Port Development

Port Development

Learning Outcomes

• Understand port development over time

• Appreciate the factors affecting port development
 Port Development
Ports face increasing pressures over time:
– Socio Economic
• economic development
– Financial
• public sector = drain on resources
• private sector = profit
– Political
• changes in political aspiration
– Technological
• fundamental to the port industry
 Port Development
Drivers:
– Long term economic growth rates
– who buys products
– product innovation
– technological change
– increased globalisation, trade
– interoperability of transport modes
– interconnectivity of land and sea networks
– IT systems
 Port Development
• Ports have traditionally been reactive to change
• No longer a viable option
– have to be change leaders
– how can / does this occur?
– should they integrate into the supply chain more
effectively?
– If so, how?
– What would be the benefits?
 Development of ports

Prior to 1800
• Most ports were no further than the stage of ‘marginal quay
elaboration’.
• Ships were powered by sail with deadweight of 300 tons.
• Cargo was loaded and discharged manually.
• Cranes, when used, were hand powered.
• Ships acted as warehouses until customs clearance was obtained.
• At low tide they sat on the mud
 Development of ports

1800 - 1850
• The industrial revolution introduced steam power.
• Steam ships were built, mainly for the coastal trades: they were coal
powered with a short range.
• The railways were built – the success of a port could depend on a
railway connection.
• Docks were dug out and locks built
• Trade steadily increased
• Commodity ports were built to handle coal, iron ore and other
commodities
• Warehouses of many storeys began to give way to transit sheds and
more open space was needed
 Development of ports

1850 - 1900
• The first tanker in 1885
• Large dock systems were dug out
• helped by steam power.
• The Suez canal opens
• Steam ships became more efficient
• could be used on long distance trades
• discovery of cube law
• Steam ships need more dock space than sailing ships
• Steam cranes and tugs reduced need for dock labour
• Ships did not need to wait for a wind
• Steam ships no longer needed to weather route
 Development of ports

1900 - 1960

• Ship propulsion changed from coal to oil

• Less dust on bunkering
• Less storage space needed for bunkers
• Ships grew in size
• The end of sailing ships
• From 1920 road haulage grew in importance
• Cargo handling technology gradually improved
• Fork lift trucks could stack boxes, transit sheds had higher
rooves
 Post WWII Revolution

• World trade grew quickly

• Ships increased in size rapidly
• Tankers and bulk carriers reached 500,000dwt and then fell
back for demand/technical reasons.
• Steam turbines were replaced by more powerful diesels
• Improved steel allowed wider hatch openings, leading to
faster unloading
• Ports often became part of an industrial area
• Specialised trades developed
• Container ships
• Car carriers
• Fruit Juice / Wine Carrier
 Post war Revolution

• Industrial activity moved from the old sites, close to coal, iron ore
and oil deposits.

• Heavy industry grew in coastal areas with deep- water access,

good inland transport and extensive available land.

• In most industrialised countries it was concentrated on a small

number of very large ports
 1960-1990s
• In the 1960s ports were the basic cargo interchange points
between maritime and inland transport.
• In the 1970s outside the unit load sector, port functions and
processes steadily increased in complexity with Maritime Industrial
Development Areas (MIDAS) emerging with more complex
relationships

• Expansion of containerization
• During the 1980s some ports diversified into the emerging field of
logistics
• The 1990s saw the extension of the globalization process into the
port industry as mergers, acquisitions and joint-venture operations
became more common and more complex
 Port Development post 1960s
• New technologies, new approaches to cargo handling
• Unitisation / Containerisation
– new phase of operation
– general cargo increasingly containerised
– increasing number of problems for ports
• large financial investment
• increasing cost of ship’s time
• cargo to ship not ship to cargo
• increasing inter-port competition
• increased requirement for IT systems
• smaller workforce
• improved customs clearance required
 Container ship evolution

Name/ TEU Year Length Breadth Depth

Type range
3rd/ 4th 3k – 5k 1980 260-295m 32.2m 13.5m
Generation

Post Panamax 5k – 6k 1992 294-318m 39.2 - 42.0m 13.5 -

14.5m

5th/ 6th 5k – 8.7k 1997 263-350m 39.2 - 42.0m 13.5 -

Generation 14.5m

Mega ~ 12k 2005 >380m 55 m 14.5m

EEE ~ 18k 2012 >400m 65m 16m

➢ EEE ~22 k 2017 < 400m 70m 16m

 Port Development post 1960s

• Bulk cargo
– Panamax, 65,000 dwt, some VLCC size
– Usually located near to raw materials
– larger volumes, greater environmental problems
– part of industrial complexes
 Evolution of Rotterdam

Source – T. E. Notteboom and J. P. Rodrigue (2005)

Port Development

UNCTAD model
3 Generation model:
pre 1960s;
post 1960s;
post 1980s
 Port Development

