseminate nautical and other relevant information to ships and all other involved
parties.
• To control maritime transport and loading and discharging of dangerous goods.
• To exercise regulatory functions for the protection of the marine environment.
• To discharge or facilitate the discharge of international obligations of the port authority
with respect to marine safety and protection of the environment.
• To promote measures for the safety of persons who work at or visit the port.
• To combat or to provide for combating marine accidents in the port, including fire fighting
and ambulance services.
• To secure public order in the port area and to exercise police functions in cooperation with
the civilian police authority.
• To play an important role in the provision of security within the framework of the ISPS
(International Ship and Port Facilities Security) Code.