- Email: [email protected]
The impact of world trade on the Port of Rotterdam and the wider region of Rotterdam-Rijnmond
G Model CSTP 157 No. of Pages 4
Case Studies on Transport Policy xxx (2016) xxx–xxx
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The impact of world trade on the Port of Rotterdam and the wider region of Rotterdam-Rijnmond Wim Heijman* , Cornelis Gardebroek, Wouter van Os Wageningen University, Agricultural Economics and Rural Policy, Hollandseweg 1, 6706 KN Wageningen, The Netherlands
A R T I C L E I N F O
Article history: Received 4 September 2015 Received in revised form 27 June 2016 Accepted 7 March 2017 Available online xxx Keywords: World trade Throughput Port of Rotterdam Rotterdam-Rijnmond region Regional economy
A B S T R A C T
We study the economic impact of world trade on the throughput in the Port of Rotterdam and the regional economy of Rotterdam-Rijnmond. We use a two-step approach. In the first step we analyze the relationship between world trade and the port’s throughput. In the second step we deal with the impact of the port’s throughput on regional economic indicators like income and number of jobs. It appears that the global business cycle determines the port activities and that, in turn, the port activities are essential for the regional economic development, in this way linking the regional economy to the global business cycle. Diversification of the regional economy is recommended to make the regional economy more resilient. © 2017 Published by Elsevier Ltd on behalf of World Conference on Transport Research Society.
1. Introduction World trade is increasing over the years (Krugman, 1995). The European Union is the world’s largest importer and exporter of goods and services, responsible for almost 20 percent of total world trade (European Commission, 2012). Even though all EU countries individually are a member of the World Trade Organization they act as a single block. Market incentives dictate that a large part of EU’s trade is concentrated in Europe’s northern port ranges of which Rotterdam is by far the biggest (Bosch et al., 2011). More and more large ports act as global hubs. Therefore, ports like Rotterdam are assumed to react more to global development than to the development of the hinterland only. World trade is a suitable indicator of the global business cycle. The objective of this study is to analyse the economic impact of world trade on the port of Rotterdam and the regional economy of Rotterdam-Rijnmond. This is done in two stages. First, the impact of world trade on Rotterdam’s port activity is assessed. Total world trade is assumed to be related to the throughput in the port. The second part of the analysis deals with the influence of the port on the wider region of Rotterdam-Rijnmond in which the port is located. Much research has been done on the relationship
* Corresponding author. E-mail address: [email protected] (W. Heijman).
between regional economic development and port activities and generally speaking the influence of the port on regional development is significant (Botasso et al., 2014). However, what is lacking in literature is the two-step-approach that we carry out in this paper (Grammenos, 2013; Coto Millán et al., 2010; Hensher and Button, 2007; Coppens et al., 2007). Port related industry is overrepresented in Rotterdam-Rijnmond. In that respect Rotterdam-Rijnmond is representative for other regions in which a port is located (e.g. Antwerp, Hamburg), so there we may expect the same type of chain reactions as we find for Rotterdam. In the final part of the paper we link the two steps by estimating the impact of world trade on regional economic development. We assume that for the development of regions like RotterdamRijnmond international trade is of crucial importance. Therefore we hypothesize that a positive relation is to be found between total world trade and the activity of the port. Furthermore, we expect that some countries have a bigger impact on port activity than others. We also expect a positive relationship between port activity and regional economic growth. 2. Trade and throughput in the Port of Rotterdam Fig. 1 shows the development of total world trade volume and Rotterdam throughput since 1975. One can spot a distinct downward movement in both graphs during the 1980s. This can
http://dx.doi.org/10.1016/j.cstp.2017.03.005 2213-624X/© 2017 Published by Elsevier Ltd on behalf of World Conference on Transport Research Society.
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
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9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 1970
1975
1980
1985
1990
1995
world trade
2000
2005
2010
500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2015
throughput
Fig. 1. World trade volume (in millions of 1975 dollars, left axis) and throughput in the Port of Rotterdam (millions of metric tons, right axis). Source: WTO (2012), Port of Rotterdam (2012a).
