Foreland-Based Regionalization:
Integrating Intermediate Hubs with Port Hinterlands
Theo Notteboom
ITMMA - University of Antwerp and Antwerp Maritime Academy
Jean-Paul Rodrigue
Department of Global Studies & Geography, Hofstra University
IFSPA Conference 2009
Hong Kong Polytechnic University, Hong Kong – 25-27 May 2009
Content
1. PORT REGIONALIZATION REVISITED
2. THE ROLE AND FUNCTION OF INTERMEDIATE
HUBS
3. IN SEARCH OF COMPETITIVE ADVANTAGE
4. RECONCILING FORELANDS AND
HINTERLANDS
5. AN UNFOLDING PARADIGM?
1. Port Regionalization Re-visited
• Globalization
- Fragmented
production and
consumption systems.
- Maritime side:
• Economies of scale and
frequency of service
along major pendulum
routes.
- Inland side:
• Spatial deconsolidation
(or consolidation).
• Local constraints
- Congestion and limited
amount of land.
- Port growth and
expansion issues.
- Freight activities:
• Used to take place in
proximity of port
terminal facilities.
• Setting of a network of
inland terminals.
1. Port Regionalization Re-visited
The Spatial Development of a Port System
Phase 2: Penetration and hinterland capture
Phase 1: Scattered ports
LAND
SEA
Phase 3: Interconnection & concentration
Phase 4: Centralization
Phase 5: Decentralization and insertion of ‘offshore’ hub
Phase 6: Regionalization
Load center
Interior centre
Freight corridor
Deepsea liner services
Shortsea/feeder services
Hinterland-based (Regional
load centre network)
Foreland-based
1. Port Regionalization Re-visited
Regionalization and Hinterland Setting
North America
Western Europe
East and Southeast Asia
Coastal concentration
Landbridge connections
Inland concentration
Coastal gateways
Coastal concentration
Low hinterland access
1. Port Regionalization Re-visited
- Path dependency:
• Building on previous phases and ‘memory effects’.
• Follow a similar evolutionary development path.
- Degree of contingency:
• Deviate from existing development paths.
- Consequences:
• Port systems do not follow the same sequence of
stages.
• Some level of disparity among port system
developments.
1. Port Regionalization Re-visited
• “Terminalization”
- Higher level of integration within freight
distribution systems through terminals.
- Terminals and terminalization:
• A buffer to be used for temporary storage.
• A constraint inciting various forms of satellite/inland
terminal use and inventory in transit practices.
• Extended gateways and extended distribution centers.
- The need to look at intermediate hubs.
2. The Role and Function of
Intermediate Hubs
• Emergence
- Since the mid 1990s in many port systems.
- Critical factors:
• Excellent nautical accessibility.
• Proximity of major shipping routes (deviation).
• Land for future expansion.
- Mostly owned by port holdings or carriers.
- Not in all port systems:
• Prevalent in the Mediterranean and Pacific Asia / Middle
East.
• Limited in the Americas (avoid flag restriction).
2. The Role and Function of
Intermediate Hubs
• Function
- Multiply shipping options.
- Optimization of vessel movements:
• Hubs, relay or interlining locations.
- Points of convergence of regional shipping
- Connect the same hierarchy levels and improve
connectivity within the network (relay and
interlining)
- Some intermediary locations strictly perform
cargo handling functions and have a nonexistent hinterland
The Insertion of Intermediate
Hub Terminals
Hub-and-Spoke
Relay
Interlining
Hub
85% of Transshipment Traffic
15% of Transshipment Traffic
World’s Main Intermediate Hubs, 2007
World’s Main Transshipment Markets, 2007
Transhipment flows in Europe
Transhipment hubs in Med
(85-95% transhipment incidence)
Gioia Tauro, Algeciras, Taranto, Cagliari, Malta
11
Container throughput 2007 in million TEU
10
25.4%
Sea-sea transhipment
9
Inland gateway traffic
(road/rail/barge)
8
19.9%
45.8%
7
6
5
4
60.8%
3
28.7%
19.6%
2
34.0%
37.9%
1
0
Antwerp
Zeebrugge
Rotterdam
Hamburg
Bremerhaven
Le Havre
Valencia
Barcelona
2. The Role and Function of
Intermediate Hubs
• Regional shipping networks
- Ports feel that serving feeder vessels means a
loss of status.
- Feeder options:
• Direct feeders between hub and feeder port:
- Lowest transit time but requires more feeders and smaller
feeder vessels.
• Indirect feeders via line-bundling loops including more
than one feeder port:
- Economies of feeder vessel size, but incur longer distances
and longer transit times.
2. The Role and Function of
Intermediate Hubs
• Vulnerability of intermediate hubs to
container growth and decline
- Direct end-to-end or line-bundling services
versus hub-and-spoke: a hub can become a
redundant node in the network
- Footloose behaviour of transhipment/relay
volumes
Transhipment Hubs in the West Mediterranean
Taranto
Valencia (MSC)
Cagliari
Piraeus (?)
