Port Centric Logistics: From Dissociation to Reinsertion

Port Centric Logistics From Dissociation to Reinsertion

Historically, ports and adjacent areas had a pronounced maritime support function with a clearly defined port district composed of docks, piers, warehouses, and other related activities. These are usually referred to as first-tier logistics because they directly support the port’s cargo transfer. Low mechanization levels implied the use of a large workforce manually handling breakbulk cargo, loading or unloading ships, and moving to adjacent transit sheds. This was a time-consuming process, with ships spending a significant amount of time at ports, in many cases, two-thirds of their operational time. The second tier of port-centric logistics was directly adjacent to port districts, which included warehouses, distribution centers, manufacturing, and commercial and financial districts. Inefficiencies in port operations and throughput were a strong driver of containerization, and its diffusion indirectly led to a dissociation between ports and their logistical activities.

Because of the technical requirements of containerization, new port terminal facilities were built at locations better suited to container operations, particularly those with a larger terminal footprint. This, by itself, led to a physical dissociation of the terminal from local logistical activities, which was exacerbated by the substantial decline in the port workforce due to mechanization. Many old port sites were abandoned and converted to other uses (commercial and residential), further contributing to the dissociation. Port districts were declining in size and importance. Lower inland transport costs and low congestion levels allowed commercial and manufacturing activities related to ports to be less constrained in their locational choice. Container ports were serving a wider hinterland, which coincided with trade liberalization and the offshoring of manufacturing activities to lower-cost locations. While port-centric logistics were being dissociated in older port areas, new forms of port-centric logistics were being created in others. For bulk port activities such as metals and petrochemicals, the level of integration did not change much because of the high weight-to-value transport cost ratio for the involved commodities. What changed was mostly the larger scale of these activities, which, for some, has prompted relocation to more suitable sites.

As containerization is reaching a phase of maturity in terms of spatial diffusion and lower growth rates, a reinsertion of port-centric logistics is occurring around many container ports. Enduring trade imbalances reflected in container flows require the management and repositioning of empty containers, along with related logistics activities. For instance, at gateways with a strong import function, transloading the contents of containers into domestic load units is a notable port-centric logistics activity. At export-oriented gateways, warehousing and container stuffing operations are more prevalent. Global supply chains are becoming increasingly complex, which, for some sectors, is prompting the relocation to port-centric logistics zones to maximize connectivity to suppliers and customers that could be shifting due to market, technological, or regulatory changes. The impact of congestion is also non-negligible, as additional costs, uncertainty, and delays could render port-centric sites more suitable than lower-cost inland sites. There is also a scale effect as large containerized volumes handled at major ports increase the commercial appeal of their port-centric logistics sites.