World Bank Port Reform Toolkit Module 2 The Evolution of Ports in a Competitive World

World Bank Port Reform Toolkit Module 22 Overview of the competitive landscape Evolution of Ports in a Competitive World Ports dynamics in the 21 st Century Challenges and Opportunities

World Bank Port Reform Toolkit Module 23 Threat of New Entrants Rivalry among Existing Competitors Potential for Global Substitute Bargaining power of Service Providers Bargaining Power of Port Users Forces governing the competitive landscape

World Bank Port Reform Toolkit Module 24 Rivalry among existing competitors : determining factors Hinterland market access Ability to service transshipment trade Regional port capacity and demand Ability to create competition within the port Stakes at risk

World Bank Port Reform Toolkit Module 25 Rivalry among existing competitors : determining factors (cont’d.) Ability to absorb losses Ability to control operations Limits on rivalry within ports Government willingness to subsidize operations

World Bank Port Reform Toolkit Module 26 Threat of New Competitors : determining factors Capital expenditure for new port facilities New distribution patterns Provisions in operating agreements Natural barriers Magnitude of switching costs Cost advantages and customer loyalties

World Bank Port Reform Toolkit Module 27 Potential for Global Substitutes : determining factors Other global sources for products moving through the port Substitute products for exports and imports Magnitude of switching costs for substitution Demand elasticity of exports and imports Importance of port costs in total delivered price

World Bank Port Reform Toolkit Module 28 Bargaining Power of Port Users : determining factors Concentration of port user power Impact of changing business relationships Presence of large value adding tenants Importance of the port to the economy Ability to replicate port services Facility investments by ports users

World Bank Port Reform Toolkit Module 29 Bargaining Power of Service Providers : determining factors Experience and capabilities of service provider Participation in facility financing Choke points in the port Ability to absorb downtime Interrelationships between providers and port users Rights and obligations conveyed by contractual agreements

World Bank Port Reform Toolkit Module 210 Overview of the competitive landscape Evolution of Ports in a Competitive World Ports dynamics in the 21 st Century Challenges and Opportunities

World Bank Port Reform Toolkit Module 211 Globalization of Production : observed trends Vertical specialization Focused manufacturing Expanded logistics reach Increased sourcing alternatives Impact of globalization on ports

World Bank Port Reform Toolkit Module 212 Impacts of technological changes (1/4) Containerization of world trade Future containership designs Impact on port operations : reduction of ship’s time in port and at berth, reduction of personnel requirements for cargo handling, raise of berth productivity, increase of capital intensity of port operations.

World Bank Port Reform Toolkit Module 213 Impacts of technological changes (2/4) Need for container port productivity improvements

World Bank Port Reform Toolkit Module 214 Impacts of technological changes (3/4) Impact of increasing port productivity on voyage cost per TEU

World Bank Port Reform Toolkit Module 215 Growing role of information technology Impacts of technological changes (4/4) Port requirements for large cruise ships Other technology impacting port services : podded drive propulsion systems, self unloading bulk carriers, …

World Bank Port Reform Toolkit Module 216 Shifting Bargaining power Consolidation among ocean carriers Emergence of global terminal operators Potential emergence of other global port service suppliers Emergence of global logistics service providers Different ways to buy and sell port services

World Bank Port Reform Toolkit Module 217 Changing Distribution Patterns : the Hub and Spoke distribution Expected attributes of hubs : strategic location, sufficient depth, extend of terminal facilities, efficiency of container handling operations, availability of frequent feeder services, attractive cargo- handling charges Benefits of hub status : increased income, reduced transport time, increased competitiveness of exporters, creation of jobs Problems hubs face : competition from other hubs, lower income from terminal services charges Inland container terminals are shifting activities away from the port

World Bank Port Reform Toolkit Module 218 Environmental and safety concerns Growing environmental concerns : Oily ballast water discharge Water pollution, air pollution, aesthetics, noise, etc. Issue of sub-standard ships Port State Control Regional cooperation

World Bank Port Reform Toolkit Module 219 Overview of the competitive landscape Evolution of Ports in a Competitive World Ports dynamics in the 21 st Century Challenges and Opportunities

World Bank Port Reform Toolkit Module 220 Transferring Port Operations to the Private Sector The need for change : private sector companies have proved their ability… Impacts of privatizing operations : success stories and failures Lessons learned from the past : Contingency plan to improve port efficiency to transfer their knowledge to the port personnel to bear the financial burden of port expansion and development. need for transparency and open competition need to plan the transition to private operation and the future functioning scheme of port after reform

World Bank Port Reform Toolkit Module 221 Opportunities for the Private Sector : available annual revenue Terminal operations : $30 to $40 billion Tug assist services : $4 to $5 billion Maintenance dredging : $4 to $5 billion Information technology : $2 to $3 billion Environmental facilities and ship safety : $1 to $2 billion Other port services : warehousing and storage, port security, pilotage, etc. : $4 to $5 billion Total : $45 to 60 billion