Showing papers in "Maritime economics and logistics in 2005"

An operational model for empty container management

Abstract: This paper proposes a mathematical programming approach for empty container management. Since directional imbalances in trade activities result in a surplus or shortage of empty containers in ports and depots, their management can be thought of as a min cost flow problem whose arcs represent services routes, inventory links and decisions concerning the time and place to lease containers from external sources. We adopt an hourly time-step in a dynamic network and, although this time-period generates large-size instances, the two implemented algorithms show a good computational efficiency. A possible case study of the Mediterranean basin is proposed and results are presented with a graphical representation, providing a useful support to decision-makers in the field.

A Mixed Integer Programming Model on the Location of a Hub Port in the East Coast of South America

Abstract: The paper introduces a mixed integer programming model on the selection of a hub port in the East Coast of South America, among a set of 11 ports that are servicing the regional demand for container transportation. Ports in Brazil, Argentina and Uruguay are considered, together with several origin/destination ports in the world. The model minimises total system costs, taking into account both port costs (dues and terminal handling charges) and shipping costs (feedering and mainline). In total, the model consists of 3,883 decision variables and 4,225 constraints. It turns up the port of Santos (Brazil) as the optimal single-hub solution, with the port of Buenos Aires (Argentina) as a close runner up. In addition, the model provides tentative estimates of improvements in demand and costs necessary to bring a certain port up to hub status. Despite some bold assumptions and limitations – mainly due to data availability – the model offers a straightforward decision tool to all ports in the world aspiring to achieve hub status and all that comes with it.

Decomposing Growth in Portuguese Seaports: A Frontier Cost Approach

Abstract: This paper analyses the extent of technical change and technical efficiency in Portuguese seaport costs between 1990 and 2000, using a stochastic cost frontier method. A translog frontier and the maximum likelihood estimation technique are employed to estimate the empirical model. The results show that the average score of inefficiency is 39.6%, denoting a high degree of waste in the use of resources, despite the fact that technical change contributed to a reduction of costs.

The Impact of Integrated Logistics Relationships on Third-Party Logistics Service Quality and Performance

Abstract: Third-party logistics has been an efficient organisational adjustment to the needs of clients for logistics solutions and improvement in supply chain performance. Examination of logistics performance has mainly been focused on operational measures. There has been less attention placed on the influence of organisational factors, despite the advocated need for greater inter-organisational integration among supply chain partners. This study examines empirically the influence of relationship orientation in third-party logistics and its impact on logistics service quality and performance. Data were collected via a large-scale industrial survey and structural equation modelling was used to examine the causal hypotheses. The findings suggest that relational exchange can have a positive effect on logistics service quality and performance in third-party logistics. Research and managerial implications are discussed.

Ship Investment under Uncertainty: Valuing a Real Option on the Maximum of Several Strategies

Abstract: This paper demonstrates the use of real option analysis to value the flexibility available to management decision making in introducing an express liner service using a new technology. The ship operator's decision is framed as an option to exchange the risky income stream of one strategy (asset) for the maximum of several alternatives as uncertainty is resolved over time. Copeland's and Antikarov's Marketable Asset Disclaimer is invoked; the intrinsic values of the underlying assets and their volatilities and correlations are modelled using traditional discounted cash flow techniques. The option is valued numerically in a multinomial tree. The result is the value of flexibility and is added to the present value of the original strategy to derive the present value of the flexible strategy. A sensitivity analysis is performed to examine the value of the flexible strategy as both the levels of uncertain factors and their volatilities change.

