the port service industry in an environment of change

Geoforum, Vol 20, No 4, pp 447-457, 1989 00167185/8Y $3 oO+O 00

Prmted I” Great Bntam 0 1989 Pergamon Press plc

The Port Service Industry in an Environment of Change

BRIAN SLACK,* Montreal, Canada

Abstract: This paper describes the distinctive characteristics of the service industry linked to ports and shipping. The firms constituting the complex tend to be small and cluster in well-defined spatial agglomerations. The industry as a whole exhibits considerable volatility, with high firm turnover and frequent address changes. Yet it occupies neighbourhoods that have remained stable for many decades. Despite the rapid and extensive changes that have occurred in other urban service sectors and in shipping and cargo handling since the 196Os, few significant effects were felt by the port service industry until the 1980s. This paper argues that the changes presently being felt by the industry are linked most directly to urban redevelopment projects that are transforming neighbourhoods that the port service industry has traditionally occupied.

Introduction

Across the urban waterfront, there are significant linkages between ports and the business sector whose raison d’Ctre is the provision of services to the vessels in harbour, the organization and direction of the movement of ships and their cargoes. These services are important in three respects. First, since they organize and facilitate shipping activities, their efficiency and vitality influence the competitive status of individual ports. An inefficient or poorly developed service sector may detract from a port’s ability to transfer cargoes competitively. Second, the companies that comprise the port service sector have a direct stake in augmenting port traffic. Their own business growth may depend on developing new markets, thus enhancing trade flows through the port. Third, port service firms may represent an important employment sector in port cities.

The changes that are transforming shipping and cargo handling around the world inevitably affect the port service industry. Although there has been a considerable amount of scholarly research on the impacts of these changes on port activity, manufacturing, and urban land use, service sector impacts have been

*Department of Geography, Concordia University, Mon- treal, Canada H3G lM8.

almost completely ignored. This paper, which ex- plores the developments occurring in the port service industry, attempts to redress this imbalance. In order to set the context of the changes, the paper begins by outlining some of the characteristics of the firms in the port tertiary sector, a topic itself that has received little attention. It draws upon research that has been undertaken in a number of case studies. Inevitably, the discussion of the transformations is imprecise and speculative, partly because of the paucity of analyses, but also because many of the changes still have to work themselves through the industry.

Internal Characteristics of the Port Service Industry

Defining the port service industry presents a number of basic problems. Even a cursory examination of a typical port directory reveals a large array of business types. For example, in the Directory of the Port of Baltimore (MARYLAND PORT ADMINIS- TRATION, 1986), a classified index of over 60 business types are listed, most of them in the service sector. While steamship agents and non-vessel- operating common carriers (NVOCCs) represent ob- vious port service categories, customs-house brokers or crane suppliers may have business linkages with other modes as well. In addition, several of the

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listings in the directory are of less direct relevance to the port service sector, such as consuls and laundry services.

In Montreal, only a small number of the 108 business categories in the port directory are deeply linked to the port (SLACK, 1975). A detailed survey of the listings reveals a bipolar distribution of companies in terms of their degree of dependence on the port. A quarter of the firms indicate that less than 4% of their total business activity is port-related. On the other hand, 26% of the companies claim that at least 99% of their business is marine. By selecting the firms claiming at least 50% port business dependence, a delimitation and definition of the service sector is possible (see Table 1). Even here, however, problems are encountered, since a particular firm may claim high port dependence, while no such relation- ship actually exists for the industry sector as a whole. The taxi and electrical repair categories are examples, in which a small number of firms do indeed rely on the port for an important proportion of their business, but generally neither industry grouping is highly port-dependent.

The port service industry, as defined, is made up of several assemblages of businesses. There are companies that provide goods and services to the vessels and their crews while in port: ship chandlers, marine equipment suppliers, marine paints, bars, seamen’s hostels. A second group is concerned directly with the physical transfer of cargoes: stevedores, material handling equipment. The largest group is comprised of firms that organize and arrange the movement of

Table 1. Businesses for which marine activity accounts for over 50% of local business activity*

Cargo surveyors Marine surveyors Chandlers Material handling equipment Chemical companies Naval architects Classification societies Navigation aids suppliers Customs brokers Office suppliers Divers Rope companies Electrical repairs Railroad companies Freight forwarders Steamship agents Fork lift trucks Steamship brokers Grain dealers Steamship companies Importers Stevedore companies Marine contractors Tarpaulin suppliers Marine equipment supplies Taxis Marine insurance Weighers Marine paints

*Source: SLACK (1975).

