2011 workshop analysis on development interplay between ... · analysis on development interplay...
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Analysis on Development Interplay between Port and Maritime Cluster
Jasmine Siu Lee Lam
Division of Infrastructure Systems and Maritime Studies School of Civil and Environmental Engineering
Nanyang Technological University, N1, 50 Nanyang Avenue Singapore 639798
Email: [email protected] Tel: +65 6790 5276 Fax: +65 6791 0676
Wei Zhang
Division of Infrastructure Systems and Maritime Studies School of Civil and Environmental Engineering
Nanyang Technological University, N1, 50 Nanyang Avenue Singapore 639798
Email: [email protected]
Abstract
Recent research shows that maritime clusters can maximize competitive advantages in
maritime and regional development. Thus the creation and promotion of maritime
cluster has been taken as an important policy tool when considering an array of linked
sectors in the maritime industry from the network perspective. Of all the sectors in a
maritime cluster, port plays an important role in cluster development. This paper aims to
study the interrelationship between port development and maritime cluster
development. The analysis starts with an overview of maritime cluster, which is not a
static concept, but an evolutionary one based on the dynamics of its functions. The
development of a maritime cluster can be divided into four categories by the changing of
port and maritime services. They are cargo loading and discharging, value-added
processing and logistics, regional/global supply chain hub, and international maritime
services. The paper then identifies some world famous maritime clusters, which are
already or capable of being the international maritime centre (IMC), commonly regarded
as the most matured stage of maritime cluster. Two case examples, namely London
and Hong Kong, are drawn from these clusters, showing port’s contribution to maritime
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cluster development, and reflecting the relationship between port development and
maritime cluster development. In order to study the coordinated development
quantitatively among different ports and maritime clusters, Data Envelopment Analysis
(DEA) is proposed, aiming to evaluate the validity of support and utilization between the
two systems. The paper presents a useful reference for research and policy
suggestions on the interplay between maritime cluster and its port development for
maritime cities and regions en route to higher value generating IMCs.
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1. Introduction
Cluster theory was developed over the last two decades as a tool for better
understanding the economic activities in service or knowledge-based regional
economies. The essence of a cluster is that the value of the whole exceeds the sum of
its parts, and that there is a critical mass - in one geographical place - of remarkable
competitive success in a particular field. Cluster is viewed to gain the advantage of
competitiveness. It reflects firstly the productivity, including accessing efficiently to
information, specialized inputs and employees, institutions, and “public goods”;
achieving complementarities across businesses; better incentives and performance
measurement. Secondly is innovation, including ability to perceive and respond to
innovation opportunities; and rapid diffusion of improvements. Thirdly is the formation,
including perceiving opportunities for new businesses and lowering barriers to entry,
including the perceived risk of market entry. These are the very reasons that industries
tend to carry on organizing mode in the form of cluster (Porter, 1990). The notion of
industry clusters has been revived in economics and has become central to business
strategists and industrial policy makers (Arthur, 1989; Krugman, 1991; Doeringer and
Terkla, 1995; Appold, 1997; Malmberg and Maskell, 1997; Bathelt et al., 2002; Martin
and Sunley, 2003; Sternberg and Litzenberg, 2004).
This study devotes to the analysis of maritime cluster. When taking reference from
business cluster, also known as industry cluster or competitive cluster, there is no
standard definition for the maritime sector. Often the definition starts with general
industry cluster then focuses on maritime section. For example, Chang (2011) based on
industry cluster and maritime industry, proposed the definition of maritime cluster as a
network of firm, research, development and innovation units and training organizations,
sometimes supported by national or local authorities, which cooperates with the aim of
technology innovation and of increasing maritime industry’s performance. In this case,
some traditional areas of the maritime sector are identified, such as inland navigation,
marine aggregates, marine equipment, maritime services, maritime works, navy and
coastguard and offshore supply, recreational boating, seaports, ship building and
shipping. It also includes the coastal and sea-related (marine) recreation and tourism
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and fisheries (Ianca and Batrinca, 2010) in a broader way. What is more, it includes
other marine sectors, including emerging knowledge-intensive businesses and services
in marine science and technology (Kwak et al., 2005).
Of all the maritime sectors, port is regarded as an important one, for it is identified as
playing a core role in the whole maritime world and is taking up a more active role in
supply chains (Rodrigue and Notteboom, 2009). Today, growing international trade is
transforming the world economy into a single system and integrating world transport
activities. Ports are naturally being incorporated into this huge, changing and
competitive system. This is the very reason of resulting in port functions’ changing to
adapt this dynamic system. At the same time, the functions of maritime cluster are
changing to provide better and more efficient maritime services.
