Port Terminals

Authors: Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom

1. Ports and Port Sites

Ports are points of convergence between two geographical domains of freight
circulation (sometimes passengers); the land and maritime domains. While the
maritime domain can involve substantial geographical coverage related to global trade,
the land domain is related to the port’s region and locality. The term port comes from
the Latin portus, which means gate or gateway. Historically, ports emerged as safe
harbors for fishing and those with convenient locations became trade hubs, many of
which of free access and designed to protect trade. As such, they became nexus of
urbanization with several becoming the first port cities playing an important role in the
economic welfare of their regions. Today, many of the most important cities in the
world owe their origin to their port location. The port is a multidimensional entity at
start anchored within geography, but also dependent on its operations, governance
structure and embedded within supply chains.

Considering the operational characteristics of maritime transportation, the location of

ports is constrained to a limited array of sites, mostly defined by geography. Since ports
are bound by the need to serve ships, and so access to navigable water has been
historically the most important site consideration. Before the industrial revolution, ships
were the most efficient means of transporting goods, and thus port sites were
frequently chosen at the head of water navigation, the most upstream site. Many major
cities owed their early pre-eminence to this fact, such as London on the Thames,
Montreal on the St. Lawrence River or Guangzhou on the Pearl River. Ship draft was
small, so many sites were suitable. Sites on tidal waterways created a particular
problem for shipping because of the twice-daily rise and fall of water levels at the
berths, and by the 18th the technology of enclosed docks, with lock gates was
developed to mitigate this problem. Because ship transfers were slow, and vessels
typically spent weeks in ports, a large number of berths were required. This frequently
gave rise to the construction of piers and jetties, often called finger piers, to increase
the number of berths per given length of shoreline.
Port Dimensions Port Sites

Loading Break-bulk Cargo, Port of New Orleans, early 20th Century

Conventional and Emerging Container Terminal Configurations

Port Elizabeth Intermodal Complex, Port of New York / New Jersey

Conventional break-bulk terminals were mainly focused on direct transshipment from
the deepsea vessel to inland transport modes. Direct transshipment is associated with
very short dwell times (the average time the cargo remains stacked on the terminal and
during which it waits for some activity to occur), requiring only a small temporary
storage area on the terminal. Transshipment was very labor intensive with operations
managed on an ad-hoc basis. It was common due to the lengthy loading or unloading
process to have goods move directly from the land mode (trucks or rail) to the ship or
vice-versa and ships staying at berth for several days.
 The gradual shift from conventional break-bulk terminals to container terminals since
the early 1960s brought about a fundamental change in layout of terminals as well as
site selection. Ports increasingly became impacted by global processes. Containerized
transportation has substantially changed port dynamics to favor the emergence of
specialized container ports. As compared to conventional break-bulk cargo ships
containerships did not have onboard cranes, container terminal facilities had to provide
capital intensive cranes and well as ample storage space to stack containers dockside.
Finger piers were no longer adequate and berths were redesigned to accommodate for
quick ship turnaround and more effective dockside operations between the crane and
the container storage areas. The usual dwell time of a containership are around 24
hours, implying that a containerships spends about 10 times less in a port than an
equivalent break-bulk cargo ship. Containerization has consequently become a
fundamental function of global port operations and has changed the structure
and configuration of port terminals that tend to occupy more space. While inland port
sites (such as at the end of a bay or along a river) generally have the advantage of
being closer to the final market they imply longer deviations from maritime shipping
routes. Therefore, the most successful inland ports sites are those that act as gateways
(e.g. Antwerp, Montreal, Constanza).

As terminals, ports handle the largest amounts of freight, more than any other types of
terminals combined. To handle this freight, port infrastructures jointly have to
accommodate transshipment activities both on ships and inland and thus facilitate
convergence between land transport and maritime systems. In many parts of the world,
ports are the points of convergence from which inland transport systems, particularly
rail, were laid. Most ports, especially those that are ancient, owe their initial emergence
to their site as the great majority of harbors are taking advantage of a natural coastline
or a natural site along a river. Many port sites are constrained by:

