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

Ports are composed of specialized terminals designed to handle a specific cargo type. An increasing number of port terminals, serving either cargoes or passengers, are managed by operators maintaining an international portfolio.

1. Port Terminals

Ports are mainly multifunctional entities, but this characteristic is often the result of the combined activities of a number of specialized terminals, each dealing with specific goods and commodities such as containers, grain, oil, or iron ore. Thus, a port combines terminal facilities, each developed to fulfill a specific function and sometimes serving a single user, such as a petrochemical plant. The main types of port terminals include:

• Break-bulk. Concerns cargo that is carried in drums, bags, pallets, or boxes. Also referred to as general-purpose facilities that combine open storage space and warehouses. Historically, most port terminals were built as multipurpose facilities, as most commercial cargo was carried in a break-bulk form. It was only in the late nineteenth century that ship specialization became dominant, allowing specialized terminal facilities.
• Dry bulk. Relates to cargo that is not packaged and transported in large quantities that are limited by ship size or existing demand. The main commodities involve coal, iron ore, and grain, which require specialized equipment and storage facilities. This specialization level implies that the terminal cannot handle bulk products other than those it was designed and equipped to handle. Thus, a grain terminal cannot handle other commodities even if the pier can accommodate any ship class.
• Liquid bulk. Commodities transported in liquid form require specialized transshipment equipment and storage facilities. The most common liquid bulk terminal facilities are designed to handle oil and petroleum products.
• Containers. Terminal facilities are designed only to handle a single break-bulk standard transport unit, the container. Container terminals have come to dominate the port terminal landscape because of the large variety of goods that can be carried in containers. They are capital-intensive and require a large footprint due to the storage requirement of containers.
• Ro-Ro. Handles vehicles that are rolled on and off a vehicle carrier. Require ramps, but standard vehicle carriers commonly have their own ramps. The most important footprint of a ro-ro terminal is the parking space used to store vehicles. It also includes ferries that carry a combination of vehicles and passengers and, as such, require rather extensive parking space while vehicles are waiting to roll onto the ferry.
• Passengers. Historically, passengers were handled at multipurpose facilities as liner ships also carried freight. Ferry terminals are a specialized component in many ports that are part of a domestic ferry network, such as Greece and Japan. The emergence of the cruise industry has been associated with the setting up of cruise passenger terminals that can be extensive at turn port facilities such as Miami and Barcelona.

Although terminals may share a related port site, they often have no particular commonality in terms of the supply chain they are servicing. There is the potential that a multi-terminal port may not be an integrated entity, with its presence merely being coincidental. Still, terminals share common maritime and inland infrastructure. Further, terminals are influenced by the fundamental characteristics and capacity of ships, particularly their draft.

Outside commercial issues related to the demand for cargo, port terminals depend on a specific range of equipment, and this equipment requires a footprint and a configuration. Terminal equipment is highly commodity-specific as some terminals can only handle one commodity or a limited range of cargoes. For instance, an oil terminal can only handle crude oil bulk shipment through specialized equipment, pipes, pumps, and storage facilities. This equipment would not be able to handle other forms of liquid cargo.

Three fundamental categories of port terminals, equipment, and design characteristics can be found:

• General cargo. Unitized cargo that can be carried in batches and handled by three specialized terminal types with specific equipment and design considerations. Since break-bulk and container terminals handle unit cargoes, they are designed around the lift-on/lift-off principle, requiring cranes and storage areas. Vehicle terminals, a type of neo bulk terminals, are operated on the roll-on/roll-off principle and are dominated by parking areas. The design of general cargo terminals is a balance between the average throughput and the related storage requirements.
• Bulk cargo. Loose cargo carried in loads that are limited only by demand, ship size, and storage capacity. The bulk terminal is where this system is synchronized. Liquid bulk and dry bulk depend on different transshipment and storage techniques and are two distinct categories of bulk terminals with design considerations. Bulk terminals tend to specialize in handling a single commodity, such as coal, grain, iron ore, natural gas, or petroleum. Each of these commodities has unique equipment, storage, and design considerations.
• Passengers. Ferry and cruise terminals are a small segment of port terminals. Ferry terminals are mainly roll-on/roll-off facilities with direct connectivity to the road system. Larger facilities require significant parking areas, but infrastructures and equipment are simple, with mooring areas and ramps. Recently, the growth of the cruise industry has led to the emergence of specialized cruise terminals that include passenger handling facilities and parking areas. Cruise terminals might also be involved in freight activities related to the procurement of cruise ships.

