Journal of Transport Geography 17 (2009)10-20 Contents lists available at ScienceDirect Transport Geograpny Journal of Transport Geography ELSEVIER journal homepage:www.elsevier.com/locate/jtrangeo Emerging inter-industry partnerships between shipping lines and stevedores: from rivalry to cooperation? Martin Soppea.",Francesco Parola b,Antoine Fremonta INRETS-SPLOT French National Institute for Transport and Safety Research,2 Avenue du GL.Malleret-Joinville,94114 Arcueil Cedex,France University of Genova-Department of Business Studies,CIELI-Italian Centre of Excellence for Integrated Logistics,Via Vivaldi 5.16126 Genova,Italy ARTICLE INFO ABSTRACT Keywords: Since late-1960s stevedoring operations assumed a dramatic importance for shipping lines,who have Shipping lines been securing dedicated berths for some decades.Over the last 20 years,the institutional turn in ports International terminal operators drove the overseas expansion of pure stevedoring companies.For quite a long time carriers and steve- Ports dores fiercely battled each other both for bargaining contractual arrangements and for securing new con- Corporate strategy Co-operation cessions in the key port areas.Currently this scenario is slowly changing and some early-forms of Maritime network partnership are coming out.This paper analyses the different pathways through which carriers satisfy their needs of handling services.Based on 2006 data it empirically demonstrates the growing resort to such forms of cooperation both contractually and via equity ventures. 2008 Elsevier Ltd.All rights reserved. 1.The liner shipping industry and the supply of port services Terminal Operators2(ITOs)is on the point of dominating the market. The advent of containerisation has deeply affected the organisa- The emergence of powerful pure terminal operators(PTOs). tion of maritime shipping industry as well as the relationships willing to diversify their portfolios and to increase their financial among the players within the transportation chain.The demand margins overseas,gave momentum to carriers'involvement in ter- for containerised transport has been continuously increasing and minals as major shipping lines were growingly constrained to de- leading shippers to progressively enlarge their focus towards a fend their enormous investment in maritime assets(i.e.vessels). 'global'perspective.The whole liner shipping industry had to adapt The last few years have been characterised by a strong battle be- to these changes of demand.Besides the expansion in marine oper- tween carriers and PTOs to get the control of the "port phase". ations,top shipping lines(SLs)have also aimed at reducing other Nevertheless,this scenario,characterised by a clear-cut separa- production costs,diversifying their investments and achieving tion and a fierce competition between SLs and PTOs (Parola and paths of vertical integration along the transportation chain(Panay- Musso,2007),is slowly changing (i.e."corporate realignment"- ides and Cullinane,2002).Major carriers have deeply invested on Slack,2004).The progressive scarcity of available port spaces for the land-side,set up a network of port facilities all over the world greenfield projects,the end of the "privatisation window"(early and become integrated shipping lines'(ISLs). 1990s/early 2000s).as well as the enormous cash-flows needed In reaction to the carriers'evolving and aggressive strategies, for the realization of modern terminal facilities,are leading PTOs but also in order to exploit the growing investment opportunities and carriers to stay "closer"to each other and to experiment with offered by the recent "institutional turn"in ports (De Monie, some forms of co-operation.In other words,the above changes are 1994:Airriess,2001:Juhel,2001;World Bank,2001),some pure driving towards a partial convergence of their respective interests, terminal operators (PTOs)have been expanding their operations giving rise to the establishment of contractual and equity internationally,by setting up wide networks of terminal facilities cooperative agreements. across various regions.The port handling sector has been experi- encing a similar consolidation trend:a handful of International 2 In this respect,a very common term used in the container handling business by Corresponding author.Tel.:+33 1 47 40 72 20:fax:+33 1 45 47 56 06. leading consultants (Drewry.OSC.etc.)is Global Terminal Operators (GTOs). E-mail addresses:martin.soppe@inrets.fr (M.Soppe),parola@economia.unige.it Nevertheless.in this paper,we prefer to use the term"ITO"because,as demonstrated (F.Parola).antoine.fremont@inrets.fr(A.Fremont). by Parola and Veenstra(2008).only a few terminal operators show a real global 1Shipping lines which have taken on many roles in the supply chain.involving terminal network.Therefore,it is more appropriate to discuss "international"players, more than just sea transport.One of these activities is terminal operations,which is of avoiding the potentially misleading GTO terminology.although widely used.ITOs(as interest in this paper. well as GTOs)refers to both PTOs and ISLs as defined earlier. 