Container hub port development in a peripheral location: The case of Indonesia

This PhD research is sponsored by the Indonesia Port Corporation (PT. Pelabuhan Indonesia II Persero) with an aim of identifying ways for Indonesian ports to contribute to the nation’s economic growth. There are always two sides to a story. The large and small; the centre and periphery. Since containerisation in the late 1950s, research in maritime transport has been looking at trends in port competition, how ports are chosen by shipping lines to be their port of call and concentration of cargo in particular ports or regions. From this concentration, large world hub ports have emerged undertaking transhipment activities, enabling economies of scale, cost saving and increased connectivity links to more destinations. In contrast, this research considers smaller ports in peripheral locations. Increasing containerisation and large ship sizes increased the need for transhipment in order to transport container cargoes around the globe. This includes the rise of secondary hub ports from smaller peripheral ports. The main purpose of this research is to explore how a container hub port in a peripheral location could capture opportunities of growth, or in other words to identify factors for a peripheral port to reduce its peripherality by becoming a hub. Besides contributing to peripheral ports research which is still understudied, this study combines literature from port concentration/deconcentration, peripheral port challenges, port selection factors and hub port choice. The Indonesian ports and maritime transport industry are chosen as the focus of this empirical study because Indonesia is a developing country with one of the longest coast lines and a significant number of small container ports. Furthermore, Indonesian ports are still understudied. A survey research strategy using mixed methods is conducted. Players in the Indonesian maritime transport industry in a national level is the population for data collection and non-probability sampling is used. Respondents are customers of a port operator company, which approximately handles 50% of the entire flow of goods coming in and out of the country. Qualitative interviews were conducted to understand the meaning of peripherality, identify concentration-deconcentration factors and willingness of stakeholders to expand business in peripheral locations. This phase consisted of 13 preliminary interviews to a port operator company and main interviews to 46 respondents which represents 7 types of stakeholders (port operators, shipping lines, cargo owners, logistics companies, central government, local government and financial institutions). Interviews were transcribed and analysed using Nvivo 11, qualitative data software. Meanwhile, quantitative data was collected through an online survey questionnaire to reduce 111 item variables from 7 latent variables identified from literature and interview results. These variables were analysed through Exploratory Factor Analysis, to identify critical factors for a peripheral port to become hub. Results shows that peripherality is a cycle. Peripheral locations with low cargo volume lead to low shipping connections, low port performance and infrastructure, low economic activities, low population and political power, and returns to low volume. To break out of the cycle, cargo volume needs to be generated, new market and routes opened and hub dependence to be shifted to emerging secondary hubs. Quantitative results show that there are 66 item variables from 3 main factors identified for a peripheral port to become a hub, which are: standardised port operations; clear policy, financed and governance; and positive spatial aspects. Implications of the research is addressed to the sponsor, to the literature and to peripheral ports in developing countries globally

Ports, peripherality and concentration - deconcentration factors: a review

Purpose – The purpose of this paper is to review the literature on peripheral ports, hub ports and concentration – deconcentration factors. This is an issue since investments in port development in more peripheral locations are challenging due to the difficult financial situation currently faced by the maritime industry. Design/methodology/approach –This paper presents a narrative literature review focusing on peripherality in the context of seaports and transport. Moreover, it gathers the reasons why ports concentrate - deconcentrate, and how these factors evolve over time. Findings – This paper develops a future research agenda for peripheral ports. Practical implications – The paper provides insights for ports in developing countries in their efforts to upgrade their port facilities and infrastructure. Originality/value – This paper contributes to the research on ports in peripheral locations which have been under studied compared to larger hub ports

Willingness to invest in peripheral ports: Perceptions of Indonesian port and maritime industry stakeholders

The growth of containerisation and the increase in ship size have resulted in a greater need for transhipment hubs. Hence, some peripheral ports are upgrading to become secondary hub ports. However, it remains unclear why these ports would move towards this strategic direction. The aim of this study is to investigate stakeholders’ perceptions on the importance of peripherality, so as to understand their willingness to invest in secondary hub ports. Stakeholders from the Indonesian port and maritime industry were chosen as the focus of the present study, representing a connected network of peripheral and hub ports at a country level. The study used a mixed-methods approach. Qualitative interviews were conducted with 46 respondents, while quantitative data were collected through an online survey, involving 171 respondents. The data were subsequently analysed through exploratory factor analysis and correlation tests. Results show a pattern in stakeholder behaviour, explaining their reasoning, locational decisions, their perceptions on the importance of peripheral locations and their willingness to invest. It is believed that these findings will prove of value both for governments and the private sectors of international shipping and port operations