The case for independence
Independent container operators can dramtically improve new terminal prospects
It’s an old story but it is worth one reiterating that if a country has a single container terminal then it is a no brainer when it comes to deciding on the category of operator that should be awarded a concession under a privatisation initiative: independent container terminal operator every time!
The record shows such an operator can deliver a level playing to the client base and as such facilitate traffic growth and cargo importer/exporter choice over the long term. Shipping lines or companies affiliated to a shipping line may be able to offer the carrot of increased volume from the related liner business but their presence is not welcomed by other lines and as such it potentially offers the scenario of “short term gain, long term pain.”
There is also the possibility that a shipping line or shipping line affiliate operating the single gateway terminal of a given country will lead to a reduction of choice of shipping lines by cargo importers and exporters.
A line involved with a terminal operation can obtain a discount for container handling that its competitors cannot. It can use this discount to reduce its freight rates and increase market share, to the extent that it can knock other players out of the market. When this happens importers and exporters are very reliant on the line with increased market share and at this point the line concerned usually bangs its freight rates back up. Net result for importers and exporters: reduced shipping options and higher costs.
This is not to say there is no place for shipping lines or their affiliates in terminal operations, the main place for them, though, is in conjunction with dedicated terminal operations to meet the needs of its own operations and/or those of its consortia partners.
Terminals of this description also usually come into existence in the context of high volume container operations.
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