However, maritime cluster is not a once-for-all concept, it is a dynamic one with different
connotations in different development stages. Different historical period means different
cluster functions, vice versa, clusters in different situations reflect quite different stages
of economic and social development. It is such a changing formation and development
concept that any static and definitive claims of what a maritime cluster should be,
seems to be imprecise. However, few address the evolution of this definition and
connotation according to the existing literatures, not to mention this evolution depends
on the changing and development of port functions and maritime services. Though the
development of maritime cluster has close relationship with port, there is yet any
literature on the study of relationship between port and maritime cluster, either
qualitatively or quantitatively. The paper aims to study maritime cluster evolution from
the changing of port and maritime services perspective. Besides, in order to analyze the
contribution of port to maritime cluster, with contributions from other maritime sectors as
comparison, the paper studies the cases of London and Hong Kong. The two typical
examples are selected from the two identified categories of maritime clusters, In
addition, so as to study the coordination development between port and maritime cluster,
Data Envelopment Analysis (DEA) model is proposed, which provides the quantitative
method for future research.
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2. Maritime cluster connotation
2.1 Evolution and classification of maritime cluster
Maritime cluster comprises an array of linked sections in maritime industries. Taking an
overall review throughout famous maritime clusters, such as London, New York,
Rotterdam, Singapore, Hong Kong, etc, it can be observed that most maritime clusters
developed from port production in the early stage. It is interesting to find that maritime
cluster functions are evolved by the changing of port functions in some degree. Port
functions can be as limited as simple berthing facilities, ship/shore or intermodal
interfaces, or extended to trade, logistics and production centres (Bichou and Gray,
2005). Port function is also a changing concept, for they have different categories or
generations evolving with time, based on UNCTAD (1992). The following part discusses
the functions of maritime clusters based on the changing functions of port, see Table 1.
Port roles and functions, but also institutional structuring, as well as operational and
management practices vary significantly from generation to generation (UNCTAD,
1992). First and second generation ports, respectively relating to ship/shore and
industrial interfaces, operate bulk and break bulk cargo in a traditional manner, with the
second generation-type being reliant more on capital than labour. Third generation ports
are the product of the unitisation of sea-trade and multimodal cargo packaging (mainly
in the form of containers) which has led to the development of ports as logistics and
intermodal centres offering value-added services, with technology and know-how being
the major determining factors (Bichou and Gray, 2005). At the same time, the dynamic
definition and function of maritime cluster can be derived from the change in port
functions.
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Table 1 Maritime Cluster Classification Type 1 Type 2 Type 3 Type 4
Scope of activities
Cargo loading and
discharging, Cargo
storage and
distribution,
transportation
facilities,
navigational
service-Quay,
waterfront area
and distribution
channel
Logistics in value-
added processing for
cargo: initially
consolidating and
distributing products,
nearby industrial
processing,
combination,
grouping, packing
and commercial
marketing
Concentration and
distribution of factors
and production and
information, relating to
economic, financial,
technological,
communicational and
international trade
aspects
Variety of
maritime services
provided:
shipping services,
regulators,
industry
associations,
intermediate
services, support
services
Operation characteri-
stics
-Cargo flow
-Simple individual
service
-Low value-added
-Cargo
transformation
-Combined services
-Improved value-
added
-Cargo/information
distribution
-Multiple service
package
-Feature in
maritime services
-Operated by
highly advanced
human capital
Decisive factors
Labour/capital/Nat
ural conditions
Capital Technology/knowhow Knowhow
Main Functions
Cargo handling
and distribution
Value-added
processing
Key node in
global/regional supply
chains
International
maritime service
centre
Position of port in maritime cluster
-Conservative
-Changing point of
transport mode
-Expansionist
-Transport, industrial
and commercial
centre
-Efficiency oriented
-Integrated transport
centre and logistic
platform for international
trade
-Maritime service
oriented
-Varied positions
in different
maritime clusters
Current Examples
Dublin (Ireland), Selangor (Malaysia)
Antwerp (Belgium),
Kaohsiung (Taiwan),
Osaka (Japan)
Hamburg (Germany),
Hong Kong (China),
New York/New Jersey
(USA), Piraeus
(Greece), Rotterdam
(Netherlands),
Singapore, Shanghai
(China), Tokyo (Japan)
London (UK),
Oslo (Norway)
Source: authors
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In the first stage, maritime activities within maritime cluster focus on shipping and port -
cargo loading and discharging mainly. At the commercial level the different maritime
activities do not act together in unison, but make their decisions independently of how
other organizations in the same cluster will react. This was nevertheless quite natural at
the time of pre-containerization, since the commercial relationship between different
activities or the port was casual. Users were more familiar with individual sectors or
different port services, rather than with the maritime cluster in its entirety. As a result,
the main functions in the early maritime cluster are cargo handling and distribution.
London and Rotterdam were the pioneers of the first generation maritime cluster.
Around the Second World War, for example, New York and Hamburg played a big part
of it. Dublin in Ireland and Selangor in Malaysia at their current status (Brett and Roe,
2010; Othman et al., 2011) are considered in this category.