 Maritime access, which refers to the physical capacity of the site to

accommodate ship operations. It includes the tidal range, which is the difference
between the high and low tide, as normal ship operations cannot handle variations of
more than 3 meters. Channel and berth depths are also very important to
accommodate modern cargo ships. A standard Panamax ship of 65,000 deadweight
tons requires more than 12 meters (40 feet) of depth. However, about 70% of world
ports have depths of less than 10 meters and are unable to accommodate ships of more
than 200 meters in length. Many ports are also impacted by sedimentation, particularly
ports in river deltas. This requires continuous dredging, which adds to the costs of port
operations. Some river ports may be impacted by periods of flooding and drought while
other ports may be impeded or closed during winter because of ice conditions.
 Maritime interface. Indicates the amount of space that is available to support
maritime access, namely the amount of shoreline that has good maritime access. This
attribute is very important since ports are linear entities. Even if a port site has an
excellent maritime access, namely deep water waterways, there may not be enough
land available to guarantee its future development and expansion. Containerization has
 expanded the land consumption requirements of many ports. It is therefore not
surprising to see that modern port expansion projects involve significant capital
investments to create artificial port facilities.
 Infrastructures and equipment. The site, to be efficiently used, must have
infrastructures such as piers, basins, stacking or storage areas, warehouses, and
equipment such as cranes, all of which involving high levels of capital investment. In
turn, these infrastructures consume land which must be available to insure port
expansion. Keeping up with the investment requirements of modern port operations has
become a challenge for many ports, particularly in light of containerization which
requires substantial amounts of terminal space to operate. Modern container terminals
rely on an unique array of infrastructure, including portainers, stacking yards serviced
by gantry cranes and the vehicles used to move containers around the terminal, such
as straddle carriers. Container ports have also developed infrastructure to handle
refrigerated containers (reefers) with separated stacking areas. Many terminals are also
becoming increasingly automated, particularly for stacking areas that can be serviced
by automated cranes and vehicles.
 Land access. Access from the port to industrial complexes and markets insure
its growth and importance. This requires efficient inland distribution systems, such as
fluvial, rail (mainly for containers) and road transportation. The land access to ports
located in densely populated areas is facing increasing congestion. For instance, the
ports of Los Angeles and Long Beach have invested massively to develop the Alameda
rail corridor in an attempt to promote inland access and reduce truck congestion. A
similar trend has taken place in Europe where ports such as Rotterdam and Antwerp
have been involved in the setting on inland barge and rail shuttle services.

Harbor Types of the World’s Large Sized Ports

Number of Large and Medium Ports by Channel Depth

Dredging Ship at the Port of Zeebrugge, Belgium

Portainer, APM Terminal, Port Newark (New York)

Rubber-Tired Overhead Gantry Crane (RTG), Halterm Terminal, Halifax

Container Straddler, Port of Gothenburg, Sweden

Reefer Stacking Area, Maher Terminal, Newark

Reefer Stacking Area, Porte Oceane Terminal, Le Havre

Diffusion of Key Port Terminal Automation Technologies

Ports of Los Angeles / Long Beach, Inland Flows

All the main port constraints have a significant impacts on their operations which are
part of the port performance continuum. In view of the construction of larger ships,
namely tankers and containerships, many port sites found themselves unable to provide
maritime access to modern cargo operations. Since container terminals were
constructed much more recently, they have a better nautical profile as depth and
available space were fundamental factors in site selection. There is thus a pressure in
increase channel depth where possible, but this is a costly and environmentally
controversial endeavor. Berths and access channel depth have become important
constraints for maritime operations in light of growing ship size.

There is also an array of problems related to port infrastructures. Ports along rivers are
continuously facing dredging problems and the width of rivers is strongly limiting
their capacity since it provides constraints to navigation. Rarely a port along a river has
the capacity to handle to new generation of giant ships, namely Post Panamax
containerships, which have put additional pressures on port infrastructures to
accommodate the transshipment generated by these ships. Ports next to the sea are
commonly facing a lateral spread of their infrastructures. Several ports have growth
problems that force them to spread their infrastructures far from the original port sites.
Since ports are generally old, and in several cases were responsible for urban growth,
they are located nearby central areas. This is creating congestion problems where the
transport network has the least capacity to be improved.

