Literature review: port choice and competitiveness determinants

In the situation of fierce competition between ports, it is essential to identify the determinants of port competitiveness. In order to do that, a total of 30 references were used as the basis for the analytical review. Some older sources like Slack (1985), Branch (1986), Bird and Bland (1988), Frankel (1992), Murphy et al. (1992), Gibson et al. (1993), Murphy and Daley (1994) and Tongzon (1995) are reviewed, but main focus is on the most recent literature. The choice of sources was not constrained by geographical considerations.

Decision makers

The decision makers that are identified by the authors of the papers are: shippers, forwarders, shipping companies, terminal operators, port authorities and government agencies. A major part - 15 of the studies - identify shippers

as main or one of the decision makers in the port selection. Studies done by Branch (1986), Murphy and Daley (1994), Kumar and Vijay (2002), Nir et al. (2003), Tiwari et al. (2003), Malchow and Kanafani (2001), (2004), Guy and Urli (2006), Ugboma et al. (2006) and Leachman (2008) focus only on shippers as decision makers in port selection. Other sources, like Slack (1985), Murphy et al. (1992), Song and Yeo (2004), Cullinane et al. (2005), De Langen (2007) and De Martino and Morvillo (2008) consider shippers, but also take into account other actors as decision makers for port selection.

The studies that evaluate forwarders' decisions in port selection are by Slack (1985), Murphy et al. (1992), De Langen (2007) and De Martino and Morvillo (2008); in these sources other actors are also considered. However in studies of Bird and Bland (1988), Tongzon and Sawant (2007), Tongzon (1995),(2009), Grosso and Monteiro (2008) forwarders are the only decision makers considered, and a survey is chosen as the method of research.

Eight of the sources (Murphy et al. (1992), Lirn et al. (2004), Ha (2003), Song and Yeo (2004), Shintani et al. (2007), De Martino and Morvillo (2008), Meersman et al. (2008)) also evaluate shipping companies as port choice makers.

Terminal operators

are mentioned only in four sources (Song and Yeo (2004), Acosta et al. (2007),Meersman et al. (2008), Wiegmans et al. (2008)). Only few (Frankel (1992), Cullinane et al. (2005), De Martino and Morvillo (2008), Meersman et al. (2008)) focused on port choice criteria influence by government/port authority decisions. Literature reviewed in time Shippers and shipping companies have been in focus of the researchers during the whole period covered by the literature reviewed (from mid 80s till 2009). For a brief period of time around 1990 (Bird and Bland (1988); Frankel (1992); Murphy et al. (1992)) and in recent years (De Langen (2007); De Martino and Morvillo (2008); Grosso and Monteiro (2008); Tongzon (2009)) literature focuses on forwarders. Terminal operators are evaluated as port choice decision makers in since 2004 in the literature reviewed (Song and Yeo (2004); Acosta et al. (2007); Meersman et al. (2008); Wiegmans et al. (2008)).

Methodology

The most popular methodology for approaching the problem of determining port choice criteria is surveying the decision makers. This approach was taken in half of all the sources reviewed. Other approaches like analytic hierarchy process, literature analysis, multivariate and discrete choice analysiswere also used by the authors in the literature reviewed. Criteria The literature reviewed reveals a considerable range of factors that have influence on the decision of port choice. The most mentioned factors in order of citation times are: cost, location, port operations quality/reputation, speed/time, infrastructure/facilities availability, efficiency, frequency of sailings, port information systems,hinterland/intermodal links and congestion in port . Other port selection criteria are mentioned in the sources reviewed less than 3 times. Importance of criteria for different actors For different actors authors have focused on different criteria as important for port selection. The criteria that are most mentioned as important to shippers (in order of citation times) are cost, port operations quality/reputation and port location. Of a bit less cited is frequency of shipping services, speed/time, efficiency of service, efficiency, port facilities/infrastructure, port information system, intermodal/hinterland connections, congestion in port, port services and flexibility (for special cargo).