In the second stage, maritime cluster is the centre of cargo allocation and value-added
processing. It consolidates and distributes cargoes initially, including on the spot of
industrial processing, combination, grouping, packing and commercial marketing. It is
the typical centre of logistics and cargo allocation. Maritime activities in this stage are
also carried out in and around port of the second generation. In this category of ports,
governments, port authorities and those who provide port services have a broader
understanding of port’s functions. The port is regarded as a transport, industrial and
commercial service centre. Thus ports are allowed to undertake and offer industrial or
commercial services to their users, which are not directly connected to the traditional
loading/discharging activity. Based on a broader conception and management attitude,
port policies, legislation and development strategies are made. As a result, the scope of
port activities is extended to commercial or any other relevant service such as cargo
packing, marking and industrial services such as cargo transformation. Industrial
facilities are built up within the port area. Therefore, maritime cluster develops and
expands towards its hinterland with industries such as iron and steel, heavy metallurgy,
refineries and basic petrochemicals, aluminium, paper pulp making, fertilizers, sugar
and starch, flour milling and various agro-food activities. The second generation
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maritime cluster is not only a transport centre but also industrial and commercial centre.
Second generation maritime clusters enjoy a closer relationship with transport and trade
partners who have built their cargo transformation facilities in the port area. The second
generation maritime clusters also have a closer relationship with the municipality since
they are more dependent on the surrounding city as regards land, energy, water and
manpower supply as well as the land transport connection systems. Therefore, the
second type maritime cluster is regarded as a cargo allocation, logistics and value-
added processing centre. For example, in this period Hong Kong and Singapore were
the creators of this type, followed up with New York, Rotterdam and London (De Langen,
2002; Fisher Associates, 2004; Maunsell Consultants, 2003), which completed the
function transition to this new era, whilst Antwerp and Kaohsiung are current examples.
World trade changes its pattern and develops in depth and in dimension. The multiplicity
of world trade centres calls for an extensive transport network. A greater variety of
transport services should be provided to link the whole world trade complex consisting
of big, medium and small centres. The third generation maritime clusters emerged in the
1980’s, principally due to world-wide large scale containerization and intermodalism
combined with the growing requirement of supply chain management. A network
expansion is the first requirement of this new trade pattern. The important characteristic
in the third stage is integrated resources allocation. It integrates not only products but
capital, information and technology as well. When international trade is involved not only
before and after production but during the whole production process, maritime cluster
assumes a very special role, especially, being an important part of global supply chain,
it has the capacity for information processing and distribution. With various kinds of
resources, it engages actively in the international flow of factors of production. Maritime
cluster is regarded as the supply chain hub in global/regional economic and trade
market, enjoying largely the economies of density and scope by the effect of hub-and-
spoke system. Rotterdam, Hong Kong and Singapore are the leaders of this generation
(Janssen, 2006; Maunsell Consultants, 2003).
In the 1990s, the fourth-generation port concept was proposed which was physically
separated but linked through common operators or through a common administration. It
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is mainly the result of the recent vertical and horizontal integration strategies undertaken
by transport operators. However, this time maritime cluster has its new function as a
maritime service centre, so-called the international maritime centre. The details are
discussed below.
2.2 Formation of international maritime centre
The wide range of maritime cluster is as such that it can be viewed as making up of
several subsets. Taking London the world’s biggest maritime services centre as an
example, the maritime services cluster is shown in figure 1. Thus we define maritime
services to include an interconnected supply chain that covers several distinct activities:
Shipping, Intermediate Services, Maritime Governance and Regulation, Support
Services, and Industry Associations.
Fig. 1 Overview of the Maritime Services Cluster in London
Source: Fisher Associates (2004), p.14.
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Some of the intermediate services (specifically those related to marine insurance,
maritime law, and shipping finance) each form a niche market for a subset of the
financial services cluster in London. The port and physical cargo handling do not play a
major role in maritime services cluster. The focus is rather on knowhow which is high-
value and the most difficult to be imitated by competitors.
2.3 World famous maritime clusters
Maritime clusters come in a wide variety of forms depending on the mix of maritime
activities that make up the cluster and their relative weights within the cluster. According
to the analysis on the changing functions of maritime cluster, we can find different
maritime clusters show their generation characteristics differently. London falls into the
fourth-generation category, retaining the leading position. This section studies on
London and other maritime clusters identified as (potential) competitors to the London
maritime cluster. The (potential) competitors to the London cluster are primarily those
that have maritime services as a principal feature of the cluster, or that wish to expand
maritime services as a strategic objective. It is noted that not all maritime clusters as yet
identify themselves as maritime services centre. Several have yet to establish cluster
level institutions to provide support across the maritime activities that constitute the
cluster (Fisher Associates, 2004).
