Stakeholder Relations Management in ports:

dealing with the interplay of forces among

stakeholders in a changing competitive
environment
Theo E. Notteboom, Associate Professor, ITMMA University of Antwerp, theo.notteboom@ua.ac.be
i!!y in"e!mans, #ean of ITMMA University of Antwerp an$ %hairman of the &!emish Ports
%ommission, wi!!y.win"e!mans@ua.ac.be

ABSTRACT
A whole series of changes in the field of world economics such as the globalisation of
production and consumption and the structural changes in inter-port relations, port-
hinterland relationships and logistics, have strengthened the role of ports as nodes in
the global transport system. These tendencies and the expansion of the role of the
private sector in port activities have forced ports to become more market-oriented and
to cope with a lot of risks and uncertainties. At the same time, one can observe a
growing awareness for external effects of port activity and the related risks and harms
for community groups. As a result, port authorities have to cope and to interact with a
large number of internal and external groups, each with their own interests and
objectives.
This paper deals with the interplay of forces among different stakeholders directly and
indirectly involved in port activity and port development. The stakeholders approach
is applied to the port sector, in particular to landlord ports. Furthermore, it
demonstrates how different stakeholders are repositioning themselves in the interplay
of forces and how landlord port authorities can cope with the new port environment
using takeholder !elations "anagement #!"$.
Keywords%
port management, stakeholders, port policy
&aper for 'A"( &A)A"A *++* ,"aritime (conomics% setting the foundations for port and shipping
policies-, &anama .ity, &anama, /0-/1 )ovember *++*
/
INTR!"CTIN
The interest in stakeholder approaches to strategic management is growing around the
world #"ills 2 3einstein, *+++$. 4rganisations possess multiple goals and those can
only be achieved by the co-operation of a group of people commonly known as
stakeholders, each with their own specific goals. The stakeholders approach meets the
need for more open communication between employers and employees, between
governmental authorities and public or private companies, between authorities and
civilians or citi5ens, etc. 'n the framework of a global economy such an approach
becomes even more important.

There is no clear definition of ,stakeholders-, so the use of the expression
,stakeholder- is certainly not univocal. The classification of stakeholders depends on
the purpose. This inevitably leads to a wide diversity in interpretations of who can be
classified as a stakeholder #see e.g. 6onaldson 2 &reston, /771$. 'n the broa$ view
stakeholders are described as any individual or group having interest or being affected
by the corporation. The narrow view only recognises stakeholders whose relationship
is primarily of an economic8contractual kind #hankman, /777$.
This paper deals with the interplay of forces among different stakeholders directly and
indirectly involved in port activity and port development. The stakeholders approach
is applied to the port sector. Furthermore, it demonstrates how different stakeholders
are repositioning themselves in the interplay of forces and how landlord port
authorities could cope with the new port environment using takeholder !elations
"anagement #!"$.
This discussion paper does not provide the reader with straight answers to all aspects
of !". "oreover, the paper is focussed on landlord ports and does not touch on the
issue of operating ports. 't should therefore be regarded as a step towards further
research in this field on a case-by-case basis.
T#$ STA%$#&!$RS A''RAC# IN T#$ 'RT S$CTR
&ort managers are increasingly faced with the dilemma of how to reconcile the
competing claims of all kinds of stakeholders, certainly when it comes to port
development and especially to port extension.
A port both technologically and economically is in fact a node for contacts and
contracts, whereby every stakeholder is driven by his own interests and priorities.
&orts are associations where a multitude of individuals and interests #should$
collaborate for the creation and distribution of wealth. 9ence, the value creation
process in ports is dependent upon the support of the different stakeholders groups.
(ach group of stakeholders however merits consideration for its own sake.
'n a port context, one could argue that stakeholders are groups8persons with legitimate
interests in procedural and8or substantive aspects of port activity and port
development. 'n the narrow view the port-s stakeholders include% shareholders,
managers, employees, port users, service providers and other economic players in and
around the port #including port customers, etc..$. 'n the broa$ view on stakeholders
*
also community stakeholders should by included #e.g. community groups and
environmentalists$, because they may experience actual or potential harms or benefits
as a result of port action or inaction. 't is possible that some community stakeholders
may be unaware of their relationship to the port until a specific event - favourable or
unfavourable - draws their attention. triking examples of such third party impacts
exist in relation to large investments in port infrastructure #cf. in terms of
environmental harms and economic benefits that may be experienced by
communities$. The broad view should also include producers and consumers of
products that move through the port, as they are often cited as the political basis for
financial support.
(ig)re *: The port as a node for contacts and contracts +from the perspective
of a ,landlord- port a)thority.
'ource( authors
0
INT$RNA& STA%$#&!$RS
Groups inside port authority organization Managers Employees Board members S#AR$#&!$RS
$/T$RNA& STA%$#&!$RS SEA (IN/OUT) PORT HINTERLAND (OUT/IN)
Groups not part of port authority organization
TRANSPORT OPERATOR GROUPS
(including branch organizaion!)
"arii#$ ran!%or Tran!hi%#$n & !orag$ Rail
Shipping line Stevedoring companies Railway companies
Inland !hi%%ing
'alu$(add$d aci)ii$! Inland barge operators
Logistic service providers Road haulag$
Trucking companies
TRANSPORT ORGANISATION GROUPS
(including branch organizaion!)
Shipping agent Freight orwarder
Logistic service providers !"#L and $#L%
SUPPORTING SER'I*ES Towage companies
(including branch organizaion!) #ilotage services
Ship chandlers
Repair services !c& shiprepair' container repair%
(aste reception acilities
Inspection services
Banks' insurance companies' &&&
Legal irms !lawyers' &&%
INDUSTR+ GROUPS industries in oreland industrial companies in port industries in hinterland
(including branch organizaion!)
