1.1 Introduction
This first section starts from a broad definition of a seaport. Primarily, ports serve as transfer points in a transport chain. Besides this transport function, they also function as a location for (petrochemical) industry and logistics activities. The section will discuss these three port functions. For each of the functions it will become clear that they are highly different. Each port function has different firms that provide the services, different geographical scales of competition and different ways to measure port performance. Given a portās many functions, it is difficult to measure port performance. Worldwide, throughput is most used in the industry. However, this does not provide information on the (regional) economic benefits of the port. Therefore, port-related employment and value added are also used as port performance indicators. The three port functions and the performance of the port will be illustrated for the case of Rotterdam, being Europeās largest port. Also the performance of the port will be discussed. Several port performance indicators are discussed for the Rotterdam situation. The section illustrates some measures that have been taken in the past to increase the value added of the Rotterdam port region and to maintain its position in worldwide supply chains.
Section 1.2 will introduce the primary function of a port and the most important companies active in ports, such as deep-sea terminal operators, shipping lines, port-related transport companies, transport intermediaries (forwarders and brokers) and the port authority. Section 1.3 will discuss the three port functions (transport node, location for the [petro]chemical industry and location for logistics activities). Section 1.4 deals with measuring the economic performance of ports. In Section 1.5 the focus will be on how the port of Rotterdam could increase its value added. Section 1.6 will give some summarising conclusions.
1.2 The primary function of a port and its main actors
Many different definitions exist about ports. An often used textbook definition can be found in Stopford (2009: 81), who defines a port as āa geographical area where ships are brought alongside land to load and discharge cargo ā usually a sheltered deep-water area such as a bay or river mouthā. The Port Working Group of the European Commission (1975: 6) defines a port as
an area of land and water [ā¦] to permit, principally, the reception of ships, their loading and unloading, the storage of goods, the receipt and delivery of these goods by inland transport and can also include the activities of businesses linked to sea transport.
From both definitions the first and most important function of a port becomes clear: ports are nodes in transport chains. Looking at the second part of the definition of the European Commission (1975), it makes clear that a port is also a location for economic activities related to the handling of ships and cargo in a port. In this section we will discuss the primary function of a port, namely its role as a node in transport chains. In the next section we will extend the function of ports to other activities.
The transport node function of a port is similar to other nodes in transport chains, such as airports or stations for public transport. But ports are to a large extent focused on cargo. Cargo includes bulk cargo, general cargo, containers, roll-on/roll-off and project cargo.
- Bulk cargo can be defined as cargo that is transported unpackaged in large quantities. Often a distinction is made between dry and liquid bulk cargo. The main dry bulk cargoes are coal, iron ore and grain.
- Liquid bulk products are usually split up in two groups: crude oil and refined oil products. Of course, the latter category consists of a variety of products, such as naphtha, gasoline, diesel fuel, kerosene and liquefied petroleum gas.
- General cargo, sometimes also referred to as ābreak bulkā, includes steel, nonferrous metals; and paper, wood and fruit if transported on pallets and in rolls, bales, sacks, ābig bagsā, packages and bundles. In contrast with dry and liquid bulk, general cargo can be counted apiece if the goods are loaded and unloaded.
- Container cargo is cargo stored in standardised boxes, generally 20 or 40 feet in length. Containers are units that are used for a large variety of goods, such as electronics, textiles, chemicals and machinery. Because of the standardised measures, containers can be handled in the same way in container ports and in port-related transport, resulting in low transport costs.
- Roll-on/roll-off cargo is āwheeled cargoā. It encompasses all transport flows where vehicles like cars, trucks, semi-trailer trucks and trailers drive on and off the ship.
- A final commodity group is project cargo, consisting of all kinds of special cargoes that need to be transported overseas and require a special transport
solution. Examples include bulky and heavy objects such as yachts, generators, transformers, shipsā engines and wind turbines.
Ports are nodes in transport chains because there is a need for the exchange of cargo. De Wit and Van Gent (2001) distinguish three reasons why these nodes are necessary. First, ports are needed to connect different modes of transports. Each mode of transport is characterised by different technical-operational and economic features. For example, seaborne transport vessels are equipped for long-distance, intercontinental transport, with large quantities of cargo, while truck transport is suitable for short-distance, continental transport, bringing the cargo to its final destination.
A second reason why a port exists is that the demand for transport is spatially diverse. That is, production and consumption of goods do not take place at the same location (country, region, city). For example, large quantities of grain are produced in the United States, but are processed and consumed in other places worldwide. In general, no country in the world is self-sufficient. Each country sells what it produces and tries to acquire what it needs. In this respect, it is important to note that ports are facilitators of international trade. The demand for port services is derived from the demand for transport services, and the demand for transport services depends on international trade flows. Changes in international trade patterns and transport networks have a huge impact on ports (De Langen et al., 2012). Because there are trade flows worldwide with different origins and destinations and with a different āthicknessā (small/large quantities of cargo flows), there is a need for consolidation and deconsolidation. In ports, goods could be combined in case of consolidation with the purpose to realise economies of scale and make transport more efficient.
Third, ports could facilitate temporary storage (buffer). A node is a buffer where goods are temporarily stored. Temporary storage could help to match the difference in scale between transport modes (De Langen et al., 2012). For example, a ship carries up to 300,000 tons of cargo, while the connecting transport modes, such as truck, barge and train, can only transport much smaller quantities. As a consequence, temporary storage is needed. Temporary storage could also be needed for logistics or marketing reasons. For example, creating a storage place in the port that is close to the market could help to shorten the ātime-to-marketā of the cargo for its end user.
Important actors in the port are the deep-sea terminal operators, the shipping lines and port-related transport companies for railway transport, inland waterway transport and truck transport (see Figure 1.1). Besides these actors, two intermediaries play a role, namely, the forwarder and the shipbroker. In the remainder of this section we discuss the major roles and the clients of these actors, including the role of providers of nautical services (pilots, towage companies and mooring companies), and the port administration or port authority.
- Deep-sea terminal operator (also called stevedore or terminal operating company). The main activity of a deep-sea terminal operator is loading and unloading ships and the temporary storage of the goods. A deep-sea terminal operator focuses mainly on the handling of one cargo type, because the technologies with regard to handling and storage of the different commodities vary. In general, deep-sea terminal operators have two different customers: shipping lines and the importing or exporting companies (shippers). In some transport chains, where cheap and reliable access to port services is important, shippers choose to vertically integrate. In this case, they have their own terminal operating company, or they have a majority share in a terminal. Some terminal operators exploit terminals in different ports all over the world, while others are only active in one port.
Figure 1.1 Main actors in the maritime transport chain of containers
- Shipping line. The core business of shipping lines is to operate ships and provide shipping services. In maritime transport, a distinction can be made between liner shipping and tramp shipping. Liner shipping offers transport with a fixed route and fixed schedule. This can be compared with a bus line service on a route with a fixed timetable and stops. Shipping lines in tramp shipping do not have a fixed route. Ships sail from one port to another depending on the demand for cargo. Liner shipping is offered for containers, cars and RoRo-cargo (roll-on/roll-offācargo), while tramp shipping is used for commodities such as oil and iron ore. Shipping companies do not necessarily own ships. In many cases, specialised ship-finance and ship-owning companies play a role and charter ships for a relatively long period to the shipping companies. The main business of shipp...