Based on the definition in Section 2.2, the competitive advantages of sixteen maritime
sectors on which to base this exercise are compared in Table 2 - Port, Marine insurance,
Ship Finance & Related Services, Ship registry, Shipowners, Operators & Managers,
Classification Society, Ship Agency and Forwarding, Shipbrokers, Maritime Legal
Services, Ship building and repair, Marine Personnel, Maritime Research, Education
and Training, Information and Communication Technology (ICT) Services, Maritime
Organisations /Associations, Maritime Culture and Heritage and government supporting.
Disadvantages comparison is shown in Table 3. Both tables are derived on the basis of
thorough review of literature and secondary sources, such as Fisher Associates (2004)
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and Hamburg: Wijnolst and Janssens (2006); Hong Kong: Maunsell Consultants (2003);
London: Brownrigg (2006), Dong (2010); New York/New Jersey: ; Oslo: Benito et al.
(2003), Wijnolst (2003), Jakobsen (2006), Reve (2009), Isaksen (2009); Piraeus:
Grammenos and Choi (1999); Rotterdam: De Langen (2002), Nijdam (2003), Wijnolst
(2003), Janssens (2006); Shanghai: Lam and Cullinane (2003); Singapore: Wonga
(2006) ; Tokyo: Shinohara (2006), Shinohara (2010), etc.
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Table 2 Comparison of world famous maritime clusters
Note: “Ο” denotes maritime clusters have the competitive advantages in the particular aspects.
Source: Authors.
Maritime advantages Hamburg Hong Kong
London New York/ New Jersey
Oslo Piraeus Rotterdam Shanghai Singapore Tokyo
Port Ο Ο Ο Ο Ο Marine insurance Ο Ο Ο Ο Financial service Ο Ο Ο Ο Ο Ο Ο Ο Ship registry Ο Ο Ο Ο Ο Ο Shipowners, Operators & Managers Ο Ο Ο Ο Ο Ο Ο Ship classification society Ο Ο Ship agency and forwarding Ο Ο Ο Ο Ship brokers Ο Ο Ο Legal services Ο Ο Ο Ο Ship building & repair Ο Ο Ο Ο Marine personnel Ο Ο Ο Research , education & training Ο Ο Ο Ο Ο Ο Ο Ο Information and communication technology (ICT) Services
Ο Ο Ο
Ο Ο
Ο
Regulators: Maritime Organisations / Associations/exchange market, etc.
Ο Ο
Ο
Ο
Governmental support Ο Ο Ο Maritime culture and heritage Ο Ο Ο Ο Ο Ο
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Table 3 Maritime cluster threats and disadvantages
Famous maritime cluster
Threats and disadvantages
Hamburg • Relative remoteness in geographical location • Poor access (eg. No. of intermodal connections) • Restriction beyond a regional presence
Hong Kong • Concern of being inhibited by government • Port competition from mainland China
London • The balance of shipping business now exists in Far East • High property and salary costs • Overall transport infrastructure • Unfavourable UK tax measures • Insufficient support from government
New York/ New Jersey
• Insufficient capacity in port infrastructure • Slowing growth of US economy
Oslo • Relatively small scale • Insufficient internal competition to drive quality and efficiency in
services
Piraeus • Not being supported by cluster policies or initiatives • Lack of international base of shipping companies, though a large
Greek shipping centre • Not having a reputation of major shipping operators
Rotterdam • Absence of a large financial services sector
Shanghai • Not much value in short term to as a cluster analysis
Singapore • Hampered by protectionist policies in legal services sector • Corporatist does little to engender a risk-taking commercial
culture
Tokyo • Insufficient platform of maritime information and intelligence • Weak influencing of maritime trading marketing
Source: Authors
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Based on tables 1 to 3 and port status in the various maritime clusters, the classification of maritime clusters can be carried out by the influences of their ports. The categorisation is shown in Table 4.
Table 4 Maritime clusters with/without strong port support
With/Without strong port support Typical world famous maritime clusters
With strong port support Hong Kong, Rotterdam, Hamburg, Singapore, Shanghai
Without strong port support London, Oslo, Piraeus Source: Authors.
3. Case studies of port in maritime cluster
Based on the above discussion, port plays an important part in the whole development
process of maritime cluster, though there are some famous maritime clusters without
port as a prior advantage in its development, such as Oslo. As such, port contribution to
maritime cluster development is an interesting research question which needs to be
compared and further studied.
3.1 Contribution of port in maritime cluster
At the early stage of maritime cluster, maritime activities focus on port production.
Therefore, the port has almost absolute contribution to maritime cluster earnings. With
the change in maritime cluster functions, maritime service activities are increasing. Port
production is not the only or majority of earning resources. The following section takes
maritime clusters of London and Hong Kong as case study to research on the
development relationship between port and maritime cluster.
