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Archive for June, 2011

The Dutch passenger railway system is organized around one national carrier, i.e. the incumbent Netherlands Railways or NS. The NS has performed quite well given the complex infrastructure it operates and the number of trains it moves around each day. However, some feel that other companies can do this more efficiently. As per EU-regulations, some other railway companies have been given access to the Dutch network, such as Arriva, Veolia, Syntus and Connexxion. They operate on secondary lines at the edges of the core network. The nation-wide concession that was handed to NS is nearing its end and those other companies have now launched a plan to create a level playing field that will allow them to compete with NS to win concessions everywhere in the country.

A Stadler GTW as operated by Veolia in the south of the Netherlands. Picture by Janderk1968

They presented this proposal to the Minister of Transport who, in return, asked them to make a quick-scan about the financial, economical and institutional consequences of this plan. I was part of the research team that carried out this research. The report (in Dutch only, sorry) can be downloaded at the website of the Parliament. The full package of documents can be downloaded here.

The research found that, under certain circumstances and assumptions, money can be saved when the operation of the railway network is put out to tender. Institutional changes will be necessary. However, we argue that this doesn’t add to the institutional complexity of operating the railways and supervising the companies. Instead, it makes the existing complexity more transparent and manageable.

Whether the operation of railways should be put out to tender is a political decision and I’m not making a stance here. All that I can say is that it is not impossible and that its possible negative side-effects can be managed. Those of you who by now have memories of British Rail and its collapse: there is an interesting report available called: The Restructuring and Privatisation of British Rail: Was it really that bad? Let’s get the public debate going!

Connexxion runs these lovely Protos trains. Only 6 of them were ever built. Picture by me at station Amersfoort

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I had a discussion with a number of project managers of the municipal planning department. They expressed their concern about how difficult it was to plan the city if one is not in full control. I’ve tried explaining that full control is a fantasy and that, if you manage to obtain it, you wish you rather didn´t. To me, this is normal stuff and not a very novel insight. See e.g. Van Gunsteren’s ‘The Quest for Control’, published in 1976. But the wish to be in control is very persistent in urban planning.

Ok, there must be other ways to experience the stress of being in full control. Enter Cities XL 2011. It is a game or better: a simulation. The chief aim of this game is to build a city and make sure it doesn’t collapse. As a player, you are offered almost full control. This ranges from generic tools such as land use zoning and infrastructure to tweaking trade, businesses and demographic development. To make the right decisions, a bewildering range of information sources is available, again ranging from macro-trends to the state of individual businesses and homes. So, we got everything we need to build the perfect city.

My first city was bankrupt in about 20 minutes; the second didn’t last much longer.

So, what happened? Lots of things went wrong. Luckily, it is a game so I didn’t get ousted as a planner (although I should have been). I learned very quickly that planning a city means considerable patience, low ambitions, and moderate and targeted investments. Trying to build a large city as once is asking for a quick bankruptcy. I managed to build a stable city with a population of around 10.000 people. Anything bigger required more patience, and much incremental growth. The game offers a dynamic balance between growth, taxes, facilities, income and expenditures. It is up to you to maintain that balance without exhausting your budget, whilst still promoting growth. That is quite difficult because the equilibrium is dynamic, which is somewhat different from stability. I’ve seen people on the Internet discussing which formula would work best in maintaining balance, such as the number of houses against the number of shops and all that. The result of following such formula is a boring city derived from continuous calculations.

Building a city quickly may be quite difficult, at least it is somewhat manageable. Shrinkage, however, is not. Once some inhabitants decided to leave my town, it quickly spiraled out of control. Oh yes, I did borrow a big amount of money to reinvest but that only hastened my demise. I thought that this was pretty much similar to what happens in real-world urban planning in rural areas that are subject to shrinkage. I experienced that there is very little one can do except for aiming for a soft landing. Perhaps it is possible to turn it around but I’ve not managed to that in this game.

Other things I noted included that it was tempting to build modernist cities based on raster-like streets. It turned out to be efficient and easier to control but the result was probably not a happy place. I also noted that there are many, many mutual dependencies between everything a city has to offer, ranging from a local school to large-scale stadiums. Neglecting those dependencies is possible, but only to some extent. Bankruptcy is always somewhere waiting for you. Meanwhile, the player is flooded with statistics about how the city develops. You know you want to take that all into account, you know you will need to do this, and you experience the sheer impossibility of this. Great.

