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Transport networks are comprised of gateway and hub cities where goods are transshipped between transport modes along established trade corridors. The economics of gateways and hubs depends on the competitiveness of their trade corridors. Trade corridor routes are determined by geophysical features, political borders, proximity to markets, and investment in transportation infrastructure. The advantages of location can be altered by changes in transportation and communications technologies that favor some locations at the expense of others. Over time, hierarchies of hub and gateway cities have formed based on their trade of goods and increasingly on the services they provide. This chapter sets out a framework to analyze the evolution of transport networks and nodes where transshipments occur.

Located along shorelines, seaports are highly vulnerable to coastal and marine natural disasters. Damage caused by disasters can be prevented or alleviated if sufficient investments are made in a timely manner. However, despite a wide range of investment options and well-developed engineering expertise, port investment on disaster prevention remains a challenging task involving great complexities. This paper develops an integrated economic model for the analysis of disaster-prevention investments at a “landlord” port. It simultaneously considers the uncertainty of disaster occurrence and associated return of prevention investments, the information accumulation and related investment timing, and the spillovers (externalities) of investment among stakeholders. Our analysis shows that the timing of port investments depends on the probability of disasters. Immediate investment is optimal for disasters with very high probability, while investment should be postponed if such a probability is very low. Optimal timing for cases of intermediate probability cannot be determined analytically, as it is influenced by other factors such as discount rate, information accumulation and efficiency of investments. Positive externalities between a port and its tenants lead to under-investment, which can be corrected by coordination between stakeholders. However, since there are risks of “over-investment” due to uncertainty, government intervention is only optimal with a good understanding of disaster probability distribution.

Due to increases in labor and operational costs within the Pearl River Delta (PRD) region, many manufacturing firms are relocating their plants to inland provinces in China. The existence of significant intra- and inter-port cluster competition means that this ongoing relocation process will not only affect the ports of Shenzhen and Hong Kong, but will also have an impact on ports in other clusters such as Shanghai in the Yangtze River Delta (YRD). Furthermore, since Hong Kong and Shenzhen share the same transportation corridor to inland China, the hinterland access condition is another concern to be examined. This paper employs an analytical economic model to investigate the implications of this process. With the model allowing for substitutable but differentiated services among the three competing ports, the finding in all cases shows that the process will harm the performance of the ports in PRD region, but will benefit the port YRD region. With respect to the impact of a change in hinterland access condition, the implications for Hong Kong are clear, but more complex for Shenzhen. This is because although it shares the same transport corridor to inland China with Hong Kong, it is also one of Hong Kong’s competitors. Since Hong Kong also benefits from the hinterland access and/or negative externality improvement, such effect may either benefit or lower performance of Shenzhen port. The analytical results suggest that a more competitive port of Hong Kong will be in a better position to cooperate with the neighboring port of Shenzhen, and that it is important for Hong Kong to improve its cross-border cargo flows.