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Competition between the ports of Hong Kong and Singapore: a structural vector error correction model to forecast the demand for container handling services

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  • King-Fai Fung

Abstract

The objective of this paper is to provide the Hong Kong government with an alternative forecast of container throughput, by studying various interactive relationships between major ports in East and Southeast Asia. As the demand for container handling services is 'derived' from the demand for imports, the resulting market shares for the container handling services gripped by different regions inevitably become a mirror image of the relative competitiveness of their exports. When the markets of the two ports overlap, their market shares will become a function of the prices they charge and how well they meet the needs of the shippers and shipping lines. A vector error correction model (VECM) with structural identification was set up to capture this kind of trade-interdependency and oligopolistic relationship in the East and Southeast Asian market for container handling services. In the course of so-doing, the upward sloping supply curves and downward sloping demand curve for the container handling services provided by Hong Kong and Singapore are identified from the model. Interestingly, the impulse response functions display what is reminiscent of the trade-interdependency and oligopolistic relationship. The forecast of Hong Kong container throughput generated by the structural VECM is then compared with that obtained by the Hong Kong Port Development Board (PDB). The sensitivity analysis shows that, in all possible cases, the structural VECM produces higher growth paths for the Hong Kong container throughput than the PDB does and, hence, suggests an earlier construction of new terminals.

Suggested Citation

  • King-Fai Fung, 2001. "Competition between the ports of Hong Kong and Singapore: a structural vector error correction model to forecast the demand for container handling services," Maritime Policy & Management, Taylor & Francis Journals, vol. 28(1), pages 3-22, January.
    • Handle: RePEc:taf:marpmg:v:28:y:2001:i:1:p:3-22
    DOI: 10.1080/03088830119563
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    1. Yip, Tsz Leung & Liu, John Jianhua & Fu, Xiaowen & Feng, Jiejian, 2014. "Modeling the effects of competition on seaport terminal awarding," Transport Policy, Elsevier, vol. 35(C), pages 341-349.
    2. Lam, Jasmine Siu Lee & Yap, Wei Yim, 2011. "Dynamics of liner shipping network and port connectivity in supply chain systems: analysis on East Asia," Journal of Transport Geography, Elsevier, vol. 19(6), pages 1272-1281.
    3. Cheng-Hsien Hsieh, 2014. "Disaster risk assessment of ports based on the perspective of vulnerability," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 74(2), pages 851-864, November.
    4. Izabela Kotowska & Marta Mańkowska & Michał Pluciński, 2018. "Inland Shipping to Serve the Hinterland: The Challenge for Seaport Authorities," Sustainability, MDPI, vol. 10(10), pages 1-17, September.
    5. Yadong Wang & Qiang Meng, 2019. "Integrated method for forecasting container slot booking in intercontinental liner shipping service," Flexible Services and Manufacturing Journal, Springer, vol. 31(3), pages 653-674, September.
    6. Jin, Jiahuan & Ma, Mingyu & Jin, Huan & Cui, Tianxiang & Bai, Ruibin, 2023. "Container terminal daily gate in and gate out forecasting using machine learning methods," Transport Policy, Elsevier, vol. 132(C), pages 163-174.
    7. Fung, Michael K. & Cheng, Leonard K. & Qiu, Larry D., 2003. "The impact of terminal handling charges on overall shipping charges: an empirical study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(8), pages 703-716, October.
    8. Zheng, Shiyuan & Ge, Ying-En & Fu, Xiaowen & Nie, Yu (Marco) & Xie, Chi, 2017. "Modeling collusion-proof port emission regulation of cargo-handling activities under incomplete information," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 543-567.
    9. Twrdy, Elen & Batista, Milan, 2016. "Modeling of container throughput in Northern Adriatic ports over the period 1990–2013," Journal of Transport Geography, Elsevier, vol. 52(C), pages 131-142.
    10. Yi Xiao & Shouyang Wang & John J. Liu & Jin Xiao & Yi Hu, 2016. "Throughput estimation based port development and management policies analysis," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(1), pages 84-97, January.
    11. Low, Joyce M.W. & Lam, Shao Wei & Tang, Loon Ching, 2009. "Assessment of hub status among Asian ports from a network perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(6), pages 593-606, July.
    12. Zheng, Shiyuan & Negenborn, Rudy R., 2014. "Centralization or decentralization: A comparative analysis of port regulation modes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 21-40.
    13. Young-Gyun Ahn & Min-Kyu Lee, 2021. "Elasticity of the Number of World Cruise Tourists Using the Vector Error Correction Model," Sustainability, MDPI, vol. 13(16), pages 1-11, August.
    14. Asgari, Nasrin & Farahani, Reza Zanjirani & Goh, Mark, 2013. "Network design approach for hub ports-shipping companies competition and cooperation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 48(C), pages 1-18.
    15. Tan, Zhijia & Li, Wan & Zhang, Xiaoning & Yang, Hai, 2015. "Service charge and capacity selection of an inland river port with location-dependent shipping cost and service congestion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 13-33.
    16. Woo, Su-Han & Pettit, Stephen J. & Kwak, Dong-Wook & Beresford, Anthony K.C., 2011. "Seaport research: A structured literature review on methodological issues since the 1980s," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(7), pages 667-685, August.
    17. Tsung-Chen Lee & Chia-Hsuan Wu & Paul T.-W. Lee, 2010. "Impacts of the ECFA on seaborne trade volume and policy development for shipping and port industry in Taiwan," Maritime Policy & Management, Taylor & Francis Journals, vol. 38(2), pages 169-189, December.
    18. Carlos Pestana Barros, 2016. "Demand analysis in Angola seaports," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(6), pages 676-682, August.
    19. Amir Gharehgozli & Nima Zaerpour & Rene Koster, 2020. "Container terminal layout design: transition and future," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(4), pages 610-639, December.
    20. Cheng-Hsien Hsieh & Hui-Huang Tai & Yang-Ning Lee, 2014. "Port vulnerability assessment from the perspective of critical infrastructure interdependency," Maritime Policy & Management, Taylor & Francis Journals, vol. 41(6), pages 589-606, November.
    21. Su-Han Woo & Stephen Pettit & Anthony Beresford & Dong-Wook Kwak, 2012. "Seaport Research: A Decadal Analysis of Trends and Themes Since the 1980s," Transport Reviews, Taylor & Francis Journals, vol. 32(3), pages 351-377, January.

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