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Ports as Nodal Points in a Global Transport System
Ports as Nodal Points in a Global Transport System W. Winkelmans Erasmus University Rotterdam
I. Introduction Transport has always been crucial to the evolution of mankind. Kipling, the novelist, seemed to understand this quite well. Indeed, what else could he have meant when he observed that "transport is civilization"? This very simple statement acquires its full meaning today, especially when we rephrase it as "trans-port is civilization". Ports, doors, sea-ports, door to the open sea, doors to an open mind, have been and remain essential to the well-being and welfare of the regions in which they are located. How otherwise could we explain the initial and incredible differences between continental and mainland civilizations, such as Russia, and maritime civilizations, such as England, and between the original North American civilization and the ones that developed later. To a certain extent, the non-existence of an effective global transport system is responsible for the current 'gap' or the discrepancies between the over-abundance in most parts of the North and the shortages and shortcomings in much of the South. To understand these discrepancies, we might refer to Toynbee's 'Challenge and Response* theory. But in such a framework the importance of transport appears to have been overlooked. Moreover, today's increasing transportability, in the air, on water and over the land, is not only a prerequisite for globalization, it will also stimulate the creation of a global economy. Transportation is much more than a derived activity. It obviously became one of the crucial motors and practical ways for triggering an economy. Many quite perfect relationships have been found to exist between the level of regional development, for example GNP per capita, and one or another transport indicator, such as the number of telephones per capita, kilometres of railways per capita, etc. Several freight and passenger mobility indices have been calculated 65
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by Wilfred Own that demonstrate the existence of a close interrelationship between welfare and transport. Transport increases the value of goods and services, not through changes in form or content, but basically through changes in place and time. Sometimes, and today ever more so, the added value created by transport activities is larger than related production activities. For this reason, it is unwise to concentrate too much on the service or passive role of transportation. In many cases transport exists as an independent industry, an active partner, not just a derived activity, in the global system of production. As early as 1947 M.R. Bonavia observed that the importance of transport is universal and that very often "it is impossible to make a clear distinction between transport and production". Since then, transport has become more and more functionally integrated in the production chain, making Bonavia's statement even truer. From a technical viewpoint, seaports are a complex of several transversal sections of various and variable product and trans-port chains. As such, they need to be as flexible as possible, and, of course, ports must also be seen more as social than as technical bodies. Being a crucial interface between the land and sea legs of industrial and commercial activity, seaports directly influence the conditions for maritime transport development. The creation of MIDAS (Marine Industrial Development Areas) represent in so many countries sound and practical examples of this way of thinking. A great deal of evidence can, therefore, be assembled to show that water-borne transportation is the basic ingredient of civilization and that it helps mankind in attaining both prosperity and freedom.
II. Globalization of the Economy
Industrial activity is no longer as centred in Northwestern Europe and the Great Lakes area in North America as it once was. This is due to emerging industrial activity around the northern part of the Pacific basin. This activity emerged first in Japan and later also in Hong Kong, Taiwan, Singapore and Korea, as well as along the Westcoast of North America, mainly in the Vancouver-Seattle-Tacoma area and in California. 66
WINKELMANS
There have been major changes in the location and nature of industrial production. Until comparatively recently, when raw materials were not available at the place of manufacture, they were shipped from where they were produced to the industrial areas where they were required to be transformed into finished products. Today, raw material producers - mostly developing countries - are starting to ship not only raw materials but also intermediate and even finished products. Besides the shift in location, industrial production is thus also becoming increasingly partialized. Both changes may prove to be an economic blessing for developing countries and regions. In the older industrial areas, mainly situated in the industrialized countries, a shift is taking place from basic industrial activities, such as iron and steel production and oil refining, to knowledge-intensive activities for which labour costs can be higher. These changes in the industrialized countries and the emergence of the newly industrializing countries (NICs) are having major effects on the world transport pattern of goods. Transport patterns are becoming increasingly more complex and the interest in transport is growing world-wide. The latter is not only the consequence of longer transport distances and greater transport volumes, it is also reflected in increasing awareness of the importance of business logistics, in which production and transportation are integrated. For these reasons port planning is no longer that simple. No easy answers can today be given to such basic and pertinent questions as the following: (a) What kind of ship is calling at the port? (Changes in ship technology and ship management). (b) What kind of (world) trade will pass through the port and, consequently, what kind of goods are to be handled by the port? (Revolutionary changes in the structure and volumes of ocean-borne world trade). (c) What kind of cargo handling technology will be required? (Evolution of container sizes, changing appearance of goods, falling packing statistics, etc.). (d) What will be the right position of the port with respect to new shipping and port policies? 67
PARTE
(Implications of feeder lining, mainporting, teleporting, etc.). (e) What are the implications of growing environmental
considerations?