According to literature the most mentioned criteria for forwarders are efficiency and port operation quality/reputation. Fewer times mentioned are cost, frequency, location, speed/time, port information systems and intermodal/hinterland connections. For

shipping companies

criteria that are most mentioned (in order of citation times) are cost, location, port facilities/infrastructure and port operations quality/reputation. Criteria of a lesser importance are speed/time, efficiency, congestion in port, frequency of shipping service, intermodal/hinterland links, port information systems, information availability, port administration, port services and flexibility for special cargo.

For

terminal operators

criteria that are mentioned as important (in order of citation times) are: port facilities/infrastructure, port operations quality/reputation, cost, location, intermodal/hitnerland links, port information systems, congestion in port and efficiency.

The following gives a summary of the literature reviewed.

Table 1: Summary of port choice criteria in literature reviewed

Source

Decision maker

Criteria

Methodology

Slack (1985)

Shippers

Forwarders

Number of sailings

Freight rates

Congestion

Intermodal links

Survey

Branch (1986)

Shippers

Cost

Nature of traffic

Adequacy of port facilities

Overall efficiency

Industrial relations record

n/a

Bird and Bland (1988)

Forwarders

Frequency of shipping service

Port charges

Time

Grouping and freight consolidation

Labour problems at ports

Spirit of free enterprise

Delivered price

Survey

Frankel (1992)

Governmental bodies

Shipping companies

Shippers

Freight forwarders

Liner companies revenues / costs / fleet size / fleet employment

Cargo volume / value / allocation

Analytic hierarchy process

Murphy et al. (1992)

Large/small shippers

International water carriers

International water ports

International freights forwarders

Loading/unloading facilities for large/odd sized freight

Large volume shipments

Low loss and damage frequency

Available equipment

Convenient pickup and delivery times

Information concerning shipments

Assistance in claims handling

Flexibility in meeting special handling requirements

Survey

Univariate analysis

Multivariate factor analysis

Murphy and Daley (1994)

Purchasing manager (shipper)

Shipment information

Loss & damage performance

Freight charges

Equipment availability

Convenient pickup and delivery

Claims handling ability

Special handling ability

Large volume shipments

Large & odd-sized freight

Survey

Kumar and Vijay (2002)

Shipper

On time performance

Value

Information technology

Customer service

Equipment and operations

Analytic hierarchy process

Mangan et al. (2002)

Decision makers (on ferry choice) in transport companies

Service availability

Sailing frequency

Risk of cancellation

Fastest overall route

Proximity of ports to origin/destination

Cost

Speed of getting through ports

Suitability for special cargo

Delays

Intermodal/connecting links

Information availability

Modeling

Survey

Nir et al. (2003)

Shipper

Highway travel time (origin: company, destination: port)

Travel cost

Number of available routes

Frequency

Survey

Revealed preference multinomial logical model

Lirn et al. (2004)

Shipping lines

Physical infrastructure (including depth)

Geographical location (proximity to markets, main routes)

Port administration and service to vessels (turn around time)

Carriers cost per call

Analytic hierarchy process

Tongzon (1995);(2009),

Tongzon and Sawant (2007)

Forwarders

Frequency of ship visits

Port efficiency

Adequate infrastructure

Location

Port charges

Quick response to port users' needs

Port's reputation for cargo damage

Survey

Ha (2003)

Shipping companies

Information availability on port activities

Port location

Port turnaround time

Facilities available

Port management

Port costs

Customer convenience

Survey

Tiwari et al. (2003)

Shippers

Ship calls (frequency)

Total TEUs handled at the port

TEUs per berth at the port

TEUs of cargo per crane

Handling volume (thousand tons) per length of quay

Number of routes offered

Port and loading charges

Literature review

Discrete Choice Analysis

Malchow and Kanafani (2001);(2004)

Shippers (commodity types)

Distance

Frequency of sailings

Average size of vessel

Loading/unloading time

Discrete choice model

Song and Yeo (2004)

