Factors Expanding a Port’s Cargo Base

Factors Expanding a Ports Cargo Base

There are three main interdependent factors behind the growth of a port’s cargo base, particularly when it is containerized. They are reflective of port competition strategies:

  • Hinterland intensification. A port has a market area over which it assumes the dominance of cargo flows. This is often referred to as its main, or fundamental hinterland. Any organic growth in this hinterland, either as imports or exports, results in expanding the cargo base. A port can also be more actively involved in intensifying its fundamental hinterland by developing land for logistics, such as port-centric logistics zones.
  • Hinterland expansion. A port also has a market area where it is competing with other ports, often referred to as its competition margin. If this hinterland expands, so does a port’s cargo base. However, this requires large investments in infrastructure to increase hinterland connectivity, particularly along corridors. Further, inland facilities such as dry ports are part of a strategy to expand a port’s cargo base.
  • Additional transshipment. Many ports have developed a notable transshipment function (ship to ship), some even becoming pure transshipment hubs. This function is often related to the position of a port within the global and regional shipping networks and the outcome of the decision of shipping lines in the organization of their service networks. The challenge remains that transshipment is complex to anchor and subject to fluctuation if a shipping line decides to change its network configuration. Ports with an active hinterland can expand this connectivity with that of transshipment since they can build additional economies of scale.

Thus, the balance between hinterland intensification, expansion, and transshipment can shift during a port’s evolution. Typically, a port starts with a local cargo base which can be expanded through the development of its hinterland. However, until recently, the port played a limited role in developing their hinterland. Hinterland expansion was more coincidental and subject to national or regional infrastructure strategies.