(Marpol regulations with respect to spoiled dredging materials). (f) What does the new marketing mix mean to seaports? (g) What are the consequences for seaports of shrinking state aid and budgeting programmes'! 2.1 Logistics In the case of logistics the following main trends can be observed: (a) Mainporting: The concentration of transport flows on a limited number (a few dozen in the world as a whole) of mainports, serving ever larger areas by the expansion of their operations to the sub-regional and regional scales and even beyond. (b) Specialization: Market segmentation and product variation call for 'tailor-made' transport. The frequency of transhipment increases, the parcel size decreases. This leads to differentiation in the transport market. (c) Cooperation between producer and transporter/distributor: There is a trend towards the shifting of certain (assembly) activities upstream, from in-house to transport nodal points. (d) Electronification of information: A decrease in costs and an increase in reliability and speed of and control over the logistics chain can be achieved by the electronification of the information flow accompanying the transport flow. (e) Growth in control: Trends are evident towards control by one firm over the total logistics chain. A growing number of shipowners are expanding their role by gaining control of the total logistics chain, including inland transport, storage and distribution. These trends lead to changing requirements with respect to vessels, navigation, information, and ports and their hinterland connections. Link-to-link decisions are becoming a thing of the past: today a more functional approach is the answer. Consequently, the goods to be carried, the 'loading', are no longer considered as exogenous to the transport system. 68
WINKELMANS
The container has arrived: it is a means of transport, of loading, of stevedoring and marshalling at one and the same time. The traditional man-load concept is slowly but steadily disappearing. Indirect transhipment and inland (dry) port terminals are further logical consequences and are also growing in importance. 2.2 Seaport Activity Changes in the world economy and the patterns of world trade carry numerous consequences for seaport activity. Some of the main ones are discussed below under the headings of transhipment, port layout, port industry, hinterland connections, port employment, and Western European seaports in general. Transhipment Consequences include: (a) the further dissipation of conventional break bulk in favour of neo-bulk, container and ro-ro loadings; by the year 2000 less than 10% of the throughput of many ports will be handled in the conventional way, i.e. by means of gantry cranes, in mixed sheds and on rather small terminal areas. (b) increasing specialization and concentration in liquid and dry bulk trades by means of large and very large - but not ultra large - vessels (100,000-250,000 dwt); the terminals themselves will therefore need capacities in the order of 5-10 million tons annually. Port Layout (a) maximization of scale economies, eventually in the field of stevedoring activities, with, as a consequence, deeper (i.e. larger) terminals for a given quay length and, as a further consequence, (re)location with a view to more space for rapid transhipment and storage. (b) fast increasing throughput per running metre of waterfront through increasing unit loads, in contrast to fairly constant throughputs per square metre in dry terminal areas. (c) slightly increasing ratios of wet port area to dry port area. Port Industry (a) decreasing external expansion in favour of capital-intensive deeplevel investments, especially for energy-intensive industries; the more 69
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downstream chemicals and heterogeneous final products will increase the need for more highly sophisticated transhipment installations of a rather moderated scale provided the same installations are established in ports in developing countries. (b) increasing contribution of railway and inland navigation in container and neo-bulk flows. Port Employment (a) decreasing quay-linked employment. (b) increasing productivity per man- or gang-hour. (c) decreasing manning levels per gang. (d) increasing need for specialization and flexibility. Western European Seaports in General (a) Western Europe remains the largest transport pole for dry bulks as a whole; the Mediterranean ports increase in relative importance, especially for exports. (b) overall tendency for a reduction in superfluous capacities. (c) attainment of a high degree of rationalization. (d) within the range Marseilles-Hamburg (14 ports), the Benelux ports continue to represent more than 50% of throughput. (e) in the case of world trade, Western Europe's share of the total is in decline, from 47% of the total in the period 1964-73 to 11 % in the period 1979-84; the share of its ports will probably also continue to fall, from 2 1 % in 1980 to 17.5% at the turn of the century.
