Port Competition and Hinterland Connections

Maritime freight transport has experienced strong growth and profound change overrecent decades. Freight volumes and container traffic in particular have grown with theintensification of global trade and the geographical dispersion of production. The industrialorganization of the sector has evolved rapidly. These changes have rendered the portsbusiness environment more challenging. Many agents along the supply chain have engagedin horizontal and vertical integration of activities. This has lead to more efficiency in themovement of cargo, but has reduced the number of players, with an attendant risk of abuseof market power. The market power of the ports vis-à-vis shippers and shipping companieshas become correspondingly weaker.The rapid expansion of trade has led to fast growth of throughput in many ports. As aresult, in many large gateway ports, local communities are increasingly concerned about thenegative impacts of port activity, including local pollution and congestion. The greenhousegas emissions generated by freight traffic are also a growing policy concern. This paperexplores the economic framework in which potential regulatory intervention to address theissues of competition, air pollution, congestion, greenhouse gas emissions, and financingand provision of infrastructure should be considered.