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STRA TEGIES FOR GLOBAL AND REGIONAL PORTS
Strategies for Global and Regional Ports The Case of Caribbean Container and Cruise Ports
by
Gustaaf De Monie Frank Hendrickx Karel laos Lars Couvreur and Chris Peeters
Policy Research Corporation N. V.
SPRINGER SCIENCE+BUSINESS MEDIA, LLC
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-1-4419-5075-8 ISBN 978-1-4757-6602-8 (eBook) DOI 10.1007/978-1-4757-6602-8
Policy Research Corporation N. V . .Ian Moorkensstraat 68 B - 2600 Antwerpen Belgium Tel. : +32 32869494 Fax: +32 3 2869496 Email: [email protected]
Printed on acid-free paper
All Rights Reserved C 1998 Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1998 No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the copyright owner.
STRATEGIES FOR GLOBAL AND REGIONAL PORTS
THE CASE OF CARmBEAN CONTAINER AND CRUISE PORTS
With the financial support of the Division for Maritime Transport of the Dutch Ministry of
Transport, Public Works and Water Management, Policy Research Corporation N. V has
carried out a Caribbean SWOT analysis. Two sectors were examined: container shipping and
cruising.
Included in the study was a comprehensive scan of the competitive position of Caribbean
ports with respect to the main container trade routes or cruise loops within the region. The
main analyses, findings and conclusions of this study are brought together in this "Strategies
for Global and Regional Ports". The conclusions presented in the book are largely based on
information gathered during fact-finding missions in the wider Caribbean region. During
these missions several interviews with key players were conducted, including port authorities,
terminal operating companies, shipping and forwarding agents. In addition, the wide
experience gained by the project team and other Policy Research staff members in the course
of prior research projects also provided useful material.
The authors would like to thank all the staff members of the Policy Research Corporation
N. V and in particular Ms. A. Donkers, Administrative and Research Assistant and Mr. T.
Spiessens, Research Assistant for their highly appreciated cooperation.
Many thanks to Prof. dr. Diana Phillips for revising the text.
In addition, the authors would like to express their appreciation to all parties who actively
collaborated with Policy Research by providing relevant input information, by discussing
related issues with the project team or by any other action that proved helpful.
Drs. Gustaaf De Monie is the Research Director of the management conSUlting agency
Policy Research Corporation N. V. Antwerp. He is a renowned international expert in port
planning .and management and a well-known advisor to amongst others The World Bank,
UNCTAD, ILO and EBRD. His role as a manager of a large terminal operating company
provided him with substantial practical transport and logistics know-how. He acquired
extensive field experience as an international consultant responsible for the development of
port master plans and the design of operational systems for specialised terminals.
Hir. Frank Heodrickx is Research Manager at Policy Research. He holds a degree in
Commercial Engineering, summa cum laude from the University of Antwerp. Mr. Hendrickx
gained consulting experience in the field of maritime transport and shortsea shipping by
working on a number of studies and research projects. He is also the co-author of strategy
papers on container terminal management arrangements and on issues relating to the strategic
positioning of shipping lines.
log. Karel Joos is Research Associate at Policy Research. He graduated from the Belgian
Royal School of Cadets and the Royal Military Academy and holds a degree in construction
engineering and financial economics. Before he joined Policy Research, Mr. Joos was a
project officer with the Directorate of Military Constructions and performed input-output
analyse on the Belgian army budget. In his present function, he specialises in using input
output analysis to evaluate and optimise government policies relating to maritime sectors.
Drs. Lars Couvreur is Research Associate at Policy Research. He studied economics at the
University of Amsterdam and specialised in Traffic & Transport Economics and Marketing
Management. He has acquired international experience in the field of policy making for the
shipping sector. Countries and their respective Governments he has given advice to or whose
maritime policy is in the process of being evaluated include the Netherlands, Germany, Italy,
the United Kingdom, Belgium and the Netherlands Antilles.
Prof. Dr. Chris Peeters is Executive Director and President of the Board of Directors of
Policy Research. Prof. Peeters also teaches public finance, international finance, maritime
economics and transport economics at the Faculty of Applied Economics of the University of
Antwerp, where he is attached to the Department of Transport Economics. Prof. Peeters is a
well-known expert on the maritime industry and on policy analysis in general, and is an
external advisor to several public and private policymakers. He is the author of influential
strategic papers and scientific publications, including an in-depth analysis of the Dutch
Shipping Industry.
FOREWORD PROF. DR. anus PEETERS PRESIDENT- ExECUTIVE DIRECTOR, POLICY RESEARCH CORPORATION N.V.
The "Strategies for Global and Regional Ports" confirms that container shipping in the wider
Caribbean is in for tumultuous development in the years to come. One of the driving forces
behind the momentous changes expected in the provision of maritime liner services in the
region, is the growing reliance by major container carriers on multi-layered transhipment
concepts and hub ports. Given its favourable location at the junction of North-South and East
West trades, the Caribbean region is increasingly becoming a crucial factor in the service
pattern of major carriers. As a result, global terminal operating companies such as Hutchison
Port Holdings and Stevedoring Services of America, are already tapping the potential for
developing port activity that was, until recently, dormant.
In anticipation of the new shipping patterns to emerge in the coming months and years, major
political decisions with respect to shipping and port development need to be taken by
Caribbean Governments. Many of these decisions will be made under pressure of well
meaning lobbies, but which do not always have the necessary insight into liner shipping
developments. The Netherlands Antilles is one of those nations whose ports are at a
crossroads and may either become regional hub ports or turn into feeder ports. In view of the
changes in the Caribbean maritime geography, the Ministry of Traffic and Transport of the
Netherlands Antilles commissioned Policy Research Corporation N. V to present a sound and
balanced maritime policy and strategy. The "Strategies for Global and Regional Ports" was in
fact complementary to this in-depth policy analysis for the Netherlands Antilles, as it
supplied Policy Research staff members with the information necessary to evaluate the
external context of the Netherlands Antilles.