III. New Trans-port Technologies Many of the shifts in trade and production, which are resulting in structural changes in the world economy, are going hand-in-hand with the establishment of new transportation facilities. Because land transport and air cargo transport in an increasing number of cases are becoming effective competitors to sea transport, it is no longer possible to consider maritime transport, including port 70
WINKELMANS
economics, outside of the total transport system. This explains why traditional modal split issues are being reconsidered in a so-called system modal splits. As Ljungstrom has observed: "the choice will not primarily be a modal choice; it will really be a choice between different transport systems, some of which will contain a combination of several modes and some of which will depend on only one mode". Recent developments with respect to vessels reveal two distinctive trends: a growth in ship size; and increasing specialization. The growth in size of container vessels has probably been the most impressive. In navigation, the above trends in logistics require more flexible voyage planning. In addition, environmental demands and concerns are leading to a greater emphasis on maritime safety. This has given rise to the need for: (i) improved communications techniques; (ii) more accurate navigation systems; and (iii) stricter vessel regulation. The following developments can be observed: (a) The International Maritime Satellite Organization (INMARSAT) providing communications at sea: telephone, telex, facsimile, data and television. (b) Installation of the Global Positioning System (GPS), improving the navigational safety of ships and other vessels anywhere on the planet to within 150 feet. (c) Remote piloting or even of remote control of vessels approaching ports. (d) The introduction of Vessel Traffic Management Systems (VTMS). (e) The use of electronic charts. Port infrastructure will consequently need to change from rigid to flexible facilities. Whereas the former were planned for 50 years, the latter may have to be depreciated in only a few decades. At the same time, hinterland connections of ports become increasingly important. Multi-modal transport infrastructure will be required (water, road, rail, pipeline and air), possibly making it more difficult to achieve the required flexibility in port layout. The availability of facilities for Electronic Data Interchange (EDI) will be a key element in the future of ports. Telematics (a contraction of telecommunications and informatics) will influence the total transport chain by increasing the 71
PART Π
efficiency of information flows in the transport process ('paperless trading'). The integration of transport information systems in global data communication networks will be of major importance in the next few years. In conclusion, the overall trend in maritime transport is towards larger and more specialized vessels, on even tighter but more flexible schedules under increasingly strict safety regulations, sailing to a more or less limited number of main ports. At the same time, the flow of accompanying information will gradually become as important as the transport of goods itself.
IV. Transport and the Environment It cannot be denied that the current mode of maritime transport does have adverse impacts on the environment, impacts that have to be eliminated. The protection of the marine environment, especially the preservation of its delicate ecological balance, is absolutely vital for the survival of mankind. The United Nations Convention on the Law of the Sea (UNCLOS, 1982) addresses in its Part XII Protection and Preservation of the Marine Environment not only pollution from ships but also from land-based sources. The International Maritime Organization (IMO) has unique responsibilities with regard to the promotion of safety of ships and the prevention of pollution by ships. IMO's Marine Pollution Convention (Marpol 1973/78) endeavours to achieve this goal. At present, 56 countries, their combined fleets representing over 80% of the world's merchant shipping tonnage, are parties to Marpol. The weakness of the present Marpol is that it shifts a marine environment problem to the shore: it requires that facilities be provided in ports for the reception and ultimate disposal of all harmful wastes which ships may not discharge at sea. It its Preamble, Marpol clearly specifies its objective: the complete elimination of intentional pollution of the marine environment by harmful substances and the minimization of accidental discharge of such substances. Ports too have become pollution centres, either directly or via rivers from their hinterlands. This is evident when dealing with the problem of dredging. Ports have to be dredged and many toxic chemicals are to be found in the silt removed. This leads to disposal problems. For this reason, special storage basins are being constructed, like the Slufter in Rotterdam. However, the number of realistic disposal alternatives is declining rapidly. 72
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For maritime transport itself, ports can act as 'nodal points' for combatting pollution and should be equipped with facilities for receiving and disposing of wastes and wrecks with hazardous goods. For many ports, however, the effects can be quite serious, since the costs of disposal are becoming prohibitive, placing some port operations in jeopardy. In addition, regentrification of urban areas and increasing real estate values often exert pressures on ports to reduce the scope of or even relocate their operations. It can be asked whether the development of a "safe and environmentally sound" maritime transport system would not make a 'source-oriented' approach to the problem necessary. The development and introduction of low- or non-waste technology on board ships would prevent the problem of operational pollution. In conclusion, the above gives rise to the following questions: (a) To what extent are current Marpol requirements effective and implemented globally? (b) To what extent are regional programmes for port State control effective and how can they be expanded? (c) How can maritime development cooperation be promoted to ensure the participation of the South in safeguarding the marine environment? (d) What fundamental changes in the maritime transport system and its techniques can be anticipated and what are their consequences for the South?
