Port Strategic Issues Overview

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Analysis of the port competitiveness
Use of Marketing in business promotion
Logistics plans
Environment, safety, and security
Port performance targets
SWOT analysis and strategies
Conclusion
Reference list

Introduction

The advancement in technology has helped improve transportation and communication around the globe. The availability of high-speed water vessels has enhanced global trade while ensuring timely exchange of containers and important bulk liquids that are essential in supporting crucial sectors in national economies. The fact that sea transport has proved the ideal mode of transporting these materials has meant that sea harbors and ports have continually strived to improve on the quality of service delivery. In Australia, major ports have instituted far-reaching reforms in marketing, logistics, and overall management with the sole aim of improving productivity and efficiency. This essay will discuss the port internal and external competition, marketing strategies, logistic functions, appraisal of the environment and security, the scope of port performance, and an evaluation of the port’s strategies and operations.

Analysis of the port competitiveness

Many of the ports in Australia are managed by port corporations owing to the sensitivity of the transport sector to the state as well as the national economy (Maton 1997). The fact that they are monopolistic translates to a lack of equality in the bargaining power particularly in the negotiation of terms. In New South Wales, the government has instituted major reforms aimed at providing competitive neutrality in the state ports. Sydney ports handle the majority of all terminal and container operations in the state thereby making their management follow specific guidelines aimed at improving and sustaining efficiency in the port operations (Alderton 2005). Port Botany, the largest and most busy port in the corporation, has continually improved services through investing heavily in infrastructure within and without the port area. Port botany enjoys a strategic location and massive landing bay and harbor that make it an ideal port with the capacity to handle huge vessels carrying petroleum products and containers. Owing to the high reliance on imports, Port Botany will continue being the largest port in Sydney in terms of cargo held and infrastructure considering the projected expansion to accommodate additional terminals to handle the expected increases of containers and bulk liquids. Competition between the various ports in New South Wales is limited owing to the geographical factors and the close relationship in terms of management and operations shared by the ports. Inter-port competition in Australia is better discussed nationally rather than at the state level to enable understanding the influencing factors such as geographical factors and the utilized management strategies. More importantly, the Australian economy is viewed on a national basis with Port Botany handling substantial quantities of cargo in Australia owing to its strategic location. The monopolistic nature of the state ports has brought about clear-cut costs while improving the efficiency of the major ports in the area. Intra-port competition has gained momentum since the ports allowed private companies to run some of the operations (DP World 2007). Despite the fact that Port Botany does not operate at its capacity, competition among the various terminal operators and stevedoring companies is rife. With its substantial market share in terms of handling containers and bulk liquids, shipping and clearing companies are engaged in stiff competition to sign contracts of running terminals while another looks for additional infrastructure and space to cater for the anticipated growth in the trade volumes. In addition, the stevedoring companies decentralize their services and operating bases from the national level thereby ensuring they provide customized and timely services for their customers (DP World 2007).

Use of Marketing in business promotion

Marketing of services has become critical in the shipping industry in the last few years owing to the increased competition brought by the improvement of infrastructure in the majority of the ports and the demand for quality services from the customers. As part of their long-term strategy, ports come up with sustainable programs aimed at ensuring the betterment of the overall efficiency coupled with the provision of incentives targeting the improvement in truck servicing and the important rail performance. Awarding of contracts for terminal operations is aimed at encouraging competitiveness through focussing on the provision of efficient and high-quality terminal services in the long term. Port Botany has embarked on programs aimed at introducing commercial principles in the overall management of the port corporations hence ensuring they operate under the available market principles (Sydney Ports Corporation Board 2010). Under the program, decision-making on some pertinent issues is delegated to the port authority thereby allowing for expediency when planning and implementing major projects. The fact that the port authority has greater control over the daily management of the port not only encourages the investors but also results in inefficiency in the handling of containers. More importantly, collaboration with the concerned stakeholders during the implementation of major infrastructural and services networks is another important marketing tool since it brings into fore the potential of the port with regard to its capacity to efficiently handle cargo hence enhancing savings for the customers (Talley 2009; World Bank 2005). For instance, the expansion of the port through the addition of other terminals and upgrading of the inland transport infrastructure is proof enough to the customers of the desire of the port management to improve on the service delivery. On the other hand, customers repay through loyalty and bringing more business to the port thereby reinforcing its status as the major entry avenue for important economic commodities in Sydney and the whole of New South Wales. Allowing for increased competition in the provision of vessel services has proved pivotal in wooing potential customers since it enhances time and financial resources savings (Sydney Ports Corporation 2008b).

