PROSPECTS OF TRANSSHIPMENT TRAFFIC IN THE EAST MEDITERRANEAN: A COMPARATIVE STUDY OF DAMIETTA AND ISRAELI HAIFA CONTAINER TERMINALS

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1 ARAB ACADEMY FOR SCIENCE & TECHNOLOGY & MARITIME TRANSPORT College of Maritime Transport & Technology PROSPECTS OF TRANSSHIPMENT TRAFFIC IN THE EAST MEDITERRANEAN: A COMPARATIVE STUDY OF DAMIETTA AND ISRAELI HAIFA CONTAINER TERMINALS By May Salah El-dine Mohamed El-sayed A dissertation submitted to the Arab Academy for Sciences, Technology & Maritime Transport in partial fulfillment of the requirements for the award of MASTER DEGREE in Maritime Transport Technology Supervised by Mr. Mohamed Tawfik Dr. Mohamed Nagy Khairalla Head of the Department Senior Lecturer of Maritime English of Transport Researches College of Maritime Transport Maritime Researches & Consultancy Center & Technology 2006

2 DECLARATION I hereby certify that the material in this research that is not my own work has been identified, and that the contents of this research reflect my own personal view, and are not necessarily endorsed by the Academy. (Signatures)... (Date) Supervised by: Name: Mr. Mohamed Tawfik Office: Head Department Maritime Research and Consultation Center and Name: Dr. Mohamed Nagy Khairalla Office: Senior Lecturer of Maritime English College of Maritime Transport & Technology Assessed by: Name: Office: College of Maritime Transport & Technology ii

3 ACKNOWLEDGEMENT I would like to record my gratitude to my supervisors: Mr. Mohamed Tawfik and Dr. Mohamed Nagy Khairalla, to whom I am heavily indebted for their readily offered support and encouragement. I would also like to record my gratitude to my parents who supported me throughout the whole research period. Thanks are also due to my lecturers and colleagues in the Department of International Transport and Logistics, whose guidance and encouragement have greatly helped me finish this research project in due course. iii

4 ABSTRACT Thesis Title: Degree: Prospects of Transshipment Traffic in the East Mediterranean: A Comparative Study between Damietta and the Israeli Haifa Container Terminal M. Sc. This thesis aims at investigating the current status of transshipment prospects in the East Mediterranean area and the competitive status of the major container terminals in the region in term of that kind of traffic, especially between Damietta and Haifa to identify their competitive advantages gained for the present and the future. It uses a number of methodologies to deal with the research problem through observing the problem in terms of the inductive method. As well as, a SWOT analysis is used to determine the competitive situation of each. This thesis comprises three chapters. Chapter 1 addresses the issue of containerization by reviewing the historical background of containerization in the Mediterranean region. It highlights the recent developments of containerization in the region. It also addresses the important concept of Transshipment in relation to the development of container traffic, and the increase in the size of containerships. Chapter 2 presents an overview of the major container terminals in the East Mediterranean. It also investigates their current competitive status in terms of containers and transshipment traffic, with particular emphasis on development projects in container terminals. Chapter 3, which is the core of the thesis, presents the SWOT analysis of both Damietta and Haifa container terminals. Finally, it is ended by the conclusions and the recommendations, as it comes to a fact that Haifa port container terminal can not compete Damietta in terms of the transhipment traffic within its current status, but, due to its continuous increase in its volume of container traffic and the current Israeli-Arab agreement, it may represent a threat on Damietta for the long run that should be taken into considerations. iv

5 TABLE OF CONTENTS Title Page Declaration Acknowledgment Abstract Table of Contents List of Tables List of Figures List of Abbreviations Page i ii iii iv v x xiii xiv Introductory Chapter :The Research Theoretical Framework 1 Introduction 1 Research Problem 2 Research Objectives 3 Research Methodology 3 Research Resources 3 Chapter 1 Historical Review of Containerization in the Mediterranean 4 Region 1.1 Containerization in the World Sea-borne Trade International Container traffic in The Relationship between Economic Development and 8 Container Traffic Growth 1.2 Container Trade Environment in the Mediterranean Container Port Demand Trend in the Mediterranean 15 v

