Authors: Dr. Jean-Paul Rodrigue, Dr. Theo Notteboom, and Dr. Athanasios Pallis

The demand for port traffic is derived from world trade which has experienced a wide range of economic, technological, and geopolitical developments. Shifts in global production and international trade are affecting port activity levels and operations.

1. Demand for Ports and their Services

Seaports serve to realize local or international maritime trade through well-organized transport systems. Two dimensions, the dynamics, the size and the structure of the trade, and the trends in the shipping industry, catalyze the organization and structures of ports.

In principle, the demand for port services is a derived demand. The demand for using any given port, or a particular port service offered at it, is derived from either the demand for transporting goods by sea for consumption (or processing) to a point other than the point of production or from the willingness of the passengers to travel via a particular port to another destination., to, generates the demand for the port services.

The desire to move goods and people using maritime transport and, by extension, the demand to use a port is linked to the unequal distribution of natural resources, the scarcity or abundance of production factors, and the consequent different rates of development in different economies, the morphology of a place (e.g., soil structure, subsoil), the prevailing consumption patterns, the development of social and cultural relations, as well as the geopolitical and military role of maritime transport:

• The economic cycles of the global economy and the changes in prices in different markets affect the demand for maritime transport, with the extent of this influence related to the elasticity of maritime trade compared to changes in industrial production. 
• The distribution of an economy’s resources, such as the scarcity or abundance of available factors of production and raw materials, the extent to which an economy is dynamic, growing, developing, developed, or declining, and the characteristics of the dynamic sectors of an economy (for example, the size and needs of industrial production, the changes in imports and exports) contribute to the size of international trade. 
• The geography of a region, the structure of the hinterland, and the subsoil facilitate or restrict the development of transport infrastructure and the use of specific means of transport.
• The consumption patterns of an economy and the development of social and cultural relations between social groups intensify communication and trade.
• The relationship between work and leisure is particularly important for the demand for passenger port services, as it determines the extent of demand for port services for coastal shipping, cruise, and tourist ports.
• Geopolitical relationships shape trade relations between countries along with maritime and land transport corridor structures.
• Serving military transport is also crucial to developing some ports.

The demand for the maritime transportation of any good, and therefore the demand for cargo-related port services, is significantly influenced by:

• The changes in the GDP of the economy.
• The price elasticity of the demand for the specific type of goods transported.
• The ratio of transport costs to the value of the transported goods.
• The presence of alternative means of transportation. 

In the case of passenger ports, the parameters for shaping passenger service demand include:

• The necessity of the passenger to travel and/or the reasoning for the journey
• The ratio of the transportation costs to the value of the journey for the passenger
• The presence of alternative means of transportation. 
• The ability of passengers to choose another destination for their journey.

At the same time, a modern port might act as a demand generator for its services. Adequate infrastructure, cost advantages, an efficient organization of the resources (factors of production used), an effective supply of services, and embeddedness in supply chains help create and maintain a competitive advantage capable of attracting and increasing the volume of freight and passenger traffic a port serves.     

The demand to move goods using a particular port is often linked to: 

• The range and quality of port and related services offered.
• The specialization of the port services provided – with modern production-distribution-consumption networks often requiring specialized services to serve ships or cargoes.
• The interconnection of the port services offered with broader landside transport networks and supply chain services

Demand creation is noticeable in the case of ports hosting international cargo traffic and even more when handling containerized cargo. These are ports that, in addition to cargo destined for or originating in the local economy, handle (a) a significant amount of cargo that is not destined for the host economy and (b) significant quantities of unfinished and/or intermediate goods that require value-added services (such as storage, transshipment, assembly/reassembly, etc.) which can be provided even at a distance from the port. A port can create demand for the services offered by expanding inland transport systems and developing transshipment services to other destinations, thus succeeding in serving cargo that is not destined for the economic area in which the port is located or the directly connected neighboring areas. An illustrative example is the port of Piraeus in Greece, particularly its container terminals. These terminals accommodate cargoes destined for Budapest in Hungary. When the cargo arrives at the port of Piraeus, it will be loaded onto a commercial train. The distance between Piraeus and Budapest is 1.476 km. The distances from alternative ports to the same destination, which could be used by the owner of the cargo, the shipping company, or the forwarder, are considerably shorter. Rotterdam (distance from Budapest 1.409 km), Hamburg (1.100 km), Trieste (550 km), and Rijeka (505 km.) are just some examples of container ports with international traffic.  Apparently, in addition to the ‘geographical’ criterion, i.e., the proximity of the port to the destination of the cargo, at least for some users, are additional criteria for choosing the use of a port, such as value-added services.

