A Secure Bet in the Maritime Supply Chain: Current Situation and Opportunities for Ports' Attractiveness

A Secure Bet in the Maritime Supply Chain: Current Situation and Opportunities for Ports' Attractiveness

Julia Pahl (University of Southern Denmark, Denmark) and Miguel Cordova (Pontificia Universidad Católica del Perú, Peru)
DOI: 10.4018/978-1-7998-1397-2.ch018

Abstract

Extended research has been conducted related to how ports are capable to offer differentiated services for their customers, as well as how these decide to do business with one port rather than another. However, the literature about ports' attractiveness is not conclusive. This chapter identifies main drivers with respect to their relevance for managerial practices and proposes an agenda that tackles the obstacles that ports may find when aiming at enhancing their attractiveness. The chapter reviews the relevant literature, reports, and media to provide a comprehensive and up-to-date picture. It further opens the discussion related to exogenous, endogenous, and subjective factor of port attractiveness and how they influence stakeholders' decisions. The study concludes with proposals for further research.
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Introduction

If goods commerce were electricity, ports would be the electric centrals; if it were blood, ports could be the heart in the system, pumping commercial transactions strong enough to keep the world trade alive. Ports emerge as complex systems, somewhat connected to each other as well as to different transport hubs, working 365 days a year, all day long.

Nowadays, global economy demands for global scale solutions to deal with different limitations imposed by countries’ insufficient infrastructure and inappropriate regulations. Global supply chains need not only be efficient, but also and especially integrated to take full advantage of opportunities for maintaining or enhancing their performance. More than 90% of the world commerce goes through oceans (International Maritime Organization-IMO), which means that maritime supply chains play a significant role in the global economy.

In 2017 and 2018, world merchandise growth rates ranged around 4.7 percent and 4.4 percent, respectively (WTO b, 2018), and is expected to be 4.0 percent in 2019. This motivates countries and organizations around the world to adapt their strategies and capabilities with respect to increased requirements for logistical capacities as well as information and communication technology (ICT).

As the maritime market experience high pressure on their margins, ports that succeed in boosting their efficiency, improve their infrastructure, be open for privatization processes, and connect themselves to other ports can achieve reductions on international maritime transport cost (see, e.g., Wilmsmeier et al., 2006; Cho, 2014; Olivier and Slack, 2006) and pass them to their customers. Customers could perceive this benefit as an attractive factor for port selection (Wilmsmeier et al, 2006). Anyhow, ports that are more efficient are not necessarily the ones who offer the lower rates (Sanchez et al, 2003; Wilmsmeier et al, 2006). In general, ports who can provide reliable, efficient, and economic services are more attractive to both shipping lines as well as shippers (Jiang et al., 2015).

Since ports are the natural link of connecting the hinterland with the waterfront and an integral platform for port users serving as a base for production, trading, logistics, and information transfer (see Lam and Yap, 2011; Cho, 2014; Si et al., 2018), they are key drivers for overall processes also in terms of costs (De Langen et al., 2018; Wilmsmeier and Monis, 2016; Zhang and Lam, 2014). As an example, ports are rated as “high” or “very high” quality infrastructure by 63% of top quintile logistics performers (World Bank, 2018). Accordingly, ports have a strong motivation to go beyond their traditional activities of discharging, loading and storing cargo, but extending to strategic value-added services (Wilmsmeier et al., 2006; De Langen et al., 2018). Certainly, the authors of this work recognize that the strategic value of ports lies in their geographic position, as “they cannot move to where the demand would like them to be”. Nevertheless, they can attract demand by providing high-quality service by efficiently processing cargo (Sánchez, Ng and Garcia-Alonso, 2011; Tongzon and Heng, 2005) and position themselves well in their relevant supply chains (see also Ha et al., 2017; Talley and Ng, 2013) as we will show in this work.

Key Terms in this Chapter

Container: A 20-foot capacity box, usually made of steel. Its main task is to facilitate transport of goods. One container is referred in logistics terms as one TEU (twenty-foot equivalent unit).

Terminal: An area of the port where transports load and unload the cargo.

Network: A group of nodes connected by ties, building an interconnected system.

Freight Forwarder: An intermediary between the customer and the logistic services suppliers.

Shipping Line: A company that own cargo vessels and it is responsible for the sea transport.

Supply Chain: A logistic process that includes warehousing and transport activities and involves two or more participants connected by trade transactions.

Postpanamax: This name is given to ships that can cross through Panama Canal, having a cargo capacity between 4,000 and 5,000 TEU.

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