Ship owners

Shipping companies

Shippers

Terminal operators

Academics

Cargo volume

Port facility

Port location

Service level

Port expenses

Analytic hierarchy process

Experts surveys

Cullinane et al. (2005)

Shippers (demand trends)

Port authorities (supply)

Price

Generalized cost

Quality of service

Policy developments

Relative competitiveness analysis

Guy and Urli (2006)

Shipping companies

Port infrastructures

Cost of port transit for a carrier

Port administration

Geographical location

Multicriteria analysis

Ugboma et al. (2006)

Shippers

Efficiency

Frequency of ship visits

Adequate infrastructure

Analytic hierarchy process

Acosta et al. (2007)

Terminal operators

Infrastructure

Superstructure

Technology and communications systems

Internal competition

Cooperation of the institutions and companies involved in the port activity

Survey

De Langen (2007)

Shippers

Forwarders

Location of port

Efficiency of cargo handling

Quality of terminal operating companies

Quality of equipment

Quality of shipping services

Information services in port

Good reputation to damage/delays

Customer focus

Connection to hinterland modes

Personal contacts in port

Survey

Shintani et al. (2007)

Shipping companies

Costs

Empty container distribution

Algorithm-based heuristic analysis

De Martino and Morvillo (2008)

Port authorities

Shippers

Forwarders

Shipping companies

Quality of the entire port: infrastructure, links to transport systems, terms of services

Value is generated by joint effort of port actors in the satisfaction of clients' needs

Literature review

Grosso and Monteiro (2008)

Forwarding companies

Connectivity of the port

Cost and Port Productivity

Electronic information

Logistics of the container

Literature review

Survey

Leachman (2008)

Importers

Transportation costs

Alternative routes

Door-to-door transit times

Shipments pooling

Lead times of container movement

Economic optimization model

Meersman et al. (2008)

Shipping companies

Terminal operating companies

Port authorities

Port hinterland connection capacity

Analysis of expected trends

Wiegmans et al. (2008)

Container terminal operators

Port physical and technical infrastructure

Geographical location

Port efficiency

Interconnectivity of the port (sailing frequency of deep-sea and feeder shipping services)

Reliability, capacity, frequency and costs of inland transport services by truck, rail and barge (if any).

Quality and costs of auxiliary services such as pilotage, towage, customs, etc.

Efficiency and costs of port management and administration (e.g. port dues).

Availability, quality and costs of logistic value-added activities (e.g. warehousing).

Availability, quality and costs of port community systems.

Port security/safety and environmental profile of the port.

Port reputation (satisfactory ranking in benchmarking studies).

Interviews

Literature review

Karlaftis et al. (2009)

Shipping company

Distances between ports

Demand

Supply

Service time

Modeling

Interviews

In order to test the information obtained in the literature review and objectively evaluate the criteria discussed previously interviews are done. For the interviews the following actors (a total of 35) were selected:

  • Shipping companies;
  • Terminal operators;
  • Shippers;
  • Logistics groups;
  • European Logistics Centres.

Interviews were done during a period of almost 2 months from 7 April till 15 June 2009.

Shipping companies

The input provided by respondents from shipping companies enables us to identify decision makers in port selection, evaluate the importance of port selection criteria for shipping companies, and applying those to a selected set of ports in Europe, to verify their attractiveness. Equally, the company's current flows are mapped, and insight is gained in the evolution of their future flow structure. Finally, an evaluation by shipping companies of the importance of and the score on different characteristics of hinterland transport modes will be done.

Terminal operators

The input provided by terminal operators enables identifying decision makers in port selection, evaluating the importance of selection criteria for investment purposes, and obtaining similar information on port selection by their customers. Evaluation of perceived current and future qualities of a selected set of seaports in respondents' opinion, split among terminal operators themselves, as well as by their customers, will also be achieved. The same is done for the wider chain sections. An estimation is also made of the future development of carriers' networks.

Shippers

Data on shippers' importance of transport service selection criteria are obtained, and performance of transportation services or transportation modes is evaluated. Perceived current and future qualities of selected ports can also be identified from the results. .