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vessels and their cargoes: steamship companies and agents, forwarders, ‘customs brokers, marine insur- ante .

Detailed questionnaire surveys of the Montreal service industry indicate several distinctive characteristics (SLACK, 1975; BAZINETand SLACK, 1982). Most of the businesses in the sector are small. This is reflected both in terms of the number of employees, with a median of 15, and in the size of premises occupied, with a median of 303 m2. The use of the median is necessary because a very small number of large firms, such as a major shipping line, distort the mean values. Managers account for 19% of the labour force, while clerical staff form the majority, with 60%. The remainder of the labour force is made up of a mixture of employees, such as messengers and drivers.

As largely office activities, most companies rely on the telephone for communication with other businesses: 75% of the firms surveyed rate the telephone as the premier mode of communication. Second in importance is personal contact, followed by mail and courier services. No significant differences among different types of port service businesses were noted.

Many of these features ae replicated elsewhere. For example, 50.3% of the firms in Hong Kong’s marine transport service sector have fewer than five employees, and only 1.6% employ more than 100 people (HONG KONG, 1982). For the shipping companies alone, two thirds have fewer than 20 employees.

In a study of the freight forwarding business in Singapore, SEAH (1984, p. 15) notes the highly fragmented structure of the industry, with a large number of small local firms. Singapore provides ex- cellent opportunities to explore the entire port service industry because it publishes detailed surveys of the sector. Table 2 summarizes some of the characteristics of Singapore’s shipping services. The size of firms, both in terms of number of employees and office space, are roughly comparable to those in Montreal.

The data also reveal that the productivity of the industry is generally lower than the overall average for Singapore. Referring to the forwarding industry, SEAH (1984) speaks of “mosquito” firms: small, sometimes one-man operations, with limited capitali- zation and minimal overheads. This highlights a further feature of the port service industry in general:

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Table 2. Sample characteristics of Singapore’s port service industry*

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Local shipping lines Stevedores and lightermen Forwarders All-water transport services All services

No. of Value added establishments Employees ($000 Singaporean)

169 5794 582,435 286 3085 58,894 637 6748 160,888

3200 22,509 1,205,525 29,443 259,307 11,545,ooo

Employees

>lO 10-24 25-50 <50

Local shipping lines

83 42 27

9

Stevedores

237 19 19 11

Floorspace (m’)

Forwarders

521 67 24 25

Local shipping lines Stevedores Forwarders

>lO 93 167 248 l&49 24 65 203 50-199 30 44 92 <200 12 12 94

*Source: SINGAPORE (1984).

the ease of entry. For the most part, new firms depend on contacts and the provision of expertise rather than on a large capital base to get established. It is relatively easy, therefore, to gain entry into most types of port service industry. Many firms are started by the former employees of established companies, not surprisingly, therefore, some of the larger firms are concerned that their workers will leave, taking with them the clients they serve.

The low entry thresholds, in turn, give rise to another distinctive feature of the industry: the lack of capital resources and the vagaries of market conditions, which make it difficult for many of the small firms to stay in business. The turnover in companies is great. SEAH (1984) notes that, in 1980, 12% of the forwarders were new firms and 13% had been in oper- ation for less than 2 years, but only 17% had been operating longer than 10 years. Although Montreal’s port service industry is longer established than that of Singapore, similar high rates of turnover are evident. In a detailed longitudinal study, which involved reg- ular lo-year sampling of a business directory, it was shown that 78% of companies appeared only once over the period 1842-1930 (SLACK, 1986). Less than 2% of firms survived for more than 50 years.

While ease of entry gives rise to high mortality rates, there are some positive aspects to low capital thresholds. They provide opportunities for individuals, local entrepreneurs in particular, to become established, thereby contributing to the vitality of the industry. Inevitably, some new companies succeed, enabling their owners, whose initial financial resources may have been modest, to accumulate capital. Detailed tracings of the fortunes of the successful Montreal companies reveal that profits were frequently reinvested in the acquisition of other firms in the port service industry. Figure 1 reveals these ownership linkages (SLACK, 1988). Of over 2000 individuals and firms comprising the port service industry between 1842 and 1930, only one of the long- standing, successful companies, a marine insurance agency, did not acquire any other businesses. The results of this study also reveal the central positions of forwarders and commission merchants in the port service industry. As trade-organizing activities, they have almost daily contact with many other branches of the industry. In Montreal, these associations led, in some cases, to formal business ties.