To solve fundamental policy questions Policy Research uses the Economic Impact Study
(EIS~ methodology. The key characteristic of this analysis is the elaborate bottom-up
approach that is applied. The necessary data, both strategic and financial, is thus collected at
company level. On the basis of the calculated economic impact of the maritime sector, the
effects of policy alternatives are quantified and the subsequent behaviour of the sector
anticipated in terms of value added, employment, backtlow to the government and spending
impact. As a result of this approach, the EISIIP for the Netherlands Antilles provides its
Government with the necessary instruments to justify plans to either transform its ports into
subregional hubs for the Caribbean or accept a feeder port role. The policy recommendations
as well as a readily-implementable plan for the further development of the maritime sector of
the Netherlands Antilles are outlined in a pUblication entitled: Policy Research Corporation
N v.. "Economic Impact Study (E/~) for the Maritime Sector of the Netherlands Antilles" .
1998.
Besides container shipping, cruise tourism was another focal point in the EIS®-project for the
Netherlands Antilles. The latter topic is also covered in the "Strategies for Global and
Regional Ports", which shows for example that Curafi:ao is a potential home port candidate for
Southern and Deep Caribbean destinations. The main competitor for that role is expected to
be Barbados. Both are key examples of destinations presently performing below their
potential. They score high on port and island-related standards, but have the disadvantage of
being located in a geographical area presently less attractive to cruise operators. Cruise loops
may, however, over time shift from one area to another, as is shown in for example, the recent
shift in itineraries from Eastern to Western Caribbean cruise destinations. Fundamental shifts
can also be expected if significant economic and structural changes take place such as, for
example, the possible opening up of Cuba to the US tourist trade.
Thanks to its in-depth SWOT analysis, its comprehensiveness and its long-term view, both
with respect to container shipping and cruising, the "Strategies for Global and Regional
Ports" will no doubt be of interest and use to many governments, port and shipping
organisations, shipping and cruise lines and staff in research institutes, universities or other
similar institutions serving or studying the Caribbean region.
Antwerp, June 2nd, 1998
Prof. Dr. Chris Peeters
Table o/Contents
TABLE OF CONTENTS
PART ONE: CONTAINER SHIPPING
I. CONTAINERISATION: THE OVERALL PICTURE ............................................................ 1
1.1. STRUCTURAL CHANGES IN CONTAINER LINER SHIPPING WORLD-WIDE AND IN THE CARIBBEAN BASIN ............................................................ '" ............................................................... 1
1.2. IMPACT OF SCALE INCREASES AND CONCENTRATION IN LINER SHIPPING ON THE MARITIME GEOGRAPHY OF CONTAINER LINES ..........................................................•.......................................... 12
1.3. PRESENT AND FUTURE CONTAINER TERMINAL STATUS AND ROLE ..................................................... 16
II. PAST AND PRESENT CONTAINER TERMINAL PERFORMANCE IN THE CARIBBEAN AND ADJACENT SUB-REGION (COLOMBIA I VENEZUELA) .............. 23
11.1. PAST CONTAINER THROUGHPUT ........................................................................................................ 23
IU.I. Current supply of container handling capacity.................. . ........................ 27
11.1.2. Future supply of container handling capacity........ .............. ...... ........... . ... 35 IU.3. Container terminal handling productivity....... ...................... ....................... ..37 11.1.4. Container handling tarijJrates .............................................. ............................................. 42
ill. ANALYSIS OF STRENGTHS AND WEAKNESSES IN THE MAJOR PORTS OF THE CARIBBEAN REGION AND THE COLOMBIANNENEZUELAN SUB-REGION ....................................................................................................................................... 49 III.1. FREEPORT...................................................................... .. ...................... . ...................... 49
IIU.I. Location and accessibility................... . ..... 49
IIU.2. Existingfacilities ............................................... . .... 50 III. 1.3. Plannedfacilities........................................ ..................................... . .. 51 111.1.4. Terminal ownership and management ............................................ ....... . 111.1.5. Terminal performance ........................................................................................... .
