Port Management and Operations

Maria G. Burns

• Publisher: CRC Press
• Year: 2018
• ISBN:
  9781000055122
• Edition: 1
• Topic: History
• Subtopic: Military & Maritime History
• Index: History

With 80 percent of the world's commodities being transported by water, ports are the pillars of the global economy. Port Management and Operations offers readers the opportunity to enhance their strategic thinking and problem-solving skills, while developing market foresight. It examines global port management practices at the regulatory, commercial, technological, operational, financial, and sociopolitical levels.This powerful sourcebook describes how seaports are being affected by the changes occurring nationally, regionally, and globally. Evaluating the new regulatory framework, it pinpoints the industry's implementation readiness and identifies potential problem areas. The book classifies the spectrum of interrelated port management principles, strategies, and activities in a logical sequence and under four cornerstones—Port Strategy and Structure, Legal and Regulatory Framework, Input: Factors of Production, and Output and Economic Framework.Detailing best practices and the latest industry developments, the book highlights emerging challenges for port managers and identifies opportunities to develop forward-thinking strategies. It examines the effectiveness of current strategies, tactics, tools, and resources of numerous global ports and highlights the necessity of adopting a proactive stance in harmonizing the laws, regulations, and policies pertaining to the maritime, oil, and gas industries.The shipping industry has myriad complexities and this book provides maritime managers and professionals with the wide-ranging and up-to-date understanding required to thrive in today's highly competitive and evolving environment.

CHAPTER 1

Introduction

1.1 PORT MANAGEMENT AND OPERATIONS: STRATEGY IN THE THROES OF A TRANSITION

In addition to being, historically, the first and primary facilitator of world trade—instigating economic activities and growth—the maritime industry may well proclaim to being incontestably the first industry that is truly global in nature. And yet, if one wishes to understand global economy and take the pulse of regional and national development, production, employment, and growth rates, one simply needs to examine how seaports work.

Napoleon Bonaparte opined that “to know a nation’s geography is to know its foreign policy.” When it comes to seaports, it can be inferred that to understand a nation’s seaports is to perceive its underlying economic fundamentals: to forecast the commodity markets with unfailing accuracy, one simply need visit a port on a regular or seasonal basis and observe the ship types and sizes, while assessing the commodities these ships carry. To acquire an overall picture of the market cycles, one can observe a port’s short-term traffic, in conjunction with the port’s long-term strategy. This includes partnerships with oil majors, terminal operators, shippers, major liner companies, cruise lines, and so on. Last but not least, forecasting by extrapolation—of the real and projected jobs in different industrial segments of a particular geographic location—is possible through the examination of port authority leasing contracts, concessions, leaseholds, land rents, and so on.

Port services may encompass one or more of the four key business categories of global trade and transport:

1. Landlords, through property ownership, leasing and management.

2. Brokers, by hosting or liaising with bunker brokers commodity brokers, property brokers, ships’ agents, ship brokers, stock brokers, and so on.

3. Suppliers, through leasing and handling cargo equipment, and liaising with ship chandlers, and suppliers of spare parts, engines, commodities, tools, and so on.

4. Manufacturers, by hosting or liaising with shipyards, petroleum refineries, and industrial zones. Manufacturing also encompasses broad maritime activities including port design, engineering technology, installation and modification of equipment, manufacturing machinery, and so on.

As fundamental logistic and financial portals, a seaport’s efficiency is crucial to ensure the safe, secure, productive, and ecofriendly practices of marine operations. Regardless of their size, location, and specialization, seaports are principally designed to provide shelter to oceangoing or inland ships, while effectively managing numerous dissimilar activities, human force, materials, and financial resources. Port authorities are in charge of harboring and securing ships, while ensuring smooth operations throughout ships’ anchorage, pilotage, berthing/unberthing, lightering, mooring/unmooring, load-ing/unloading operations, and so on. They oversee canal transits and channel passages and supervise cargo movement, transferring of wet, dry, and gaseous cargoes, while handling bulk, containerized, and palletized cargoes.

Based on the above, Port Management may be defined as the process of organizing, monitoring, and controlling the activities of a seaport in a precarious global industry, in order to accomplish corporate goals, which are in line with its regional and national interests.

