Competition vs. cooperation between neighbouring ports: A case study in Chile

Abstract

Since the mid-twentieth century, economic growth has yielded a major transformation in the maritime transport industry and, subsequently, in the way ports are organized and managed. The generalization of containerised cargo, accompanied by the increasing size of container ships, have not only changed port infrastructure and operations, but also affected many carriers' decisions, who now tend to concentrate their routes on few larger ports, instead of distributing them among nearby smaller ones. The way these changes might reshape competition and cooperation across ports is studied in this article using the Chilean experience as a case study. Thus, under the coverage of a theoretical model on inter-port competition in capacity and location variables, we analyse the relationship between the Chilean ports of San Antonio and Valparaiso, both serving the metropolitan area of Santiago, and separated by < 100 km. We particularly focus on their potential gains under the existing Government plans of building a large-scale port as a hub to attract ships of up to 18,000 TEUs, a prospective cooperation strategy of capacity sharing that could be viewed as a win-win alternative to competition.