A. Factors defining the demand for port services

The organization of ports and the volume and type of cargo that each port handles are shaped by a set of factors that are either ‘internal’ or ‘external’ to the development of maritime transport systems. 

The dominant influence is exerted by internal factors. At the core of the internal environment of a cargo port is the transported cargo; the port’s operation, sustainability, and growth prospects are defined and depend on it. Four other internal factors are decisive in shaping the structures and growth rates of ports (Figure 4.1). 

1. Trade: trade volume changes affect the cargo volume and type that ports have to handle.
2. Structures of the production-transport-consumption process: These structures determine the transport volumes. A first dimension is the location of production, For example, China’s economic and industrial development in recent decades has catalyzed the development of ports – especially those serving containerised trade –  and changed the philosophy regarding the servicing of international trade.  A second one is the quantity of production in a given economy. This quantity contributes to the development of existing ports or the creation of new port facilities near the production areas, as there is a need to service the exports of the products produced and possibly import raw materials. A third dimension is the increased use of alternative sources of raw materials that affect the volume of trade that ports serve while at the same time causing changes, such as the need for handling (intermediate) products that serve modern production rules and the promotion of the goods produced for final consumption. The extensive use of containers leads ports to invest in container terminals and related services and change their organization to provide the appropriate infrastructure and superstructure to serve this mode of transport.
3. Logistics services: the expanding use of supply chains and the integration of ports into such chains enables the development of value-added services and/or the attraction of companies to offer value-added services, helping to create a competitive advantage and expand the trade a port serves. 
4. The structures and growth rates of maritime shipping and the broader transport systems. The size, technologies, and requirements of ships, the services offered, the procedures employed by shipping companies, the maritime corridors they choose to carry out maritime trade, and the range of services they wish to offer, are all parameters shaping the criteria to which ports respond. The corresponding characteristics of land-based transport linked to ports are also important.

Three external factors co-shape the context in which ports operate and develop: 

1. The prevailing culture as regards the organization of the economy (i.e., the perspective of the role of public and private sectors, economic (de)regulation, etc.), which is shaped at national, and/or local, and/or international levels – with the latter influence being increasingly present.
2. Technology, the applications of which are changing the characteristics and operation of ships and transportation vessels of all kinds, as well as the provision of services for transporting goods and people.
3. Port policy is shaped in a local, national, regional (e.g., European), or international (e.g., the International Maritime Organisation) context. Issues of planning and development (e.g., land area, activities, and use of available land), port ownership (e.g., public, private, mixed-use), governance (e.g., the role of the port operator, managers), but also port operational issues (operating regulations, waste management, mitigation of external impacts), are subjects of decisions by different policy-makers that determine the development of port systems and the prospects of individual ports. 

B. Seasonal Demand

To a greater or lesser extent, all maritime markets are characterized by seasonality, with the result being the seasonality of the demand for port services. Dry bulk products (i.e., cereals collected in early autumn) or liquid bulk (i.e., petroleum transported to the northern hemisphere before winter) are two examples. In the container sector, demand for seagoing transportation is also higher in the autumn months, as large quantities of goods (including foodstuffs and apparel) are transported from Far East countries to Europe and North America for consumption. Conversely, in the first weeks of February, particularly in the period before and after the Chinese turn of the year, production and the transfer of goods to other constraints are reduced. 

