Port Privatisation: Ownership Involvement by External Companies
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MASTER OF SCIENCE IN MARITIME SCIENCE MASTER DISSERTATION Academic year 2017 – 2018 Port privatisation: Ownership involvement by external companies Alan Johnson Submitted in partial fulfillment of the requirements Supervisor: Prof. dr. Theo Notteboom for the degree of: Master of Science in Maritime Science Assessor: Prof. Daan Schalck PERMISSION I declare that the content of this Master dissertation may be consulted or reproduced, provided that the source is referenced. Alan Johnson PREFACE This Master dissertation marks the conclusion of my advanced studies in the Master of Science in Maritime Science. I would like to explicitly thank certain people who have contributed to the realisation of this thesis. In the first place, I wish to express my sincere gratitude to my supervisor Prof. dr. Theo Notteboom and co-promotor Prof. Daan Schalck for their confidence and valuable feedback. Their willingness and assistance have resulted in the accomplishment of this dissertation. Furthermore, my appreciation goes to the interviewees for their cooperation and insights as well as to the respondents for completing the survey regarding my qualitative research. Many thanks go to my friends who are always available for advice. Their relentless and unconditional enthusiasm mean a lot to me. Last but not least, I am deeply grateful to my parents for the opportunity they have offered me to follow and finalise this additional master programme. Their exceptional support and motivation are extremely valuable for me. Alan Johnson Ghent, 24 January 2018 I II TABLE OF CONTENTS Preface ...................................................................................................................................................... I Table of contents .................................................................................................................................... III List of abbreviations ............................................................................................................................. VII List of figures ...................................................................................................................................... VIII List of tables .......................................................................................................................................... IX INTRODUCTION .................................................................................................................................. 1 1 GOVERNANCE STRUCTURE IN PORTS .................................................................................. 3 1.1 Port ownership models.........................................................................................................4 1.1.1 Latin model………………………………………………………………………. 4 1.1.2 Hanseatic model………………………………………………………………….. 5 1.1.3 Anglo-Saxon model……………………………………………………………… 5 1.1.4 Mixed model……………………………………………………………………... 6 1.1.5 Summary…………………………………………………………………………. 6 1.2 Port management approaches .............................................................................................6 1.2.1 Service port………………………………………………………………………. 7 1.2.2 Tool port………………………………………………………………………….. 8 1.2.3 Landlord port……………………………………………………………………... 8 1.2.4 Private port……………………………………………………………………….. 9 1.2.5 Summary…………………………………………………………………………. 9 1.3 Port devolution ...................................................................................................................10 1.3.1 Modernisation…………………………………………………………………... 11 1.3.2 Liberalisation…………………………………………………………………….11 1.3.3 Commercialisation……………………………………………………………… 12 1.3.4 Corporatisation………………………………………………………………….. 12 1.3.5 Privatisation……………………………………………………………………...13 1.4 Motives for port privatisation ...........................................................................................14 1.4.1 Increased efficiency and flexibility…….……………………………………….. 14 1.4.2 Reduced public expenses……………………………………………………….. 15 1.4.3 Increased profits………………………………………………………………… 16 1.4.4 Increased competition…………………………………………………………... 16 1.4.5 Reduced politicisation…………………………………………………………... 18 III 1.5 Port regulation ................................................................................................................... 18 1.5.1 Port functions…………………………………………………………………… 19 1.5.2 Port concessions………………………………………………………………… 20 1.5.3 Land ownership…………………………………………………………………. 22 1.5.4 Port subsidisation……………………………………………………………….. 23 1.6 Conclusion .......................................................................................................................... 23 2 PORT PRIVATISATION IN THE UNITED KINGDOM ......................................................... 25 2.1 Privatisation process ......................................................................................................... 25 2.1.1 First privatisation wave…………………………………………………………. 26 2.1.2 Second privatisation wave……………………………………………………….27 2.1.3 Current situation………………………………………………………………… 28 2.2 Port functions ..................................................................................................................... 30 2.2.1 Operator and landlord function…………………………………………………. 31 2.2.2 Regulatory function……………………………………………………………... 31 2.3 Private port holdings ......................................................................................................... 32 2.3.1 Associated British Ports………………………………………………………… 32 2.3.2 Peel Ports………………………………………………………………………... 33 2.3.3 Forth Ports………………………………………………………………………. 33 2.3.4 PD Ports………………………………………………………………………… 33 2.3.5 Hutchison Ports…………………………………………………………………. 34 2.4 Privatisation results ........................................................................................................... 34 2.4.1 Efficiency and investments……………………………………………………... 34 2.4.2 State revenues……………………………………………………………………36 2.4.3 Profit-making…………………………………………………………………… 37 2.4.4 Competition……………………………………………………………………... 37 2.4.5 Employment…………………………………………………………………….. 38 2.4.6 National integration……………………………………………………………... 38 2.5 Conclusion .......................................................................................................................... 39 3 PORT PRIVATISATION IN GREECE ...................................................................................... 41 3.1 Importance of the Mediterranean port range ................................................................. 41 3.1.1 Transhipment hubs……………………………………………………………… 43 3.1.2 Trans-European Transport Network……………………………………………. 46 3.1.3 One Belt, One Road…………………………………………………………….. 48 3.2 Greek port reform ............................................................................................................. 49 3.2.1 First port reform: corporatisation……………………………………………….. 50 3.2.2 Second port reform: liberalisation………………………………………………. 51 3.2.3 Third port reform: privatisation………………………………………………… 53 IV 3.3 Privatisation results ...........................................................................................................55 3.3.1 Efficiency and investments……………………………………………………... 55 3.3.2 State revenues……………………………………………………………………56 3.3.3 Profit-making and growth………………………………………………………. 56 3.3.4 Competition……………………………………………………………………... 57 3.3.5 Employment…………………………………………………………………….. 58 3.3.6 Regulation and geopolitics……………………………………………………… 58 3.4 Conclusion ...........................................................................................................................60 4 QUALITATIVE RESEARCH ....................................................................................................... 63 4.1 Research methods ...............................................................................................................63 4.1.1 Questionnaire…………………………………………………………………… 63 4.1.2 Online survey…………………………………………………………………… 64 4.1.3 Interviews……………………………………………………………………….. 65 4.2 Results: the effects of port privatisation...........................................................................65 4.2.1 Efficiency of commercial operations and administrative tasks………………….65 4.2.2 Financial performance of the port authority and port fees……………………… 67 4.2.3 Intra-port competition and inter-port cooperation……………………………….69 4.2.4 Hinterland integration…………………………………………………………... 71 4.2.5 Employment level at the port…………………………………………………… 72 4.2.6 Port regulation…………………………………………………………………... 73 4.2.7 Risk-seeking behaviour of the port authority…………………………………… 74 4.2.8 Foreign investments in the port…………………………………………………. 75 4.2.9 Focus on short- and long-term goals by the port authority……………………... 76 4.2.10 Benefits for the local communities and environmental impact on the region…...77 4.3 Results: case Port of Piraeus .............................................................................................79 4.3.1 Integration with the TEN-T network…………………………………………….79 4.3.2 Maritime traffic to the Northwest-European ports……………………………… 80 4.3.3 Cooperation with other Mediterranean seaports………………………………... 81 4.3.4 Protectionist reactions from other ports against privatisation…………………... 82 4.3.5 Aversion from other European countries towards China’s geopolitical aspirations………………………………………………………………………. 83 4.4 Conclusion ...........................................................................................................................84 5 REFLECTION AND RECOMMENDATIONS ..........................................................................