Logistics plans

Landside logistics has continually been upgraded in a bid to address the challenges experienced in managing the overall port activities in view of the expected demand buoyed by the expansion of the Australian economy. The infrastructural linkages to the port are imperative in ensuring efficiency in the port operations. Taking into account that slightly above 97% of the Australian international trade occurs through the sea, makes it is imperative to provide adequate infrastructures such as cargo handling facilities and the related landside logistics with the main aim of ensuring continued growth and diversification of the economy (Stock & Lambert 2000). Port Botany remains the major entry point for commodities especially containerized cargo in Sydney, owing to its proximity to the ready market of Sydney. With the Sydney ports holding an annual average of $50 billion in terms of cargo trade, Port Botany remains its important hub since it transacts more than 95% of the containers, which account for slightly above 45% of the cargo handled by all the Sydney ports by volume.

Portside freight operations are effected through two containerized terminals that act as storage and transfer points to the expansive rail and road network. Under the current expansion plan, a third terminal is expected to be commissioned to ease pressure on the existing ones. An efficient transport system is required to enhance efficiency in the port. More importantly, integration of the various crucial components forming the transport chain not only saves resources for the exporters and importers but also ensures efficiency in the maritime activities (Lambert, Stock & Ellram 2000). Inward transport of containers is mainly restricted within the metropolitan area thereby meaning infrastructural developments must cater for the expected cargo increases in the near future. With the majority of containers being emptied in large warehouses within the city, the two major transfer pathways are overwhelmed taking into account the lack of improvements in the infrastructure in the last few years.

The road-based pathway is crucial in the transfer of containers directly from the port into the various warehouses and intermediate distribution centers. Subsequently, the containers are either returned through the empty container park or either loaded and subsequently sent to the port for shipment. In addition, the road and rail-based pathway functions through a rail network via intermodal terminals that are in proximal distance to the market, before unloading and subsequent transport through the truck system to the adjoining warehouses and various distribution centers occurs (Sydney Ports Corporation 2008b). This method is reliable since it largely reduces the overall distance covered by the trucks. The empty containers find their way to the port either directly from the exporters’ warehouses or through the intermodal terminals. The landside operations are supported by an expansive motorway system that creates an orbital network in the metropolis whereby it links the industrial with the warehousing facilities in the external port facilities. The orbital network comprises M1-M7 motorways that are directly linked to the port area via Foreshore road. In addition, a 20km rail freight line serves port botany and Enfield while there is also a rail link that joins the main port through White Bay. Patrick container terminal together with P&O Trans Australia Container Park and expansive DP world container terminals are served by several operators who include Carmella and Macarthur intermodal shipping company (Sydney Ports Corporation 2008b).

Environment, safety, and security

Safety and security have become critical issues in sea trade owing to the increased cases of piracy and trafficking-related crimes taking place in the high seas. Sydney Ports Corporation has over the years committed itself to provide safe operations to the various stakeholders as a part of a wider recognition of their paramount importance to the strategic goals of the ports. In fact, the port management continually briefs the concerned stakeholders in the various changes in measures regarding safety in addition to security. Port Botany is required to observe strict measures on safety with a major emphasis on the relationship between the safety of shipping and the overall preservation of the adjoining marine environment. Achievement of the preservation is through the competent and timely implementation of the crucial Port Safety Operating Licence (PSOL). In addition, the ports are legally bound to provide competent and timely emergency responses particularly to marine-based incidents including the clean-ups in case of any environmental spills (Lane, McDonald & Morrison 2004). The port safety functions are coordinated by the Sydney Ports Corporation. Port Botany also enjoys one of the most progressive occupation, health and safety (OH&S) programs that is aimed at ensuring strict compliance to the legislations while instilling a positive safety culture that is imperative in the achievements of the corporate safety goals. To complement the strict compliance of the legislation, the port also conducts site-specific employees together with contractor inductions, which go a long way in promoting safety requirements and mitigation measures (Shang & Lu 2009). The port also ensures stringent measures are in place to ensure the handling of dangerous goods within the port operation area.

