Saturday, April 25, 2020
Delineating the dynamic hinterlands of container ports
[free to download in the next 50 days; see footnote]
And this is why.
Thirty years ago, when port hinterlands were captive, thus giving ports a considerable degree of monopoly power, my students could easily calculate the optimum size of a port, based on a country’s trade, population and growth data. Today, with land transport infrastructures expanding at an impressive rate, and with containerization and the footloose nature of the container, hinterlands have become stochastic and thus difficult to define: they may be expanding or contracting, they are shared among ports, and, more importantly, from the captive hinterlands of the past, they now become increasingly contestable hinterlands (i.e. shared by more than one ports). In Europe, for example, the whole continent constitutes, potentially, the hinterland of each major port, from Rotterdam to Piraeus and, as I have calculated years ago, there are 147 different ways to bring a bicycle from Wuhan, China, to Paris, France.
A port’s hinterland is therefore the manifestation of the demand for the port’s services. In an era of ‘demand-driven’ port investments; of ‘assigning roles’ to ports; and of increasing cooperation and coordination among them, so as to avoid unfettered and wasteful expansion, the boundary lines of the hinterlands of container ports -for as long as these exist- serve as reference points for future port development and infrastructure planning. In such a landscape, knowledge of one’s demand is the single most important factor determining the future development of port business, as well as the future of the port itself by and large.
As said above, in this paper we use the membership degree method and the Huff Model to delineate the hinterlands of ports, using China's 20 major foreign trade container ports as an example, albeit in a fully generalizable approach. Among others, this has allowed us to ‘assign roles’ to ports and classify them in four novel categories: international hubs; regional hubs; node ports; and feeder ports.
Our research has important policy implications for central- and local governments, as well as port authorities. This is particularly true for those countries (like China) who aim for better ‘coordination’ of port activities among neighboring ports, seeing unfettered port competition as a waste of scarce resources, and believing, as we do, that ports (as well as infrastructure by and large) are there to facilitate competition among companies, rather than competition among themselves.
And, to finish this little introduction with a merry note, those of us who might complain about ‘concerted business practices’ among ports don’t have to look much further than the ‘business practices’ of the ports’ main clients, i.e. the container shipping companies and their consortia and alliances.
 For a discussion on the various types of hinterlands and their significance for port competition, see: Haralambides (2019) ‘Gigantism in container shipping, ports and global logistics: a time-lapse into the future’. Maritime Economics & Logistics, 21(1), pp. 1-60. (freely downloadable at: https://doi.org/10.1057/s41278-018-00116-0).
 This is a simplified introduction for the general reader. The technical paper can be downloaded freely (for the next 50 days) from: https://www.sciencedirect.com/science/article/pii/S0966692319308518?dgcid=coauthors.