The European Port Industry: An Analysis of its Economic Efficiency

Abstract

Because of their critical strategic role, ports have all traditionally been subject to some form of government control even if the legal form and the intensity of this control have varied across countries. The member countries of the European Union have not been different from the rest of the world in this respect. A significant difference however is the recurrent effort to integrate, in a coordinated way, the port sector in a trans-European transport network (TEN-T) through the adoption of a common legal framework. In this context, if the objective of the reforms is to ensure that port networks, integrated in combined transport networks, become competitors of the road network, the concept of port efficiency becomes central. This paper provides an overview of the evolution of the European Port Legislation and shows how comparative economic measures can be used to highlight the scope for port efficiency improvements, essential to allow short sea shipping transport to compete with road transport in Europe. To our knowledge, this paper is also the first effort of estimating technical efficiency of European Port Authorities. The average port efficiency in 2002 was estimated to be around 60%, denoting that ports could have handled 40% more traffic with the same resources.

Appendices

Appendix 1: Location of EU's Ports included in the sample

Figure A1

Appendix 2: A Brief Overview of the EU's Port Systems

The Belgian port system is made up of seven major ports, of which only four handle an annual traffic of over a million tons. In the sample, Belgium is represented by Antwerp's port authority. This port handles two-thirds of the products handled in the four largest ports. Antwerp is also on the main actors on all traffic types handled in the Le Havre–Hamburg axis.

Denmark is characterised by a dense network of public ports which are managed and organised under a very wide variety of arrangements. Of the 123 public ports, only 22 handle more than a million tons a year. The two port authorities representing Denmark in this sample are Copenhague and Aarhus. They represent about a quarter of the port freight traffic handled by Denmark in 2002.

Finland's port system is made up of 55 ports, of which 21 handle annually more than a million tons. The only Finnish port authority covered by the sample is Helsinki. It is an average size port in terms of freight but handles over 50% of Finland's passenger traffic. It ranks 11th in Europe in terms of passenger traffic.

The French ports are located along the most popular maritime routes in the world, the North Sea, the Channel, the Atlantic Ocean and the Mediterranean Sea. The French port system is made up of 56 ports, of which 20 handle annually more than a million tons. There are 10 autonomous ports that function as autonomous public enterprises. They handle 80% of France's maritime traffic and compete directly with the main European international ports. Two of these ports are dry ports (Paris and Strasbourg) and two others are in France's overseas territories. Our sample includes two port authorities: Marseilles and Le Havre. These two represent 45% of France's annual traffic and they are ranked 3rd and 5th among the top 15 European ports in terms of freight traffic.

Germany counts 80 ports of which 17 handle annually more than a million tons. Our sample includes the port authority of Bremen-Bremehaven and Hamburg. Together, they represent about 55% of the total German traffic. Moreover, Hamburg is ranked 4th among European ports in cargo volume handled.

Greece is at the centre of traffic between Europe, Asia, the Middle East and North Africa. It counts 199 ports of which only 20 handle annually more than a million tons. Its two main ports authorities are included in the sample: The Piraeus and Thesalonic. Together they handle about a third of the traffic. The Piraeus is also ranked 12th in terms of passenger traffic.

The Netherlands’ port system is made up of 48 ports, of which 10 handle annually more than a million tons. The port administration is usually delegated to a municipality. Only two of these have an independent authority to handle their port: Amsterdam and Rotterdam. They handle 90% of the Dutch port traffic and Rotterdam is Europe's first port in terms of traffic, with 27% of the traffic handled by the top 15 ports. Both port authorities are in our sample.

The Portuguese port system counts 13 ports. Only half handle annually more than a million tons. Five ports share the bulk of the traffic. We count two port authorities of them in our sample: Lisbon and Setúbal. They represented a third of the total traffic in Portugal in 2002.

Spain has 27 port authorities which manage 47 ports of general interest. Of these, 26 handle annually more than a million tons. The port authorities included in our sample are Algeciras, Valencia, Barcelona, Bilbao and Tarragona. They represented 51% of the traffic in 2002.

Sweden enjoys the longest coast line of the EU. It counts 107 ports of which 28 handle annually more than a million tons. We have two ports authorities which represent about a third of Sweden traffic in our sample: Stockholm and Göteborg. Both of these ports authorities also have a significant volume of passenger traffic. Stockholm is ranked 13th in Europe.

The UK's port system is made up of 115 ports, of which 48 handle annually more than a million tons. About two-third of the capacity of the system is controlled by private operators. Unfortunately, the only port authority for which we could get data was Belfast which only represents 2% of the total traffic.