Taking into account the real threat posed by terrorism and the proportion of exports transported through the sea makes security in the ports is a critical issue. This has resulted in the interpretation of the international maritime code and its subsequent application in Botany Bay. The security plans adopted by Port Botany are supplemented by those of Australian trading vessels together with port service providers. Heightened security measures have seen the establishment of important forums where sharing of crucial information regarding security occurs especially between the government agencies and other regulated port users. Improvements in the overall control of the port facilities in terms of provision of signage, CCTV, perimeter patrols, background checking of new workers, and restricted access especially to sensitive areas have taken place.

Sydney Ports Corporation has embraced the concept of sustainability in its business strategy (Sydney Ports Corporation 2008a). Ports have taken the responsibility of leading the communities around their vicinity in preserving the environment in a bid to preserve diversity. As part of the approach, the port largely relies on an environmental management tool, which borrows heavily from the guidelines spelled out in the ISO: 14001:2004. The utilization of this approach not only ensures the incorporation of the overall identification but also in the management of potential risks with regard to the environment. The ports are guided by an environmental policy that dictates the port planning, handling of materials, and minimization of incidents and resources utilization. In addition, Sydney Ports Corporation issues environmental licenses in tandem with the laid down federal as well as state legislations. Port Botany has over the years acted as a major stakeholder in various community projects that include clean up Australia and Earth Hour.

Port performance targets

The performance of ports has become imperative since it enhances the understanding of the direction and speed with which the performance and strategic goals will be achieved. Varying parameters are usually utilized within the maritime business with Port Botany mainly delving largely on trade and infrastructural networks. As part of the performance rating, the port management usually sets targets for container trade in the port. Despite the fact that the global financial crisis affected the majority of the sectors that acted as the pillar of the economy, total container trade in Port Botany increased marginally over the same period. A 0.3% increase in the total container trade was recorded in 2009 against a backdrop of increased demand for raw materials and fuel to propel the industrial hubs in Sydney (Board of Directors 2009). Performance is also measured in terms of the proportion of Australia’s containerized trade handled through the port (Li 1993). With regard to the proportion of trade, Port Botany expects to handle slightly above a third of containers in Australia in 2010. To achieve this milestone, several infrastructural improvements especially in the terminals and transportation modes will ensure the port becomes a leader in cargo handling in the next few years (Steenken, VoB & Stahlbock 2005). In addition, the desire to increase the revenue contribution made by each ship has been embraced since it will eventually enhance the government contribution in the eventual upgrading and improvement of infrastructural networks within and around the port area (Brooks & Cullinane 2007). Port Botany also considers the capacity of the port to handle huge vessels with immense capacity to handle more than 8000 metric tonnes and upgraded transport links with the warehouses within Sydney thus resulting in increased efficiency and savings. Cost-effectiveness of cargo handling is another parameter utilized by the port in its business plan since it impacts greatly on the competitiveness of the exported goods (Board of Directors 2009).

The triple bottom line approach has gained immense application in various corporate settings due to its recognition of the importance of all factors of production in the overall performance of an institution. In fact, the term refers to the utilization of a wide spectrum of criteria such as economic coupled with ecological and social factors when measuring organizational success. Port Botany recognizes the need to apply business practices that respect the rights of human labor while also ensuring the sustainability of environmental practices. Port botany, therefore, utilizes the triple bottom approach whereby labor is well organized and made efficient in achieving ecological and social balance in the face of increased economic activities in the economy. The recognition that sustainability of environmental resources is important towards ensuring trade growth made Port Botany management collaborate with the surrounding communities in implementing conservation activities around Botany Bay. Expansion projects are implemented only after risk reduction measures towards the environment are put in place thus ensuring minimal loss of biodiversity in the bays and harbors (Brown, Dillard. & Marshall 2006).

SWOT analysis and strategies

Port Botany has continued to serve as the major entry point for commodities into New South Wales. A SWOT analysis of the port shows major strengths and opportunities that can only be achieved if the threats and weaknesses in the port are addressed. The port’s strategic location in Botany Bay and its proximity to the industrial and commercial city of Sydney ensures long-term business and hence high returns on all capital investments in the port (Pollen & Angus 2000). The availability of modern technology in the handling has become pivotal in ensuring the port achieves its targets while also enhancing efficiency. The large depth in the containers, as well as the cargo pier, equips the port with the capacity to handle huge vessels. Infrastructural connection with the various warehouses in Sydney has proved effective in ensuring

speedy transport of containers thereby ensuring the smooth running of the economy. However, the transport linkages have started proving inadequate in the face of increased trade in the port. In fact, it is estimated that traffic snarl-up and gridlocks within the environs are mainly occasioned by the trucks from and to the port. Limitations in the landline services slow down the cargo handling in the terminals thereby impacting negatively the efficiency levels of the port. Inadequate rail and road connection has resulted in overwhelming of the road system in the last few years.

