The value of connectivity

Wide view: Morocco's Tanger Med is a good example of a port creating value for its hinterland. Credit: Yassine Abbadi Wide view: Morocco's Tanger Med is a good example of a port creating value for its hinterland. Credit: Yassine Abbadi

COMMENT: Ports create value for port users and thus also for society at large because they enable connections between consumers in the hinterland and producers overseas, and vice versa, writes Peter de Langen.

Even though economic impact studies often focus on employment, connectivity is the true value of a port for the region it serves. The quality of maritime container connectivity is most widely discussed. In addition, the connectivity through ro-ro services also creates value for port users, as does the intermodal hinterland connectivity.

 

While the value of connectivity is increasingly recognised, it is not always incorporated in port policies. One important insight is that the value of connectivity of pure transhipment hubs is low: as there are a very limited number of port users in the hinterland in these transhipment ports, the benefits from the connectivity of the hub are limited.

 

Here, the most sensible port policy is to favour the development of ports that can attract transhipment flows and substantial hinterland flows. In this approach, the high connectivity created through transhipment flows creates value for large groups of port users in the hinterland.

 

In Spain, Valencia is a good example of a port that creates value for users in the hinterland through connectivity that is in part created through transhipment volumes. Tanger-Med in Morocco is another example of using the transhipment potential for value creation for users in the hinterland. In contrast, the hinterlands of Italy’s transhipment ports, Gioia Tauro and Taranto are limited and, consequently, so is the value creation for Italy.

 

In a country like Indonesia, where maritime networks are still under development and transhipment ports still need to emerge, this insight is relevant. The selection of Kuala Tanjung as future transhipment port is sensible as it also serves as a gateway for North and Central Sumatra.

 

In contrast, the port of Bitung, identified as potential transhipment hub in East Indonesia, is not as perfectly located as it is not well located to serve the population center of Sulawesi.

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