Developments in Containerization as a Derived Demand to the Growth in Globalization



Developments in Containerization as a Derived Demand to the Growth in Globalization

1. Introduction

Similar to the hub-and-spoke model in airline transportation, the conceptual model of container load center developed by Hayuth (1978) has been widely accepted for its explanatory power in the evolution of regional container port systems in the 1970s through 1980s. The 1990s, however, witnessed an important fact that in several regions, large deep-sea direct-call ports appeared between feeders and their regional hub ports (O'Mahony, 1998). Such a structural change in regional container port systems deserves an in-depth investigation. This article provides a case study to examine such a structure being formed in the Pearl River Delta (PRD), South China, where the port development has been accelerated by ever growing international trade and globalization.

The PRD has the world's largest export production base centered in Shenzhen Special Economic Zone set up in 1980, and is adjacent to the world's busiest container port, Hong Kong. Shenzhen has grown from a village of a few thousand people to an industrial city of two million residents within 20 years due to special policy incentives from the central government of China and its proximity to Hong Kong. The key policy incentive initiated by the Chinese Government in 1979 was to set up the Shenzhen Special Economic Zone as an experiment with a market economy, while the rest of China remained a planned, closed economy. The proximity of Hong Kong provided opportunities for Hong Kong businesses to expand the manufacturing sector to Shenzhen in order to reduce production costs, while still making use of the world-class container terminal facilities for raw material imports and final product exports, and profiting the value-added chain of logistics already established in Hong Kong (Hong Kong Trade Development Council, 1998).

Several authors have sought to answer this question, including Wang, 1997; Wang, 1998; Yu and Tong, 1997 and Sun, 1997, and Cheng and Wong (1997), among others. Cheng and Wong pointed out that Yantian would be the only nearby port with potential to pose a serious challenge to Hong Kong. But this challenge would take many years to be realized, and Hong Kong would continue to enjoy its natural, man-made and systemic advantages ( Cheng and Wong, 1997, pp. 54-72). Wang (1997) saw the possibility for Hong Kong and Yantian to further cooperate and integrate, in the light of Hong Kong port operators' partial control over Yantian and Shekou ports. Yu and Tong (1997) suggested the possibility for Shenzhen and Hong Kong to form a twin-port, mirroring what was happening in some other places in the world. Sun (1997) claimed that ultimately Hong Kong and Shenzhen would form the largest container port grouping in the world. However, it was still too early for these authors to provide any concrete evidence of developments, and thus the aforementioned literature can be seen as speculative.

2. Goals and objectives

From a regional perspective, this study follows up on the previous studies cited by investigating the ...