V. Globalization of Trans-port Modem ports are not limited to transport by water but have a multi-modal transport/storage/ transhipment infrastructure. This infrastructure allows the ports to receive and store goods in massive quantities, to tranship them overseas in smaller vessels or by other inland transport modes over increasing distances. In the case of Rotterdam, inland distances may well exceed 1000 km. From an economic viewpoint, these basic port activities spread like ripples across the water. The total economic impacts of ports, as shown by economic impact studies, are the cumulative effect of the whole range of activities linked 73
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to the handling and trans-porting of goods, as well as of banks and insurance companies which finance, trade and insure the goods, and of companies which process, store and sell the cargoes loaded or unloaded. All of these activities generate a substantial amount of income and added-value which benefit the community. The total economic impact of a port consists, therefore, of direct and secondary components. The first are represented by port industries and port-dependent industries, whereas the latter create indirect and induced effects. This whole process continues throughput the regional economy, generating more sales, jobs and incomes. The multiplier effects of seaports can be essential to the existence of regional growth poles. This has been demonstrated over and over again by input-output analyses. As Pisani observes in relation to ports in the U.S., commercial port activities in 1988 generated: "1.2 million jobs; a 50 billion dollar contribution to the gross national product; personal income of 28 billion dollars; Federal taxes of 10 billion dollars and State and local taxes of 3.5 billion dollars". In organizational terms, ports haver developed from 'trans-port centres ' (transport +transhipment + storage), via 'distribution centres' (previous functions + stuffing and stripping + stockkeeping + processing) into 'logistic centres' (previous functions + information processing). They should thus be considered as the 'brains' of the whole transportation network. This holds for the transport business itself as well as for related governmental activities. The emergence of 'main' ports, serving ever-larger areas by expanding their operations to the sub-regional and regional scales, increasingly calls for intergovernmental cooperation from the sub-regional to the global level. For the longer term, the aim of such cooperation should be the development of an efficient, equitable and sustainable global transport system: efficient in order not to waste money and energy, with goods transported at the lowest possible costs; equitable in order to ensure that all the world's regions are able to fairly participate in this development; and sustainable in order to ensure that such a system poses no threat, now and in the future, to the marine environment. Bringing this about will undoubtedly prove a very difficult task. Firstly, a global transport system should not only involve all 'main' ports and the most important 'feeder' ports and their transport infrastructure, it should also include the vessels that interlink the ports, the major sealanes they use as well as the tools to manage traffic and the transport of goods. Secondly, the bringing about of such a system, given its inherently international character, must primarily be a matter of inter-governmental cooperation. How74
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ever, in the western industrialized countries, the major actors in the system are private or at most semi-public in nature. It is more than a good sign that so many ports nowadays are gradually moving away from public ownership to a form which establishes a more self-sufficient revenue base. The general practice of subsidizing ports has had in many cases a negative effect on the cost-effectiveness and productivity of ports. No wonder J.K. Stuart states: " considering ports as a social service is an approach increasingly out of date and indeed dangerous, even from the point of view of what is for social good". New forms of public-private partnership - at the local, (sub)regional as well as global levels - will have to be developed. Such partnerships will be needed on the one hand to harmonize ever growing investments in (main) ports and their multi-modal inland infrastructures and, on the other, to optimize their increasingly complex management. For reasons of equity, developing countries should not be excluded. With few exceptions, developing countries have remained outside the mainstream of these developments. It is vital that the developing countries acquaint themselves as rapidly as possible with the new ship, port and transport-related technologies, and to increasingly participate in an emerging global transport system. This is also in the interests of the industrialized countries: there would be little point in establishing a sophisticated sustainable production and transportation system in the industrialized part of the world if the present mistakes continue to be made in other parts of the world. This is made very clear by the acknowledged reality of One ocean*. A system is sustainable when the activities it comprises offer no threats to its functioning. The life-cycle of goods, from raw materials to disposal, should contain only acceptable risks. Measures should be taken to prevent hazardous goods from becoming a real danger. If this is technically impossible or cannot be justified economically, the goods should not be transported at all. This could lead to the transport of certain materials at only certain stages of their life-cycle. In conclusion, 'main* ports - serving ever larger areas by expanding their operations to the sub-regional and regional scales - are becoming increasingly interlinked: a global transport system is thus emerging. To gradually improve its efficiency, its equity and sustainability, new and active forms of inter-governmental cooperation are indispensable. This cooperation may start at the sub-regional level but should gradually expand to the global level. It should aim 75
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at coordinating investments (in port investments, hinterland connections and traffic/transport tools), at increasing Southern participation, and at harmonizing maritime transport rules.
