STRATEGIC MARKET SEGMENTS AND PROSPECTS OF SHORT SEA

SHIPPING IN THE EASTERN MEDITERRANEAN AND THE BLACK SEA

Dr Kapros Seraphim
Lecturer, University of the Aegean
Dr Panou Konstantinos
Researcher, National Technical University of Athens

1. INTRODUCTION

Short Sea Shipping (SSS) is maritime transport, which does not involve an
ocean crossing. The notion includes maritime transport along coastlines and
between ports of the continental European Union and its island possessions.
It covers the transport of goods both within an individual Member State and
between Member States. For a major part, concerning sea transport between
continental ports, SSS is considered as an alternative to land transport,
including a maritime leg in an integrated door-to-door chain. Thus, SSS meets
the wider concept of intermodality (COM 243/97), that figures among the main
policy targets of the European Union. The alleviation of external cost of road
transport is the driving force behind the policy objective for the promotion of
intermodal transport.

It is indisputable that SSS is an environmentally friendly, low cost and safe

means of transport compared with the land based alternatives, particularly
congested road transport. However, within Europe the SSS activity does not
seem to achieve an appropriate level of recognition or market share in the
overall transport network. As an industry it has grown considerably during the
1990s as available data indicates, with an estimated increase of 23% in tonne
kilometres between 1990 and 1997. This growth was somewhat lower than
that of road transport in the same period at 26% in tonne kilometres. It is not
surprising, therefore, that the Commission has taken up this problem,
adopting on 5 July 1997 a ‘Communication on Short Sea Shipping –
challenges for the future’ which examines how best to promote this means of
transport as a viable alternative to overland freight. A modal shift from road to
intermodal transport significantly influences the SSS opportunities and
practices.

The importance of SSS and seaport activities in the Eastern Mediterranean

and the Black Sea is gradually increasing. Geopolitics in the last decade
favour a multi-dimensional development in the region. New market prospects
arise since several of the adjacent countries are in the process of transition
from a planned economy to a market economy. In parallel, the on going
restructuring of the SSS market is accelerated by policy developments in both
the EU and the third countries.

The analysis of current situation of SSS market in the Eastern Mediterranean

and the Black Sea region faces a number of constraints:

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 • The Mediterranean SSS market consists of a number of heterogeneous
geographical areas, with different characteristics concerning the
various changes in process.
• It is not yet very well known which cargoes have the greatest potential
to be shifted from land to sea, either geographically or commodity-wise.
• It is too early to conclude on the market potential of fast ships in SSS.
• As far as actual traffic data is concerned, there are a large variety of
types of available information. The sources are diverse, some data is
not in the form needed, other data is not reliable, existing databases
are heterogeneous and a lot of other type of data simply does not exist.
• Among the problems in the available data, the lack of Origin-
Destination data for most of SSS traffic flows must be underlined. This
also concerns the "final" destination of goods in the hinterland. The
available data is limited to the form of "input-output" traffic of the
Mediterranean ports. Thus, a lot of problems arise in any scenario
elaboration, as far as the interface between SSS services and inland
transport flow patterns is concerned.

At the same time, the eastern Mediterranean and Black Sea region is a rapidly
changing environment, due to a number of important reasons:
• Recent research results demonstrated that a number of transport
quality variables influence (more or less, according to the market
segment to be analysed) the strategies of actors from supply side1, as
well as the modal choice of final customers2.
• Structural changes in the socio-economic and political situation of
Mediterranean countries, particularly in the eastern part of the region,
influence the configuration of traditional flow patterns.
• New logistical concepts are also changing the network organisation of
SSS actors.
• Technological developments, such as the new generation of fast
ferries, modifies the transport time values and creates a new
competition framework.
• European Transport Policy aspects (e.g. cabotage) are expected to
influence the traditional market structure.

Considering the aforementioned parameters, this paper presents two

objectives: a) it attempts to identify and analyse the structural changes and
major developments in the SSS market in the Eastern Mediterranean and the
Black Sea region and b) it tries to identify the relative weight of various criteria
in the decision-making process, that lead decision makers to use SSS instead
of a land based transport mode, and to provide decision patterns. Therefore, it
is obvious that the paper focuses on short sea transport between continental
ports. Transport between continent and islands is considered as a distinct
market segment called “captive” short sea.

To achieve the objectives of the paper, two parallel approaches are adopted:

1 IQ project, Deliverable 2, 4th Framework Programme, European Commission-Directorate General 7, 1998.

2 LOGIQ project, Deliverable 2, 4th Framework Programme, European Commission-Directorate General 7, 1999.

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The analysis of SSS in the Eastern Mediterranean and Black Sea region is
based on available statistical sources and literature review. The analysis of
the decision-making process follows a disaggregate demand approach, on the
basis of a field survey. Detailed methodological aspects are presented in the
relevant section of the paper.

2. THE STRUCTURE OF THE MEDITERRANEAN SHORT SEA SHIPPING

MARKET

2.1. An overview of Mediterranean trade by sea

Two of the most appreciable market developments are the remarkable

expansion and the structural modification of European trade by sea. During
the second half of the 1980s, Western Europe presented a quite long
economic growth3. The economic expansion of the EU member states was
accompanied by a 4.8% annual trade growth. In addition, trade between
member states has grown remarkably faster than economic output. The result
of this process should be easily reflected on trade and traffic flows.
Proportionally, intra-EU trade represented 53% of the total EU trade at the
end of the 1970s, reached 55% in 1985 and topped 60% in 1990. In 1992, it
accounted for 62% of the total and for 13% of the EU GDP4.

