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International Journal of LogisticsResearch and Applications: A LeadingJournal of Supply Chain ManagementPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/cjol20
Strategies of terminal operatingcompanies in changing environmentsP. W. de Langen a & A. Chouly ba Department Industrial Engineering and Innovation Sciences ,Eindhoven University of Technology , The Netherlandsb Department of Applied Economics , Erasmus UniversityRotterdam , The NetherlandsPublished online: 08 Jun 2009.
To cite this article: P. W. de Langen & A. Chouly (2009) Strategies of terminal operating companiesin changing environments, International Journal of Logistics Research and Applications: A LeadingJournal of Supply Chain Management, 12:6, 423-434
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International Journal of Logistics: Research and ApplicationsVol. 12, No. 6, December 2009, 423–434
Strategies of terminal operating companiesin changing environments
P.W. de Langena* and A. Choulyb
aDepartment Industrial Engineering and Innovation Sciences, Eindhoven University of Technology,The Netherlands; bDepartment of Applied Economics, Erasmus University Rotterdam, The Netherlands
(Received 30 September 2005; final version received 21 January 2009 )
This paper deals with the changing role of terminal operating companies (TOCs) in supply chains. Relevanttrends in the port industry and the consequences for terminal operators are discussed. A framework to anal-yse strategies of TOCs, based on Brewer’s [2001 Handbook of logistics and supply chain management.Amsterdam: Pergamon.] classification of logistics service providers with regard to their geographical cov-erage and provision of integrated logistics solution is developed. The framework is applied to TOCs in theNetherlands with the use of a survey. TOCs in the Netherlands increasingly offer integrated logistics ser-vices. The number of additional services, next to the terminal services, offered depends on the commoditiesthat are handled by TOCs; container TOCs offer fewer integrated logistics services than breakbulk TOCs.Most of the TOCs (still) operate in their ‘home port’ alone but roughly 15% of them have plans to expandinternationally. TOCs mostly provide additional services in-house, partnerships are less well developed.These conclusions enhance the understanding of the changing role of TOCs in supply chains.
Keywords: ports; terminal operating companies; strategies; innovations
1. Introduction
The terminal operating industry, like many other industries, has been deeply affected byinternational economic integration. Multinational companies (MNCs) increasingly purchase inter-national logistics services rather than shipping or forwarding services (Bhatnagar andViswanathan2000, Notteboom and Winkelmans 2001). Many manufacturers and retailers outsource logisticsactivities to service providers capable of providing a wide range of logistics services (Lai andCheng 2004). Consequently, some shipping lines expand their business scope to gain greatercontrol over the supply chain (Heaver 2002, Hesse and Rodrigue 2004). Research on strategiesof terminal operating companies (TOCs) is limited to container terminal operators. Slack andFremont (2005) describe the international market expansion of container operators, while deSouza et al. (2003) emphasise the increasing role of container TOCs in the provision of logisticsservices. However, many questions on strategies of TOCs, such as ‘do TOCs expand the rangeof services offered and if so, how’ and ‘are there differences between TOCs that handle different
*Corresponding author. Email: [email protected]
ISSN 1367-5567 print/ISSN 1469-848X online© 2009 Taylor & FrancisDOI: 10.1080/13675560902775725http://www.informaworld.com
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424 P.W. de Langen and A. Chouly
commodities’ still remain unanswered. Given the limited knowledge of strategies of TOCs, thisstudy aims at addressing a number of such broad research questions.
In section 2, changes in the environment of TOCs are summarised and the research questionsare presented. In this section, Brewer’s (2001) framework to classify logistics service providersaccording to their geographical coverage and completeness of logistics solution is applied toTOCs. Section 3 presents the research method for the empirical part and section 4 shows theresults of the analysis of strategies of TOCs in Dutch ports. A concluding section finalises thepaper.
