Business and Economics of Port Management

An Insider's Perspective

Wei Yim Yap

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9781138341906
• eBook ISBN: 9780429801471
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Business and Economics of Port Management is a comprehensive but concise textbook and reference for insights into the workings of port industry from the business and economics perspectives.

The book examines port management from various entities which include the government, port operator, shipping line, logistics companies and other port service providers. It provides in-depth discussions on strategic issues, challenges and disruptions that are faced by this industry. Given the uniqueness of each port and international nature of the port business, the book comes with useful case studies and lessons from different port regions around the world. Key lessons on challenges and issues faced by port managers, developers and regulators are highlighted and discussed using a combination of professional insights and publicly available information sources. The aim is to illustrate the decision-making process with the purpose of contributing to better outcomes for the industry, government and the public at large.

Anyone who is approaching the subject matter will gain utmost understanding of how ports are critical in the global economy and societal well-being.

Part 1
The port and its unique character

Chapter 1
Introduction

Synopsis of the chapter

Through this chapter, the reader will be able to:

1. Relate the importance of the port sector from the firm’s perspective as well as those from the social, trade, economic, technological, political, government and environmental aspects.
2. Interpret major challenges faced in port management and how these have evolved over the years.
3. Explain the important role of the US, Western Europe, Japan and multilateral agreements and institutions in driving trade growth especially during the 1950s, 1960s and 1970s.
4. Discuss the reasons that contributed to the seemingly slow growth in port cargo traffic during the 1980s and 1990s.
5. Identify key developments that influenced the progression of global port cargo traffic growth in the early part of the 21st century.
6. Assess developments that will affect the future of port management, particularly in areas where technology is expected to play a major role in shaping its development.

1.1 Importance of the port sector

The port is an essential feature of a city, particularly for those with access to the sea or a major river system. Since the dawn of civilisation, major cities around the world can trace their origins to a facility where seagoing or river vessels come alongside shore to load or discharge cargo. Port activities typically provide the largest employment and generate one of the biggest impacts on the economy. A well-managed port ensures that raw materials that build our roads, devices that bring comfort to our lifestyles and food that nourishes our stomachs are imported and handled in the most efficient and secure manner. A competitive port will also ensure that exporters are not unnecessarily disadvantaged when competing internationally. Above all, the port serves as a catalyst for economic growth and development for entire regions and not just the city alone.

Ports are critical enablers of seaborne trade where over 80% by volume and 70% by value are carried on the backs of shipping globally.¹ The key role of the port is underscored by its facilitation of a host of activities that support the flow of goods using waterborne methods, and the importance of the port industry can be seen from the following perspectives:

Firm’s perspective:	A well-functioning and efficient port system allows users located within its hinterland to realise their competitive advantages. Hence, the port plays an important role in supporting port users to compete against supply chain systems that utilise other port systems.
Social perspective:	The port is typically a major source of employment for the local community. Industries directly related to the port include cargo-handling activities, passenger-handling, logistics and warehousing, ship chandling, bunkering, port safety and security, and port management and regulation. Activities related to the port industry also include shipping, inland water transport, shipbuilding, ship repair, trading, ship agency, classification societies, marine insurance, ship financing and maritime training and education. Many activities are shore-based and can be found located in a major port-city.
Trade perspective:	The port industry is the bedrock for trade, commerce and logistics. It is through the port that seaborne trade is realised. Without ports, the concepts of globalisation and transnational operations are meaningless.
Economic perspective:	The port has a direct influence on the comparative advantages of its hinterland. It is through an efficient port that trade costs can be significantly lowered to allow the realisation of theories propounded by international trade theorists.
Technological perspective:	The port industry is constantly challenged by the need to improve operational efficiency while adhering to regulatory requirements. New technologies are constantly tested and introduced. It is worth noting that the port industry is among the first industries in the world to deploy driverless vehicles in container yard and apron operations.
Political perspective:	The influence and political power of port unions are a considerable force to be reckoned with in many port cities. Dissatisfaction with political decisions can trigger industrial incidents that see entire ports shutting down, causing massive disruptions to supply chains and movement of goods. This has happened before and will likely happen again.
Government’s perspective:	Safety and security in the port remains a top priority. There are many agencies that make this possible. Other than the port authority, it is common to find the navy, police coast guard, immigration and customs involved in patrolling the port waters. Safe movement of vessel traffic in port waters without incidents allow port users to enjoy unimpeded access to the facilities and services of the port. Accidents that result in sunken wrecks can take months to remove. Use of channels and anchorages may be affected in the meantime.
Environmental perspective:	Ports are under pressure given the focus on shipping as a major contributor to greenhouse gases (GHG). The port industry is responding with measures to mitigate pollution. Pollution in this case extends beyond GHG to include activities that affect the quality of air, water and soil. Noise pollution is also a major area of concern, particularly for those with constituencies residing near port areas.

Given the significance of the port impacting on different facets of human society, its importance is surprisingly less known with many of its activities typically located away from residential and commercial areas. A person buying a car may not know the port which handled the arrival of the vehicle. A person switching on the lights of the house may not even be concerned that it is through the port that energy resources are imported to generate electricity which powers up the family home. Similarly, a firm exporting fashionwear overseas may not be fully aware of the complexity in operations required to get his container of goods loaded onto the right vessel. Even fewer people may know that the commodities mentioned in these three scenarios are vastly different in nature, requiring different port facilities to handle them. The car will be handled through a car terminal, whereas energy resources in the form of crude oil will be handled through an oil terminal. The firm exporting fashionwear using containers will see the cargo handled through a container terminal. Each of these terminals requires a different set of design and expertise to ensure that the cargo is managed in the most efficient and safe manner. The complex nature of the port industry results in the business often being confused with that of the maritime industry. The two industries while related, are distinct and operate on very different parameters and considerations. At the core, ports are essential elements of the global transportation and supply chain system. They serve as important interfaces that provide for smooth interaction between different modes of transport for both freight and passenger traffic.

1.2 Challenges faced by port management in the 1950s, 1960s and 1970s

A key actor in port management is the port manager, who may be a public or private entity. An effective and efficient functioning port is intricately linked to how it is managed. The context of port management has to be understood from the perspective of history. We need to understand the circumstance of challenges faced by ports and how these were related to the wider scope of events taking place ar...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication Page
• Contents
• List of figures
• List of tables
• List of cases
• List of activities
• Preface
• Acknowledgements and credits
• List of abbreviations
• Part 1 The port and its unique character
• Part 2 Operation, finance and technology aspects of the port business
• Part 3 Competition, competitiveness, marketing and customer management in the port industry
• Part 4 Contemporary challenges and concerns regarding port development and sustainability
• Part 5 Managing risks and uncertainties, traffic forecast and strategic planning for ports
• Part 6 Looking forward to the future
• References and useful resources
• Index