This augmentation accelerated both in absolute and proportional terms, since

the relaunch of European integration. The interest in the completion of the
Single European Market (SEM) was followed by a progressive elimination of
non-tariff barriers advancing the unrestricted circulation of goods inside the
EU. Notable examples are the lessening of border controls and the mutual
recognition of technical regulations and standards. The exact magnitude of
the static and dynamic integration effects is not possible to determine, since
the rapid growth of the intra-EU trade is bound to be influenced by many
factors. Nonetheless, the stimulation of the cross-frontier flows previously
discouraged by non-tariff barriers and a national market attitude drove to a
sharp intra-EU trade expansion.

The intra-EU market growth has evident impact on the traffic growth in the
Mediterranean region. This uninterrupted traffic growth has been
accompanied by a steady increase (at around 5% per annum) of general
cargo and containerised commodities5. Overall, 15.2% of the total intra-EU
maritime flows represent intra-Mediterranean movements.

3
From 1985 to 1990 the economies of the 12 EU member states grew annually by a rate of 3:1 comparing to
averages of 2.5 and 1.4 for the periods 1974-79 and 1980-84 respectively (average annual percentage change of
real GDP at constant prices; based on 1985 price levels and exchange rates; Source: OECD, Basic Indicators,
Annual publication).
4
Sources: Eurostat, Basic Indicators; CEU, Panorama of EU Industry, annual publications.
5
While total traffic levels have risen, there has been little change in the basic trade patterns which sees
manufactured and consumer goods go southbound, and agricultural products and seafood northbound.

© Association for European Transport 2002

2.2. Network configuration and Short Sea Shipping market segmentation

The Mediterranean region presents great complexity and heterogeneity. There

are enormous differences in scale, development and trading relationships and
for most of the region development and cohesion are important issues. In
order to have a better understanding of this diversity, the short sea framework
should be systematically analysed. A rough division of the SSS market into
two quite distinct sub-segments is as follows6:
• Feeder operators inter-connect seaports on behalf of deepsea shipping
lines which need to re-position their containers. The feeder business
has grown during the last decades and have taken over the task to
serve Mediterranean ports. In general, they are not involved in
hinterland activities.
• Regional operators also labelled door-to-door operators serve
genuinely regional transport demand, e.g. between Northern Europe
and the Mediterranean. They are in direct competition to overland
transport modes such as road and rail and often organise the complete
transport chain including the land transport legs. It should be noted that
these intra-European shortsea voyages may be direct calls or may be
routed via transshipment hubs resulting in rather complex trip
schedules.

As deep-sea lines move steadily to larger vessels, deep-sea calls are limited
to one port in each trading area, hence, a strong intra-Mediterranean feeder
trade to and from these "hub" ports is being developed7.

The increase of the feeder activity contributed to a remarkable growth of

containers handled in Mediterranean ports. Unitised intra-Mediterranean traffic
in 1996 was twice as much as in 1990. Throughout the period between 1990
and 1995 container trade from Northern and outside Europe countries
increased by 4.4%, a substantial part of which arrived at a major
Mediterranean port (Algeciras, Gioia Tauro, Genoa, Barcelona, Piraeus,
Marsaxlokk, Damietta or Limassol) and then was transshipped to another port.
In general, the region’s ports have been lagging behind their northern
competitors in terms of investment, pricing efficient management, and
physical accessibility to large markets.

Feeder and Ro/Ro traffic being the most expanded market niches, the current
split between them is well in advance of feeder services for relatively long
distance voyages, and of Ro/Ro mainly for short distance coastal shipping.
Whilst it is recognised that volume growth in the trades is at a steady rate, it
remains impossible to gauge the amount of respective capacity. This is
because the hub and spoke operators, who account for around 33% of the
services on offer, have flexible allocations for these markets.

6
IQ project, Deliverable 2, "Short-Sea Shipping" - Report number 2.2.13, 4th Framework Programme, European
Commission-Directorate General 7, 1998.
7
The feeder market carries cargoes to the requirement of their customers, and also undertakes the carriage of
empty containers for deepsea lines where the trade is imbalanced and container repositioning necessary.

© Association for European Transport 2002

The Mediterranean Ro/Ro services market presents shares of about 50 % for
each of the western and eastern part of the Sea. Because of the long coastal
lines of the countries in the Western Mediterranean, there exists a substantial
share of domestic trades. Moreover, there are several operators offering Ro/Ro
services on a mixed liner/tramp basis, which can hardly be attributed to
individual countries (total capacity of 127 vessels with 715,000 gross tons8). In
the Mediterranean, the majority of Ro/Ro services are observed in either
domestic traffic to Spain and Italy (33 %) or South Europe/North Africa (40 %)
and other intra-Mediterranean trades (26 %). The remainder consists of services
either between Baltic Sea and the Mediterranean or between Belgium/France-
Northern Africa.

As far as the spatial hierarchy of the network organisation is concerned, the

ports of Algeciras, Marsaxlokk and Gioia Tauro constitute the main "hubs" in
the western Mediterranean region. The port of Algeciras is ideally located for
meeting "hub and spokes" strategies in the region, since any deviation of
deep-sea vessels is avoided and significant routing optimisations can be
achieved. The port of Marsaxlokk is mainly oriented to direct transshipment
activities between mother vessels and feeder ships. Gioia Tauro, located near
the "gravity center" of Mediterranean flow patterns, has also a strategic
advantage for attracting an important share of transshipment business in the
region. Moreover, the ports of Barcelona, Marseilles-Fos, Genoa and La
Spezia develop hub strategies and constitute important alternatives for
transshipment business.

