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A hybrid multi criteria decision making-game theory methodology to analyse port competition in Izmir

Aymelek, Murat and Kurt, Ismail and Boulougouris, Evangelos and Turan, Osman (2015) A hybrid multi criteria decision making-game theory methodology to analyse port competition in Izmir. In: Proceedings of International Association of Maritime Economists (IAME) 2015 Conference. International Association of Maritime Economists.

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Abstract

Sea ports are indispensable parts of the marine transport operations. As a brief technical description a sea port is an allocated location on a coast or shore containing one or more quay/berth where ships can dock and transfer people or cargo to land from ship or to ship from land. In terms of container transport operations even better port services are desired to provide viability of reliable liner shipping service. Therefore, port competition to supply better port services is one of the natural consequences of the container transport evolution in the globalisation era. Broadly, the port competition appears as price and quality based between the container ports and terminals which serve to collided hinterlands. In Izmir region of Turkey, three active container ports, namely Izmir Alsancak Port, Nemport and TCEGE Container Terminal, are serving to customer demands with approximately 1.8 million TEU handling capacity at present. In addition, a container terminal extension project of Izmir Alsancak port is going to add approximately 1 million TEU new port capacities to the competition. On the other hand, two potential large scale port investments (Candarli Port complex and APM Petlim Container Port) which are in construction stage will also join to the port competition of Izmir in near future. In consideration of logistical demand, the mentioned new two container ports and extension project of the Izmir Alsancak port will likely to cause a significant amount of port handling capacity oversupply for the hinterland demand in early years of the investments. This capacity oversupply is going to complicate competition game and conditions even much more between ports of Izmir region and confuse the industrial customers and the shipping liners regarding to port choice. The methodological approach of this study aims to develop a Hybrid Port Competition Analysis Model (HPCAM) to analyse port competition with different commercial aspects. The study divides HPCAM to two different methodological stages. First proposed method is to apply the Multi Attribute Value Analysis (MAVA) of the Multi Criteria Decision Making (MCDM) science in order to analyse the competitiveness of the given port alternatives to meet industrial customer demand. In this approach, multiple factors/criteria are determined which affect the dynamics of port competition in order to attract interest of the industrial customers. Service cost, location, service time, delays and waiting, network accessibility and service varieties may be considered as main criteria consisting of many determined sub-criteria. Second proposed method is to develop a game theoretical strategy concept to apply on the port competition regarding to service expectations of the shipping liners. Integration and comparison of the both methodological approaches is going to provide valuable findings to analyse competitiveness level of container ports in Izmir more accurately. Outcomes of this research may help for future business development strategies of port operators of the Izmir region. This study is expected to provide a clear holistic comprehending about the underlying dynamics of the port competition for all counterparties involved in container transport operations.