The function of port authorities approaching from traditionl to modern views

This paper studies four basic functions of the port authorities, and the ways to approach based on the changes in traditional opinions to modern one about the port, especially intensively explain about the new functions of the port authorities. This article inherits from the theories of the scholars in the world, and then suggests some policies when building the port authority model today

CELEBRATE VIET NAM TEACHERS’ DAY 20/11/2018 THE FUNCTION OF PORT AUTHORITIES APPROACHING FROM TRADITIONL TO MODERN VIEWS TRAN HOANG HAI Faculty of Political Theory, Vietnam Maritime University Abstract This paper studies four basic functions of the port authorities, and the ways to approach based on the changes in traditional opinions to modern one about the port, especially intensively explain about the new functions of the port authorities This article inherits from the theories of the scholars in the world, and then suggests some policies when building the port authority model today Keywords: The port authorities, the functions of the port authority, the port Tóm tắt Bài báo nghiên cứu bốn chức quyền cảng Cách tiệm cận dựa thay đổi quan điểm truyền thống đến đại cảng biển, đặc biệt báo sâu giải thích chức “mới” quyền cảng Bài báo có kế thừa từ lý thuyết học giả giới, từ có gợi ý sách xây dựng mơ hình quyền cảng Từ khóa: Chính quyền cảng, chức quyền cảng, cảng biển Introduction In the recent years, building the port authorities has been a controversial question There are many different opinions about this model The question is how to build the port authorities? Obviously, building the port authorities requires vigilance when setting targets, and its organizational structures The port authority model appeared in the world long time ago The process of building the port authorities has had significant improvements since the opinions about the port changed: The book “port economics” defines: Port is a place where transfers people or cargo to or from land These activities take place on the seashore or the harbor Ships transport the products The port may only transfer cargo, or passengers, or both The book named “Elements of port orientation and management” written by Alan E.Branch, in 1986, defines: Port is a place where cargo is loaded and unloaded from the boats Normally, it is linked with other means of transportation According to these traditional opinions, port is the traffic clue, the place in which loading and unloading are implemented from this shipping method to others and vice versa However, according to the modern opinions, in the globalization trend, the awareness on the position and roles of port has changed The port is considered as the link of the transportation chain, which attracts the economic activities, and the clue of transportation activities; therefore, port is the connection between sea and land, becoming the logistic and industrial centre As a result, it plays an important role in the global industrial and logistic system The recent studies about the port are based on modern opinions: In the “Governance in Seaport Clusters” written by Peter de Langen, in 2004, quoted from the book named “Seaport management”, the author uses the definition “Seaport clusters” to emphasize the new opinion about the port According to this opinion, management has to be expanded to port logistic chain, reflecting the relationship between the elements in port logistic chain and its coordination and operation mechanism The functions of the port authorities also need improvements What is Port Authority? The term "Port Authority" has been defined in various ways In 1977 a Commission of the European Union defined a Port Authority as a "State, Municipal, public or private body, which is largely responsible for the tasks of construction, administration and sometimes the operation of port facilities and, in certain circumstances, for security." This definition is sufficiently broad to accommodate the various port management models existing within the European Union and elsewhere The UNCTAD Handbook for Port Planners in Developing Countries lists the statutory powers of a National Port Authority as follows (on the assumption that operational decisions will be taken locally): - Investment: Power to approve proposals for port investments in amounts above a certain figure The criterion for approval would be that the proposal was broadly in accordance with a Journal of Marine Science and Technology No 56 – November 2018 87 CELEBRATE VIET NAM TEACHERS’ DAY 20/11/2018 national plan, which the authority would maintain; - Financial policy: Power to set common financial objectives for ports (for example, required return on investment defined on a common basis), with a common policy on what infrastructure will be funded centrally versus locally; advising the Government on loan applications; - Tariff policy: Power to regulate rates and charges as required to protect the public interest; - Labor policy: Power to set common recruitment standards, a common wage structure and common qualification for promotion; power to approve common labor union procedures; - Licensing: When appropriate, power to establish principles for licensing of port employees, agents, etc; - Information and research: Power to collect, collate, analyze and disseminate statistical information on port activity for general use, and to sponsor research into port matters as required; and - Legal: Power to act as legal advisor to local port authorities The functions of the port authority 3.1 The functions of the traditional port authority The traditional port authority has three primary functions: Owner, Regulator and Operator a Owner function This function allows the port authorities to own the hinterland, port water The port authorities manage, maintain, develop the port infrastructure, and implement the connection policies contributing to port exploitation The owner function is regarded as the main function of the port authorities, even when mentioning about Value Chain Three basic factors affecting to the owner function are: + Pressures on competitive investment to port infrastructure; + Financial pressures; + The competition for land-use, b Regulator function The supervision function of the port authorities is the combination responsibilities This function includes checking, supervising, and handling related to safety and security of boats and cargo activities in the port protection and labor regulations In some cases, the relevant authorities will about these fields and use the private inspector forces between tasks and with basic problems area; environmental build their own rules c Operator function The operator function includes providing the port services, comprising three main groups: transferring products and