Encyclopedia of Transportation: Social Science and Policy

CONTAINER TERMINALS

Athanasios A. Pallis

A container terminal is the set of facilities at a port devoted to the loading and unloading of
containers through autonomous operations. One or more of these terminals exist in a cargo port
that engages in the transfer of containerized goods and is referred to as a container port.
Container terminals represent a recent perspective of serving maritime transportation.
They appeared the last 40 years due to the increasing use of the standardized box that can hold
about twenty tons in weight and can withstand having five full containers stacked on top of it.
Before 1970 only the New York Port Authority and the ports of Rotterdam and Singapore had
invested in building and operating specialized container terminals.
Today, specialized container terminals are found in all seaports that serve international
trade. They lift more than 50 million containers per year around the globe, as over 90 per cent of
international non-bulk trade travels in containers, including cargoes that were previously
considered not suitable for containerization. Containers handled are either full or empty ones.
The latter account for more than 20 per cent of the global container port throughput. More than
100 ports handle over one million TEUs (twenty feet equivalent unit) per year, with two or more
container terminals operating in the vast majority of them. Annual throughput in nine ports in
Asia and in Rotterdam exceeds 10 million TEUs.
The transhipment (ship-to-ship) concept, and the increasing transportation of intermediate
goods along supply chains are driving forces for the rise of container handling, the operational
restructuring of this handling, and the specialization of container terminals.
The modern container terminal is generally found in one or both of two types of ports.
The transhipment hubs are designed to optimize the transfer of containers from one maritime
vessel to another between networks of long distance and/or short distance (feeder) shipping
services. While they are not directly associated with a direct hinterland, an indirect one does
exist. The gateway ports are designed to service the needs of local, regional and sometimes large,
inland populations. They may transfer its cargo to an inland terminal to service its significant
distant markets, or may transfer cargo to local distribution or transload centres for further on
carriage. A distribution centre usually involves warehousing materials until needed while a
transload centre specialises in cross-docking the contents of sea-going containers into domestic
trailers and the reverse, to serve both a sorting function and the freeing up of marine containers
for reuse near the port.
Some terminals may provide both gateway and transhipment services. Others are feeder
terminals, where containers may arrive from either of the other two port types, but these are
generally run using older equipment and the emphasis is on servicing the local population and
the captive hinterland. Such feeder operations may handle a mix of containers and trailers on a
single vessel, and the speed of terminal operations is not of paramount concern.

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 The success of container terminals is the outcome of the quality of their infrastructure and
services, the operational productivity within terminal cargo handling, an efficient interface with
inland transport systems, and their integration in modern supply chains.

Operating Container Terminals

The growing quantities, along with the increased size of containerships, which almost doubled
within the first decade of the 21st century, imply investments in infrastructures and dredging to
enable container ports to serve larger vessels. Berth and channel depth have become more
important, and berth length is more crucial to servicing sea-going container flows.
They are also associated with a fundamental change in container terminal operations, as
new generation yard equipment modern cranes offer terminal berth productivity improvements.
Competitive container terminal facilities provide capital-intensive cranes able to manage as
many lifts per hour, or the capability to lift more than one boxes side by side at one time, as
containerships do not have onboard cranes as bulk-carriers do. Important pieces of yard
equipment include rubber-tyred gantries and straddle carriers to pick up or drop off containers
over stacks dockside to and from nearby container stacking areas, thus being the last, or first,
link in a container terminal, and container rail-mounted gantry cranes that position containers
along a linear stacking yard. Technological advancement lead to the introduction of automatic
guided vehicles used for grounded container operations. The latest models of the latter aim to
ensure the required performance and improved reliability in combination with reduced fuel and
maintenance costs. An example of them are the electrically driven diesel hybrid automatic
guided vessels that are already in use, for instance at the ECT Delta terminal in Rotterdam.
As machines carry containers, and technological advancements allow for almost full
terminal automitisation, labour and of once powerful port labour organizations, have seen their
numbers role and influence diminish at the expense of the role of capital.
The productivity of the modern container terminal is highly dependent on the layout of
terminals as well. Ample storage space to stack containers dockside, berths designed to
accommodate for quick ship turnaround are important for effective dockside operations between
the ship, the crane and the container storage areas. The structure and configuration of container
handling operations change container terminals that tend to occupy more space for moving,
storing, temporary or not, and providing value added facilities at containers and the goods
transported within them.
Most important is the way that the container terminal operators manage these yards. As a
buffer between the containership and the hinterland, the yard of the terminal, needs to resolve
operations at berth, movements within the terminal, complex stacking processes, unforeseen
situations, like repositioning of several containers, randomly pick ups by customers, delayed
containership arrived. Landside operations go well beyond the unloading and storing of full and
empty containers, not least because containers terminals serve the only transport system that
allows shipment to be used by ship, rail and road modes of carriage. Trains and trucks operate
within or nearby the yard, and the smooth integration of the various modes is key to a terminal
competitiveness. The common practice is the handling of quantities of containers through
sophisticated electronically applied and monitored operations linked with supply chains.
To avoid disorganised development of container terminal facilities and allow a prompt
response to changing demand, planning is as flexible as possible. This planning aims to enable
anticipation of different scenarios, thereby minimising the risk of losing markets and enhancing
port profitability. It is used to resolve problems arising from both foreseen and unexpected

