Vertical integration between container lines and port operators.
Chew, Hui Ling.
Tang, Wai Hei.
Date of Issue2008
School of Civil and Environmental Engineering
Containerisation and port privatisation have fundamentally changed the market environment that container lines and port operators operate in. Container lines sought to secure dedicated container terminals (DCTs) in ports with the aim to support their quest of becoming logistic integrators. As such it leads to vertical integration between container lines and port operators. The objectives of this research paper are to investigate container lines’ vertical integration with port operators with respect to investment and management patterns, discuss the implications of vertical integration on players such as port authorities/operators, terminal operators, agents and shippers and hence suggest some useful recommendations to these affected players. Based on the eleven terminal portfolios of the selected container lines produced, it is observed that Far East, North America and Europe are the three regions with the most number of DCTs and regional differences in terms of investing in and managing DCTs exist among the three regions. It is found out that leasing is commonly adopted in North America, Taiwan and Japan whereas in China and Europe, joint ventures are the norm. For management of DCTs, it is more determined based on the investment choice and company strategy. Furthermore, it is also observed that a trend of vertical dis-integration has started to emerge and case studies on APL Terminals and APM Terminals are used to illustrate this phenomenon. These companies have gone through the phase of vertical integration, and then later chose to dis-integrate mainly for the purpose of earning attractive revenue and to better reflect the value of their terminals as assets and not as expenses. Finally, the implications of vertical integration on various players in container shipping are discussed, followed by recommendations and future trends. It is noted that a closer relationship might be fostered between container lines and port authorities/operators and shippers will also be guaranteed with more reliable services. As container trade continues to soar, more investment in terminal expansion projects are undertaken and the patterns may be affected by future developments in countries such as China, Africa and Europe.
DRNTU::Engineering::Maritime studies::Maritime management and business
Final Year Project (FYP)