VI. Epilogue It took Rotterdam just over 100 years to grow from a small fishing port and shipping harbour into the biggest port in the world. Several factors led to this spectacular growth. First, the industrial revolution only reached Germany around 1870 and the Netherlands early this century. Second, Rotterdam profited from the free-trade policies that existed at the end of the last century. Third, Rotterdam exploited its location in the estuary of three important Western European Rivers: the Rhine, Meuse and Scheldt. Fourth, the New Waterway was dug to the North Sea, making it possible to scale up port activities. However, neither its current access draught of 75 ft nor its almost perfect multi-modal (water, road, rail, pipeline and air) transport infrastructure fully explain Rotterdam's success as a port. They are, of course, important though not sufficient conditions for a safe and efficient port. For this, a Vessel Traffic Management System and an International Transport Information System are also vital. But behind all this we find men and women, who make the story true and real, day in and day out. We should never forget this, neither in the framework of port labour conditions or in the context of port promotion. References Mar Ad (1978), What US Ports Mean to the Economy, U.S. Department of Commerce, Washington, D.C., 58 pp. Owen, W. (1964), Strategy for Mobility, New York, 250 pp. Pisani, J.M. (1989), Port Development in the US: Status, Issues and Outlook, IAPH Foundation, Tokyo, 49 pp. Stuart, J.K. (1984), 'The Business Approach to Port Management', Ports and Harbours, Vol. 29, No. 7-8, Tokyo, pp. 28-29. 76
I. Introduction Transport has always been crucial to the evolution of mankind. Kipling, the novelist, seemed to understand this quite well. Indeed, what else could he have meant when he observed that "transport is civilization"? This very simple statement acquires its full meaning today, especially when we rephrase it as "trans-port is civilization". Ports, doors, sea-ports, door to the open sea, doors to an open mind, have been and remain essential to the well-being and welfare of the regions in which they are located. How otherwise could we explain the initial and incredible differences between continental and mainland civilizations, such as Russia, and maritime civilizations, such as England, and between the original North American civilization and the ones that developed later. To a certain extent, the non-existence of an effective global transport system is responsible for the current 'gap' or the discrepancies between the over-abundance in most parts of the North and the shortages and shortcomings in much of the South. To understand these discrepancies, we might refer to Toynbee's 'Challenge and Response* theory. But in such a framework the importance of transport appears to have been overlooked. Moreover, today's increasing transportability, in the air, on water and over the land, is not only a prerequisite for globalization, it will also stimulate the creation of a global economy. Transportation is much more than a derived activity. It obviously became one of the crucial motors and practical ways for triggering an economy. Many quite perfect relationships have been found to exist between the level of regional development, for example GNP per capita, and one or another transport indicator, such as the number of telephones per capita, kilometres of railways per capita, etc. Several freight and passenger mobility indices have been calculated 65
PART Π
by Wilfred Own that demonstrate the existence of a close interrelationship between welfare and transport. Transport increases the value of goods and services, not through changes in form or content, but basically through changes in place and time. Sometimes, and today ever more so, the added value created by transport activities is larger than related production activities. For this reason, it is unwise to concentrate too much on the service or passive role of transportation. In many cases transport exists as an independent industry, an active partner, not just a derived activity, in the global system of production. As early as 1947 M.R. Bonavia observed that the importance of transport is universal and that very often "it is impossible to make a clear distinction between transport and production". Since then, transport has become more and more functionally integrated in the production chain, making Bonavia's statement even truer. From a technical viewpoint, seaports are a complex of several transversal sections of various and variable product and trans-port chains. As such, they need to be as flexible as possible, and, of course, ports must also be seen more as social than as technical bodies. Being a crucial interface between the land and sea legs of industrial and commercial activity, seaports directly influence the conditions for maritime transport development. The creation of MIDAS (Marine Industrial Development Areas) represent in so many countries sound and practical examples of this way of thinking. A great deal of evidence can, therefore, be assembled to show that water-borne transportation is the basic ingredient of civilization and that it helps mankind in attaining both prosperity and freedom.
II. Globalization of the Economy
Industrial activity is no longer as centred in Northwestern Europe and the Great Lakes area in North America as it once was. This is due to emerging industrial activity around the northern part of the Pacific basin. This activity emerged first in Japan and later also in Hong Kong, Taiwan, Singapore and Korea, as well as along the Westcoast of North America, mainly in the Vancouver-Seattle-Tacoma area and in California. 66
WINKELMANS
There have been major changes in the location and nature of industrial production. Until comparatively recently, when raw materials were not available at the place of manufacture, they were shipped from where they were produced to the industrial areas where they were required to be transformed into finished products. Today, raw material producers - mostly developing countries - are starting to ship not only raw materials but also intermediate and even finished products. Besides the shift in location, industrial production is thus also becoming increasingly partialized. Both changes may prove to be an economic blessing for developing countries and regions. In the older industrial areas, mainly situated in the industrialized countries, a shift is taking place from basic industrial activities, such as iron and steel production and oil refining, to knowledge-intensive activities for which labour costs can be higher. These changes in the industrialized countries and the emergence of the newly industrializing countries (NICs) are having major effects on the world transport pattern of goods. Transport patterns are becoming increasingly more complex and the interest in transport is growing world-wide. The latter is not only the consequence of longer transport distances and greater transport volumes, it is also reflected in increasing awareness of the importance of business logistics, in which production and transportation are integrated. For these reasons port planning is no longer that simple. No easy answers can today be given to such basic and pertinent questions as the following: (a) What kind of ship is calling at the port? (Changes in ship technology and ship management). (b) What kind of (world) trade will pass through the port and, consequently, what kind of goods are to be handled by the port? (Revolutionary changes in the structure and volumes of ocean-borne world trade). (c) What kind of cargo handling technology will be required? (Evolution of container sizes, changing appearance of goods, falling packing statistics, etc.). (d) What will be the right position of the port with respect to new shipping and port policies? 67
PARTE
(Implications of feeder lining, mainporting, teleporting, etc.). (e) What are the implications of growing environmental
considerations?
