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This paper examines the issues that need to be considered before the decision to proceed to costly container port expansions with long-life spans and a structural influence on the local and national economy. The report benefits from a case study of Chile, where plans for a major expansion of port capacity in the central part of the country are well advanced. Chile provides the detail for an examination of factors critical to decisions on container port investments everywhere: demand forecasts, change in liner shipping markets, hinterland transport capacity, competition between container terminals, and financing of investment.

The success of private sector participation in infrastructure is highly conditioned by the ability of governments to properly shape and control the public-private contractual relationship. Therefore, determining the accurate mechanism to control private participation becomes imperative, both ex-ante (by designing correct contracts, properly assigning risks; designing effective competitive tendering and robust and transparent award criteria, and implementing effective oversight and regulation) and ex-post (post contract award management and careful handling of renegotiation requests). In addition, risk management in private concession processes is a major issue, particularly with very large infrastructure projects where the risks may be an obstacle to private finance.

The Government of Chile is developing a national ports development plan. The plan is outlined in this paper and its implications for strategic development of hinterland transport infrastructure capacity are discussed. The paper reviews port capacity and sets out the legal framework for competition between port terminal concessions and the assignment of responsibilities between port authorities and terminal concession holders for investment in new facilities. Forecast demand is compared with projected container terminal capacity and plans for development of a new large container port development, a Puerto de Gran Escala (PGE), are outlined.

Large-scale port projects have big impacts on the local economy and affect the way that the regional and national economy operates, with major implications for investment in regional transport systems. Port planners make better decisions when these broad impacts are examined as part of the development of a national freight transport and logistics strategy. Private investment in port terminals is also facilitated by the certainty engendered by development of such a national freight transport and logistics strategy. Decisions to invest in new container ports need in particular to take careful account of forecasts of hinterland demand for containerized trade, the broader context of evolving maritime transport markets, competition between ports and the development of port hinterland transport infrastructure.

This paper analyses the evolution of liner shipping networks on the West Coast of South America (WCSA) and evaluates their impact on future port system development. The work describes the interrelationship between changes in scale and structure of trade and liner shipping network structures. Particular emphasis is given on ship size development, the emergence of refrigerated container trade and the evolution of market structure in the WCSA. Chile and the WCSA region more generally, face the challenges of market concentration, further evolution of liner shipping networks towards hierarchical networks driven by hub-and-spoke operations and the cascading effects of vessel redeployment. The paper underscores the necessity for institutional and private sector actors to act together and proceed based on integrated visions and strategies in order to achieve successful port development.

The growth in container volumes and the concentration of container flows on a limited number of hubs, which derives, among other things, from the increasing vessel size, requires the development of new terminal infrastructure at ports able to handle the latest generation of vessels. In addition to the pressure that such vessels impose on the terminal cargo handling capabilities, it is often forgotten, that those larger vessels will also require higher capacity in hinterland transportation or a rationalisation and better use of existing transport alternatives.