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  1. Foreland-Based Regionalization:Integrating Intermediate Hubs with Port HinterlandsTheo NotteboomITMMA - University of Antwerp and Antwerp Maritime AcademyJean-Paul RodrigueDepartment of Global Studies & Geography, Hofstra UniversityIFSPA Conference 2009 Hong Kong Polytechnic University, Hong Kong – 25-27 May 2009

  2. Content • PORT REGIONALIZATION REVISITED • THE ROLE AND FUNCTION OF INTERMEDIATE HUBS • IN SEARCH OF COMPETITIVE ADVANTAGE • RECONCILING FORELANDS AND HINTERLANDS • AN UNFOLDING PARADIGM?

  3. 1. Port Regionalization Re-visited Globalization Fragmented production and consumption systems. Maritime side: Economies of scale and frequency of service along major pendulum routes. Inland side: Spatial deconsolidation (or consolidation). Local constraints Congestion and limited amount of land. Port growth and expansion issues. Freight activities: Used to take place in proximity of port terminal facilities. Setting of a network of inland terminals.

  4. Port Regionalization Re-visitedThe Spatial Development of a Port System Phase 2: Penetration and hinterland capture Phase 1: Scattered ports LAND SEA Phase 4: Centralization Phase 3: Interconnection & concentration Phase 6: Regionalization Phase 5: Decentralization and insertion of ‘offshore’ hub Hinterland-based (Regional load centre network) Freight corridor Load center Interior centre Deepsea liner services Shortsea/feeder services Foreland-based

  5. 1. Port Regionalization Re-visitedRegionalization and Hinterland Setting North America Western Europe East and Southeast Asia Coastal concentration Landbridge connections Inland concentration Coastal gateways Coastal concentration Low hinterland access

  6. 1. Port Regionalization Re-visited Path dependency: Building on previous phases and ‘memory effects’. Follow a similar evolutionary development path. Degree of contingency: Deviate from existing development paths. Consequences: Port systems do not follow the same sequence of stages. Some level of disparity among port system developments.

  7. 1. Port Regionalization Re-visited “Terminalization” Higher level of integration within freight distribution systems through terminals. Terminals and terminalization: A buffer to be used for temporary storage. A constraint inciting various forms of satellite/inland terminal use and inventory in transit practices. Extended gateways and extended distribution centers. The need to look at intermediate hubs.

  8. 2. The Role and Function of Intermediate Hubs Emergence Since the mid 1990s in many port systems. Critical factors: Excellent nautical accessibility. Proximity of major shipping routes (deviation). Land for future expansion. Mostly owned by port holdings or carriers. Not in all port systems: Prevalent in the Mediterranean and Pacific Asia / Middle East. Limited in the Americas (avoid flag restriction).

  9. 2. The Role and Function of Intermediate Hubs Function Multiply shipping options. Optimization of vessel movements: Hubs, relay or interlining locations. Points of convergence of regional shipping Connect the same hierarchy levels and improve connectivity within the network (relay and interlining) Some intermediary locations strictly perform cargo handling functions and have a non-existent hinterland

  10. The Insertion of Intermediate Hub Terminals Hub-and-Spoke Relay Interlining Deep-sea line Feeder Hub 85% of Transshipment Traffic 15% of Transshipment Traffic

  11. World’s Main Intermediate Hubs, 2007

  12. World’s Main Transshipment Markets, 2007

  13. Transhipment flows in Europe Transhipment hubs in Med (85-95% transhipment incidence) Gioia Tauro, Algeciras, Taranto, Cagliari, Malta

  14. 2. The Role and Function of Intermediate Hubs Regional shipping networks Ports feel that serving feeder vessels means a loss of status. Feeder options: Direct feeders between hub and feeder port: Lowest transit time but requires more feeders and smaller feeder vessels. Indirect feeders via line-bundling loops including more than one feeder port: Economies of feeder vessel size, but incur longer distances and longer transit times.