3.1.1 Case of London
The UK is the leading centre worldwide in the supply of a broad range of professional
and business services to the international maritime community, that are largely
concentrated in London. According to the IFSL (2011) report, London and the UK is a
leading source of capital and expertise for marine insurance, ship-chartering, shipping
finance, ship classification, legal and accounting services and dispute resolution. In
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addition there are a wide range of other skills and facilities based there. Table 5 shows
the increasing international market share of London’s maritime services. Table 6
indicates the rising trend in employment number of maritime service cluster in London,
followed by Table 7 and Fig. 2 which show the overseas earnings of maritime service in
London.
Table 5 International market share of London maritime services (%)
Maritime service category Year 1999
Year 2004
Year 2006
Year 2008
Year 2010
Ship finance 18 17 18 13 15 Insurance - underwriting 19 15 23 17 20 Insurance – P&I Clubs 71 67 65 62 62 Lloyd’s Register 20 19 19 18 16 Tanker charting(estimates) 50 50 50 50 50 Dry bulk chartering (estimates)
30-40 30-40 30-40 30-40 30-40
Second hand tonnage(estimates)
50 50 50 50 50
Source: IFSL (2000, 2005, 2007, 2009)
Table 6 Employment of London maritime service cluster (Person)
Maritime service category Year 1999 Year 2004 Year 2007 Year 2009 Shipbrokering 4000 4498 5000 5000 Ship classification 1300 1734 1700 3000 Insurance service 3700 3030 2950 2950 Law firms 2600 2350 2050 2050 Banking 400 400 200 200 Other service 1800 2050 2400 2400 Total 13800 14062 14300 15600 Sources: IFSL (2000, 2005, 2007, 2009)
Table 7 Overseas earnings of maritime service in London (£m)
Maritime service category
Year 1999 Year 2002 Year 2004 Year 2008 Year 2010
Ship brokering 293 322 551 948 744
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Ship classification 47 54 75 72 70 Insurance service 160 170 170 195 472 Legal service 190 190 180 205 208 Ship finance 100 150 170 500 662 Other services 140 160 155 180 60 Total 930 1046 1301 2100 2216 Sources: IFSL (2000, 2003, 2005, 2009, 2011)
Fig. 2 Overseas earnings of maritime service in London (£m)
Sources: IFSL (2000, 2003, 2005, 2009, 2011)
As shown in Table 7 and Fig. 2, the growth of total overseas earnings from maritime
service sectors in London is tremendous in the past decade, more than two times of
earnings in year 1999 comparing with 2010. Ship finance enjoyed a more than six-fold
growth, while there is approximately three times increase in earnings from insurance
0
500
1000
1500
2000
2500
1999 2002 2004 2008 2010
Ship brokering
Ship classification
Insurance service
Legal service
Ship finance
Other services
Total
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and about two times from brokering in the same period. However, when maritime
services cluster is developing rapidly in London, Port of London does not behave as
prosperous as many maritime service sectors. We see the stagnation or even tiny
downswing of freight handled by Port of London in Fig. 3, contrasting with the
background of enhancement in the international trade and port throughput worldwide.
Fig. 3 Freight handled by Port of London (mt)
Source: DfT Port Statistics, UK (9 June 2011).
The key finding of the above analysis is that, from the experience of London case, the
port does not lead the development of maritime cluster any more. Port is not the main
factor contributing to the maritime cluster in the advanced stage of cluster development,
comparing with the former stages.
3.1.2 Case of Hong Kong
Hong Kong is one of the world’s major container ports and its maritime industry is
estimated to contribute to 2.5% of its GDP. The analysis of maritime business
development in Hong Kong, based on data availability, is about the number and gross
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
All freight traffic through Port of London: 1965‐2010 (thousand tonnes)
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tonnage of ships registered in Hong Kong and authorized insurers - underwriting results
of ship business (see tables 8 and 9 and figure 4).
Table 8 Number and Gross Tonnage of Ships Registered in Hong Kong
At the end of year
No. of vessels Gross tonnage
('000 tons)
No. of vessels Year-on-year change (%)
Gross tonnage Year-on-year change (%)
1993 597 7751 2.4% 5.9%
1994 592 8003 -0.8% 3.3%
1995 582 8890 -1.7% 11.1%
1996 544 7877 -6.5% -11.4%
1997 484 5658 -11.0% -28.2%
1998 479 6213 -1.0% 9.8%
1999 521 8338 8.8% 34.2%
2000 577 10397 10.7% 24.7%
2001 653 13726 13.2% 32.0%
2002 758 16230 16.1% 18.2%
2003 880 20604 16.1% 26.9%
2004 1009 25565 14.7% 24.1%
2005 1085 29798 7.5% 16.6%
2006 1150 32529 6.0% 9.2%
2007 1227 35697 6.7% 10.6%
2008 1361 39643 10.9% 10.2%
2009 1496 44904 9.9% 13.3%
2010 1735 56510 16.0% 25.8%
Source: Summary Statistics on Shipping Industry of Hong Kong, 2011(3)
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Fig. 4 Gross tonnage from year 1993 to year 2010 (‘000 tons)
Source: Summary Statistics on Shipping Industry of Hong Kong, 2011(3)
Table 9 Authorized Insurers in Hong Kong - Underwriting Results of Ship Business
Year-on-year change (%) 2002 2003 2004 2005 2006 2007 2008 2009 2010 Gross premiums 15.2 1.6 19.3 4.8 16.8 2.2 32.4 -11.6 23.7 Net premiums 45.7 1.3 15.1 3.6 21.2 -0.1 40.3 -18.1 30 Gross claims paid -42.7 21.8 26.9 2.3 -12.4 159.5 -45.3 11.5 -19.2 Net claims paid -57.6 92.4 -2.2 38.7 -13.7 65.4 -33.9 11.8 -9.5 Net claims incurred 124.1 6.2 -33.5 81.7 -13 35.9 -2.4 -0.2 22
Source: Summary Statistics on Shipping Industry of Hong Kong, 2011(3)
Table 10 shows the port’s cargo throughput ranging from year 1993 to year 2010.