The city and the port are often competing for the same land, which can create
prioritization problems. Ports thus have a complex set of relationships,
sometimes conflicting, with the cities they service, often a function of the port and city
size. While ports are sources of employment of commercial interactions, they also
generate externalities such as noise and congestion near their access points. The
pressure of many ports on their sites is even more demanding than those of airports
because they have to be adjacent to deep water. Such sites are very limited, and may
give rise to conflicts with the city that sees waterfront land as potential high value
residential and commercial areas, park space, or as environmentally sensitive. Many
ports are now constrained by urban and environmental pressures, which did not exist
when the initial facilities were developed.

Channel Depth at Major North American Container Ports

Depth and Surface Distribution from a Sample of Container Terminals

Port / City Relations

Typology of Port Cities

2. Port Functions and Traffic

The main function of a port is to supply services to freight (warehousing,
transshipment, etc.) and ships (piers, refueling, repairs, etc.). Consequently, it is
misleading to consider a port strictly as a maritime terminal since it acts concomitantly
as a land terminal where inland traffic originates or ends. Ports are at start cargo-
oriented facilities involving a wide array of activities related to their management and
operations. The cargo base of a port can expand through the intensification of its
fundamental hinterland, the expansion of its hinterland to new areas and the
development of transshipment. In addition to significant cargo related functions, many
ports are also involved in other activities such as fishing, ferries, cruises (a growing
activity) and recreational (e.g. marinas).

Ports are becoming increasingly regional in their dynamics, which represents a new
development from their traditional local function, namely as industrial complexes. For
instance, the port of Hong Kong owes its wealth to its natural site and its geographical
position of a transit harbor for southern China. A similar function is assumed by
Shanghai for central China with the Yangtze river system. Singapore, for its part, has
been favored by its location at the outlet of the strategic Strait of Malacca and is
therefore a point of convergence of Southeast Asian transportation. More than 90% of
the traffic it handles is strictly transshipments (cargoes moving from on maritime
service to another without exiting the port terminal). New York has traditionally acted
as the gateway of the North American Midwest through the Hudson / Erie Canal
system, a function which Western European ports such as Rotterdam or Antwerp
perform with their access to the Rhine system.

A port throughput is linked to a variety of local and regional industrial activities as the
largest ports in the world are gateways to massive industrial regions. However,
comparing ports on a tonnage basis requires caution as it does not indicate the nature
and the value of the cargo. For instance, a mineral port (e.g. iron ore), an energy port
(e.g. coal or oil) and a commercial port (containers) could handle a similar tonnage but
significantly different value levels. They will also be related to different commodity
chains; bulk ports are very different entities than container ports. In terms of the freight
they handle, ports can be classified in two categories; monofunctionnal ports and
polyfunctionnal ports.

Monofunctionnal ports  transit a limited array of commodities, most often dry or

liquid bulks (raw materials). The oil ports of the Persian Gulf or the mineral ports of
Australia, Africa and in some measure of Canada are monofunctional ports. They have
specialized piers designed to handle specific commodities and where the flows a
commonly outbound, implying that they are usually load centers.
Polyfunctionnal ports  are vast harbors where several transshipment and industrial
activities are present. They have a variety of specialized and general cargo piers linked
to a wide variety of modes that can include containers, bulk cargo or raw materials.
About commercial 4,600 ports are in operation worldwide, but only less than one
hundred ports have a global importance. There are about 500 container ports with 110
handling a traffic above half a million TEU. Maritime traffic thus has a high level of
concentration in a limited number of large ports, a process mainly attributed constraints
related to maritime access and infrastructure development. Major ports have
established themselves as gateways of continental distribution systems and have
access to high capacity inland freight distribution corridors, notably rail. Such a position
is very difficult to challenge unless a port is facing acute congestion forcing maritime
shipping companies to seek alternatives. Gateways have seen the development of port-
centric logistics activities that support export and import-based activities.

Port Sites and Functions

Factors Expanding a Port’s Cargo Base

World’s Major Ports, 2013

World’s Major Container Ports, 2012

Port-Centric Logistics
The world container throughput is the summation of all containers handled by ports,
either as imports, exports or transshipment. In 2014, about 677 million TEU were
handled by container ports, with a notable growth in containers transshipped at
intermediate locations as well as the repositioning of empty containers. This means that
a container is at least counted twice; as an import and as an export, but also each time
it is handled at the ship-to-shore interface, such as at a transshipment hub where it will
be counted when unloaded and reloaded. Empty containers, most of them being
repositioned, account for about 20% of the world’s throughput. Thus, throughput
should ideally be counted in container moves, but for basic commercial and strategic
reasons, both port authorities and terminal operators prefer to communicate throughput
figures in TEU. The world container traffic is the absolute number of containers being
carried by sea, excluding the double counts of imports and exports as well as the
number of involved transshipments. The throughput reflects the level of transport
activity while the traffic reflects the level of trade activity.

