Source: Adapted from Parola, F., Pallis, A.A., Risitano, M. & Ferretti, M. (2018). Marketing strategies of port authorities: A multi-dimensional theorisation, Transportation Research Policy and Practice Part A, 111, 199-212.
A key marketing objective is to secure suitable financial resources in order to enhance the competitiveness of the port in a fast-changing environment. The demand for upgraded and modernized infrastructures and services and the provision of fast and reliable operational performances is considerable, especially as economies of scale in different port markets (i.e. gigantism of container and cruise vessels) results in various dimensions of port operations and a quest for more advanced supply chains and logistics. Yet, the mobilization of third parties to invest should not be taken for granted. Marketing strategies are devoted to attracting salient stakeholders, such as investors, logistics, and industrial firms, which bring financial, technical, and human resources, and potential organizational and managerial capabilities to ensure high service quality.
Nearly three-quarters of European Port Authorities are responsible for proceeding autonomously in identifying investors and managing the related concessions. Despite the progressive privatization of port terminals that accelerated the commitment of private firms in commercial operations and attracted considerable (inward) investments from overseas, additional investments are essential to integrate better the services provided by individual entities and facilitate clustering or provide auxiliary infrastructures. Such investments reinforce port performance, reputation, and, ultimately, competitiveness.
A second major marketing objective for port authorities is to enhance additional demand for the port. Demand refers to cargo and passenger volumes boosted by the presence of superior hinterland and maritime connectivity. Given the increasing importance of terminals as units with their own dynamic different settings exist within each port. Thus the precise nature of the demand-seeking port authority strategy is detailed accordingly. For example, Mediterranean port authorities work collectively to generate demand source markets for cruising. Notably, port authorities are leaders in such marketing activities even in ports that have concessioned terminal operations (i.e. Naples, Malta, Barcelona, Cyprus). In the case of cargo ports, the port authorities of the biggest three European ports (Rotterdam, Antwerp, Hamburg) are active in overseas markets aiming to bring cargo traffic to the ports they govern.
In the case of a landlord framework, port authorities do not have a direct contractual relation with ocean carriers; they do not undertake stevedoring or other handling operations. Thus marketing is somewhat mediated by other business players such as terminal operators and freight forwarders. Nonetheless, their role in attracting demand is relevant, as port authorities often interact with carriers and other players affecting cargo routing or cruise vessel deployment. For instance, meetings that cruise ports in Europe organize with cruise lines twice per year via their associations – MedCruise and Cruise Europe – aim to secure the favorable deployment of cruise vessels. The intervention of port authorities aims to trace back cargo flows along logistics chains and to perform multi-faceted marketing actions. Primarily, port authorities act as the orchestrator that, via marketing, generates knowledge on the presence of conditions securing an active business environment with the availability of services, levels of efficiency, and lower costs than competitors.
The presence of dedicated terminals, such as terminals run by a terminal operator and used by a single ocean carrier (or an alliance), provides a different setting requiring a marketing refinement. Once the demand for operating one such terminal is secured (operator and the user are in place), the port authority marketing is rather landside-oriented, aiming to make the demand for the operation (by end-users, logistics, value-added services, and logistics, communities) sustainable.
Given the above, port authority marketing actions are successful if the marketing activities of terminal operators or shipping lines are aligned with each other for value co-creation. A port authority can spend large sums of money on marketing but, if terminal operators or shipping lines do not perform well, port authority actions will not have the expected outcome. This means that the port authority is very dependent on the performance and marketing activities of its own customers. For this reason, the selection of reliable terminal operators as concessionaires constitutes a relevant pre-condition for attracting demand.
Exploring business opportunities
Enhancing additional demand and securing suitable endowments are two strongly interdependent marketing objectives that may produce synergies. A successful attraction of investments and resources creates pre-conditions for a competitive port, with a solid market reputation and capabilities to deliver reliable services. In turn, a port that generates growing traffic volumes is considered attractive by port operators and draws the attention of business and financial players seeking investment opportunities in logistics facilities.
The objectives of marketing activities by port authorities include catching up with other business opportunities in areas beyond their core objectives, which are the handling and serving of cargoes/passengers in the port and adjacent areas. Here the reference is not only to logistics and supply chain integration but also to activities such as ship-repairing or hotel management. Such emerging initiatives are strategically related to the more traditional port authority marketing objectives (Objectives 1 and 2) but take place through comparatively uncommon strategies that exploit the resources and capabilities accumulated in mainstream activities.
This exploitation might take place by using in-house agglomerated expertise, capabilities, and resources. For instance, the capabilities developed with (foreign) bidders in tendering procedures, stimulate the accumulation of managerial and relational skills, which might be monetized by providing consultancy services to other port authorities. In this perspective, port authorities perform a process of internationalization grounded on the deployment of managerial and financial resources, to sell the port worldwide (customers-seeking principle), keep control over the international logistics networks that a given port is part of (efficiency and effectiveness principle), and gain benefits for the organization, such as revenue streams, incremental knowledge, cutting-edge technologies, and attractive business opportunities (competitive advantage principle). The port of Antwerp has developed strategies of this nature with ports in America (Montreal, Panama Canal Authority), Africa (San Pedro), and Asia (Jawaharial Nehru Port Trust; Essar Ports, in India), while in Europe, Rotterdam is also active in different continents, Hamburg is working towards this end in the US, and Bremerhaven does so within Europe. This way, port authorities gain visibility and economic benefits and support core marketing objectives.
Business-to-business marketing coexists with business-to-community objectives, as the environmental complexity and spatial issues incentivize ports to establish a trustworthy relationship with their local stakeholders.
The building of solid community liaisons with the societal backyard is increasingly necessary for internationalized ports, where the disconnection between global (business-driven) ambitions and local interests becomes critical. Port authorities promote the related port by effectively communicating with the main local community stakeholders. Such promotional activities aim to make the population aware of the beneficial presence of the port, projecting an appropriate image. Marketing activities aim to build the consensus and trust of citizens and local economic clusters on port planning, securing the satisfactory co-existence and coherent co-development of urban and port areas. The most indicative example is establishing the annual award of societal integration established by the European Sea Ports Organisation (ESPO) in the 2000s. Ports from all over the world have also established AIVP, the International Association of Ports and Cities, aiming to collectively promote such marketing activities, establishing among others port centers to communicate with the local community effectively.
Good relationships with public administrations are a fundamental business marketing building block that, inter alia, enhances community liaisons. These activities stand at the intersection between marketing activities and lobbying. To maintain the pace of port and business development, port authorities have to efficiently deal with political and administrative counterparts at various levels. They do so working either alone, collectively via local initiatives, or via their associations at the national level (e.g. American Association of Port Authorities – AAPA in the US; Assoporti in Italy; Hellenic Association of Ports-ELIME in Greece; Cruise Norway), regionally (e.g. European Sea Ports Organisation-ESPO; Cruise Europe; MedCruise in Europe) or internationally (e.g. International Ports & Harbors Association-IAPH).
Generating balance within a given institutional architecture is tuning in the decisions of public administrators to the evolving needs of private firms. In this regard, vertical and horizontal coordination with public organizations enables dealing with key issues such as port planning and development, port reform and regulatory implementation, the execution of administrative and business decisions, and the implementation of political actions. Vertical coordination refers to effective institutional dialogue and distribution of competencies between port authorities and public actors. Horizontal coordination, instead, requires a sound and integrated dialogue among port authorities concerning the prioritization of investments and the avoidance of overcapacity concerns in port planning. These dialogues generate lobbying effects, exert political pressure to raise additional funding, moderate conflicts with the local community, and obtain a fast-tracked approval of key projects.