Based on the figures of port and typical maritime services in Hong Kong, such as
number and gross tonnage of ships registered in Hong Kong and the authorized
insurers in Hong Kong - underwriting results of ship business, figure 5 summerises the
year-on-year percentage change of these indexes.
0
10000
20000
30000
40000
50000
60000
Gross tonnage ('000 tons)
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Table 10 Seaborne Cargo Throughput
Year Discharged Loaded Total seaborne cargo
throughput ('000
tonnes) Year-on-year
% change ('000
tonnes)Year-on-year
% change('000
tonnes) Year-on-year
% change
1993 68 226 +15.8 27 873 +13.7 96 100 +15.21994 76 672 +12.4 34 274 +23.0 110 947 +15.41995 87 048 +13.5 40 127 +17.1 127 175 +14.61996 86 694 -0.4 39 145 -2.4 125 838 -1.11997 91 950 +6.1 41 351 +5.6 133 301 +5.91998 90 104 -2.0 37 378 -9.6 127 482 -4.41999 88 621 -1.6 39 601 +5.9 128 222 +0.62000 88 003 -0.7 42 934 +8.4 130 937 +2.12001 88 506 +0.6 42 170 -1.8 130 676 -0.22002 93 444 +5.6 44 857 +6.4 138 301 +5.82003 99 363 +6.3 49 255 +9.8 148 618 +7.52004 104 612 +5.3 54 006 +9.6 158 617 +6.72005 106 695 +2.0 54 772 +1.4 161 467 +1.82006 106 579 -0.1 59 629 +8.9 166 208 +2.92007 109 435 +2.7 67 912 +13.9 177 347 +6.72008 110 220 +0.7 69 755 +2.7 179 974 +1.52009 105 612 -4.2 55 979 -19.7 161 591 -10.22010 114 447 +8.4 67 557 +20.7 182 004 +12.6Source: Census and statistics department (2011)
It can be seen that total seaborne cargo throughput in Hong Kong is not increased as
much as ship gross registered tonnage and ship insurance business, but more steady
than the other businesses.
From the case of London maritime cluster, it can be found that port throughput is
encountering a downturn in the past few years, which contrasts sharply with the
tremendous increase of earnings in many maritime service sectors. It also sees the
changing positions of Port of London and maritime service sectors. Port of London used
to be the world main and leading port. However, the leading position of the port has
disappeared, and is replaced by maritime service business instead, which is
approximately 50% of oversea earnings in the world. The port no longer plays the key
role in maritime cluster development in London.
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Fig. 5 Year-on-year % change of port throughput (tonnes), gross registered tonnage
and ship insurance business
Source: Drawn by authors based on Census and statistics department and Summary
Statistics on Shipping Industry of Hong Kong, 2011(3)
‐100
‐50
0
50
100
150
200
2002 2003 2004 2005 2006 2007 2008 2009 2010
Gross premiums Net premiums
Gross claims paid Net claims paid
Net claims incurred Gross tonnage
Total seaborne cargo throughput
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In the case of Hong Kong, according to the past tendency, it can be deduced that
dynamics of Hong Kong maritime cluster are driven by both maritime service sectors
and the port. Port of Hong Kong is still one of the leading sea ports in the world, but with
relatively stagnant throughput movement, comparing with the vibrant maritime service
sectors. It seems that the port’s significance to the cluster’s development is relatively
lower than earlier years.
By comparison of maritime clusters in both London and Hong Kong, it can be found that
port is not necessarily the leading influencing factor to maritime cluster development
nowadays. Based on the analysis of the maritime cluster evolution in section 2.1, some
world-famous maritime clusters such as Hong Kong are entering the new generation.
The new era of maritime cluster features maritime service provider and intelligence
capability, It takes over port’s leading position of being the unique or main determinant
of maritime cluster development.