Demand for passenger services is even more seasonal. Coastal shipping shows a wide variation in the number of calls, vessels, and passengers, with demand being limited in winter. In the case of cruise shipping, seasonality is one of the main characteristics of a market dictated by the weather conditions in the various destination cities. In the Mediterranean, for example, more than 85% of cruise calls take place in the period April-October, while in the period November-March, cruises are extremely limited.

C. Demand Function for Port Services

Taking into account the discussion, the required quantity of a particular port service (i.e., cargo (un)loading) at port level is determined based on the demand function:

DA = f (PA, Ps1...Psn, Pc1...Pcn, N, Y, T, QA, Qcn)

Where: 

• DA = Demand for port service A
• PA = Price of port service A 
• Ps1…Psn = Price of the substitute services for service A
• Pc1…Pcn = Price of the complementary services for service A
• N = Population (of the market under consideration)
• QA = Quality of service A
• Qcn = Quality of complementary services for service A

The optimal balance between the supply and the demand for port services is determined by what in economics is called the Pareto criterion (or Pareto optimum): this is the reaching of the point at which the price or quantity of the service that improves the position of one stakeholder without worsening the position of another. This equals the optimal social welfare, taking into account the following characteristics of the port services offered:

• Prices of port services
• Economic development and trade trends
• Congestion from the use of port and transport services
• Perceptions of the organization of economic activities (i.e., provision of public services
• Social impacts of port operations
• Efficiency (productivity) of the port and related services
• Effectiveness (user satisfaction) of the port and related services
• Other factors

The port product consists of a set of services offered to port users either in complementarity with other services or by substituting previously used services.  

Two services are substitute services for each other when an increase (decrease) in the consumption/use of one service causes a decrease (increase) in the consumption/use of the other service: 

D_A’ < D_A => D_B’> D_B

Examples of substitute services are two neighboring ports or two terminals operating in one port, serving the same port markets. As a result of the increased specialization, and thus variation, in the port services offered to different sets of users, or even individual users, the potential of the substitution needs further qualification (i.e., it is necessary to consider cross-elasticity). The services of a port terminal that almost exclusively serves container transshipment can hardly be substituted by a port with different infrastructure, superstructures, and procedures, which offers a balance of inbound cargo for the local or regional hinterland.

Two services are considered complementary services when an increase (decrease) in the consumption/use of one service causes an increase (decrease) in the use of the other service:

D_A’ < D_A => D_B’> D_B

An example of complementary port services is the nautical-technical services of towing, navigation, and pilotage offered to a ship approaching a port.

2. Maritime Shipping as a Driver of Globalization

Global economic integration is a key factor behind the rising significance of international trade. Historically, trade was prevalent but set up under constraining conditions in terms of the technical means to support it. Trading over long distances remained slow and expensive, limiting its scale and scope. By the early 20th century, transport technologies such as the steamship became ubiquitous and efficient enough to support the emergence of a complex international trade system. Particularly, the steamship enabled economies of scale that could not have been achieved beforehand. However, it was not until the mid-20th century that the global regulatory regime became open enough to allow an expanded form of globalization.

Global trade is impossible without transportation, making efficient transport a key trade facilitator. By definition, almost all the cargo carried by maritime shipping is considered to be international trade, but active internal trade is present in countries with long coastlines (e.g., the United States, Brazil, and China) or that are archipelagic (Japan, Indonesia, the Philippines). Transport costs (both freight costs and time costs) constitute a key component of total trade costs. These trade costs also include other costs incurred in getting goods to final users other than the marginal cost of producing the good itself, such as policy barriers, information costs, and legal and regulatory costs. Lower trade costs contribute to trade growth as it has been underlined that for developing economies, a 10% reduction in transportation costs was associated with a 20% growth in international trade. Distance has become a factor that plays a lesser role in the intensity of maritime trade relations, making the capacity and direct connectivity of maritime shipping networks more relevant. International trade influences the structure of maritime shipping networks, which are organized according to a hierarchy where the most important shipping routes are related to the most important trade relations.

