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Foreland-Based Regionalization:Integrating Intermediate Hubs with Port Hinterlands
Theo NotteboomITMMA - University of Antwerp and Antwerp Maritime Academy
Jean-Paul RodrigueDepartment of Global Studies & Geography, Hofstra University
IFSPA Conference 2009 Hong Kong Polytechnic University, Hong Kong – 25-27 May 2009
Content
1. PORT REGIONALIZATION REVISITED2. THE ROLE AND FUNCTION OF INTERMEDIATE
HUBS3. IN SEARCH OF COMPETITIVE ADVANTAGE4. RECONCILING FORELANDS AND HINTERLANDS5. AN UNFOLDING PARADIGM?
1. Port Regionalization Re-visited
• Globalization- Fragmented
production and consumption systems.
- Maritime side:• Economies of scale and
frequency of service along major pendulum routes.
- Inland side:• Spatial deconsolidation
(or consolidation).
• Local constraints- Congestion and
limited amount of land.
- Port growth and expansion issues.
- Freight activities:• Used to take place in
proximity of port terminal facilities.
• Setting of a network of inland terminals.
1. Port Regionalization Re-visited The Spatial Development of a Port System
Phase 1: Scattered ports Phase 2: Penetration and hinterland capture
Phase 3: Interconnection & concentration Phase 4: Centralization
Phase 5: Decentralization and insertion of ‘offshore’ hub Phase 6: Regionalization
Load center Interior centreHinterland-based (Regional load centre network)
Freight corridor
LAND
SEA
Deepsea liner services
Shortsea/feeder services Foreland-based
1. Port Regionalization Re-visited Regionalization and Hinterland Setting
North America Western Europe East and Southeast Asia
Coastal concentrationLandbridge connections
Inland concentrationCoastal gateways
Coastal concentrationLow hinterland access
1. Port Regionalization Re-visited
- Path dependency:• Building on previous phases and ‘memory effects’.• Follow a similar evolutionary development path.
- Degree of contingency:• Deviate from existing development paths.
- Consequences:• Port systems do not follow the same sequence of
stages. • Some level of disparity among port system
developments.
1. Port Regionalization Re-visited
• “Terminalization”- Higher level of integration within freight
distribution systems through terminals.- Terminals and terminalization:
• A buffer to be used for temporary storage.• A constraint inciting various forms of satellite/inland
terminal use and inventory in transit practices. • Extended gateways and extended distribution centers.
- The need to look at intermediate hubs.
2. The Role and Function of Intermediate Hubs
• Emergence- Since the mid 1990s in many port systems.- Critical factors:
• Excellent nautical accessibility.• Proximity of major shipping routes (deviation).• Land for future expansion.
- Mostly owned by port holdings or carriers.- Not in all port systems:
• Prevalent in the Mediterranean and Pacific Asia / Middle East.
• Limited in the Americas (avoid flag restriction).
2. The Role and Function of Intermediate Hubs
• Function- Multiply shipping options.- Optimization of vessel movements:
• Hubs, relay or interlining locations.
- Points of convergence of regional shipping- Connect the same hierarchy levels and improve
connectivity within the network (relay and interlining)
- Some intermediary locations strictly perform cargo handling functions and have a non-existent hinterland
The Insertion of Intermediate Hub Terminals
Hub-and-Spoke
HubFeeder
Relay
Deep
-sea
line
Interlining
85% of Transshipment Traffic 15% of Transshipment Traffic
World’s Main Intermediate Hubs, 2007
World’s Main Transshipment Markets, 2007
Transhipment flows in Europe
0
1
2
3
4
5
6
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9
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11
Antwerp Zeebrugge Rotterdam Hamburg Bremerhaven Le Havre Valencia Barcelona
Co
nta
iner
th
rou
gh
pu
t 20
07 i
n m
illi
on
TE
U Sea-sea transhipment
Inland gateway traffic(road/rail/barge)
19.9%
19.6%
25.4%
34.0%28.7%
60.8%
45.8%
37.9%
Transhipment hubs in Med (85-95% transhipment incidence)
Gioia Tauro, Algeciras, Taranto, Cagliari, Malta
2. The Role and Function of Intermediate Hubs
• Regional shipping networks- Ports feel that serving feeder vessels means a
loss of status.- Feeder options:
• Direct feeders between hub and feeder port:- Lowest transit time but requires more feeders and smaller
feeder vessels.
• Indirect feeders via line-bundling loops including more than one feeder port:
- Economies of feeder vessel size, but incur longer distances and longer transit times.
2. The Role and Function of Intermediate Hubs
• Vulnerability of intermediate hubs to container growth and decline- Direct end-to-end or line-bundling services
versus hub-and-spoke: a hub can become a redundant node in the network
- Footloose behaviour of transhipment/relay volumes
Transhipment Hubs in the West Mediterranean
Algeciras
Valencia (MSC) Cagliari
Gioia Tauro
Malta
Taranto
Piraeus (?)