The Montreal service industry also laid the foun- dations of the fortunes of a number of the city’s most

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BUSINESS LINKAGES IN THE

ri

CUSTOM PORT SERVICE INDUSTRY *OENTS

SIWPINO SHlPPlNG

COMPANES AOENCES m FORWARDERS - STEVEDORES

I

WP-SLRDNG MAemE COMMlSSlON MARME -

SWPLES STORES MERCHANTS lNSURANcE

NUMBER OF LlNKAGES

1-2 3- 7 1 WANDLERS L

S- 14

15 - 23

24 - 35

Figure 1.

important capitalists. Money made in the shipping industry was invested in other economic sectors, such as banking, insurance, transportation and manufacturing (SLACK, 1988). A similar process has been observed in New York (HOOVER and VERNON, 1958). In Southeast Asia, the bases of the commercial empires of many of the large ‘European’ groups (e.g. Mansfield’s, the Bousted Group, Jardine Mathieson, the Swire Group) were based originally in trade and marine services.

It is very likely that the specific characteristics de- scribed above, though based on a relatively small number of cases, can be generalized. The complexity, diversity and uncertainty of transactions involved in cargo transfers and vessel movements require specialized services. In a few cases, these are contained within the firm itself, as in the various departments of a large shipping company. More typically, however, small agencies and brokers are the ones that offer services to customers requiring assistance in shipping specific commodities from diverse locations to different parts of the world. As the international trade system has become more complex in the twentieth century, with a multiplicity of linkages across national boundaries, involving currency, regulatory and safety concerns, the specialist forwarder, customs broker and marine insurance agent have come to play essential roles. The nature of the producer services they perform, providing specialized expertise and dealing with irregular, changing market and regulatory conditions, ensures that firm size remains small. The port service industry is an example of what SCOTI (1986)

has recently termed “vertical disintegration”, in which economies of scale are internalized within an industry complex.

Spatial Characteristics of the Port Service Industry

For an industry characterized by external economies, it is no surprise to discover that port services tend to agglomerate. In their study of the City of London, DUNNING and MORGAN (1971) identified “trading services” as a leading cluster in their factor analysis of business linkages. They commented on the close spatial association among a number of firms tied to trade, such as ship brokers, shipping agents, grain brokers, reinsurance brokers and other kinds of merchants.

The high degree of geographical concentration of the port service industry has also been reported in several other studies. In Vancouver, research has demonstrated the extreme clustering of steamship companies and custom brokers just south of Burrard Inlet, adjacent to the CBD (GRIGGS and TASSIE, 1972). In Hong Kong, the dominance of the Central and Wenchai districts for shipping companies has been observed (WONG, 1982).

For Montreal, the agglomeration is located in Old Montreal, the historic core of the city, adjacent to the waterfront. Detailed investigations of the spatial patterns in this part of the city reveal a number of

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paradoxes (SLACK, 1986). The industry is characterized not only by a high turnover of firms, but also by a high rate of locational mobility. Surviving firms change their addresses with considerable frequency. Over half the companies were found to have occupied their present premises for fewer than 9 years, and over 60% had moved at least once. This mobility is confirmed in Hong Kong, where, of 52 shipping companies surveyed, 43 had moved offices at least once (WONG, 1982). Several factors may be considered to explain these high rates of internal mobility. Most firms are tenants of office space, and, although this fact alone does not induce relocation, it certainly facilitates moves as leases expire. However, perhaps the major factor inducing mobility is the volatility of the sector itself: growth or decline of particular business segments is reflected in changes in the size of premises required.

Despite the internal mobility of its service industry, the Montreal agglomeration has exhibited remarkable locational stability over a 150-year period (SLACK, 1983,1986). From its earliest beginnings in the 182Os, the industry has persisted in a small section of the old downtown core. The shipping-industry quarter consists of a few narrow streets and a number of eighteenth- and nineteenth-century stone office buildings. Indeed, individual buildings have been associated with the service industry for many decades (SLACK, 1986). Maps of shipping services in Cardiff and London recently gathered by HILLING (1987) confirm the strong historical locational persistence. One must conclude, therefore, that, despite a high turnover of companies in the industry and high rates of mobility of survivors, external economies bind together the companies very firmly. The result is that the port service industry occupies a rather unique niche in the urban milieu.