Foldable Containers to Reduce the Costs of Empty Transport? A Cost–Benefit Analysis from a Chain and Multi-Actor Perspective

Abstract: Transport of empty containers, which arises from the need to reposition containers, is an expensive business. This holds in particular for shipping lines, which are usually responsible for container repositioning and have to bear these container management costs. Shipping lines are known to follow various strategies to reduce the costs of empty transport. A rather unfamiliar, but interesting option to save costs is the possibility to fold empty containers. This could save transport costs, but also transhipment and storage costs. In this paper, we analyse the opportunities for commercial application of foldable containers. For this purpose a cost–benefit analysis is adopted in which four logistic concepts to use foldable containers are presented as a framework for analysis. The costs and benefits of using foldable containers in these logistic concepts are calculated and compared with the situation in which standard containers are used. It is shown that the use of foldable containers can lead to substantial net benefits in the total chain of container transport. However, much depends on the additional costs that foldable containers cause, that is, the cost of folding and unfolding, additional exploitation costs and any additional transport to places where folding and unfolding can take place. The logistic concept plays a part in it, but it should be a great challenge for designers and container producers to develop a foldable container that generates limited additional costs.

Private Entry and Emerging Partnerships in Container Terminal Operations: Evidence from Asia

Abstract: This paper seeks to expand understanding of inter-firm partnerships in the maritime sector. The paper recognises ocean carriers and global terminal operators as leading agents of change in the container port industry. While useful, the extant literature's focus on strategic alliances among mega-carriers neglects the role of terminals in defining firms' global strategies in logistical expansion. Meanwhile, rapidly expanding port-operating transnational corporations (TNC) are forcing fundamental shifts in partnership dynamics, defining port–carrier interaction. A multilayered network framework is introduced to build a conceptual link between private entry and emerging partnerships in the container terminal industry. Evidence from Asian ports and Asian TNCs are provided in support of this. The paper concludes by stressing the need to recognise heterogeneity among strategic entry paths available to private entrants in their stake over container terminal operation and finance.

Port Reform and Concessioning in Developing Countries

Abstract: Over the past decade many ports, with the exception of the UK and New Zealand ports that were privatised, have introduced private participation in port operations through different forms of concession or lease agreements. One of the most common reasons for private participation was believed to be efficiency gains through the introduction of competition. However, the potential for creating private monopolies in most cases is contentious, because the investment in the cost structure of ports render them natural monopolies; if not dealt with carefully, this could give rise to anti-competitive behaviour. It is normally accepted that terminal operations in the ports of developed countries are contestable due to the size of the markets and the competition with adequately adjacent foreign ports. However, that is not the case in developing countries with low cargo volumes; remote countries that only serve natural hinterlands; and end ports on the north–south routes that are not located on existing major shipping networks. Most of these ports pursue private participation in order to generate funds for investment; increase efficiencies; and ensure cost-effective services. To avoid monopolistic behaviour in such cases, a sound regulatory framework is necessary, but without preventing commercial entrepreneurship. In this article, port reform and the issues regarding concessioning of terminals will be discussed along with the regulation needed, if free market competition does not already exist. The implications of concessioning under such circumstances of regulated competition will be discussed and applied to South Africa as an example.

Simulation Modelling of Ship-Berth Link With Priority Service

Abstract: Simulation of the logistics activities related to the arrival, berthing, service and departure processes of ships in container ports can be carried out for different goals such as design of ship-berth link, increase productivity and efficiency of quay cranes, analysis and planning of operations at the ship-berth link, etc. These logistics activities are particularly complex and very costly since they require the combined use of expensive infrastructure capacities especially berths and quay cranes. Ship-berth link as a main port link is required to serve ships as quickly as possible. Thus, in order to successfully design and develop ship-berth link in a container port and utilise it as efficiently as possible, it is necessary to develop a simulation model that will support decision-making processes of terminal managers. The results, analysis and conclusions given in this paper are intended to provide guidance on achieving time efficiency and accuracy in the modelling of ship-berth link and calibration of ship-berth link simulation models for Pusan East Container Terminal (PECT).

EU Ports Policy: Where do we Go from Here?