passengers to or from land; providing maritime technique services (Pilot, landing) and many additional services 3.2 Community management function (The new function of the port authorities) The new opinion about the port is considered as a luster, or an economic area appearing plenty of forms of services and new infrastructure such as railways, roads, supporting industrial zones, and logistics, Besides, privatization has been popular in the major ports in order to take advantages of source of capital from private economic sector Space and port ownership expansion requires the port authorities taking up a new function: community management function Let us consider the problem of a firm interested in maximizing the net benefit from capital (k), defined as the difference between benefit (B) and costs (C) This problem can be simply formulated as: max [B(k) - C(k)] (1) B’(kp) = C’(kp) (2) k The solution to Equation (1) is: where kp is the private solution, i.e the level of capital that a firm would choose if it did not consider the presence of externalities In Figure 2, the private solution is represented by point A 88 Journal of Marine Science and Technology No 56 – November 2018 CELEBRATE VIET NAM TEACHERS’ DAY 20/11/2018 Figure The consequences of positive externalities in port clusters However, integration into the production function of firms operating in a port cluster often generates positive capital externalities, as well argued by De Langen (2003) This, in turn, implies that Eq (1) can be reformulated as: max[B(k) - E(k) - C(k)] (3) k where E(k) are positive capital externalities The solution to (3) is: B’(k*) + E’(k*) = C(k*) (4) Which corresponds to the social optimum in Figure It is also clear from Figure that the presence of positive externalities may lead to a sub-optimal level of capital in the cluster, because k*>kp Therefore PAs should be conceived as cluster managers able to coordinate and maximize investments in order to fill the gap between kp and k* In fact, as argued by De Langen (2003), an ideal cluster manager should be characterized by: a) Incentives to invest with subsequent direct and indirect investment costs recovery; b) A budget constraint strictly linked to seaport performance; c) Incentives to participate into public-private partnerships with other stakeholders in the cluster; d) A commitment to invest only in projects for which coordination failures among firms lead to a clear underprovision of the good In order to meet those criteria, the cluster manager should be able to levy a “cluster tax (De Langen, 2003), i.e its costs should be recovered by revenues as a direct or indirect function of port performance However, as will become clear in the next section, the governance of Italian ports is especially complex, and the role of PAs is very limited, unless a necessary reform on PAs financial autonomy is carried out Conclusions and contact with Vietnam seaport management In the globalization trend, changing in awareness on seaport from traditional opinion to modern one results in the appearance of a new function of the port authority: community management This is very important when building the port authority model in each country When building this model, it is necessary to focus on four basic functions of the port authorities With regard to Vietnam ports, in the coming years, it‘d be better to choose the port landlord model, organize and manage the ports by the port authorities This will bring the following advantages: - Build and develop the ports with the plan and strategic orientation; - Eradicate separation, fragmentation and scattered planning in investment in the construction of Vietnam ports; - Tackle mass investment and oversupply; maximize the efficiency of exploiting the ports and the land in the back of the ports; - Mobilize the domestic and international private capital to invest in the construction of port infrastructure; - Take advantages and flexibility in port management and exploitation; - Charge the bridge and harbor fees, landing fees and the values of port land; Journal of Marine Science and Technology No 56 – November 2018 89 CELEBRATE VIET NAM TEACHERS’ DAY 20/11/2018 - Ensure to choose the efficient operators with the optimal charge - Step by step develop goods supply chain with the nuclear (the ports) However, it is difficult to apply simultaneously this model in Vietnam ports due to the difficulties in laws, the current management situation, and the invested capital in building ports Revising the existing regulations on land, navigation, and fees,… affects the functions and missions of state management organ, Vietnam marine bureau, port authorities, enterprises, and many companies of marine safe As a result, we should apply the port authorities’ organizational model to the large ports, which have the advantage of size and can be the international commerce port in the region and over the world REFERENCES [1] Athanasios A Pallis & Theodore Syriopoulos, Port governance models: Financial evaluation, Transport Policy, pp.232-246, 2007 [2] Branch, A E., Elements of port operation and management, New York : Chapman and Hall Ltd, 1986 [3] Chris Peeters, Jaap Reijling Ad Verbrugge.The governance structure of port authorities: Striking a balance between economic, social and environmental goals, Conference University of Antwerp/TPR, 2015 [4] G.Burns, M., Port Management and Operations, Parkway NW: Taylor & Francis Group, LLC, 2015 [5] K.Talley, W., Port Economics, New York: Routlege, 2009 [6] Roy Van den Berg, Peter W De Langen, Carles Rúa Costa., The role of port authorities in new intermodal service development; the case of Barcelona Port Authority, Research in Transportation Business & Management 5, pp.78-84, 2012 [7] Stopford, M, Maritime Economics, New York: Routledge, 2009 [8] Talley, K C., Port economics, Amsterdam: Elservier, 2006 [9] Tedeschi, O B., Port Authorities as cluster managers: the case of the Ligurian ports, European Transport \ Trasporti Europei No 39, pp.44-58, 2008 [10] Word Bank, Port Reform Toolkit, 2003 Received: Revised: Accepted: 90 11 January 2018 07 March 2018 13 March 2018 Journal of Marine Science and Technology No 56 – November 2018 ... 3.1 The functions of the traditional port authority The traditional port authority has three primary functions: Owner, Regulator and Operator a Owner function This function allows the port authorities. .. oversupply; maximize the efficiency of exploiting the ports and the land in the back of the ports; - Mobilize the domestic and international private capital to invest in the construction of port infrastructure;... authorities to own the hinterland, port water The port authorities manage, maintain, develop the port infrastructure, and implement the connection policies contributing to port exploitation The owner function