Summary
This thesis carries out the capacity expansion strategy for port in a competition
environment. A new model which deals sea port as a node in the logistic chain
will be built in this study. And the port of Rotterdam and port of Antwerp will be
used as a special case study.
Nowadays containers are widely used in world trade business. Millions of
containers are being moved from one point to another every single day. In the
last decades, world container traffic has increased enormously because of the
increasing world population and the more specific needs of customers. The
world container traffic increased from around 100 Million TEU in 1990 to around
400 Million TEU in 2005 (Hofstra University). And the container traffic is
expected to remain growing in the future. The growth in international container
shipping will continue with the expected percentage of 9% annually up to 2015
(Heymann, 2006).
Ports, as facilities for accommodate ships and transferring cargoes, play
essential nodes in maritime-land freight transport network. The strong growth in
container industry, gives a good opportunity for port development on one hand.
On the other hand, ports are facing great pressure of handling with the
rapid-growing container traffic. Due to the enormous growth in total demand
and uncertain demand fluctuation in short periods, ports are always faced with
capacity problems, either short-capacity or over-capacity. When taking into
account new trends in containerization, and intensively increasing competition
among ports in regional port clusters, port planning in capacity will become
even more significant. Therefore, developing best strategies to deal with port
capacity expansion problems in competitive environments is a main challenge
faced by port authorities.
In order to provide information to port authorities when they make port capacity
expansion strategies, simulation models are widely used. In these simulation
models, main focus is on hinterland transport network, because of the quality of
hinterland transport has become increasingly important for the competitiveness
of a seaport (Konings, 2007). Basically, two types of approaches for transport
modeling can be used in transportation planning concerning port capacity
problems. One is simulation of route assignment in network, e.g. the SMILE
model (Strategic Model for Integrated Logistics and Evaluation) developed by
the Dutch institute TNO, which simulates the assignment of freight flows for
different commodity types and transportation modes. The other one is
projection of port demand based on macro-economic relationships with a more
or less fixed market share for a particular port. The example of this second
approach is the GSM model (Goederen Stromen Model) used by the Port of
Rotterdam. But there are some limitations in these two approaches. The first
approach does not account for port development. This approach mainly
focuses on hinterland transportation network. However, port investment
characteristics are not taken into account in this approach. The second
approach accounts for port development, but does not incorporate the potential
changes in a port’s market share caused by, for instance, competition between
transportation routes or port service level. In this case, it is essential to develop
a new model, which combine these two fore-mentioned approaches, with the
capability of both simulating the effect of competition and incorporating
autonomous demand growth.
In this thesis, a new concept is formulated that sea port is considered as a node
in total logistic chain. A new dynamic port planning model is developed with
Microsoft Excel Program. In this port planning model, factors of port capacity,
port-commercial and public interests, port competition, capacity problems of
hinterland infrastructures are all taken into consideration.
An actor analysis is firstly carried out in the thesis. The main actors in container
industry are analyzed, including terminal operators, port authorities, shipping
companies, inland transport operators, manufacturers and consignees. Market
share, port utilization, traffic volume, and unit cost are concluded as the main
interests of port authorities.
Based on the conclusions of actor analysis, the port planning model is
developed with three key inputs, including (1) port residence cost and
congestion; (2) port investment cost; (3) hinterland transport cost and
congestion.
This model is developed based on the following iterative mechanism: In one
year, these three aspects (i.e. port residence cost, port investment cost, and
hinterland transport cost) determine the unit transshipment cost per TEU of this
same year and ultimately determine ports’ market share of the same year.
However, the market share of this year would determine the three costs of the
next following year (i.e. port residence cost, port investment cost, and
hinterland transport cost).
In the iterative process, several other factors are also included. Port capacity
also affects the port residence cost of the same year. The new capacity added
is another factor that affects the port investment costs of the same year.
Hinterland infrastructure also affects the hinterland transport cost of the same
year.
A case study is carried out by means of the port-planning model. In this case
study, port of Antwerp and port of Rotterdam are chosen as the two competition
ports. Time horizon of 30 years is analyzed with thirty iterations.
First of all, a general description of both ports is shown, including geographical
location, historical overview, port statistics, hinterland connection, future
expansion planning and containerization in each port. Based on this basic port
information, five scenarios and assumptions are made as follows: changing
expansion plans; changes in port congestion; changes in hinterland congestion;
global economy development; combination of strategies with uncertainty. The
first two scenarios (changing expansion plans and changes in port congestion)
can be fully determined by port authorities. But for the third (changes in
hinterland congestion) and fourth (global economy development) scenarios,
port authorities have very limited power on it. Therefore, uncertainty with
strategies, as the fifth scenario, is also analyzed by simulation.
From the simulation results of these five scenarios, the following conclusions
are derived in this thesis:

The port-planning model developed in this thesis can be used as a tool to
provide information to port authorities to choose port capacity expansion
strategies.

It is better to expand port capacity step by step, not to adding too many new
capacities in once expansion.

A trade-off between standard utilization rate and port service level needs to
be taken into account.

Hinterland transportation cost is the main part of the total unit cost. The cost
of each modality varies with different value of time and different
development of hinterland connections.
At the end of the thesis, limitations of the research and recommendations for
further research are discussed. The main limitations in this thesis include both
research limitation and model limitation. In this study, the competition is
restricted to inter-port competition and only in container market. In the model,
merely thirty percent of the total throughput is taken into account. And the cost
of transportation, port congestion and port investment are calculated in a rough
level.
And for further study, main focus should be on modeling at a disaggregate level,
in which way more accurate results can be derived. And a thorough analysis on
port congestion, port investment recovery is better to consider. And other
alternative methods to ease competition problems are also need to be taken
into account.
To sum up, the concept used in this thesis and the model developed in this
study are useful to analyze port capacity expansion strategy. It can provide
information to port authorities to choose the best strategies to deal with port
capacity expansion problems in competitive environments by using the
simulation model. Effects of hinterland transport, port congestion and port
investment can be effectively shown in the simulation result. Also, the model
can be easily expanded for dealing with more complex issues.