masterclass port authorities in international perspective

STC-Group

Netherlands Maritime University

Port authority internationalisation

October 17, 2013STC-Group,

Lloydstraat 300 Rotterdam

Platform for knowledge exchange between education, business community and association of young port professionals

Master Class Knowledge platform for young port professionals

Port Internationalisation

Time Speaker Subject17:00 hrs Reception

17:20 hrs Maurice JansenSenior Manager Innovation, Research & Development

Opening

17:30 hrs Peter de LangenVisiting Professor Netherlands Maritime University and Owner Port & Logistics Advisory

“Beyond the landlord model”, an overview of port authority strategies

18:15 hrs Break

18:30 –19:15 hrs

Marc EvertsePort of Rotterdam International

Collaboration and participation abroad: a case study

19:30 hrs Drink in Café Verhip!

Master Shipping and TransportNetherlands Maritime University

Welcome

Curriculum of the Master Shipping and Transport

Thesis

Student counseling /Research and management skills

Teaching cases in maritime and port related issuesPort Case

Shipping Case

Courses:AMS; CMS; HRM/

HRD

Domain: Maritime

management

Domain: Logistics

Courses:SCM; COM; HIN,

ILO

Domain: Finance and

economics

Courses: ECO I; ECO II; FCM-I; FCM-II; FCM-III

Domain: Shipping

management

Courses:SBC; FLM; SBP, ISM

Domain: Law and Policies

Courses: LAW; POL; OCM;

SEC

Outline Port authority case

Compilationof finalreport

Handover toPoRINT

Presentation to Port of

Rotterdam

Finalreport

Analysis of different

input elements:

Income, cargo flows,

tariffsPort

management model

Business plan

Draw a masterplan based on:

Market analysis

Stakeholder analysis

Competitiveanalysis

Vision & Masterplan

Analysis of the stakeholders of a certain

area/portRole and

influence of the

stakeholdersPosition of PA

Institutionalframework

Stakeholder

analysisAnalysis of

maincommoditiesThroughput

driversTrends and

developmentsPort

competitionProduct-

market mixFuture outlook

Supply chain analysis and

port competitionMacro

analysis on industrial,

supplychain,

shipping andport

developments in a

country

Market analysis

Master Shipping and Transport applies a case driven approach towardsactual port and shipping management topics

What’s happening internationally?

Theses regarding today’s topic

What is a good investment?

What is the added value of oversea’sparticipations?

Who’s interested?

Speakers

Prof.dr. Peter de Langen is senior advisor to Port of Rotterdam, and is involved in various strategic renewal

projects. He holds a part-time position as professor Cargo Transport & Logistics, at Technical University Eindhoven.

Publications on port selection, port policy, and international transport & logistics chains in various scientific journals,

provides guest lectures at various universities abroad and participates as speaker/ session chairman, in (industry)

conferences.30 years of experience in several, mostly port related projects abroad. Project Manager in large scale port

projects focusing on setting up new, long-term participations with (greenfield) ports worldwide. In addition Project

manager for extensive port consultancy projects; recently in the preparation of masterplans and strategic port reform recommendations for the Brazilian port sector and as an advisor to the Indian Government in the preparation of

business plans for the 12 major ports. Based in Rotterdam, working experience in 60+ countries.

Peter de Langen

Marc Evertse

Peter de Langen

Dr. Peter de LangenVisiting Professor

Netherlands Maritime University and Owner Port & Logistics Advisory

Contents

• The port development playing field• Conceptually: deterritorialisation of port

authorities• Rotterdam credentials• Driving markets

The port development playing field

• Shipping lines– Containers: top 3 about 45% market share.

New development: P3– Other commodities: quite/somewhat

concentrated markets (Cars, liquid bulk, dry bulk, LNG).

• Terminals– Containers, ‘big four’ have > 50%

marketshare– Tank storage: highly concentrated.– Other commodities: often increasing

concentration, often direct involvement of globally operating end users (ThyssenKrupp, Shell, Vale)

• Port industries– Energy, refining, chemical industry:

increasingly globally operating– Logistics: increasing globalisation,

forwarders as well as logistics real estate investors

Deterritorialisation of port authorities

• In NW Europe: centuries old Hanseatic tradition

• Elsewhere: deeply locally rooted. Example: PANYNJ.

• Public orientation; often focused on local public benefits (employment, value added) but do these really matter?

• Methaphor: school square.