In the eastern Mediterranean region, no clear spatial hierarchy arise. The

ports of Piraeus, Damietta, Limassol, Larnaca, Alexandria have increased
their respective traffic volumes in the transhipment market. However, the
traffic evolution and distribution among these ports were not regular in the
recent past.

Based upon data published by Ocean Shipping Consultants9, feeder traffic for
eastern Mediterranean trade amount to about 723,000 GRT. About 13 % of total
capacities are related to trade between the East Mediterranean and North
Europe and 23 % to those between East Mediterranean and Black and Red
Sea, respectively10.

As far as a commodity-based segmentation is concerned, it should be pointed

out that a high proportion of the trade growth in the Mediterranean has been
in low value products, once shipped in bulk, but now treated as
containerisable. Such products are sugar and chemicals. It is the low value of
these products that has been instrumental in making freight rates, at best,
stable. It is this reduction in prices that has lessened the competition of trailer
operators, whose transit times are marginally better, but whose rates are very
significantly higher than shipping lines. Over the past two years, rates to Israel
for example, have declined by up to 30%, while to Turkey by up to 50%. Rates
are also being depressed by new network configurations substituting direct
8
G.P. WILD (International) Ltd.: The Ro-Ro Market, London 1994, p. 40.
9Ocean Shipping Consultants: Market Prospects for European Continerisation, Chertsey 1995, p. 12
10
M. Zachcial, “Land/Sea Transport flows in Europe”

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calls through hub & spoke systems using for example Gioia Tauro as a hub
and spokes are as far along the eastern Mediterranean as Israel.

2.3. Trends of structural changes in the Mediterranean Short Sea

Shipping: organisational and technological aspects

The changes to be identified derive from intrinsic market developments. They

are mainly related to changing behaviors of the market actors either on the
supply or the demand side. Others are attributable to external factors, largely
beyond the control of short sea transport market forces. In conjunction, they
have created a new economic environment within which Mediterranean SSS
operates.

The most important structural changes derive from the strong trends to
reorganisation of production systems and distribution channels. The
increasing development of logistics is an element affecting the characteristics
of the demand for SSS, but also transforming the organization of the maritime
process per se. Production practices move steadily from the conventional
mass production and economies of scale towards a process dominated by
focused manufacturing of specific parts with earlier steps being conducted by
outside suppliers. Thus, new operational concepts are driving factors for
changes in industrial enterprises’ operations. They imply a just-in-time
manufacturing and procurement strategy, which is the supply of the exactly
required items at exactly the required quality, in exactly the required quantities
at exactly the required time. Those involved in this chain, from early suppliers
to final customers, favour the synchronisation of the whole transport operation
to serve an unbroken management of physical lows11.

The intensification of competition between transport modes for the same

consignment is another feature that characterizes the Mediterranean
environment. The expanding general cargo figures, particularly their most
profitable unitised part, represent commodities exposed to sharp modal
competition. Road and air are two modes already involved in business
logistics. Rail also competes strongly for around-Mediterranean traffic.
Excluding the cases where geographical characteristics impose short sea as
the unique viable choice (the case of islands), the competition has been
sharpened by developments to other transport modes. The construction and
operation of high-speed distribution networks within and between areas in the
Mediterranean and the Black Sea, once mainly served by sea shipping,
introduce prospects of growth in highly flexible low-cost inland transport
modes.

As port authority reformation evolved during the last decades, several different
models of port constitution have emerged, in particular privatisation and
commercialisation. Privatisation, which is in some ways the most transparent
of the above, has become the most fashionable trend and after the dramatic
11
US-based companies, in particular, have been among the first to take this view with many of them selecting a
single Mediterranean port of entry, to serve a wider geographical market through a just-in-time process. According
to a World Bank (1995) survey, by 1990 some 28% of all shipments in the US and EC were carried on a just-in-
time basis and the portion projected for 1995 was over one-third.

© Association for European Transport 2002

and controversial restructuring of the UK port industry in the early 1980s,
many Mediterranean countries have pledged to increase the role of the private
sector in their ports (e.g. Italy). Some others have already completed the
actual implementation of the deregulation policies (e.g. Spain), while others
are still pondering the best way forward (e.g. Greece). The growing number of
Mediterranean and Black Sea countries that have indicated the intention to
introduce some degree of private sector involvement in their national ports
industry, support the view that most governments (even those with centrally
planned economies) have now come to recognize the fundamental difference
between port administration and management.

A growing interdependence also marks the relationship between shippers and

shipowners. In a privatised environment, shipowners and the port industry will
become more interdependent than ever. To ports, the means to win traffic and
secure the continuity of costly adjustments presupposes closer cooperation
with the shipping lines. Such modernisation is of equal importance to
shipowners. It influences the variation of the costs associated with the port
interface12 and improves the speed of SSS. Due to the latter, the range of the
potential freights expands, and operators who invest in modern and larger
short sea vessels can increase their competitiveness and profitability.