(PU,LI*) IN-RASTRU*TURE *OORDINATION. port authorities o other seaports
-A*ILITATION & "ANAGE"ENT GROUPS Inland terminal authorities
Rail inrastructure management companies
)entral' regional and local public authorities !c& roads' !inland% waterways' &&%
Supranational public organisations !c& E*' (orld Bank%
LEGISLATION & PU,LI* POLI*+ GROUPS central and regional governments !including port commissions%
European *nion
Trade negotiations groups !c& (T+%
*O""UNIT+ GROUPS Local inhabitants groups
)onsumers, ta- payers
Environmentalist groups o a local' regional or global scale
The press
. the /port/ or /port community/ as perceived by many e-ternal entities
Figure / depicts a port as a coalition of interest groups based on the broader view on
stakeholders. The perspective is that of a landlord port authority. The functional
relationships among the different stakeholders groups are not indicated. A graphical
representation of all contractual and non-contractual relationships among the
individual groups is hardly possible as there are so many of them.
Internal stakeholders
The internal stakeholders are part of the comprehensive port authority organi5ation.
Apart from the aim to realise port authority objectives the top management of a port
authority might also envisage more personal goals such as salary, prestige and power.
The employees are interested in their wages, working conditions and personal
development. A good human resources management #9!"$ with an eye for
motivation and reward is indispensable.
The public, semi-public or private shareholders pursue goals such as return on
investment, shareholder8stakeholder value and8or welfare creation. The identification
of the true shareholders of a port authority is not always an easy task. A large number
of landlord port authorities are of the #semi-$public kind with strong links to a
municipality, a city, a region or province. The true shareholders of a public port
authority de facto are the taxpayers on the relevant geographical level. As such, the
general public has a univocal role to play% in many cases the #local$ public is at the
same time external stakeholder and indirect shareholder. The same kind of reasoning
is valid in case of public investments in port infrastructure by local, regional, national
or supranational government bodies.
$conomic0contract)al e1ternal stakeholders
tructural changes in the market environment make economic external stakeholders
wonder about their specific role in the competitive process. The inter-organisational
relationships among economic8contractual external stakeholders are characterised by
two forms of interaction% physical #i.e. related to the physical transfer of cargo$ and
incorporeal #"artin 2 Thomas, *++/$. The latter type of interactions consists of
contractual, supervisory or information based exchanges. The interactions between
port authorities and the first order port players are mainly of an incorporeal kind. For
instance, port companies involved in physical operations are linked to the port
authority via concession agreements #esp. in case of landlord port authority$.
There are the different port companies and supporting industries who invest directly
in the port area and who generate value-added and employment by doing so. ome of
these companies are mainly involved in physical transport operations linked to cargo
flows #e.g. terminal operators and stevedoring companies - including the
carrier8terminal operator in case of dedicated terminals$. 4thers solely offer logistical
organisation services #e.g. forwarding agencies, shipping agencies, etc...$. 'ndustrial
companies in the port area #e.g. power plants, chemical companies, assembly
plants, ..$, supporting industries #e.g. shiprepair, inspection services, etc..$ and port
labour pools also belong to the group of the first order economic stakeholders.
A large number of these in situ economic stakeholders are represented by branch
organisations and8or regional associations for specific industries. "anaging the
:
relations between different branch organisations is a challenging task. ;oth the
regional associations for specific industries as well as the existing port cluster
umbrella associations #e.g. 6eltalin<s in !otterdam and A=9A in Antwerp$ play an
important role in the governance of the port cluster and can have a huge impact on the
competitiveness of the cluster #6e >angen, *++*$.
4ther economic stakeholder groups include port customers, trading companies and
importers8exporters. They are less directly involved than the in situ economic groups
as they normally do not invest directly in the port. )evertheless they follow the port
evolution carefully, because port activity can influence their business results.
"oreover, they exert strong demand pull forces on port service suppliers and as such
,dictate- the market re<uirements to which the port community has to reply.
')2lic policy stakeholders
(conomic literature supports the idea that the public sector has its role to play in a
market-oriented port industry #cf. )otteboom 2 3inkelmans, *++/b$. A rationale for
government intervention emerges when, in certain circumstances, the competitive
market mechanism ,fails- #=oss, /77+ and 9aralambides et al, /77?$. &ractical
evidence shows that even in case of <uite extensive privatisation schemes, the public
sector has not withdrawn entirely from the port industry. The debate in (urope on
government intervention in an efficiency-oriented port industry focuses especially on
the issue of market liberalisation, the monopoly issue, the public goods issue and the
port financing issue.
&ublic policy stakeholders do not only include government departments responsible
for transport and economic affairs on a local, regional, national and supranational
level. 9ence, the scarcity of resources such as land and nature has increased the
impact and involvement of environmental departments and spatial planning
authorities on decision processes #in particular in case of port expansion plans$.
The potential overlap in jurisdiction between the various geographical levels in public
policy making is another issue that needs careful attention. A vague division of
jurisdiction or bad co-ordination among the various levels can have a detrimental
impact on port development processes, in particular when a court contests the validity
of earlier #political$ decisions because of procedural errors with respect to public
policy making.
&ublic policy stakeholders typically follow a political management system based on
the principle of distributional e<uity. The organi5ation structure in a political system
is often based on the administrative heritage and on structural shocks caused by
powerful individuals or pressure groups. &ort authorities partly rely on political
organi5ations for their survival, as ports are often considered as strategic assets in the
process of community welfare creation and as appropriate tools for achieving a higher
distributional e<uity. The challenge is for technocratic port organi5ations to work
constructively with political managers by forming alliances of effective operating
organi5ations.
1
Comm)nity stakeholders
.ommunity stakeholders include community groups or civil society organisations, the
general public, the press and other non-market players. They are concerned about the
port-s evolution, i.e. mainly about its expansion programmes, for reasons of well-
being. They pay a lot of attention both for getting and distributing information about
port activity trends and port development plans. (nvironmental considerations are
very prominent in the relationship of these groups with port authorities.
As in many organisations, community groups are often guided by local rationality and
opportunistic behaviour. >ocal pressure groups often defend their local interests in
such a fierce way that the individual well-being of a few people is becoming an even
bigger driving force than the well-being of the greater community. For instance, the
omnipresence of the )'";@ syndrome #Anot in my backyardB$ can seriously
complicate the development of new hinterland infrastructures, even if these
infrastructures will generate a positive impact on the modal shift from road to
environment friendly transport modes.