Each terminal acts as a key node in the maritime-land interface, allowing maritime and inland systems to interact. The balance between market demand, ship capacity and frequency, and hinterland distribution requires a variety of footprints and design considerations.

2. Freight Terminal Operators

A. Private involvement in port terminal operations

As late as the 1980s, public ownership and operation were the dominant models. While the forms of port governance differed greatly, from the municipally-owned ports in Northern Europe and the United States to the state-owned ports in France, Italy, and much of the developing world, public ownership was dominant, and publicly managed port operations were prevalent. The institutional entry barriers for port terminal operations were remarkably high and limited to specific services. This contrasted with the shipping industry, where private ownership was almost universal. Containerization particularly underlined how operationally deficient public port authorities adapted to growing time and performance requirements imposed on intermodal transport chains. The changes, slow at first, came from two directions:

• First, there was the belief that the transport industry as a whole should be divested to the private sector to promote competition. Ports were among the many sectors targeted by economic liberalization policies.
• Second, there was a policy recommendation from the World Bank that developing countries would do well to free their highly controlled port industry by issuing concessions to organizations able to modernize their port industries and better manage operations. To facilitate required changes, the World Bank created a Port Reform Tool Kit.

These developments helped create what has become a global snowball of port government reforms, commonly known as port devolution, as the public sector relinquished its role in a function it had formerly assumed. It made governments more open to considering reforming port governance and offering better conditions to ensure privatization. The growing demands for public and private investment in ports, precipitated by the growth in world trade, and the limited abilities of governments to meet these needs because of competing investment priorities, were key factors. Thus, while few were willing to go as far as the UK in the total privatization of ports, many countries were willing to consider awarding concessions as an intermediate form of privatization, leading to various forms of public-private partnerships.

B. Typology of port holdings

Privatization has stimulated an almost global trend toward awarding port operational concessions, especially for container terminals. The reasons container terminals were particularly prone to concessioning were related to the fast growth of international trade requiring massive and rapid capital investments. If the opportunities to award operational concessions can be seen as an increase in demand, growth has also been greatly affected by an increase in the number of companies seeking concessions, with many becoming large port holdings.

Port holding. An entity, commonly private that owns or leases port terminals in a variety of locations. It is also known as a port terminal operator.

Transnational terminal holding companies are grouped into three categories, with some companies showing a more hybrid nature:

• Pure stevedores. Port terminal operators that expanded into new markets to replicate their expertise in terminal operations and to diversify their revenue geographically. PSA International, with headquarters in Singapore, is the largest global terminal operator coming from a stevedore background, followed by Hutchison Ports, with headquarters in Hong Kong. Stevedores account for about 50% of the hectares controlled by terminal operators worldwide. In recent years, many of these companies have moved beyond terminal operations by investing in (inland) logistics service provision. Examples include DP World’s strategy to transition from a global terminal operator to a global logistics service provider, and PSA’s move into logistics through the creation of PSA Cargo Solutions and PSA BDP. The latter delivers cargo solutions for global supply chains and was created after the take-over of BDP International.
• Maritime shipping companies. Invested in port terminal facilities to help support their core maritime shipping business. In many cases, hybrid structures are formed with separate business units or sister companies active in liner shipping or terminal operations. The terminal facilities can be operated on a single-user dedicated base or alternatively also be open to third-party shipping lines. APM Terminals, a Maersk Line sister company, is one of the largest global terminal operators from a maritime shipping background. Shipping lines account for about 31% of the hectares controlled by terminal operators worldwide.
• Financial holdings. Include various financial interests ranging from investment banks and retirement funds to sovereign wealth funds attracted by the port terminal sector as an asset class and with revenue generation potential. The majority have an indirect management approach, acquiring an asset stake, and leaving the existing operator to take care of the operations. Others will directly manage the terminal assets through a parent company. The main reason why financial holding companies became interested in having port terminal assets in their portfolio is that they were perceived to have a high-value proposition. Holdings account for about 19% of the hectares controlled by terminal operators worldwide.

