Answer to the Research Question

It is now time to answer the research question: how do port-dependent agents change the port’s institutional and physical structure in order to optimize their competitive po-sitions in the international transport of containers? We observe shifting interactions between agents at various spatial scales as a result of changing positions and dependen-cies of the agents involved in the international transport of containers. The world wide distribution of goods is more and more organized in global integrated logistical chains and networks. Shipping lines in particular have been involved in processes of both hori-zontal and vertical integration and in this way have gained more control and power over the global logistical chain. A global company such as the A.P. Möller- Maersk Group, for example, includes the world’s largest shipping line (Maersk-Sealand), one of the

world’s largest terminal operators (APM Terminals) and furthermore owns several feeder services (Norfolk Line) and rail services (European Rail Shuttle). It can offer shippers completely integrated transport from a production centre in China to a con-sumer-market in Germany.

In order for port authorities and locally based port-dependent agents (such as terminal operators and hinterland transporters) to remain competitive, they must become embed-ded within these global production networks. The fact that many different agents are dependent on the port’s performance stimulates collective actions through the formation of coalitions and the coordination of strategic action. In order for port-dependent agents to strengthen the performance of the port and consequently their own position, their collective strategies are aimed at changing the “structure of provision” of the port. The most appropriate agent in this respect is the port authority, since it has ultimate public responsibility over the port’s overall performance, and it holds ultimate regulatory power within the port.

The most obvious and traditional way in which a port authority attracts container flows and becomes embedded in these global networks is to offer sufficient capacity and com-petitive infrastructures, and to guarantee efficiency. The increase in size of ocean-going container carriers and the overall growth of containerized transport demand this. How-ever just offering a piece of land or sufficient depths of the port’s channels is not enough, especially in a region where there is oversupply or competitive alternatives.

Port authorities therefore try to attract shipping lines and their cargo by offering extra benefits. One way is to offer dedicated container terminals to shipping lines, who are then guaranteed berthing space and who can internalize the terminal handling charges..

Another way port authorities attract container flows is to engage in strategic pricing and to provide discounts on either the lease of land or the port tariffs. These discounts are mostly based upon certain container thresholds that a shipping line or operator guaran-tees to bring in or to handle. The discounts are most of the time negotiated behind closed doors.

However, the historically grown institutional and organizational constraints and depend-encies of a port authority have an important influence on its ‘capacity to act’ and on its strategic possibilities. We have seen, for example, a case in which a port authority is not allowed by law to use its revenues to develop sites inland or outside its jurisdiction. In another case, the port authority can strategically invest in ports across the region, effec-tively transforming itself into a trans-national terminal operator. Similarly, some port authorities are not constrained in their pricing policy, whereas others are subjected to political decision-making over tariffs. Port authorities also are responsible for a number of public duties not directly related to commercial interests such as safety, security and issues related to environmental quality.

The interests and stakes of other port dependent agents (i.e. other than the port authori-ties) are less simple to reveal, and their commitment to the port’s performance as a whole is largely determined by their degree of dependency. Some terminal operators have invested substantially in the superstructure of the port, which commits the operator for a period of time to the port. The terminal operator can, however, leave the port when investments made have been recouped and profits have dried up. In a worst case sce-nario, the costs of pulling back during contract time are less than continuing the opera-tions. The dependency of the operators nowadays stretches along corporate ties and logistical networks to distant locations in the port’s fore- and hinterlands. The primary interests of operators are profits and continuity. Hinterland transporters are also to dif-ferent degrees dependent on the port for their business. Especially railroad companies, due to their large fixed costs in rail-infrastructure (or in the user-rights), are literally tied to ground. Also barge operators are, precisely because of the nature of their business, tied to the rivers that connect the port with inland sites. These port dependent agents are themselves organized in several branch associations which lobby the port authority and the government for their specific interests. Not all port-dependent agents are totally committed to the growth of the port. Labor unions for example are not always in favor of growth per se, if that would be accompanied by the loss of jobs or social benefits.

Some port-dependent agents might not be interested in growth at all, e.g. environmental-ists and local communities. They can organize themselves in powerful (multi-scalar) coalitions and networks of engagement that are able to delay port development and frus-trate growth agendas.

