Port Operations, Designing, and Logistics in China Report (Assessment)

Implications of an Uncertain Future on Port Planning and Design

Introduction

Ports act as economic gateways of various countries. The reason behind this is because they play a key role in the development of both domestic and international trade. According to Bichou, the effective operation of ports is dependent on, among others, the mission statement of the planners (99). It is also noted that the operations of these facilities differ between regions. The differences result from the laws, approaches, and attitudes of specific nations.

In the recent past, analysts have shown interest in conducting studies on port development. The scope of research has become a dominant theme in the field of maritime economics. Harlaftis, Tenold, and Valdaliso note that the studies aim at understanding the uncertainties and evolution of the port industry (102). Besides, scholars want to gain more knowledge of the changing role of ports in logistics and supply chains.

In this section, the author will discuss a statement made by Taneja et al. regarding the uncertainties affecting port planning (222).

Uncertainties Affecting Port Planning and Design

In the journal ‘Implications of an Uncertain Future for Port Planning’, Taneja et al. make several observations regarding the future of the maritime industry (224). They note that the uncertainties under which docks operate make planning and designing of these socio-technical infrastructures difficult. Uncertainty refers to inadequate knowledge of past, current, or future events. According to Taneja et al., the port industry is characterized by an evolution of function, logistical, economic, and technological ambiguities (221). The statement by the scholars is true. The reason is that the factors mentioned are linked to globalization and liberalization. In the recent past, the business environment has experienced extensive changes.

Analyzing the Uncertainties Mentioned by Taneja et al. (221-245)

Evolution of the Functions of the Port

Over the past few decades, the maritime industry has experienced extensive transformation. Since the introduction of commercial containers, shipping has become a faster and cheaper way of transporting merchandise from one continent to the other (Pineiro 89). Due to these changes, the functions carried out by ports have evolved. Initially, the role of these facilities was to handle, distribute, and stack merchandise. Today, ports have become multipurpose logistic chains.

Transportation of goods in harbors flows from one form to another. In the end, all the flows integrate and then disband. The evolution of functions has become an uncertainty under which the docks must operate. If proper measures are not put in place, the ambiguity makes planning and designing of maritime activities a challenging task. To minimize the complexities, port planning needs to concentrate on flows. Besides, the industry should ensure effective and cheap transportation of goods. Borger and Bruyne note that there will be an extensive growth in containerized traffic shortly (248). Consequently, port managers must ensure that the infrastructure matches the traffic growth.

Technological Uncertainties

Taneja et al. consider technology to be one of the ambiguities that make planning and designing of ports a challenge. Today, most nations are working hard to introduce new technology into their dock industry. The advancement leads to changes in the shape and texture of the old container terminals. According to Shen, the rapid developments in construction materials and technology impact significantly on planning (65).

The maritime industry has to shift and use emerging technologies to deal with such issues as security, operational effectiveness, and environmental conditions. Also, ports have to focus on acquiring bigger ships, up-to-date cargo handling techniques, efficient data collection and processing frameworks, and new equipment configurations. Harlaftis, Tenold, and Valdaliso support the arguments made by Taneja et al. by stating that contemporary ports must adopt advancements in ICT and use efficient data collection procedures (247). All these changes are aimed at boosting terminal operations. However, the new technological innovations place new demands on port infrastructures.

Logistical Ambiguities

Taneja et al. consider this element to be an issue that affects planning and designing in the maritime industry (228). Logistics refers to a time-sensitive procedure of the flow of merchandise from one point to another (Taneja et al. 233). According to this definition, logistical ambiguity can be described as the various factors affecting the transportation of goods. It is a fact that the shipping industry suffers from these uncertainties.

The problem is caused by such issues as delays, demand and inventory, poor coordination, and delivery constraints. Logistics is an evolving phenomenon (Shen 25). The development is caused by such aspects as globalization, changes in shipping costs, and the desire to venture into new markets. With the innovations in the maritime industry, clients expect reliable, flexible, and precise services. Besides, they need their goods to be delivered at the utmost speed and affordable costs. All the factors associated with logistical uncertainties impact the planning and designing of technical infrastructure in the ports.

Economic Uncertainties

The constant shifts in the global economy lead to ambiguities in the maritime industry. The primary role of ports is to facilitate international trade. Trade is affected negatively by global recessions. The impacts extend to the shipping industry. Pineiro notes that approximately 90% of the world’s trade is supported by the maritime industry (114). The statistics reveal that shipping is the most common means of ferrying goods. Economic uncertainties cannot be avoided. During severe global recessions, companies tend to lay off container ships and workers. According to Taneja et al., such crises make it a challenge for ports to design and plan socio-technical infrastructures (240).

Conclusion

The maritime industry is the primary driver of international trade in the world. Despite the various economic gains associated with the industry, the sector is affected by various uncertainties. According to Bichou, the ambiguities impact the planning and designing of port infrastructure (97). Coordination of activities is affected negatively when planning is interfered with.