3.2 Coordinated development between port and maritime cluster
The above statement is based on conceptual development and qualitative analysis on
port and maritime cluster. As the result shows, port’s significance is diminishing as a
maritime cluster advances to become more service oriented. It would be interesting to
know what a proper development degree between these two systems is. The following
part carries on the discussion on the measurement of the coordinated development
between port and maritime cluster in a quantitative way.
3.2.1 Evaluation model selection
From above analysis, we can see that the prompting effect of port on maritime cluster is
changing. Questions concerned here are whether the impact of input and output of the
two systems are coordinated and whether the impact of the input is evident (Liu et al.,
2010). Aiming at the problems, based on some famous maritime clusters as the
research scope, the study selects port and maritime cluster as Decision Making Units.
By analysing input and output data from these two systems, we are able to evaluate the
23
coordination development and efficiency validity of support and utilization between
these two systems.
Data analysis techniques used in port research are mainly descriptive statistics (35.5%),
regression (16.9%), DEA (10.2%), Logit model (5.1%) and SFA (4.8%) (Woo, et al.
2011). These techniques, such as DEA, SFA, Logit model, Multi-Criteria Decision
Making (MCDM), Error Correction Model (ECM) and Structural Equation Modelling
(SEM), have more specific purposes and usages than descriptive statistics. The
comparison of these methods is listed in Table 11.
Table 11. Comparison of data analysis techniques used in port research
Data analysis
technique Functions Examples
DEA & SFA
• Assess the relative efficiency of port
operations
• Evaluate the consequence of port reform
• Evaluate the impact of regulation on port
efficiency
• Cullinane and Wang, 2007
• Cullinane et al., 2002; Cullinane
et al., 2005
• Barros, 2003; Ferrari and Basta,
2009
Logit model
• Traditionally determine or predict demand for
freight and passengers in transport
economics, using a discrete choice approach
• Demand analysis for port services
• Frequently in port selection studies
• Winston, 1985
• Anderson et al., 2009; Veldman
et al., 2005
• Garcia-Alonso and Sanchez-
Soriano, 2009; Magala and
Sammons, 2008; Malchow and
Kanafani, 2001, 2004; Tongzon
and Sawant, 2007
MCDM
Evaluate competitiveness of particular ports
and to develop strategies for competitiveness:
• Analytical Hierarchical Process (AHP)
• PROMETHEE
• Lirn et al., 2003, 2004; Ugboma
et al., 2006
• Castillo-Manzano et al., 2009;
Guy and Urli, 2006
24
• Technique for Order Performance by
Similarity to Ideal Solution (TOPSIS)
• Gray Relation Analysis (GRA)
• Hierarchical Fuzzy Process (HFP)
• Celik et al., 2009
• Teng et al., 2004; Huang et al.,
2003
• Yeo and Song, 2006
ECM
• Estimate both short term and long run effects
of explanatory time series variables
• Forecast by predicting short-run adjustments
of the dependent variable
• Determine relationships between the
variables, such as inter-port dynamics
• DeBoef, 2001
• Fung, 2001; Hui et al., 2004
• Yap and Lam, 2006
SEM
• Take a confirmatory approach to the analysis
of a structural theory
• Examine the channel relationship
• Examine the impact of people’s perception on
performance
• Examine and the Technology Acceptance
Model (TAM)
• Byrne, 2001
• Bichou and Bell, 2007; Lai et
al., 2008
• Shang and Lu, 2009
• Norzaidi et al., 2009
Source: Compiled by authors, according to references of Lin and Tseng (2005) and
Woo et al. (2011).
As shown in the table above, there are two techniques - SFA and DEA, to measure port
efficiency. The measurement of efficiency can be applied in the study of coordination
development and efficiency validity. However, there are some differences to be
considered when adopting the proper method. By comparing the advantages and
disadvantages of the two methods, DEA is adopted. It is mainly because SFA needs to
assume functional form and distribution type in advance, which is difficult to be applied
in the research of maritime cluster.
3.2.2 Application of DEA model
25
The paper proposes to use the DEA method to evaluate the coordination between port
and maritime cluster development, which is to evaluate the validity of support and
utilization between the two systems. The development of the port might promote
maritime cluster, and vice versa. Therefore, the two systems as input and output
respectively can be counted as a big input-output system. When taking port as the input
system, DEA validity evaluation is to evaluate whether port accommodates to the
demand of maritime cluster development, as well as whether port strongly supports the
cluster’s progress. When maritime cluster is the input system, it is to measure whether
the cluster has powerfully supported and utilized maritime cluster system.