(Marpol regulations with respect to spoiled dredging materials). (f) What does the new marketing mix mean to seaports? (g) What are the consequences for seaports of shrinking state aid and budgeting programmes'! 2.1 Logistics In the case of logistics the following main trends can be observed: (a) Mainporting: The concentration of transport flows on a limited number (a few dozen in the world as a whole) of mainports, serving ever larger areas by the expansion of their operations to the sub-regional and regional scales and even beyond. (b) Specialization: Market segmentation and product variation call for 'tailor-made' transport. The frequency of transhipment increases, the parcel size decreases. This leads to differentiation in the transport market. (c) Cooperation between producer and transporter/distributor: There is a trend towards the shifting of certain (assembly) activities upstream, from in-house to transport nodal points. (d) Electronification of information: A decrease in costs and an increase in reliability and speed of and control over the logistics chain can be achieved by the electronification of the information flow accompanying the transport flow. (e) Growth in control: Trends are evident towards control by one firm over the total logistics chain. A growing number of shipowners are expanding their role by gaining control of the total logistics chain, including inland transport, storage and distribution. These trends lead to changing requirements with respect to vessels, navigation, information, and ports and their hinterland connections. Link-to-link decisions are becoming a thing of the past: today a more functional approach is the answer. Consequently, the goods to be carried, the 'loading', are no longer considered as exogenous to the transport system. 68
WINKELMANS
The container has arrived: it is a means of transport, of loading, of stevedoring and marshalling at one and the same time. The traditional man-load concept is slowly but steadily disappearing. Indirect transhipment and inland (dry) port terminals are further logical consequences and are also growing in importance. 2.2 Seaport Activity Changes in the world economy and the patterns of world trade carry numerous consequences for seaport activity. Some of the main ones are discussed below under the headings of transhipment, port layout, port industry, hinterland connections, port employment, and Western European seaports in general. Transhipment Consequences include: (a) the further dissipation of conventional break bulk in favour of neo-bulk, container and ro-ro loadings; by the year 2000 less than 10% of the throughput of many ports will be handled in the conventional way, i.e. by means of gantry cranes, in mixed sheds and on rather small terminal areas. (b) increasing specialization and concentration in liquid and dry bulk trades by means of large and very large - but not ultra large - vessels (100,000-250,000 dwt); the terminals themselves will therefore need capacities in the order of 5-10 million tons annually. Port Layout (a) maximization of scale economies, eventually in the field of stevedoring activities, with, as a consequence, deeper (i.e. larger) terminals for a given quay length and, as a further consequence, (re)location with a view to more space for rapid transhipment and storage. (b) fast increasing throughput per running metre of waterfront through increasing unit loads, in contrast to fairly constant throughputs per square metre in dry terminal areas. (c) slightly increasing ratios of wet port area to dry port area. Port Industry (a) decreasing external expansion in favour of capital-intensive deeplevel investments, especially for energy-intensive industries; the more 69
PART Π
downstream chemicals and heterogeneous final products will increase the need for more highly sophisticated transhipment installations of a rather moderated scale provided the same installations are established in ports in developing countries. (b) increasing contribution of railway and inland navigation in container and neo-bulk flows. Port Employment (a) decreasing quay-linked employment. (b) increasing productivity per man- or gang-hour. (c) decreasing manning levels per gang. (d) increasing need for specialization and flexibility. Western European Seaports in General (a) Western Europe remains the largest transport pole for dry bulks as a whole; the Mediterranean ports increase in relative importance, especially for exports. (b) overall tendency for a reduction in superfluous capacities. (c) attainment of a high degree of rationalization. (d) within the range Marseilles-Hamburg (14 ports), the Benelux ports continue to represent more than 50% of throughput. (e) in the case of world trade, Western Europe's share of the total is in decline, from 47% of the total in the period 1964-73 to 11 % in the period 1979-84; the share of its ports will probably also continue to fall, from 2 1 % in 1980 to 17.5% at the turn of the century.
