Frequently, this is seen as a major justification by government for handing over a public asset to the private sector. It is, therefore, against this background that shipping lines or the affiliated companies of shipping lines can be seen as an attractive option to nominate as the incoming concession holder. With them, it is assumed, comes the real prospect of significant cargo volume increases.
But even if the cargo volume does increase significantly as a result of appointing such a concession holder is it a worthwhile step? In the instance where the concession represents the only gateway to a country then experience tells us there are too many dangers associated with this. In the case of a container terminal concession, for instance, a line or a company affiliated to a line could offer itself a discounted rate for the terminal operation and use the resulting margin to discount freight rates and win market share in a given trade. The next step on from this is that this tough competitive climate results in lines leaving a given trade and therefore the remaining few lines enjoy something of a monopoly. In turn, the cargo shippers and consignees in the country concerned face significantly higher freight rates.
Even if the terminal concerned is not the sole country gateway but does function as a multi-user terminal there are dangers with shipping line “ownership”. There is the possibility that for the line will apply terminal charges on a cost basis for itself as opposed to charges that seek to achieve a profit. Equally, as is well known, lines are never keen to share a terminal with a competitor – the danger exists that with a line or its affiliate in charge of a terminal that it will be able to source valuable information that it can use in a competitive context – the origin of cargo, given volumes and so on.
There is a place for lines in terminal operation but the consensus of opinion is that this remains in the province of dedicated terminal operation to meet their own needs and those of their consortia partners.