..52
. .... 52
III. 1.6. Strategy and assessment of opportunities and threats ................................... ... . .. 52 III.2. KINGSTON - PORT BUSTAMANTE ...................................................................................................... 55
111.2.1. Location and accessibility ................... ............. .. 55 Ill. 2.2. Existingfacilities ............ . . .... 55 111.2.3. Planned facilities ........................... . . ... 57
III.2A. Port and terminal ownership and management... . ... 57
111.2.5. Terminal performance ..................................... ................... . .................... 57
1l1.2.6. Strategy and assessment of opportunities and threats ........................................................ 60
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111.3. RIo llAINA ....•.......•............................................................................................................................ 63 III. 3. 1. Location and accessibility .................................................................................................. 63 III.3.2. Existingfacilites ................................................................................................................. 64
lIl3.3. Plannedfacilities ................................................................................................................ 64
1I1.3.4. Port and terminal ownership and management .................................................................. 65 III 3. 5. Handling peiformance ........................................................................................................ 66 1I1. 3. 6. Strategy and assessment of opportunities and threats ........................................................ 68
111.4. POINTE-A-PITRE ................................................................................................................................ 69 //l.4.I. Existingfacilities ................................................................................................................ 69
Ill4.2. Plannedfacilities ................................................................................................................ 70 1I1.4.3. Port and terminal ownership and management .................................................................. 70 1I1.4.4. Handling peiformance ........................................................................................................ 71 1I1.4.5. Strategy and assessment of opportunities and threats ........................................................ 74
m.s. FORT-DE-FRANCE .............................................................................................................................. 76 III. 5. I. Location and accessibility ........................................................ .......................................... 76 III. 5. 2. Existingfacilities ................................................................................................................ 76 /11.5.3. Plannedfacilities ..................................................................... ........................................... 77
111.5.4. Port and Terminal ownership and management ......................................................... ........ 77 III. 5. 5. Handling peiformance ........................................................................................................ 79 1I1.5.6. Strategy and assessment of strengths and weaknesses ....................................................... 82
m.6. PORT OF SPAIN .................................................................................................................................. 84 11I.6.1. Location and accessibility .................................................................................................. 84 //l.6.2. Existingfacilities ................................................................................................................ 84 1I1.6.3. Port and terminal.ownership and management.. ................................................................ 85 III. 6. 4. Plannedfacilities ................................................................................................................ 87 III. 6. 5. Handling peiformance ....................................................................... ................................. 87 1I1. 6. 6. Strategy and assessment of opportunities and threats ......... ............................................... 89 1I1.6.7. Competition from Point Lisas ............................................................................................. 90
111.7. PuERTO CABELLO ............................................................................................................................. 92 III. 7.1. Location and accessibility .................................................................................................. 92 111.7.2. Existingfacilities ............................................................................................................... 92 111.7.3. Plannedfacilities ................................................................ ................................................ 93
Ill. 7.4. Port and terminal ownership and management .. ............................................................... 94 //1.7.5. Terminalpeiformance ........................................................................................................ 94 1I1. 7.6. Strategy and assessment of opportunities and threats ........................................................ 97
111.8. CARTAGENA ...................................................................................................................................... 99 11I.8.1. Location and accessibility .................................................................................................. 99 III.8.2. Existingfacilities ................................................................................................................ 99 1//.8.4. Port and terminal ownership and management ................................................................ 101 Ill. 8. 5. Terminal peiformance .................................................................................................... 102 lIl8.6. Strategy and assessment of opportunities and threats ...................................................... 105
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ID.9. MANZANILLO(PANAMA) •.•..•.••••.........••..•.•.•.....•••.•..............•.............•.•.....•.....•....•....... ..............•.... 106
1/1.9.1. Location and accesibility .................................................................................................. 106
1ll.9.1. Existing facilities .............................................................................................................. 106
1/1.9.3. Plannedfacilities .............................................................................................................. 107
1119.4. Port and terminal ownership and management ................ ................................................ 108
1/19.5. Terminal performance ...................................................................................................... 109
1119.6. Strategy and assessment of opportunities and threats ...................................................... 110
III.1 O. CoLON CONTAINER TERMINAL ....................................................................................................... 112
Ill. 1 0.1. Location and accessibility ............................................................................................... 112
Ill. 10.1. Existingfacility ............................................................................. .................................... 113
1/110.3. Plannedfacilities .............................................................................................................. 113
I/ll 0.4. Port and Terminal ownership and terminal management ................................................ 113
11110.5. Handling Performance .............................................................................. ....................... 113
I/ll 0.6. Strategy and assessment of opportunities and threats ...................................................... I J4
III.l!. SAN JUAN (PUERTO RICo) ............................................................................................................... 116
Illl 1.1. Location and accessibility .......... ...................................................................................... 116
1//11.1. Existingfacilities .............................................................................................................. 116