The locational determinants of the port service industry are not immediately evident. Part of the problem lies in the paradox of an industry complex characterized by considerable internal turnover, yet apparently bound to stable locations. Another part of the problem has to do with the relationships between the industry, the port that it serves, and the broader urban service sector of which it is a component, and with the extent to which these relationships shape its location.

Although many port service industry complexes are located adjacent to waterfront sites, there is growing evidence that a port location is not essential. A questionnaire survey of Montreal businesses (BAZI-

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NET and SLACK, 1982) revealed that proximity to the port was ranked lower in importance than near- ness either to other port service businesses or to the central business district (CBD). The persistence of the industry in Old Montreal (SLACK, 1983) is clear confirmation of this fact, since most cargo transfers now take place several kilometres downriver. Further confirmation of this point can be found in Hong Kong. As Figure 2 clearly shows the dominance of the Central (Wan Chai) area on Hong Kong Island in the distribution of shipping companies is striking, and, even though there is a secondary cluster on the Kowloon side (Tsim Sha Tsui), it is far removed from most of the docks (CHU and CHIU, 1984).

The spatial patterns of port service industries appear to indicate that locational associations with central business functions are important. As many urban commercial cores developed adjacent to waterfront sites, such locations were particularly appropriate to marine service businesses. But as cargo handling functions have progressively moved away, port service agglomerations have remained tied to the CBD. WONG (1982) has demonstrated that although Hong Kong’s shipping companies have extensive business contacts with other firms in the port service sector; such as other shipping companies and import/export agencies, the most frequent, important contacts are with banks. This, of course, results in the attractive- ness of CBD locations.

Nevertheless, there is some evidence to suggest that a core CBD location is not of paramount importance. Given the size characteristics of most of the firms in the sector and their generally low levels of capitaliza- tion, the need to minimize overheads, including rentals, is paramount. Although the larger firms may lease ‘prestige’ office space and many may own their premises, most firms, struggling to survive in a very competitive environment, cannot afford the high rents of many CBD buildings. Consequently, they seek out modest premises on the edge of the central commercial core. WONG’s (1982) study of shipping companies (frequently the largest and most capitalized sector of the service industry) reveals that rental costs are the most important factor in the choice of a site. Admittedly, Hong Kong’s rental market is unusually highly priced but it would appear that rental costs are generally a prime factor in the choice of premises for port service industry firms. The persistence of certain addresses in Montreal’s service industry is partially accounted for by the fact that the buildings associated with the industry for over a century are old and largely unrenovated. The rentals

452 Geoforum/Volume 20 Number 4 1989

HONG KONG 8. KOWLOON:

Distribution of Shipping Companies

\ \ / ,

__-- _ -,’ _-- I’

I/

KOWLOON

1’

1 0 1 Km

LEGEND

Number of Businesses

. l 0 0 1 2-5 6-9 10 8 more

----- Mayor Road

Source. liwg Kong G&t. Lands Dept St Survey IJlv .7th ed 1984.

Figure 2.

are significantly below the rates of newer office shift in location of the CBD to a newer ‘uptown’ towers. This also partially explains why Montreal’s location, where rents are significantly higher port service industry has not reacted spatially to the (SLACK, 1983).


Secondary locational factors for the industry as a whole may be principal determinants for one business type in particular. Customs brokers traditionally have been influenced by the location of the Customs House. The requirements of cargo clearance may have become streamlined to reflect changing cargo handling technology, such as containerization, and documents may be distributed electronically, but they have not eliminated the need for the close proximity of brokers and government institutions. The fact that customs agents and brokers are inti- mately linked with other port services results in the Customs Houses becoming an indirect locational determinant for all. Similarly, the location of the Baltic Exchange in London has an impact not only on the shipping brokers and shipping lines, but also on the entire port service complex in the City (DUN- NING and MORGAN, 1971).

Typically, therefore, the port service industry is made up of an agglomeration of firms in the older, less ‘up- market’ sections of CBDs. Indeed, these areas are frequently associated with zones of discard that are usually adjacent to old harbour sites. They represent distinct downtown districts, with a character and ambience that set them apart from adjacent central area functional zones.