Market shares of ports in the West Mediterranean according to the diversion distance (1975-2008)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
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19
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19
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19
90
19
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19
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19
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19
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19
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20
00
20
01
20
02
20
03
20
04
20
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20
06
20
07
20
08
Sh
are
in T
EU
th
rou
gh
pu
t W
est-
Med
West-Mediterranean ports with one-way diversion distance > 250 nm
West-Mediterranean ports with one-way diversion distance 100-250 nm
West-Mediterranean ports with one-way diversion distance < 100 nm
Source: Notteboom (2009)
Tanger Med IIAPMT/Akwa: + 3 mln TEU (2012)PSA: +2 mln TEU (2012)
Tanger MedAPMT: + 1.5 mln TEUEurogate: +1.5 mln TEU
Port Said (Egypt)Traffic: 3.2 (2008)Capacity: +2.5 (2011)
Ambarli (Turkey)Traffic: 2.26 (2008)
Haifa (Israel)Traffic: 1.39 (2008)
Beirut (Libanon)Traffic: 0.95 (2008)
Damietta (Egypt)Capacity: +4 (2012)
Mersin (Turkey)
Djendjen (Algeria)Capacity: +2 (DP World)
Bejaia (Algeria)Traffic: 0.15 (2008)
Capacity: +2.5 (>2010)
Algiers (Algeria)Traffic: 0.5 (2007)
Capacity: +0.8 (2010)
Container throughput in million TEU, capacity extensions in million TEU
PLAN OF TANGER MED
Rades (Tunisia)Traffic: 0.3 (2007)
Enfidha (Tunisia)Capacity: +1 (2011)+2.5 (period 2011-2015)+2 (period 2015-2030)
Misurata (Libya)Initial plans
Competition from new port developments in Med
Source: Notteboom (2009)
3. Foreland-Based Regionalization: In Search of Competitive Advantage
• Vulnerability of intermediate hubs:
- Narrow focus on transhipment only
- Competition on basic resources such as location, nautical accessibility, terminal infrastructure and on terminal productivity
- Sources of competition can rather easily be imitated by competitors => hard to create a sustainable competitive advantage
3. Foreland-Based Regionalization: In Search of Competitive Advantage
• Intermediate hubs likely to play a more important role beyond pure transhipment:- Capitalize on scale increases of vessels:
• Undermining the serviceability of some ports (lack of connectivity)• Hubs offer advantages of consolidation + support a level of traffic not
feasible otherwise
- Extracting more value/economic rent from cargo passing through:
• Using the hub for added-value logistical activities (see e.g. Theys et al, 2008)
• Low-end to high-end value added activities (e.g. mass customization of products)
• Low cost location before entering high distribution cost areas• Free-trade zone status can trigger development of value-added services
3. Foreland-Based Regionalization: In Search of Competitive Advantage
- Integration of intermediate hubs in regional shipping networks.
- The maritime foreland of the intermediate hub is functionally acting as a hinterland.
- Reconciling operational characteristics of forelands and hinterlands
FORELAND
HINTERLAND
Main Shipping Lane
Inland Terminal
INTERMEDIATE HUB
4. Foreland-Based Regionalization: Reconciling Forelands and Hinterlands
• Different momentums- Maritime momentum (carriers’ needs):
• Economies of scale.• Optimal network configuration (concentration).
- Inland momentum (shippers’ needs):• Spatial coverage (deconcentration).• Frequency and flexibility.
- A growing disparity:• Massification versus atomization.• At a certain traffic level; inland diseconomies of scale.
The “Last Mile” in Freight Distribution
GatewayGatewayInland Inland
TerminalTerminalDistributionDistribution
CenterCenter
Capacity
Frequency
CorridorCustomerCustomer
“Last Mile”
Segment
GLOBALGLOBAL HINTERLANDHINTERLAND REGIONALREGIONAL LOCALLOCAL
Shipping Network
MassificationMassification AtomizationAtomization
Functional and Geographical Diffusion of Containerization: Globalization and Regionalization
Cost
per
TEU
-KM
Volume
Foreland Traffic
Hinterland Traffic
Regionalization
4. Foreland-Based Regionalization: Reconciling Forelands and Hinterlands
• Reconciliation- Hinterland-based regionalization permitted
inland freight traffic to keep up with volume and network configuration changes.
- Foreland-based regionalization enables small and medium-sized ports an integration to an intermediate hub:
• Long distance volatile transshipment traffic complemented with more stable regional traffic.
• Functional gateway of a regional port system.• Competitiveness of a maritime range.
Port Regionalization Clusters in Pacific Asia
Foreland-based regionalization
Hinterland-based regionalization
5. An Unfolding Paradigm?
• Changing role of intermediate hubs in regional shipping networks ?- Competitive strategy to cope with risks:
• Footloose operators and shifts in maritime shipping networks.• Secure traffic from smaller regional ports.• Capture added value.
• Perception of the feeder function- Ports prefer direct calls.- Option: link to more than one hub.
• Transition phase?- Foreland-based regionalization appears to be a
distinct phase on its own.