6 1.2.2 The Annual Development of the Container Trade in the East 17 Mediterranean The Economic Characteristics of Container Port Market in 20 East Mediterranean 1.3 Analysis of Container Traffic in the East Mediterranean Throughput of Container Terminals in the Major Ports of 21 East Mediterranean Region Transhipment Traffic in the Mediterranean Deviations from the Main Routes and Depth of Port 28 Waters The Economic Characteristics of Transhipment 32 Traffic in East Mediterranean Region 1.4 Hub Ports Concept Points of Attraction to the Carriers When Selecting a 38 Transhipment Hub Shipping Lines Requirements from a Hub Port The Shippers Point of View Benefits of a Transshipment Hub The Problems Facing Hubs Ports Competitiveness A Conceptual Definition of Seaport Competition The Competitive Advantage of Seaports The Case of Ports in an Integrated Logistics System The Value Added Services The Emergence of High Information Technology Increasing Involvement of The Private Sectors in Port Activities and 55 Services 1.8 Opportunities for the Private Sector 57 Chapter 2 - The Major Container Terminals in the East Mediterranean 60 vi

7 Area 2.1 A Review of the Major Container Terminals in the East 60 Mediterranean Region 2.2 The Egyptian Container Terminals Damietta Container Terminal Port Said Container Terminal Alexandria Container Terminal El Dekheila Container Terminal East Port Said Container Terminal The Israeli Container Terminals Haifa Container Terminals The Eastern Container Terminal The Western Container Terminal Ashdod Container Terminal Syrian Ports Latakia Container Terminal Tartous Port Lebanese Container Terminal: Beirut Container Terminal The Cypriot Ports Limassol Container Terminal Larnaca Container Terminal Facilities Turkish Container Ports Izmir Container Terminal Mersin Container Terminal Haydarpasa Container Terminal Container Transhipment Analysis in The Major Container Ports in The East Mediterranean Region 97 Chapter 3 - A SWOT Analysis of both Damietta and Israeli Haifa Port 100 vii

8 Container Terminals in the Outlook of Container Transhipment Traffic 3.1 Introduction Port Efficiency The SWOT Analysis Internal Analysis External Analysis SWOT Analysis of Damietta Port Highlights on Damietta Port The New Damietta Port The Advantage of Damietta Port Port Productivity Features Damietta Container Terminal Major Container Lines Using Damietta Container 108 Terminal The Development of container traffic Container Traffic Analysis in Damietta Port (TEUs) Transhipment Analysis in Damietta Container Terminal Damietta Tariff Levels Performance and Service Levels Damietta Logistics Center IT Applications in Damietta Port IT Projects in Damietta Container Terminal SWOT Matrix of Damietta Port Container Terminal The Israeli Ports in the East Mediterranean Region The Israeli Merchant Fleet Zim Israeli Shipping Company Haifa Port: A Historical Background Haifa Port Structure Kishon Zone Haifa Port Operations IT Development in Haifa Port Port 2000 Integrated Maritime Information 134 viii

9 System (IMIS) HATAD 2000: Port Customer System Container Terminal Operating System 135 (TOS System) Haifa Port's Development Plans Haifa Container Terminal Containerized Cargo Transhipment Analysis in Haifa Port Deviation Distance Container Handling History of Zim at Haifa Port Haifa (Israeli shipping transport) Tariff Rates Type of Port's Ownership Haifa Logistic Interconnections The Proposed Railway linked between Haifa and Eilat SWOT Analysis of Haifa Port Container Terminal 151 Conclusions and Recommendations 154 Conclusions 154 Recommendations 159 Bibliography 161 Appendices 168 Appendix A Israel's Maps 168 Appendix B - Container Ports Tables 172 ix

10 LIST OF TABLES # Table Title Page No. 1.1 World Fleet Size by Vessel's Types, The Throughput of the Top 20 Container Terminals, (In Millions of TEUs and Percentage Changes) 1.3 Economic and Container Port Demand Growth, Container Throughput of the Major Ports in the 11 Mediterranean during the Period (in TEUs) 1.5 The Mediterranean Container Port Market Sectors Mediterranean Cargo Markets and Competing Ports East Mediterranean container throughput by port, Container Terminals' Productivity in East Mediterranean 23 Region (through 1999 to 2003) in TEUs 1.9 Container Traffic in the Mediterranean from 1980 to with respect to Origin/Destination and Transshipment Services (in 000 of TEUs) 1.10 Major Mediterranean Transshipment Ports and their 29 Transshipment Ratios 1.11 Transhipment market share, (%) Port Throughput in Major Mediterranean Hub Ports (000 TEUs) 1.13 Economics of hub and spoke transhipment versus direct calls Hub Ports and their Major Shipping Lines in the 42 Mediterranean Region List of the Elements of Port Competitiveness 45 x