2. The changing port environment
Seaports enable the transfer of goods from one mode of transport to another. Consequently,changes in this transport chain (e.g. the introduction of containers and the use of larger ships)affect ports. Ports are not ‘just’ transport nodes but also important elements in logistics chains(Carbone and de Martino 2003, Robinson 2006). Ports need to fit perfectly in a logistics chainto be competitive and be responsive to changes in logistics (Paixao and Marlow 2003). Ports areaffected by changes in international trade, both in terms of cargo volumes passing through theport and the types and service requirements of these good flows. Thus, changes in the transportindustry, the logistics industry as well as international trade affect the role of ports and terminalsin ports. Table 1 summarises such changes.
TOCs need to respond to the changes summarised in Table 1. TOCs face fewer, but morepowerful customers (i.e. shipping lines or shippers) and have to redefine their role in supplychains, because these supply chains become much more integrated (Robinson 2006). TOCs facetwo important issues. First, the issue of international expansion. The main reason to expandmarkets is to increase market share. This can lead to lower costs through scale economies (DrewryShipping Consultants 2002). Furthermore, a larger market share may lead to a stronger bargainingposition (de Souza et al. 2003). Slack and Fremont (2005) demonstrate that some container TOCsare truly internationalised but that in some countries ‘local’ TOCs dominate the industry.
Table 1. Trends in international trade, logistics and transport.
Network Trends
Trade Declining costs of international transport and improved communication systemsTrade liberalisation and internationalisation of firmsGlobal sourcing of MNCsInternational division of labour, leading to global supply chainsWeaker ties between regional institutions and decision-making of MNCsInternational networks of firms in ‘value webs’
Logistics Outsourcing and ICT systems to manage supply chainsStandardisation and unitisation and increased safety/security measuresEfforts to reduce time-to-markets and stock levels and increase flexibility of logistics systemsCompetition between firms with different backgrounds and competences to become global logistics
service providersDevelopment of systems of ‘collaborative planning’ in transport and logistics
Transport Liberalisation of transport markets, and policies to support sustainable transportIncreasing vessel size and, in the container market, evolving structure of liner shipping networksBetter (computer aided) planning and increased pressure on port performanceConsolidation across all segments of transport industry, e.g. shipping, inland transport terminal operators
Sources: Drewry Shipping Consultants (2002), Notteboom and Winkelmans (2001), Notteboom (2004).
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International Journal of Logistics: Research and Applications 425
A second important issue forTOCs is the question whether or not they should expand the range ofservices that they offer (Bichou and Gray 2004, Hall and Olivier 2005). Airriess (2001) provides acase study of a leading Hong Kong-based container terminal operator that develops new logisticsservices, such as warehousing. de Souza et al. (2003) discuss initiatives of TOCs to providelogistics services, such as value-added services and warehousing. Expansion of the range ofservices can result in economies of scope (Notteboom and Winkelmans 2001). Such an integratedproduct can differentiate a TOC from competitors (Ocean Shipping Consultants Ltd 2004). Theproduct of TOCs becomes more integrated when more additional services are offered and wheninvestments to enhance integration in the supply chain are made (Mason and Lalwani 2006).
Both market expansion and provision of additional services by TOCs can be observed inpractice. However, efforts to compare strategies of different TOCs are lacking, just as a preciseanalysis of the types of additional services that may be offered by TOCs.We have used a frameworkclosely related to Ansoff’s (1957) work on corporate strategies to classify firms that provide aservice in the supply chain based on their geographical coverage and their degree of verticalintegration. This framework was also used by Brewer et al. (2001) and is suitable for analysingstrategies of TOCs.
We have used this framework to make a distinction of four types of TOCs. Such a distinctionis necessarily stylised, as the ‘borders’ between the four types are fluid. We have termed the fourtypes of TOCs global terminal operators, local terminal operators, global port service providersand local port service providers (Figure 2).