.ommunity groups can have a large impact on port city development programs. The
waterfront redevelopment of older port areas is valuable to #re$establish a physical
link between port activity and other economic functions such as housing, recreation,
etc.. . The local community typically perceives waterfront redevelopment as a positive
thing enhancing local <uality of living. &ort authorities should take such opportunity
to form a sound basis for dialogue with community stakeholders, resulting in
goodwill and mutual respect. As such, waterfront redevelopment projects can help to
activate public acceptance8awareness of seaport activity. They might even generate
more local economic benefit than the renovation of outdated port infrastructure
#outdated in the sense that draft conditions and terminal surfaces of older <uays8docks
are often too small for allowing modern transhipment activities$.
STA%$#&!$R R$&ATINS MANA3$M$NT +SRM.
Basic principles of SRM
takeholder relations management aims to hold the balance between various groups
and take due note of their rights #Argenti, /77?$. As port management is characterised
by complex decisions and is regularly confronted with many stakeholders, achieving a
balance between the interests of all stakeholders is becoming an important job for port
managers. The <uest for a port-s survival will encourage port managers to treat its
employees well, to act fairly and honourably towards port companies and port users,
and conduct itself responsibility in relation to the environment and society. "any port
managers are well aware of the fact that socially responsible behaviour can be the
basis for a competitive edge in both market and public policy relationships.
takeholder !elations "anagement has close ties with sustainable management, i.e.
sustainable port development is not possible without a well-balanced and integrated
stakeholders approach.
C
4ne of the keystones in !" in ports is to ,measure- the influence of various
stakeholders on the port-s functioning and performance and on each other and then to
effectively manage the linkages between these influential relationships.
!" in ports as such re<uires simultaneous attention to the legitimate interests of all
appropriate stakeholders, both in the establishment of organisational structures and
general policies and in case-by-case decision making. &ort managers should listen to
and openly communicate with stakeholders about their respective concerns and
contributions, and about the risks that they assume because of their involvement in
port activity and port development. 9owever, this principle does not imply that all
stakeholders should be e<ually involved in all processes and decisions.
'n a first step, port managers should discriminate between stakeholders with genuine
legitimate interests in the process considered and those who only claim to have a
legitimate interest. This exercise can turn out to be very difficult, because the simple
act of classifying a group as not relevant for a specific process #e.g. the planning of a
new port infrastructure$ in itself can become a major source for conflicts. For
instance, a party with no direct legitimate interest can have a large political influence
#e.g. a party who has the capacity to ,mobili5e- the press can have an impact on the
political level$. 'n order to avoid such situations, port managers often opt for a
maximum approach whereby both the legitimate groups and the non-legitimate
groups are invited to take part in the process. 'n many cases, the active role of the
latter groups is rather limited. The main purpose or role is that of generating
transparency in the fluxes of information.
(ig)re 4: A classification of stakeholders 2ased on their involvement in and
impact on a process0decision
9igh
'nvolvement in
process8decision
>ow
>ow 9igh
'mpact on process8decision
'ource( authors
econdly, port managers will also have to decide on the role attributed to each
stakeholder in the decision-making processes. Figure * provides an example of how
?
=roups that are
taking part in
deciding
=roups that are
thinking along
=roups that
are informed
=roups that
give direction
stakeholders could be classified based on their involvement in the process8decision
and their possible impact on the process8decision.
The classification of various stakeholders in the matrix of figure * is just a first step in
a comprehensive !" process. 6esigning a well-balanced time planning for the
structuring of stakeholders- participation in port activity and development processes is
one of the key actions in !". A port authority can decide to involve all stakeholders
right from the start of a port development project. The advantage is that no
stakeholder will feel neglected. 9owever, a ,slow start- due to long pre-negotiations
rounds in the early phases of the project is the main disadvantage of this approach.
Alternatively, a port authority might decide to draw up detailed plans in-house.
takeholders will only be involved in the process once these plans have gained
maturity. The strength of this approach is that stakeholders are confronted with rather
concrete development plans, so there is less room for stakeholders to introduce
unrealistic alternatives. 9owever, some stakeholders might not feel at ease% such a
top-down approach might give the impression that the decisions have already been
taken, thereby leaving the stakeholders- participation process as a formality8diversion.
An effective !" strategy is not possible without good port governance structures
/
.
takeholder relationship management in fact partly deals with <uestions of corporate
governance, i.e. mainly the processes of stakeholder input and participation. The
corporate governance framework should recognise the rights of stakeholders and
encourage active co-operation and participation of stakeholders in creating wealth
#;rooks, *++/$.
&ort authorities should develop organisational processes and entrepreneurial cultures
that enhance stakeholder satisfaction. &ort managers today have the obligation to deal
openly and honestly with the various stakeholders, thereby avoiding as much as
possibly purely self-serving actions. 'n modern port policy and the decision making
processes one should emphasise the interdependence among the various stakeholders.
&ositive and mutually supportive stakeholder relationships will encourage trust, and
stimulate collaborative efforts leading to relational wealth, i.e. organi5ational assets
arising from familiarity and teamwork. .onflict and suspicion among stakeholders
will stimulate formal bargaining resulting in time delays and increased costs. Formal
bargaining often appears when stakeholders demand compensation for incurred risks
or harms. &ort managers should work cooperatively with other entities, both public
and private, to insure that risks and harms arising from port activities are minimi5ed
and, where they cannot be avoided, appropriately compensated. .onse<uently,
compensation policies often play a crucial role in !" #in particular in relationship to
community groups$. Dnfortunately, in many cases, compensation claims are subject to
highly politicised negotiation rounds, characterised by a lack of trust and an absence
of solid deals8arrangements among the stakeholders. Dnder these circumstances port
authorities and government departments might be tempted to use compensations as a
tool to ,neutrali5e- #at least temporary$ some community groups, whereas community
/
;rooks #*++/$ refers to the 4(.6 definition of corporate governance% ,the system by which business
corporations are $irecte$ an$ contro!!e$. The corporate )overnance structure specifies the $istribution
of ri)hts an$ responsibi!ities amon) the $ifferent participants in the corporation, such as the boar$,
mana)ers, shareho!$ers an$ sta"eho!$ers, an$ spe!!s out the ru!es an$ proce$ures for ma"in)
$ecisions on corporate affairs. *y $oin) so, it a!so provi$es the structure throu)h which corporate
ob+ectives are set, an$ the means of obtainin) those ob+ectives an$ monitorin) performance-.
