PORT OPERATION AND MANAGEMENT-

TL4350

Port ownership and management

 Port operation and management
Learning outcomes

•Port administration and management

•Port ownership

•Stake holders in a port

•Port management models

•Evolution of port management and governance

 Port administration and management
• Port administration can be simply define as
regulatory functions and public service provision of
the port.

• Port management is responsible for commercial

operations of a port

• The scope and extent to which a port authority gets

involved in port activities (administration and
management) various among countries.
 Port ownership
• State ownership: many ports are owned by state, e.g. Port of Vancouver, Port
of Singapore,

• Regional government ownership

• State government: Port of Sydney port,

•Autonomous: UK Trust ports, non-profit making entity, set up by Act of

Parliament. e.g. Dover Port

•Municipal ownership: e.g. Port of Rotterdam, Port of Hamburg, Kobe

• municipality

• Private ownership: UK ports such as Felixstowe, Flinders Ports in South

Australia, Geelong port in Victoria

• Each country may have a combination of two or three types of ownership.

 Who manages and operates ports?

Organisation and management structure of a port:

• Port authorities/port corporations- Government

• Private sector stake holders

▫ Private port corporation
▫ Stevedoring firms
▫ Cargo handling companies
▫ Terminal operators
▫ Marine services providers
▫ Logistic service providers

Meersman, H., Van de Voorde, E. & Banelslander, T. 2009, ‘The economic fabric of ports’, in Future Challenges for the Port and
Shipping Sector, ed. H. Meersman, E. Van de Voorde & T. Banelslander, Informa London, pp.89-107.
 Port authority

• Historically ports were owned and managed by public entities, mainly

through Port Authorities, who performed most ports.

• Port authority has been defined as a ‘State, Municipal, public, or private

body, which is largely responsible for the tasks of construction and
sometimes the operation of port facilities, and in certain circumstances,
for security’ (European Union 1977)

• Responsibilities of the public port authorities various worldwide

Depends on the private sector involvements in port operations

• The governance structure of port authorities also differ depending on their

respective ownership type, national, regional, provincial and municipal.
Source: Chen, S-L. 2009, ‘Port administrative structure change worldwide:
its implication for restructuring port authorities in Taiwan’, Transport Reviews, Vol.29, No.2, pp.168.
Source: Port of Rotterdam, http://www.portofrotterdam.com/en/port_authority/company_information/organization/index.jsp
 Responsibilities of port authority

• Statutory powers :

- Appraisal of port investment proposals

- Setting up of financial objectives for ports
- Regulation of rates and charges
- Drafting of labor policy
- Establishment of principles for licensing
- Facilitation of market surveys and research about the port performance
- Legal advice to local port authorities

• Parallel roles:

- Regulation of shipping and port operations

- Regulation of nautical operations
- Port marketing and promotion
- Strategic planning
 Port management models
Traditionally, port management has been categorized as Landlord ports, Tool
ports and Service ports in terms of their ownership and operating structures.

– Landlord port: Port authority provides land, constructs and maintains

infrastructure. The superstructures and all port business are established and
operated by private companies.

– Tool port: The port authority provides infrastructure and superstructure,

and operates some port services, the remaining port services are
operated by the private sector.

– Service port: The port authority provides all port services to ships and
cargo owners. In addition port authority owns, maintains and develop
infrastructure and superstructure.

– Private service port refer to that the private sector provides all port services
to ships and cargo owners.
Port Administration Models

• A number of factors influence the way ports are

organized, structured, and managed, including:
• • The socioeconomic structure of a country
• (market economy, open borders).
• • Historical developments (for example,
former colonial structure).
• • Location of the port (urban area or in
isolated regions).
• • Types of cargoes handled (liquid and dry
bulk, general cargo, or containers).
 Port management models
The table outlines the sectors (public or private) and their various
responsibilities under the four basic port management models.

Responsibilities Service Tool Landlord Private

Infrastructure Public Public Public Private

Superstructure Public Public Private Private

Port Labour Public Private Private Private

Majority Majority
Other functions mixed mixed
public private

Source: World Bank (2007).

Singapore: Transforming a Service Port into
Landlord Port
• A useful example of a port authority structure change is represented by two
laws enacted in Singapore.
• Prior to the change, the port functioned as a public service port.
• As the port authority increasingly became engaged in terminal operations
abroad and other commercial activities, public functions and commercial
functions were separated.
• A new statutory board (the Maritime and Port Authority of Singapore
[MPA]) was set up.
• The commercial and marine activities of the original Port of Singapore
Authority were corporatized.
• Two acts implemented the changes, one providing the dissolution of the
Port of Singapore Authority and the other establishing the MPA (Singapore
Acts 6 and 7, 1997).
 Eastern Europe: Decentralizing Port
Management
• In the past, Eastern European ports were managed
mainly by centralized authorities.

• After the introduction of market reforms, it became

necessary to decentralize port management and
modernize former state-dominated structures.

• More independent port authorities were

established, often with some form of state
participation.
 Port management models

Source: ICS 2007, Port and Terminal Management, p.40.