UNCTAD model
4 Fey factors:
• Trade - major factor in accelerating growth
• Ports have to adapt
• Ports no longer passive interfaces
• Port competition much more prevalent
 UNCTAD model Summary

• United Nations Conference on Trade and Development model

proposed in 1992

• They emphasised:
– Why and how ports should be involved in developing their
new role
– Ports are service centres and Logistical Hubs
– Ports competitive nature of business
– The Need for port Marketing
 Weaknesses in the UNCTAD model

• Port development is not fixed in a specific period of time and

ports do not necessarily go through a developmental cycle in
order to get to third- generation status.
• Differential developments takes place at individual terminals
within a port according to their needs. The main driving factor
for these developments are through commercial pressures.
 Weaknesses in the UNCTAD model

• Allocation of a port to a particular generation category is subjective

• Several factors not considered:
– Working cultures
– Health and safety
– Port size/ vessel size
– The extent of public/private sector involvement
• Location advantages, which some ports enjoy, have largely
shaped how they have developed and will, undoubtedly, influence
their development opportunities, and therefore their market
strategy and the facilities they provide.
 Port Development

Are there more than 3 generations of port type?

4th Generation ports

Agile ports?
(Paixao and Marlow, IJPDLM, 33(4), 2003

5th Generation ports?????

 Workport (Work Organisation in Ports)

• WORKPORT model was a project funded by the European

Commission (EC) between 1998-1999, to consider the issues
relating to ‘Work Organisation in Ports’

• Aim of the project: How new technologies, new organisational

approaches and new management concepts being implemented
were able to meet modern market and societal demands.

• Objective of the project: To assess the impacts of new

technologies and other exogenous factors on the work
environment and to consider how new organizational and
management concepts have been employed in order to meet
these new demands.
 Workport (Work Organisation in Ports)

• The project also critically examined the UNCTAD Three Generation

Port Model

• Evidence from the WORKPORT study shows that,

– Rather than developing in discrete steps, ports evolve continuously,
adapting to new technologies, fresh legislation, revised working
practices and other influences on an as-required basis.
– Demonstrated that several streams of evolution can be observed
simultaneously and the pace of change within each stream can vary
substantially.
– Hence, the UNCTAD model, implying that the ports develop in
discrete steps, or generations, is therefore shown to be
fundamentally flawed.
 8 Key Factors of the
Workport classification:

1. Ownership
2. Cargo Forms
3. Cargo Handling Processes
4. Cargo Support Processes and information provision
5. Working Culture
6. Port Function / Development Processes
7. Health and Safety aspects of the working environment
8. Environment
Source: Beresford et al., 2004
Ownership
Cargo Forms
 Cargo Forms

• Cargo forms, under the UNCTAD model, were seen as very

specific to each generation. This categorization does not account
sufficiently for the fact that some ports may well accommodate
cargoes from each so-called ‘generation’ of development.
• The WORKPORT model does not, therefore, tie an individual
cargo form to a specific generation of port.
• The principal change in all cargo forms has been the substantial
changes in vessel size, a factor not accounted for at all in the
UNCTAD model.
Cargo Handling Processes
 Cargo Handling Processes

• The UNCTAD model did not account for the fundamental changes that
have occurred in cargo-handling processes.
• Increasing specialisation and automation have been hallmarks of the
last two decades.
• Volumes handled are much greater, manual handling has been reduced
and, in many cases, completely replaced by mechanised systems
• Containerisation
• Increasing vessel size has led to the requirement for significant investment in
infrastructure, superstructure and channel dredging
• Significant investments in information technology systems to support the
movement of containers within the container yard
Cargo Support Processes
 Cargo Support Processes
and information provision

• Ports have embraced new data transfer and communication

methods without shedding older methods
• Ports cannot be categorized into a specific generation by virtue of
the level of development in their computerised systems.
• Most run several systems from various stages of development
using each on an ‘as-needed’ or ‘on-merit’ basis.
Working Culture
Port Function / Development Processes
Health and Safety
Environment
 Environment and Business

1960s 1970s 1980s 1990s 2000s 2010s

Generally Generally EU EU habitats Quality- assured Increased
low level of low level of environmental directive Environmental sophistication of
awareness awareness assessment Management System business
ESPO: European (EMS) relationships and
Specific Seaport ownership
legislation Organisation formed Compliance plus
environmental issues Involvement of
Increasing integrated into non-port
awareness business plan businesses e.g.
venture capitalists
Ad hoc local Challenges in
initiatives managing port
environmental issues
 Port Development

WORKPORT model

– Additional Factors
• Integration of Ports into the Supply Chain
Integration of Ports into the Supply Chain
 Port Development

WORKPORT model

- Other Additional Factors ?

