By Peter de Langen
Many port development companies, including port authorities, develop commercial strategies which guide their commercial and investment activities. One common ambition in those strategies is the aim to expand the hinterland
The Port of Algeciras aims to serve the Madrid metro area, where Valencia is currently dominant; Rotterdam and Antwerp aim to improve competitiveness in Bavaria, where German ports, especially Hamburg, are dominant; and various US East Coast ports aim to expand their hinterland to destinations such as Chicago and Indianapolis, especially for transpacific cargo, where they benefit from the expanded Panama Canal locks.
However, such ambitions often are not achieved and when they are achieved, they require a long-term effort. In addition, cases where the ambitions have been achieved generally succeed because of two factors.
First is when there has been a widely recognised development that favours a shift of cargo. For instance, the Panama Canal could fit this category. Likewise, the disruptive trend of North Adriatic ports attracting deepsea calls enabled them to slowly gain market share in middle European countries such as Austria. But here, while the potential was already widely acknowledged in the 1990s, the shift has taken a long time and only gained momentum in the last 10 years: the port of Koper, Slovenia, surpassed Rotterdam as Austria’s most important import port in 2009, and Hamburg as Austria’s most important export port in 2011.
Second, a significant shift often requires involvement of some major shippers or hinterland operators. Mercedes made the choice to shift substantial volumes of car exports to Koper, while CN rail enables the Northern west coast port of Prince Rupert, Canada, to reach the US Mid-west market.
While these examples have succeeded, many other ambitions to expand market share have failed. If both factors mentioned above are not in place, the goal to expand the hinterland might be easy to formulate but very hard to achieve. Perhaps that should not stop port development companies from trying, but quite often port development companies turn to governments to support investments aimed at expanding the hinterland. In such cases, as a rule, public money could be much deployed better elsewhere.
First published @Port Strategy