Pathways of deterritorialisation

• UK: privatisation. Humber estuary: fifth port complex of UK, no active port development approach. ABP manages portfolio of ports & segments, investments where revenue is largest (cruise, housing).

• Mergers between ports in proximity. – Best case: CMP (see next slides)– Worst case: Zeeland seaports

• Corporatisation. Case Rotterdam.

16

CMP: shareholders

22-10-2013

Merger Copenhagen and Malmö is an exampleof deterritorialised port authorities

CMP: organisational structure (around 2008)

CMP is organised per business segment, rather than geographical area

Post merger performance CMP

18

Financial performance has significantly improveddespite stagnating throughput volumes

Rotterdam credentials

• World Economic Forum indicator ‘quality of port infrastructure’: consistent ranking among top 3 worldwide, currently nr 1.

• Widely regarded as global benchmark.• Post corporatisation performance (see next slide).• Performance Oman

– Consistent improvement WEF indicator from 70th to 85th percentile.– Private investments around 15 billion US $ (PoR nett revenue <25 million

– my rough estimate).

– Volume growth from 6 to 43 million ton in 7 years.– Around 30% of FDI in Oman is in Sohar’s port complex.

Has performance PoR improved since corporatisation?

Port of Rotterdam Authority

Variable Units 1997 2003 2005 2011

Total revenue M€ 453 457 486 588

Port dues M€ 246 228 253 291

Land rents M€ 153 197 203 267

Employees N 1165 1304 1268 1220

Turnover per employee M€ 0,389 0,350 0,383 0,482

Operating costs M€ 210 238 245 226

EBITDA M€ 242 219 241 362

Net profit M€ 62 64 81 195

Profit per employee M€ 0,053 0,049 0,064 0,160

Investments M€ 167 127 149 494 NB: 2004 excluded because of huge reservation (would make effects larger)NB2: corrected for inflationNB3: economic growth in 2005‐2011 was lower than in 1997‐2003

Results: PoR did significantly improve performance!

Table 2: Overview of test results

Real growth percentage Corrected for GDP growth

Variable Improve Test statistic

Period (1)

Period (2)

Period (2) - (1) Significant

Period (1)

Period (2)

Period (2) - (1) Significant

Market Share up Mean -1,33 0,76 2,10 ++

Mean Rank 5,43 9,57 4,14 ++

Turnover up Mean 0,21 2,50 2,29 + -3,21 -1,36 1,85 +

Mean Rank 6,14 8,86 2,71 no 5,71 9,29 3,57 +

Turnover per Employee up Mean -1,77 3,67 5,43 ++ -5,19 -0,19 5,00 ++

Mean Rank 5,00 10,00 5,00 ++ 4,57 10,43 5,86 ++

Operating Costs down Mean 3,63 -2,81 -6,45 ++ 0,21 -6,67 -6,88 ++

Mean Rank 10,00 5,00 -5,00 ++ 9,86 5,14 -4,71 ++

EBITDA up Mean -2,53 11,77 14,30 ++ -5,95 7,91 13,87 ++

Mean Rank 4,57 10,43 5,86 ++ 4,29 10,71 6,43 ++

Net Profit up Mean 5,45 23,03 17,58 + 2,03 19,17 17,14 +

Mean Rank 6,43 8,57 2,14 no 6,29 8,71 2,43 no

Profit per Employee up Mean 3,47 24,52 21,05 + 0,04 20,66 20,62 +

Mean Rank 6,00 9,00 3,00 + 6,00 9,00 3,00 +

Investments up Mean -3,00 25,48 28,48 + -6,42 21,63 28,04 +

Mean Rank 6,00 9,00 3,00 + 6,00 9,00 3,00 +

++ (or +) indicates a significant improvement of the second period at the 5% (or 10%) level.

Internationalisation of port authorities; models

Source: Dooms, Van der Lugt and De Langen (2013)

Market driven vs driving markets

• There is no ‘market’ for port development.• Initiatives are in most cases public, increasing

numbers of private initiatives.• These private initiatives: mostly by terminal

operators.• ‘Landlord model’ exception rather than the

rule.

What does it take to drive markets:

long term view, commitment, trust building.

