Investments in Container Terminals: Public Private Partnerships in Europe

Abstract

The desire to create a more competitive, market based transport system has led to the involvement of the private sector in infrastructure investments. However, there are still distinct aspects that often make investment in transport infrastructure unattractive to private parties. This paper elucidates the characteristics of investments in infrastructure in general, with the aim to clarify the hesitation of private investors. One specific category of infrastructure investments, viz. container terminals, is discussed here as an interesting case. European container terminals are mostly financed with a strong involvement of private parties. From a comparative study between investments in container terminals and other investments in infrastructure, we argue that the terminal market has several features (such as imperfect competition), which lead to a lower risk for private parties. Because of these characteristics, public-private partnerships occur rather often and seem to be attractive. A situation of a fully competitive terminal market without government intervention is in the long-run possible and clearly more realistic than in other infrastructure markets. It should be realised however, that a common European policy is required to avoid distortion of competition among ports due to different subsidy regimes.