Besides, the recent introduction of a new generation of fast ferries might be

the most important innovation in the market. Usually, the term "fast ferry"
refers to ferries with capacity for cars, trailers and busses, with or without
passengers, which can achieve a speed above 25 knots13. Three main types
of fast ferries can be distinguished:
• The small fast ferries with length between 50m and 90m, passenger
capacity between 250 and 500 and car capacity between 10 and 120.
They are enlarged fast boats with some car carrying capacity for pure
transportation routes only. Enlarged and wavepiercing catamarans and
monohulls are included.
• The medium fast ferries with length between 75m and 105m,
passenger capacity between 500 and 900 and car capacity between
140 and 210. They are equipped with onboard space for various
activities.
• The large fast ferries with length between 120m and 130m, passenger
capacity between 900 and 1500 and car capacity between 240 and
375. They are equipped with onboard activities similar to large
conventional ferries.

Fast ferries have less capacity than conventional alternatives, but a given
volume can be satisfied by a higher frequency. They have advantageous
conditions in calm waters but most of small and medium fast ferries are not
operational in high waves.

12
Which according to shipowners, currently stand on average above the total shortsea transport costs.
13
T. Wergeland and A. Osmundsvaag, "Fast ferries in the European Shortsea network: the potential and the
implications", Second European Research Roundtable Conference on Shortsea Shipping, Athens, 1994.

© Association for European Transport 2002

2.4. The current stage of Eastern Mediterranean Short Sea Shipping
evolution

The structural changes might create significant pressure for adjustments on

the Mediterranean SSS sector. The considerable quantitative and qualitative
changes come with the acquisition or loss of market shares, the break-up of
previous market balances, and fresh inter-industry relations. On the one hand,
they trigger intra-modal competition. On the other hand, they are forces
transforming the commercial relationships between the market players by
creating, for a variety of reasons, a growing interdependence of the market
actors. None of the players in the Mediterranean can stimulate its competitive
position if the others do not show the same level of adaptability. It is the entire
short sea sector that needs to improve the internal structure to remain
competitive within the new reality.

Nowadays, the essential adjustments are only partially in place. SSS is well
established in various Mediterranean corridors but a large part of its market
share results from compelling geographical circumstances, or mechanical
economic reasons (i.e. low value bulk commodities which benefit from scale
economies). The mode has yet to compete effectively in all intra-
Mediterranean markets. For instance, no-bulk trade between countries with
major container ports such as France and Spain is seldom carried in
containers by sea.

The size of the vessels has increased14 but kept up with technological
achievements only in limited routes. Obsolete ships are still in operation and
several market sections lack the services of available technologies. The
structure of the Mediterranean short sea fleet reveals that short sea operators
continue to use multipurpose general cargo or all-round Ro/Ro vessels, but
cellular containerships, characterised by a high flexibility in their operational
possibilities, represent only a minor part. The significant higher average age of
short sea vessels than that of deep-sea fleet confirms a slow replacement
cycle.

In addition, it is somewhat problematic to position fast ferries as a distinct

market within the Mediterranean SSS. This, because it is difficult to define the
"optimal" length of routes to operate. On the one hand, the distance must not
be too short, as the ratio of time spent in ports vs time saved at sea becomes
too high. On the other hand, the route must not be too long (for fast ferries for
both passengers and freight), since there is significant difference in comfort,
compared to conventional ferries.

Although ports specialisation implies substantial investments in infrastructure,

the level of these investments in the Mediterranean has followed a negative
trend, whether it is expressed as a share of the total of the investments in
transport infrastructure, or as a percentage of the GDP. The aggregate

14
The 1988 average size over 3000 dwt per vessel was more than twise the size of ten years before. That said,
there is not a clear cut of vessels operating in the Mediterranean shortsea market.

© Association for European Transport 2002

European OECD15 investments in transport infrastructure declined from 1,5%
of the GDP in 1975 to the relatively low 1% throughout the 1980s with the
share of ports decreasing from 5% to 3.5% of the total (ECMT16, 1991). True,
the absence of conventional capacity infrastructure is not a generalised
problem and, largely due to the vigorous competition that takes place even
between ports within the same country, most of the Mediterranean ports have
covered such needs. But at the end of the 1980s even the most successful
Mediterranean ports needed further modernisation to integrate into the
logistical systems. Moreover, in some Mediterranean regions and in the Black
Sea, ports have not kept pace, but they need to do so to overcome their less
efficient and less specialised facilities.

The adjustment process has not been facilitated by the national policy
frameworks that have either neglected or been ineffective at building up the
external environmental parameters that would improve the competitiveness of
the sector. In some cases, the national administration has followed a "road-
addicted" investment policy in transport infrastructure failing to modernise port
facilities. There is also an issue of adequate monitoring effects of policies, and
assessment of external costs in markets, implicating even the maintenance of
information regarding the current modal accommodation of demand. Recent
reviews of all Mediterranean national transport policies concluded that
comprehensive statutory requirements for environmental assessment seldom
exist, and practical experience is limited.

2.5. Special characteristics of Short Sea Shipping in the Black Sea

Black Sea occupies an area of about 411,540 km2 and together with the Azov
Sea, it exceeds 461,000 km2. The maximum distance between coasts is 1,125
km on the East-West, and 600 km on the North-South direction. Navigation is
possible throughout the year, exempt for the northern part of the Azov Sea,
where, during heavy winters, icebreakers are needed for no more than two
months. Three major navigable rivers flow into the Black Sea, the Danube, the
Niper and the Don, extending considerably what can be called “the Black Sea
maritime hinterland”. Together with the Rhine, the Danube forms a navigable
corridor, which crosses Central and Western Europe to the North Sea. The
Volga - Don Canal allows for ship navigation up to the Caspian Sea and then,
through Russian inland waterways, to the White Sea, passing from the
Moscow and the St. Petersburg area. The Black Sea is connected to the
Mediterranean through the Bosphorus and Dardanelles and then, to the
Atlantic Ocean through Gibraltar and to the Asia/Pacific region through the
Suez Canal. Major continental corridors (Pan-European corridors IV, VIII, IX)
are also connecting the Black Sea to the European hinterland. Corridor IV’s
section towards Sofia has an outstanding importance as it provides (with
corridor VIII and via-Egnatia) an East-West link to the Adriatic Sea.