The setting up of specialized terminal operating companies is not a recent phenomenon. Many ports in Europe and the United States had already been awarded to local cargo handling companies through concessions and lease agreements. Because they were relatively small and locally based, with only a few exceptions, they did not participate in the global growth of concession awards opportunities. The exceptions were Stevedore Services of America (SSA), already active in several US West Coast Ports, which obtained concessions to operate facilities in Panama and several other smaller ports in Central America; Eurogate, a joint company formed by terminal handling companies from Bremen and Hamburg and Contship Italia, that obtained concessions in Italy and Morocco.

Beyond the three main categories, other types of companies are also involved in container terminal operations:

• Freight transport companies. They are involved in a wide range of freight services, such as shipping agents, freight forwarders, road and rail transport companies, and third-party logistics service providers. Examples include Bollore, Arkas (Turkey), Wilson (Brazil), Kuwait Gulf Link, Rennies (South Africa), Korea Express, Nippon Express, Severstahltrans (Russia), and Kontena Nasional (Malaysia).
• Construction companies. Primarily large engineering firms that have become involved in container terminal concessions through Private Finance Initiatives or attempts to secure terminal construction contracts. Examples include Acciona (Spain), Gammon (India), Tribasa (Mexico), Tucuman (Brazil), Samsung Corp, and Hyundai Development.
• Equipment manufacturers. Small specialist companies that have moved into concessions from their original base in equipment servicing. It is worth noting that none of the major manufacturers of container terminal equipment (quay cranes, RTGs) have been involved in bids for terminal concessions. Being involved in terminal operations could be perceived as an unfair competitive practice since they would be providing equipment to competing operators. Examples include Portek (Singapore), ABG Heavy Industries (India), and Mi-Jack (USA).
• Property developers. These are companies based mainly in Hong Kong and Southeast Asia, and have diversified from commercial/residential developments into the provision of concessioned infrastructure. Examples include New World, Fairyoung, Henderson (HK), Metro Pacific Investment Corp, and Brisas del Pacifico (Colombia).
• Industrial conglomerates. These are either diversified holding companies or large manufacturers (such as steel or cars) regarded by their governments as national champions with the management ability to develop strategic assets. An important subset of this group comprises wealthy or well-connected individuals or families who have become involved because of their links to governments. For example, the Motta and Heibron families in Manzanillo (Panama), the Suharto family in Indonesia, and Dato Ahmad Sebi at Westports in Port Klang. Other examples of industrial conglomerates include CITIC (China), Syanco (Saudi Arabia), FIAT, Mitsui, Tusdeer, CSN (Brazil), Razon Group (Philippines), Evyap Group (Turkey), and John Keells Holdings (Sri Lanka).

Several companies operating container terminals are multi-faceted, often belonging to larger corporate entities covering a wide range of economic activities. Their categorization depends on how far back one goes in tracing the chain of ownership. The farther back the beneficial ownership of a concession is traced, the more complex and fragmented the ownership structure becomes. APMT, for example, has close links to Maersk Line while trading as an independent terminal operator. Similarly, until its sale to institutional investors, Dradagos, the Spanish port and logistics services company, formed part of the ACS Group. ACS’s activities include construction, energy supply, environmental engineering, industrial services, and concessions in other modes of transport. In addition, some corporate structures are deliberately opaque to minimize commercial risks, taxation, or exposure to publicity.

C. Global terminal operators

Like many multinational corporations, global terminal operators are market seekers who expand their business opportunities through entry into new markets. A terminal can grow organically, but this is a rather slow process. A much faster growth rate can be achieved by acquiring terminal facilities in new markets. From the 1990s, a few companies became major global terminal operators controlling a multinational portfolio of terminal assets. They mostly originate from Asia, with four large companies dominating, three coming from a stevedore background and one from a shipping line:

• Hong Kong-based firm, Hutchison Ports (HPH), part of a major conglomerate Hutchison Whampoa.
• PSA International (PSA), the government-owned operator of the port of Singapore. Note that the Port of Singapore Authority (PSA) was formed in 1964. In 1997, PSA was corporatized and renamed PSA Corporation Limited. The company kept the name PSA, which is no longer an acronym. In 2003, PSA International Private Limited became the main holding company for the PSA Group.
• DP World (DPW), which is mainly part of a sovereign wealth fund created by the government of Dubai to invest the wealth derived from oil trade.
• APM Terminals (APM), as a parent company of the world’s largest shipping line; Maersk.

