Port Investment and Container Shipping Markets

Large-scale port projects have irreversible effects on land use and multiple impacts on the local economy and local community. They affect the way that the regional and national economy operates as a whole, with major impacts on regional transport systems. Port planners make better decisions when these broad impacts are examined as part of the development of a national freight transport and logistics strategy. Private investment in port terminals is also facilitated by the certainty engendered by development of a national freight transport and logistics strategy. This report examines the issues that need to be considered before the decision to proceed to costly expansions with long-life spans and a structural influence on the local and national economy. The report benefits from a case study of Chile, where plans for a major expansion of port capacity in the central part of the country are well advanced. Chile provides the detail for an examination of factors critical to decisions on container port investments anywhere: demand forecasts, change in liner shipping markets, hinterland transport capacity, competition between container terminals, and the framework for financing of investment.