Abstract: With the advent of the ISPS code, an impressive array of regulations has been put in place to safeguard European Union (EU) ports from acts of terrorism and other unlawful acts. Also, the ‘Prestige’ tanker disaster has triggered important legislation that may affect ports, as regards safety and environmental protection. This paper takes a look at current port safety, security and environmental protection legislation, vis-a-vis the general policy thrust of the EU in the area of transport, and discusses the situation faced by the port sector and EU intermodal transport in the new regime. It is argued that we have a long way to go towards reaching policy goals as regards shifting cargo from land to sea. Challenges and opportunities are identified, and recommendations on how to improve the current situation are made.

Port Competitiveness and the EU ‘Port Services’ Directive: the Case of Greek Ports

Abstract: The European Union (EU) institutions have discussed but failed to agree on a proposal for a ‘port services’ directive that would introduce free market access to port services provision. This paper examines the impact that this EU policy initiative could have on Greek ports. A reform towards port devolution has characterised the national port policy since 2002. The paper analyses the responses of the first post-reform CEOs to a questionnaire on the draft EU proposal, in order to establish whether this temporary EU policy failure would work in favour of Greek ports. The research findings suggest that the adoption of an EU regulatory framework would reinforce the quality of services provided by Greek ports and advance an essential restructuring of the Greek port system, on the condition that it takes into account the specific local characteristics. By linking these results to the existing literature on port competitiveness and the current structures of Greek ports, the paper explains why Greek port authorities have endorsed a positive approach to the general aims of the proposed directive.

Towards Supply Chain Integration Through Multimodal Transport in Developing Economies: The Case of Bangladesh

Abstract: This paper presents a normative model for efficient goods movement promoting supply chain integration in developing economies. Supply chains encompass a holistic throughput of goods movements to and from partner organisations including internal and external suppliers. Similarly, multimodal freight transport represents an integrated system for moving goods quickly and inexpensively from shipper to consignee by at least two different modes under a single contract. The initial discussion considers the influence of containerisation on international freight transport and some benefits and limitations of multimodalism. A trend towards supply chain integration and the implications for intermediaries and shippers or manufacturers in freight transport systems are discussed. Various barriers to supply chain integration in developing economies are presented. A case study of the scope for developing multimodal transport is reviewed in the light of particular national transport problems facing Bangladesh. Conclusions note the potential for multimodal freight transport to provide a catalyst for removing trade barriers and offer a model for achieving supply chain integration in such economies.

River Depth and Container Port Market Shares: The Impact of Deepening the Scheldt River on the West European Container Hub-Port Market Shares

Abstract: For the economic and financial evaluation of investment projects in container ports it is important to know the relation between container throughput and the price of using the port, the demand function of the port's services. The accessibility of the Port of Antwerp is greatly influenced by the depth of the Scheldt River. For the assessment of the economic impact of a river deepening project the demand function for the Port of Antwerp is derived. We have distinguished, among other variables of the demand function, a ‘maritime resistance variable’ expressing the time ships have to wait for the tide. This variable appeared to be statistically significant and to play an important role for the assessment of the competitive position of the Port of Antwerp with respect to other ports in North West Europe.

Simulation and the Lean Port Environment

Abstract: This paper considers the applicability of simulation tools in the development of lean ports and lean ports networks. To achieve its objective the paper analyses how container terminal operations work, gives an introduction to simulation, and provides an insight how simulation has been used in a port environment. The focus on a container terminal can be explained by the need to optimise resources, by the capability of a terminal to achieve very fast cargo handling rates, and by the simplification of intermodal transfer. The use of simulation tools has been of growing importance in port activities, especially when these are limited by physical constraints. This paper describes port industry operations, simulation, and assessment of the impact of simulation on the development of lean ports and lean ports networks.

Investment Cycles in the Newbuilding Market of Ice-Strengthened Oil Tankers

Abstract: Investment cycles and their modelling have been under the interest of system dynamics since long ago. Most often these cycles are caused by the uncertain profitability expectations involved in long-term capital investments, as well as the long manufacturing processes of the needed buildings, machines and/or equipment. This paper concentrates on the investment decisions of class I A ice-strengthened oil tankers. In the European oil transport market, these tankers are required only in the Baltic Sea region, and especially in the oil terminals of the Gulf of Finland. The demand for these special class tankers can be derived from the handling capacity available in the most important Russian oil export terminal, Primorsk. However, in the near future, planned capacity enlargements in Primorsk will create additional dynamics. Based on the simulation results, we argue that terminal capacity could not be used in full scale in the near future, if the use of appropriate ice-strengthened tanker capacity is favoured. However, if oil exports are aimed to be completed with I A class vessels, this class of tankers will face a newbuilding boom, which is expected to last at least for the next 10 years.