Logistics groups

The questionnaire allows for evaluation of transport solution and port selection decision making and criteria that the decisions are based on. Also, from the point of view of logistic groups, perceived current and future qualities of transport modes can be identified. The same is true for seaports in case the logistics operator is involved.

European Logistics Centers

The purpose of the questionnaire is to evaluate the importance of different location criteria, with main cateories seaport accessibility, customer accessibility, land price, building/rental price and fiscal policy. Different regions in western Europe are compared in their scores on the different variables. The EDC market is also mapped by gathering information on traffic flows through EDCs' logistics chains.

Results:

A summary of some results from the interviews that have taken place can be given.

Respondent: shipping companies

Decision makers

The answers on decision makers obtained from shipping lines seem to be greatly influenced by the business strategies that each company is using. However some general conclusions still can be done.

In selection of transportation solution or selection of transport modes the most important role is played by the forwarderand sender of the cargo, however in some cases the shipping company takes part in making this decision.

Logistics/transport providers

in most cases are selected by forwarder or sender and only in some business conducts it is done by the shipping company or receiver of goods.

Seaport selection

is always done by the shipping company, but as comments obtained during the interviews show, this choice is influenced by geographical considerations (range of clients that can be served through that port, links to particular destinations). Recently there is a trend that the big shippers become more powerful in the decision on seaport selection because of their increased importance in the market. On individual shipment level sender, forwarder and receiver also take part in seaport selection.

Seaport choice criteria

In order to evaluate the importance of port selection criteria for shipping companies during the interviews they were presented with a list of port selection criteria and asked to rank them and give comments on them. The most important criteria in order of importance for sipping companies are cost , quality of hinterland connections, port capacity , reliability , port location (at sea or indand) and cargo base. Criteria of a lower importance are flexibility , customer servicequality, location in por (if locks need to be used), total door to door transport time and feeder frequency . Risk of loss/damage is of low importance.

Shipping companies comment that a decision to call port is usually made based on the availability of cargo from/to that port which is closely linked to ports' geographical location and area that can be served through it. Also, inland port location is perceived as an advantage by the shipping companies, because it allows for cost savings.

Evaluation of hinterland transport modes

In evaluating hinterland transportation services or hinterland transport modes by far the most important criterion is cost . Then come reliability, frequency of service, flexibility , total door-to-door transport time and customer servicequality. Environmental impact and risk of loss/damage are of low importance.

Shipping companies comment that the transport mode or a set of transport modes that is used is chosen mainly taking into account the destination that has to be served, value of goods, time constraints and cost. Environmental impact of a transport mode chosen is slowly gaining importance because of government policy. ort performance

During the interviews respondents were asked to evaluate different criteria in different ports in scale from 1 (very bad) to 5 (very good). Due to geographical distribution of the companies surveyed, not all companies could comment on all ports that were included in the questionnaire. and Table 3 show summary of evaluation of seaports.

Table 2: Evaluation of criteria for seaports (averages)

Felixstowe

Zeebruges

Antwerp

Hamburg

Le Havre

RELIABILITY

3.0

4.3

4.5

4.1

2.4

FLEXIBILITY

3.0

4.0

4.5

3.8

2.4

RISK OF LOSS/DAMAGE

4.0

4.4

4.8

4.6

4.3

FREQUENCY

2.7

2.9

3.4

4.8

2.6

COST

3.2

4.0

4.4

3.4

3.1

CUSTOMER SERVICE

3.5

3.8

4.2

3.9

3.1

PORT CAPACITY

2.7

4.3

4.6

3.7

4.4

PORT LOCATION

3.2

3.4

4.2

4.4

3.8

CARGO BASE

3.4

3.1

4.4

4.2

3.3

HINTERLAND CONNECTIONS

3.4

3.3

4.5

4.4

3.6

CUSTOMS SERVICE

3.6

3.4

3.0

3.9

2.9

Table 3: Evaluation of criteria for seaports (medians)