be contributed to the oil crisis of 1979 and the subsequent economic crises and political tensions. Furthermore the 2007 financial crisis leaves a dent in both graphs. To assess more formally whether a relationship between world trade and Rotterdam throughput exists, we apply time-series analysis on the natural logarithms of both variables. First, it is assessed whether both series are stationary or not. Non-stationary series may have stochastic or deterministic trends in common that suggest a relationship that may not exist in reality. In other words, the upward-sloping trend that both series show in Fig. 1, does not necessarily mean there is a causal relation. Dickey-Fuller and KPSS tests (Verbeek, 2012, p. 292–294) show that both series are nonstationary and integrated of order one. This means that standard OLS on the observed values cannot be applied. Since both series have the same order of integration there could be a stable long-run co-integrating relation between world trade and Rotterdam throughput (e.g. Verbeek, 2012: p. 343–348). However, the Engle-Granger test and the CRDW test for co-integration both indicate that the series are not co-integrated, indicating absence of a long-run equilibrium relation between the series. Therefore, since both series are integrated of order one we proceed by estimating an equation in first-differences, resulting in Eq. (1):
Dðln TRt Þ ¼ 0:010 þ 0:279 Dðln WT t Þ R2 ¼ 0:296 N ¼ 36
3:43
3:77
ð1Þ
9000000
500,000
8000000
450,000
Table 1 Share of the different groups of countries in the total world trade over the period 1994–2011. Year
BRIC
OECD
LDC
ROTW
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0.073 0.075 0.076 0.082 0.080 0.076 0.083 0.092 0.097 0.106 0.118 0.130 0.140 0.152 0.166 0.173 0.190 0.202
0.476 0.471 0.477 0.482 0.500 0.534 0.525 0.524 0.519 0.508 0.497 0.488 0.480 0.477 0.484 0.452 0.439 0.432
0.006 0.006 0.006 0.006 0.006 0.006 0.006 0.007 0.007 0.007 0.007 0.009 0.009 0.01 0.011 0.013 0.012 0.012
0.444 0.446 0.438 0.428 0.412 0.382 0.384 0.376 0.375 0.377 0.376 0.372 0.369 0.360 0.337 0.361 0.355 0.353
where TR stands for throughput in the port of Rotterdam, WT is world trade and D indicates first-differences. T-ratios are presented below the estimated coefficients. The regression results indicate that short-run shocks in world trade have a statistically significant impact on Rotterdam throughput. Since we use differences in natural logarithms this implies that the growth rate of the Rotterdam throughput between two years is a function of 0.279 times the growth rate of world trade. This makes sense because global trade rose faster than the port’s throughput. This is also in line with Fig. 1. Analysis of the residuals using autocorrelation (AC), partial autocorrelation (PAC) and Ljung-Box tests (Verbeek, 2012, p. 306–310) showed that the residuals are white noise, so that higher order ARIMA terms are not required. The value of R2 is reasonable given that the model is estimated in firstdifferences and since only world trade was included as regressor. Note that our goal is to test this relation, not to come up with a complete model explaining Rotterdam throughput. Next, we consider four groups of countries: BRIC, OECD, LDC (Least Developed Countries) and ROTW (Rest of the World). Fig. 2 shows the trade volumes of the four groups and the throughput of the port. Data for this analysis was only available since 1994. One can observe the impact the 2007 financial crisis had on trade volumes, especially on the trade of OECD countries. The trade of
400,000
7000000
350,000
6000000
300,000 5000000 250,000 4000000 200,000 3000000
150,000
2000000
100,000
1000000 0 1992 1994 BRIC
50,000
1996 1998 OECD
2000 LDC
2002
2004 ROTW
2006
2008 Total
0 2010 2012 Throughput
Fig. 2. Total world trade of the four groups on the left y-axis (millions of 1975 dollars). Throughput in the Port of Rotterdam on the right y-axis (millions of tons). Source: WTO (2012), Port of Rotterdam (2012a).
Fig. 3. Port’s throughput of the four groups of countries 1996–2010 (millions of tons).
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
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45000
500,000
40000
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35000
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3
350,000
30000
300,000
25000
250,000 20000
200,000
15000
150,000
10000
100,000
5000
50,000
0 1994
1996
1998
2000
2002
2004
2006
GDP Rijnmond
2008
2010
0 2012
Throughput
Fig. 4. GDP Rotterdam-Rijnmond on the left y-axis (in 1995 euros). Source: Statistics Netherlands (2012) and throughput in the port of Rotterdam (in millions of tons) on the right y-axis. Source: Port of Rotterdam (2012a).
the BRIC countries had almost the same volumes as the LDC’s countries in 1994 but increased sharply after 2002. LDC’s are at the very bottom of the pile in terms of their trade volumes, showing little real increase over the years (Groot et al., 2011). Table 1 presents the shares of the different groups in the world trade over the years. From Table 1 we conclude that the BRIC countries and the LDC’s have an increasing share of the world trade, whereas the OECD and the ROTW have a large but declining share (Brenton, 2003). This means that BRIC- and LDC trade is growing faster than OECD and ROTW-trade. This also reflects in the port’s throughput (see Fig. 3): in the period 1996–2011 BRIC’s throughput grew faster than OECD’s throughput (Moe et al., 2010).
