Source: Adapted from Notteboom, T.E., Parola, F., Satta, G., Pallis, A.A., 2017, The relationship between port choice and terminal involvement of alliance members in container shipping, Journal of Transport Geography, vol. 64, p. 58-173.
Port selection is a complex process subject to several criteria. The direct impact of shippers and other cargo interests on terminal operations depends on the commodity and terminal activity type. There are typically no contractual arrangements between terminal operators and shippers in the container business or their representatives, such as freight forwarders. The market demand is exerted indirectly via the shipping lines that have contractual arrangements with the terminal operators.
The port choice criteria used by shipping lines include four distinctive groups of selection factors relevant to shipping lines. These factors are related to the demand profile of the port or terminal, the supply profile, the market profile, and carrier dynamics linked to carrier operations and cooperation. The above figure conceptualizes the port selection process by container lines, combining these four groups of selection factors. The shaded areas refer to decision variables in liner service design. They include the choice of the liner service type (e.g. direct service vs. transshipment), the number and order of port calls, vessel speed, service frequency, and vessel size and fleet mix.
Terminal ownership of shipping lines (or their affiliated companies) and the strategic alliance dynamics among shipping lines belong to the fourth category of port selection factors (see textbox at bottom left). Thus, strategic considerations at the company level play a role in port and terminal selection. These strategic considerations include alliance developments and the location of container terminals of the carrier or alliance. Other strategic factors include the fit of the port in the trade (or string), the location of key customers, present contracts with independent terminal operators, and the location of decision-makers (head office vs. more regional offices). Port choice can be subject to negotiations among the alliance members and can deviate from the choice of one particular member.