Felixstowe

Zeebruges

Antwerp

Hamburg

Le Havre

RELIABILITY

3.0

4.0

4.0

4.0

2.0

FLEXIBILITY

3.0

4.0

5.0

4.0

3.0

RISK OF LOSS/DAMAGE

4.0

4.0

5.0

5.0

4.5

FREQUENCY

3.0

2.5

3.0

5.0

2.5

COST

3.0

4.0

5.0

3.0

3.5

CUSTOMER SERVICE

3.0

3.5

4.5

4.0

3.0

PORT CAPACITY

2.5

4.0

5.0

4.0

4.0

PORT LOCATION

3.5

4.0

4.0

4.5

4.0

CARGO BASE

4.0

3.0

4.0

4.0

3.0

HINTERLAND CONNECTIONS

3.0

3.0

5.0

4.0

4.0

CUSTOMS SERVICE

3.0

3.0

3.0

4.0

3.0

Table 4: Evaluation of criteria for seaports (AVG (MIN - MAX))

Felixstowe

Zeebruges

Antwerp

Hamburg

Le Havre

RELIABILITY

3 (2 - 4)

4.3 (4 - 5)

4.5 (4 - 5)

4.1 (3 - 5)

2.4 (2 - 4)

FLEXIBILITY

3 (2 - 5)

4 (3 - 5)

4.5 (4 - 5)

3.8 (2 - 5)

2.4 (1 - 3)

RISK OF LOSS/DAMAGE

4 (2 - 5)

4.4 (4 - 5)

4.8 (4 - 5)

4.6 (4 - 5)

4.3 (2 - 5)

FREQUENCY

2.7 (1 - 4)

2.9 (2 - 4.5)

3.4 (2 - 5)

4.8 (4 - 5)

2.6 (1 - 4)

COST

3.2 (2 - 4)

4 (3 - 5)

4.4 (3 - 5)

3.4 (3 - 4)

3.1 (1 - 4)

CUSTOMER SERVICE

3.5 (3 - 5)

3.8 (3 - 5)

4.2 (3 - 5)

3.9 (3 - 5)

3.1 (2 - 5)

PORT CAPACITY

2.7 (1 - 4)

4.3 (3 - 5)

4.6 (4 - 5)

3.7 (2 - 5)

4.4 (4 - 5)

PORT LOCATION

3.2 (2 - 4)

3.4 (2 - 4)

4.2 (3 - 5)

4.4 (3 - 5)

3.8 (2 - 5)

CARGO BASE

3.4 (1 - 4)

3.1 (2 - 5)

4.4 (3 - 5)

4.2 (3 - 5)

3.3 (2 - 4)

HINTERLAND CONNECTIONS

3.4 (3 - 4)

3.3 (2 - 4)

4.5 (4 - 5)

4.4 (4 - 5)

3.6 (2 - 4)

CUSTOMS SERVICE

3.6 (2 - 5)

3.4 (3 - 4)

3 (2 - 4)

3.9 (3 - 5)

2.9 (2 - 4)

Respondents from shipping lines commented that port of Le Havre is scoring low in reliability and flexibility because of the social instability created by trade unions and frequent strikes. Some shipping lines mentioned that this is one of the main reasons why they decide to stop calling Le Havre. Also, lack of hinterland connections is mentioned as a disadvantage. For Felixstowe the port capacity is one of the main problems. It is reflected also in the ratings in Table 2 , >Table 3 and Table 4 . The advantage of Antwerp is that it is closer to the customer compared to a port located at the seaside. erceptions of investment plans

Shipping lines were presented with a summary of planned improvements and investments (see Table 5 ) that are planned or being done in some of the ports in order to ask to give their evaluation of the importance of these actions to them. In general all the investments are perceived positively, but also some valuable comments and suggestions were received.