0966-6923/$-see front matter 2008 Elsevier Ltd.All rights reserved. doi:10.1016 j.jtrangeo.2008.04.006Emerging inter-industry partnerships between shipping lines and stevedores: from rivalry to cooperation? Martin Soppé a,*, Francesco Parola b , Antoine Frémont a a INRETS-SPLOT French National Institute for Transport and Safety Research, 2 Avenue du Gl. Malleret-Joinville, 94114 Arcueil Cedex, France bUniversity of Genova – Department of Business Studies, CIELI – Italian Centre of Excellence for Integrated Logistics, Via Vivaldi 5, 16126 Genova, Italy article info Keywords: Shipping lines International terminal operators Ports Corporate strategy Co-operation Maritime network abstract Since late-1960s stevedoring operations assumed a dramatic importance for shipping lines, who have been securing dedicated berths for some decades. Over the last 20 years, the institutional turn in ports drove the overseas expansion of pure stevedoring companies. For quite a long time carriers and steve￾dores fiercely battled each other both for bargaining contractual arrangements and for securing new con￾cessions in the key port areas. Currently this scenario is slowly changing and some early-forms of partnership are coming out. This paper analyses the different pathways through which carriers satisfy their needs of handling services. Based on 2006 data it empirically demonstrates the growing resort to such forms of cooperation both contractually and via equity ventures. 2008 Elsevier Ltd. All rights reserved. 1. The liner shipping industry and the supply of port services The advent of containerisation has deeply affected the organisa￾tion of maritime shipping industry as well as the relationships among the players within the transportation chain. The demand for containerised transport has been continuously increasing and leading shippers to progressively enlarge their focus towards a ‘global’ perspective. The whole liner shipping industry had to adapt to these changes of demand. Besides the expansion in marine oper￾ations, top shipping lines (SLs) have also aimed at reducing other production costs, diversifying their investments and achieving paths of vertical integration along the transportation chain (Panay￾ides and Cullinane, 2002). Major carriers have deeply invested on the land-side, set up a network of port facilities all over the world and become integrated shipping lines1 (ISLs). In reaction to the carriers’ evolving and aggressive strategies, but also in order to exploit the growing investment opportunities offered by the recent ‘‘institutional turn” in ports (De Monie, 1994; Airriess, 2001; Juhel, 2001; World Bank, 2001), some pure terminal operators (PTOs) have been expanding their operations internationally, by setting up wide networks of terminal facilities across various regions. The port handling sector has been experi￾encing a similar consolidation trend: a handful of International Terminal Operators2 (ITOs) is on the point of dominating the market. The emergence of powerful pure terminal operators (PTOs), willing to diversify their portfolios and to increase their financial margins overseas, gave momentum to carriers’ involvement in ter￾minals as major shipping lines were growingly constrained to de￾fend their enormous investment in maritime assets (i.e. vessels). The last few years have been characterised by a strong battle be￾tween carriers and PTOs to get the control of the ‘‘port phase”. Nevertheless, this scenario, characterised by a clear-cut separa￾tion and a fierce competition between SLs and PTOs (Parola and Musso, 2007), is slowly changing (i.e. ‘‘corporate realignment” – Slack, 2004). The progressive scarcity of available port spaces for greenfield projects, the end of the ‘‘privatisation window” (early 1990s/early 2000s), as well as the enormous cash-flows needed for the realization of modern terminal facilities, are leading PTOs and carriers to stay ‘‘closer” to each other and to experiment with some forms of co-operation. In other words, the above changes are driving towards a partial convergence of their respective interests, giving rise to the establishment of contractual and equity cooperative agreements. 0966-6923/$ - see front matter 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.jtrangeo.2008.04.006 * Corresponding author. Tel.: +33 1 47 40 72 20; fax: +33 1 45 47 56 06. E-mail addresses: martin.soppe@inrets.fr (M. Soppé), parola@economia.unige.it (F. Parola), antoine.fremont@inrets.fr (A. Frémont). 1 Shipping lines which have taken on many roles in the supply chain, involving more than just sea transport. One of these activities is terminal operations, which is of interest in this paper. 2 In this respect, a very common term used in the container handling business by leading consultants (Drewry, OSC, etc.) is Global Terminal Operators (GTOs). Nevertheless, in this paper, we prefer to use the term ‘‘ITO” because, as demonstrated by Parola and Veenstra (2008), only a few terminal operators show a real global terminal network. Therefore, it is more appropriate to discuss ‘‘international” players, avoiding the potentially misleading GTO terminology, although widely used. ITOs (as well as GTOs) refers to both PTOs and ISLs as defined earlier. Journal of Transport Geography 17 (2009) 10–20 Contents lists available at ScienceDirect Journal of Transport Geography journal homepage: www.elsevier.com/locate/jtrangeo