The embeddedness of ports and port dependent agents in these global logistical net-works is therefore crucial in their quest to remain competitive. However, ports are not only embedded within these logistical networks but also within a politicized territorial regime that can exercise considerable control over the port’s development, especially through the actions of the state. The state can indeed have a decisive role in the competi-tiveness of ports. Ports are, for instance, usually dependent on the state for the finance and construction of the port’s hinterland infrastructure. The influence of the state further includes strategic trade agreements, environmental legislation, labor and immigration laws, taxes and customs. Its contribution and role largely depend on its own constitu-tional structure, administrative expertise, economic condition, and political system. In the fast growing and moving world of containerized traffic, democratic states are strained in their support for port development by the wide variety of interests of its con-stituency, in which ‘cargo does not vote’. States have subsequently set up all kinds of legislation and procedures to deal with the social costs of port development and growth.

Non-democratic states do not have the ‘burdens’ of public accountability and political opposition, but often lack the means (capital, knowledge), economic base (imports and exports, consumer-markets) and willingness to invest in ports. Exceptions are some rather autocratic states, e.g. Dubai and countries in Asia, which progressively pursue economic development through mercantilist policies and large scale investments in port infrastructure. Some of these states have also been actively involved in stimulating the creation of a ‘national champion’ (shipping line or terminal operator) in the interna-tional maritime sector, that is a territorially embedded firm that can successfully engage and compete within a global production network.

In their turn, states operate in an international arena in which all kinds of regulatory agreements for international trade are set through the World Trade Organisation. Other forms of international regulation are formulated by the United Nations’ International Maritime Organisation, which deals with safety and security and the use of the world’s oceans. But at a regional level also, nation-states are involved in all kinds of interna-tional strategic agenda’s of political cooperation, instituinterna-tional coordination and eco-nomic integration. Supra-national regional trade blocks have been formed during the 1990s such as the North American Free Trade Association (NAFTA) between the U.S., Canada and Mexico, and the Gulf Cooperation Council (GCC) between the Arab coun-tries of the Persian Gulf. These blocks are formed to facilitate trade among its members by easing customs procedures and eliminating trade barriers. The most significant in that respect is the European Union, with its common internal market, customs union and high degree of political integration. The EU has set up all kinds of regulation and has formulated policies that directly affect the performance of ports. The EU’s environ-mental legislation in particular, such as the Bird & Habitat Guidelines and the obligatory Environmental Impact Assessments for major development projects are constraining port expansion and they are useful instruments for environmental pressure groups to gain leverage. In addition, the EU has set up regulations which prohibit member-states from subsidizing their ports and port development, as it would distort the common mar-ket. These kinds of regulations prevent EU member states from creating ‘national cham-pions’, even though these member states often try to secure the interests of their port dependent agents.

The study concludes that competition within the maritime transport sector is not solely an economic game being played out between fully rational and completely informed agents. Neither does it unfold according to the ‘Invisible Hand’ of some God-given set of rules of ‘fair play’, nor does it ultimately results in some competitive equilibrium in which it is no player’s interest to change the way the game is played. Rather, competi-tion must be understood as a historically and institucompeti-tionally biased process which favors some sectors over others, some agents over others and some territories over others. This study has made clear how the economic activity of ports and strategic actions of port dependent agents are both constrained and enabled by path dependent institutional struc-tures and territorially-bounded political agendas. Thus, in spite of the neo-classical eco-nomic ( neo-liberal) call for the establishment of ecoeco-nomic level playing fields in the spirit of the ‘free market’- ideology, the market economy remains a ‘public creation’

subjected to political contests over the ‘rules of the game’ at any spatial level.

It is only by taking into account the historical-materialism of port competition, that we observe the fundamental role of agency in the evolution of institutions and local eco-nomic development. The case studies have shown how agents operating at various levels try to strategically position and maneuver themselves institutionally and politically, to gain a competitive edge over others. This strategic behavior results in new rules of the game, new spaces of dependency and new spaces of engagements: from the local to the

global. Competition is therefore not only a structural feature of the (global) market economy, but also the outcome of strategic and political interaction among public and private agents in space.