Container Port Competition Research Articles

Regional container port competition in a dual gateway-port system

Many ocean transportation hub systems consist of two container ports that share the container handling business in the area. The container flow passing through a port is the main measurement of the port’s competitiveness. In this paper we adopt a Hotelling model to study the container port competition in a so-called “dual gateway-port system”. The system contains two ports and two terminals, one belonging to each port. The two governments in which the two ports are located compete on cargo fees and the two terminals determine service price and service quality. We study two models with different levels of competition between the terminals. In the first model, the two terminals are owned by two different operators and in the second model, the two terminals are centralized under one operator. The second model exists in practice but is not well studied in the literature. We derive the cargo fee, terminal service price, and service quality equilibria for these two models. We investigate the competition outcome sensitivity with a numerical study. The numerical results reveal that governments prefer terminals to compete with each other. If the terminals do not have competitive advantages in their service quality, then terminal centralization brings more profits to the terminal operator than the competition case.

The regional port competition with different terminal competition intensity

This paper studies the regional container port competition problem which involves two port cities each with its own container terminal. We provide two-level game-theoretic models to characterize several practice-related issues, such as container terminal cooperation situation, and the difference between local in/out and transshipment container throughputs. Numerical experiments are conducted based on the port system in the Pearl River Delta area of China. We find that (1) the two ports in the heterogeneous regional port system should focus on differentiating services rather than compete with each other in every service; (2) the terminal cooperation may not be preferred by both of the port city governments; (3) the developed port will gradually dominate the transshipment container business in the system, leaving the developing port to focus its efforts on the local in/out container business instead.

North–South container port competition in Europe: The effect of changing environmental policy

This article examines environmental policy impacts on competition between the European container ports in the Hamburg–Le Havre range on the one hand and the Mediterranean ports on the other. More in particular, two scenarios are considered: the internalisation of external cost on the European hinterland and the establishment of a Sulphur Emission Control Area (SECA) in the North Sea region. Geographically, applications are made for container loops from both Asia and South America to Europe. A total chain model is applied that incorporates the maritime, port and hinterland legs of the supply chain. The calculations show that the effects of either policy option would not significantly impact on the theoretical captive hinterland of respectively the Hamburg–Le Havre range and the ports of the Mediterranean, as the effects measured are smaller than the error margin of the model applied. Additionally, it is found that the impacts of the two policy options on competition between ports in the Hamburg–Le Havre range and the Mediterranean ports would differ for the two container loops considered.

Container transshipment and port competition

The purpose of this paper is to study container port competition for transshipment cargo in duopoly market. We develop the linear container handling demand function which incorporates transshipment traffic, and apply a non-cooperative two-stage game to a vertical-structure seaport market with ports as upstream players and shipping lines as downstream players. The drivers behind port competition are explained through existence of the unique Nash equilibrium which incorporates shipping lines’ port call decisions and ports’ pricing strategies. A port collusion model and social optimum model are then analysed for further insights, and a numerical simulation is conducted to demonstrate the results.

Post-entry container port capacity expansion

Port capacity development is a critical strategy for the growth of a new port, as well as for the development of existing ones, when both new and existing ports serve the same hinterland but have different competitive conditions. To study this strategy, we develop a two-stage duopoly model that comprises the pricing and capacity decisions of two heterogeneous players serving an increasing market. We identify the necessary condition for a port to increase its profit through capacity expansion, and characterize the condition when preemptive pricing by the dominant player is neither credible nor effective in preventing the smaller player from gaining market share. We also find the pure-strategy Nash equilibrium in the capacity expansion game for two ports that have different price sensitivities, as well as different operation and capacity investment costs. We apply the model results to the container port competition between Hong Kong and Shenzhen after Shenzhen port started its container operation in 1991. Our analysis explains the transition of market power from monopoly to duopoly, the fast development of Shenzhen Port, and the possible market structure changes with the continuing increase in demand.

Dynamics of liner shipping service scheduling and their impact on container port competition

Container ports provide the primary interface where physical exchange between buyers and sellers of containerised shipping capacity can be consolidated and realised. Consequently, ports that are able to complement and add value to the objectives of shipping lines and shippers will become focal points for containerised cargo flows. To evaluate container port competition, the authors propose a practical and direct approach based on revealed preferences of shipping lines with respect to container shipping service dynamics. The container shipping networks are generated as carriers formulate their service schedules to capitalise on opportunities that are presented by evolving container trade patterns along trade routes and relative changes in the competitive profile of the ports of call. Empirical results showed that this approach offers a deeper understanding on the workings and evolution of competitive dynamics between ports, which may not be obvious from observations of port performance at the aggregated level. Benefits of the approach also include raising awareness that policy makers should be aware of the need to understand the nature, extensity and intensity of competitive relationships between ports as they craft and implement policies to correct for the actual or perceived market failures in the industry.

Container port competition and complementarity in supply chain systems: Evidence from the Pearl River Delta

Container shipping is a significant trade facilitator in supply chains. Embedded within the container shipping system are competitive elements as well as complementary aspects in inter-container port relationships. The article aims to examine these relationships through a thorough investigation of the calling patterns of container shipping services in order to understand the dynamics of competition and complementarity which exist among container ports. Specifically, empirical evidence will be sought from the Pearl River Delta in South China where the analysis will identify the routes and markets where competition or complementarity exists, participants involved, and the extensity and intensity of such relationships between the container ports of Hong Kong and Shenzhen. The investigation shows that apart from container port competition, inter-port complementarity also accounted for a significant share of changes to shipping capacity affected. The article discusses the benefits offered from inter-container port complementarity for advancing the competitive position of container ports and the practical and research implications.

