PORT OF SHANGHAI

As the economic market is continuously changing, and consequently, the shipping of cargo and port facilities requires continuous involvements in adopting new strategies and embrace new technology in the port facility. A large number of countries have untaken institutional reform to improve their operational efficiency, port performances, reduce their government financial dependency, and to stay ahead in the competitiveness with other ports. This paper analyses the rationale behind port institutional restructuring, assesses its impact of the privatisation on the ownership structure and the relationship with port performances. This paper further examines a case study of the Rijeka Port, which is currently going through the privatisation process, and advises which restructuring model will be the best applicable for Rijeka. The rationale behind port institutional restructuring is that transportation is a key element in trade markets and serves as the driver of economic growth. Thus, port performances and economic development are interlinked with each other, and port improvements will translate into changes in the port city and into the economy e.g. financial value of the port and job creation (direct and indirect) in the economic port region. In many cases these developments are mostly transferred to the private sector with some subsidies from the state (Port Authority) in order to maximize port benefits. Governments believe that privatisation, by transferring the ownership, aimed at improvements in economic efficiency, will result in better financial and operational performances. Reform in port ownership structure comprises an array of alternative port management and control structures, which are filled and performed by the private and the public sector. From the four presented port governance models, the landlord port model is clearly the favourite model based on existing literature. Which is not surprising, considering the advantages of the model towards the public sector. The rationale behind value creation in the privatisation mode by using the landlord port model is researched in order to justify the impact of the different port ownership structures on port performances. The empirical analysis used 65 ports that underwent institutional transition. Increase in the port throughput has been used as a key performance indicator and explains the ports choice privatisation mode. The Bårdsen and Bewley linear transformations of a general autoregressive distributed lag model (ADL) has been applied in order to get direct estimations of both short run and long run impacts of GDP on the throughput demand. For both the short and the long run, the analysis shows the Landlord Port as the best port governance model with the highest significant influence on port performance in contradiction to the Private-, Service-, and Tool Port. This strengthens the theoretical framework. The port city Rijeka is currently facing a tremendous change with the reconstruction of the Rijeka Gateway Project by using the PPP approach mainly through concession agreement in a Landlord Port Model. The choice of Rijeka of using the port governance model Landlord Port has been reviewed, and based on the literature review and the empirical analysis, the Landlord Port is indeed the best advisable model for the port city Rijeka. The “Landlord Port” model clearly comes out as the winner and favourite port governance model. Although the port governance model “Landlord Port” has been applied in many ports worldwide, Rijeka and each other port should investigate by themselves whether this port governance model is applicable for their port. Each port has his own distinctive features and none of the ports look alike. Furthermore, it should be noted, it can take years before any changes in the port performances become visible and can only be successful unless certain preliminary conditions are met and proper strategies are implemented.