Since the end of World War II, ongoing trade liberalism has led to the gradual removal of political, regulatory, and cultural obstacles to trade. Integration processes took place both at the regional and the global level. The collapse of the Soviet Union and the opening up of China in the 1990s represented landmark events that incited the entry of close to 2 billion consumers as well as related labor and natural resources into the global economy. Regional trading blocs have been formed with differing trade liberalization levels, such as NAFTA (which became USMCA) in North America, the EU Single Market in Europe, ASEAN in Southeast Asia, Mercosur in South America, and Ecowas in West Africa. An important share of international trade occurs within economic blocs, especially the European Union and USMCA, which rely more on land transport modes such as road and rail. The European Union and USMCA are considered the world’s most integrated trade agreements, with 61.4% and 51.2% of their respective trade concerning member nations. For ASEAN, 75.5% of its trade concerns nations outside the agreement, implying a greater relative share of maritime shipping.

The globalization of production is a driver for the globalization of trade as they are interrelated. The scale, volume, and efficiency of international trade have continued to improve. Global trade liberalization is supported by the continuing evolution of the World Trade Organisation (WTO) and initiatives by organizations such as UNCTAD or the World Bank. After World War II, a number of international corporations sought the support of intergovernmental organizations such as the United Nations for regulatory frameworks that enabled the pursuit of international operations. Multinational corporations assumed growing importance as investors and traders in such an environment. Inter-governmental organizations still play an essential role in shaping the rules of the game in international competition and global trade.

3. Ongoing Growth of International Trade

World trade has experienced a significant increase since the 1950s and represents a growing share of global economic output. In 2007, international trade surpassed 50% of the global GDP for the first time, a share that was conventionally in the 20% to 25% range in the first half of the 20th century. In the 19th century, this share was around 10%. Several factors explained this growth:

• Income growth linked with additional consumption of goods and services, some of which are traded.
• Falling transport costs allow for more options and opportunities to trade.
• Trade liberalization and the associated tariff rate reductions, easing trade transactions.
• Economic convergence of countries around trade agreements and common commercial policies.
• Increase of intermediate goods trade in the context of global production chains, outsourcing, and offshoring.

Between 1958 and 1988, income growth explained 67% of the real growth of world trade, while tariff reductions accounted for about 26% and transport-cost reductions roughly 8%. However, developed and developing economies might face different economic characteristics, which play different roles in the growth of international trade. Low-income economies tend to have a high reliance on the trade of resources and low added value goods, intermediate income economies are oriented around manufacturing, and high-income economies tend to be net importers of products and services.

The ongoing growth of international trade also impacted firms, many of which expanded to become multinational corporations. The benefits that multinational corporations derive from trade are varied:

• Competition. Seeking new resources, markets, and processes in international markets increases the competitiveness of corporations.
• Economies of scale. International markets allow firms to produce larger quantities of goods, which enables lower unit costs.
• Innovation. International markets incite the development of new products or the adaptation of existing products to different market characteristics.

As international trade depends on the provision of distribution and transactional services, the demand for these services has increased substantially, leading to the growth of carriers, cargo owners, terminal operators, third-party logistics service providers (3PL), freight forwarders, and insurers. International transportation and transaction service providers represent a complex ecosystem aiming to support international trade and extract added value. Transportation services providers, like manufacturing firms, have become large multinational corporations due to the extensive markets they cover.

The nature of what is being traded and the main traders involved influence the modes of transportation used for international transportation. Maritime transportation dominates, handling about 80% of the volume and 70% of the value of international trade.

