Port Investment and Container Shipping Markets

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Large-scale port projects have irreversible effects on land use and multiple impacts on the local economy and local community. They affect the way that the regional and national economy operates as a whole, with major impacts on regional transport systems. Port planners make better decisions when these broad impacts are examined as part of the development of a national freight transport and logistics strategy. Private investment in port terminals is also facilitated by the certainty engendered by development of a national freight transport and logistics strategy.

This report examines the issues that need to be considered before the decision to proceed to costly expansions with long-life spans and a structural influence on the local and national economy. The report benefits from a case study of Chile, where plans for a major expansion of port capacity in the central part of the country are well advanced. Chile provides the detail for an examination of factors critical to decisions on container port investments anywhere: demand forecasts, change in liner shipping markets, hinterland transport capacity, competition between container terminals, and the framework for financing of investment.

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Structure, financing and risk management in large port infrastructure concessions: The Chilean case

International Transport Forum

The success of private sector participation in infrastructure is highly conditioned by the ability of governments to properly shape and control the public-private contractual relationship. Therefore, determining the accurate mechanism to control private participation becomes imperative, both ex-ante (by designing correct contracts, properly assigning risks; designing effective competitive tendering and robust and transparent award criteria, and implementing effective oversight and regulation) and ex-post (post contract award management and careful handling of renegotiation requests). In addition, risk management in private concession processes is a major issue, particularly with very large infrastructure projects where the risks may be an obstacle to private finance.

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