1/11 1.3. Planned facilities .............................................................................................................. 117
I/ll 1.4. Port and terminal ownership and management ................................................................ 118
111.11.5. Handling Performance ..................................................................................................... 118
11/.11.6. Strategy and assessment of opportunities and threats ...................................................... 120
III.12. PORT OF WILLEMSTAD .................................................................................................................... 122
11112.1. Location and accessibility ................................................................................................ 122
1ll.ll.2. Existingfacilities .............................................................................................................. 122
Ill. 12.3. Plannedfaci/ities .............................................................................................................. 123
11/.12.4. Port and Terminal Ownership and Management .. ........................................................... 123
1/112.5. Terminal Performance ................................................................................. ..................... 114
111.11.6. Strategy and assessment of opportunities and threats ...................................................... 128
III.l3. PORT OF PHILIPSBURG ..................................................................................................................... 129
11//3.1. Location and accessibility ................................................................... ............ ............. 129
//1/3.1. Existingfacilities ............................................................................................................. 129
Ill. 13. 3. Planned facilities .............................................................................................................. 130
11113.4. Port and terminal ownership and management ........................................................ ........ 130
11113.5. Port and Terminal Performance ........................................................................ ............... 131
111.13.6. Strategy and assessment of opportunities and threats ...................................................... 133
IV. LESSONS AND CONCLUSIONS ........................................................................................... 135
PART TWO: CRUISE LINE INDUSTRY
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I. METHODOLOGY ........................................................................................................................ 143
n. THE WORLD CRUISE INDUSTRy ......................................................................................... 145
n.l. MARKET GROWTH •.••••......•....••••.•.••.•..•......•..•..•...•.••.•••...•••.......................•............•.•. ............•.....•......• 145
I1.2. CRUISE DURATION ..........................•........•.•...................•.•.........•..................................•... .................. 145
I1.3. CRUISE CAPACITY .....••..•..................•..•••..••..•..•........•...•......•....•.....•................................. ................... 147
m. THE CARIBBEAN CRUISE INDUSTRY ............................................................................... 153
In.l. MARKET GROWTH ............................................................................................................................. 153
In.2. CARIBBEAN DESTINATIONS ..................................................................................................... ..•........ 155
m.3. GEOGRAPHICAL SEGMENTATION •.••••••......•.•..•......••••.•.•.....•.••.......•... ...........•••....••..••......................... 161
m.4. CRUISE CAPACITY ..•••••.......••••....•..••.•...••••......•••••••.........•........•..•..•.•••..................•.....•.•..................... 164
IV. IMPACT OF STRUCTURAL CHANGES IN THE CRUISE INDUSTRY ON THE COMPETITIVE POSITION OF CARIBBEAN DESTINATIONS ..................................... 165
IV. J. TRENDS AND STRUCTURAL CHANGES IN THE CRUISE INDUSTRY .•••••...•..•......•......••...••.............••••••.... 165
IV.2. IMPACT ON THE COMPETITIVE POSITION OF CARIBBEAN CRUISE DESTINATIONS •...•.•.•...........•..•.•.... 169
[V.l.I. Prospectsfor the Caribbean region .................................................................................... 170
[V.l.l. Prospects per geographical market segment ............ , ......................................................... 173
IV.l.3. Increased competition between Caribbean destinations ........................................... .......... 175
V. STRENGTHS AND WEAKNESSES OF SELECTED CARIBBEAN DESTINATIONS ....................................................................................................................... 177
V.I. DECISIVE FACTORS FOR PORT SELECTION ........................................................................................... 177 V.I.I. Port selection criteria for regular ports-of-call................................................................... 178
V.I.2. Port selection criteria for home ports .................................................................................. 179
V.2. STRENGTHS AND WEAKNESSES •.••..••••...•......••••••......••.•••.......•......................................•.....•...........••••. 185
VI. CONCLUSIONS ......................................................................................................................... 187
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LIST OF FIGURES
Part One: Container Shipping
Figure 1.1 : Trends in liner shipping ................................................................................................. 9
Figure 1.2: Acute problems in liner shipping ................................................................................ 10
Figure 1.3 : Maritime geography of container lines in the next decade ......................................... 13
Figure 1.4: Multi-layered port calls ............................................................................................... 14
Figure II.l: Container Throughput of Caribbean Ports 1985-1995 ................................................ 24
Figure III.J : Graphical presentation of the evolution of container throughput in Kingston between 1977 and 1996 ............................................................................................... 59
Figure 1Il.2 : Graphical presentation of the container throughput in the port of Pointe-a-Pitre .................................................................................... ".,." .... , .. ', ..... "'.',., .. " ....... , 72
Figure III.3 : Graphical presentation of the evolution of container throughput in the port of Fort-de-France ..... , ................................................. " .... , .. ,""'" ,., ' ..... , ... , '., .... ,", .. ,." ..... , 79
Figure 1Il.4 : Graphical presentation of the evolution of container throughput in the Port of Spain (period 1980 - 1996) ................. , ........................... , ..... " ... , ............................. , .. ,86
Figure III.5 : Graphical presentation of the container throughput in Puerto Cabello from 1984 to 1996 .................... , ............. , ............ , ....................................... , .... ,., .... , ... , ...... ,.96
Figure 1Il.6 : Graphical presentation of the evolution of container throughput in the port of Cartagena (period 1984 - 1996) ..................................................... " ........................ " 104
Figure III.7 : Graphical presentation of the evolution of container throughput III the port of San Juan (period 1978 - 1996) ...................... , ......................... " ............. " ... "." .. " ..... 119
Figure III.8 : Graphical presentation of the evolution of the container throughput in the Cura9ao Container Terminal (1980-1996) .......................................... " .................... 125
Part Two: Cruise Line Industry
Figure I.l : SWOT-analysis of Caribbean cruise destinations - structured overview .... "., ............... , 144
Figure II.I : Overall passenger growth in the North American cruise market (in thousands) .. " .. " ... 146
Figure 11.2 : Distribution of cruise lengths 1980 - 1996 ............................ , ....................... , ............. ".147
Figure II.3 : Past and prospected evolution of North American lower berth capacity 1981-2001 ............ , ................................................... " .. , ........... , ... " .... , .. , ......... ,." .... , ....... , .. ' 150
