More traffic demands more cargo handling capacity and in turn this demands new terminals. Introducing a new terminal is not a straightforward matter it requires careful planning to ensure a good competitive balance is maintained – where market forces act as the main regulator.
Where terminals are introduced on a different footing – for example where one is concessioned via a fully international tender, another by a direct award and where privately-owned terminals exist side-by-side, achieving a level competitive playing field can be challenging. It may require government agency intervention via national port planning measures or some other instrument. There may also be attention required to wider areas such as tax breaks and funding measures.
Where the development sequence and/or approach is such that competitive inequalities are not addressed this can lead to diverse problems, which some parties argue is currently the case in Ecuador.
The source of such problems is multi-directional – in Ecuador it is the breaks given to certain terminals in terms of fees and service requirements but elsewhere it can be a port authority installing a new terminal operation that is encumbered by higher fees than existing competing terminals. This can be as a result of the port authority seeking to set the standard for rents under its jurisdiction at a higher level or some other goal that is seen to take precedence over maintaining a strong competitive environment. History tells us that this can lead to a chaotic situation with stronger than usual infighting between terminals and liner clients able to leverage the overall situation.
It is also not just the case that the competitive balance between like for like terminals needs to be addressed, for example container terminals. It can also be important to consider such an aspect between, for instance, container and multi-purpose terminals where the latter may offer a substantial container handling capacity targeted at the same categories of liner clients as the container terminal.
Unusual circumstance, you may say? Perhaps not! Without doubt there are many terminals that can flag up inequalities in this respect but elect not to do so for tactical or other reasons. It is also certain that many conversations on this and allied subjects take place behind closed doors.
One thing is for certain, however, this is a problem area that promises to achieve increased prominence in the coming years as terminals continue to multiply and their respective experienced developers increase efforts to gain competitive advantage. It is thus an aspect of terminal development that port authorities and other public agencies need to be increasingly aware of as they offer new concession or other similar opportunities.
In short, it is a subject worthy of serious respect and one that the relevant agencies would do well to give serious attention to right from the outset of new terminal development.