Table 5: Summary of improvements and investments

Port

Improvements

Felixstowe

improved rail connections

Zeebruges

Extend quay length at various terminals + new terminal (3 million TEU extra); new lock; logistics zone development; new shunting yard

Antwerp

complete Deurganckdok + build Saeftinghedok (3+6 million TEU extra); new intermodal terminal; Scheldt deepening

Hamburg

terminal extensions: 10 million TEU more by 2010

Le Havre

logistics zone and multimodal platform for rail and barge developmentComplete Port 2000 (capacity of 4.2 M TEU)

Gioia Tauro

terminal extension; industrial development zone; rail gate development

For Le Havre

it was mentioned that further investments should focus on development of hinterland connections. In the direction of Paris barge and rail connections should be improved. Further promotion of barge connections in the direction of Strasbourg was also mentioned as a suggestion. The improvements that were mentioned (see Table 5 ) were evaluated as valuable. It was also noted that Le Havre has no capacity problems. Social instability was the main problem that the port is facing and it was also mentioned as the main reason for the shipping lines decision to stop calling the port of Le Havre. Also, extraordinarily high container handling cost (according to shipping lines 2.5 times higher than in Zeebruges and 2 times higher than in Antwerp) is one of the reasons for not choosing Le Havre.

In Felixstowe the developments of rail connections were valued positively since rail hinterland connections is the problematic issue that this port is facing. Zeebruges receives very positive valuation of developments: extending of quay length, logistics zone development and railway developments. Some shipping lines mention that Zeebruges might become a hub port for their operations in the future. For Antwerpone of the developments that mentioned are valued positively. Scheldt dredging is of vital importance. However Saeftinghe dock development is perceived as an unnecessary at the moment and it should be slowed down or postponed until the end of economic crisis. In Hamburgthe planned developments are valued positively because lack of capacity is an important issue; some rationalization initiatives should also be developed. It is mentioned that dredging works should be planned in order to be able to accommodate new larger ships.

Most of the shipping companies surveyed had no operations in Gioia Tauro , so no conclusions on perception of the investment plans can be drawn.

Perceived Future Quality of hinterland transport modes

The respondents from shipping lines were asked to give evaluation of perceived future quality of hinterland transport modes. Table 6 and Table 7 show summary of the responses.

Table 6: Perceived Future Quality of hinterland transport modes (averages)

ROAD

RAIL

INTERMODAL (including ShortSea and Barge)

RELIABILITY

3.90

3.56

4.40

FLEXIBILITY

4.64

2.44

3.50

RISK OF LOSS/DAMAGE

3.50

3.67

3.80

FREQUENCY

4.70

3.44

3.75

COST

3.40

3.33

4.30

D2D TOTAL TRANSPORT TIME

4.09

3.28

3.50

CUSTOMER SERVICE

4.10

2.67

3.70

ENVIRONMENTAL IMPACT

1.90

4.00

3.90

Table 7: Perceived Future Quality of hinterland transport modes (medians)

ROAD

RAIL

INTERMODAL (including ShortSea and Barge)

RELIABILITY

4

4

4

FLEXIBILITY

5

2

4

RISK OF LOSS/DAMAGE

3

4

4

FREQUENCY

5

3

4

COST

3.5

3

4

D2D TOTAL TRANSPORT TIME

4

3

3.5

CUSTOMER SERVICE

4

3

4

ENVIRONMENTAL IMPACT

2

4

4

Source: Essay UK - http://turkiyegoz.com/free-essays/economics/port-choice-and-competitiveness-determinants.php


Not what you're looking for?

Search:


About this resource

This Economics essay was submitted to us by a student in order to help you with your studies.


Rating:

Rating  
No ratings yet!

  • Order a custom essay
  • Download this page
  • Print this page
  • Search again

Word count:

This page has approximately words.


Share:


Cite:

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay UK, Port choice and competitiveness determinants. Available from: <http://turkiyegoz.com/free-essays/economics/port-choice-and-competitiveness-determinants.php> [14-12-18].


More information:

If you are the original author of this content and no longer wish to have it published on our website then please click on the link below to request removal:


Essay and dissertation help

badges

 
Video Speed Slow Motion Fast APK mod | BADLAND 2 premium | Special Education - 2865 Words