Recent Changes to the Port Service Industry

As HOYLE and HILLING (1984, p. 9) have pre- viously shown, cargo handling and shipping have undergone changes in the last 30 years that have been greater and more fundamental than at any other period in history. Inevitably, these developments affect the port service industry. In this section, some of these impacts will be outlined. Unfortunately, it is not possible to provide a definitive statement of the effects. Much will be conjectural, since there have been few detailed analyses, and the actual changes themselves have still to run their course.

The shipping industry is becoming more capitalized. The requirements of modern sea transport, both in terms of the types and size of vessels, give rise to economies of scale. In the bulk trades, with the appearance of VLCCs, and in the general cargo trades, with the remarkable growth of containerization, very significant capital investments have been made. Capital costs of shipping frequently exceed the resources of even the large companies and, as in the case of containerization, many of the lines have had to pool their resources to form consortia, for different

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routes: ACL, Dart, Canada Maritime are just three of many examples. Large firms dominate these capital-intensive shipping systems, with the top 20 container operators, for instance, accounting for 60% of the worldwide container-slot capacity (PEARSON and FOSSEY, 1983).

The decline in the number of ships calling at ports is a worldwide phenomenon. Increasing vessel size has greatly reduced the numbers of vessels required, even though traffic volumes may have risen. Furthermore, the manpower requirements of the ships has fallen. The small crews may now have their own onboard entertainment, and they may be flown home regu- larly, wherever home may be. The net effect is to reduce the demand for supplies and services gener- ated by sailors and ships. Recent research by HILL- ING (1987) has demonstrated how “sailor towns” have disappeared. Not only have the numbers of chandlers and ship suppliers been reduced but the notorious association of brothels, bars and pawn- shops with sailors has been virtually eradicated from most port city landscapes.

Scale economies in the shipping industry are rever- berating through other sections of the port service industry. The size of shipments and the tendency for shipping companies to offer door-to-door rates are reducing the opportunities for smaller businesses. Increasingly, the services formerly provided by specialist firms are now handled by internal departments of the shipping lines. On some trade routes, over half the containerized traffic is organized by the lines themselves. This represents a significant diminution of business opportunities traditionally handled by a number of specialist firms. Some components of the industry are fighting to preserve their business positions. Freight forwarders in the United States, for example, have evolved as competitors of the lines by establishing their status as NVOCCs (MAHONEY, 1985; HAYUTH, 1987). In the major ports of the world, freight forwarding is dominated by a few large firms. In their survey of the European forwarding business, BAXTER and ALLERA (1980) note that the top 20% of these companies account for 80% of the profits. Many of the firms are multinational companies operating on a worldwide basis in major port cities, and many have branched into the air freight business as well.

Interviews with various segments of the port service industry reveal that the few large companies in each sector tend to deal with other large firms far more frequently than with smaller businesses. The larger

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firms tend to offer a wider range of services. It is claimed that time and money may be wasted trying to find small firms offering the specific service required, especially if many small shipments are involved. For example, some shipping lines in Canada have been found to deal exclusively with the two Canadian railroad companies rather than with local truckers. The explanation provided is that, on the one hand, the railways offer a range of intermodal services because of their scale of operations: on the other hand, dealing with truckers may involve time- consuming search because of the complex system of permits that restrict particular trucking firms to specific destinations (SLACK et al., 1987). SEAH

(1984) notes that foreign-owned forwarders have an advantage over the smaller local firms in Singapore. Because the foreigners have branches all over the world, their affiliates are able to pass on business to the Singapore office. Furthermore, foreign traders will frequently ensure that their local business transactions are handled by subsidiaries of national enter- prises. Thus, Japanese trade will be handled by Japa- nese service companies.

The developments in shipping and cargo handling are inevitably changing the character of the port service industry. There are legitimate fears that the capital requirements for entry into the industry may detract from its vitality. As this paper has demonstrated, low entry thresholds have contributed to the dynamism of the sector, but this dynamism may be impaired by the growing dominance of large multinational firms. In particular, the emergence of locally based companies may be stifled. The fragmentary evidence that is available, however, does not suggest that, as yet, this is occurring to any great extent.