III. New Trans-port Technologies Many of the shifts in trade and production, which are resulting in structural changes in the world economy, are going hand-in-hand with the establishment of new transportation facilities. Because land transport and air cargo transport in an increasing number of cases are becoming effective competitors to sea transport, it is no longer possible to consider maritime transport, including port 70
WINKELMANS
economics, outside of the total transport system. This explains why traditional modal split issues are being reconsidered in a so-called system modal splits. As Ljungstrom has observed: "the choice will not primarily be a modal choice; it will really be a choice between different transport systems, some of which will contain a combination of several modes and some of which will depend on only one mode". Recent developments with respect to vessels reveal two distinctive trends: a growth in ship size; and increasing specialization. The growth in size of container vessels has probably been the most impressive. In navigation, the above trends in logistics require more flexible voyage planning. In addition, environmental demands and concerns are leading to a greater emphasis on maritime safety. This has given rise to the need for: (i) improved communications techniques; (ii) more accurate navigation systems; and (iii) stricter vessel regulation. The following developments can be observed: (a) The International Maritime Satellite Organization (INMARSAT) providing communications at sea: telephone, telex, facsimile, data and television. (b) Installation of the Global Positioning System (GPS), improving the navigational safety of ships and other vessels anywhere on the planet to within 150 feet. (c) Remote piloting or even of remote control of vessels approaching ports. (d) The introduction of Vessel Traffic Management Systems (VTMS). (e) The use of electronic charts. Port infrastructure will consequently need to change from rigid to flexible facilities. Whereas the former were planned for 50 years, the latter may have to be depreciated in only a few decades. At the same time, hinterland connections of ports become increasingly important. Multi-modal transport infrastructure will be required (water, road, rail, pipeline and air), possibly making it more difficult to achieve the required flexibility in port layout. The availability of facilities for Electronic Data Interchange (EDI) will be a key element in the future of ports. Telematics (a contraction of telecommunications and informatics) will influence the total transport chain by increasing the 71
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efficiency of information flows in the transport process ('paperless trading'). The integration of transport information systems in global data communication networks will be of major importance in the next few years. In conclusion, the overall trend in maritime transport is towards larger and more specialized vessels, on even tighter but more flexible schedules under increasingly strict safety regulations, sailing to a more or less limited number of main ports. At the same time, the flow of accompanying information will gradually become as important as the transport of goods itself.
IV. Transport and the Environment It cannot be denied that the current mode of maritime transport does have adverse impacts on the environment, impacts that have to be eliminated. The protection of the marine environment, especially the preservation of its delicate ecological balance, is absolutely vital for the survival of mankind. The United Nations Convention on the Law of the Sea (UNCLOS, 1982) addresses in its Part XII Protection and Preservation of the Marine Environment not only pollution from ships but also from land-based sources. The International Maritime Organization (IMO) has unique responsibilities with regard to the promotion of safety of ships and the prevention of pollution by ships. IMO's Marine Pollution Convention (Marpol 1973/78) endeavours to achieve this goal. At present, 56 countries, their combined fleets representing over 80% of the world's merchant shipping tonnage, are parties to Marpol. The weakness of the present Marpol is that it shifts a marine environment problem to the shore: it requires that facilities be provided in ports for the reception and ultimate disposal of all harmful wastes which ships may not discharge at sea. It its Preamble, Marpol clearly specifies its objective: the complete elimination of intentional pollution of the marine environment by harmful substances and the minimization of accidental discharge of such substances. Ports too have become pollution centres, either directly or via rivers from their hinterlands. This is evident when dealing with the problem of dredging. Ports have to be dredged and many toxic chemicals are to be found in the silt removed. This leads to disposal problems. For this reason, special storage basins are being constructed, like the Slufter in Rotterdam. However, the number of realistic disposal alternatives is declining rapidly. 72
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For maritime transport itself, ports can act as 'nodal points' for combatting pollution and should be equipped with facilities for receiving and disposing of wastes and wrecks with hazardous goods. For many ports, however, the effects can be quite serious, since the costs of disposal are becoming prohibitive, placing some port operations in jeopardy. In addition, regentrification of urban areas and increasing real estate values often exert pressures on ports to reduce the scope of or even relocate their operations. It can be asked whether the development of a "safe and environmentally sound" maritime transport system would not make a 'source-oriented' approach to the problem necessary. The development and introduction of low- or non-waste technology on board ships would prevent the problem of operational pollution. In conclusion, the above gives rise to the following questions: (a) To what extent are current Marpol requirements effective and implemented globally? (b) To what extent are regional programmes for port State control effective and how can they be expanded? (c) How can maritime development cooperation be promoted to ensure the participation of the South in safeguarding the marine environment? (d) What fundamental changes in the maritime transport system and its techniques can be anticipated and what are their consequences for the South?