The four positions of TOCs (Figure 2) can be regarded as alterative strategies. TOCs makechoices both with regard to international expansion and integration in the supply chain. TOCs thatdecide neither to expand their markets nor expand their role in supply chains are local terminaloperators. In most cases, such TOCs operate one terminal in one port. It is questionable whethersuch a strategy is a viable option. Due to the increased concentration of customers and competingTOCs, it may be the case that local terminal operators can only survive in specialised supplychains where they are somewhat protected from competition through entry barriers such as legaland economic entry barriers, e.g. high fixed capital costs (de Langen and Pallis 2007). For instance,high entry barriers in ports in France explain the dominance of local TOCs (Slack and Fremont2005).
TOCs that provide terminal operations on a large geographical scale and do not provideadditional services in the supply chain are the so-called global TOCs.
‘Port service providers’ aim to get more control over the supply chain in one port. Even thoughTOCs with an integrated logistics service may still not be regarded as true strategic partners by
Figure 1. Brewer’s framework with four generic strategies of logistics service providers. Source: Brewer (2001),used with permission.
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Figure 2. Four types of terminal operators. Source: Adapted from Brewer (2001).
shippers (Makukha and Gray 2004), such TOCs benefit from the economies of scope associatedwith providing additional services.
Finally, TOCs can also choose a dual strategy of internationalisation and provision of additionallogistics services. TOCs that follow this strategy are termed global port service providers.A number of cases in the port industry demonstrate that a dual strategy can result in highperformance (Olivier et al. 2005).1
3. Research questions and research methodology
In the empirical part of this paper, this framework is applied to classify TOCs and analyse whetherand how their strategy is changing. Furthermore, an analysis is made of potential new sources ofdifferentiation for TOCs aiming at providing more integrated logistics services.
The framework to analyse strategies of TOCs is used to analyse TOCs in the four Dutch ports:Rotterdam, Amsterdam, Zeeland Seaports and Groningen. In contrast to previous studies, notonly container terminal operators but all TOCs are taken into account. This provides a basisfor analysing differences between TOCs that handle different commodities. The first researchquestion is: ‘what is the current strategic position of TOCs in Dutch ports and how is this positionchanging?’
In order to answer this question, measures for the degree of market expansion and provision oflogistics services are required. For both, an index is developed, based on the answers of TOCs toa limited set of survey questions.
The index of logistics service provision is computed based on a list of services and investmentsto increase the integration of the terminal in global supply chains. This list is based on an analysisof the annual reports and websites of various TOCs (included in the references), a review ofindustry magazines such as Cargo Systems and Port Strategy and an overview of the academicliterature. The list is not all-encompassing, but covers important services and investments:
1. road transport from terminal to final destination;2. rail transport from terminal to an inland railway terminal;3. inland waterway transport to an inland waterway terminal;4. intermodal transport to final destination;5. hinterland terminal services;
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6. complementary storage services (besides normal temporary storage at the terminal);7. value-added services, like (re)packing, repair, blending and quality control;8. information systems that enable ‘collaborative planning’;9. safety in supply chains;
10. ‘preferential treatment’ of time sensitive shipments;11. management of reverse logistic flows.
The first four additional services all deal with the provision of hinterland transport (van Klinkand van den Berg 1998). TOCs that provide such services have an expanded product. Examplesof TOCs that offer such services include Eurogate and the Mersey Docks and Harbour Company.
TOCs can also expand their services by providing additional storage and value-added ser-vices. Examples of such firms in the Netherlands include the Broekman Group in Rotterdam andKloosterboer in Flushing. Investments in information systems supply chain safety (Bichou 2004),preferential treatment of time-sensitive cargo (de Langen 1999) and facilities for reverse logistics(Bernon and Cullen 2007) also enhance the integration of a TOC in supply chains.
In the index of the extent of integration of a TOC in supply chains, the number of servicesprovided by, and investments made by, a particular TOC is divided by the total number of additionalinvestments and services (11). For instance, a TOC that offers 4 of the services listed above andmakes three of the investments listed above has a logistics service provision index of 0.64 (7/11).The survey results provide the necessary data for this index.