The Black Sea forms a natural border of 6 countries: Romania, Ukraine,

Russia, Georgia, Turkey and Bulgaria. These six countries, together with
15
Organization for the Economic Cooperation and Development
16
European Conference of Ministers of Transport

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Greece and Albania have created a zone of Economic Co-operation in the
Black Sea (BSEC), having as their main focus the development of transport in
the region.

There are more than 35 ports on the Black and the Azov Sea. About one third of
these ports are accessible to middle and large capacity ships. Such ports are:
Constantza, Odessa, Novorosiisk, Poti, Samsun, Istanbul etc., as well as the
ports situated on the Danube, namely Sulina, Tulcea, Galatzi, Braila in Romania
and Reni, Ismail in Ukraine. The planned port of Giurgiulesti in the Republic of
Moldavia, will soon be part of these ports.

The frequency of SSS services in the East-European and Black Sea ports is
weekly. Most of "hub and spokes" SSS actors serve the region using either the
port of Gioia Tauro or this of Marsaxlokk as transshipment basis17. The ports of
Black Sea are essentialy organised for handling bulk cargo. Few ports offer
facilities for serving unitised cargo. Considering that the total European non-bulk
trade does not exceeds 6%-7% of the total intra-European maritime traffic, the
corresponding containerised part of traffic volumes between Black Sea and the
rest of Europe must be smaller than 5%18.

3. ANALYSIS OF THE DECISION PROCESS OF INTERMODAL AND

SHORT SEA SHIPPING USERS

3.1. The framework of a specific research

The previous sections presented the main characteristics of the SSS market
in the Eastern Mediterranean and the Black Sea region, on the basis of
statistical data and aggregate research results. In this section, the paper tries
to complete the topic by understanding actors’ decisions for the use of SSS,
through a “behavioral” approach.

A better understanding of decision-making processes in transportation

necessitated a specific field survey. This survey covered all possible forms of
intermodal transport, SSS being one of the possible alternative forms. More
concretely, the objectives of the survey were:
• Identification of the key variables for the most common situations in
deciding whether to favor the use of intermodal transportation
• Identification of actor groups having common attitudes towards
intermodal transportation
• Identification of decision patterns, on the basis of which the choice of
intermodal transportation is made
Furthermore, the paper particularly focuses on decision patterns related to the
SSS cases.

17
The characteristics of SSS services and ports of Black Sea ports have been analysed in IQ project, Deliverable 2,
"Short-Sea Shipping" - Report number 2.2.13, 4th Framework Programme, European Commission-Directorate
General 7, 1998.
18
P. Sutcliffe and M. Garrat, "Container traffics in Europe-Changing patterns and policy options", Second
European Research Roundtable Conference on Shortsea Shipping, Athens, 1994.

© Association for European Transport 2002

3.2. Methodology

The methodology is developed for decision making at the firm/company level.

Three types of actors-decision-makers have been examined: forwarders/road
hauliers, shippers and shipping lines. The methodology does not follow a
specific “Origin-Destination” approach, but considers the overall firm’ behavior
and deployment of its operations at the European intermodal infrastructure
network.

The methodology follows two stages. At the first stage, fourteen qualitative
variables possibly affecting the decision-making process are examined
separately from each other. The actor types, in relation to the specific
individual shares of intermodal transportation related to their total
transportation volumes, have been recorded and the corresponding
frequencies are produced. Furthermore, possible correlations between the
importance of each decision criterion (and corresponding variable) and the
respective intermodal share of respondents are assessed. This stage is based
on descriptive statistics.

The second stage identifies common decision patterns, on the basis of

correlation between the criteria affecting the decision-making process. This
stage is based on a behavioral analysis assessing the importance that the
actors attribute to fourteen criteria. Based on this elaboration, the respective
generic groups of actors are identified. The method used at this stage is
Factor Analysis.

3.3. Data collection

The data required were gathered from a field survey at the European level. A
sample has been designed, consisting of 92 large companies with European
range of activities and distributed within 12 EU member states. The
companies were chosen almost proportionally to the economic status and
population of the countries. The companies surveyed are among the large
industries, producers of goods, Pan-European forwarders and carriers, as well
as international shipping lines, operating significant traffic volumes. Most of
these actors use intermodal transportation for some portion of the volumes
they handle. They could increase or reduce their share of intermodal
transportation, according to eventual changes in the characteristics of
services supply.