Algeciras
Gioia Tauro
Malta
Market shares of ports in the West Mediterranean
according to the diversion distance (1975-2008)
West-Mediterranean ports with one-way diversion distance > 250 nm
West-Mediterranean ports with one-way diversion distance 100-250 nm
West-Mediterranean ports with one-way diversion distance < 100 nm
Share in TEU throughput West-Med
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Source: Notteboom (2009)
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
0%
Competition from new
port developments in Med
Container throughput in million TEU, capacity extensions in million TEU
Djendjen (Algeria)
Capacity: +2 (DP World)
Bejaia (Algeria)
Ambarli (Turkey)
Traffic: 0.15 (2008)
Capacity: +2.5 (>2010)
Traffic: 2.26 (2008)
Algiers (Algeria)
Beirut (Libanon)
Traffic: 0.5 (2007)
Capacity: +0.8 (2010)
Traffic: 0.95 (2008)
Mersin (Turkey)
Misurata (Libya)
Initial plans
Tanger Med II
APMT/Akwa: + 3 mln TEU (2012)
PSA: +2 mln TEU (2012)
Haifa (Israel)
Tanger Med
APMT: + 1.5 mln TEU
Eurogate: +1.5 mln TEU
Damietta (Egypt)
Capacity: +4 (2012)
Rades (Tunisia)
Traffic: 0.3 (2007)
Enfidha (Tunisia)
Capacity: +1 (2011)
+2.5 (period 2011-2015)
+2 (period 2015-2030)
PLAN OF TANGER MED
Source: Notteboom (2009)
Traffic: 1.39 (2008)
Port Said (Egypt)
Traffic: 3.2 (2008)
Capacity: +2.5 (2011)
3. Foreland-Based Regionalization:
In Search of Competitive Advantage
• Vulnerability of intermediate hubs:
- Narrow focus on transhipment only
- Competition on basic resources such as location,
nautical accessibility, terminal infrastructure and
on terminal productivity
- Sources of competition can rather easily be
imitated by competitors => hard to create a
sustainable competitive advantage
3. Foreland-Based Regionalization:
In Search of Competitive Advantage
• Intermediate hubs likely to play a more important
role beyond pure transhipment:
- Capitalize on scale increases of vessels:
• Undermining the serviceability of some ports (lack of
connectivity)
• Hubs offer advantages of consolidation + support a level of
traffic not feasible otherwise
- Extracting more value/economic rent from cargo
passing through:
• Using the hub for added-value logistical activities (see e.g.
Theys et al, 2008)
• Low-end to high-end value added activities (e.g. mass
customization of products)
• Low cost location before entering high distribution cost areas
• Free-trade zone status can trigger development of value-added
services
3. Foreland-Based Regionalization:
In Search of Competitive Advantage
Inland Terminal
HINTERLAND
FORELAND
Main Shipping Lane
INTERMEDIATE HUB
- Integration of
intermediate hubs in
regional shipping
networks.
- The maritime foreland
of the intermediate
hub is functionally
acting as a hinterland.
- Reconciling
operational
characteristics of
forelands and
hinterlands
4. Foreland-Based Regionalization:
Reconciling Forelands and Hinterlands
• Different momentums
- Maritime momentum (carriers’ needs):
• Economies of scale.
• Optimal network configuration (concentration).
- Inland momentum (shippers’ needs):
• Spatial coverage (deconcentration).
• Frequency and flexibility.
- A growing disparity:
• Massification versus atomization.
• At a certain traffic level; inland diseconomies of scale.
The “Last Mile” in Freight Distribution
Massification
Atomization
Frequency
Capacity
HINTERLAND
GLOBAL
Shipping Network
Corridor
Gateway
REGIONAL
LOCAL
Segment
Inland
Terminal
Customer
Distribution
Center
“Last Mile”
Functional and Geographical Diffusion of
Containerization: Globalization and Regionalization
Foreland Traffic
Cost per TEU-KM
Hinterland Traffic
Regionalization
Volume
4. Foreland-Based Regionalization:
Reconciling Forelands and Hinterlands
• Reconciliation
- Hinterland-based regionalization permitted
inland freight traffic to keep up with volume and
network configuration changes.
- Foreland-based regionalization enables small and
medium-sized ports an integration to an
intermediate hub:
• Long distance volatile transshipment traffic
complemented with more stable regional traffic.
• Functional gateway of a regional port system.
• Competitiveness of a maritime range.
Port Regionalization Clusters in Pacific Asia
Hinterland-based regionalization
Foreland-based regionalization
5. An Unfolding Paradigm?
• Changing role of intermediate hubs in
regional shipping networks ?
- Competitive strategy to cope with risks:
• Footloose operators and shifts in maritime shipping
networks.
• Secure traffic from smaller regional ports.
• Capture added value.
• Perception of the feeder function
- Ports prefer direct calls.
- Option: link to more than one hub.
• Transition phase?
- Foreland-based regionalization appears to be a
distinct phase on its own.
Thank you for your attention !
theo.notteboom@ua.ac.be
jean-paul.rodrigue@hofstra.edu