E
groups might use the negotiations rounds as a tool to consolidate their position as
legitimate interlocutors in port development debates.
SRM and the port management o25ective str)ggle
&ort managers should acknowledge and whenever possible actively monitor the
concerns of all legitimate stakeholders, i.e. they should take the interests of certain
stakeholders appropriately into account in decision-making and operations. They are
obliged to examine all claims and criticism carefully before passing judgment on their
validity. 'n taking particular decisions and actions, port managers should give primary
consideration to the interests of those stakeholders who are most intimately and
critically involved.
This balancing exercise is far from easy, given the latent danger of a struggle between
port management objectives as a function of group interests. The underlying common
interest of stakeholders of any port is the port-s survival, but it is too simplistic to
assume that all parties accept that the main port development objective is ,to provide
port facilities and operating systems in the national interest at the lowest combined cost
to the port and port users- #D).TA6, /7E1%*?$. .onflicts of interests among different
stakeholders may overshadow the community of interests #see figure 0$. The
objectives of port authorities are becoming increasingly scrutini5ed as a result of
government involvement as well as increased complexity of the industry and its
environment #Frankel, /7E?$. ome examples%
The final or primary objectives of environmental pressure groups are often
conflicting with that of the port authority% for the one the less expansion the better,
for the other almost continuous extension is re<uired to cope with market
opportunities in the foreland-hinterland continuumF
The central government usually pursues socio-economic objectives, aimed at an
increase of the societal value-added of the national seaport system through an active
seaport policy. The aim to increase national socio-economic welfare may in practice
be influenced by a number of economic and political considerations #Frankel, /7E?$.
Through their port policy, some larger (uropean countries for example also aim at
increasing the national control of foreign trade. As most 3est-(uropean central
governments intervene in seaport policy, through the allocation of resources in
function of objectives related to socio-economic welfare, the central government
objectives may conflict with or at least diverge from objectives of the port authorityF
The objectives of the port industries and operators usually relate to traditional micro-
economic goals such as a mix of shareholder value, maximi5ation of profits, growth,
increase in market share, productivity, etc.. .
7
(ig)re 6: The port management o25ectives str)ggle +7.
#G$ Tentative representation of main objectives per category of stakeholders in order to detect potential
conflict situations
&ort authorities do not always have explicitly specified objectives nor do they have a
good defendable strategic intent. "unicipal ports may be instructed to provide the
community with the best possible port service that is consistent with the municipal
policy and financial capability.
The lack of clearly specified ambitions or a clear mission statement makes it
extremely difficult to develop sustainable stakeholders relationships. As such, it might
be very important to formulate accurately a mission statement for the whole port. 'n
formulating its strategic intent a port should try to go beyond extrapolation of the
current role of the port. A good mission statement can help to avoid wasting resources
due to the port management objectives struggle #3inkelmans, *++*$. The port-s
ambition as specified in the strategic intent must be accepted by internal and external
stakeholders. &ersonal effort and commitment of the stakeholders involved in the port
sector can only be gained if they can identify themselves with the strategic intent.
ince the formulation of a comprehensive and effective mission statement generates a
positive commitment under the most concerned actors, it might help to achieve the
goal of competitive advantage. A good mission statement always should contain a
clear message toward the stakeholders of the company8organisation formulating the
strategic intent. This message should be valid and controllable.
0r +b1ective Rating 2ctor )omment Rating
3 ma-imise throughput #+RT 2*T4+RIT5 conlict 6 7
8 ma-imise net proits S4I##I09 LI0E
" operate at least cost S4I##I09 LI0E
$ ma-imise employment level *0I+0S
: secure national independence
as regards matitime transport
9+;ER0ME0T
< promote regional economic development 9+;ER0ME0T
= ma-imise >uality o service to shippers #+RT 2*T4+RIT5
7 minimise vessel/s time in port #+RT 2*T4+RIT5 conlict 6 3
? reach inancial autonomy 2LL
3@ minimise total cost o maritime transport S4I##ERS conlict 6 3<
33 ma-imise return on capital invested #+RT 2*T4+RIT5
38 minimise re>uired capital investments 9+;ER0ME0T conlict 6 3"
3" ensure ull environmental protection #RESS*RE 9R+*# conlict 6 38
3$ minimise port user cost S4I# +(0ER
3: minimise cargo delays S4I##ERS
3< ma-imise pay levels *0I+0S conlict 6 3@
3= A
/+
!$8$&'M$NTS A(($CTIN3 STA%$#&!$R R$&ATINS
MANA3$M$NT
The increasing need for effective stakeholder relationship management is a fairly
normal development given the globalisation and liberali5ation of economy. These
structural changes are pushing seaports to deal with new kinds of social, political and
economic stakeholders in a different way. As such, !" will prove to be a keystone
in a port-s functioning and development.
4n the one side the expansion of the role of the private sector in port activities has
forced ports to become more market-oriented. 4n the other hand non-market forces
still exist. 6espite the growing market and customer orientation the non-market
environment remains important. =overnment interventions at different levels as well
as external pressure groups such as the ecological pressure groups may still interact
without incurring the demand for efficiency #e.g. think of the non-market force
incurring severe delays on the implementation of the dredging program for the port of
)ew @ork and )ew Hersey by so-called IgreenI actions$.
This section points to some developments in the port environment that need special
attention in the framework of !". The list of issues raised is not complete, but it
provides a first step towards further discussion and research in this field.