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situations, such as greater demand, new port policies, greater competition, the loss or
incorporation of areas with or without equipment, and interruptions to terminal access. Along
with other factors traditionally included in the calculation of port terminal capacity, container
terminal planning is commonly dynamic so as to facilitate adaptation to variations in demand and
unexpected situations that along with forecasting difficulties mark the container market.
One of the first tasks when planning a terminal is to determine port demand and capacity. For
the estimation of capacity, one needs to determine what may be expected at the port berth and
others for storage capacity. In the case of an import container, capacity is calculated from the
time the container is unloaded to the time it leaves the port i.e. it is equivalent to the capacity to
unload a container, have it remain for some period in the yard and eventually exit through the
gate. For an export container, the steps are similar but in reverse and, for a transhipment
container, capacity involves loading and unloading the container plus its stay in the terminal.

Integration in supply chains

Container terminals are increasingly elements in value-driven chain systems not simply places
with particular functions. With shippers transporting vast quantities of final and intermediate
goods, opening the box within nearby terminal locations, or even within the terminal, is as
crucial as the efficient and effective operational integration of container terminals in multimodal
transport chains that allow the provision of value added services and logistics at locations where,
for example, inland depots and logistics related service providers exist. The terminal captures
value for itself and for the chain (i.e. shippers, third party service providers), maritime companies
demand further services specialization within the port area, and firms providing port or value
adding services and logistics are interested in the development of logistics pathways in which the
terminal is embedded.
Container terminals are thus associated with a growing number of stakeholders. The
relevant cluster involves multiple actors who are involved within the supply chain, and the
operation of all of them conditions port competitiveness. This implies a change in port
governance, with port authorities that had acted as a landlords of private operated terminals only,
assuming a more active role in networking these actors, in resolving collective problems, like
port marketing, and in promoting the interest of all those involved in the relevant container
terminals cluster that operates within a given port.
All the above have led to the spatial and functional expansion of the activities of the
container terminals, as well as those economic and operational activities related to it, a process
described by Notteboom and Rodrigue as hinterland and foreland ‘port regionalisation’. The
latter associates container terminals with economic growth, yet it generates several challenges in
the relations with port-cities that see port terminals seeking further expansion of their activities
the more competitive they are; in turn generating a number of negative externalities such as noise
pollution, and usage of scarce land space.

Terminal entry
The changes in the organisation of container handling resulted in the transformation of port
governance. A key move is the progressive entry of private terminal operators, an opportunity for
entry and rise of international terminal operators. This implied a fundamental shift in the concept
of port, from one whose operations are coordinated and controlled by a public agency whose
actions are shaped by local and regional interests to one that is made up of independent terminals