With regard to the above strengths and weaknesses, several opportunities have presented themselves to the port. The increased container trade has provided the impetus for the expansion of the port to accommodate a third terminal with advanced cargo handling equipment (Shang & Tseng 2010). Furthermore, improvements in the rail system and intermodal terminals will lessen the burden on the roads while bringing cost-effectiveness in the landline transportation of the containers. However, the opportunities presented are under threat especially from lack of commitment from the port authority in expediting the necessary infrastructural upgrades in the port area through the delayed release of funding or licensing. Terrorism and damage to the surrounding marine environment may result in loss of business in the port hence putting the expansion project in disarray. The port management should improve the infrastructural linkages within the port area to ensure speedy movement of the containers hence saving time and resources for the concerned stakeholders. In addition, the embracement of the latest technology in carrying terminal operations will bring efficiency thereby boosting trade and increasing revenue collection.

Conclusion

Port Botany enjoys a strategic location and massive landing bay and harbor that make it a competitive sport in the region while improvement and efficiency in operations have endeared the port to many customers. Integration of the landside and portside operations coupled with concerted measures regarding the environment, security, and port safety has improved the reputation of the port. Application of triple bottom line approach should be encouraged since it enhances the balancing of economic benefits with those in the social and ecological fronts. More importantly, the port should strive to improve infrastructure and efficiency in order to achieve greater heights in handling containerized trade.

Reference list

Alderton, P. 2005, Port management and operations: Lloyd’s practical shipping guides, Lloyd List Publishers, London.

Board of Directors 2009, Sydney ports corporation: statement of corporate intent 2009/10, SPC, Sydney.

Brooks, M. R. & Cullinane, K. 2007, Devolution, port governance and port performance Volume 17 of Research in transportation economics, Elsevier, London.

Brown, D., Dillard, J. & Marshall, R.S. 2006, Triple Bottom Line: A business metaphor for a social construct, Portland State University, School of Business Administration, Canberra.

DP World. 2007, Review Of Port Competition & Regulation in NSW September 2007, DP World, Sydney.

Lambert, D.K., Stock, J.P. & Ellram, S. M. 2000, Fundamentals of Logistics, 4^th edition, Mc Graw-Hill/Irwin, New York.

Lane, G., McDonald, T. & Morrison, H. 2004, “Decentralization and Environmental Management in Australia: a Comment on the Prescriptions of the Wentworth Group Issue”, Australian Geographical Studies, vol. 42, no. 1, pp. 103–115.

Li, H. C. 1993, “Port operation needs management strategies,” Kaohsiung Harbor, vol. 7, no. 6, pp. 2-11.

Maton, J. M. 1997, Public Port Administration and Private Sector Intervention in Ports and the Port Industry, World Bank, New York.

Pollen, F. & Angus, D. 2000, The Book of Sydney Suburbs, Robertson Publishers, Sydney.

Shang, K. C. & Lu, C. S., 2009, “The effects of safety climate on perceptions of safety performance in container terminal operations,” Transport Reviews, vol. 29, no. 1, pp. 1-19.

Shang, K.C. & Tseng, W.J. 2010, A Risk Analysis of Stevedoring Operations in Seaport Container Terminals, Journal of Marine Science and Technology, vol. 18, no. 2, pp. 78-98.

Steenken, D., VoB, S. & Stahlbock, R. 2005, “Container terminal operation and operations research – a classification and literature review”, Container Terminals and Automated Transport Systems, vol. 26, no. 1, pp. 3-49.

Stock, J., Lambert, D. 2000, Strategic Logistics Management, 4^th edition, Mc Graw-Hill/Irwin, New York.

Sydney ports corporation 2008a, Sustainability Report 2008/09, SPC, Sydney.

Sydney Ports Corporation 2008b, Port Freight Logistics Plan: A framework to improve road and rail performance at Port Botany, 2008, SPC, Sydney.

Sydney Ports Corporation Board 2010, Sydney Ports Corporation, Sydney.

Talley, K.W. 2009, Port Economics, Illustrated ed, Taylor & Francis, Miami.

World Bank 2005, World Bank Port Reform Tool Kit Alternative Port Management Structures and Ownership Models, World Bank Publications, New York.

Click Here To Order Now!