Integration at the level of market players
A lot of market players in the foreland-hinterland continuum aim to integrate either
vertically or hori5ontally all kinds of activities to reduce costs, to improve efficiency
and by doing so to deliver value and a ,one-stop shop- service to the customer.
The observed vertical integration strategies of the market players have blurred the
traditional division of tasks within logistic chains. For instance, the (uropean
stevedoring market is witnessing an influx of new entrants including railway
companies #e.g. ;elgian !ail$, shipping lines #e.g. dedicated terminals of "aersk
ea>and in ;remen, Algeciras and !otterdam$, logistics companies and investment
groups. A lot of shipping lines, stevedoring companies and transport operators are
now offering forwarding services to the customer. Freight forwarders no longer act as
agents of the shipper, but are principals in their own right. !oad hauliers have in
many countries become professional service providers with whom the shipping line or
the shipper can outsource part or all of its inland distribution operation #)otteboom 2
3inkelmans, *++/$. 't is important to add that the provision of integrated services
does not always need to coincide with the ownership of the related assets. 'n many
cases, the integration is achieved through close partnerships with other players.
This integrated approach has created an environment in which ports are increasingly
competing not as individual places that handle ships but as nodal points within a
complex of supply and demand chains, including various transport chains. 3hile co-
operation at the operational level between the actors in the supply chain may have
increased, this has not necessarily resulted in increased commitment to a long-term
future relationship with the port. 'n this competitive environment, the ultimate success
of a port will depend on the ability to integrate the port effectively into the networks
//
of business relationships that shape supply chains. 'n other words, the success of a
seaport no longer exclusively depends on its internal weaknesses and strengths. 't is
more and more being determined by the ability of the port community to fully exploit
synergies with other nodes and other players within the logistics networks of which
they are part.
'n terms of stakeholder management this observation does not only imply that the port
authority will have to manifest itself as an important stakeholder to others. 't also
means that port authorities will have to consider more market-related external
stakeholders than ever before. At the same time, port managers will increasingly
encounter new challenges while identifying and classifying the relevant stakeholders.
For instance, it is no longer straightforward to make a keen distinction between port
suppliers and port demanders. 'f a shipowner operates a dedicated terminal (here
defined as a port terminal that has been reserved by the port authority for a single port
user or shipowner$, it is becoming less clear who is then the basic port customer, since
the shipping company itself is taking care of the re<uired port #cargo$ handling
capacity. 'n addition we should notice, that due to the many vertical and hori5ontal
integrations in the maritime industry #including the so-called strategic alliances$ fewer
but bigger players are intervening, i.e. using the new interplay of forces, and as such
are creating new challenges in the framework of port development and management.
The emergence of powerf)l players
&ort managers aim at making the port attractive to users, by providing a competitive
supply of services for carriers and shippers. 9owever, several ports are becoming
increasingly dependent on external co-ordination and control by #foreign$ actors who
might extract a substantial share of the economic rent #wealth$ produced by ports and
who are often only guided by the aim of creating a maximum shareholder value.
=iven the increasingly footloose character of #maritime$ traffic, it might be
inappropriate for a port trying to keep this kind of traffic at any cost. 'f powerful
actors in a specific logistics chain exert strong pressure on a port, because of
economic rent generated elsewhere in the chain, it might be wise for the port to ,opt
out- of this chain. For instance, the port community is rarely involved in load centring
decisions of shipping lines. 9owever, many of the costs arising out of hub selection
are borne by the #port$ community #lack, /77+$. The port-s ability to raise tariffs,
even when justified by rising costs, is very limited as a function of concrete market
considerations. 'f the costs and benefits of achieving hub status cannot clearly be
distributed e<ually between shipping lines and ports, the position of the port is no
longer sustainable.
The increasing bargaining power of some market players #in particular shippers and
carriers$ undoubtedly will reshape the relationships with port authorities and even
with the government. &owerful market players will more and more step to the
foreground as direct interlocutors not only on the operational level of port activity, but
also in strategic matters related to port planning and port policy. They will more than
ever establish the base lines for pricing. All this will certainly have an effect on the
necessary stakeholder relationship management.
/*
The increased bargaining power of some market players is clearly illustrated by
looking at the concept of a dedicated terminal. ;y means of dedicated terminal
shipping companies can establish port infrastructure at their own expense #cf. e.g.
"aersk ealand in Algeciras, ;remen and !otterdam$. This may create <uite specific
legal problems with regard to property law and the territorial competence of the
public port authority. An important issue in this context is the <uestion whether the
port operator-user in possession of a dedicated terminal holds a dominant position. 'n
general terms, a dominant position means that a player is able to prevent effective
competition in the marketplace due to the fact that he can act largely independently
from competitors and customers, and ultimately from consumers too #9uybrechts et
al, *++*% /*1$. 't all depends on the substitutability of the facility, whence - once
again - the importance of applying !" in order to avoid conflicting #c.<. dominating
or abusing$ situations.
The distri2)tion of 2enefits and costs related to ports
The external spill-over effects of ports never have been greater. At the same time, the
economic effects of seaport activities are no longer limited to the local environment
#i.e. the port region and the local market players$, but are spread over a much wider
geographical area and among a large number of international players. 'n other words,
the economic benefits of port activities are expanding from the local port system
towards a much larger economic system #;enacchio 2 "usso, *++/$.
The geographical dispersion of economic effects is very apparent when a port does
not concentrate on developing local value-added activities linked to transit cargo
#intermediacy-based as well as centrality-based flows$ or on establishing a strong
local industrial and logistic cluster. 'n that case cargo flows are just passing without
generating a lot of employment and value-added for the local community. The
changing distribution of benefits is also illustrated by the development of logistics
5ones in the vicinity of seaports or in inland locations along the main corridors
towards the hinterland #supported by growing containerisation and inter-modality$.
