A measurement and comparison of cost competitiveness of container ports in Southeast Asia

Terminal users face a variety of costs associated with the container terminal and those that are harder to quantify should not be ignored for they might represent a larger component of the overall costs associated with using a particular terminal. Similarly, the competitive advantage of a container terminal operator goes beyond the elements that can be quantified. The paper uses and modifies Cournot's simultaneous quantity-setting model as a means to derive the overall costs of using the terminal. The application of this model to the perspective of competition between container terminal operators in Singapore, Port Klang and Tanjung Pelepas finds that the increasingly cost competitive operators in Port Klang and Tanjung Pelepas were able to close the gap with PSA Corporation in Singapore in the overall costs of using their terminal facilities between 1998 and 2002 although PSAC continued to enjoy a dominant share of the container-handling market in the region. The paper also highlights the tremendous amount of opportunities available to these terminal operators to advance and capitalise on their competitive advantages beyond aggressive price competition.