1.1.1 Port Authorities Departments and Activities

Global trade is characterized by high-risk, cutthroat competition and capital intensive activities. Hence, port authorities find it increasingly arduous to adapt to an ever-changing global landscape and antagonize with global ports in an effort to improve their annual performance and achieve sustainable import/export levels. Port authorities liaise with governments, policy makers and law enforcement agencies, shareholders, investors, banks, shipowners, ship managers, cargo forwarders, cargo receivers, classification societies, P&I clubs, underwriters, unions, flags of convenience, commodity brokers, customs brokers, ship brokers, ship agents, ship chandlers, shipyards, repair teams, surveyors, inspectors and auditors, not to mention senior maritime officers, seafarers, and stevedores (longshoremen). Port executives are in charge of purchasing land and facilities; they allocate and maintain warehouses as well as indoor and outdoor storage spaces, while recruiting and training efficient personnel. Figure 1.1 illustrates how port management within a typical supply chain is a nexus of sea trade, multimodal trade, and inland trade.

FIGURE 1.1 Port management within a global supply chain. (Courtesy of M.G. Burns.)

While ports’ efficiency is typically measured in terms of time, safety, and value for money, the ultimate challenge for modern port managers is the optimum combination and usage of their factors of production, in order to serve the global supply chain. After all, the demand for seaports derives from the demand for commodities and seaborne trade.

1.1.2 Ports’ Strategy in the Throes of a Transition

During the contemporary history of shipping, ports empower corporations and consumers to sell and purchase global commodities to an extent, rate, and volume that were previously considered inconceivable. Technology has immensely contributed in the way we do business.

It is imperative for port authorities to cultivate strategists capable of efficiently operating in international market platforms, while taking decisions critical to the port’s future employability. Port management functions have been fundamentally reshaped over the past decades, owing to the accelerating change of maritime technology, followed by a major shift of global economic power and trade patterns:

1. Information Technology is an umbrella term that covers the satellite systems and software used to facilitate global communication between ports, ships, and supply chain. Ports benefited from improved communication, including the widespread use of satellite communication and Internet-based software onboard ships, enabling cargo handling, loading/unloading operations, and the remote monitoring and controlling of a ship’s navigational and engineering performance. Port managers became vital emergency and rescue coordinators and recipients of ships’ distress signals, through emergency location beacon devices, such as AIS (Automatic Identification System), that is, an automatic tracking system used for identifying and locating vessels; EPIRBs (Emergency Position Indicating Radio Beacons); PLBs (Personal Location Beacons); SARTs (Search and Rescue Transponders); VHF Radios; and so on.

2. Maritime Technology encompasses the novelties of ship design, marine engineering, ship building, and ship operations. Ports have to keep abreast with the new ship types, sizes, and designs that emerged and accommodate their clients’ requirements pertaining to safe port operations and efficient cargo handling.

a. In 1992, the MARPOL 73/78 protocol (IMO’s International Convention for the Prevention of Pollution from Ships) enforced its new maritime regulations for double-hull/double-bottom ships, to ensure ship safety and environmental protection.

b. Containerization was a great breakthrough as it increased the efficiency of high-valued break-bulk cargoes and reduced cargo loading/discharging time by 84% and costs by 35%. The first container ships were operated in 1952 in the United States and Denmark, and since then multiple design, volume, and technological advances have been gestated.

Port terminals now required container handling facilities and equipment, and a whole new industry was reinvented, that is, container trucks, stevedore operations, minimum port stay requirements, and so on. Subsequently, ports can fully benefit from economies of scale, in terms of higher dock labor productivity per working hour, increased ship size, and reduced traffic. In 2009, over 90% of nonbulk commodities were being transported in containers. Pursuant to this high demand and the gradual recovery from the 2008’s economic crisis, new, larger, and more efficient designs have been launched. As of 2013, the largest and state-of-the-art container type is Maersk’s “Triple E Class,” which contains three major design advantages: “Economy of scale, Energy efficiency and Environment improvements.”

c. Liquefied Natural Gas Carriers (LNG) and Liquefied Petroleum Gas Carriers (LPG).

i. LNG carriers store natural gas that is transformed into a cryogenic liquid (i.e., liquefied through extremely cold temperatures). Typically, the temperature required to condense it ranges between –120°C and –170°C (between –184°F and –274°F). The first LNG carrier sailed from Louisiana, United States, to the United Kingdom in 1959. New gas deposits discovered over the past few years have changed the trade flows and have significantly increased the demand for LNG carriers.

ii. LPG carriers are designed to carry liquefied petroleum gases (e.g., butane, propane, etc.) at a controlled pressure and temperature. They are categorized into three key types: fully pressurized, semipressurized and refrigerated, and fully refrigerated. During the last few years, several larger-capacity fully pressurized vessels have been constructed with spherical tanks.

Hence, new-designs of LNG/LPG tankers are growing larger and sophisticated to accommodate larger volume of cargoes.

3. Global Economy and Trade: The “New Economy” concept introduced in the 1980s illustrated a transition from a manufacturing-based economy to a service-based economy. The shift toward a service-oriented, value-added economy led to the geographical reorganization of the supply chai...