Figure II.4 : Evolution of the cruise capacity in terms of bed-days 1987 - 1997 (in thousands of bed-days) ...... , .................................................. , .. , ....... , .. , .... " ... , ... , .. " .. " .. "',.,.,, .. ,.,' 151
Figure III, 1 : Compound annual growth rate (period 1981 -1996) versus market share in 1996 for destinations world-wide with respect to the number of bed-days ...... ,,""""'" ",154
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Figure m.2: Evolution of cruise passenger arrivals in Caribbean ports (in thousands) .................... 154
Figure m.3 : Compound annual growth rate (period 1986 - 1996) versus market share in 1996 for Caribbean destinations (passenger arrivals) ........................................................ 157
Figure IlIA : Compound annual growth rate (period 1991 - 1996) versus market share in 1996 for Caribbean destinations (passenger arrivals) ........................................................ 158
Figure I1I.5 : Strong growing Caribbean destinations (passenger arrivals in thousands) ................... 160
Figure m.6 : Passenger arrivals in the top four Caribbean destinations (in thousands) ..................... 160
Figure m.7 : Compound annual growth rate (period 1986 - 1996) versus market share in 1996 for the various geographical segments ...................................................................... 162
Figure IV.l : Forecast prospects for the world cruise market (passengers in thousands) .................. 172
Figure IV.2 : Forecast evolution of the number of bed-days in the Caribbean and passenger visits to Caribbean destinations (bed-days and passengers in thousands) ................ 172
Figure IV.3 : Forecast evolution of the passenger visits per geographical market segment in the Caribbean (passenger visits in thousands) .......................................................... 175
Figure V.l : Intrinsic value versus actual performance in terms of passenger arrivals for a selection of Caribbean destinations ........................................................................... 1 82
Figure V.2 : CuraQao versus St. Maarten on the basis of their intrinsic value ................................... 183
Figure V.3 : Ranking of a selection of Caribbean destinations by overall rating on port related attributes .................................................................................................................... 184
Figure VA : Ranking of a selection of Caribbean destinations by overall rating on island related attributes ........................................................................................................ 185
Figure V.5 : Ranking ofa selection of Caribbean destinations by overall image .............................. 186
Figure VI.l : Schematic overview of the SWOT-analysis ................................................................. 188
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LIST OF TABLES
Part One: Container Shipping
Table 1.1 : Principal dimensions of cellular container ships by various generations ..................... 5 Table 1.2 : Physical dimensions of very large container ships ....................................................... 5 Table 1.3 : Share of very large container ships in the total TEU-slot capacity (in service
and on order on 01 November 1997) ............................................................................. 6
Table 1.4 : Summary of OSC throughput forecasts for the Caribbean and Central American regions ........................................................................................................ 20
Table 11.1: Container throughput of Caribbean and Venezuelan/Colombian ports 1985-1990 ............................................................................................................................. 25
Table II.2: Container handling facilities in the Caribbean and in Venezuelan/Colombian Atlantic coast ports ...................................................................................................... 29
Table 11.3: Container handling facilities in the Caribbean and in Venezuelan/Colombian Atlantic coast ports ...................................................................................................... 3 1
Table II.4: Planned container handling facilities in the Caribbean and in Venezuelan/Colombian Atlantic Coast Ports .............................................................. 33
Table II.5: Additional container handling capacity in Panamanian terminals by 2005 ................ 36
Table II.6: Review of port productivity measured on NCS vessels (1995) in the Caribbean region and the ColombianlVenezuelan Atlantic Coast sub-region ............ 39
Table II.7: Review of Port productivity at the Port Bustamante Container Terminal (Jamaica) ..................................................................................................................... 39
Table 11.8: Gantry crane productivity at the Container Terminal of Fort-de France 1991-1995 ............................................................................................................................. 40
Table 11.9: Shift productivity at the container terminal of Jarry. Point-a-Pitre (Guadeloupe) ............................................................................................................... 40
Table 11.10: Selected container tariff rates in Caribbean and Central American ports (in US$) ............................................................................................................................. 44
Table 11.11: Indicative tariffs for 20' local containers (imports/exports) ....................................... 46
Table II.12: Comparison of transhipment tariff rates in Caribbean and Central American ports ............................................................................................................................. 47
Table 111.1: Main characteristics of the Freeport (Grand Bahamas) container terminal ................ 51
Table m.2 : Main characteristics of the Kingston Container Port .................................................. 56
Table III.3 : Evolution of container throughput in the port of Kingston between 1977 and 1996 ............................................................................................................................. 58
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Table m.4 : Principal features of the planned Puerto Fortuguero container tenninal .................... 6s
Table m.s : Share of Rio Haina in total vessel calIs at Dominican Republic ports (period 1990-1996) .................................................................. Error! Bookmark not defined.
Table III.6 : Breakdown of container throughput by main group of activities (1996) in the port of Rio Haina ......................................................................................................... 67
Table m.7: Evolution ofTEU throughput in the port of Rio Haina .............................................. 67
Table m.8 : Container throughput in the port of Pointe-a-Pitre ..................................................... 71
Table m.9 : Average number of container exchanges per vessel calI at the port of Pointe-a-Pitre .......................................................................................................................... 73
Table m.10: Ratio of number of container movements to number of TEU on the larry Tenninal ...................................................................................................................... 73
Table m.11: Fort-de-France - main characteristics of the planned container tenninal at "Pointe des Grives" ..................................................................................................... 78
Table m.12: Evolution of container throughput in the port of Fort-de-France ............................... 80
Table m.13: Share of transhipment in total throughput of the port of Fort-de-France .................... 80
Table m.14: Comparison of number of moves and TEU throughput at the Fort-de-France container terminal ........................................................................................................ 81
Table III.ls: Number of container exchanges per vessel calI at the port of Fort-de-France ........... 82
Table III. 16 : Evolution of container throughput in the port of Port of Spain (1980 to 1996) .......... 86
Table 111.17: Number ofTEUs handled per vessel call (1990 - 1994) ............................................. 88
Table m.18: Summary of containerised cargo charges in Port of Spain (including Wharf Dues) ............................................................................................................................ 90
Table m.19: Container throughput in the port of Puerto Cabello from 1984 to 1996 ..................... 96