Port Performance Indicators

The Use of Port Performance Indicators

Performance measurement in ports helps in the management of internal and external pressures. The evaluation is done by collecting data, monitoring, and benchmarking activities (Borger and Bruyne 250). The procedure has various benefits for organizations in the port sector. For example, the information acquired can be used to enhance operations. Besides, the process can provide dock managers with a basis for planning future developments.

Port performance indicators are measures of different aspects of facilities and operations in the harbor. To enhance the effective evaluation of the performance of ports and terminals, the selected indicators should be easy to use and compute. The pointers should also provide insight into port management (Harlaftis, Tenold, and Valdaliso113). Different sets of indicators can be used in various ways. One mode is to compare performance with a goal. The second involves monitoring the recital trend.

Various performance indicators can be used to examine the efficiency of ports and terminals. According to Pineiro, each cargo at the dock should have its unique set of pointers (85). The reason is that ships transport different categories of goods. The most common port performance indicators include those associated with the financial, operational, and logistical aspects of the facility.

Financial Indicators

The pointers are used by dock managers to determine the cost of running operations. Labor and capital equipment are some of the elements that incur high expenditure. Financial indicators are also used to evaluate the total revenues generated from the shipping activities. All the fiscal information is acquired from the accounting systems. According to Bichou, financial indicators are used to identify the areas that need more allocation of resources (117).

Operational Indicators

The pointers are used to ensure that all activities run as expected. If port operations are not going according to plan, many areas will be affected. One of the elements impacted by an operational failure in the financial sector. The indicator comprises four efficiency parameters (Taneja et al. 237). They include:

Output per ship berth-day

The constraint is used to determine the average output of each carrier at a berth per day. The output is measured in tons.

Idle time at berth

The indicator is used to measure the time a ship stays inactive at the dock. Minimal idle time is an indication that cargo handling is done on time. As such, more carriers can be prepared to ferry goods.

Pre-berth detention

The parameter measures the time vessels wait before they are allowed to access a berth.

Turn-round time

The indicator defines the time spent by ships in the dock. It is the duration spanning from entry to departure (Harlaftis, Tenold, and Valdaliso 101).

Logistics Performance Indicators

They are used to measure throughput, maritime, and intermodal connectivity (Borger and Bruyne 260). They are also used to evaluate vessels’ call size and quality of procedures carried out by customs officials.

Linear Programming for Data Envelopment Analysis (DEA)

Data Envelopment Analysis (DEA) is a non-parametric linear programming technique. It is used to evaluate the efficiency of decision-making units (DMUs) in the transport industry.

Calculation

In the table provided, there are 7 DMUs to be evaluated. They are represented by _n. Each consumes _m inputs and produces _s outputs.

From the statement, it is assumed that DMU₁ consumes X_1j of output _A and produces Y_1j of output _A.

It is also assumed that X_1j ≥_0, Y_1j ≥ _0, and for each DMU there is at least one positive input and output. From these assumptions, the ratio of outputs used to measure the relative efficiency = DMU_A = DMU_0, the DMU to be evaluated relative to the ratio of all the _j = _n DMU_js

The function to be maximized is:

Max h₀ =

s.t = for j=1,….n

max h₀ =

s.t = for j=7

x_ij is the amount of inputs _i used to obtain Y_rj.

The amount of output _r produced by DMU _j, v_i, and u_r represents the weight allocated to input _i and output _r.

To solve the mathematical problem, the equation is transformed into a linear programming model.

Max =

U_r, v_i ≥ 0

38_, 16 ≥ 0

The solution to equation 2 is as follows (min ᶱ)

λj≥0 j=1….n

The above equation is a CCR model that portrays the use of an input-oriented approach. The output orientation is depicted as follows:

Max ᴓ

λj≥0 j=1….n

.

ᴓ is the value of the relative efficiency score for each DMU.

To come up with a final solution, the DEA model integrates another constraint:

.

.

Issues Affecting the Chinese Bulk Port Sector

Introduction

Port developments take place all over the world. The level of growth is determined by a nation’s need to import and export goods. It is also influenced by the desire to acquire and benefit from the growing seaborne trade. Currently, China is the largest shipbuilder in the world (Pineiro 110). Over the past five years, the nation has also reported the highest container-port throughput in the globe. China’s ports facilitate the transportation of such goods as coal and iron ore between the mainland and islands. To keep up with the increasing competition in the shipping industry, China is upgrading its container transport system.

In this section, the author will analyze the issues facing the Chinese bulk port sector’s development. Besides, the implications of these phenomena on the government and policymakers will be addressed.

