THIRD FORCE ARGUMENT FADES

We also see the same idea being promoted in some of the larger pending port privatisation plans and notably in South Africa. In Durban, for instance, the latest idea is to provide at least two or three different container terminal facilities to ensure the shipping sector can achieve prices and services determined by “real” market forces.

The same principle also continues to surface fairly regularly where the World Bank has a hand in guiding ports from the public to the private sector. Is, however, this preoccupation with providing a diversified service base in the container handling sector still justified?

It is a fact of life nowadays that just as the shipping line sector is scaling up into bigger power blocs – whether these be mega-alliances or larger company structures – so is the container terminal operating sector. It too, to use a retail analogy, is making the transition from corner shop to supermarket recognising that at the top end of the game at least this is what is required. Bigger consortia, vessels and box exchanges all demand container terminals with a much larger capacity and the basic ability to process more containers at a greater rate.

To a significant extent these new system requirements are progressively driving consolidation in the container-handling sector and by association a contraction in the competitive service base. It is against this background, for example, that recent years have seen a shrinking of the number of container handling service providers in main ports such as Rotterdam, Europe’s number one container handling port.

Equally, this scaling up has complemented the ambitions of the larger of the international terminal operators and has added strength to their increasing grip on the container handling sector. They, to a large extent, have become the few parties that are able to take on the larger system investments required nowadays to meet new shipowner needs on the marine side and increasingly demanding cargo shipper requirements on the landside.

It is certainly an interesting statistic that today, according to Drewry Shipping Consultants, global operators account for around 60% of the containers handled annually in the world’s containerports!

Further, that the top two companies – Hutchison Port Holdings and the Port of Singapore Authority – between them account for over 20% of all containers handled annually!

Equally, it is interesting to note that in Drewry’s Global Operators throughput league table for 2001-2002, 11 of the 23 companies referenced are shipping lines.

Another major factor now impacting the new competitive mix in container handling service is the desire of the lines themselves to get in on this business. In part, this is driven by profit motive but particularly, where lines are pursuing logistics-oriented development strategies, it is seen as a natural step – i. e. it gives much greater control over their own destiny in a climate where one day here and there knocked off container transit times is increasingly influential in consolidating and expanding traffic volumes overall.

Overall, we now appear to be in the middle of a structural change where system requirements are dictating that having a diversified service base within a particular port is less important than scaling up to meet new system requirements. As indicated, this trend is now most noticeable in the higher capacity containerports but over time there is every reason to expect that it will filter down to second division ports.

Increasingly, therefore, the future is likely to see more emphasis on maintaining inter-port rather than intra-port competition including where various ports are located in different countries as is the case along the northern European coastline. Or, in conclusion, to put it another way, the relevance of debates such as the ongoing one in Australia about the need for a “third force” appears to be fast dissipating as other priorities take centre stage. Mike Mundy