Monument Economics Group is pleased to share Dr. Paul Kent’s new paper in his For the Beauty of Logistics series: “Port Competition Regulation Revisited: Competition, Integration, and the Logistics Corridor.”
The paper represents something of a return to where Dr. Kent began. His doctoral dissertation, completed more than 25 years ago, examined port privatization and developed a model for monitoring anticompetitive behavior in highly concentrated port markets. That work led to subsequent research on port competition regulation, and elements of the analytical framework were later incorporated into the Regulatory Module of the World Bank’s Port Reform Toolkit.
Much has changed since then. Ports have become larger, carrier and terminal industries more concentrated, logistics chains more integrated, and relevant competitive markets increasingly difficult to define around a single terminal—or even a single port. At the same time, port competition regulation has returned to the policy agenda. Recent issues involving Chancay in Peru, the proposed Tecon Santos 10 concession in Brazil, DP World’s acquisition of Silk Logistics in Australia, and vertically integrated shipping and logistics services in Kenya illustrate how familiar competition questions are reappearing in a more complex logistics environment.
Revisiting the original framework, this paper asks what a Model 2.0 should look like. Among other things, it argues that concentration measures such as HHI should tell regulators where to look, not what to conclude; that competition increasingly needs to be assessed across logistics corridors and, where appropriate, shipping networks; and that regulation should distinguish carefully between the structural potential for market power and evidence that it is actually being exercised.
The paper follows naturally from Dr. Kent’s two recent articles, Performance-Based Port Concession Extensions: A Pragmatic Framework for Renewal in Colombia and Beyond—Part 1, on the evolution of port concessions and the renewal question, and Part 2, on market structure and institutional design. Taken together, the three papers examine related parts of the same problem: how competition is created and preserved through concession design and renewal, how institutional arrangements affect that competition, and how regulators should monitor the market once concessions and investments are in place.
One conclusion runs through all three: regulation should protect competition without undermining the investment incentives on which ports depend.
And, for readers of some earlier For the Beauty of Logistics papers, Maria returns, this time with a considerably more complicated assignment.
Click here to read the full paper.