The setting up of global terminal operators took place in three main waves:

• The first wave began in the 1990s and included companies like HPH, P&O Ports, and SSA, which expanded their operations on a geographical scale, thereby benefiting from the port privatization schemes in many regions across the world. HPH, which originated as a terminal operator in Hong Kong, first purchased Felixstowe in 1991, the largest UK container port. It developed a portfolio of more than 50 terminals worldwide, including in Rotterdam and Shanghai.
• As soon as the strategies of the pioneers proved to be successful, the second wave of companies started in the 2000s to seek expansion internationally, such as PSA, CSX World Terminals, and Eurogate. PSA has actively secured concessions in China and Europe, including Antwerp and Genoa. Like HPH, PSA originates from globally-oriented ports offering limited local terminal expansion opportunities. Local operators were thus encouraged to manage the constrained assets efficiently and to look abroad for expansion opportunities.
• The third wave of terminal operators emerged during the 2010s when major container carriers entered the terminal industry in an effort to support their core business. This also included financial holdings such as DPW that have grown through acquisitions, such as P&O Ports and CSX World Terminals, and by securing concessions in new markets. Shipping lines have also participated in terminal concessions but to a lesser extent. The most important is the in-house terminal operating company of Maersk; APM Terminals. Besides, Evergreen, COSCO (via COSCO Shipping Ports), MSC (via its majority shareholding in TIL – Terminal Investment Limited), and CMA-CGM (via its majority shareholding in Terminal Link) hold port terminal leases. A global pattern of concessions is evident between the dedicated terminal operating companies and the shipping lines.

A concentration of ownership among four major port holdings is taking place. While mergers and acquisitions are usually successfully completed, there are cases where they have triggered a regulatory response. For instance, in 2006, DPW acquired the terminal assets of P&O (Peninsular & Oriental Ports), further consolidating its global holdings. However, DPW was constrained to rescind the American assets of this transaction (terminals in Baltimore, Miami, New Orleans, New York, and Philadelphia) to the holding AIG (Ports America) due to political controversy; a Middle Eastern holding operating major American port terminals was perceived negatively in the post 9-11 context.

Despite being global, large terminal operators have a strong regional orientation, which indicates their transnational level. Global container terminal operators show varying degrees of involvement in the main cargo handling markets around the world. Complex and geographically diversified portfolios were established in virtually every freight market of the world. The container terminal has become a fundamental node in global freight distribution, with the managerial and operational expertise offered by global holdings an important element in its performance in terms of capacity and reliability.

3. Cruise Terminal Operators

A. The emergence of cruise terminal operators

Until the COVID-19 pandemic, the cruise industry experienced remarkable growth rates. Since the 1990s, the global growth rate of the cruise industry has endured despite economic cycles of growth and recession or other events disrupting cruise tourism, such as hurricanes. This growth rapidly reshapes the cruise industry, with private operators entering the business. Liberalization and internationalization in the cruise terminal business have become a trend similar to what occurred in the container terminal sector. Ports started to see cruises as more than an ancillary activity of secondary importance.

The presence of specialized cruise terminal operators has expanded. Along with service and other upgrades, the essential infrastructure for cruise terminal operations is also changing rapidly. Specialized cruise terminals replace multipurpose or temporary docking facilities. The bigger cruise ports develop via a terminalization strategy, – the evolution of autonomously operating terminals of considerable size; the terminals at Cruise Port Barcelona, the biggest port in Europe; and the size of cruise terminals in North America provide illustrative examples. New cruise terminals are built, and existing facilities are upsized and upgraded, imposing additional investments on the host port or terminal operator. Aiming to effectively respond to calls for upgrading cruise terminals, while safeguarding public spending, port authorities started to seek the active involvement of third parties to finance, construct, operate, and commercially develop cruise facilities. Private entry in cruise terminals has been facilitated by the port governance reforms applied to all port activities, with governments establishing a more commercialized environment for port operators.