Fig. 6. Index real GDP and number of jobs E, 1995–2011 (prices 2005).
respectively. Both are assumed to be a function of the port’s throughput. Again, since we use non-stationary time series, the equations are estimated in first-differences of natural logarithms. The results of the regression analysis with throughput TR as independent variable (ln of first differences) and GDP and employment E in Rotterdam-Rijnmond as dependent variables (both as ln of first differences) are shown in Eqs. (2) and (3).
Dðln GDPt Þ ¼ 0:009 þ 0:495 Dðln TRt Þ; 1:212
¼ 16
3:527
¼ 16
It is logical to hypothesize that there is a relationship between the economic performance of the port and that of the region in which it is located (Groot-Rijnmond). Assumingly, the port functions as the economic base of the region (Schaffer, 2010). It is home to a highly comprehensive range of companies specializing in cargo handling, transportation, storage, warehousing and distribution, industrial processing and various auxiliary services (Port of Rotterdam, 2012b). To test the hypothesis that port throughput affects the regional economy, two regression analyses are performed. The dependent variables in the regression equations are regional GDP (Fig. 4) and, as a measure of employment, the number of jobs in FTE’s (Fig. 5),
0:032
N ð2Þ
Dðln Et Þ ¼ 0:001 þ 0:486 Dðln TRt Þ;
3. Regional importance of port activity
R2 ¼ 0:471;
1:507
R2 ¼ 0:140;
N ð3Þ
From these results we conclude that there is a significant relationship between the throughput in the port on the one hand and GDP of the region Rotterdam-Rijnmond on the other (Eq. (2)). The relationship between the number of jobs E (FTE’s) in the region and the throughput TR is much weaker (Eq. (3)), probably due to the variation in the productivity of labor, illustrated by Fig. 6. This figure shows that between 1995 and 2011 the GDP per worker increased, suggesting that labor productivity has increased during the period indicated. GDP per FTE increased by 0.62 percent annually on average. The regression results of the relationship between number of jobs E (FTE’s, ln of first differences) and real GDP (ln of first
125 500,000
700
TR
120
450,000
600
400,000 350,000
500
115
300,000
400
110
GDP
105
E
250,000 200,000
300
150,000
200
100,000 100
50,000 0 1994
1996
1998
2000
2002
throughput
2004
2006
2008
2010
0 2012
employment
100 95 90 2011
Fig. 5. Number of jobs (FTE’s in thousands) in the region on the right vertical axis and throughput (in millions of tons) on the left vertical axis. Source Statistics Netherlands (2012); Port of Rotterdam (2012a).
2012
2013
2014
2015
2016
2017
2018
2019
2020
Fig. 7. Development to be expected in the period 2011–2020 of Throughput TR, GDP (real) and Number of Jobs E (FTE’s) (index numbers, 2011 = 100, prices 2005).
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
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differences) are shown in Eq. (4).
Dðln Et Þ ¼ 0:005 þ 0:799 Dðln GDPt Þ; ¼ 16
0:315
1:922
R2 ¼ 0:20; N ð4Þ
From Eq. (4) it appears that there is a relationship between number of jobs E and GDP with a significant coefficient (5% level, one sided test). It can be stated that, in real terms, labor productivity (GDP per FTE) from 1994 till 2011 has increased from s 65,186 till s 107,021 per FTE per year. This has not been a smooth development and therefore the relationship between the growth of employment E and growth of GDP is not a very strong one. This also explains why the relationship between throughput and employment is much weaker than the one between throughput and GDP. Finally, Fig. 7 shows the development to be expected in the period 2011–2020 of Throughput TR, GDP (real) and number of jobs E if throughput is growing according to the average growth rate of the period 1994–2011. It appears that in the period 2011–2020 Throughput TR may increase by roughly 20% where GDP and Number of Jobs E may increase by around 10% and 7% respectively. 4. Relevance for municipal port policy The results of the analysis are most relevant for the municipal port policy. It appears that port development is depending more and more on global development which is beyond the control of regional and even national policies. Further, to a large part, regional development is determined by the port activities. This implies that regional development is more and more depending on the global business cycle. If the region’s vulnerability with respect to global economic development is to be reduced, diversification of regional economic activities is necessary, making the region less dependent on the up and down swings of port related activities and, in this way, make it more resilient. The regional authorities are aware of this already for a number of years (IAB, 2015). 