2007 TP Pallis & Syriopoulos

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    This is a PDF file of an unedited manuscript that, in a modified form, has been accepted for

    publication or has already been published. For the convenience of the visitors of this site, an

    early version of the manuscript is provided. All legal disclaimers that apply to the journal pertain.

    Please site this article as: Pallis, A.A. and Syriopoulos, T. (2007). Port Governance

    Models: Financial Evaluation of Greek Port Restructuring. Transport Policy, 14(2), 232-

    246.

    This article was uploaded to www.porteconomics.eu

    On: 14/09/2009

    PortGovernanceModels:FinancialEvaluationofGreekPortRestructuring

    Author(s): : Pallis,A.A.andSyriopoulos,T.

    Amodifiedversionofthispaperhadbeenpublishedin:

    TransportPolicy,vol.14,no.2,232246.

    Porteconomics.eu is a non-profit, web-based initiative aiming to advance knowledge exchange on

    seaport studies. Developed by researchers affiliated to various academic institutions throughout

    Europe, it provides freely accessible research, education and network-building material on critical

    issues of port economics, management and policies.

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    Port Governance Models:Financial Evaluation of Greek Port Restructuring

    Athanasios A. Pallis and Theodore SyriopoulosDepartmentofShipping,TradeandTransport,UniversityoftheAegean,Greece

    Finalversion(January2007)

    SubmittedforpublicationinTransportPolicy

    The

    journal

    is

    available

    online

    at:

    www.elsevier.com/locate/tranpol

    Abstract

    In the late 1990s, Greece proceeded to a major port governance reform, aiming to

    overcome observed deficiencies of its national port system. Twelve major ports of national

    interest were transformed from public law undertakings to government-owned port

    corporations. Responsibility of port governance was devolved to autonomous

    commercially driven port authorities. At a latter stage, two ports (Piraeus and Thessaloniki)

    were listed on the Athens Stock Exchange. Grounding on the discussions regarding port

    performance indicators, this paper examines the financial performance of this new port

    governance model. It does so through an empirical evaluation of the twelve port entitiesfinancial performance over a time span that corresponds to the sectors reorganization.

    The analysis suggests that certain rigidities are still present and further steps of

    modernisation and restructuring are essential. Despite profitable financial results, in the

    case of most Greek ports of national interest the examination of the financial accounts

    raises considerable doubts as to the efficiency of their organisational structures, currently

    in a transitional phase. These results are in line with suggestions that port governance in

    Greece does not respond, yet, to any of the potential matching framework configurations

    of structures and strategies that advance port competitiveness thus have been identified in

    the port literature.

    Keywords:Port Governance; Port performance; Financial Performance Evaluation; Financial Ratio

    Analysis.

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    1. INTRODUCTION

    Since the late 1990s Greek ports have been in a state of transition. Breaking a long-

    standing tradition of state-controlled comprehensive port organisations, twelve ports of

    national interest were converted from public law undertakings to government-ownedport corporations. The responsibility of governing these ports was devolved from the

    national government to commercially driven autonomous port authorities. The latter

    assumed responsibility for port services provision as well. The two major ports of Piraeus

    and Thessaloniki are currently listed on the Athens Stock Exchange, with the States stake

    being in the order of 75%.

    The introduction of a new governance model aims to overcome deficiencies of the earlier

    port structures and facilitate adjustment to a complex economic context. Apart from well-

    known physical factors such as the location, maritime accessibility and hinterlandinfrastructure, the governance of ports stands as an important determinant of port

    performance (De Langen, 2004).

    This paper examines the financial performance of the new governance model, and

    concludes on the financial implications of the applied national port system restructuring.

    In particular, it proceeds to an empirical evaluation of the recently established port entities

    financial performance over a recent time span that corresponds to the sectors

    reorganisation. The overall aim is to identify performance (d)efficiencies and generate

    knowledge on whether the endorsed port policy reforms support an improvement to keyfinancial indicators. This evaluation also offers the opportunity to examining key

    characteristics in the sector and assessing vital issues for prospective growth and

    development. Such a financial appraisal is surprisingly lacking from the empirical financial

    literature, and not least in port studies.

    Section 2 presents the scope and the content of the reform that has taken place in Greece,

    illustrating that boosting performance through adaptation to complex economic

    conditions has been a major driving force towards port devolution. In Section 3, the paper

    establishes the importance of examining financial performance. Thus, it develops andevaluates key financial indicators in order to assess individual port performance over time

    and within the context of a dynamic sectoral environment. The financial appraisal of the

    Greek ports performance is based on a data-set provided by port authorities and refers to

    their annual reports and financial accounts. The key objective is to gain a meaningful

    insight into the financial impact of the particular institutional and managerial shifts

    experienced over recent years.

    Presenting the conclusions of the empirical findings, Section 4 suggests that these findings

    are in line with both data envelopment analysis (Barros and Athanassiou, 2004) andgovernance studies (Pallis, 2007a) of the post-reform structures of Greek ports. These

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    studies are based on the relevant literature of port governance (cf. Brooks, 2004) and

    advocate that the specifics of port governance in Greece do not respond to a matching

    framework configuration that advances port performance. Given that the governance

    structure of ports globally has changed dramatically over the last two decades, this

    discussion contributes to a much needed association of the financial performance of

    particular autonomous port entities with the broader port governance and performance

    literature - i.e. matching framework approach (Baltazar and Brooks, 2001; Brooks and

    Cullinane 2007a); and, implications of legislation (i.e. Everett, 2003; Everett and Pettit,

    2006).

    2. THENEWGOVERNANCEOFGREEKPORTS

    2.1

    Background

    Conditions

    and

    the

    Scope

    for

    Reform

    Following a Mediterranean tradition, in the pre-reform period Greek ports had been

    organised as state-controlled public law undertakings and ruled according to the general

    regulatory regime of public entities in Greece. The prevailing concept of ports as public

    welfare services justified a governance and operational model wherein national level

    authorities act both as regulators and as managers responsible for the provision of

    services. Brooks and Cullinane (2007b: 415) develop a typology of five governance

    combinations that provide an accurate reflection of the port governance models imposed.

    The Greek pre-devolution model corresponded to the first one of those models: a

    combination of central government-owned ports with central government management

    and control specific ownership and management practices.1Governmental activities were

    not just core management activities but included operations, planning, financing and so

    on. The state appointed and controlled public port authority that owns and maintains the

    infrastructure and superstructure and provides all port services. The private sector is

    involved in the provision of these services solely in the cases when port authorities lack

    the capacity or the equipment (i.e. handling cranes, towing) to provide them, while some

    services provision (i.e. pilotage) were directly controlled by the Ministry of MercantileMarine (MMM).

    Despite observed deficiencies in these port structures, there had been no interest in

    alternative service delivery models before the early 1990s. Ports were overlooked, due to

    the small size of the country in the global marketplace. The principal state agent (the

    1 The other four ownership and management combinations are: (a) Government owned butmanagement and control are decentralized to a local government body; (b) Government owned(federal, regional or municipal) but managed and controlled by a corporatized entity; (c)

    government owned but managed by a private sector entity via a concession or lease arrangement,or owned and managed via a public-private partnership agreement; and (d) privately owned,managed and controlled (Brooks and Cullinane 2007b: 415).

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    MMM) continued to focus on flag-state policies for supporting the Greek owned fleet,

    rather than on policies for provid

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