This development has resulted in new opportunities for several firms, such as cruise lines and specialized cruise terminal operators, wishing to undertake new or additional investments in the cruise business, and sometimes to follow a path of internationalization. The concessioning of cruise terminals to third parties and the development of new terminals have become common practices. In some ports, cruise lines are directly involved in the financing, building, and operations of terminals. In other ports, local cruise terminal operators, which are often also port agents, are progressively joined by other companies that have developed interests in taking control of cruise ports and specialized purpose vehicles (SPVs) built by terminal operating companies. Eventually, international players emerged. As cruise activities in ports gain additional operational autonomy, public authorities are pursuing partnerships with third parties to finance and develop growth strategies.

B. The internationalization of cruise terminal operators

More recently, cruise terminal operators started expanding overseas.

International Cruise Terminal Operators (ICTOs) are companies holding at least a share in one cruise facility located in a foreign country, and emerging as the main actors driving industry privatization.

Global Ports Holding (GPH) is a major ICTO established in 2004 as an international port operator with a diversified portfolio of cruise and commercial ports. It started as a cruise terminal operator in Turkey and now operates 21 ports in 13 countries, including nine ports in six Mediterranean countries. As of 2019, GPH facilities handled 14 million passengers, accounting for a 24% market share in the Mediterranean. The group also offers commercial port operations specializing in container, bulk, and general cargo handling. Another ICTO, Creuers Del Port Barcelona S.A., was established by the Port of Barcelona and then extended its cruise terminal portfolio to Asia (Singapore). The internationalization of cruise terminals might create an array of international actors managing global portfolios of facilities, comparable to what has happened with the rise of global container terminal operators.

Global Container Terminal Operators (GTOs) have recently assumed responsibilities for cruise terminal operations. This has been the outcome of the acquisition of majority stakes and ownership of entire ports. For instance, China Cosco Shipping became the owner of the master concession in Piraeus, and Terminal Link (CMA CGM) took over the concession in Thessaloniki, both ports and important container terminal facilities, but also cruise ports. Further, in 2017, DP World was awarded the concession to operate the port of Limassol, another important cruise destination. This trend is emerging even though cruise terminal activities are not part of their core business but a derived responsibility that may provide an incentive to acquire additional assets.

Given the pivotal role of cruise terminals in touristic global value chains, entities responsible for port destination development, such as Chambers of Commerce, and tourism-related firms, such as shipping agencies and travel operators, have become involved. Cruise facilities operations are seen as a tool to promote local and regional business or to support tourism. In some cases, such entities establish hybrid companies responsible for the management and operation of cruise ports. For instance, CCI Nice Cote d’Azur is an entity operating cruise terminals in several French Riviera ports. Several port companies are corporations with a public-ownership background that paved the way for the cruise business launch and facilitated a higher private equity commitment. Some of them entered the market predominantly in search of economies of scope and new business opportunities. For this purpose, they often exploited formal and informal ties with local public entities and institutions, rejecting the option of seeking foreign investments.

Financial investors, who are less directly involved, might be attracted by high growth rates and profitability in the cruise business. Specialized financial institutions, such as banks, insurance companies, and private equity (PE) firms, are searching for a reasonable risk, return maximization, and maturity of investments. They may see cruise terminals as attractive assets for diversifying their business portfolio, contributing to a higher degree of financialization of the port sector. The attractive features of port terminals include the long-term economic life of the assets, the monopolistic or oligopolistic nature of the industry, and the possibility of partially transferring risk to host governments through public-private partnerships.

An emerging trend has been the setting up of dedicated facilities where the cruise shipping company is directly involved in the development of the cruise terminal as well as co-located amenities. Examples of this practice are the private islands in the Caribbean, which are reserved exclusively for a cruise company. The most prominent include Labadee (Royal Caribbean) in Haiti, Coco Cay (Royal Caribbean), Half Moon Cay (Holland), Castaway Cay (Disney), Princess Cay (Princess), and Great Stirrup Cay (Norwegian) in the Bahamas. These private facilities are all within one cruise day from the home ports of Florida, offering the option of short 3-4 day cruises to a quiet and safe destination. They are all enclaves within their respective host countries.

