COMMENT: The bedrock of any port’s efficient operations is a strong working relationship between a port authority and its private sector tenants, particularly terminal operators, writes Mike Mundy.
Too often, however, the fact that such relationships need to be worked at in order to stay strong and purposeful is a reality that gets shuffled down the list of priorities.
The framework for a port authority-tenant relationship is invariably shaped through a concession agreement or contract of some description. And there have been lessons learnt in this respect over the years – concession agreements, for example, tend nowadays to pay much more attention to how they end as well as how they start, the options for renewal etc.
Equally, there is more recognition of the potential for structural changes such as industry consolidation leading to acquisitions which can potentially mean that a port authority can end up in ‘partnership’ with a different party than it originally entered into an agreement with.
Progressively, concession agreements are being fine-tuned to take account of such aspects and as a result they remove the scope for misunderstandings and thereby strengthen the port authority – terminal operator relationship.
A core job on the part of a port authority is to maintain a level playing field between terminal operators working in the same sector – container handling for example.
Striking such a balance is not always easy, however, particularly when it comes to planning an expansion of capacity. It is this fact though that should stay at the forefront of a port authority’s mind as opposed to other factors such as setting a new benchmark for port rents via a proposed new terminal or other facility.
Promoting effective competition between terminals is fundamental to delivering cost effective and efficient supply chain operations, and thereby complementing general economic objectives and serving the interests of business and the consumer.
The picture can get more complicated when a port authority does not occupy a position of neutrality – for example, has an equity stake in one terminal operation and not another.
Or when it has allowed use of fundamentally different contractual mechanisms to be employed within its port perimeters – for instance concession and freehold.
Such arrangements can be worked around but experience over recent decades confirms that neutrality – or practically speaking operating off a level playing field – is the best path to keeping all stakeholders happy and thereby open to further investment and other positives.
Port authorities today operate in an inherently potentially more complicated world but in essence the main challenge remains to ‘keep it simple’ to the benefit of all stakeholders/port users and in line with the fundamentals of a public service remit.