4. The Shift in Global Trade Patterns

In recent decades, important changes have been seen in international trade flows. A growing share of international trade occurs within regions (and particularly economic blocs) even if long-distance trade has increased in absolute numbers. Trade predominantly takes place within Europe, North America, and East Asia, commonly called the triad. Still, a shift in trade relations between the northern and southern hemispheres, particularly between developed and developing economies, has occurred. The structure of global trade has become much more complex in its relations and diversified in what is being traded. The pattern of trade relations is mainly explained by the following factors:

• Geographical proximity. The intensity of trade relations is commonly a function of proximity unless notable advantages can be found further away. The European Union has significant trading linkages with adjacent areas in Eastern Europe, North Africa, and the Middle East. North America also maintains important trade linkages with Latin America, notably Mexico, as part of the USMCA (United States-Mexico-Canada Agreement). Shorter distances have an important impact on the modes used for trade, with maritime shipping less suitable outside short sea shipping. Still, a key advantage of maritime shipping is that it substantially attenuates the negative effects of long distances on trade as the development of containerized shipping underlines.
• Resources availability. The scarcity and availability of resources have shaped maritime networks for close to two centuries and remain the main component, ton-wise, of maritime shipping. Energy, mineral, and agricultural trades have distinct shipping networks and specialized port facilities designed to handle bulk cargoes such as petroleum, natural gas, coal, grains, alumina, and iron ore.
• History and culture. Long and enduring trade relations have emerged (some declined and disappeared) due to historical factors. The trade networks established during the colonial era have endured in relations such as those between Europe and Africa or between the United States and Latin America. China has commercial historical ties with Central Asia and Southeast Asia, which have been recreated and expanded in recent decades. Irrespective of the political context, trade networks tend to endure because of the reciprocal systems of supply and demand on which they depend.
• Geopolitics. Trade between nations and regions can be promoted or inhibited because of political factors impacting exchange rates, tariffs, quotas, and embargoes. Trade has been the source of conflicts and a tool to put pressure on antagonistic regimes. The most fundamental aspect remains the ability of nations to use international shipping lanes and strategic passages to access global markets.

Another characteristic of the contemporary commercial setting concerns imbalances in trade flows. For instance, China exports more than it imports with partners such as the United States and the European Union. Trade imbalances directly reflect imbalances in shipping flows. For bulk trade, such as energy and minerals, it is common for a return trip to be empty. For containerized trade, the load factors of return trips are lower, and the share of empty containers is higher. The imbalanced trade structure is also reflected in the composition of container imports and exports, which differ substantially. Further, trade imbalances imply the repositioning of empty containers, accounting for about 20% of global container moves.

Geographical and economic shifts in international trade are directly observable in the evolution of the level of trade intensity by ocean, as the Trans-Pacific trade has grown faster than the Trans-Atlantic trade. The most significant trade flows are between Asia and North America (especially the United States), Europe and North America, and Europe and Asia. The associated maritime routes are the most commercially used, with sizeable trade going through chokepoints such as the Strait of Malacca (30% of global trade transiting), the Suez Canal (15%), the Strait of Gibraltar, and the Panama Canal (5%). These bottlenecks allow for a connection between major systems of maritime circulation where transatlantic, transpacific, and Asia-Europe routes dominate. North-south flows complement these east-west routes, many of which interact at major transshipment hubs around Singapore, Dubai, and the Caribbean (Panama, Cartagena, Kingston). The evolution of international trade shapes the structure of maritime shipping networks and port development as shipping lines tend to organize their services to connect the dominant trade flows directly, and the less dominant trade flows indirectly through transhipments.

5. The Containerization of Trade

A. The emergence of the container

The container and the associated maritime and inland transport systems have proved to be instrumental to the consecutive waves of globalization and global trade growth since the 1970s. The launching of the first containership by Malcolm McLean in 1956, the Ideal X, marked the beginning of containerization. The first transatlantic container service between the US East Coast and Northern Europe in 1966 marked the start of long-distance containerized trade. The first specialized cellular containerships were delivered in 1968, and containerization expanded over maritime and inland freight transport systems. Container shipping developed rapidly due to the adoption of standard container sizes in the late 1960s. The cost savings resulting from faster vessel turnaround times in ports, the reduction in the level of damages and associated insurance fees, and the integration with inland transport modes such as trucks, barges, and trains became acknowledged as clear containerization advantages.