4. The Strategies of Terminal Operators

A. Container terminal operators

The rapid expansion of container terminal operating companies is a strategy that reflects two economic forces. First, the entry of former terminal operators into the global system represents a horizontal integration process. The companies, constrained by the growth limits of their own ports, seek to apply their expertise in new markets and seek new income sources. Second, the entry of shipping lines into terminal operations is an example of vertical integration. The companies aim to extend their control over other links in the transport chain. A third strategy is mainly followed by holdings with a strong financial orientation and portfolio diversification in which terminal assets feature.

Several strategies explain the growth of global terminal operating companies and their diffusion as key stakeholders in port terminals:

• Profitability. By modernizing port operations, mainly through better equipment, information systems, and management, port holdings can increase the profitability of their terminal assets. Because of their scale, management, and efficiency, global terminal operators tend to be more profitable than a single terminal operating firm. For instance, HPH achieved a 35% per year return on investment in the early 2000s. Port management was very lucrative, inciting others to expand existing assets and new players to enter the field. Since 2010, profit margins in terminal operations have become thinner, further underlining the advantage of efficient terminal operation practices.
• Financial assets. Port holdings have the financial means to invest in infrastructures as they have a wide variety of assets and the capacity to borrow large quantities of capital. They can use the profits generated by their profitable terminals to invest and subsidize the development of new terminals, thus expanding their asset base and operating revenues. Most are listed on equity markets, allowing access to global capital, which supports the freight transport sector as a source of returns driven by traffic growth fundamentals. This financial advantage cannot be matched by port authorities, even those heavily subsidized by public funds. In other cases, terminals have become financial assets that can grow more valuable as the traffic they handle increases (additional revenue). Financial holdings, such as retirement funds, have considered transport and port terminal assets for their portfolio.
• Managerial expertise. Port holdings excel in establishing procedures to handle complex tasks such as the loading and unloading sequence of containerships and all the intricacies of terminal operations. Many have accumulated substantial experience in terminal design and the management of containerized operations in a wide array of settings. Therefore, they are able to transfer managerial expertise to new terminals. Being private entities, they tend to have better customer service and considerable flexibility to meet the needs of their clients through service differentiation. This also includes the use of well-developed information systems and the capacity to quickly comply with legal procedures related to customs clearance and security.
• Gateway access. From a geographical standpoint, most port holdings follow a strategy to establish privileged positions to access hinterlands. By doing so, they secure a market share and can guarantee a level of port and often inland transport service to their customers. This can also be seen as a commercial strategy where a “stronghold” is established, limiting the presence of other competitors and creating a monopoly situation. Gateway access thus provides a more stable flow of containerized shipments since gateways tend to endure as global connectors. The acquisition of a new port terminal is often accompanied by the development of related inland logistics activities by companies related to the port holding.
• Leverage. A port holding is able to negotiate favorable conditions with maritime shippers and inland freight transport companies, namely around rates, access, and level of service. Some are subsidiaries of global maritime shipping lines (such as the A.P. Moller group controlled by the shipper Maesrk). In contrast, others are directly controlled by them (such as Evergreen), so they can offer a complete logistical solution to international freight transportation. They are also better placed to mitigate pressures from port authorities to increase rents and port fees. The “footloose” character of maritime shippers has for long been recognized, with the balance of power more in their favor than the port authorities they negotiate with.
• Traffic capture. Because of their privileged relationships with maritime shipping lines, port holdings are able to capture and maintain traffic for their terminals. The decision to invest is often related to knowing that the terminal will handle a relatively secure number of port calls. Consequently, the level of traffic and revenue can be secured more effectively.
• Global perspective. Port holdings have a comprehensive view of the state of the industry and can interpret political and price signals to their advantage. They are thus well placed to influence the direction of the industry and anticipate developments and opportunities to offer global solutions to terminal requirements in ports around the world. Under such circumstances, they can allocate new investments (or divest) to take advantage of new growth opportunities and new markets.

