World Port Productivity and competition (Part 1/6)

World Port Productivity and competition

By Ernesto Garcia-Marin

EGMConsult.com

This essay analyze  roles of ownership, corporate structure, and inter-port competition. Conducts   comprehensive   analyses   on   global   seaport institutions and port infrastructure productivity. It also examines the determinants of port output and the roles port institutions play in driving port infrastructure productivity.

Specifically, the essay analyzes the roles of macro-, meso-, and micro-levels of institutional features of ports (inter-port competition, corporate structure, and port asset ownership practice). They are evaluated to understand why ports  have  become productive over the last decade and how those factors yield better opportunities for ports to prosper. While influences from external environments are still one of the important factors in shaping port efficiency, the roles of institutions play an increasingly important role, especially in the management of ports over the medium-long term. Furthermore, port efficiency has been shaped not only by macro-level market institutions (i.e. inter-port competition) but also by the capacity of port authorities to implement innovative institutional practices for port ownership and capital asset management.

While port managing institutions maintain a close relationship with their own historical trajectories, global container ports in the contemporary era search for a strategic flexibility with institutional bindings to respond to external challenges and to overcome their limitations. This strategic flexibility can be partly achieved by “vertical unbundling” of container terminal operation functions from the government’s hand and by private sector participation for investment in port assets, i.e. concessions or leases -institutional bindings based on neoclassical contracts.

From the view of regulators and policy makers, they should focus their policy making on environmental, safety, and customs regulations. They also need to create a competitive market to reduce oligopoly in the port sector by adopting diverse policy mechanisms. Given the competitive market structure, the business aspects of port operation can be better secured through diverse institutional mechanisms of private sector participation.

From the view of planners in port authorities facing global competition, the capacity of strategic planning to increase strategic flexibility of ports based on medium-or long-term scenarios is essential to achieve this institutional flexibility, thereby contributing to a higher productivity level of leading ports. This is a critical time for port authorities, managers, and policy makers to understand that they have a choice in what roles to play with what kinds of policy tools under the global pressure and rapidly transforming environments.