3. Port Authorities and Port Holdings

Ports are subject to active governance. Due to the growing level of complexity of port
operations, public port authorities were created at the beginning of the 20th
century. For instance, the London Port Authority, the world’s first, was established in
1908 by consolidating all the existing harbor facilities. Such a governance
structure became a standard that was adapted to many other ports. For North America
the States of New York and New Jersey created in 1921 the Port Authority of New York
and New Jersey, which has become one of the world’s most diversified port authority
with a portfolio including port facilities, bridges, airports and public transit systems.
Administratively, port authorities are regulating infrastructure investments, its
organization and development and its relationships with customers using its services.

Port Authority. An entity of state or local government that owns, operates, or

otherwise provides wharf, dock and other marine terminal investments and services at
ports.
The main rationale behind the setting of many port authorities was their ability to
manage more efficiently port facilities as a whole rather than privately owned
and operated terminals. Since port facilities were becoming more complex and more
capital intensive, it was perceived that public agencies would be better placed to raise
investment capital and mitigate the risk of such investments. Port authorities tend to
be vertically integrated entitiesas they are involved in most of the activities related to
port operations, from the construction and maintenance of infrastructure to the
marketing and management of port services. Yet, their activities were limited within
their jurisdictions, an attribute that became increasingly at odds with the
transformations of the maritime shipping industry through globalization.

Occasionally, terminals were leased to private companies but throughout the greater
part of the 20th century, public ownership and operation of ports was dominant. Most
port authorities are owned by federal, state or municipal agencies. From the
1980s, privatizationmarks a reversal in this trend since many became inefficient, unable
to cope with market expectations (performance, reliability and quality of service) and
provide adequate financing for infrastructure and equipment becoming increasingly
capital intensive. As public agencies, many port authorities were seen by governments
as a source of revenue and were mandated to perform various non-revenue generating
community projects, or at least provide employment.

The emergence of specialized and capital intensive container terminals servicing global
trade has created a new environment for the management of port terminals, both for
the port authorities and the terminal operators. Port authorities are gradually incited to
look at a new array of issues related to the governance of their area and are
increasingly acting as cluster managers, interacting with a variety of stakeholders
and marketing the port. With the availability and diffusion of information technologies,
port authorities have been proactive in developing port community systems enabling
many key actors to better interact and share information, such as customs, freight
forwarders and carriers.  For port operations that have conventionally be assumed by
port authorities, a significant trend has been an increase in the role of private operators
where major port holdings have emerged with the purpose to manage a wide array of
terminals, the great majority of which are containerized.

Port holding. An entity, commonly private, that owns or lease port terminals in a
variety of locations. It is also known as a port terminal operator.
In an era characterized by lower levels of direct public involvement in the management
of transport terminals and port terminal privatization, specialized companies involved in
the management of port terminals are finding opportunities. They thus tend to
be horizontally integrated entities focusing on terminal operations in a variety of
locations. As of 2013, port holdings accounted for over 58% of the world’s container
port capacity.The main tool for global port operators to achieve control of port terminals
has been through concession agreements.

A  concession agreement is a long-term lease of port facilities involving the

requirement that the concessionaire undertakes capital investments to build, expand, or
maintain the cargo-handling facilities, equipment, and infrastructure to satisfy a
minimum level.