Although the concentration of capital in shipping has increased the market share of the largest lines, it must be recognized that the industry is still far from being a monopoly. In the short sea trades, smaller companies prevail, and there are signs that, even in the concentrated container business, small companies spring up to exploit particular market situations. On the St. Lawrence River, for example, a number of new lines have been established over the last 5 years to compete with the conference lines of CAST and Canada Mari- time. Using vessels with capacities of less than 600 Teus, considered uneconomic in size by the large lines, companies such as UAL-Atlantica Lines have successfully sought out and exploited markets ignored by the majors. There have been fatalities, such as the Sofati group, but overall there is a


dynamism that has always been a hallmark of the shipping industry.

The deregulation of many parts of the transport industry, particularly in North America, is also help- ing, at least in the short run, certain sectors of the service industry to withstand the forces of business concentration. The development of new markets with new intermodal transport technologies has created opportunities that small enterprising firms have been able to exploit. MAHONEY (1985) cites the growth of air freight forwarders in the U.S.A. from 300 in 1976 to 1200 in 1979 after entry requirements were eased. He postulates similar opportunities in the shipping industry with the passage of the Shipping Act of 1984.

In the freight forwarding business, as BAXTER and ALLERA (1980) note, the degree of concentration in the British industry is still significantly less than for business in general. Although the five largest firms account for 37% of total profits in this sector, this is much lower than the 50-70% share commonly found in other U.K. industries. They conclude that “the forwarding industry is not dominated by a few companies” (p. 463).

More serious for the port service industry, in my opinion, are the changes occurring in its intra-urban spatial patterns. As has been demonstrated elsewhere in this paper, this pattern presently consists of a distinct agglomeration, usually on the edge of CBDs, adjacent to the waterfront. The two strongest locational factors (the port and the shipping activity it serves and the broader tertiary sector of the city of which it is a component) have each undergone significant shifts over the last 30 years. The decentralization of port activity from old waterfront areas is a practi- cally universal trend (HOYLE and HILLING, 1984). In most major ports, cargo handling now takes place predominantly on new sites some distance from the historic dock areas. The 1960s and 1970s also pro- duced significant changes in the general service structure of cities (DANIELS, 1985). Many central areas lost some of their traditional service functions, while major physical redevelopment of the CBD has often resulted in spatial shifts. Expansion frequently occurred on the fringes of the CBD furthest removed from the old docks.

Despite these changes, port service industry complexes remained surprisingly undisturbed until the 1980s. There are, however, now signs that this stability is being disturbed. The neighbourhoods they


occupy (and have occupied for many years) are at last feeling the effects of renovation. It is the redevelopment of deserted docklands that is having the most pervasive impact. In cities around the world, the redevelopment of old port sites has become a major focus of urban planning, comparable in scope and scale to the revitalization of CBD cores 10-20 years ago. The character and extent of waterfront- redevelopment schemes vary considerably from port city to port city, but, whatever their form, the adjacent waterfront neighbourhoods are now being affec- ted. Close to downtown cores, these areas are subject to speculation because of their proximity to the reno- vated dockland sites.

In some port cities, the urban renewal that is taking place is reaffirming the commercial character of the site. Old warehouses and office buildings are being replaced by hotel and office complexes. In London, New York and Baltimore (among many others), one of the showpiece buildings is a ‘world trade’ centre or tower, an apparent recognition of the historic importance of trade at these sites. In fact, this tends to be a rather hollow recognition. The new towers that have replaced the old buildings are beyond the financial means of most firms in the port service industry. In New York’s World Trade Towers, only one shipping line has its office amongst the thousands of tenants, most of which are not related to the port. It is perhaps significant that the only major port service industry tenant of these ‘prestige’ addresses tends to be the port authority itself, usually a public or para-public bureaucracy.

In other port cities, tourism and residential developments are affecting the traditional port service quarter. In Montreal, for example, the part of the old city sheltering the industry has recently become the target of developers who recognize the architectural possibilities of converting old warehouses to condominiums. Adjacent to the Upper Harbour, still wait- ing redevelopment, but whose location has already been designated as public and largely recreational space, the new condominiums are attracting ‘yuppie’ buyers. This is a process that is being repeated in Vancouver, London, Seattle and Sydney, amongst others.