Three questionnaires have been drafted, respectively for forwarders or road

hauliers, shippers and shipping lines.
Firstly, basic information concerning the traffic volumes of respondents and
the respective individual intermodal transportation shares has been collected.
For the identification of common decision patterns and respective generic
groups of actors, qualitative data were collected. Questions related to the
perception the transportation actors have on the importance of various
variables affecting the decision-making process were included. The answers
record the importance of each variable in an artificial technical scale from 1 to
5 (1: being less important and 5: being highly important). Furthermore,

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questions related to fourteen criteria, corresponding to the factors affecting the
decision-making process, are examined, which are.
- Cost factor: transportation Cost
- Internal to company factors: size of transportation order; commodity
types; regularity of shipment; warehouse location; historical tradition of
the company (how long they keep the same contract).
- Quality factors: reliability, flexibility and safety.
- External factors (from supply side): supply of suitable operating
systems (mostly rail), supply of adequate frequency of services,
additional logistics services supply, availability of information systems.
- Policy factors: EU transportation policy measures, regional/local policy
measures.

3.4. Results

3.4.1. Variables affecting the intermodal transportation use

Possible correlations between the importance of the fourteen criteria in the

decision-making process and the respective shares of intermodal
transportation by the groups of decision-makers are elaborated. However,
high average values of importance might not be determinant of users’
decisions. As an example, if safety is highly important but both road and
intermodal transportation offer similar performance in safety, the criterion of
safety would not influence the decision-making process. Consequently, two
aspects are examined:
• the mean qualitative values of importance accorded to each variable by
the respondents in the survey (in a scale from 1 to 5);
• the variation of the importance of each variable as it is related to its
impact on intermodal shares.
The mean qualitative values are presented in Table 1, as well as the intervals
for 95% confidence level.

TABLE 1. Mean values of importance of criteria per actor type and

intervals-95% confidence level
Mean values
Criteria Forwarders Shippers Shipping Lines Total
Transportation Cost 4,3 (± 0,3) 4,1 (± 0,5) 5,0 (± 0,0) 4,3
Size of Shipment 2,6 (± 0,4) 3,1 (± 0,5) 2,4 (± 0,7) 2,8
Regularity of Shipment 3,8 (± 0,4) 3,2 (± 0,5) 3,0 (± 0,8) 3,5
Warehouse Location 2,8 (± 0,4) 2,7 (± 0,5) 2,1 (± 0,7) 2,7
Historical Tradition 1,9 (± 0,4) 1,6 (± 0,3) 1,1 (± 0,1) 1,7
Reliability 4,3 (± 0,3) 4,0 (± 0,5) 3,1 (± 1,0) 4,0
Flexibility 3,5 (± 0,4) 3,5 (± 0,5) 2,8 (± 1,0) 3,4
Safety 3,6 (± 0,5) 3,7 (± 0,5) 2,4 (± 1,0) 3,4
Operating systems 3,5 (± 0,4) 3,1 (± 0,5) 2,7 (± 0,9) 3,2
Frequency of services 4,0 (± 0,3) 3,5 (± 0,4) 2,8 (± 1,0) 3,6
Additional logistics services 2,1 (± 0,4) 2,6 (± 0,4) 2,4 (± 0,8) 2,3
Information systems 2,9 (± 0,4) 2,8 (± 0,5) 2,4 (± 0,8) 2,8
EU transportation policy 1,9 (± 0,4) 2,2 (± 0,4) 2,1 (± 0,7) 2,1
Regional/local policy 2,4 (± 0,5) 2,5 (± 0,5) 2,2 (± 0,9) 2,4
Other 1,7 (± 0,4) 1,4 (± 0,4) 1,3 (± 0,6) 1,6

© Association for European Transport 2002

The variations in the intermodal shares corresponding to the decision-makers,
associated with the variations in the importance that they attribute to each
variable are analysed. Using the Fisher test, the analysis proved that the
variation of importance of variables do not present a statistically accepted
correlation with the shares of intermodal transportation. Consequently, the
statistical analysis can lead to the following general conclusions:
• The three actor types (forwarders, shippers, shipping lines) do not
demonstrate significant differentiation, as far as their perception of the
variables affecting the decision-making process is concerned.
• Cost and reliability are the most important criteria for their decisions.
• Similarly, frequency of services offered and operating systems are the
most important criteria considered from the supply side (in order to
meet their requirements).
• Regularity of shipments is almost a prerequisite for using intermodal
transportation.
• For shipping lines, the cost factor is much more important than quality
variables.
Among the variables examined, the variation in the importance attributed to
the cost factor does not significantly differentiate the individual shares of
intermodal transportation. However, the “absolute” importance of the cost
factor had been confirmed.

3.4.2. Decision patterns and actor groups

The identification of decision patterns are based on the correlation between

the criteria used for identifying the decision making by the actors. Factor
analysis was applied to find such correlations, which are presented in a Factor
Loadings Matrix. Table 2 specifies the factors and answers the question
“which criteria are strongly correlated in the decision-making process”.

TABLE 2. Factors Loadings Matrix

Variables Factor 1 Factor 2 Factor 3
Frequency of services 0,81
Reliability 0,79
Regularity of Shipment 0,74
Safety 0,66
Operating Systems 0,63
Information systems 0,61 0,43
Warehouse Location 0,50 -0,40
Flexibility 0,49 0,37 -0,28

EU transportation policy 0,86

Regional/local transportation 0,80
policy
Additional logistics services 0,68
Historical tradition 0,35

Transportation cost 0,74

Size of Shipment 0,26 -0,36

© Association for European Transport 2002

The analysis suggests the consideration of three factors, which cluster the
criteria. The coefficients of correlation measure the strength of association
between variables. The value of this measure ranges between –1 (a perfect
negative relationship in which all points fall on a line with negative slope) and
+1 (a perfect positive relationship in which all points fall on a line with positive
slope). A value of 0 indicates no linear relationship.