Marc Evertse

Marc EvertseProject Manager PoRINT

Port of Rotterdam

1 © Copyright - Port of Rotterdam - 2012

Title

Marc Evertse, Project Manager, Port of Rotterdam International

STC, 17th of October 2013

Port of Rotterdam International

Masterclass for Netherlands Maritime University and Jong Havenvereniging


Text

Table of Contents

1. Who we are

2. Vision

3. Objectives & Approach

4. Track Record & Current Projects

5. Paths to Partnerships


Text

1. Who we are

1. A port development company

• Develop land/infrastructure to attract cargoes

• Business case driven approach to development

• Asset management

• Strategic stakeholder management

2. A publicly owned business driven company

• Financially self-sustaining – no subsidies

• Pays out dividends to shareholders

• Profitable but not profit maximizing

3. Corporatized non-political organization

• Public shareholders but autonomous

• Professional management – no political appointees

4. Landlord model

• PoR leases 4,000 ha. of land to private companies

• Aiming to attract EUR 10 billion in private investments (2011-

2015)

• Annual investments in land/infrastructure (> EUR 200 million)

5. Authority as harbor master

• Formal authority as harbor master

• Harbor master is responsible for safety and security


Text

1. Throughput and revenue growth have improved after corporatization

Pre-Corporatization Post-Corporatization

Growth (CAGR) Throughput: 1.67%

Total Revenue: 0.20%

Net Profit: 3.72%

Growth (CAGR) Throughput: 3.07%

Total Revenue: 3.23%

Net Profit: 15.86%

* Corrected for inflation


Text

Main criteria for our shareholders

What we do must be good for Rotterdam (and the Netherlands):

• Give Rotterdam clients the opportunity to enter a new market under the

‘umbrella’ of Port of Rotterdam, and/or:

• Generate cargo flows to the Port of Rotterdam, and/or:

• Attract foreign companies to set up business in Rotterdam.


Text

2. Port of Rotterdam International (PoRInt) is a key component of the

PORs corporate strategy


2. Sample Partnership Structure

16 oktober 2013

Port

Management Co.

Asset Management

Co.

PoR Partner(s)

Long-term

Concession

PoR option to

participate in

Asset Mgmt. Co.

Owns port land

Gives long-term lease to

Port Mgmt. Co.

May be needed where

public land is involved

Basic infrastructure

investment

Leases out land to clients

Port planning, development

& management

Stakeholder management

Nautical control/safety

What do we look for in a partnership

structure?

Stable, reliable, long-term partner

Substantial shareholding to ensure

appropriate mandate to

develop/manage the port


Text

2. Why is PoR an attractive partner in port development?

• Experience: > 75 years of World class port planning

• Commercial Opportunity: a global network of contacts with with key

players in transport, logistics, energy, chemical industry, and mining.

• Credibility: Track record in port development at home and abroad (the

only one!)

• Reliability: Port of Rotterdam brand creates trust with all relevant

stakeholders (commercial, financial, institutional)

• Vision: for PoR development means long-term partnership

• Landlord Operating Principle: is key to attracting leading terminal

operators


Text

2. What is the benefit of partnering with PoR?

Know-how

Transfer

Boardroom Consultancy: short-term port management/development advisory

Port Management Services Agreement: long-term know-how transfer via PoR experts

Port Management Program: yearly training program for port managers offered at PoR

(customized programs also available for global strategic partners)

Investment

Partner with long-term outlook and commitment

Direct: equity investments via port partnership JVs

Indirect: via investments made by companies in PoR’s commercial network (i.e. terminal

operators)

Brand Name PoR has a strong brand name among terminal operators, shipping lines, and other

maritime companies.

Brand name attracts clients and therefore new business

12 © Copyright - Port of Rotterdam

Text & Image 50/50

The Quality of port infrastructure in the

Netherlands is world-class…

In the Global Competitiveness

Report, a leading study of the

competitive strength of

various countries conducted

by the World Economic

Forum, the Netherlands

ranks 1 worldwide

Global Competitiveness Report (2012 - 2013)


Text

3. The market for port development – what projects do we look for?

Single User

Port/Terminal Industrial Port Complex Greenfield Brownfield ?

Brownfield projects are only considered if:

• There’s room for expansion inside or next to

existing port

• Port offers business development opportunities

• Is of strategic interests to existing clients

• Offers opportunity to create new partnerships

Port Landlord

Terminal

Operator


4. Track Record: 72 locations in 33 countries analyzed between 2009 and

2012

16 oktober 2013

Countries

Visited/Analyzed

Past/Current

Port Locations

15 © Copyright - Port of Rotterdam

Track Record: Current Key Projects are result of careful selection

16 oktober 2013

Focus Areas

Main Projects PORTO CENTRAL

CEYHAN

CONSTANTZA

TEDA NANGANG

NACALA

SOHAR

JOHOR

Key Prospects

BARRANQUILLA


4. Track Record: PoRInt has advised governments and port authorities

around the world contributing to better port development/governance

Consultancy Indian Port Association: Business plans for the 12 major ports

Brazilian Ministry of Ports: PNLP Project – Port Reform study for

the whole Brazilian port sector

Port of New York and New Jersey , USA

Partnerships & Agreements Qatar Petroleum , Qatar

Port of Constantza , Romania

Espirito Santo State , Brazil

Suape , Brazil

Tianjin Economic Development Area , China

Senegal (CSR project)