An internationalisation index of TOCs is constructed based on four variables given in Table 2.The first variable is whether or not a TOC is part of an internationally operating firm. This
variable has a relatively low weight as ‘foreign ownership’ alone does not make a TOC in aparticular port ‘international’. Thus, foreign ownership of a TOC is insufficient to classify astrategy of a TOC as ‘global’. This reasoning may be illustrated by taking ECT (a subsidiary ofHutchison Port Holdings International – a large multinational in the port industry) as an example:even though ECT has a foreign parent company, ECT is not internationalised: it focuses solelyon Rotterdam and thus does not classify as a global operator.
The second variable is the provision of port services overseas. This is the case when the TOC ina particular port is involved in providing port services overseas, for instance, through contacts withthe customers of the terminal overseas or involvement in managing the terminal. This variable isthe strongest indicator of a market expansion strategy and consequently has the strongest weight.The third variable, investments in hinterland terminals, has a weight of 0.2. The variable is includedbecause such TOCs are not purely ‘local’ operators but have invested outside the port area. Theinternationalisation index ranges from 0.1 to 1. All TOCs get a ‘starting value’ of 0.1 to improvethe graphical presentation.
These two indices enable the classification of the TOCs in Brewer’s framework. Based on asurvey question to identify whether or not TOCs intend to start providing additional services,make additional investments or expand internationally, an analysis of changes of strategies ofTOCs.
Table 2. Components of the internationalisation index.
Variable Weight
Is the TOC part of an internationally operating firm; 0.3Does the TOC offer port services overseas. 0.4Does the TOC invest in hinterland terminalsa? 0.2Starting weight2 0.1
aThese are included because they indicate TOCs are not purely local.
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The second research question is: ‘what is the relation between strategy of TOCs and thecommodities they handle and the customers they serve?’
The second question is concerned with analysing differences between TOCs based on two char-acteristics of TOCs. First, TOCs that handle different commodities may have different strategiesconcerning market expansion and provision of logistics services. For such an analysis, TOCs areasked in the survey to indicate what commodities they handle. Based on the answers, TOCs aregrouped into three categories: containers, bulk and non-containerised general cargo (including, forinstance, fruit, cars and paper). Second, the influence of customer types on the strategy of TOCsis analysed. Three different types of customers can be identified: shipping lines, forwarders andshippers. TOCs can have contractual relationships with each of those three types of customers.Again, the survey provides the data for this analysis.
The third research question is: ‘which additional services or investments to enhance theintegration of TOCs in supply chains can be expected to give TOCs a competitive edge?’
Simply providing additional services may not be enough for TOCs to develop a competitiveadvantage. Similar investments may have already been made by competing TOCs. Alternatively,other TOCs may have considered such investments, but decided against them. In both cases,it is doubtful such investments will lead to competitive advantage. The classical concept of the‘diffusion cycle’of innovations (Rogers 1983) can be used to provide some insights into the relationbetween investments of TOCs and competitive advantage. If <20% of all TOCs indicate that theyhave either invested or seriously considered investments, these investments are considered tobe in the early stage of a diffusion process (only ‘innovators’ have made investments). In thesecond stage, early adopters (roughly the next 20% fastest movers) have made the investmentsor seriously considered to do so. The early majority (40–60%) follows in the next stage, and thelate majority (60–80%) come next. The final stage is reached when even laggards (80–100%)made the investments. The respondents were asked to judge the stage in the diffusion cycle of theservices and investments discussed before.
Investments and/or additional services which, according to the respondents, are in the innovatoror early mover stage in the diffusion cycle are more likely to be potential sources of competitiveadvantage than additional services that according to the respondents are in the ‘late majority stage’.
The fourth research question is: ‘do TOCs develop partnerships to expand the range of servicesthey can offer?’