Table m.20: Forecast of container activity in the port of Puerto Cabello (1998 - 2005) ................ 97
Table m.21: Comparison between Puerto CabelIo's present and future port function for container trades ................................................................................................ '" ......... 98
Table 111.22: Evolution of container throughput in the port of Cartagena (I 984 - 1996) .............. 104
Table 111.23: Throughput at MIT (in container moves) .................................................................. 109
Table m.24: Evolution of container throughput in the port of San Juan (period 1978 -1996) .......................................................................................................................... 119
Table m.2s: Evolution of container throughput (in TEU) in the Cura~ao Container TenninaI (1980-1996) ............................................................................................... 124
Table 111.26 : Cura~ao Container Tenninal (port of Willemstad) - Share of transhipment containers in the total handled (1987-1996) .............................................................. 126
Table m.27: Ratio ofTEU to container moves on the Cura~ao Container Terminal .................... 126
Table 111.28: Summary of past ships' crane, mobile crane and gantry crane performance on the Cura~ao Container Tenninal (port of Willems tad) ............................................. 127
Table m.29 : Comparison of SMPA throughput data (in containers) with similar data from the Cargo Industry Study (in TEU) ........................................................................... 131
Table m.30: SMP A: Average number of container exchanges per call ........................................ 132 Table 111.31: SMP A transhipment container throughput and cargo cube (1994-1996) ................. 133
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Part Two: Cruise Line Industry
Table 11.1 : Distribution of cruise durations 1980 1996 (passengers in thousands) ............... 146
Table 11.2 : Overview of North American cruise passenger capacity in 1996 ............................. 148
Table 11.3 : Contracted and planned newbuildings 1997-2001 .................................................... 150
Table I1I.4 : Cruise passenger arrivals in Caribbean destinations in 1996 (in thousands) ............ 156
Table I1I.5 : Evolution of the market shares for selected Caribbean destinations ........................ 158
Table I1I.6 : Passenger arrival growth in main Caribbean destinations in the period 1986-1996 ........................................................................................................................... 159
Table I1I.7 : Geographic segmentation of the Bahamas and Caribbean cruise market.. ............... 161
Table IV.8 : Evaluation of the projected number of North American cruise passengers .............. 170
Table IV.9: Forecast evolution of the passenger visits per geographical market segment in the Caribbean (passenger visits in thousands) .......................................................... 174
Table V.I0: Port selection criteria ................................................................................................. 178
Table V.ll : Selection criteria for home ports ............................................................................... 179
Table V.12 : Summary of strengths and weaknesses of Caribbean destinations with respect to selected port related attributes ............................................................................... 185
Table V.13 : Summary of strengths and weaknesses of Caribbean destinations with respect to selected island related attributes ........................................................................... 186
Policy Research Corporation N. V. -i-
The first Part of the "Strategies for Global and Regional Pons" considers container trades.
In the years ahead shipping and port developments in the Caribbean region will. much more than before. be determined by the dramatic changes currently affecting the liner industry.
The future maritime transport model for container trades consisls o[ a backbone service formed by the main East-West and West-East loops on which multiple North-South links are grajled.
In the Caribbean and Central American regions hub trades can be expected 10 grow rapidly in the next two decades, as the potential impact of multilayered transhipment and feedering is realised.
Executive Summary
EXECUTIVE SUMMARY
Part one: Container Shipping
The first Part of the "Strategies for Global and Regional Ports" con
siders container trades. In the years ahead shipping and port devel
opments in the Caribbean, in Central America and the Col om
bianlVenezuelan seaboard will, much more than before, be deter
mined by the dramatic changes currently affecting the liner industry.
These changes are driven by the need to adapt to new logistics con
cepts, accommodate scale increases and face up to strong concentra
tion of the demand and supply side in the liner business.
The future maritime transport model for container trades will possi
bly be one dominated by large container ships (8000 TEU or more),
relayed by an extensive fleet of feeder vessels. The consequences on
the maritime geography of container lines will be dramatic. The
overall picture, already emerging today, is one based on a backbone
service, formed by the main East-West and West-East loops, on
which multiple North-South links are grafted. These critical link-ups
will occur in global or mega hub ports. The network of services will
be completed by different layers of transhipment and feedering whlch
will connect the global or mega hubs wlth regional or subreglOnal
hubs and the latter with a multitude of feeder ports. Such mull!
layered networks will give each port a distinct status within a global
service pattern and inevitably alter the competitive position of indi
vidual ports.
In the Caribbean and Central American regions hub trades, underde
veloped as they have been for the past thirty years, can be expected to
grow rapidly in the next two decades as the potential impact of multi
layered transhipment and feedering is realised. How quickly and how
well these transhipment and feeder flows can develop, will to a large
Policy Research Corporation N. V. -i-
The choice of main hub ports for the Caribbean and Central American regions seems to have been made already.
The choice of subregional hubs. on the contrary, is still wide open.
The Caribbean region constitutes an emerging and promising container transport markel.
Major development schemes have been announced and are being implemented. As a result, port competition in the container handling market is likely to increase.
The recent arrival of reputable container terminal operators in the Caribbean and Central American region should greatly improve the output rates in the region's ports.
-ii-
Strategies for Global and Regional Ports
extent depend on service quality, the price of terminal handling and
the availability of appropriate container berths in sufficient numbers.
The choice of main hub ports for the Caribbean and Central Ameri
can regions seems to have been made already, although there is little
doubt that over time some carrier-hub port partnerships will change.
The choice of subregional hubs, on the contrary, is still wide open. If
the Port Authorities and terminal operators want to capitalise on the
opportunities offered by multi-layered feedering, they will have to
act quickly and appropriately.
In order better to appraise the chances of individual ports, to gain
subregional hub status, a Strategy for Global and Regional Ports was
carried out. This revealed that although the region's container ports
have almost doubled their throughput in the period 1985-1995, it re
mains modest on a global scale. However the region constitutes an
emerging and promising container transport market.
Up to now, the handling of containers has taken place both at dedi
cated container terminals and conventional facilities. In most ports
berth capacities and the quality and quantity of the ship-to-shore
handling equipment are inadequate for larger container vessels car
rying a substantial number of transhipment containers.
Major development schemes have been announced and are being im
plemented. This is bound to lead to a concentration of the top range
of transhipment cargoes on a few selected main hub ports such as
Freeport, Kingston, Colon, Manzanillo, Cristobal and Balboa. At the
same time the new development schemes of both larger and smaller
ports wi1l create a considerable risk of overcapacity. Port competition
in the container handling market is therefore likely to increase as
supply can be expected to increase faster than demand, notwith
standing the anticipated growth in subregional transhipment.