Rosmorport , Russia

Vinalines , Vietnam

Port of Taranto , Italy

Saldanha Bay , South Africa


Text

4. Sohar: Rotterdam’s 1st port development partnership

2000-2002

2000: PoR advises Omani gov. on

development and management of

Sohar

2002: PoR and Omani gov.

establish a 50:50 JV

2003-2007 2008-Present

2004: first vessel arrives

2006: refinery and container

terminal begin operations

2007: Concession area expanded

from 2,000 ha to 6,400 ha – Sohar

Free Zone established

USD 14 billion in investments

generated since 2004 (30% of

inbound FDI in Oman)

1,500 ha. leased out

Expansion of liquid and container

terminals

60% (CAGR) throughput volume

growth since 2007

Paying dividends since 2009


4. Sohar: a diversified industrial port complex built through

partnerships with world class Rotterdam clients

16 oktober 2013

Dry Bulk

Containers

“After Vale’s successful

inauguration of its new iron

ore transport hub in

Oman…other dry bulk

shippers are now flocking to

the Port of Sohar”

- Lloyd’s List Mar. 2012

“Hong-Kong based global

operator Hutchinson Port

Holdings signed an

agreement with Sohar port

authority to expand its joint

venture”

- Lloyd’s List Jan. 2013

Breakbulk

Tank Storage


Nangang

16 oktober 2013


4. Porto Central: Greenfield port development project in

Brazil

16 oktober 2013

• 1,500 ha greenfield being developed into a deep water port and industrial complex

• Centrally located to the offshore, mining and agri-bulk production sites

• Expected cargo throughput of up to 200 million tons

• Project is being developed with local partner – TPK Logistica


4. Porto Central: scheduled start of operations in 2016

16 oktober 2013

1. Location: centrally located to offshore oil

fields and major economic centers in

undeveloped rural area

2. Management: professional private sector

management

3. Concept: varied economic activities

clustered to generate synergies

4. Accessibility: 24/7 port with deep draught

(23m.) and multimodal hinterland access

5. Port Infrastructure: state of the art

infrastructure and low environmental impact

Unique Selling Points


Text

5. Paths to Partnership: 2 track partnership process

Fast Track:

Port Analysis/boardroom consultancy identifies

strengths, weaknesses, opportunities, and threats

of prospective partner port.

Business case is drafted and if positive JV

establishment processes begin

Slow Track:

After port analysis PoR and prospective partner

port sign a Port Management Services Agreement

(“PMSA”)

Through PMSA PoR transfers know-how allowing

partners to assess attractiveness of a JV

If partners wish to continue, a business case is

drafted and JV establishment processes begin

Go/No Go Decision Point

Initial Track

Fast Track

Slow Track


5. Partnership process can result in different types of partnerships

16 oktober 2013

Private Port JV Fully private port development co.

Owns, develops, and manages port land

Port JV w/

Concession

Land owned by government

Port development co. receives long-term

concession to develop and manage the port

Know-how Transfer

Via boardroom consultancy or port

management services agreement (“PMSA”)

technical, managerial, market expertise

Business development assistance

Partnership Types

Different paths, different partnerships Examples


Title

Thank you for your Attention

Questions?

Photo impression

Maurice Jansen

Maurice was the first head of Netherlands Maritime University of Applied Sciences (STC-NMU) and responsible

for the Master Shipping and Transport program at STC-Group's main campus in Rotterdam as well as at STC-Korea. Currently at STC-Group’s Innovation and R&D department

he’s working as a researcher and thesis supervisor to Master students in the field of port strategy, port governance and

supply chain management. Previously he was a supply chain solutions engineer and consultant at UTi Worldwide and

KPMG Consulting.

More information:Maurice Jansen MSc,

[email protected] / T. +31 10 4486000

Master class organiser

@STCGroupNL

NetherlandsMaritime University

www.stc-nmu.eu

How to stay in contact?

Email: [email protected]

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