The impact on port competition of the integration of port and inland transport services

• We study port activities integration with inland transport under ports competition.
• Ports find it advantageous to engage in such integration process.
• It may be detrimental to welfare, since shippers’ aggregate surplus decreases.
• Several scenarios not leading to such welfare decrease are identified.

The performance of the transport chain is important for the efficiency and competitiveness of an economy. In the context of port competition, there has been an increasing cooperation between firms involved in the intermodal transport chain including seaport services. This paper examines the economic incentives and welfare implications to the integration of port activities with inland transport services under inter-ports competition. Although ports find it advantageous to engage in such integration process it may be detrimental to welfare, since shippers’ aggregate surplus decreases – noting that farther away users benefit at the expense of those closer to the ports. Several scenarios not leading to such welfare decrease are identified: asymmetries in port capacities, government regulation and efficiency gains. These latter results provide support to policies that favor integration processes of transport services.