These logistics sites and 5ones in many cases generate considerable economic effects
by providing low-end and high-end value-adding logistic activities and only use large
load centres as a transit point for their cargo. )evertheless, it is <uite unlikely that
these sites and 5ones would have developed were it not for the presence of seaports.
For example, the functional interactions between the ports of Antwerp, !otterdam and
logistics 5ones in the hinterland have created a large logistics pole. Antwerp and
!otterdam are the central nodes driving the transport dynamics in this logistics pole.
;ut at the same time Antwerp and !otterdam rely heavily on the hinterland nodes to
preserve their attractiveness #)otteboom, *+++$.
The benefits tend to become less concentrated in the local port region but at the same
time negative side-effects of port activities are primarily felt at the local level.
/0
A large part of the population takes seaports for granted and is woefully ignorant of
how the port is organi5ed and operated and to what extent the port contributes to the
local economy
*
. "ore attention is given to the fact that the growth of a port in many
cases goes hand in hand with increasing negative effects for the local community,
such as road congestion, intrusion of the landscape, noise and air pollution and the use
of scarce land. ome community groups argue that there is a clear imbalance between
the benefits and costs for the local community of having larger and larger ports. This
viewpoint is a breeding ground for major socio-economic confrontations related to
port development.
'n view of developing sustainable stakeholder relations, port managers and
government bodies nowadays #have to$ spend a lot of time in trying to make sure that
new port developments are socially broadly based. &orts cannot and must not take
broad public support for development plans for granted. This aspect of port
competitiveness will undoubtedly become more important in the near future as
resources such as land are becoming scarcer and as broader social and environmental
functions are challenging the economic function of seaports. The more international
the maritime and port industry becomes, the more energy will have to be put in
embedding the port in the local community.
The increasing press)re on local reso)rces
&orts use resources in order to consolidate their position in worldwide logistic and
transport networks. The <uestion remains whether the local community is getting a
fair input payback for the scarce local resources used for creating economic rent. For
instance, land for new port developments has become very scarce. )evertheless, land
sites for port activities are sometimes ,sold- on the market for less than their intrinsic
value. ;y doing so, port managers hope to attract new clients. 4nce a new port client
starts operations, the less than correct input payback for port land would be
compensated abundantly by value-added creation #local employment, investments,
taxes and profits$. 9owever, one has to keep in mind that many powerful port users
are extracting a large part of the economic rent produced by ports, so the issue of a
correct input payback for the local system remains a tricky one.
takeholder relationship management should take into account the increasing pressure
on local resources. &ort authorities should make the relation between the price for
scarce resources on the one hand and the socio-economic payback on the other more
transparent both to port users and community groups. >ack of transparency feeds the
suspicion among port companies and clients on the existence of price discriminating
behaviour in favour of some companies #e.g. in terms of land lease agreements or port
dues$ and might lead to harmful socio-economic confrontations in this field.
*
ometimes ports like to overestimate their economic impact. The <uestion is not that ports add
economic value J but, given the level of economic subsidy, could there have been more economic
value created by an alternative deployment of the subsidy K The answer to this kind of <uestion is far
from straightforward. There might be industries with higher value-added per invested or subsidi5ed
unit, but the high returns in such industries in many cases partly relies on the performance of a port
system that takes care of cargo handling and logistics.
/:
Investments in port infrastr)ct)re
(conomic theory proves that optimal working conditions only exist when a fairly
good e<uilibrium exists between supply and demand. Achieving such an e<uilibrium
in real world conditions never has been an easy task.
'n the past, most (uropean governments have predominantly funded the majority of
large infrastructure works in (uropean container ports. These governments now want
to curb their financial participation in terminal development projects as they face
declining available funds. "oreover, this development is enhanced by the (uropean
.ommission-s statement that the assumed high level of distortions in (uropean inter-
port competition results from public interventions #including subsidies for port
infrastructures$ at the national and sub-national levels in various (D "ember tates.
The expected gradual withdrawal of governments in the financing of terminal
infrastructure might confront even the largest and most prosperous ports in (urope
with severe financial pressures to keep their competitive edge.
(ven with the current rise of self-financing investors in port infrastructure #being
autonomous public port authorities$ it remains extremely difficult to install a
comprehensive port capacity regulation and to lower the apparent danger of structural
overcapacity. 't is more than an open <uestion whether port authorities will take
action to co-ordinate their ambition in capacity #building$ with other ports or whether
it will be primarily up to the market mechanism to reduce overcapacity.
The changes to be expected in the way port infrastructures are financed, urgently
re<uire reconsideration of the many stakeholder relationships, i.e. with governments
and shareholders, with primary economic stakeholders and the indirect or community
stakeholders as well. "uch of the port policy debate in (uropean countries is directed
toward the establishment of effective relationships between the private port industry,
public or private port authorities and central government.
SM$ R$(&$CTINS N SRM IN T#$ (&$MIS# 'RT
S9ST$M
The 'ort !ecree as a tool for SRM among port a)thorities
The seaport system of Flanders consists of four ports% Antwerpen, Leebrugge, =hent
and 4stend. Total cargo throughput in *++/ amounted to some /7+ million tonnes of
which /0+ million was generated in the port of Antwerp. The Flemish port authorities
operate basically as landlords. 'n recent years, their position and role has changed as a
result of developments on the international markets, including a general concentration
in the maritime container transport sector, greater port volatility on the part of
container shipping companies, the allocation of dedicated terminals in competing
ports, etc.. .
The former instant fights for public support between the ;elgian #since /77+ Flemish$
government and among the four Flemish port authorities has come to an end by
structuring the relationships between port authorities and governments in the
/1
framework of the &ort 6ecree #"arch *
nd
of /777$. The &ort 6ecree has moved the
Flemish ports towards full corporatisation. The decree covers the rules and conditions
for a higher managerial autonomy for each Flemish port, via a shift towards an
independent legal status. As a result the public port authorities have been transformed
towards a more autonomous status. Although port authorities still have strong ties
with their respective municipalities through the ownership structure, decision in the
last three years are made on an independent basis and port managers are accountable
for these decisions.