The redevelopment is forcing port service industry firms to relocate, either because they cannot afford the high rents or because they are being excluded by zoning changes. There have been no comprehensive studies of the effects. For example, there are no detailed investigations of where the firms are reloca-

455

ting. Some tentative observations are that the smaller firms are either trying to survive by relocating in the same areas or are making a substantial shift to periph- eral sites, sometimes closer to new port sites, or to airport locations when air freight constitutes part of a firm’s activity. The larger firms are tending to move in one of two directions. Some are relocating to more prestigeous ‘uptown’ locations, the office complexes of the CBD core. Montreal’s conference container lines are an example of this pattern. Others, however, are moving to newer suburban locations, frequently far removed from the docks and other shipping service locations. In the New York area, many of the container lines, following the trend of other corpor- ations, now have their head offices in suburban New Jersey, drawn by lower rents and easier access to a white-collar clerical labour force.

The impacts of these changes on the efficiency and vitality of the port service industry as a whole are presently unknown. One must presume that a weakening of the agglomeration economies that traditionally bound the complex together will result. There is a need to investigate how the weakening of the bonds will affect the efficiency of the industry and, through it, the port. In particular, the future of small firms, the mainstay of the traditional industry, may be in ques- tion. They depend upon the external linkages that a locationally concentrated industry provides. The deconcentration of the service sector may precipitate significant changes in the size structure of the port service as a whole.

It is interesting to note that the main cause of the weakening of the agglomeration economies is not directly related to the revolutions in the shipping industry itself. Certainly there have been increases in the internal economies of modern cargo handling and shipping, but the principal factor is pressure from competing urban land uses. The competition may owe its origin to the changes in the shipping industry that made old port sites obsolete and available for urban renewal, but the link is not a direct one. For example, the role of local governments in bringing about the dislocations must be recognized. City administrations have favoured and promoted urban- waterfront renovation as a means of upgrading ne- glected neighbourhoods and increasing municipal revenues. If there has been any concern about the redevelopment process, it has tended to focus either on the plight of local residents caught up and dispos- sessed by gentrification and renovation or on the role of private capital (TWEEDALE, 1987). The effects

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of redevelopment on the port service sector have simply been ignored.

The poor state of knowledge about the port service industry is a critical issue at this time. Because so little is known about the industry, its needs have never been fully enunciated. It is not surprising, therefore, that its concerns are almost never taken into account in revitalization projects. Yet these projects are irre- vocably changing the industry. It is important for academic researchers and planners to begin defining the specific space needs of this industry and identify- ing where these can best be provided. The conse- quences of inconsiderate urban redevelopment on the port service industry as a whole require investi- gation. There needs to be an evaluation of the economic costs of decentralization and even dispersal on such a formerly highly agglomerated industry. The status of the smaller firms should be a particular concern. They form the majority of companies, but are least able to adjust to rising rentals that follow redevelopment. If they are forced into less oper- ationally efficient locations or if they find it difficult to stay in business because of rising rents, there may be significant long-term impacts on the health and vitality of the industry as a whole. A potential decline in the economic health of the port service industry as a whole or in part may have far-reaching conse- quences on both the port and the broader service sector of the city.

Conclusion

This paper has demonstrated that the port service industry possesses similar characteristics in different cities around the world. The industry constitutes a unique and distinctive agglomeration of businesses in major port cities. Part of its distinctiveness relates to the great stability in location it has exhibited, at least until recently.

Over the last 30 years, the general service sectors of cities have experienced a number of significant structural and spatial changes and the shipping industry has been transformed by economies of scale. Although the port service industry is related to both, it has remained largely insulated from many of the changes occurring in each. CBDs have altered more rapidly than the port service industry over the last 30 years, and activities related to shipping, including manufacturing and cargo handling, have experienced more fundamental locational shifts than the marine service sector.


Recent evidence reveals that the port service industry is now changing. The changes are being precipitated by urban redevelopment projects that are transforming the traditional districts in which the industry tended to agglomerate. Firms are being forced to relocate elsewhere, and there are signs that the agglomeration is fragmenting. The potential impact of this deconcentration on the efficiency and health of firms formerly dependent upon external economies of scale is considerable. The lack of studies dealing with the industry is a serious problem, and presents a challenge to which geographers and planners should re- spond.

References

BAXTER, R. E. and ALLERA, S. V. (1980) Freight transport: shippers and forwarders, In: Transport and the Challenge of Structural Change, pp. 459-501. OECD, Paris.

BAZINET, G. and SLACK, B. (1981) Le tertiaire maritime, In: Le Port de Montreal, Rapport de la Phase 11. Minis&e des Affaires Municipales, Montreal.

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