Emerging Paradigm in the Role of Port Authorities within their Port Regions

Port Authority Marketing Strategies and Stakeholder Types

Port Community Systems

Ownership of European Port Authorities

Largest Global Container Terminal Operators by Equity-Based Throughput, 2013

Container Terminals of the World’s Four Major Port Holdings, 2010

Regional Share in the Terminal Portfolio of the Twelve Largest Global Terminal
Operators (Hectares, 2010)
A number of issues are involved in the decision of a terminal operator to invest in a
particularly port, namely the transparency of the bidding process and the quality of
infrastructures (port and inland). The market potential however remains one of the
determining criteria. The range of port terminals controlled by port holdings covers
several of the largest freight markets. As globalization permitted the emergence of large
multinational corporations managing assets in a variety of locations, global port
holdings are a similar trend concerning the management of port terminal assets.
Yet, regional orientation remains a strong characteristic of container terminal operators.
The emergence of global terminal operators have changed the parameters of port
competition. Ports have always to some extent been competing to service their
hinterland, which is known as inter-port competition. Concessions agreements in larger
port have permitted the setting of more than one terminal operator who are now
competing over the port foreland and addition to the hinterland. This is known as intra-
port competition.

4. Port Evolution and Development

The evolution of transport terminal development has been examined most extensively
in port site studies. Port terminals and activities, as documented by Bird’s Anyport, tend
to expand away from their original sites towards locations offering better maritime and
land access. The site of the port is thus the object of a process of valorization through
capital investments in infrastructures, the convergence of inland and maritime transport
networks with their flows as well as the complex management of the concerned supply
chains. Port development can be perceived within a sequential perspective, where each
phase builds upon the previous, from port cities of the 19th century to the emerging
port logistics network of the 21st century.

Conventionally, port terminals where located close to city cores as many where the
initial rationale for the existence of the city. The proximity to downtown areas also
insured the availability of large pools of workers to perform the labor intensive
transshipment activities that used to characterize port operations. But these activities
tended to have low productivity levels as a stevedoring team could handle 10 to 15 tons
per day and a berth could handle 150,000 tons per year. At their peak in the early
1950s ports such as London and New York each employed more than 50,000
longshoremen. Containerization had the dramatic impact of lowering the need for labor
for port operations. For instance, the number of longshoremen jobs in the Port of New
York and New Jersey declined from 35,000 in the 1960s to about 3,500 in the 1990s.
The Evolution of a Port (The Anyport Model)

A Multi-Layer Approach to Port Dynamics

Evolution of the Port of Rotterdam, 1400-2030

Average Monthly Container Traffic Share, Selected Ports, 2005-2010

Over time, changes in ships and handling equipment gave rise to new site
requirements. By the post World War II period a growing specialization of vessels
emerged, especially the development of bulk carriers. These ships were the first to
achieve significant economies of scale, and their size grew very quickly. For example,
the world’s largest oil tanker in 1947 was only 27,000 dwt, by the mid 1970’s it was in
excess of 500,000 dwt. There was thus a growing vessel specialization using semi-
automated transshipment equipment and increase in size which resulted in new site
requirements, especially the need for dock space and greater water depths.
 The mechanization of cargo handling and the storage requirements because of greater
vessel capacities have greatly extended the space demands for port activities. Many
ports, such as Rotterdam and Antwerp are larger in area than the cities they serve. The
expansion of Chinese ports, such as Shanghai, has required altogether the use of
entirely new sites outside central areas. Further, growing ship sizes have implied
several new constraints for port sites such as deeper waterways, larger terminal space,
both for ship handling and warehousing, and more efficient inland road and rail access.
Modern port infrastructures are often intensive in capital and several port authorities
are struggling to keep up with large infrastructure investment requirements. However,
the presence of infrastructures does not necessarily guarantee traffic as maritime
companies can select the ports they service as business opportunities changes. Over
this, three recent mega projects are particularly revealing:

 Maasvlatke II (Rotterdam). For decades, the port of Rotterdam, Europe’s

largest port, has expanded downstream. The growth of container traffic along with
continued expansion of bulk traffic caused the port to consider expansion out in the
North Sea. This led to the construction of an entirely new facility on reclaimed land at
Maasvlatke in the 1980s. However, subsequent traffic growth in the 1990s resulted in
the port authority proposing a new facility further out in the North Sea: Maasvlatke II.
The project began construction in 2008 and operations began in 2013, with full
completion expected by 2030. Once completed, this terminal facility would likely mark
the end of the geographical expansion for Rotterdam, outside the reconversion of
existing terminal sites into more productive uses.
 Deurganck dock (Antwerp). Like Rotterdam, the expansion options of the
port of Antwerp are limited. With the right bank of the River Scheldt, where the bulk of
the port’s facilities are located, reaching capacity a new dock complex was built on the
left bank. The Deurganck dock opened in 2005 and can add about 9 million TEUs to the
existing capacity of about 10 million TEUs.
 Yangshan container port (Shanghai). A rare case where a completely new
facility has been built from scratch, and this well outside the existing port facilities in
the Changjiang delta to a facility located in Hangzhou Bay, 35 km offshore. It opened in
2005 and was built for two purposes. The first was to overcome the physical limitations
of the existing port facilities, too shallow to accommodate the latest generation of
containerships. The second was to provide additional capacity to meet traffic growth
expectations as well as room for new terminal facilities if container growth endures. The
fully completed port would have an expected capacity of 15 million TEUs. To link the
port to the mainland, the world’s third longest bridge with a length of 32.5 km was
built.
The success of major container ports is jointly the outcome of a shift to containerized
shipping in new industrializing regions (containerized commodity chains), the quality of
their infrastructure and services and an efficient interface with inland transport systems.
Still, container traffic is subject to fluctuations mainly related to seasonal variations in
the demand. They remain bound to the economic structure and dynamism of the
hinterland they service. Another aspect concerns the automation of port terminal
operations. Although container ports are highly mechanized entities, the equipment is
operated by workers. It is therefore possible to automate one or all three of the main
stages of port operations; the portainer (ship to shore moves), the dock to stacking
yard movements (lateral moves) and the stacking yard gantry cranes. Another notable
impact of automation is the ability to operate on several work shifts per day. Although a
conventional container port can add additional work shifts if required, this is easier to
implement in automated terminals since less workers are involved. As a result,
automated terminals are usually twice as productive as standard mechanized terminals.

5. Regionalization and Transshipment

Hubs
The current development phase underlines that ports are going beyond their own
facilities to help accommodate additional traffic and the complexity of freight
distribution, namely by improving hinterland transportation. Port regionalization is such
an outcome and indicates a higher level of integration between maritime and inland
transport systems, particularly by using rail and barge transportation, which are less
prone to congestion than road transportation. The development of global supply chains
increased the pressure on maritime transport, port operations, and on inland freight
distribution, which in turn has incited the setting of satellite terminals and transloading
activities in the vicinity of port terminals. Regionalization is a process that can take
place both of the foreland and the hinterland with the goal to provide a continuity
between the maritime and inland freight transport systems.

The Spatial Development of a Port System

Port Regionalization
The Insertion of a Satellite Terminal in Port Operations

Foreland and Hinterland-Based Regionalization

Modal Split at Selected European Container Ports, 2007

Modal Split at Selected North American Container Ports, 2007

Inland accessibility has become a cornerstone in port competitiveness since it can be
serviced by several road, rail and barge transportation. Those three options a
particularly present in Europe, while North America is dominated by road and rail
hinterland access. Port regionalization is characterized by strong functional
interdependency and even joint development of a specific load center and logistics
platforms in the hinterland. This leads ultimately to the formation of a regional load
center network, strengthening the position of the port as a gateway. Many factors favor
the emergence of this phase, namely:
 Local constraints. Ports, especially large gateways, are facing a wide array of
local constraints that impair their growth and efficiency. The lack of available land for
expansion is among one of the most acute problem. This issue is exacerbated by the
deep water requirements for handling larger ships. Increased port traffic may also lead
to diseconomies as local road and rail systems are heavily burdened. Environmental
constraints and local opposition to port development are also of significance. Port
regionalization thus enables to partially circumscribe local constraints by externalizing
them.
 Supply chain management. Global production and consumption have
substantially changed distribution with the emergence of regional production systems as
well as large consumption markets. No single locality can service efficiently the
distribution requirements of such a complex web of activities. For instance, globally
integrated logistics zones, including Free Trade Zones (FTZ) have emerged near many
load centers, but seeing logistics zones as a functionally integrated entity may be
misleading as each activity is part of a specific supply chain. Port regionalization thus
permits the development of a distribution network that corresponds more closely to
fragmented production and consumption systems.
Cargo at ports always required some transshipment to smaller ships used a feeders
to smaller ports. For obvious reasons, it is impossible to connect directly all possible
port pairs, so transshipment is required to insure connectivity within the global trading
system. Transshipment was initially developed to service smaller ports unable to
accommodate larger containerships, which is commonly because of limited draft and
port infrastructure. However, as maritime networks became increasingly complex,
specialized transshipment hubs emerged. Transshipment requires significant yard space
as containers are stored up for a few days while waiting for the connecting ship(s) to be
serviced.

