Vertical and Horizontal Integration in Port Development

In economic theory vertical integration involves an entity, such as a manufacturer, trying to acquire or take control of the activities that are upstream or downstream of the stage it is involved in. So, a manufacturer may attempt to acquire some of its suppliers or the distributors or retailers it is selling to. Horizontal integration involves the acquisition of entities that perform a similar function either as a process of consolidation or for the penetration of new markets. A port authority is a good example of a vertically integrated port structure by providing a wide array of services while port holdings, such as Hutchison Port Holdings or Dubai Ports World, are attempts at horizontal integration by acquiring stakes in a variety of strategically located port terminals. A maritime shipping company that ventures into the management of port terminals performs concomitantly a process of vertical and horizontal integration since it is expanding geographically but also from maritime towards inland services. In all cases, the outcome is a more integrated and efficient maritime transport system.