  15. 2. The Role and Function of Intermediate Hubs Vulnerability of intermediate hubs to container growth and decline Direct end-to-end or line-bundling services versus hub-and-spoke: a hub can become a redundant node in the network Footloose behaviour of transhipment/relay volumes

  16. Transhipment Hubs in the West Mediterranean Taranto Valencia (MSC) Cagliari Piraeus (?) Algeciras Gioia Tauro Malta

  17. Market shares of ports in the West Mediterranean according to the diversion distance (1975-2008) Source: Notteboom (2009)

  18. Container throughput in million TEU, capacity extensions in million TEU Djendjen (Algeria) Capacity: +2 (DP World) Bejaia (Algeria) Traffic: 0.15 (2008) Capacity: +2.5 (>2010) Algiers (Algeria) Traffic: 0.5 (2007) Capacity: +0.8 (2010) Ambarli (Turkey) Traffic: 2.26 (2008) Beirut (Libanon) Traffic: 0.95 (2008) Mersin (Turkey) Misurata (Libya) Initial plans Tanger Med II APMT/Akwa: + 3 mln TEU (2012) PSA: +2 mln TEU (2012) Haifa (Israel) Traffic: 1.39 (2008) Tanger Med APMT: + 1.5 mln TEU Eurogate: +1.5 mln TEU Damietta (Egypt) Capacity: +4 (2012) Port Said (Egypt) Traffic: 3.2 (2008) Capacity: +2.5 (2011) Rades (Tunisia) Traffic: 0.3 (2007) Enfidha (Tunisia) Capacity: +1 (2011) +2.5 (period 2011-2015) +2 (period 2015-2030) PLAN OF TANGER MED Competition from new port developments in Med Source: Notteboom (2009)

  19. 3. Foreland-Based Regionalization: In Search of Competitive Advantage Vulnerability of intermediate hubs: Narrow focus on transhipment only Competition on basic resources such as location, nautical accessibility, terminal infrastructure and on terminal productivity Sources of competition can rather easily be imitated by competitors => hard to create a sustainable competitive advantage

  20. 3. Foreland-Based Regionalization: In Search of Competitive Advantage Intermediate hubs likely to play a more important role beyond pure transhipment: Capitalize on scale increases of vessels: Undermining the serviceability of some ports (lack of connectivity) Hubs offer advantages of consolidation + support a level of traffic not feasible otherwise Extracting more value/economic rent from cargo passing through: Using the hub for added-value logistical activities (see e.g. Theys et al, 2008) Low-end to high-end value added activities (e.g. mass customization of products) Low cost location before entering high distribution cost areas Free-trade zone status can trigger development of value-added services

  21. 3. Foreland-Based Regionalization: In Search of Competitive Advantage Integration of intermediate hubs in regional shipping networks. The maritime foreland of the intermediate hub is functionally acting as a hinterland. Reconciling operational characteristics of forelands and hinterlands Inland Terminal HINTERLAND FORELAND Main Shipping Lane INTERMEDIATE HUB

  22. 4. Foreland-Based Regionalization: Reconciling Forelands and Hinterlands Different momentums Maritime momentum (carriers’ needs): Economies of scale. Optimal network configuration (concentration). Inland momentum (shippers’ needs): Spatial coverage (deconcentration). Frequency and flexibility. A growing disparity: Massification versus atomization. At a certain traffic level; inland diseconomies of scale.

  23. The “Last Mile” in Freight Distribution Massification Atomization Frequency Capacity REGIONAL LOCAL HINTERLAND GLOBAL Shipping Network Segment Corridor Customer “Last Mile” Inland Terminal Distribution Center Gateway

  24. Functional and Geographical Diffusion of Containerization: Globalization and Regionalization Foreland Traffic Hinterland Traffic Regionalization Cost per TEU-KM Volume

  25. 4. Foreland-Based Regionalization: Reconciling Forelands and Hinterlands Reconciliation Hinterland-based regionalization permitted inland freight traffic to keep up with volume and network configuration changes. Foreland-based regionalization enables small and medium-sized ports an integration to an intermediate hub: Long distance volatile transshipment traffic complemented with more stable regional traffic. Functional gateway of a regional port system. Competitiveness of a maritime range.

  26. Port Regionalization Clusters in Pacific Asia Hinterland-based regionalization Foreland-based regionalization

  27. 5. An Unfolding Paradigm? Changing role of intermediate hubs in regional shipping networks ? Competitive strategy to cope with risks: Footloose operators and shifts in maritime shipping networks. Secure traffic from smaller regional ports. Capture added value. Perception of the feeder function Ports prefer direct calls. Option: link to more than one hub. Transition phase? Foreland-based regionalization appears to be a distinct phase on its own.

  28. Thank you for your attention ! theo.notteboom@ua.ac.be jean-paul.rodrigue@hofstra.edu

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