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Title: Vertical integration within the logistic chain: does "regulation" play rational? The case for dedicated container terminals
Authors: Cariou, Pierre
Issue Date: 2001
Publisher: EUT Edizioni Università di Trieste
ISTIEE Istituto per lo studio dei trasporti nell’integrazione economica
Source: Pierre Cairou, "Vertical integration within the logistic chain: does "regulation" play rational? The case for dedicated container terminals", in: European Transport / Trasporti Europei, VII (2001) 17, pp. 37-41
Series/Report no.: European Transport / Trasporti Europei
VII (2001) 17
The liberalisation process of European port markets is similar to the one implemented in most of the networks industries (telecommunication, gas, water, airlines...). It takes place during a period of vertical integration within the logistical chain. The basic idea of this article is to present the main features of those processes and their major implications in one case of vertical integration: dedicated container terminals (DTs).
A first section compares port systems and general network characteristics. It stresses that the Community efforts to complete the single market, the pressure from both customers and competitors, the withdrawal of public funding, have induced a general move towards liberalisation. This liberalisation is also justify within a network industry by economies of scale and positive network externalities. Analysis of network liberalisation process also stresses that it generally goes hand-in-hand with regulatory reforms that need to achieve a "public acceptance" (i.e. determining in a clear way the main economic effects of liberalisation) and to combine efficiency, competition and the provision of Universal Service Obligation (USO).
A second section focuses on one question that usually raises when analysing liberalisation process. How to create conditions of entries (ex ante,) and how to make sure that those conditions will not reduce the level of competition (barriers to entry) and the provision of USO (ex post,)? The case of DTs in container market is analysed with respect to competition issues. DTs are private agreements between one or more carriers and a port operator or authority. They entail both a geographic -the use of facilities in a defined part of the terminal- and a temporal dimension -the use of facilities for a certain period of time. It represents a case of vertical integration within a network industry. An hypothetical queuing model is developed to investigate under which assumptions this vertical integration could reduce competition in the long run.
This last section underlines that we can not consider that to maintain a multi-user terminal within a port or to split the port area into dedicated and multi-user servers allowing for some restricting agreement is not neural when considering the level of competition. It induces to investigate access and interconnection pricing in port industries. A rule to internalise the potential benefits and costs resulting from integration is finally consider: The Efficient Component Pricing Rule (ECPR).
The final conclusion that comes from previous developments is that liberalisation when combining with vertical integration process appears to be a complex process. It requires both to select the infrastructures and services to liberalised, to "protect" the USO and at the same time, to analyse the impact of liberalisation on heterogeneous (geographic and economic) European port markets.
Type: Article
ISSN: 1129-5627
Appears in Collections:European Transport / Trasporti Europei (2001) 17/VII

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