5. Conclusion and discussion In this paper we set out to gain some insight in the effects of world trade on the regional economy of Rotterdam-Rijnmond through port activity. First we looked for a causal relationship between the trade volumes in the world (in millions of dollars) and activity in the port of Rotterdam (throughput in millions of tons). This relationship is supported by statistical evidence. To deepen the analysis the countries in the world were split up into four groups based on their position along the development continuum. Measuring the throughput in tons seems to be a point in the analysis that can be improved because the value added per ton of throughput may change during the period of analysis. Using a monetary indicator for the port activities (e.g. turnover in money terms) may be a better option. Furthermore an effort was made to link throughput with regional economic indicators. There appears to be a statistically significant relationship between the port’s throughput and Rotterdam-Rijnmond’s regional GDP. However, a much weaker
relation was found between the throughput and the regional number of jobs, which can be explained from the volatile labor productivity. Finally, if international trade will rise according to expectations, it may be expected that in the period 2011–2020 throughput will rise by 20% where GDP and Employment will rise by 10% and 7% respectively. Of course this is a rather crude way of forecasting. Though, this is a useful first impression of the growth to be expected, it could be significantly improved by applying more sophisticated forecast methods (Rashed et al., 2016). The outcomes indicate a strong dependence of port related activities and regional development on the global business cycle, which cannot be influenced by regional policies. Diversification of the regional economy should be aimed for in order to make the regional economy less dependent on port activities and make it more resilient. However, diversification of the regional economy in times of economic recession is not an easy task. A comparison between the Port of Rotterdam and other ports like Antwerp or Hamburg is an interesting topic for further research in this area. References Bosch van den F.A.J., Hollen R., Volberda H.W., Baaij M.G., 2011. De strategische waarde van het Haven- en Industriecomplex Rotterdam voor het internationale concurrentievermogen van Nederland: een eerste verkenning. Onderzoeksrapport in opdracht van het havenbedrijf Rotterdam. Botasso, A., Conti, M., Ferrari, C., Tei, A., 2014. Ports and regional development: spatial analysis on a panel of European regions. Transp. Res. Part 1: Policy Pract. 65, 44–55. Brenton, P., 2003. Integrating The Least Developed Countries Into The World Trading System: The Current Impact of EU Preferences Under Everything But Arms, Policy Research Working Paper Series 3018. The World Bank. Coppens, F., Lagneaux, F., Meersman, H., Sellekaerts, N., van Voorde, E., van Gastel, G., Vanelslanden, T., Verhetsel, A., 2007. Economic Impact of Port Activity: A Disaggregate Analysis; The Case of Antwerp. National Bank of Belgium, Working Paper Document Nr 110. Coto Millán, P., Ángel Pesquera, M., Castanedo, J., 2010. Essays on Port Economics. Springer, Berlin. European Commission, 2012. http://ec.europa.eu/trade/creating-opportunities/ bilateral-relations/countries-and-regions/. Grammenos, C.T., 2013. The Handbook of Maritime Economics and Business, 2nd ed. Taylor and Francis, London. Groot, S.P.T., Groot de, A.M.J., Mohlmann, J., 2011. The Rise of the BRIC Countries and Its Impact on the Dutch Economy. CPB Background Document. On request by the Ministry of Economic Affairs, Agriculture and Innovation. Hensher, D.A., Button, K.J., 2007. Handbook of Transport Modelling, 2nd ed. Emerald. IAB (International Advisory Board Rotterdam), 2015. Rotterdam Discovery City. Rotterdam Partners. Krugman, P., 1995. Growing world trade: causes and consequences. Brook. Pap. Econ. Activity 1, 327–362. Moe T., Maasry C., Tang R., 2010. EM Equity in Two Decades: A Changing Landscape. Global Economics Paper No: 204. Port of Rotterdam, 2012a. http://www.portofrotterdam.com/en/Port/portstatistics/Documents/throughput_time_series.pdf. Port of Rotterdam, 2012b. http://www.portofrotterdam.com/en/Business/aboutthe-port/industrial-cluster/Pages/default.aspx. Rashed Y., Meersman H., Van de Voorde E., Vanelslander T., 2016. Short-term forecast of container throughout: An ARIMA-intervention model for the port of Antwerp. Maritime Economics & Logistics. Online publication date: 10-Mar2016. Schaffer, W.A., 2010. Economic Base Theory, Chapter 3. Web book. http://www.rri. wvu.edu/WebBook/Schaffer/Chapter%203%20S11%20for%20WVA2.pdf. Statistics Netherlands, 2012. http://statline.cbs.nl/. Verbeek, M., 2012. A Guide to Modern Econometrics, 4th ed. Wiley, Chichester. WTO, 2012. http://stat.wto.org/Home/WSDBHome.aspx?Language.