Quality Shipping and Incentive Schemes: From the Perspective of the Institutional Economics

Abstract: With serious maritime accidents not showing signs of decrease, concern over the quality of shipping is growing more than ever. Many maritime rules and regulations are implemented to regulate shipping. However, they are only to set out the minimum standard. More proactive measures using incentives have recently been introduced to promote a higher level of governance in ship management and operation. The original and the new institutional economics give interesting perspectives on the governance structure and the institutional environment surrounding these phenomena of shipping transactions. The concepts of bounded rationality and opportunism in institutional economics are applicable to shipping. Incentive schemes can be seen as the agents of change. This paper intends to explain how incentives are being incorporated in the governance structure of shipping and influence the evolution of institutions functioning under the shipping culture, which is embedded in the minds of people.

Tariff Reform in the Port of Piraeus: a Practical Approach

Abstract: This paper gives an overview of the main elements of the tariff reform that took place in the port of Piraeus during the last decade. The process of ‘structural’ revisions in many of the port's tariffs took place mainly between 1996 and 2001, which is the period during which, among other developments, container traffic through Piraeus more than doubled. Focusing on the above period and on container tariffs, the paper highlights the motivation for the changes and some of the practical difficulties associated with the process of port rate making in this major Mediterranean port. The tariff reform in some eight other categories that took place in that period is also briefly outlined, and some success and failure stories are described.

A Fuzzy Multi-Criteria Decision-Making Model for the Selection of Courier Service Providers: An Empirical Study from Shippers' Perspective in Taiwan

Abstract: The main purpose of this paper is to develop a fuzzy multi-criteria decision-making (FMCDM) model to support decisions on the selection of a suitable courier service provider (CSP). The emphasis of the systematic appraisal employed in the evaluation process is on trapezoidal fuzzy numbers and linguistic values characterised by trapezoidal fuzzy numbers, as well as the graded mean integration representation method. An empirical study with four alternatives, that is, DHL, FedEx, UPS, and Taiwan Post Office, is designed to demonstrate the FMCDM algorithm. Study results show that UPS and Taiwan Post Office are the best and worst CSPs, based on shippers' perceptions in Taiwan.

Shifting Seas: A Survey of US and European Liner Shipping Regulatory Developments Affecting the Trans-Atlantic Trades

Abstract: Often, MEL introduces a special section under the heading ‘Policy Perspectives’. Papers here, often solicited ones, emphasise strategic policy implications rather than scientific rigour in a strict sense. Papers in Policy Perspectives are not subject to peer review; this results in speedier publication. Papers submitted to MEL are submitted for both sections at the discretion of Editors. Authors not wishing to have their papers considered for Policy Perspectives should state this in the cover letter.

The US Coast Guard Vessel Inspection Programme: A Probability Analysis

Abstract: This study investigates the probabilities of vessel safety and pollution inspections by type of vessel by the US Coast Guard based upon individual vessel inspections for the years 1992–2001. Probit estimates of vessel safety (versus pollution) inspection equations suggest that fishing, passenger, recreation and tug boats are less (more) likely to be inspected for safety (pollution), whereas tank barges and US flag vessels are more (less) likely to be inspected for safety (pollution). Also, vessel safety and pollution inspection probabilities by vessel type vary by Coast Guard district and time. The probability of a US flag vessel being inspected for safety has increased over the time period of the study. The results bring into question the effectiveness of the Coast Guard in reducing the oil-spill pollution of tank barges and improving the safety of fishing boats.