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whose activities are determined by the commercial interests of its international long-term lessors
– a shift termed by Slack as ‘the terminalisation of seaports’.
The acquisition of a concession to provide terminal services, along with variable
commitments to infrastructure building, is the dominant mode of private entry in all continents.
Governments, or port authorities, commonly retain the initiative of planning.
The awarding concession procedures differ between regions, within countries, even
within a given port. In Europe and USA, where port authorities transfer the rights to provide port
services to the private sector, dual practices exist as calls for tenders for a new terminal are
combined with direct talks with incumbents, whereas corporatization and listing of the seaport in
the Stock Exchange is seen as a precondition in some cases. In the booming ports in China
public-private joint ventures involve public sector operators that retain a share of at least 75%
and foreign investors.
Different types of container terminals emerge as regards the responsible operator. Some
remain public or state run, with facilities used by all commonly on a first comes first served
basis. Others operate by terminal operators that invest directly in operation, handling facilities,
and when applicable the construction, of the terminal. Stevadores, the companies that act as
terminal operators, expand into new markets to replicate their expertise in terminal operations
and to diversify their revenue geographically. Port of Singapore Authority (PSA) is the largest
global terminal operator coming from a stevedore background. Similarly, shipping companies,
either alone or in collaboration, also operate container terminals. These terminal facilities operate
on a single-user dedicated base, where major shipping lines sign long-term contracts for using
the terminals exclusively, or alternatively are open to third shipping lines. In many cases hybrid
structures are formed with separate business units or sister companies active in terminal
operations. APM Terminals, a sister company of Maersk, is the largest global terminal operator
from this background. Joint venturing of carriers and terminal operators also exist, whereas there
are fewer partnerships among the shipping lines that have multi-user long term contracts to share
out the terminal usages.
Ports witnessed the emergence of international terminal oparators operating a global
portfolio of container terminals across various ports, regions or countries. In the 1990s carriers
and terminal operators doubled their involvement into terminal management. Since then,
international terminal operating companies continued to take a bigger share of the global
container handling market at the expense of both family-controlled stevedores and state-owned
enterprises.
In the last decade they were joined by the various financial interests ranging from
investment banks, retirement funds to sovereign wealth funds attracted by the port container
terminal sector as an asset class and for revenue generation potential. The majority has an
indirect management approach; acquiring an asset stake and leaving the existing operator take
care of the operations. Others manage directly the terminal assets through a parent company, an
example that marks the extent of this financ being Dubai Ports World (DP World), a branch of
the Dubai World sovereign wealth fund, marking the extent of that financialisation trend.
Today the four major container terminal operators, Port of Singapore Authority
Corporation (PSA), Hutchison Port Holdings (HPH), Dubai Port World (DP World) and APM
Terminals handle 46% of global container trade and the 10 major ones approximately 65% of
world container traffic; whereas a decade ago they handled 45% only. The extent of this presence
is such that challenges the contestability of the container terminals market.

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 These trends chaged the nature of the competition between container terminals and the
ports that host them. The competition between ports in different locations for the handling of
containers, commonly termed as inter-port competion, is now accompanied by intra-port
competition, a situation where two or more different terminal operators have jurisdiction over
respective terminal areas, for berth to gate, within the same port are vying for the same market.
In bigger ports, for example Hong-Kong, it takes the form of intra-terminal competition with
companies competing to provide the same services within the same terminal.
Responding to market development port policies with reference to container terminals
developed. The emphasis on the integration of ports to multimodal transport networks. It is also
on the facilitation of intra-port competition that allows for operational flexibility, and inovation
and limits excess rent seeking by those operators mantaining monopoly posititions. With few
exemptions, port authorities develop policies to promote it whenever the scale of the operation is
of a scale that allows more than one terminal operator to be active in a specific port.

Athanasios A. Pallis
University of the Aegean, Greece

See Also:
World Container Ports, Containerization/Container Shipping, Ports and Harbors; Global
Competition in Transportation Markets

Further Readings
de Langen, Peter W. and Athanasios A. Pallis. “Analysis of the benefits intra-port competition.”
International Journal of Transport Economics, 33(1), (2006)

Farrell Sheila. “The ownership and management structure of container terminal concessions.”
Maritime Policy and Management, 39/1 (2012).

Notteboom, Theo and Jean-Paul Rodrigue. “Port regionalization: towards a new phase in port
development.” Maritime Policy and Management, 32/3 (2005)

Notteboom, Theo and Jean-Paul Rodrigue. “The corporate geography of global container
terminal operators.” Maritime Policy & Management, 39/3, (2012)

Slack, Brian et al.“The Terminalisation of Seaports.” In: Wang James et al. (ed). Port Cities and
Global Supply, Cheldenham: Edgward Elgar, 27-39, (2007).