The container offered a standard around which physical distribution systems could operate. Hence, emerging container shipping networks allowed changes in the economic and transport geography as they significantly reduced maritime costs between production and consumption centers across the world. Container shipping has also become an essential driver in reshaping global supply chains, allowing sourcing strategies of multinational enterprises and developing global production networks. New supply chain practices increased the requirements on container shipping in terms of frequency, schedule reliability/integrity, global coverage of services, rate setting, and environmental performance. The outcome has been an ongoing growth of the global container throughput.

The container has evolved from a transport unit to a supply or commodity chain unit. Containerization is inherently linked to the transport of load units (containers) across several transportation modes. It is more than a box as it acts as a vector for production and distribution. Containerization has led to various changes in the geography of transport, trade, and distribution, particularly in how production and physical distribution interact. The container can be considered revolutionary, as new practices have taken place after its introduction. It has become a ubiquitous transport product servicing mobility requirements at almost all stages of supply and commodity chains and is able to be carried virtually everywhere there are transport infrastructures.

B. Containerized trade networks

Before containerization, many goods subject to trade had to be handled manually. Emerging worldwide container shipping networks allowed changes in the economic and transport geography as they significantly shortened the maritime cost distances between production and consumption centers around the world. Container shipping also became an essential driver in reshaping global supply chain practices, allowing global sourcing strategies of multinational enterprises, pull logistics solutions, and developing global production networks.

Containerization has been the most dynamic physical component of globalization, far exceeding the growth of the value of exports and the GDP. As globalization developed, each new individual, GDP, or export unit was associated with a higher level of container flows. This is often referred to as the TEU-to-GDP multiplier. While up to 1980, the growth of container port throughput went on par with the growth of the value of exports, a divergence is noted afterward, with container flows growing faster than trade flows. Containerization entered the acceleration phase of its diffusion cycle as the fundamental support of export-oriented strategies pursued by Asian economies.

The composition of international trade goods carried in containers is impressive in its diversity. The 20 most important SITC (Standard International Trade Classification) categories accounted for 65% of the global containerized trade, underlining that the container has been used to carry any possible good that could be fitted in. More than 75% of container freight flows are related to consumer spending on retail goods. However, many of the most significant categories of containerized trade are the outcome of comparative advantage factors, namely labor, that can be temporary and subject to change. If these advantages were to shift because of technological changes (e.g. automation), then a notable share of the containerized trade could be impacted.

About one out of every ten containers handled worldwide is handled in ports of the Yangtze River Delta. In East Asia, export-oriented industrialization policies undertaken by Hong Kong, Taiwan, and South Korea sustained the strong growth in container throughput handled by these economies from the 1980s. China developed similar strategies in the late 1980s, resulting in elevated growth first in the Pearl River Delta and then in the Yangtze Delta port system and the Bohai Bay region. In the past ten years, Shanghai, Guangzhou, Shenzhen, Qingdao, and Ningbo joined Hong Kong, Busan, and Singapore as the world’s busiest container ports. The Rhine-Scheldt Delta (Belgium/the Netherlands) was the world’s number one container handling region until the mid-1990s when South China took the lead. While the dynamics of containerization and container flows are well-known, much less is known about what is being carried by containers, particularly as it concerns commodities.

C. Containerized growth dynamics

The conventional growth dynamics of containerization have mainly relied on an array of drivers, which include:

• Derived Growth. Often labeled as organic growth, derived growth is an economic development outcome with greater quantities of containerized cargo being traded. Globalization also implies a growth in the average distance over which containerized freight is being carried. In both cases, greater containerized capacities are required, average voyage days per vessel increase, and the number of vessel roundtrips per year decreases. The dynamics based on derived demand may have reached maturity in containerization potential as many global supply chains are now fully containerized.
• Substitution-based growth. Initially, substitution was the main factor behind containerization with the gradual capture of the breakbulk cargo market. This process has been particularly visible in many ports, as illustrated by rising containerization degrees (the ratio between the containerized throughput of the port and the total general cargo volumes). Since almost all break-bulk cargo that could be containerized has been containerized, this substitution process is essentially near completion in developed economies. It is also rising rapidly in emerging economies and developing countries. This leaves the possible further containerization of niche markets, namely commodities and temperature-sensitive cargo.
• Incidental growth. Production and trade imbalances in the global economy are reflected in physical flows and transport rates and lead to specific container repositioning strategies. Containerized flows are rarely balanced, implying that empty containers must be repositioned to locations where export cargo is available.
• Induced Growth. The growth of deep-sea services and the use of larger containerships has led to the setting up of intermediary hubs connecting different systems of circulation via transshipment. Intermediary hubs emerge in locations offering clear advantages over direct port calls at mainland ports. The setting up of intermediate hubs occurs around specific regions ideally suited for maritime hub-and-spoke distribution patterns. Transshipment has proven to be a major driver for global container port throughput, with substantially higher growth rates than observed for gateway traffic. The worldwide transshipment incidence has steadily increased from around 18% in 1990 to around 35% in 2018.