UK Container Port Investment and Competition: Impediments to the Market

The UK’s container trade is dominated by ports in the South East of England. In order to accommodate both trade growth and the increasing size of container ships, several investment schemes have been put forward in recent years. During their public scrutiny, a number of impediments to the market have become apparent, namely, the treatment of sunk cost, environmental constraints, the availability of subsidies to UK competitor ports and the nature of inland network infrastructure charging. These are analysed with a view to identifying policy prescriptions that are consistent with European Union perceptions of fair competition.

Stated Preference Technique for Analysis of Container Port Competition

With the development of container port services and inland logistics, the differences between regional container terminals are gradually diminishing while the competitiveness among ports is increasing. As a result, port choice is becoming an important aspect of port transportation demand behavior. A framework based on the stated preference technique is developed for the analysis of container port competition and the feasibility of hub port implementation in China. This framework is applied to an analysis of container terminal competitiveness in the coastal provinces of eastern China, including terminals in Dalian, Guangzhou, Ningbo, Qingdao, Shanghai, Shenzhen, and Tianjin. A pilot survey conducted at Dalian Container Terminal (which is located near several similar-scale container terminals) aimed at identifying the main attributes that importers and exporters of containerized cargos consider when choosing ports of service; results of the survey are presented. The main attributes were the goal of a factor analysis experiment conducted to reduce the number of attributes considered in applying the stated preference technique.

An Application of the Hierarchical Fuzzy Process to Container Port Competition: Policy and Strategic Implications

This paper aims to empirically identify the competitiveness of container ports in Asia by examining factors influencing the perceived competitive edge of each port using the Hierarchical Fuzzy Process, a method embracing human knowledge and/or judgement into a mathematical framework. This analysis is unique in that the ‘human-perceived’ competitiveness on Asian container ports is examined under the quantifiable framework. The findings reveal that Singapore is the most competitive port among the sampled ports. Moreover, the methodology employed here shows the potential to be applicable to other transport and logistics related service industries.

Efficiency Measurement of Major Container Terminals in Asia

Due to the growth of container traffic and port competition, ports have increasingly been under pressure to improve their efficiency in port operation and port management for competitive edge. The purpose of this study is to compare the technical efficiency among major container terminals in China, Korea and Singapore using Data Envelopment Analysis (DEA). This paper analyses the returns-to-scale using the output orientation of VRS and CRS model. The benefits of this study examining the relative performance of container terminals will enable container terminal operating companies or port policy makers in those countries to identify current slacks and to set up a proper port management and operation plan to improve their productivity.

Developments in Container Port Competition in East Asia

The ports of Hong Kong, Busan and Kaohsiung have long dominated container handling in East Asia. However, the emergence of new transhipment and gateway hub candidates, which include Shanghai, Shenzhen, Kwangyang and Qingdao, among others, will vie with these incumbents for a greater share of container traffic. Some might even unseat the incumbents. This study finds, through evidences from container shipping services connecting the region to major markets and trade routes between 1995 and 2001, that Mainland Chinese ports are increasingly attractive as direct ports of call for mainline services. The evidence also suggests that new services started by mainline operators calling at Mainland China are bypassing Japanese and Taiwanese ports. Nonetheless, these services continue to call at Hong Kong. Although the composition of containers handled at Mainland Chinese ports consists largely of gateway cargo, these ports are expected to handle a rising share of transhipment traffic.

A Model on Container Port Competition: An Application for the West European Container Hub-Ports

The worldwide network of container transport services, both on land and at sea, is becoming increasingly fine-meshed. The growth in the number of intermodal transfer points on the land side, at the sea–land interface in the seaports and at the connecting points of liner services in transhipment ports leads to an increasing number of routing options for a container flow between two regions somewhere on the globe. This increase complicates forecasting the container throughput of a port in the traditional way by linking it directly to a specific hinterland area. In the approach presented here, a port is considered as a nodal point in a network of container routings, where the routings using a certain port add up to the port's container throughput. The model presented here is intended to explain the market share of the port's routings for each of the traffic zones or regions that comprise a port's potential hinterland. Explanatory variables include transport cost, transit time, frequency of service and indicators of quality of service. A logit model is used to quantify the routing choice and to derive from that a demand function to be used for port traffic forecasting and for the economic and financial evaluation of container port projects. The authors had the opportunity to calibrate logit models in the framework of the evaluation of the Maasvlakte-2 container port expansion project in the port of Rotterdam.

Regional container port competition and co-operation: the case of Hong Kong and South China

As the entrepôt to the Chinese mainland, the economy of Hong Kong has enjoyed a high growth rate of economic development. When Hong Kong developed its container ports in order to accommodate the regional economic boom, its counterparts in China were left far behind; there was no serious port competition from China. However, as China develops its economy, the port of Hong Kong faces real challenges from Chinese ports, particularly from southern ones. Interestingly, the handover of its sovereignty to China in 1997 caused an issue of competition and co-operation between these ports. This paper aims to examine the possible competition and co-operation of the adjacent container ports in Hong Kong and South China from a strategic perspective.