The three factors identified indicate three different attitudes in the decision-
making process for using intermodal transportation or not. Factor 1 represents
a decision pattern mainly based on both quality and cost criteria concerning
transportation. The decision-makers falling into this decision pattern value
greatly the quality criteria of reliability, safety and flexibility. Moreover,
decision-makers relate the demand side criteria to the respective criteria from
supply side: frequency of services, operating systems, and information
systems offered.

Factor 2 represents a decision pattern based on criteria of a “specific” context

or a specific market area, with particular socio-economic and infrastructure
characteristics. Issues of transportation policy at European, regional and/or
local level determines the final modal choice by the users. In addition, in this
“specific” decision pattern, the supply of additional logistics services plays a
major role, and it is influenced by historical and traditional factors is also taken
into account.

Factor 3 represents a decision pattern almost exclusively based on the

criterion of transportation cost. This represents the most traditional decision
pattern in transportation. The negative signs in the column of Factor 3 mean a
negative correlation. As an example, when the importance of variable
Warehouse Location is rising, the weight of this variable decreases in Factor
3.

Based on the extracted factors, the most distinct generic groups of actors are
identified, according to the importance they place on the decision criteria
during the decision-making process. The application of a Hierarchical Cluster
Analysis within the sample identifies three relatively homogeneous groups of
actors, which correspond to three distinct decision patterns. The group
composed of actors falling in the decision pattern based on quality criteria
(Factor 1) is labeled “Quality-cost oriented” group. The group consisted of
actors falling in the decision pattern derived from a specific environment of
operations (Factor 2) is labeled “Specific” group. The group composed of
actors falling in the decision pattern based on the criterion of cost (Factor 3) is
labeled “Cost oriented” group. The composition of the sample of interviewed
companies, according to the three actor groups is presented in Table 3.

TABLE 3. Decision patterns and actor groups

Factor Actors group % of the sample (respondents)
1 "Quality-cost oriented" 45,1
2 "Specific" 19,8
3 “Cost oriented” 35,1

© Association for European Transport 2002

The “specific” group represents approximately 1/5 of the total sample. Taking
into account the selected criteria, on which this group proceeds to the
decision-making, the size of this group is relatively important. In addition it
assesses that 1/5 of users of intermodal transportation makes decisions on
the basis of specific logistical needs (e.g., demand for third party end-haul
operations, refrigerated storage areas etc), and the particularities of the
respective geographical areas from supply side. The criteria governing their
decision-making process can be neither generalized nor valid everywhere. It
appears that in these cases, the characteristics of intermodal transportation
supply differentiate from the general characteristics of intermodal
transportation supply in Europe. Consequently, in one case out of five, the
decision pattern of intermodal transportation users cannot be generalized.

3.4.3. Decision patterns and shares of intermodal transportation

Almost all actors included in the sample are non-exclusive users of intermodal
transportation. The volumes of continental traffic are also transported with
door-to-door road modes. However, three groups of actors with distinct
attitudes towards intermodal transportation have been identified. On the other
hand, all actors are faced with a given context of intermodal services supply.
Consequently, the three distinct attitudes might lead to differentiation of the
“intensity” of intermodal transportation use per actor group.

The analysis examined the “individual” shares of intermodal transportation of

actors for each group. It revealed distinct ranges of individual intermodal
transportation shares per actor group, which are ranked accordingly in Figure
1.

FIGURE 1. Ranked diagram of individual intermodal transportation

shares

100
90
Intermodal transport share (%)

80
70
60
50
40
30
20
10
0
Observations

"Specific" "Quality oriented" "Cost oriented"

All companies are graphically represented. The result is a ranked disposition

of individual shares of intermodal transportation. According to the diagram, the
intermodal transportation shares of the “cost oriented” group range from 50%

© Association for European Transport 2002

to 100% of total individual traffic volumes. The shares of the “quality-cost
oriented” group range from 10% to 50% of total individual traffic volumes.
Finally, the shares of the “specific” group range from 0% to 10%.

3.5. Identification of decision patterns of Short Sea Shipping in the

Eastern Mediterranean and the Black Sea

Given the previous research results, an additional elaboration allows

identifying the SSS cases in the three major decision patterns. The main
results are presented hereafter:
• The SSS cases represent approximately 30% of the sample
• All actor types (shippers, forwarders, shipping lines) are represented in
cases of short sea choice
• The SSS cases in the Eastern Mediterranean and the Black Sea
represent less than 20% of the sample
• Decision patterns of SSS in their largest part refer to the “cost oriented”
group.
• The small number of cases belonging to the “quality-cost” oriented
group concerns the Adriatic-Ionian corridor.

Considering these results, the SSS market share in the Eastern

Mediterranean region is far from meeting high quality requirements.
Inadequate and outdated port installations are largely responsible for the
slowness of maritime transport. Very often, ships are forced to spend too
much time in port due to equipment poorly adapted to current conditions. Ship
owners estimate their vessels spend on average 60% of total transport time in
ports and only 40% at sea. Similarly, over-inflated and highly variable port
fees sharply increase the cost of maritime transport. They represent up to 70-
80% of the cost of SSS, especially in ports where vessels are charged for
services they neither want nor need.

4. CONCLUSION

In the recent years, the SSS in Eastern Mediterranean is characterised by a

remarkable expansion and structural modifications as well. However, within
Europe the SSS activity does not seem to achieve an appropriate level of
recognition or market share in the overall transport network. As an industry it
has grown considerably during the 1990s as available data indicates, but this
growth was somewhat lower than that of road transport in the same period.

