Simon Majtlis 10281738 Thesis: Economics & Finance Comparison between Port of Rotterdam and Port of Amsterdam Simon Majtlis, 10281738, Economics and Business – Economics & Finance Supervisor: Swapnil Singh Date: 01-04-2015 1 Simon Majtlis 10281738 Thesis: Economics & Finance Abstract This paper is a comparison between the Port of Rotterdam and the Port of Amsterdam. Both are ports of significant economic value within the Hamburg – Le Havre port region. The Port of Rotterdam and the Port of Amsterdam act as important main ports for Western Europe in the fast moving and rapidly changing globalizing markets. Nevertheless, until now, relatively little (numerical) research on these ports has been conducted and published. For this paper we are researching whether the Port of Rotterdam and the Port of Amsterdam are creating synergy or negative competitiveness for one another. This research question is derived from a current OECD working paper by Merk & Notteboom (2013). The influence of general economic variables on port-specific variables is tested over the timespan 1980-2013. Data has been retrieved from the ports’, OECD’s and EUROSTAT’s databanks. By far not all data proofed usable for the concluding residual value correlation and suggestions for further research are made. Our research concluded that the answer to our main research question seems to be more of an expected future trend than a clearly outlined currently visible situation. Synergy between the Port of Rotterdam and the Port of Amsterdam is likely to occur as both ports aim to cooperate and in the future will be under even more competitive pressure. 2 Simon Majtlis 10281738 Thesis: Economics & Finance 1) Introduction Throughout past centuries the Netherlands has been a country of traders. From the Golden Age onwards this meant trading across oceans with own ships and ports. Nowadays, in the 21st century, this is still the case and the Port of Rotterdam and the Port of Amsterdam play an important role in Western-European transport economics. In the last fifty years the maritime industry has changed the shape of the world economy (Stopford, 2003). Revolutions such as mechanized bulk transport and containerization have in an impressive way contributed towards globalization. The Port of Rotterdam and the Port of Amsterdam have both, irrespective of their size, profited from these developments. Throughout the last decades they have rapidly grown in size. Due to this growth both ports are now running up against their limits in terms of size (Port of Rotterdam, Wiegmans 2011) . With fierce competition in the Le Havre port range and changing global economic landscapes it is key for these ports to keep on developing and innovating. Not only for their own company profits but also for their contribution to local employment, regional economic impact and their fair contribution to the Dutch economy. To gain more market shares the Port of Rotterdam and the port of Amsterdam could compete each other or search for ways of synergy. As noted in Rotterdam’s Port Compass 2030: “Collaboration between the port of Rotterdam and other ports realizes advantage for customers and the community: this can be achieved by maximizing the use of resources and optimizing the usage of suitable waterways” (Port Compass 2030, 2011). This sounds positive and beneficial, nevertheless little is known about possible synergy or negative competition actually occurring between the Port of Rotterdam and the Port Amsterdam. The scope for this research will therefore be a competitiveness comparison between the Port of Rotterdam and the Port of Amsterdam. The specific research question is if the ports of Rotterdam and Amsterdam create synergy or negative competitiveness for one another? This study contributes in an empirical way to an OECD research by Merk & Notteboom (2013). Merk & Notteboom’s working paper tries to give an evaluation of the current performance of the ports of Rotterdam and Amsterdam. They also try to quantify the effect of the two ports on economic and environmental questions. Summarized, the main scope of their research consists of “attempting to identify the impact of ports on their territories and possible policies to increase the positive impacts of ports on these territories” (Merk & Notteboom, 2013). Besides the OECD research, even though maritime academic research is 3 Simon Majtlis 10281738 Thesis: Economics & Finance actively developing, little research has been performed on comparisons between the Port of Rotterdam and the Port of Amsterdam. Taking into account the effect both ports have on the Dutch economy this is remarkable. The lack of relevant research data in combination with the major positive economic effect of both ports gave cause for this thesis study. As will be elaborated further on, a general economic research method was applied to compare the ports of Rotterdam and Amsterdam. This general economic research method was chosen due to a lack of available port specific (statistical) research methods. By conducting extensive port- specific literature research a good direction was given on what data to collect in order to perform the research and answer our research question. The port-specific literature clarified which port-specific and general economic variables play an important role in measuring port performance. From there on, the necessary port-specific data was gathered by contacting the business intelligence units of the Port of Rotterdam and the Port of Amsterdam. Next to that, general economic variables used as independent variables were taken from databanks provided by the OECD and EUROSTAT. With all the data provided, this study step by step worked towards a residual value correlation determining similarities between both ports. When reviewing these final outcomes of our research, statistics showed that both the Port of Rotterdam and the Port of Amsterdam achieve most of their overall transhipment, and income, through the port-specific incoming transhipment variable. The relevant individual regressions and correlated residual values showed strong dependency on the Dutch imports. The Port of Rotterdam and the Port of Amsterdam can thus mutually benefit from increasing Dutch imports. The exact (numerical) results of the research will be presented throughout the study; the remainder of this paper is therefore build up as follows. Section 2 discusses current academic maritime research and data. Section 3 presents the related literature. Section 4 gives the relevant variables and their underlying data. Section 5 provides the descriptive statistics, followed in section 6 and 7 with respectively the correlations and regression model. Section 8 concludes, discussing limitations of this study and giving suggestions to future research. 4 Simon Majtlis 10281738 Thesis: Economics & Finance Research question Do the ports of Rotterdam and Amsterdam create synergy or negative competitiveness for one another? Sub Research question Do the Port of Rotterdam and the Port of Amsterdam behave in the same cyclical direction when looking at important economically determining variables? 2) Current academic maritime research and data As stated by Palls, Vitsounis & de Langen (2010), in our rapidly growing globalizing economy there is an increase in maritime (port-specific) economic research taking place. This increase in maritime (port-specific) economic research can be explained by rapid developments in the port industry (increasing world trade, new technologies and increasing private involvement). This academic research is often of immediate relevance and challenges the conventional organization and classification of ports. However, despite the currently increasing amount of research, many studies still only focus on a specific port or terminal. Also, within these academic studies, only a small amount of research is actually based on commodities other than containers (Palls, Vitsounis & de Langen, 2010). Little attention is being given to the different possible (macro) economic effects of ports performing in the same region or country, for instance economic effects between ports (negative competitiveness vs. synergy) and other economic effects with a more general economical undertone. The latter for example being: the mutual effect of Dutch GDP on transhipment for both the Port of Rotterdam and the Port of Amsterdam. A relevant current research for this thesis is the OECD study by Merk & Notteboom (2013), which tries to explain port competitiveness between the Port of Rotterdam and the Port of Amsterdam. They do so by emphasizing on the economic impact of both of these ports within their regions and on the Dutch economy. To clarify: data provided by the Port of Rotterdam for instance states that the Port of Rotterdam accounts for 3 % of the Dutch national income. Merk & Notteboom (2013) also speak of the importance of possible synergy between ports in a certain region or country. How the existence of such a synergy should be measured is however not explained or emphasized. Finding an appropriate way of researching this would thus definitely be a contribution to research and a useful scope for this research. 5 Simon Majtlis 10281738 Thesis: Economics & Finance Looking for a maritime economic framework to represent such a study, the following is of interest. When one takes Stopford’s (2003) writings on maritime economics, a significant amount of the graphical representations is derived from time-series correlations. Researching similar port-specific variables on a numerical statistical