Issues Facing the Chinese Bulk Port Sector

The Chinese bulk port industry has experienced extensive growth in the recent past. By the end of 2004, the nation’s ports had approximately 2,500 berths (Borger and Bruyne 265). The berths had a combined capability of handling 61.5 million containers. Consequently, China is ranked first in the world in terms of the capacity to handle containers. In 2009, the country’s container throughput registered a 6% decline. Despite the drop, China’s throughput accounts for 25% of the global container share (Shen 36).

China continues to dominate the shipping industry. Currently, the country controls the largest share of imports and exports in dry and bulky goods (Pineiro 96). However, various factors affect the bulk port sector. One of the problems is the competition. Chinese carriers faced stiff rivalry from the Brazilian Valemax. Vales are the largest bulk carriers in the world (Harlaftis, Tenold, and Valdaliso 113).

Their capacity ranges from 380,000 to 400,000 tons. They are also the longest ships in the world. The vessels were intended to transport iron ore from Brazil to Asian and European ports. Since the launch of Vale operations, Brazil has failed to get clearance to dock in Chinese ports. Due to their large size, the carriers would transport iron at lower prices. To limit the competition, China’s transport ministry banned Vales in 2012. The authorities claimed that the interdiction was based on technical reasons (Shen 40). However, the ban has been lifted.

According to Taneja et al., the growth of Chinese iron ore and coastal sectors is facing a downturn (241). The reason is due to stiff competition from neighboring ports. The Port of Rizhao, for example, poses threat to Qingdao. Each dock wants to lead in the iron ore throughput. The rivalry has affected the capability of most ports in north and northeast China to handle bulky goods. Also, all the harbors in the country are competing amongst themselves.

Each dock desires to be the ‘pivot haven’ of the industry (Shen 24). Some ports have even violated bans put in place by the state with regards to the acquisition of new ships. One such harbor is Lianyungang. Over the past two years, the haven has obtained two carriers. On its part, Taipingwan went ahead and carried out construction projects without the approval of the Beijing authorities. The reason behind these moves is to stay ahead of rivals.

Another issue affecting the Chinese bulk sector is overcapacity. The issue is a major source of concern due to the nation’s slowing economic growth and ongoing capacity additions. Overcapacity is not limited to China’s economic landscape (Pineiro 110). It also affects the global economy. The reason is that congestion leads to increased tension in the trade sector. Some of the harbors suffering from severe overcapacity include Xiamen, Dalian, and Yingkou. Major developments have been taking place in Dalian. Once the project is complete, the port will have the capacity to handle over 300 million tons of goods. Expansion plans lead to increased competition (Bichou 105). On its part, such rivalry results in overcapacity of resources.

Another issue affecting the Chinese bulk port sector is the demand for efficient, comprehensive, and high-quality services. To meet the demands, Chinese ports will have to invest more in infrastructure. With the slowing economic growth and downturn in steel production, the nation is at risk of acquiring expensive but empty terminals (Pineiro 95).

Implications on the Chinese Government and Policymakers

The issues affecting the Chinese bulk port sector have various implications for the government and policymakers. The key players in the maritime industry have to come up with ways to tackle the existing issues. After lifting the ban on Brazil’s Vales, the port industry had to devise ways of keeping up with the competition. Policymakers in the ministry of transport permitted Dalian, Tangshan, and Ningbo-Zhoushan Qingdao to build bigger berths capable of handling the vessels (Harlaftis, Tenold, and Valdaliso 108).

In efforts to improve the port industry, the government and policymakers will have to approve the construction of more terminals. The move will facilitate the handling of more goods. As such, pressure from customers will be reduced. Also, the transportation of more commodities will lead to a rise in the growth of GDP (Pineiro 83). The stakeholders will have to devise ways to deter ports from violating the restrictions put in place. Several ports have carried out expansions without authorization. Such moves disadvantage other players in the sector (Bichou 109). Finally, the government and policymakers need to put in place measures to curb excessive competition and overcapacity in the maritime sector.

Works Cited

Bichou, Khalid. Port Operations, Planning, and Logistics, London: Informa Law from Routledge, 2009. Print.

Borger, Bruno, and Denis Bruyne. “Port Activities, Hinterland Congestion, and Optimal Government Policies: The Role of Vertical Integration in Logistic Operations.” Journal of Transport Economics and Policy 45.2 (2011): 247-275. Print.

Harlaftis, Gelina, Stig Tenold, and Jesus Valdaliso. The World’s Key Industry: History and Economics of International Shipping, Basingstoke: Palgrave Macmillan, 2012. Print.

Pineiro, Laura. International Maritime Labor Law, Berlin: Springer-Verlag Berlin Heidelberg, 2015. Print.

Shen, Cichen. Port Selection Reveals Beijing’s Concerns about Terminal Overcapacity. 2015. Web.

Taneja, Poonam, William Walker, Han Ligteringen, Maurits Schuylenburg and Robert Plas. “Implications of an Uncertain Future for Port Planning.” Maritime Policy & Management 37.3 (2010): 221-245. Print.