V. Globalization of Trans-port Modem ports are not limited to transport by water but have a multi-modal transport/storage/ transhipment infrastructure. This infrastructure allows the ports to receive and store goods in massive quantities, to tranship them overseas in smaller vessels or by other inland transport modes over increasing distances. In the case of Rotterdam, inland distances may well exceed 1000 km. From an economic viewpoint, these basic port activities spread like ripples across the water. The total economic impacts of ports, as shown by economic impact studies, are the cumulative effect of the whole range of activities linked 73
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to the handling and trans-porting of goods, as well as of banks and insurance companies which finance, trade and insure the goods, and of companies which process, store and sell the cargoes loaded or unloaded. All of these activities generate a substantial amount of income and added-value which benefit the community. The total economic impact of a port consists, therefore, of direct and secondary components. The first are represented by port industries and port-dependent industries, whereas the latter create indirect and induced effects. This whole process continues throughput the regional economy, generating more sales, jobs and incomes. The multiplier effects of seaports can be essential to the existence of regional growth poles. This has been demonstrated over and over again by input-output analyses. As Pisani observes in relation to ports in the U.S., commercial port activities in 1988 generated: "1.2 million jobs; a 50 billion dollar contribution to the gross national product; personal income of 28 billion dollars; Federal taxes of 10 billion dollars and State and local taxes of 3.5 billion dollars". In organizational terms, ports haver developed from 'trans-port centres ' (transport +transhipment + storage), via 'distribution centres' (previous functions + stuffing and stripping + stockkeeping + processing) into 'logistic centres' (previous functions + information processing). They should thus be considered as the 'brains' of the whole transportation network. This holds for the transport business itself as well as for related governmental activities. The emergence of 'main' ports, serving ever-larger areas by expanding their operations to the sub-regional and regional scales, increasingly calls for intergovernmental cooperation from the sub-regional to the global level. For the longer term, the aim of such cooperation should be the development of an efficient, equitable and sustainable global transport system: efficient in order not to waste money and energy, with goods transported at the lowest possible costs; equitable in order to ensure that all the world's regions are able to fairly participate in this development; and sustainable in order to ensure that such a system poses no threat, now and in the future, to the marine environment. Bringing this about will undoubtedly prove a very difficult task. Firstly, a global transport system should not only involve all 'main' ports and the most important 'feeder' ports and their transport infrastructure, it should also include the vessels that interlink the ports, the major sealanes they use as well as the tools to manage traffic and the transport of goods. Secondly, the bringing about of such a system, given its inherently international character, must primarily be a matter of inter-governmental cooperation. How74
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ever, in the western industrialized countries, the major actors in the system are private or at most semi-public in nature. It is more than a good sign that so many ports nowadays are gradually moving away from public ownership to a form which establishes a more self-sufficient revenue base. The general practice of subsidizing ports has had in many cases a negative effect on the cost-effectiveness and productivity of ports. No wonder J.K. Stuart states: " considering ports as a social service is an approach increasingly out of date and indeed dangerous, even from the point of view of what is for social good". New forms of public-private partnership - at the local, (sub)regional as well as global levels - will have to be developed. Such partnerships will be needed on the one hand to harmonize ever growing investments in (main) ports and their multi-modal inland infrastructures and, on the other, to optimize their increasingly complex management. For reasons of equity, developing countries should not be excluded. With few exceptions, developing countries have remained outside the mainstream of these developments. It is vital that the developing countries acquaint themselves as rapidly as possible with the new ship, port and transport-related technologies, and to increasingly participate in an emerging global transport system. This is also in the interests of the industrialized countries: there would be little point in establishing a sophisticated sustainable production and transportation system in the industrialized part of the world if the present mistakes continue to be made in other parts of the world. This is made very clear by the acknowledged reality of One ocean*. A system is sustainable when the activities it comprises offer no threats to its functioning. The life-cycle of goods, from raw materials to disposal, should contain only acceptable risks. Measures should be taken to prevent hazardous goods from becoming a real danger. If this is technically impossible or cannot be justified economically, the goods should not be transported at all. This could lead to the transport of certain materials at only certain stages of their life-cycle. In conclusion, 'main* ports - serving ever larger areas by expanding their operations to the sub-regional and regional scales - are becoming increasingly interlinked: a global transport system is thus emerging. To gradually improve its efficiency, its equity and sustainability, new and active forms of inter-governmental cooperation are indispensable. This cooperation may start at the sub-regional level but should gradually expand to the global level. It should aim 75
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at coordinating investments (in port investments, hinterland connections and traffic/transport tools), at increasing Southern participation, and at harmonizing maritime transport rules.
VI. Epilogue It took Rotterdam just over 100 years to grow from a small fishing port and shipping harbour into the biggest port in the world. Several factors led to this spectacular growth. First, the industrial revolution only reached Germany around 1870 and the Netherlands early this century. Second, Rotterdam profited from the free-trade policies that existed at the end of the last century. Third, Rotterdam exploited its location in the estuary of three important Western European Rivers: the Rhine, Meuse and Scheldt. Fourth, the New Waterway was dug to the North Sea, making it possible to scale up port activities. However, neither its current access draught of 75 ft nor its almost perfect multi-modal (water, road, rail, pipeline and air) transport infrastructure fully explain Rotterdam's success as a port. They are, of course, important though not sufficient conditions for a safe and efficient port. For this, a Vessel Traffic Management System and an International Transport Information System are also vital. But behind all this we find men and women, who make the story true and real, day in and day out. We should never forget this, neither in the framework of port labour conditions or in the context of port promotion. References Mar Ad (1978), What US Ports Mean to the Economy, U.S. Department of Commerce, Washington, D.C., 58 pp. Owen, W. (1964), Strategy for Mobility, New York, 250 pp. Pisani, J.M. (1989), Port Development in the US: Status, Issues and Outlook, IAPH Foundation, Tokyo, 49 pp. Stuart, J.K. (1984), 'The Business Approach to Port Management', Ports and Harbours, Vol. 29, No. 7-8, Tokyo, pp. 28-29. 76