Maritime and Logistics Management
 Evolution of Port Management and
Governance
Since 1980s, restructuring port operation and management has
taken place to address the external environmental changes.
• Increased competition among ports
• Technology changes in the port and transport industry
• Private participation in infrastructure, development and
service delivery
• The diversification and globalization of investors and
operators in the port industry
• The role of a port has been altered by integrating it into
manufacturing and distribution systems due to globalisation of
trade and production.
Hinterland connections
 Evolution of port management and
governance
Factors which contributed to the emergence of the private
sector:
• Supply/distribution chains: Ports as bottlenecks
• Labor Practices: Labor unions often ignored the need to
reduce the labor force and upgrade skills implied by the
modernization of port-handling equipment.
• Centralized government control: was too rigid and slowed
down the pace of planning, control and command structures
and limiting responsiveness to market demand.
• Public investment in port infrastructure was often
insufficient or inadequate, and implied heavy reliance on
state budget.
 Evolution of port management and
governance
• Reforms in the Port Sector

• Liberalization/de-regulation: Reform or partial elimination of

government rules, enabling private companies to operate in a previously
publicly-operated areas.

• Commercialization: The public ports are given more autonomy, made

accountable for their decisions and overall performance and encouraged to
apply private sector management accounting principles.

• Corporatization: The public ports are given the legal status of a

private company, although the public sector sill retains the ownership.

• Privatization: Transfer of ownership of assets from the public to the

private sector, or the application of private capital to fund investments in
port facilities, equipment and systems. It can be comprehensive or partial.
 Evolution of Port Management and
Governance
Impacts of changing port ownership, management and
operations:
Division of responsibilities between the public and the private sectors
− Public sector : Planner, facilitator and regulator, (i.e. the role of port
authorities change )

− Private Sector : Service provider, operator and developer

• Ports integrated in global logistics chains
– Local benefits also have global and regional attributes
– Private port service providers are increasingly global in scope and scale
(e.g. Globalisation of terminal operations)
This is a challenge to the port authorities.
– Globalization will challenge the protection of “public” and local interests
 Globalization of terminal
operations
• Port authorities are increasingly confronted with the globalised
terminal operators.

• During the 1990s, a number of terminal operators and major

shipping lines merged to control the container terminals all over
the world.

• This trend has far reaching consequences for the strategic position
of port management in relation to some of their major clients.

• Today, a handful of major carrier alliances and independent

operators dominate the global container trades.
 The current status of global terminal operators :
www.drewry.co.uk/news.php?id=149 – The table should be updated
 Globalization of terminal
operations

• Container lines challenged to shift their operations to other

ports if their financial and operational demands are not met.

• Example: The Port of Singapore did not meet the requirements of

Maersk Line. Which resulted in the carrier initiating the development of
the nearby Malaysian Port of Tanjung Pelpas. (the terminal operator in
Singapore PSA also competing in the global market).
Port of Tanjun Pelepas
Port of Tanjun Pelepas
• The Port of Tanjung Pelepas
located on the eastern mouth of the
Pulai River in south-western Johor,
Malaysia- 1999.

• Part of the APM Terminals Global

Terminal Network

It set a world record as the fastest

growing port with one million
twenty-foot equivalent units (TEU)
of containers handled after 571 days
of operations.
Port of Salalah -1998
 Port of Salalah
• If the dominant line
abandon the port 80-90
per cent of traffic could
be lost.

• Port of Vallarpadam?
 Division of responsibilities between
public and private sectors
• Port operation function has been devolved to the private
sector so that the Public/private model (i.e. landlord model) is,
to a large extent, preferred in many countries.

• Landlord and regulatory functions are public sector’s

responsibilities.

• Regulatory function is separated from port functions

(Baltazar and Brook 2001), and may be fallen to other public
sector rather than the public port authority.
 Port Model Port Functions
Port privatisation matrix
Regulator Landowner Utility

Public Public Public Public

Public/private Public Public Private

Private/public Public Private Private

Private Private Private Private

Source: Baird (1995).

Governance (port model) Regulator function Port functions

Port devolution matrix

landlord operator
public  Licensing permitting  Waterside  Cargo and passenger
Public/private maintenance handling
private  Vessel traffic safety  Marketing of  Pilotage and towage
 Customs and location,  Line handling
development  Facilities security,
immigration strategies, planning maintenance, and
 Port monitoring  Maintenance of port repair
access  Marketing of
 Emergency services  Port security operations
 Protection of public  Land acquisition  Waste disposal
disposal  Landside and berth
interest on behalf of capital investment
the community
 Determining port
policy and
environmental
policies applicable

Source: Baltazar and Brook (2001).

 Source: Chen (2009)
Chen, S-L. 2009, ‘Port administrative structure change worldwide:
its implication for restructuring port authorities in Taiwan’, Transport Reviews, Vol.29, No.2, pp.163-181

Maritime and Logistics Management

 Port development projects
• During early years, the container terminal
of the Port of Damietta in Egypt was
often cited as a “failed” port development
project.

• In the 1970s, the terminal was constructed

and fully equipped to handle anticipated
container transhipment requirements in
the eastern Mediterranean.

• The terminal was without any business

for years.

• Only when the shipping company Scan-

Dutch decided to change its Eastern
Mediterranean port of call from Cyprus
to Damiette did throughput starts to
increase sharply.
 Port development projects
• Port of Eemshaven: Despite
modern port facilities and
large government subsidies,
port never became a
success.

• It was too isolated and

lacked an industrial
hinterland.
London Gateway Terminal
• London Gateway port includes a 2.7 km
long container quay, with a capacity of
3.5 million TEU a year when fully
developed, being developed in phases.

• The port is located on the major shipping

lanes serving north west Europe, there
by increasing national deep-sea port
capacity for the UK.

• At present, the ports of Felixstowe and

Southampton are the first- and second-
largest ports by container traffic in the
UK, with the Port of London third.
• Close to Gateway, on the south bank of
the Thames estuary, on the south-east
side of the Isle of Grain, is Thamesport, a
small, but well-established container
terminal.
Port financing