Playing this game was more fun than I expected. It was both unreal (it is a game) and real. Although it is a game, it still shows some things that are surprisingly real, especially the dynamic equilibrium and the erratic changes that punish you for not maintaining that equilibrium. And if anything, it hammered home the message that being able to control everything is a real pain.

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A few days ago, prof. dr. Frans van den Bosch of the Rotterdam School of Management presented his research report on the strategic value of the Port of Rotterdam for the international competitiveness of the Netherlands*. This report was commissioned by the Port of Rotterdam Authorities as part of the development of the strategic vision of the port for 2030. It is a most interesting report and prof. Van den Bosch presented some thought-provoking conclusions. Yes, the Port of Rotterdam is important but contrary to popular opinions, it is not really important for the city of Rotterdam itself. This is something that fascinates and bothers me simultaneously.

First some facts, taken directly from the report. The combined (direct and indirect) value added amount to around 22 billion euros annually (or about 3,7% of the Dutch GDP). It provides direct and indirect employment to 90.000, respectively 55.000 persons, totaling 145.000 persons. The researchers expect that the total volume of investments in the coming years is around 10 billion euros. Impressive numbers indeed, but one should not get blinded by such numbers. To put things in perspective, the Port of Hamburg, much smaller by many accounts, employs between 60.000 to 150.000 people, depending on the definition (see Gerrits, 2008).

The report identifies three important strategic contributions the port generates for the country as a whole: [1] functioning as one of the most important and biggest goods hubs in Europe; [2] development and dispersion of knowledge through cooperation with other ports and logistic hubs; [3] strengthening of the port and the Netherlands through international cooperation and control of logistics, e.g. through acquisitions and participation in feeder ports. The researchers then elaborate further and conclude that the strategic value of the port is much higher than the employment and investments associated with the port.

The petro-chemical cluster at Pernis, Rotterdam. Picture by the Rotterdam Port Authorities

The relationship between the port and the city of Rotterdam is mentioned where it concerns the question of whether Rotterdam and its surrounding areas offer an attractive location for corporate headquarters. The picture is rather bleak. Of the top 100 headquarters in the Netherlands, only 14 are located within the Rotterdam greater area. This is almost insignificant if compared to e.g. Hamburg. Anybody who has ever walked around the Binnenalster will know that the city has a great collection of corporate headquarters. In the words of the researchers: “In order to be acknowledged as ‘world maritime city’, the presence of corporate headquarters and/or regional offices of container shipping companies and container terminal operators is essential.” (2011: 19). This seems not to be the case for Rotterdam. The remainder of the report only talks about the city where it concerns the availability of land for port expansion.

I found it particularly interesting that much of the port’s development is driven by international competition. Prof. Van den Bosch quoted a respondent saying his company was not competing with local firms but with other similar firms elsewhere in the world. It is an indication that the port’s relations are with other ports, companies and hubs elsewhere in the world. Its relationship with the city does not matter for this competition and adaptation and survival in this competition. Of course, the city benefits from the port and the profits from the Rotterdam Port Authorities but it also has to bear its negative externalities such as congestion, noise pollution and emissions of particulate matter to name a few.

To illustrate all this, prof. Van den Bosch run an interesting though experiment with us. He asked the question what would happen if, in a hypothetical case, the Port of Rotterdam would stop working. His conclusion: if surrounding ports are able to increase their capacity to accommodate the port of Rotterdam, nothing much would happen. In other words: the port has no proverbial anchor. Strategically, it could be anywhere. The city doesn’t really matter in this.

There is much more to say about this, which I will do soon when I will post a review of the strategic vision of the Rotterdam Port Authorities, as published recently.

*) Van den Bosch, F., Hollen, R., Volberda, H., Baaij, M. (2011). The strategic value of the Port of Rotterdam for the international competitiveness of the Netherlands: a first exploration. Rotterdam: INSCOPE: Research for Innovation. ISBN: 978-90-817220-2-5

Container transfer. Picture by the Rotterdam Port Authorities

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Sunset over Rotterdam, June 2011. Picture by me.

 

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