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
Case Studies on Transport Policy xxx (2016) xxx–xxx
Contents lists available at ScienceDirect
Case Studies on Transport Policy journal homepage: www.elsevier.com/locate/cstp
The impact of world trade on the Port of Rotterdam and the wider region of Rotterdam-Rijnmond Wim Heijman* , Cornelis Gardebroek, Wouter van Os Wageningen University, Agricultural Economics and Rural Policy, Hollandseweg 1, 6706 KN Wageningen, The Netherlands
A R T I C L E I N F O
Article history: Received 4 September 2015 Received in revised form 27 June 2016 Accepted 7 March 2017 Available online xxx Keywords: World trade Throughput Port of Rotterdam Rotterdam-Rijnmond region Regional economy
A B S T R A C T
We study the economic impact of world trade on the throughput in the Port of Rotterdam and the regional economy of Rotterdam-Rijnmond. We use a two-step approach. In the first step we analyze the relationship between world trade and the port’s throughput. In the second step we deal with the impact of the port’s throughput on regional economic indicators like income and number of jobs. It appears that the global business cycle determines the port activities and that, in turn, the port activities are essential for the regional economic development, in this way linking the regional economy to the global business cycle. Diversification of the regional economy is recommended to make the regional economy more resilient. © 2017 Published by Elsevier Ltd on behalf of World Conference on Transport Research Society.
1. Introduction World trade is increasing over the years (Krugman, 1995). The European Union is the world’s largest importer and exporter of goods and services, responsible for almost 20 percent of total world trade (European Commission, 2012). Even though all EU countries individually are a member of the World Trade Organization they act as a single block. Market incentives dictate that a large part of EU’s trade is concentrated in Europe’s northern port ranges of which Rotterdam is by far the biggest (Bosch et al., 2011). More and more large ports act as global hubs. Therefore, ports like Rotterdam are assumed to react more to global development than to the development of the hinterland only. World trade is a suitable indicator of the global business cycle. The objective of this study is to analyse the economic impact of world trade on the port of Rotterdam and the regional economy of Rotterdam-Rijnmond. This is done in two stages. First, the impact of world trade on Rotterdam’s port activity is assessed. Total world trade is assumed to be related to the throughput in the port. The second part of the analysis deals with the influence of the port on the wider region of Rotterdam-Rijnmond in which the port is located. Much research has been done on the relationship
* Corresponding author. E-mail address: [email protected] (W. Heijman).
between regional economic development and port activities and generally speaking the influence of the port on regional development is significant (Botasso et al., 2014). However, what is lacking in literature is the two-step-approach that we carry out in this paper (Grammenos, 2013; Coto Millán et al., 2010; Hensher and Button, 2007; Coppens et al., 2007). Port related industry is overrepresented in Rotterdam-Rijnmond. In that respect Rotterdam-Rijnmond is representative for other regions in which a port is located (e.g. Antwerp, Hamburg), so there we may expect the same type of chain reactions as we find for Rotterdam. In the final part of the paper we link the two steps by estimating the impact of world trade on regional economic development. We assume that for the development of regions like RotterdamRijnmond international trade is of crucial importance. Therefore we hypothesize that a positive relation is to be found between total world trade and the activity of the port. Furthermore, we expect that some countries have a bigger impact on port activity than others. We also expect a positive relationship between port activity and regional economic growth. 2. Trade and throughput in the Port of Rotterdam Fig. 1 shows the development of total world trade volume and Rotterdam throughput since 1975. One can spot a distinct downward movement in both graphs during the 1980s. This can
http://dx.doi.org/10.1016/j.cstp.2017.03.005 2213-624X/© 2017 Published by Elsevier Ltd on behalf of World Conference on Transport Research Society.
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
G Model CSTP 157 No. of Pages 4
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W. Heijman et al. / Case Studies on Transport Policy xxx (2016) xxx–xxx
9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 1970
1975
1980
1985
1990
1995
world trade
2000
2005
2010
500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2015
throughput
Fig. 1. World trade volume (in millions of 1975 dollars, left axis) and throughput in the Port of Rotterdam (millions of metric tons, right axis). Source: WTO (2012), Port of Rotterdam (2012a).