The general strategy literature suggests that partnerships can be an attractive method to expandthe range of services offered to customers (Dyer and Singh 1998). Various scholars also claimthat partnerships improve the performance of supply chains (Bowersox et al. 2003). However,it is also argued that few firms in logistics are effectively operating in partnerships (Crum andPalmatier 2004). The partnerships of TOCs have not been analysed in detail. Thus, the aim is togain some general insight into the use of partnerships by TOCs to introduce new services.
4. Results
The survey questions discussed above were sent to senior managers of 69 TOCs registered in theNetherlands.3 Thirty-three useful surveys were returned, a satisfactory response rate of 48%. The15 TOCs in Rotterdam that participated in the study (of the total of 33 in the Netherlands as awhole) were visited and filled in the survey in our presence. They were asked to explain theiranswers. With this method, additional qualitative information was collected that allows for a betterinterpretation of the survey results. The number of returned surveys is somewhat small for formalanalysis of the results, but the combination with interviews provides a basis for drawing sometentative conclusions. The sample could not be enlarged since all TOCs in the Netherlands wereincluded in the survey and sending the survey also to TOCs in other countries was beyond the
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scope of this research. The interview and survey results were treated confidentially. The surveyresults allow for the following conclusions.
4.1. Changing strategies of TOCs
In Figure 3, the TOCs are classified in Brewer’s framework, based on the calculations discussedin the previous section.
These data allow the following two conclusions.
• More than 75% of the terminal companies in Dutch ports operate on a local scale with one ormore terminals in the Netherlands.
• More than 50% of the involved TOCs are port service providers. The other part is focused onterminal services and is less concerned with upgrading their product in supply chains.
The changes of the strategies of these TOCs are given in Figure 4. This table is based on theanswers of the TOCs on the questions regarding plans to introduce new services.
Figure 4 shows a trend towards more integration of TOCs in the supply chain. Fourteen ofthe 33 respondents (48%) indicate that they expect to start offering additional services withinthe next 3 years. Especially local terminal operators are trying to develop into local port serviceproviders. TOCs increasingly invest in rail and intermodal services and in storage services.Anotherimportant development is the increasing investment ofTOCs in supply chain integration, especiallyin information systems for joint planning.
Five TOCs (15%) also have plans to expand internationally.
4.2. Influence of commodities and customers on strategies of TOCs
The commodities handled influence the strategies of TOCs. Container terminal operators andbulk operators are less integrated in the supply chain compared with TOCs that handle breakbulkcommodities (Table 3).
Figure 3. Competitive strategies of TOCs in Dutch ports.
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Figure 4. Changing strategies of TOCs.
Table 3. Logistics services for three commodity types.
Mean score for % shipping line % forwarder % shipperCommodity N logistics services as client as client as client
Breakbulk 18 0.59 0.94 1.00 1.00Bulk 9 0.36 0.44 0.55 0.67Containers 6 0.47 1.00 0.17 0.33
While most container TOCs work exclusively for shipping lines, breakbulk TOCs have directcommercial relationships with shippers. Examples include fruit (where TOCs offer cold storage,value-added services and distribution to shippers), cars (where TOCs offer value-added services,storage and door-to-door transport) and liquid chemicals (where TOCs offer storage and door-to-door transport). Bulk TOCs in general work either for shippers or for shipping lines (Table 3).4
The limited integration of container TOCs in the supply chain is explained by the fact thatvalue-added services for containerised cargo are less frequently located in seaports, due to thefact that containers can be cost-effectively transported directly to the hinterland.
Road transport services, inland waterway services, value-added services and additional storageservices are provided by the majority of the TOCs. Other services, such as hinterland terminals,are only provided by a small percentage of all TOCs.
In Table 4, the services offered by TOCs are related to the commodities types.Container TOCs invest relatively more in other terminals, either in the hinterland or overseas,
and in planning systems. Container TOCs seldom offer additional storage services. BreakbulkTOCs offer relatively more road, rail and inland waterway services and complementary storageservices. Bulk operators offer relatively more value-added services, especially blending. Theyhardly invest in information systems.