11 2.1 Cargo Volume Handled in Damietta during the year The Containers Handled in Port Said in the Period Alexandria Port Cargo Traffic through in million 65 tons 2.4 The Container handled in Alexandria Port due The Relative Share for Containers in Transit and Home 67 Trade through period Container Traffic Handled in Egyptian ports in the East 68 Mediterranean Region 2.7 The Container Transhipment Handled Through the Egyptian 69 Ports in East Mediterranean Region in (TEUs) 2.8 Cranes types in Eastern Quay of Haifa Container Terminal The Total TEUs Handled in Beirut Port ( ) The Containers Handled in both Limassol and Larnaca Ports 87 during The Period The General Specifications and Capacities of TCDD Ports Transhipment Container Traffic in the East Mediterranean 98 Container Terminals 2.13 Container Throughput of Selected ports in the Eastern 99 Mediterranean Region (000 TEUs) 3.1 Damietta Berths Information According to Their Types Main Handling Equipment in Damietta Container Terminal Container Traffic in Damietta Port The Productivity of Damietta Container Terminal (from to 2004) 3.5 Transhipment Traffic in Damietta Container Terminal 115 xi

12 3.6 Damietta Transhipment Forecast in 2020 (000 TEUs) Transhipment Container Transport in Egyptian Seaports 117 during the Period (000 TEUs) 3.8 Forecast of East Mediterranean Container Throughput to by Country (million TEUs) 3.9 Forecast of Container Throughput in Egyptian Ports in East 119 Mediterranean during 2006 to 2010 (million TEUs) 3.10 SWOT Matrix of Damietta Port Container Terminal The Kishon Zone The Mechanical Equipment in Haifa Port Haifa's Container Terminals Container Traffic in Haifa Port from 1994 to 2004 (TEUs) Actual Capacities of Israeli Ports (000 TEUs) Deviation Distances of the East Mediterranean Ports Volume of Container Movement in the East Mediterranean 146 Region ( ) 3.18 SWOT Matrix of Haifa Container Terminal 151 xii

13 LIST OF FIGURES # Figure Title Page No. 1.1 Transhipment Hubs and Gateways in the Mediterranean 28 Region 1.2 Determining Optimum Transhipment Port for global 40 container carriers using the AHP Model 1.3 Visual Representation of the Conceptual Definition of Port 48 Competition 1.4 The Three Main Supply Chain by Order Overview of the Value Added Services in Ports Damietta Container Terminal East Port Said Container Terminal Haifa Port Israeli Port Authority Container Traffic by Port: Lattakia Port Growth in Volumes Cypriot Port Haydarpasa Port Izmir as a Hub Port in the Sea of Marmara Mersin as Hub Port in the Mediterranean The Top 20 Container Carriers NAVIS Software Radio Data Terminals Israeli P.A Container Traffic: Haifa Port Structure The Israeli Information Highway Infrastructure Israeli P.A Container Traffic by Port: xiii

14 LIST OF ABBREVIATIONS AHP Model B.O.T. BMD C.F.S C.G.S CPA CY CYPOS EDI F.L.T. GLS GSCY HLF IAPH IMF IMIS JIT L.C LCIS N.M NIS O/D services OSC PA RDT RTG SCCT Analytic Hierarchy Process Build, Operate and Transfer British Mercy Docks Container Freight Station Container Ground slots Cyprus Port Authority Container Yard Cypriot Port Operating System Electronic Data Interchange Fork Lift Tonnage General Logistics Services Ground Slot Container Yard Histadruth Labor Federation International Association of Port Harbor International Monetary Fund Integrated Maritime Information System Just-in-Time Deliveries lifting capacity Logistics Chain Integration Services Nautical Miles National Israeli Shekel Origin/destination services Ocean Shipping Consultant Port Authority Radio Data Terminal Rubber Tyred Gantry Suez Canal Container Terminal xiv

15 SWOT TCDD TEUs TLSS TOS VAF VAL VTS Strengths, Weaknesses, Opportunities and Threats Turkish State Railways Twenty Equivalent Units Total Logistic Support System Terminal Operating System Value added Facilities Value added logistics Vessel Traffic Service xv