Public-private partnerships for the development of port hinterlands and their ramifications for global supply chain management

Ongoing world-wide economic slumps coupled with the undisciplined capacity expansion of some international hub ports have created a glut for port services and intensified port competition. As a way to better utilize the existing port infrastructure and attract more shippers/carriers, a growing number of ports have begun to provide various incentives including tax benefits and subsidies to private enterprises that engage in global supply chain activities. Such incentives also include co-development of port hinterlands between government agencies and private enterprises in such a way that the government agencies establish the basic infrastructure tailored to specific needs of the private enterprises, whereas the private enterprises pay rental fees and create the economic spillover effects of the port hinterland development. In other words, port hinterland development through the public private partnership (PPP) can be a viable strategic option for creating 'win-win' situations for both government agencies and private enterprises. Considering the benefit potentials and supply chain implications, this article examines the current PPP practices of the major hub ports in the Asia-Pacific region and then identifies critical success factors for port hinterland development through PPP based on a descriptive case study.