The &ort 6ecree-s objectives are e<ual working conditions for the Flemish ports, the
creation of clear and transparent relationships among Flemish ports and some general
guidelines with respect to investments in port infrastructure and maritime access
routes #Flemish &ort .ommission, /77E and /777$. The final aim is the creation of an
independent port management system with a sound commercial strategy - including
the possibility to diversify in other ports or activities via financial participation - and
full accountability for the results of administrative and operational activities
#3inkelmans 2 &oelvoorde, /77:$.
The &ort 6ecree not only promotes better port governance structures, it also gives
each port authority more space to develop its stakeholders relationship management
autonomously, under more or less e<ual starting conditions as the other Flemish ports.
't is still too early to measure the full impact of the &ort 6ecree and associated port
management reorganisation on the competitiveness and governance structure of the
Flemish seaports. 4ne of the conse<uences of this new port policy framework is that
all four Flemish seaports are clearly in speaking terms about co-operation much more
than ever before. The Flemish &orts .ommission has carefully built the foundations in
this field. ince /77+ this commission indeed has made several recommendations
regarding ,the establishment of long term port strategy- #/77*$, ,port subsidisation-
#/77*$, ,port management- #/77*$, ,a first draft of port decree- #/770$, ,toward a new
port policy and management- #/770$, ,about strengths and weaknesses of the Flemish
ports- #/77?$, ,on financing port investments- #/77?$, and ,about strategic port
planning- #*++*$.
The (lemish 'orts Commission as a stakeholders meeting point
The &ort 6ecree of the Flemish government includes paragraphs on the role of the
Flemish &orts .ommission as an interface between the public administration of ports,
the port authorities and the #trans$port industry in the renewed policy framework and
the changing market environment.
The current composition of the Flemish &orts .ommission is depicted in Figure 0.
/C
(ig)re 6: Composition of the (lemish 'orts Commission as from 4::*
'ource( the authors, own representation
>egend% formal relationships informal #informative$ relationships
The compositional structure of the F&. is rather original in the sense that #/$ neither
public departments8ministries nor external experts can exert any direct influence on
the decision making process of the commission, #*$ the port authorities never possess
a majority of votes - even if they exceptionally would all fully agree, and #0$ strategic
and administrative confrontations are fostered in view of gaining a sound balance in
potentially conflicting interests. The majority of votes belongs to representatives of
trade unions and employers, not to those who are directly involved in #or committed
to$ one specific port. These representatives are indeed expected to consider port
policy, port development and management not as the final aim but as means to
enhance regional and societal welfare. The civil servants from various relevant
ministries, who are expected to act in the same direction, however are expected to
inform their relevant minister#s$ of transport #infrastructure$ and mobility, and as such
they can be asked J whenever considered necessary - to inform the .ommission,
which will then come to its own conclusions under the form of advice or a
recommendation to its minister. 'f this recommendation is formulated by unanimity
/?
Board of
Ministers
Minister o
#ublic (orks' Transport
and
Spatial #lanning
Bepartment o
Maritime Transport
and Seaport
#ort
2utorities !33%
Representatives
o Inland !"%
Transport Modes
(&$MIS#
'RT +6:.
CMMISSIN
E-ternal
e-perts
Representatives
o trade unions !7%
Representatives o
Employers !7%
(orking group
port
pro1ects
(orking group
competition C
management

Board of
Ministers
Minister o
#ublic (orks' Transport
and
Spatial #lanning
Bepartment o
Maritime Transport
and Seaports
#ort
2uthorities !33%
Representatives
o Inland !"%
Transport Modes
(&$MIS#
'RT +6:.
CMMISSIN
E-ternal
e-perts
Representatives
o trade unions !7%
Representatives o
Employers !7%
(orking group
port
pro1ects
(orking group
competition C
management
EXECUTIVE
BOARD
then the minister is compelled to follow it. 9e or she is also compelled to ask for
advice whenever the #port$ project involves public means of more than /+ million M.
6uring its rather short period of existence F&. succeeded in producing a whole series
of advices, recommendations and reports, which have had a very positive influence.
ince the installation of F&., port authorities show less opportunistic behavior and
local rationality when port #extension$ projects are at stake. The confrontation of
ideas, proposals and plans in the bosom of the F&. finally have created a constructive
climate and a growing mutual understanding, esp. with respect to the existence of
many common interests in the field of the ever changing maritime world.

At the moment a series of strategic plans for every seaport in Flanders are at stake. 'n
accordance to the proposed stakeholders approach it should become very clear that
economic and ecological reasoning is to be compromised. The best way to come to
consistent and coherent conclusions is to start from a well understood long term
strategic vision and to integrate as much as possible into the debate the relevant
shareholder and stakeholder visions
. uch strategic studies are to be fulfilled neither top-down nor bottom-up, they
should reflect the so-called goals-down, planning-up approach. Top-down planning
typically results in incoherent compilations of local port plans. ;ottom-up planning at
first sight looks more promising, but due to local rationality and opportunism macro-
and socio-economic objectives are under pressure. The ,goals down - plans-up-
approach is to be preferred. 'n that case the government e.g. proposes to define first of
all the Astrategic intentsB in collaboration with the individual ports concerned and asks
the port authorities and port industry to come up with their own strategic plans that
comply with this intent. 'n view of getting the necessary structured strategic and
administrative confrontations, the government can establish a coordinating body. The
final aim is to achieve a dynamic balance between on the one hand macro-economic
objectives and on the other hand micro-economic goals. &ort operators and port
authorities are no doubt the core actors in the development of specific port projects,
nevertheless other stakeholders - amongst which the government - play a very
important role and therefore should get a full but well-structured opportunity to fulfil
their role in the interplay of forces and to ensure that essential macro-economic goals
are not neglected.
;y means of a well-structured !" a wider socially relevant port planning can be
achieved. 'n that case the port could find out how to defend and how to bring into
operation the thesis, that not only well-being, but the degree of welfare too is
important as a focus in achieving sustainable development.
