The role of ports in local economies

1
The role of ports in local economies

• prof. Enrico Musso
• university of Genoa
• sommet des villes de la Méditerranée
• Genoa, Oct. 12th, 2000

2
Background

• Changes in maritime transports (containerisation,
  specialisation, rises in ships sizes) largely
  affect port local economies, since
• the positive impact of ports tend to spread from
  local environment to a wider and often
  international one, including the hinterland and
  the shippers/consignees
• space consumption and negative externalities are
  bigger, because of containerisation, overcapacity
  caused by port competition, dramatic increases in
  throughputs
• ?
• Changes and possible gaps in spatial distribution
  of costs and benefits

3
Benefits and costs for local economies

• Benefits
• Revenue of inputs
• Multiplier effects
• Positive externalities

• Costs
• Cost of inputs
• Negative externalities

4
Local economy vs. hinterland?

• The role of ports in local economies
• macro-economic
• employment
• industrial linkage / induced effects
• environmental
• The roles of ports outside the local economy
• on the transport industry (microeconomic)
• reduction in costs (efficiency)
• increase in transport demand
• on the hinterland (macroeconomic)
• development of international trade

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Some dramatic changes...

• Traffic growth
• Port operations more capital intensive, labour
  saving and space consuming
• More competition between ports
• Lower fares and lower ports times
• Overcapacity
• Decreases in producers (terminal operator)
  surpluses and increases in consumers (liners,
  MTOs) surpluses
• Relocation of formerly port-oriented industries
• Control of intermodal and logistic cycle by
  NVOCCs
• Weaker spatial links with the port
  (intermodality, transhipment...)

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and their consequences on costs

• Reduction of transport costs
• Increase in demand
• port costs (costs of the port node for the
  transport industry, i.e. port ship generalised
  costs) shift from ships to terminals
• port service inputs shift from labour to capital
  and to land

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How does this affect local economy?

• Labour per cargo unit dramatically decreases
• Capital and entrepreneurship shift outside the
  local control (horizontal and vertical
  integrations in port industry)
• Land price for port uses is low since
• port competition pushes down prices of
  stevedoring
• competition and low prices transfer on input
  markets
• land price lowers around the opportunity cost (or
  even below)
• Substantial and increasing external costs
  (road/rail traffic, congestion, marine and air
  pollution, etc.)
• Regional multipliers possibly lower
• ?
• A threat for port local economy?

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CHALLENGES
THREATS
WHY?
SPACE CONS. THROUGHPUT SPACE SCARC. NO
INVEST. NO SELF-GOV. NO TAX YELD LITTLE
BARGAINING POWER SMALL/ISOLATED PORTS LOSS
OF LEADERSHIP CENTRAL GOVERNANCE NO LOCAL
INVOLVMENT
LAND USE POLLUTION CONGESTION
PORT PLANNING
DECENTRALIS. SELECTION PARTNERSHIPS NETWORKING
DELOCALISATION
SELF-GOVERN. - TAXATION - FINANCE - PLANNING
LAND UNDERPAID
ENTREPR. LEADERSHIP
EXTERNAL CONTROL ON PORT INDUSTRY
INVOLVMENT OF LOCAL COMM.
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Demaritimisation or remaritimisation?

• Changes in port and transport industry bring
  about
• reduced net benefits for port local economies,
  resulting from positive economic impact and
  negative impact on land and environment
• loss of local control and lossof leadership on
  port industry
• Geographical unbalance between costs and benefits
  of ports are a key issue in sustainable port
  development

10
Some strategies for a port economy

• Partnership and networking
• between ports
• between ports and inland terminals
• Financial / fiscal autonomy
• Planning autonomy
• Location of value-added services (VAS)
• Involvment of local community .

11
Some strategies for a port economy

• Partnership and networking
• between ports
• between ports and inland terminals
• Financial / fiscal autonomy
• Planning autonomy
• Location of value-added services (VAS)
• Involvment of local community