The traffic increase is mainly related to the feeder activity, that contributed to a
remarkable growth of containers handled in Mediterranean ports. However,
the containerization rate remains significantly low in the Eastern part,
compared to the ports of western Mediterranean and northern Europe. The
region’s ports have been lagging behind their northern competitors in terms of
investment, pricing efficient management, and physical accessibility to large
markets. Feeder and Ro/Ro traffic being the most expanded market niches,
the current split between them is well in advance of feeder services for
relatively long distance voyages, and of Ro/Ro mainly for short distance
coastal shipping. The Mediterranean Ro/Ro services market presents shares of

© Association for European Transport 2002

about 50 % for each of the western and eastern part of the Sea. As far as a
commodity-based segmentation is concerned, a high proportion of the trade
growth in the Mediterranean has been in low value products, once shipped in
bulk, but now treated as unitized cargo. Particularly in the Black sea, the
containerization rate must be smaller than 5%, considering that the total
European non-bulk trade does not exceeds 6%-7% of the total intra-European
maritime traffic.

A number of structural trends create significant pressure for adjustments on

the Mediterranean SSS sector. Among them, the increasing development of
logistics is an element affecting the characteristics of the demand for SSS, but
also transforming the organization of the maritime process per se. A growing
interdependence between shippers and shipowners is changing the actors’
relationships. The intensification of competition between transport modes is
affecting the quality aspects of transport services. The privatisation and
commercialization procedures are changing the management concepts of port
authorities. Finally, the recent introduction of a new generation of fast ferries
might significantly affect the modal choice of users.

The decision-making in choosing SSS as an alternative transport mode is a

quite complicated process. More generally, the attitude of actors towards
intermodal transportation results from both “objective” characteristics and
individual perceptions. Taking into account the multiplicity of variables and
contexts, there is no standard approach. Each company proceeds to
decisions in an individual way. Without neglecting this fact, the paper
investigated common patterns (and not detailed attitudes) in the decision-
making process followed by transportation users.

Three distinct groups of decision-makers and respectively three decision

patterns have been identified. The first group, so-called “cost oriented” group,
structures its decision pattern almost exclusively on the criterion of
transportation cost. The second group, also labeled “quality-cost oriented”
group, develops a decision pattern on the basis of quality criteria of
transportation. The third group, labeled “specific” group, refers to “specific”
contexts or specific environments of operations. Each actor group includes
forwarders and road companies, shippers and shipping lines, which can
consider either internal or external to companies factors in an identical way.

Almost all the actors included in the three groups of decision-makers split their
total volumes of continental traffic between intermodal and door-to-door road
transportation. The elaboration of the findings refer to a given context of
intermodal services supply, which is the same for all.

The cases of SSS users in the Eastern Mediterranean and the Black Sea
mainly belong to the “cost oriented” group. It concern commodities that do not
require high quality performance in transportation operations. The absence of
good intermodal transportation performance in reliability and flexibility,
compared to road transportation, does not considerably affect the choice of
these users, even for small differences between intermodal and road
transportation cost. However, the regularity of shipments, safety and duration

© Association for European Transport 2002

aspects of intermodal transportation use are variables that affect the modal
choice for intermodal transportation. This represents the most traditional
decision pattern in transportation. In any case, the “cost oriented” group is the
most “intensive” user of intermodal transportation.

A minor part of SSS traffic in the region, almost exclusively concerning the
Adriatic-Ionian corridor, refers to the decision pattern of “quality-cost oriented”.
This group considers the criteria of reliability, safety and flexibility in an
integrated way. These criteria, which derive from their own requirements, are
associated with the respective criteria from supply side: frequency of services,
operating systems, and information systems offered. The intermodal share
changes are also correlated to commodity types and influenced by the
ownership of intermodal assets. The “quality-cost oriented” group also
presents a relatively important potential demand for the intermodal
transportation market.

The integration of SSS into more sophisticated just-in-time systems remains a

permanent problem in the Eastern Mediterranean Sea. Transit times may be
inaccurate and delivery times from port to importer premises are subject to
lengthy delays in customs clearance. Customs clearance is still a big problem
in Trade between Member-States of the European Union and third countries
and it is reckoned that, in some cases, delivery from port to importers
premises can take as long as the whole sea voyage. The necessary policy
actions in order to take advantage of this potential must focus on
improvements of quality performance.

The exploration of the SSS potential in the region is related to a process-

oriented treatment of goods and information, for logistics and for new types of
cargo. This inaugurates a new role for the Mediterranean ports. The traditional
conception of a "gate" simply providing the facility of transferring cargoes
between ship and quayside becomes no longer adequate. Along with
conventional operations, ports need to work as intermodal nodal centres
providing a range of complementary storage and distribution services. The
cargo generating capacity remains a powerful element but other qualitative
factors - i.e. inland connections or provision of electronic data information -
come into play. In their absence, ports cannot meet the demand for
commodities to be delivered (or transshipped) quickly and predictably, and the
user considers the employment of the mode as a disadvantage of the
production function. In order to compete in this changing environment,
Mediterranean ports have to adjust quickly, become bigger in terms of
infrastructure, and increase their handling capacity by introducing new and
sophisticated equipment. A more flexible constitutional, fiscal and operational
framework should accompany all these.

© Association for European Transport 2002

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