Preferred scale of containers terminals in seaports : a size distribution analysis?
Institute for Transport en Maritime Management (ITMMA)
ECONSHIP 2011 Conference, University of the Aegean, Chios, 22-24 June 2011
University of Antwerp
Both terminal operators and port authorities make management decisions on the scale of terminals they operate or lease. Existing studies on determining the best possible scale in classic non-port economic theory use the notion of Minimum Efficient Scale (MES) focusing on the shape of the Long Run Average Cost (LRAC) Curve. The MES in combination with a number of other factors such as the market size and structures, technological change and operational considerations, the port governance framework and objectives, physical and geographical limitations and shipping line costs and business patterns induce a complex interaction. This interaction leads to a preferred scale.The analysis in this paper is focused on two hypothesis. The first hypothesis is that the preferred scale of container terminals can be deducted from size distribution analysis. The second hypothesis is that the preferred scale lies within a range of values. A revealed preference technique is used for the analysis of the size distribution of 496 container terminals following a differentiated approach based on some of the parameters affecting the preferred scale (e.g. geographical separation, involvement of global terminal operators etc.). In particular, a size distribution analysis is deployed using the Interquartile Range (IQR) to find the upper and lower limits of the preferred scale range.