Port Development in Europe Challenges and Prospects

Patrick Verhoeven Norfolk VA – 17 February 2012

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Summary

1. Introduction to the European port system

2. Operational dimension

3. Spatial dimension

4. Societal dimension

5. Governance implications

6. EU policy context

7. Conclusions

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1. Introduction to the European port system

3

7

8

0

500000

1000000

1500000

2000000

2500000

2008 2009 2010 2011

Total

Liquid bulk

Solid bulk

Containers

Breakbulk

Evolution traffic selected EU ports in 1000 metric tonnes: 2008 – 2011

Source: ESPO / Rapid Exchange System

2. Operational dimension

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Photo: Autoridad Portuaria de la Bahía de Algeciras

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Photo: ECT

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Photo: Antwerp Port Authority

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Photo: Port of Rotterdam

Dimension Sub-dimension Key features

Operational Ship-shore

operations

Core port services: cargo-handling,

technical-nautical and ancillary

services.

Strong focus on containers

Value-added logistics Shift from core to non-core port

activities (various paths possible).

Industrial activities Shift from traditional to sustainable

industries (e.g. LNG, biofuel)

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3. Spatial dimension

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16

Source: Theo Notteboom / ITMMA (2007)

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Photo: Maersk

Source: Port of Rotterdam

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Photo: Andreas Gress

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Source: North Adriatic Ports Association

Dimension Sub-dimension Key features

Spatial Terminalisation Multinational operators develop

networks of terminals under

corporate logic.

Competitive emphasis shifts to

terminal level, extending into the

supply chain.

Port-city separation Loosening of spatial relationship

combined with weakening of

economic and societal ties (but first

signs of re-integration appear).

Regionalisation Network development beyond the

port perimeter, involves co-operation

with inland ports, dry ports and

(neighbouring) seaports.

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4. Societal dimension

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Photo: Hamburg Port Authority

Photo: Patrick Verhoeven

Photo: Port of Helsinki

Photo: Patrick Verhoeven

Dimension Sub-dimension Key features

Societal Ecosystems Seaport is part of a wider (coastal)

ecosystem where it has a variety of

environmental interactions with the

outside.

Human factor Sustainable co-habitation with local

communities, focus on avoiding

negative (pollution, congestion, etc.)

and stimulating positive externalities

(soft values).

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Conclusions so far

• Ports are elements in value-driven logistics chain • Port competitiveness depends largely on factors

external to the port • Bargaining power of market players shifted due to

horizontal and vertical integration • Post-modern society does no longer value the

significance of ports • Result: ports function in a highly uncertain and

complex environment

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5. Governance implications

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• Multiple pressure on port authorities:

– Pressure of market players

– Pressure of government

– Pressure of societal stakeholders

• Existential options (Heaver et al. 2000):

– Be full-fledged partners in the logistics chain

– Play a supporting role

– Disappear

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A renaissance of port authorities?

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Sandro Botticelli – Nascita di Venere (Galleria degli Uffizi, Firenze)

Conservator Facilitator Entrepreneur

Landlord Passive real estate “manager”

Active real estate “broker”

Mediator in B2B relations

Strategic partnerships beyond port perimeter

Active real estate “developer”

Direct commercial B2B negotiations

Direct investments beyond port perimeter

Regulator Passive application and enforcement

Rules set by others

Financial revenue on “tariff” basis

Active application and enforcement

Other + own rules

Provide assistance in compliance

Tariffs + differential charging options to promote sustainability

Idem facilitator

Idem facilitator + commercialising expertise and tools outside port

Financial revenue on commercial basis

Operator Mechanistic concession policy

Dynamic concession policy

“Leader in dissatisfaction”

Provide public services / specialised services

Dynamic concession policy

Shareholder in private service providers

Provide commercial and public services

Community manager

Not actively developed Solve economic bottlenecks

Provide public goods

Solve conflicting interests

Promote positive externalities

Idem facilitator but more direct commercial involvement

Local Local + Regional Local + Regional + Global

Hypothetical typology

Source: Patrick Verhoeven (2010)

Facts: functional profile

• Cargo handling services are mostly privatised / liberalised

• The landlord function has become the primary function

• Increased attention for negative externalities of port

operations has reinforced the regulator function

• The ‘community manager’ function is well-established

• So far few port authorities expand their activities beyond their

own port perimeter, but this is evolving

• Conclusion: most European port authorities converge towards

the ‘facilitator’ type

• Most port authorities in Europe are publicly owned

– North Europe: mainly cities

– South Europe: mainly central government

– Multipurpose private ports only exist in the UK

• Most European port authorities have their own legal personality

• There is a growing trend of corporatisation

• But political influence remains present almost everywhere

Facts: legal and statutory framework

Facts: financial capabilities

• European port authorities bear considerable financial

responsibilities for capital assets that constitute a port

• Maritime and land access in several EU countries

funded by the public purse

• Port dues form the main source of income of port

authorities, followed by land lease and services

• Port dues are generally of public nature (taxes or

retributions)

• Financial autonomy of port authorities varies a lot and

is generally more restricted in southern Europe

6. EU policy context

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Common EU ports policy

• A long and difficult process given diversity of sector

• Two attempts to open up market access for port services failed in 2003 and 2006 (so-called ‘port packages’)

• New start in 2007: Ports Policy Communication

• Revival policy in 2011: – Infrastructure: ports integrated in Trans-European Transport

Networks (TEN-T)

– Administrative simplification

– Financing (use of public funding – State aid)

– Concessions (application of internal market rules – transparency)

– Port services (dock labour, technical-nautical services)

• 2012 consultation period – 2013 new proposals (?)

7. Conclusions

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• European port system dynamic and generally competitive

• Challenges EU ports not fundamentally different from those of US ports

• Operational, spatial and societal changes put strong pressure on role port authorities

• Many port authorities have ‘renaissance’ ambitions, converging to ‘facilitator’ role

• Governance factors play major enabling / inhibiting role

• Governance diversity mainly determined regionally

• Common EU ports policy has the potential of creating a more level playing field

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Thank you for your attention

Patrick Verhoeven – Secretary General European Sea Ports Organisation (ESPO)

Treurenberg 6 – B-1000 Brussel / Bruxelles Tel + 32 2 736 34 63 – Fax + 32 2 736 63 25

Email: patrick.verhoeven@espo.be – www.espo.be