An Explorative Research to Sustainable Container Terminal Concessions: A focus on Intensification in Use of Space as Awarding Criterion

This thesis is the result of a graduation project, conducted at the financial consultancy firm Maritime Transport and Business Solutions, to fulfill the Master of Science program Management of Technology at the faculty of Technology, Policy and Management at Delft University of Technology. This thesis comes forth out the increasing awareness of the port industry on sustainability and the continuous growth of container transport. Dutch ports are more and more constrained by their physical and environmental boundaries. To reduce the environmental and physical constraints of ports, this research aims to examine whether it is possible to stimulate container terminal operators to enhance their environmental performance. Environment is one of the three elements to enhance sustainability. In order to enhance sustainability it is important to increase the environmental performance without compromising the economic and social factors. A port authority has two revenue streams which both can be used to pressure concessionaires and visiting modalities. This thesis focuses on the incorporation of environmental criteria in the concession agreement and thereby the feasibility to exert pressure on the private sector to increase sustainability. This is combined in the following research question, “How can environmental criteria be incorporated in the awarding procedure for port concessions in order to enhance sustainability of container terminal operations?" In order to do so three building blocks are determined that will provide the information. These three building blocks are, - Concession awarding process, - Evaluation methods for port concessions, - Environmental themes. Container terminal concessions are increasingly awarded via a competitive process. This competitive process can consist of private bilateral negotiation or container terminal concessions can be awarded through an open call for tender. In the awarding process environmental criteria are underexposed but already present in the form of existing legislation and permits. The use of environmental awarding criteria is virtually absent in ports with the exception of Maasvlakte 2. For Maasvlakte 2 concessions an environmental management system and modal split criteria have been used as environmental awarding criteria. The developed evaluation method for port tenders does not differ from other investment projects. The Net Present Value technique is used to determine the added value of the container terminal investment for the port authority. The net present value technique is incorporated in the business case which is an analysis of to determine whether an investment for the port authority is worthwhile. The weighed sum is an evaluation model is the most widely applied evaluation model for tenders. The European Commission implicitly refers to use the weighted sum as evaluation model to evaluate the outcome of a tender process. The establishment of weighting is ultimately determined by political decisions. The net present value technique provides insight on the costs or benefits on the incorporation of environmental criteria and is used as input to apply the weighted sum technique. The combination to determine the value of a project with the net present value technique and further develop an evaluation method with the method of the weighted sum provides an evaluation method to combine the best of both worlds. Environmental themes that are important for consideration in the awarding process of container terminals are: - Air quality, - Energy consumption, - Intensification in use of space, - Water quality management, - Noise, - Light - Preservation and development of nature. These themes have come forth out of desk research and the conducted expert interviews. The themes are reviewed by experts in interviews to judge the feasibility of the themes for the construction of awarding criteria. For the port authorities, an expert from the Port of Rotterdam, two experts from the Port of Amsterdam and one expert of Zeeland Seaports are interviewed. To represent the terminal operators one expert of APM Terminals and one expert of Europe Container Terminals (United States Environmental Protection Agency) have been interviewed. Representing the government, three experts of the Ministry of Transport, Public Works and Water Management were interviewed. In order maintain coherence with economic and social parts of sustainability for both these aspects of sustainability an indicator is introduced. For the economic part this indicator is profitability and for social part this indicator is employment. The combination of environmental, social and economical themes represents the sustainability framework. The interviewed experts have acknowledged that incorporation of environmental awarding criteria will stimulate environmental innovation and considering the environment is an increasing dominant factor to maintain their license-to-operate. This license-to-operate is under continuous pressure due to the general trend in society to enhance sustainability. In order to cope with the general trend in society the experts have indicated that intensification in use of space is the most important theme to enhance sustainability. Dutch ports and society are constraint by the physical constraints of the country. To be able to expand the ports’ transshipment without physical expansion benefits the port authorities and society in general. Society in general benefits due to the reason that space can therefore be utilized for other purposes, as housing or recreation for instance. Therefore an indicator for this theme is developed which is based on terminal efficiency and is calculated by the annual throughput per square meter. The second stage of this research has reviewed the feasibility to incorporate intensification of space in the awarding process. To be able to provide sensible comment on this topic, two cases were abstracted from real terminals. The straddle carrier terminal and the change needed in a rail mounted gantry crane terminal. On basis of their differences the needed change to increase sustainability in port operation is mapped. The analysis of the reference terminals was divided in a financial review, an environmental analysis and the application of the evaluation methodology. The reference terminals have revealed that in Hong Kong intensification of space is possible on basis of current practices. The reference cases served as input for the financial review. A business case served as financial review. The business case has revealed that intensification of space is financially feasible. The financial analysis has indicated the trade-off between the economic indicator, profitability and the environmental indicator, space. Based on this business case the performance measures and scoring functions for the weighted sum are constructed. Both reference container terminals are subjected to an environmental analysis based on the sustainable framework of environmental, social and economical themes. This analysis has indicated that the rail mounted gantry crane terminal will have similar of better environmental and social performance than the straddle carrier option. However, due to the higher investments needed to realize the rail mounted gantry crane terminal the profitability of this terminal is lower. To assess whether incorporation in use of space will actually enhance the sustainable performance of container terminals an expert meeting has been held. The port experts of MTBS have revealed that the total sustainability can be determined when all of the above mentioned themes are quantified. Therefore, at this stadium no conclusion can be provided whether the sustainability of container terminals is enhanced with the incorporation of space. However the The general conclusion of this research is that it is possible to enhance the environmental performance of the port by integrating environmental criteria the concession agreement. Based on reference cases the financial, technical and environmental feasibility of the environmental criteria can be determined. The input following from the business case can be used as input for the evaluation model. The application of the weighted sum technique will determine the performance measures and scoring functions of the environmental criterion. When incorporating environmental criteria in the awarding procedure it is important to consider that the environmental criteria are measureable and are attributable to the party responsible. The incorporation of environmental criteria will lead to additional costs without generating additional revenues for port authority and terminal operator. However, from the expert interviews follows that incorporation of environmental criteria is necessary to respond to the general trend in society where environment is becoming an increasingly important topic to maintain their license-to-operate. This implies that environmental criteria have great potential to be incorporated in the near future.

Subject

concessions
tender procedure
intensification in use of space
port
environmental criteria

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http://resolver.tudelft.nl/uuid:971623d0-707c-4cf5-959e-a2d594869525

Embargo date

2010-09-30

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Student theses

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master thesis

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