The suitability of the chosen inputs and outputs is a key concern. In terms of the
approaches towards the selection of input and output variables for port, they can be
classified into two categories according to whether a monetary parameter should be
used or not (Panayides et al., 2009) and such reference can be drawn from the
literature. Though there is no research on maritime cluster inputs or outputs in DEA
method, it can be derived from the relationship between port and city when considering
and choosing the variables of inputs and outputs for maritime cluster, since maritime
cluster is one of the industry clusters within a region economy. According to Li and Lu
(2009), fixed assets investment amount and number of employees are selected as
maritime cluster inputs, with GDP and total sales of retail trade as port city output,
Besides, Liu et al (2010) takes GDP, investment in fixed assets and social retail goods
as variables of economy society. Based on the prior research and maritime cluster
characteristics, such as internationalism, we propose the variables for port and maritime
cluster, as shown in Table 12.
Here CCR input-oriented model in DEA approach is proposed in the port and maritime
cluster development evaluation model, with the objective of focusing on how many
inputs can be reduced by maintaining the same level of output by providing information
purely on technical and scale efficiency. In this way, relationships such as whether the
development of port is coordinated with maritime cluster can it be identified.
26
Table 12 The variables in DEA model
Variables References
Port
Number of employees( 1x )
Roll and Hayuth (1993); Martinez-Budria et al. (1999) – labour expenditure; Tongzon (2001); Barros (2003); Barros and Athanassiou (2004); Liu et al. (2010)
Number of Productive Berths ( 2x )
Barros (2003); Park and De (2004); Barros and Athanassiou (2004)
Cargo Throughput(x3)
Martinez-Budria et al. (1999); Tongzon (2001); Valentine and Gray (2001, 2002); Barros (2003); Park and De (2004); Barros and Athanassiou (2004); Min and Park (2005)
Maritime cluster
Total Investment Amount( 1y ) Barros (2003, 2006); Liu et al. (2010)
Total Number of Employees ( 2y )
Roll and Hayuth (1993); Martinez-Budria et al. (1999) – labour expenditure; Tongzon (2001); Barros (2003); Barros and Athanassiou (2004); Liu et al. (2010)
GDP from maritime cluster ( 3y )
Park and De (2004); Barros (2006); Liu et al. (2010)
Overseas earnings ( 4y )
Source: Authors.
CCR model assumes there are n Decision Making Units (DMU) and each of them has m
types of input (the consumption of resources) and s types of output (the effect of the
input). When taking port as the input, the relative efficiency is represented by Pθ , which
stands for the degree of closeness between actual effective rates of port development
scale and technology and the requirements of the maritime cluster development. The
size of value refers to the adaptability of the port to maritime cluster development. On
the other hand, when taking maritime cluster as input system, the relative efficiency is
represented by Mθ , which stands for the degree of closeness between actual effective
rates of maritime cluster supporting and utilizing port and the requirements of to
27
maritime cluster. Using weighted method on Pθ and Mθ , p p m mθ λ θ λ θ= + ( + 1p mλ λ = ), λ
stands for the linear combination’s coefficient of the DMUs. The index θ represents the
coordination of the whole system. It can combine the two indexes of relative efficiency,
and preferably evaluates the coordination degree of port and maritime cluster.
4. Conclusions
The paper studies the influence and contribution of port on maritime cluster
development. It thoroughly develops an original maritime cluster connotation, especially
in the aspects of its formation and relationship with the port within it. Then, it
summarizes maritime cluster development evolution from the perspective of dynamic
port functions. Based on this relationship with port, it categorizes world-famous maritime
clusters into two parts - with/without strong port throughput support. One typical case of
maritime cluster from each of these two groups - London and Hong Kong, is selected
and analysed. In each case, the paper studies the development trends and positions of
maritime sectors within a cluster. It is found that port is not the only main influencing
factor in the advanced generation of maritime cluster, which is recognized as
international maritime cluster with the main function of maritime services centre. In order
to take further analysis as to what extent this coordination development relationship
between port and maritime cluster should be maintained, the study proposes DEA
model to evaluate the two systems. With this method, it provides the reference for
maritime clusters, which are on their way to be international maritime centres, to handle
the development relationship with ports.
This research findings presented are based primarily on evidences from the changing
functions of maritime clusters and case analysis of London and Hong Kong. For the
maritime cluster evolution based on changing port functions, future research can apply
the DEA model for detailed analysis. Future studies could also take into account other
maritime sectors that might be identified as important influencing factors to maritime
cluster development. Besides, maritime service sectors analysed in London and Hong
28
Kong cases are part of maritime service provided in their clusters. Hence, future
researchers could also choose more comprehensive sectors into maritime cluster
analysis, to compare and evaluate the relationship between port and maritime cluster.
What is more, the unique characteristic of each maritime cluster might have its own
dynamic development path with port, which is different from London or Hong Kong.
Future researchers could take steps on different classification of maritime clusters to
make the relationship with port more precisely. As a whole, the paper presents a useful
reference for research and policy suggestions on the interplay between maritime cluster
and its port development for maritime cities and regions en route to higher value
generating IMCs.
29
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