be contributed to the oil crisis of 1979 and the subsequent economic crises and political tensions. Furthermore the 2007 financial crisis leaves a dent in both graphs. To assess more formally whether a relationship between world trade and Rotterdam throughput exists, we apply time-series analysis on the natural logarithms of both variables. First, it is assessed whether both series are stationary or not. Non-stationary series may have stochastic or deterministic trends in common that suggest a relationship that may not exist in reality. In other words, the upward-sloping trend that both series show in Fig. 1, does not necessarily mean there is a causal relation. Dickey-Fuller and KPSS tests (Verbeek, 2012, p. 292–294) show that both series are nonstationary and integrated of order one. This means that standard OLS on the observed values cannot be applied. Since both series have the same order of integration there could be a stable long-run co-integrating relation between world trade and Rotterdam throughput (e.g. Verbeek, 2012: p. 343–348). However, the Engle-Granger test and the CRDW test for co-integration both indicate that the series are not co-integrated, indicating absence of a long-run equilibrium relation between the series. Therefore, since both series are integrated of order one we proceed by estimating an equation in first-differences, resulting in Eq. (1):
Dðln TRt Þ ¼ 0:010 þ 0:279 Dðln WT t Þ R2 ¼ 0:296 N ¼ 36
3:43
3:77
ð1Þ
9000000
500,000
8000000
450,000
Table 1 Share of the different groups of countries in the total world trade over the period 1994–2011. Year
BRIC
OECD
LDC
ROTW
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0.073 0.075 0.076 0.082 0.080 0.076 0.083 0.092 0.097 0.106 0.118 0.130 0.140 0.152 0.166 0.173 0.190 0.202
0.476 0.471 0.477 0.482 0.500 0.534 0.525 0.524 0.519 0.508 0.497 0.488 0.480 0.477 0.484 0.452 0.439 0.432
0.006 0.006 0.006 0.006 0.006 0.006 0.006 0.007 0.007 0.007 0.007 0.009 0.009 0.01 0.011 0.013 0.012 0.012
0.444 0.446 0.438 0.428 0.412 0.382 0.384 0.376 0.375 0.377 0.376 0.372 0.369 0.360 0.337 0.361 0.355 0.353
where TR stands for throughput in the port of Rotterdam, WT is world trade and D indicates first-differences. T-ratios are presented below the estimated coefficients. The regression results indicate that short-run shocks in world trade have a statistically significant impact on Rotterdam throughput. Since we use differences in natural logarithms this implies that the growth rate of the Rotterdam throughput between two years is a function of 0.279 times the growth rate of world trade. This makes sense because global trade rose faster than the port’s throughput. This is also in line with Fig. 1. Analysis of the residuals using autocorrelation (AC), partial autocorrelation (PAC) and Ljung-Box tests (Verbeek, 2012, p. 306–310) showed that the residuals are white noise, so that higher order ARIMA terms are not required. The value of R2 is reasonable given that the model is estimated in firstdifferences and since only world trade was included as regressor. Note that our goal is to test this relation, not to come up with a complete model explaining Rotterdam throughput. Next, we consider four groups of countries: BRIC, OECD, LDC (Least Developed Countries) and ROTW (Rest of the World). Fig. 2 shows the trade volumes of the four groups and the throughput of the port. Data for this analysis was only available since 1994. One can observe the impact the 2007 financial crisis had on trade volumes, especially on the trade of OECD countries. The trade of
400,000
7000000
350,000
6000000
300,000 5000000 250,000 4000000 200,000 3000000
150,000
2000000
100,000
1000000 0 1992 1994 BRIC
50,000
1996 1998 OECD
2000 LDC
2002
2004 ROTW
2006
2008 Total
0 2010 2012 Throughput
Fig. 2. Total world trade of the four groups on the left y-axis (millions of 1975 dollars). Throughput in the Port of Rotterdam on the right y-axis (millions of tons). Source: WTO (2012), Port of Rotterdam (2012a).
Fig. 3. Port’s throughput of the four groups of countries 1996–2010 (millions of tons).
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
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30000
300,000
25000
250,000 20000
200,000
15000
150,000
10000
100,000
5000
50,000
0 1994
1996
1998
2000
2002
2004
2006
GDP Rijnmond
2008
2010
0 2012
Throughput
Fig. 4. GDP Rotterdam-Rijnmond on the left y-axis (in 1995 euros). Source: Statistics Netherlands (2012) and throughput in the port of Rotterdam (in millions of tons) on the right y-axis. Source: Port of Rotterdam (2012a).
the BRIC countries had almost the same volumes as the LDC’s countries in 1994 but increased sharply after 2002. LDC’s are at the very bottom of the pile in terms of their trade volumes, showing little real increase over the years (Groot et al., 2011). Table 1 presents the shares of the different groups in the world trade over the years. From Table 1 we conclude that the BRIC countries and the LDC’s have an increasing share of the world trade, whereas the OECD and the ROTW have a large but declining share (Brenton, 2003). This means that BRIC- and LDC trade is growing faster than OECD and ROTW-trade. This also reflects in the port’s throughput (see Fig. 3): in the period 1996–2011 BRIC’s throughput grew faster than OECD’s throughput (Moe et al., 2010).