• Changes in Inland Transport Infrastructure
• Changes in Financial / Logistic Thinking
• Length of Life of Port
 Port Development
• Growth of the world’s leading ports
– Site
– Traffic Generating Location
– Government Policy
Source: Geography of Transport Systems
 Stage 1 Stage 2 Stage 3 Stage 4
Mid 19th century
Up to the mid 19th Late 20th century,
Period to mid 20th Late 20th century
century early 21st century
century
Development
Rise in trade Industrialization Globalization Logistics
rationale
Cargo handling;
Cargo handling;
Storage; Trade;
Cargo handling; Storage; Trade;
Industrial
Main port Cargo handling; Storage; Trade; Industrial
manufacturing;
function Storage; Trade Industrial manufacturing;
Container
manufacturing Container
distribution;
distribution
Logistics control
Containers and
Dominant cargo General cargo Bulk cargo Containers information flows
(supply chain)
Spatial scale Port city Port area Port region
Port network
Nautical services;
Nautical services; Land and
Nautical services;
Role of port Land and infrastructure; Port
Nautical services Land and
authority infrastructure; Port marketing;
infrastructure
marketing Network
management

Source: adapted from Van Klink, A. (2003) "The Kempen nexus" in R. Loyen, E. Buyst and G. Devos (eds) Struggling for Leadership:
Antw erp-Rotterdam Port Competition betw een 1870-2000, Heidelberg , New York: Physical: pp. 143-159.
 Spatial Development

Source: Geography of Transport Systems

 Spatial Development

Source: Geography of Transport Systems

Do we need new theories on port development?

• Development of ports into transhipment hubs is not explained by

the previous theories

• Inland container depots/ freight distribution centres do not feature as

major influencing factor

• The main driver of port development is not simply growth but its
inland connectivity
 What is regionalisation of the port?

• ‘Regionalization expands the hinterland reach of the port through a

number of market strategies and policies linking it more closely to
inland freight

• Hinterland can stretch so far that it meets the foreland e.g. through
the landbridge concept

• International ports e.g. Copenhagen – Malmo port owned by two

countries
 Port Regionalisation
• Driven by:
• Demand
• Technology
• Efficiency
• Growth in trade
• Privatisation (Change in governance structure)
• Globalisation

• Led by better Logistics solutions

• Focus on inland distribution nodes
• Extending the function of port inland into transport
corridors/ logistic nodes
• Capturing hinterland predominantly by two means:
• Better Intermodality
• Inland Load distribution centre
 Port Regionalisation features

• Cost reduction: focus to reduce the most expensive

sector – need logistical efficiency
• Intermodal operations and ICD: crucial to take the port’s
logistical function faster and closer to the hinterland
• Freight corridor: consolidation of all logistical businesses
(zoning/ polarizing) helps regionalise port function
• Business partnership: Strategic relation between port &
inland port / Free Trade Zone
• Port Management: extended beyond port in terms of
investment & management… logistics management
 Functional Integrity

• Need rail/road connections to move cargo from/to port

• Maritime shipping lines, freight forwarders and rail and trucking
companies – all traditional independent businesses

• Integration prevented by regulation

• Shift between modality and ownership mean delays and cost
 Cost Reduction

• Inland transportation involves 40-80% of total transportation cost

• In China total inland transport cost is around 60% for a product

which is transported to the West

• Smarter management of inland container logistics is the key to

effective regionalisation
 Comparative costs and time to transport
ONE TEU to Shanghai from Chongqing

Chongqing to Distance Transit Time Cost (US$, 20-

Shanghai (Miles) (Days) ft container)

Road 1,300 3–4 (40 hours) $1,500

Rail 1,600 7–10 $ 540

Barge 1,500 8 (11 upriver) $ 315

 Port Regionalisation and the
development of freight corridor
 Formation of freight corridor

• Freight corridor is the main link between the port terminals and
inland distribution

• These links are connected via on dock rail transhipment facilities

and use of barges.

• Corridors developed to Polarisation and zoning of logistics sites in

transport nodes.

• Hence logistics companies set up their firms close to one another to

benefit from proximity to markets and availability of inland and where
there is availability of intermodal connections and support facilities
(value added service).
The Last Mile
 Just in Time

• JIT in port leads to:

– Better use of scarce resources
– Productive use of all sorts of resources
– Elimination of waste
– Better utilization of port infrastructure and superstructure
– Reduction or elimination in the amount in cargo storage
 Implications for ports as
elements in logistics chains

• Better organised and proactive

• Ships stay for a shorter time period
• Investment in Value addition
• Attracts shippers and shipping lines
• Profitability increases
• Reduction in port costs
 Financing Port Development
• Where does the finance come from?
• Affected by port type
– Private ports
• private sector investment
• reinvestment of profit
• joint developments
• growth of business
• sale of assets
– Public ports
• government funding
• joint development with private sector
 Cardiff

Port of Cardiff