The growth of transnational terminal operating companies has resulted in a concentration of ownership. In 2018, the top seven global terminal operators accounted for 34.5% of global container port activity in terms of equity-based throughput. Perhaps most important is that they are now dominant in the most important container ports in the world and wield monopoly power in many smaller ports. There is strong evidence that performance has improved in most ports due to concessioning to global terminal operators. The question is whether to regulate the further concentration of power, leaving several maritime ranges having to deal with a limited number of terminal operators that are in a position to impose oligopolistic fees and charges.

B. Cruise terminal operators

The growing commitment of investors in the funding and management of cruise ports has reached levels comparable to what is being experienced in cargo ports, particularly container terminals. In the long term, this might affect the interactions between ports and cruise lines, changing bargaining power relations between cruise lines and port authorities, and the structure of cruise itineraries, as well as development strategies, such as initiatives to address the existing seasonality of cruise activities or attract higher spending cruisers. The leading actors involved in cruise terminal operations include:

• Cruise lines that are expanding vertically into terminal operation to support their core activity.
• Pure cruise terminal operators that are expanding horizontally in new markets.
• Third parties such as Chambers of Commerce, shipping agencies, travel operators, and logistics companies entering for a specific opportunity such as local economic development and simple diversification.

Cruise lines exploit the opportunities offered and undertake aggressive growth strategies, often entering overseas locations. In the Mediterranean market alone, Royal Caribbean Cruise Lines has emerged as the most active. The company operates cruise terminals in four different countries, such as Italy (Civitavecchia, La Spezia, Naples, Ravenna), Portugal (Lisbon), Spain (Barcelona), and Turkey (Kusadasi). Costa Crociere is present in France (Port of Marseille) and Spain (Port of Barcelona), and MSC Cruises operates cruise terminals both in France (Port of Marseille) and Italy (Port of Naples).

Cruise lines prefer to focus their terminal investments in turnaround (home) ports with a high level of transport accessibility for tourists and cruisers. The key facilities are airports and high-speed rail stations from which most cruisers arrive. This has resulted in the “fly and cruise” model, where cruise passengers are directly picked up and checked in at the airport. In contrast, transit ports (ports of call) are selected for their touristic highlights and landmarks. The interest of international cruise lines in the financing, building, and terminal operations, which emerged in the early 2000s, is part of a vertical integration strategy. The main drivers of their strategies include the need for cost control and improvement in service quality and reliability, the need to defend their core assets financially, and the search for additional bargaining power in negotiations with local public authorities. Such vertical integration is experienced in other shipping sectors and is a means for achieving competitiveness along the supply chain.

Pure cruise terminal operators are investors who pursue horizontal integration and internationalization strategies to reach economies of scope and geographic diversification. Similar drivers trigger the entry of real estate and infrastructure managers, which rely on technical and managerial competencies developed in their core business to generate cross-sectorial synergies.

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Related Topics

• Chapter 3.2 Terminal Concessions and Land Leases
• Chapter 4.1 Port Governance and Reform
• Chapter 5.2 Intra-Port Competition
• Chapter 5.5. Entry Barriers
• Chapter 8.1 Cruise Ports

References

• Notteboom, T. and J-P Rodrigue (2011) “Emerging Global Networks in the Container Terminal Operating Industry”, in T. Notteboom (ed) Current Issues in Shipping, Ports and Logistics, Brussels: Academic & Scientific Publishers. pp. 243-270.
• Notteboom, T. and J-P Rodrigue (2012) “The Corporate Geography of Global Container Terminal Operators”, Maritime Policy and Management, Vol. 39, No. 3, pp. 249-279.
• Pallis A.A., K.P. Arapi, and A.A. Papachristou (2019). “Models of Cruise Ports Governance”, Maritime Policy and Management, 46(5), 630-651.
• Pallis, A.A., F. Parola, G. Satta, and T. Notteboom (2018). “Private Entry and Emerging Partnerships in Cruise Terminal Operations in the Meditteranean Sea, Maritime Economics and Logistics, 20(1), pp. 1-28.
• Parola, F. T. Notteboom, G. Satta and J-P Rodrigue (2015) “The Impact of Multiple-site Acquisitions on Corporate Growth Patterns of International Terminal Operators”, International Journal of Shipping and Transport Logistics, Vol. 7, No. 5, pp. 621-635.