Fig. 6. Index real GDP and number of jobs E, 1995–2011 (prices 2005).
respectively. Both are assumed to be a function of the port’s throughput. Again, since we use non-stationary time series, the equations are estimated in first-differences of natural logarithms. The results of the regression analysis with throughput TR as independent variable (ln of first differences) and GDP and employment E in Rotterdam-Rijnmond as dependent variables (both as ln of first differences) are shown in Eqs. (2) and (3).
Dðln GDPt Þ ¼ 0:009 þ 0:495 Dðln TRt Þ; 1:212
¼ 16
3:527
¼ 16
It is logical to hypothesize that there is a relationship between the economic performance of the port and that of the region in which it is located (Groot-Rijnmond). Assumingly, the port functions as the economic base of the region (Schaffer, 2010). It is home to a highly comprehensive range of companies specializing in cargo handling, transportation, storage, warehousing and distribution, industrial processing and various auxiliary services (Port of Rotterdam, 2012b). To test the hypothesis that port throughput affects the regional economy, two regression analyses are performed. The dependent variables in the regression equations are regional GDP (Fig. 4) and, as a measure of employment, the number of jobs in FTE’s (Fig. 5),
0:032
N ð2Þ
Dðln Et Þ ¼ 0:001 þ 0:486 Dðln TRt Þ;
3. Regional importance of port activity
R2 ¼ 0:471;
1:507
R2 ¼ 0:140;
N ð3Þ
From these results we conclude that there is a significant relationship between the throughput in the port on the one hand and GDP of the region Rotterdam-Rijnmond on the other (Eq. (2)). The relationship between the number of jobs E (FTE’s) in the region and the throughput TR is much weaker (Eq. (3)), probably due to the variation in the productivity of labor, illustrated by Fig. 6. This figure shows that between 1995 and 2011 the GDP per worker increased, suggesting that labor productivity has increased during the period indicated. GDP per FTE increased by 0.62 percent annually on average. The regression results of the relationship between number of jobs E (FTE’s, ln of first differences) and real GDP (ln of first
125 500,000
700
TR
120
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500
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GDP
105
E
250,000 200,000
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200
100,000 100
50,000 0 1994
1996
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throughput
2004
2006
2008
2010
0 2012
employment
100 95 90 2011
Fig. 5. Number of jobs (FTE’s in thousands) in the region on the right vertical axis and throughput (in millions of tons) on the left vertical axis. Source Statistics Netherlands (2012); Port of Rotterdam (2012a).
2012
2013
2014
2015
2016
2017
2018
2019
2020
Fig. 7. Development to be expected in the period 2011–2020 of Throughput TR, GDP (real) and Number of Jobs E (FTE’s) (index numbers, 2011 = 100, prices 2005).
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005
G Model CSTP 157 No. of Pages 4
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differences) are shown in Eq. (4).
Dðln Et Þ ¼ 0:005 þ 0:799 Dðln GDPt Þ; ¼ 16
0:315
1:922
R2 ¼ 0:20; N ð4Þ
From Eq. (4) it appears that there is a relationship between number of jobs E and GDP with a significant coefficient (5% level, one sided test). It can be stated that, in real terms, labor productivity (GDP per FTE) from 1994 till 2011 has increased from s 65,186 till s 107,021 per FTE per year. This has not been a smooth development and therefore the relationship between the growth of employment E and growth of GDP is not a very strong one. This also explains why the relationship between throughput and employment is much weaker than the one between throughput and GDP. Finally, Fig. 7 shows the development to be expected in the period 2011–2020 of Throughput TR, GDP (real) and number of jobs E if throughput is growing according to the average growth rate of the period 1994–2011. It appears that in the period 2011–2020 Throughput TR may increase by roughly 20% where GDP and Number of Jobs E may increase by around 10% and 7% respectively. 4. Relevance for municipal port policy The results of the analysis are most relevant for the municipal port policy. It appears that port development is depending more and more on global development which is beyond the control of regional and even national policies. Further, to a large part, regional development is determined by the port activities. This implies that regional development is more and more depending on the global business cycle. If the region’s vulnerability with respect to global economic development is to be reduced, diversification of regional economic activities is necessary, making the region less dependent on the up and down swings of port related activities and, in this way, make it more resilient. The regional authorities are aware of this already for a number of years (IAB, 2015). 