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Table 4. Services offered by TOCs in three commodities.
Bulk Cont BreakbulkService (n = 9) (%) (n = 6) (%) (n = 18) (%)
Providing road transport to final destination 67 50 94Providing rail transport to an inland railway terminal 29 33 61Providing inland waterway transport to an inland waterway terminal 43 67 83Providing intermodal transport to final destination 43 50 78Providing complementary storage services 50 33 88Providing value-added services 88 67 76Investing in hinterland terminals 25 50 25Investing in terminals overseas 13 33 25Investing in transport means 25 50 38Investing in information systems that enable ‘collaborative planning’ 25 83 71Investing in maximising safety in supply chains 38% 67% 65%Investing in preferential treatment’ of time sensitive shipments 13% 0% 41%Investing in logistic systems to manage reverse logistic flows 13% 17% 24%
The interviews made it clear that ‘history’is an important factor explaining the strategic positionof TOCs. Many TOCs that were developed by firms with business activities outside the terminalindustry, for instance, in storage, inland shipping or value-added services generally offer moreadditional services than TOCs where cargo handling has historically been the core activity. Thisis explained by the fact that these firms focused on optimising the supply chain from the start,while ‘independent’ TOCs are more focused on a profitable terminal operation.
4.3. Additional services and competitive advantage
Table 5 shows the percentage of firms that offer various services and the opinion of the respondentsregarding stage of the services in the ‘diffusion cycle’ described in the preceding section.
These answers suggest that it is difficult to create competitive advantage by offering hinterlandtransport services: only the ‘late majority’ does not offer road transport yet, the other services arein the phase of the ‘early majority’.
On the other end of the spectrum are ‘systems to manage reverse logistics flows’: only a limitednumber of firms already offer these services and the respondents indicate such services are in theearly adoption stage. Consequently, firms can create a competitive edge in this field.
Table 5. Investments of TOCs: diffusion in the industry.
Percentage of TOCs thatmake investments/provide Phase in
services diffusion cycle
Investments to manage reverse logistics flows 0.17 0.22Investments in information systems for joint planning 0.60 0.25Investments in terminals overseas 0.21 0.27Investments in hinterland terminals 0.28 0.28Investments in preferential treatment of shipments 0.30 0.35Joint investments in safety in the whole supply chain 0.57 0.36Value-added services 0.77 0.38Inland waterway transport to an inland waterway terminal 0.70 0.40Rail transport to an inland railway hub 0.50 0.43Complementary storage services 0.67 0.43Intermodal hinterland transport to final destination 0.63 0.49Road transport to final destination 0.78 0.60
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Overall, the relation between the percentage of firms that offer a service and the ‘phase inthe diffusion cycle’ according to the respondents is rather coherent. The most notable excep-tion is joint planning systems. Even though 60% of all TOCs have already invested in jointplanning systems, most experts still feel a competitive edge can be created through furtherinvestments.
A substantial number of firms (slightly <50%) have plans to expand the number of servicesoffered to customers in the next 3 years. Firms that have not invested yet in joint informationsystems intend to do so (Table 6). The same is true, to a lesser extent, for the storage services.These data suggest that investments information systems, storage services, value-added servicesand terminals overseas are priorities of TOCs, while investments to provide road transport andinland waterway transport services are not.
4.4. Partnerships of TOCs
Most additional services are offered directly by the TOC and not in partnership with other firms.Only a number of services, most notable road transport, inland waterway and intermodal services,are offered through a joint venture while an independent subsidiary is used for terminals, in thehinterland or overseas (Table 7).
The limited use of partnerships may be explained by the advantages of full ownership but it mayalso be the case that TOCs do not have sufficient capabilities to establish and manage partnerships(Kale et al. 2002). This is an issue for further research.