The overall productivity and output levels of the container ports in
the Caribbean and the Atlantic seaboard are at best mediocre. But the
recent arrival of reputable container terminal operators in the Carib
bean and Central American region should greatly contribute to ame
liorating overall performance, which will be absolutely necessary if
the concept of multi-layered transhipment is to succeed.
Policy Research Corporation N. V.
The present poor output performance of container lerminals in the region explaillS the high handling charges.
The purpose 0/ Part Two is to pinpoint the prevailing trends currently shaping the cruise business' configuration.
In addition. their impact on the cruising geography is assessed.
Executive Summary
Given the poor output performance of the container terminals, it is
not surprising that handling charges are two or three limes as high as
in similar container ports in other regions and that the overall cost of
transport and insurance in the Caribbean basin is some 40% higher
than the average for the world. In fact, container handling tariffs in
the Caribbean are either opaque or hidden and inevitably trigger
heavy cross-subsidisation. The latter not only leads to a disconnec
tion between the actual costs incurred in handling the containers and
the tariff levels charged but, more significantly, promotes ineffi
ciency and excessive tariff levels. It is obvious that improving port
pricing concepts as well as tariff structures and levels will have to be
a top priority in the short to medium term.
The scan of Caribbean, Central American and Colum
bianlVenezuelan ports has revealed their polarisation. A small num
ber of them are developing into first-rate global hubs, but most re
main small and only have feeder status, with some increasing their
throughput volumes by becoming subregional hubs.
Port competitive pressure is increasing ever faster. Spectacular future
development in Balboa and the weight of the Florida ports (in par
ticular Miami) will lead to even fiercer interport competition. What is
no longer in doubt is the fact that the "main hub concept" and multi
layered transhipment have been accepted by the leading decision
makers in the Caribbean ports industry. This has an impact on route
patterns, port investment plans and economic development in the
wider region.
Part Two: Cruise Line Industry
The cruise industry is one of the fastest growing segments in the leI
sure industry. In addition, it has become greatly diversified in the past decade. New destinations and itineranes are emergmg world wide, order books are filled with new mega ships, and prices for
cruises have dropped dramatically. Cruise operators are prospecting
for cheaper destinations, often even calling at their own private is-
Policy Research Corporation N. V. - iii-
To this end, a SWOT analysis of Caribbean cruise destinations was carried out.
An overview of the different research phases is presented in Figure 0.1.
For each geographical market segment in the Caribbean. passenger arrival projections are shown in Figure 0.2.
The Bahamas were added as a fifth market segment due to their proximity to the Caribbean marlcet.
Strategies lor Global and Regional Ports
lands. Others are tapping new sources of income through the intro
duction of on-board advertisement systems, thereby offering island
entrepreneurs the possibility to promote their services and products.
These and other trends at present have a major impact on the cruise
industry and are shaping its configuration. Consequently, the purpose
of Part Two of the "Strategies for Global and Regional Ports" is to
pinpoint the prevailing trends and assess their impact on the cruising
geography of the Caribbean region.
To this end, a SWOT analysis of Caribbean cruise destinations was
carried out with respect to their ability to cater for cruise ships and
their passengers. Basically, there were five research phases (see
Figure 0.1). First a general overview with respect to the world cruise
markets and the Caribbean cruise market itself was drawn up. Build
ing upon this information the prevailing trends in the cruise industry
were determined and listed. In addition, the effect of these structural
changes (opportunities and threats) on the attractiveness of geo
graphical market segments in the Caribbean was evaluated. This re
sulted in passenger arrival projections per segment (see Figure 0.2).
The Bahamas were added to the report as a fifth market segment due
to their importance and proximity to the Caribbean market.
Figure 0.1 : SWOT analysis of Caribbean crnlse destinations - structured overview
WORLD / CARIBBEAN CRUISE INDUSTRY
present aituation
OPPORTUNITIES/THREATS
TRENDS AND STRUCTIJRAL CHANGES
IN TIlE CRUISE INDUSTRY
ATTRACTIVENESS OF c) GEOGRAPHICAL MARKET
SEGMENTS IN TIlE CARIBBEAN
Source: Policy Research Corporation N. V.
- iv-
STRENGTHS / WEAKNESSES
CHANGES IN THE INTRINSIC VALUE OF CARIBBEAN CRUISE DESTINA nONS
ATTRACTIVENESS OF CARIBBEAN CRUISE
DESTINA nONS
Policy Research Corporation N. V.
Executive Summary
Figure 0.2 : Forecast evolution of market shares and annual compound growth rates (period 1986-1996 versus period 1997-2005) for the various geographical market segments in the Caribbean
1<% ~ compound annual growth rate :1------------------------, Southern Carlbban
11%
10%
1%
6% _ Deep Carlbban
II 0\ • <%
1%
,..w Bahama.
1"~IP" ... 0% 5% 10% 15%
•
10%
Western Caribbean
-~ •
Ea.tern7-•
I market share
15% 30% 35%
Source: Policy Research Corporation N. v.. based on data from the Caribbean Tourism Organisation
The Eastern Caribbean is expected to remain the largest Caribbean cruise segment.
The Western Caribbean will be the fastest growing area in the Caribbean.
Passenger arrivals ill the Caribbean are expected to grow from 10.6 million in 1996 to some U million in 2005.
Despite a decreasing market share (from 34% in 1996 to some 30%
in 2005), the Eastern Caribbean is expected to remain the largest
Caribbean cruise segment. The Western Caribbean on the other hand
will continue to grow spectacularly. It will be the fastest growing
geographical area in the Caribbean in the next five to ten years, with
an annual compound growth rate of slightly over 9% (in companson,
in the period 1986-1996 it grew by II % per annum on average).