5. Conclusion and discussion In this paper we set out to gain some insight in the effects of world trade on the regional economy of Rotterdam-Rijnmond through port activity. First we looked for a causal relationship between the trade volumes in the world (in millions of dollars) and activity in the port of Rotterdam (throughput in millions of tons). This relationship is supported by statistical evidence. To deepen the analysis the countries in the world were split up into four groups based on their position along the development continuum. Measuring the throughput in tons seems to be a point in the analysis that can be improved because the value added per ton of throughput may change during the period of analysis. Using a monetary indicator for the port activities (e.g. turnover in money terms) may be a better option. Furthermore an effort was made to link throughput with regional economic indicators. There appears to be a statistically significant relationship between the port’s throughput and Rotterdam-Rijnmond’s regional GDP. However, a much weaker
relation was found between the throughput and the regional number of jobs, which can be explained from the volatile labor productivity. Finally, if international trade will rise according to expectations, it may be expected that in the period 2011–2020 throughput will rise by 20% where GDP and Employment will rise by 10% and 7% respectively. Of course this is a rather crude way of forecasting. Though, this is a useful first impression of the growth to be expected, it could be significantly improved by applying more sophisticated forecast methods (Rashed et al., 2016). The outcomes indicate a strong dependence of port related activities and regional development on the global business cycle, which cannot be influenced by regional policies. Diversification of the regional economy should be aimed for in order to make the regional economy less dependent on port activities and make it more resilient. However, diversification of the regional economy in times of economic recession is not an easy task. A comparison between the Port of Rotterdam and other ports like Antwerp or Hamburg is an interesting topic for further research in this area. References Bosch van den F.A.J., Hollen R., Volberda H.W., Baaij M.G., 2011. De strategische waarde van het Haven- en Industriecomplex Rotterdam voor het internationale concurrentievermogen van Nederland: een eerste verkenning. Onderzoeksrapport in opdracht van het havenbedrijf Rotterdam. Botasso, A., Conti, M., Ferrari, C., Tei, A., 2014. Ports and regional development: spatial analysis on a panel of European regions. Transp. Res. Part 1: Policy Pract. 65, 44–55. Brenton, P., 2003. Integrating The Least Developed Countries Into The World Trading System: The Current Impact of EU Preferences Under Everything But Arms, Policy Research Working Paper Series 3018. The World Bank. Coppens, F., Lagneaux, F., Meersman, H., Sellekaerts, N., van Voorde, E., van Gastel, G., Vanelslanden, T., Verhetsel, A., 2007. Economic Impact of Port Activity: A Disaggregate Analysis; The Case of Antwerp. National Bank of Belgium, Working Paper Document Nr 110. Coto Millán, P., Ángel Pesquera, M., Castanedo, J., 2010. Essays on Port Economics. Springer, Berlin. European Commission, 2012. http://ec.europa.eu/trade/creating-opportunities/ bilateral-relations/countries-and-regions/. Grammenos, C.T., 2013. The Handbook of Maritime Economics and Business, 2nd ed. Taylor and Francis, London. Groot, S.P.T., Groot de, A.M.J., Mohlmann, J., 2011. The Rise of the BRIC Countries and Its Impact on the Dutch Economy. CPB Background Document. On request by the Ministry of Economic Affairs, Agriculture and Innovation. Hensher, D.A., Button, K.J., 2007. Handbook of Transport Modelling, 2nd ed. Emerald. IAB (International Advisory Board Rotterdam), 2015. Rotterdam Discovery City. Rotterdam Partners. Krugman, P., 1995. Growing world trade: causes and consequences. Brook. Pap. Econ. Activity 1, 327–362. Moe T., Maasry C., Tang R., 2010. EM Equity in Two Decades: A Changing Landscape. Global Economics Paper No: 204. Port of Rotterdam, 2012a. http://www.portofrotterdam.com/en/Port/portstatistics/Documents/throughput_time_series.pdf. Port of Rotterdam, 2012b. http://www.portofrotterdam.com/en/Business/aboutthe-port/industrial-cluster/Pages/default.aspx. Rashed Y., Meersman H., Van de Voorde E., Vanelslander T., 2016. Short-term forecast of container throughout: An ARIMA-intervention model for the port of Antwerp. Maritime Economics & Logistics. Online publication date: 10-Mar2016. Schaffer, W.A., 2010. Economic Base Theory, Chapter 3. Web book. http://www.rri. wvu.edu/WebBook/Schaffer/Chapter%203%20S11%20for%20WVA2.pdf. Statistics Netherlands, 2012. http://statline.cbs.nl/. Verbeek, M., 2012. A Guide to Modern Econometrics, 4th ed. Wiley, Chichester. WTO, 2012. http://stat.wto.org/Home/WSDBHome.aspx?Language.
Please cite this article in press as: W. Heijman, et al., The impact of world trade on the Port of Rotterdam and the wider region of RotterdamRijnmond, Case Stud. Transp. Policy (2017), http://dx.doi.org/10.1016/j.cstp.2017.03.005