In terms of the value of global trade carried in containers, maritime shipping accounts for 70% of the total trade, and 66% of this value is carried in containers, which represented in 2020 about $54,000 per TEU.

6. International Trade and Maritime Shipping Services

International trade relies volume-wise for about 80% on maritime transportation, which involves several markets such as dry bulk, roll-on/roll-off, general cargo, and containers.

A. Maritime services in dry bulk shipping

The maritime transport of major bulks such as iron ore and coal typically relies on end-to-end services between a port of loading (connected by rail to mines) and a port of discharge. Economies of scale in vessel size are significant in dry bulk shipping, so operators will try to maximize vessel size on the end-to-end tramp service. The nautical accessibility in the port of loading and port of discharge, the charter price level, and the availability of vessel types play a decisive role in vessel size choice. Inland transport costs per ton-kilometer are typically 20 to 30 percent higher than sea transport costs per ton-kilometer.

Consequently, market players make a trade-off between, on the one hand, the minimization of inland transport costs by routing the bulk flows via the ports that are closest to the final destination, and, on the other hand, maximizing the scale economies in vessel size by calling at the ports that offer the best nautical accessibility. This exercise, in some cases, leads to multiple calls whereby a large Capesize vessel will first call at a deepwater port to discharge part of the cargo and then proceed to the second port of call with less favorable nautical access to discharge the remainder (e.g., a call sequence starting in Dunkirk and ending in Antwerp). Another practice consists of lightening deepsea vessels on stream, whereby floating cranes discharge part of the load to barges given decreasing vessel draft (e.g. lightning operations on River Scheldt to access the Canal Ghent-Terneuzen).

The vessels deployed in the minor bulk segments (grain, fertilizers, minerals) are generally much smaller, so vessel operators have a much wider range of potential ports of call at their disposal. The eventual call patterns will be determined by factors such as proximity to the market, the specificities of the distribution network (centralized or decentralized), the number of cargo batches on the vessel, and the need for dedicated terminal facilities (e.g. grain silos).    

B. Maritime services in the roll-on/roll-off market

The operational characteristics of maritime services in the RORO segment depend on the submarkets considered:

• Intra-regional RORO and ropax services are typical of the end-to-end type with a port of call at either side of the route. The shipping services follow a fixed schedule with medium to high frequencies (sometimes several times a day). Ferry capacities tend to vary greatly depending on the cargo density of the route and the one-way distance. For example, in Europe, large units are deployed on the English Channel and parts of the Baltic (e.g. 120 trucks per voyage on the Dover-Calais link and several hundreds of passengers between Travemünde and Finland). In contrast, vessel capacities on services in smaller markets (e.g. the Irish Isles) tend to be much smaller. Trucks using ferry services can have a long pre- and end haul by road. For instance, a truck driving from Dortmund to Zeebrugge to catch a ferry to Hull and onward by road to the final destination of Manchester.
• The market for unaccompanied RORO transport is based on end-to-end services with dedicated RORO freight vessels, which often have reserved space for containers.
• The deepsea and shortsea car carrying trade is another submarket in the RORO market, a function of car exports and imports. On intercontinental routes, the operators deploy Pure Car and Truck Carriers (PCTC) with capacities of up to 8000 CEU, resulting in significant cost savings on the sea leg (economies of scale). The number of ports of call is kept to a minimum as shipping lines aim for a short port time, and face a shortfall in the number of ports with the infrastructure to accommodate large quantities of new cars. As a result, a significant part of the market is concentrated in large car handling ports. The position of the main ports is strongly entwined with their proximity to the main buyer markets and the spatial concentration of car assembly plants. A number of large car ports have successfully combined deepsea services with intra-regional shortsea services. The resulting hub-and-spoke network configuration is combined with growing local clusters of automotive logistics companies. While road haulage is by far the dominant mode of inland transport to/from car terminals, rail and barge play an ever more important role in securing inland access for the larger car ports, particularly in Belgium, the Netherlands, and the Rhine and Yangtze river basins.