A result of !"-activities could be that the strategic port planning process could
include a new kind of studies, i.e. an A'(!-studyB #'nfrastructure (ffect !eporting$ in
addition to the classical A"(!-studyB #(nvironmental (ffect !eporting$. 'ndeed, both
the protection of the environment and the re<uirements of infrastructure are today
affected by considerations of scarcity and the concepts of public good and merit good.
'n ;elgium more than one port project is hampered by the sudden application of new
environmental regulations #e.g. the habitat and bird regulations$ even in cases where it
concerns port areas, which have been reserved for port extension since long ago.
Apparently the possible mutual interests J of the port in terms of space needs and of
/E
the community in terms of safeguarding free spaces - are not finding any hearing so
far. This might be due to the non-existence of any good !" policy in the context of
port development.
CNC&"SINS
A port both technologically and economically is a node for contacts and contracts,
whereby a multitude of individuals and interests #should$ collaborate for the creation
and distribution of wealth. &ort managers should carefully take into account that new
politico-economic situations exist, which make the success of a port no longer
dependent exclusively on its own performances. "any other #f$actors and situations
determine a port-s success, including
pro-active behaviour of environmentalists, the non-expert vision on port extensions
by N men in the street O, etc.
The <uest for a port-s survival will encourage port managers to develop takeholder
!elations "anagement tools that allow them to treat the employees well, to act fairly
and honourably towards port companies and port users, and to conduct responsible in
relation to the environment and society.
Peystones in !" include the identification and classification of internal and
external stakeholders, the measurement of the influence of various stakeholders on the
port-s functioning, the management of the influential relationships with stakeholders
and the development of appropriate time plans for the structuring of stakeholders-
participation in port activity and development processes.
ome developments in the port environment urge a well-balanced !". These
developments are related to hori5ontal and vertical integration at the level of market
players, the emergence of powerful players, changes in the distribution of benefits and
costs related to port activity, the increasing pressure on local resources and the
investment issue in port infrastructure.
This discussion paper did not provide the reader with straight answers to all aspects of
!". 't should therefore be regarded as a step towards further research in this field
on a case-by-case basis.

&IST ( R$($R$NC$S
A!=()T', H., /77?, takeholders% the case against, -on) .an)e P!annin), 0+#0$, ::*-::1
;()A..9'4, "., "D4, (., *++/, &orts and (conomic 'mpact% main changes,
assessment approaches and distribution dise<uilibrium, Transporti Europei #Quarterly Hournal
of Transport >aw, (conomics and (ngineering$, ? #/?$, *1-0C
6( >A)=(), &., *++*, Port competitiveness an$ c!uster )overnance, presentation at the
'T""A conference ,&ort competitiveness-, Antwerp, February 1, *++*
/7
64)A>64), T., &!(T4), >.(., /771, The stakeholder theory of the corporation%
concepts, evidence and implications, Aca$emy of Mana)ement .eview, *+ #/$, C1-7/
F>("'9 &4!T .4""''4), /77E, Annua! .eport, ;russels, (!R
F>("'9 &4!T .4""''4), /777, Annua! .eport, ;russels, (!R
F!A)P(>, (.=., /7E?, Port P!annin) an$ #eve!opment, )ew @ork, Hohn 3iley and ons
=4, !. /77+, (conomic policies and seaports - part 0% Are port authorities necessary K .
Maritime Po!icy an$ Mana)ement, /?, *1?-*?/
9A!A>A";'6(, 9.(., "A, ., R(()T!A, A.3., /77?, 3orld-wide experiences of port
reform. 'n% "eersman, 9., Ran de Roorde, (. #ed$ Transformin) the port an$ transportation
business. >euven, Acco, /+?-/:0
"A!T'), H., T94"A, ;.H., *++/, The container terminal community, Maritime Po!icy an$
Mana)ement, *E#0$, *?7-*7*
"'>>, !., 3(')T('), ;., *+++, ;eyond shareholder value J !econciling the hareholder
and takeholder perspectives, /ourna! of 0enera! Mana)ement, *1 #0$, pp. ?7-70
)4TT(;44", T., 3')P(>"A), 3., *++/, tructural changes in logistics% how will port
authorities face the challengeK, Maritime Po!icy an$ Mana)ement, *E #/$, ?/-E7
)4TT(;44", T., 3')P(>"A), 3., *++/b, !eassessing public sector involvement in
(uropean seaports, Internationa! /ourna! of Maritime Economics, * #0$, p. *:*-*17
9A)P"A), ).A., /777, !eframing the debate between agency and stakeholder theories of
the firm, /ourna! of *usiness Ethics, /7, pp. 0/7-00:
>A.P, ;., /77+, 'ntermodal transportation in )orth America and the development of inland
load centres, Professiona! 0eo)rapher, :*#/$, pp. ?*-E0
D).TA6, /7E1, Port #eve!opment( A 1an$boo" for p!anners in $eve!opin) countries, )ew
@ork.
3')P(>"A), 3., )4TT(;44", T., /77:, Ports as no$a! points in a 0!oba! Transport
'ystem, paper presented at ("'&-7:, !otterdam, *: Hune /77:, // p.
3')P(>"A), 3., *++*, trategic eaport &lanning% in search of core competency and
competitive advantage, Ports an$ 1arbors, 'A&9, April *++*, :?#0$, /?-*/.
3')P(>"A), 3., &4(>R44!6(, (., /77:, &ort !eforms in ;elgium, a earch into
)ew "anagement tructures and 6ecision &rocedures, Maritime Transport an$ -o)istics in
the New Europe #(d. Dniversity of =dansk$, =dansk, /11-/E/.
*+
This paper is part of the
IAME Panama 2002 Conference Proceedings
The paper has been anonymously peer reviewed and accepted for presentation by the
'A"( &anama *++* 'nternational teering .ommittee
The conference was held on
1 ! 1" #o$em%er 2002
in Panama
The complete conference proceedings are published in electronic format under
http%88www.eclac.cl8Transporte8perfil8iameSpapers8papers.asp
For further information contact jhoffmannSeclacTyahoo.com
*/