Ports and Economic Location Factors

Ports and Economic Location Factors

According to conventional location theory, manufacturing activities are influenced in their locational choices by three main categories of factors having different considerations (pull effect) for ports:

  • The first is the material inputs of manufacturing, such as energy, raw materials, and land. Since many of these factors involve ponderous resources such as coal, iron ore, grain, and petroleum, they are associated with industrial ports where activities are directly adjacent to port terminals.
  • The second concerns the non-material manufacturing inputs, such as labor and regulations, which are associated with manufacturing cluster ports.
  • The third involves the outputs of manufacturing, such as its markets and customers, which are associated with gateway or transshipment ports. This is the factor that depends the most on the shipping network effect and accessibility to markets.

With several aspects of manufacturing becoming less dependent on basic input costs, the value of manufacturing is more related to how a location can provide access to a wide pool of suppliers and customers. Areas having access to global and regional distribution systems thus convey an important advantage. Manufacturing has become more dependent on logistical capabilities and the flexibility they confer.

Since logistics is a highly transport-intensive activity, areas near port terminal facilities offer an attractive proposition. Through its connectivity to global markets, raw materials, and parts, the port can maximize opportunities for manufacturing and appears to be the most stable location in a context where input cost and sourcing strategies could fluctuate. The higher the connectivity a port can offer, the better its value in the emerging manufacturing landscape.