C. Maritime services in the general cargo market

The diversity in maritime service configurations is probably the highest in the market of conventional general cargo. In contrast to the bulk cargo market, where parcel sizes are usually big enough to fill an entire ship, the general cargo market deals with the shipment of consignments smaller than a ship or hold size. Given the enormous variety of different cargoes involved, there are several ways in which breakbulk cargoes can be shipped. The most common is the conventional liner-type concept of “weekly fixed-day services”, characterizing the liner shipping industry, which is something the deepsea trade of conventional cargo has never really been able to achieve. Instead, the following service/schedule options can be distinguished in the case of breakbulk shipping (the typology is based on Dynamar):

• Services of a specific frequency operated with dedicated ships.
• Services offering sailings within a certain period, deploying trip charters.
• Services operated on inducement but still within a more or less defined trade lane.
• A mixture of two or three of the above options.
• “Parcelling”, such as tramping, whereby a vessel is chartered (usually on a trip-out basis) once a specific cargo volume is available.

The conventional general cargo market includes many specialized ships designed to carry specific cargo loads. For example, heavy-lift vessels do not operate on fixed routes, but in areas where large investments in the oil and gas industry are being made. Conventional reefer ships mainly carry high-value foodstuffs that require refrigeration and atmosphere control on an end-to-end service. Examples of reefer cargoes include fresh and frozen fruit (e.g. bananas, deciduous, and other citrus fruits), vegetables, fish, meat, poultry, and dairy products. Reefer shipping is a prime example of a one-way, commonly seasonal business with cargoes mainly exported from the southern hemisphere to the rest of the world. The conventional reefer shipping sector is being captured by container shipping, implying a shift in the types of services (less point-to-point and more loops) and terminals, particularly at the destination ports.

D. Maritime services in container shipping

The most advanced structures in maritime services are found in container shipping. Shipping lines design the networks they find convenient to offer, but at the same time, they are bound to provide the services their customers want in terms of frequency, direct accessibility, and transit times. In the last two decades, increased cargo availability has made carriers and alliances reshape their liner shipping networks by introducing new types of liner services on the main east-west trade lanes.

Observing recent developments in liner shipping, productivity has been improved by using larger ships and devising new operational patterns and cooperation between shipping lines. Since the 1990s, much attention has been devoted to larger, more fuel-efficient vessels, substantially reducing the cost per TEU of capacity. Adding post-Panamax capacity gave a short-term competitive edge to the early mover, putting pressure on the followers in the market to upgrade their container fleet and avert a serious unit cost disadvantage. Alliance structures (The Alliance, Ocean Alliance, and 2M) provide their members easy access to more loops or services with relatively low-cost implications and allow them to share terminals and cooperate in many areas at sea and ashore, thereby achieving cost savings in the end. Alliances and consolidation have created multi-string networks on the major trade routes, and both shippers and liners have adapted. The largest ships operate on multi-port itineraries, calling at a limited number of ports. The networks are based on traffic circulation through a network of specific hubs.

Related Topics

• Chapter 1.2 Ports and Maritime Supply Chains
• Chapter 1.3 Ports and Container Shipping
• Chapter 1.4 Ports and Distribution Networks
• Chapter 8.4 Containers

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