Table 6. Plans of TOCs to offer additional services.
Value-added services Number of firms
Investments in information systems for joint planning with other companies in the supply chain 4Complementary storage services 3Value-added services such as packing, repacking, quality control or repair 3Rail transport from the terminal to an inland railway hub 3Investments in hinterland terminals 1Intermodal hinterland transport to final destination 1Joint investments in safety in the whole supply chain 1Investments in ‘systems’ for a preferential treatment of time sensitive shipments 1Investments in reverse logistics 1Road transport from terminal to final destination 0Inland waterway transport to an inland waterway terminal 0
Table 7. Organisation structure of services provided by TOCs.
Joint OfferedService venture Subsidiary by TOC
Providing road transport to final destination 4 4 17Providing rail transport to an inland railway terminal 1 2 11Providing inland waterway transport to an inland waterway terminal 2 4 15Providing intermodal transport to final destination 3 2 14Providing complementary storage services 1 2 18Providing value-added services 0 2 20Investing in hinterland terminals 0 3 6Investing in terminals overseas 2 3 2
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5. Conclusions
In this paper, four generic strategies for TOCs were identified, based on Brewer’s framework toclassify strategies of logistics services providers. In the Netherlands, all four strategies are present.Even though the method used in this paper to classify TOCs is not very precise, some generalconclusions can be drawn. There is a clear trend towards a port service provider strategy, eitheron a global or on a local scale. As more than 40% of the TOCs indicate to have plans to introduceadditional services in the next 3 years, the trend towards more vertical integration is likely to con-tinue. This raises an important research question of whether or not TOCs with such a strategy aremore profitable than other TOCs (Oliver et al. 2005) and emphasises the importance of researchon the changing role of TOCs in international supply chains (Paixao and Marlow 2003).
There is also a trend towards increasing internationalisation of TOCs. Local terminal operatorsmay only be able to survive in specialised supply chains where they are somewhat protected fromcompetition through legal or economic entry barriers. Thus, further attention for the issue of entrybarriers in ports as impediments of internationalisation of TOCs is required (de Langen and Pallis2007).
TOCs that handle different commodities have different strategies. Especially breakbulk TOCsare better integrated in supply chains. Further analysis of these TOCs can yield interesting insightson the changing role of ports and terminal operators in global supply chains. This may be valuablegiven the fact that most attention is given to the container market, while breakbulk cargoes generatemore value-added for port cities (Haezendonck et al. 2000).
Provision of intermodal hinterland services is not perceived as a new source of competitiveadvantage of TOCs. These services are common practice in industry and therefore unlikely tobe sources of competitive advantage. Services that can potentially lead to a competitive advantageare investments in interactive information systems, investments to manage reverse logistics flowsand investments in terminals, overseas or in the hinterland. Further analysis of such investmentsof TOCs can provide new insights in this field.
Finally, in most cases, the additional services are offered directly by the terminal operator. Onlya number of services, such as terminal overseas, are frequently offered through an independentsubsidiary, while joint ventures are only used by a minority of TOCs. This raises the importantissue of the role of TOCs in partnerships to improve efficiency and effectiveness of internationalsupply chains.
Notes
1. A good example is Hutchinson Port Holdings, world’s largest terminal operator, which increasingly invests inadditional services, like road haulage and inland logistics services.Another example is PSA Corporation (Singapore),the second largest terminal operator, which strongly invests in logistics zones in China at the moment.
2. A considerable number of TOCs are purely local. Giving these a score of 0.1 instead of 0 allows for clearer figures,while the index is relative in any case, so absolute values are not important.
3. All firms in the Netherlands are registered and classified in certain industry codes. The list of 69 TOCs coversall firms for the industry code ‘loading unloading and transhipment services’. A few firms that also do terminaloperations may be classified differently, but this list is rather complete.
4. Some bulk TOCs are single-user facilities, where the parent company, often a manufacturing company, runs theterminal on a cost-recovery basis.
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