Realization of strong ports and shipping services in developing countries using multi-criteria selection algorithm

Trade is growing as a proportion of world GDP and this was obvious during the financial crises during the year of 2008. Governments and international organizations gave a higher priority to improving ports and shipping services. This leads to deregulation, which, together with technological advances, increases the incentives for shipping companies to form alliances and to merge. Another cause of the process of developing countries to reevaluate the situation is technological change, which has led to an increase of fixed costs as a proportion of total average costs. This leads to larger optimum unit sizes of vessels, ports, and companies, which in turn reduces the number of participants in the long-term market equilibrium. To analyze the impacts of these trends, the paper examines the use of multi-criteria selection mechanism to achieve economies of scale in ports of developing countries. The criteria are based on declines in liner shipping companies´ profits; the danger of overcapacity; fluctuations in freight-rates; the strength of alliances; ports as transshipment centers; options for small liner operators; benefits for importers, exporters and consumers; and the implications for regulatory bodies.