The growth in global trade has involved greater quantities of containers in circulation,
which has incited maritime shipping companies to rely more on transshipment hubs to
connect different regions of the world. In such a context, many gateway ports were
facing the challenge of handling export, import and transshipment containers. This went
on par with the growing share of transshipments in regard to the totality of maritime
containerized traffic, from around 11% in 1980, 19% in 1990, 26% in 2000 to about
29% in 2010 and 28% in 2012. The number of times a container is handled at a port is
also increasing, underlining the setting of complex containerized transport chains as
well as the growing difficulties of transferring cargo into large containerships.

Maritime shipping companies also elect for transshipment as a way to use more
rationally their networks; more ports are serviced without increasing ship assets. In a
conventional deep sea container service, a maritime range such as the American East
Coast or Northern Europe involve several port calls. If the volume is not sufficient, this
may impose additional costs for maritime companies that are facing the dilemma
between market coverage and operational efficiency. There are several factors why
transshipment hubs are used, particularly with the growing size of containerships that
forces a lower number of port calls. By using an intermediate hub terminal in
conjunction with feeder shipping services, it is possible to reduce the number of port
calls and increase the throughput of the port calls left.

An  intermediate hub (or transshipment hub) is a port terminal used for ship-to-ship
operations within a maritime transport system. These operations do not take place
directly, which requires the temporary storage of containers in the port’s yard, usually
for one to three days. The term offshore hub has often been used to characterize
such locations because the cargo handled at the port of destination is transshipped at a
location commonly in a third country .
There are several patterns in which intermediate hubs can be inserted by connecting
long distance and short distance (feeder) maritime services, by connecting different
long distance services and by connecting services calling different ports along a similar
maritime range. A geography of transshipment hubs has emerged along several
regional markets and with different levels of specialization (transshipment incidence).
The most common market pattern is hubbing where an intermediate hub links regional
port calls to mainline long distance services. Intermediate hub terminals can thus
become effective competitive tools since the frequency and possibly the timeliness of
services can be improved. By using an intermediate hub terminal in conjunction with
short sea shipping services, often organized along a sequence, it is possible to reduce
the number of port calls and increase the throughput of the port calls left.
Transshipment also comes with a level of risk for the cargo since containers are handled
more times than for direct services. This is notably the case for the chemical industry.

Port Container Movements, 1980-2012 (in TEU)

Number of Transfers per Container between Ship and Shore

Selection Factors for a Transshipment Hub

Transshipment Patterns

The Insertion of Transshipment Hubs

World’s Main Intermediate Hubs and Markets, 2007-12

Levels of Transshipment Incidence

Ports with the Highest Transshipment Incidence, 2008

Container Port Traffic and Transshipment Traffic around the Caribbean Basin, 2015
While in theory pure intermediate hubs do not have an hinterland, but a significant
foreland, the impact of feedering (mainly by short sea shipping) confers them
a significant indirect hinterland. Feedering combines short sea and deep sea
containerized shipping at a hub where traffic is redistributed, such as for the Caribbean.
The usage of larger containerships has lead to the concentration of traffic at terminals
able to accommodate them in terms of draft and transshipment capacity. Smaller ports,
particularly those well connected to inland transport systems, become feeders through
the use of short sea shipping. As the transshipment business remains a highly volatile
business, offshore hubs might sooner or later show ambition to develop services that
add value to the cargo instead of simply moving boxes between vessels.

The intermediate hub enables a level of accessibility that incites them to look beyond
their conventional transshipment role. This includes actions to extract more values of
cargo passing through and, as such, get more economic rent out of transshipment
facilities. Such strategies have led to some transshipment hubs, such as Gioia Tauro
and Algeciras, to develop inland rail services to capture and serve the economic centers
in the distant hinterlands directly. A more common strategy is the development of port-
centric logistics zones. The multiplying effects of being an intermediate hub in terms of
frequency of port calls and connectivity to the global economy can thus be leveraged
for developing hinterland activities.