Overall, in terms of annual compound growth rates, passenger visits
to the Caribbean will increase more slowly in the period 1997-2005
than in the period 1986-1996 (6.6% instead of 7.2%). Still, in nomi
nal terms, passenger arrivals in the Caribbean are expected to grow
from 10.6 million in 1996 to some 24 million in 2005.
The expected growth in the cruise passenger market in the Caribbean
may result in port congestion, especially in the home ports. This in
turn may lead to the development of new home ports and the polari-
Policy Research Corporation N. Y. -v-
Increased competition between Caribbean destinations is more than liUly in the near future.
To determine the relative competitive position of Caribbean destinations, their strengths and wea/cne.sses are analysed.
17te relative competitive position of Caribbean cruise destinations thus becomes a key element.
Cruise destinations are compared with each other on the basis of:
- pon-related attributes; - island-related allributes; - their image.
Together these three elements form the 'intrinsic value' of a destination.
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Strategies/or Global and Regional Ports
sation of the cruise market into a mass market and a niche (or
'boutique' lines) market.
Other important elements in the assessment of the Caribbean cruise
liner business are the growing oligopoly of the main cruise operators
and their imperative need to boost profit margins, which pushes them
to economies of scale, better cost control (e.g. lower port tariffs) and
the maximisation of shore revenues (e.g. through 'private islands'
calls).
In view of this background and these future traffic expectations, in
creased competition between Caribbean destinations is more than
likely, This is the combined result of greater port awareness of the
value added by the cruise business, the introduction of mega ships,
the concentration of the supply side, the growing popularity of
shorter cruises (meaning fewer port caBs) and attempts by cruise
lines to control costs and increase revenue.
Hence, the relative competitive position of Caribbean cruise destina
tions becomes a key element. To determine this, the strengths and
weaknesses of a selected number of Caribbean destinations was
analysed.
A myriad of factors are taken into account when cruise lines develop
new itineraries, This study attempts to list these factors and group
them into two categories, i.e. port-related and island-related attrib
utes. When considering home port activities, additional issues be
come of interest, such as the availability and cost effectiveness of the
airlift, reliable and fast connections between the international airport
and passenger reception facilities at the cruise terminal, hotel ac
commodation for short-term stays and crew recreation facilities.
With regard to home port activities, Florida ports have without any
doubt outpaced rivalling ports in the Caribbean. The development of
San Juan, into the busiest home port outside the United States, has
however given rise to substantial shifts in itineraries (see the strong
growth figures in Southern and to a lesser extent Deep Caribbean
cruise destinations).
Policy Research Corporation N. V.
Figure 0.3 shows the positive correlation between the intrinsic value and the DCIllaI performance of a cruise destination in terms of passenger arrivals.
Executive Summary
For a selected number of Caribbean cruise destinations the 'intrinsic
value' has been calculated. This is an overa\I indicator of the quality
of the port and island-related attributes as we\I as of the favourable or
unfavourable image of the destination in the minds of decision
makers in the cruise industry. Figure 0.3 graphica\Iy i\Iustrates the
positive correlation between the intrinsic value and the actual per
formance of a cruise destination (in terms of passenger arrivals).
St. Thomas and San Juan are key examples of this positive correla
tion. They combine a high intrinsic value with high passenger vol
umes. Cozumel, on the other hand, clearly receives far more passen
gers than may be expected purely on the basis of its intrinsic value.
Thus, to a large extent it owes its spectacular growth to its favourable
position in the Western Caribbean. The question that can be raised is
whether this growth wi\I be sustainable if Cozumel and other West
ern Caribbean destinations do not succeed in achieving the high stan
dards of port and island related aspects offered, for example, in St.
Thomas and San Juan.
Figure 0.3 : Intrinsic value versus actual performance in terms of passenger arrivals for a selected number of Caribbean destinations
1500~--------------------------------------------------------------~
-;;... ..
passenger arrivals are HIGHER than may be expected on the basis
1250 o/intrinsic lIalue o/the destination
~ 6 1000 Cozumel. -S ~ .; 750
·S Guadeloupe.
~ 500
m
Ocho Rios. • Martinique
CI. 250
• Barbados
passenger arrivals are LOWER than may be expected on the basis o/intrinsic value o/the
destination O+-----------r---------~----------_+----------_r----------~
o 2 4
Intrinsic value of the destination
Source: Policy Research Corporation N. V
Policy Research Corporation N. V. - vii-
A high 'blYllUl vailUl' or 1IIlrillBic value a/0fUI Is 110 pDrtmtu for large f1tUH1Iget' volllllllU.
Notable examples of this are Barbados and Curafao, which are located ill the Southern and Deep Caribbean areo, respectively.
Location Is thus One of the key elements In selecting ports-ofcall.
- viii-
Strategies for Global and Regional Ports
Barbados and Cura9ao prove that the opposite is also true. A high
'brand value' or intrinsic value alone is no guarantee for large pas
senger volumes. If a destination does not fit into popular loops or
cannot be reached from a popular home port within the specified time
frame, then growth expectations for that destination are limited, un
less a well-balanced long-term policy vis-i-vis cruise tourism is in
place. Location is thus one of the key elements in selecting ports-of
call, And although a geographical location physically never changes,
its relative attractiveness does. The opening up of Cuba to the US
tourist trade, for example, is bound fundamentally to affect cruise
itineraries and the choice of home ports, and thus influence the at
tractiveness of all geographical market segments within the Carib
bean.
Policy Research Corporation N, V.