The Performance of Seaport Clusters - RePub - Erasmus Universiteit ...

Chapter 15 – Opportunities for Policy and Management in Seaport Clusters 211
15.2 Opportunities to create internal competition
The lack of internal competition has a negative effect on the performance of the cluster. This
negative effect might become more important given the rise of global terminal operators and
other (trans)port service providers that are not committed to or embedded in particular
clusters.
Internal competition between pilots is lacking in all three ports. The port authority undertakes
pilotage in Durban. In the LMPC and Rotterdam, an independent organization provides
pilotage services, but prices are not competitive. In the LMPC, port users have joined a ‘pilot
user group’ (PUG) that started elsewhere in Louisiana. This shows organizing capacity in
the LMPC is limited. The issue of appropriate regulation for the pilots is complicated and not
exclusively based on economic arguments. One arrangement that follows from the previous
discussion on entry barriers would be to develop a government owned leasing agency that
leases equipment to pilots. In this arrangement, licensed pilots can lease equipment and
provide services, without the need to make high specific investments.
With regard to the lack of competition in cargo handling, the opportunity - in general terms -
is to reconcile scale economies with competition. An arrangement could be to lease a
terminal to two operators. In principle, two independent operators can use the same gate,
berth, stacking space, cranes and a part of the labor force. If the firms are head-on
competitors this arrangement is likely to be unstable, but when one terminal operator offers
‘multi-user services’ while the other in principle only handles his own ships the arrangement
could be stable and at the same time increase competitive pressure. The possibility that the
dedicated terminal operator could start to offer services for third parties disciplines the multi-
user terminal. Such an arrangement was discussed with the port experts in Durban and was
regarded as a good arrangement to prevent monopolistic behavior.
15.3 Opportunities to reduce cluster entry and exit barriers
Entry and exit barriers reduce performance. The result that exit barriers reduce performance
is relevant, since it implies that strategies to ‘tie’ firms to the cluster are not likely to promote
the performance of the cluster.