Port Management: Supply Chain Integration for Port Competitiveness

By Capt Gajanan Karanjikar

Multi-modal Transport expert & Independent Port Consultant

“Let our advance worrying become advance thinking and planning.” – Winston Churchill

Worrying solves nothing, of course, but we take this British bulldog's words in terms of recognizing potential kinks in the supply chain before they occur. As a logistics professional it's important to run "what if" scenarios and dig into any areas that give you pause for thought. That's where you'll find those advance worries turn into advance planning!

The port is such a place where the advance planning is needed and goes on days end. The stake holders involved in cargo or vessel or Import/Export etc all go into a planning phase all the time. There is also endless worrying but this worrying is not going solve anything, certainly planning will.

In the recent debate on port competitiveness, a growing number of studies have focused on the integration of port activities in companies’ supply chains in an attempt to frame the port as a whole in the process of creating value for the end customer. The importance of port integration in the supply chain has received a great deal of attention and has been widely discussed. However, most of previous studies have focused on the conceptualization and measurement of port supply chain integration.

The concept of integration in the port context has essentially concerned inter-modality and organisational integration undertaken by global carriers in order to meet the changing requirements of industrial and commercial firms and, at the same time, improving their own efficiency.

In particular, inter-modality has mainly concentrated on the conditions for efficiency and effectiveness of intermodal container transport chains, with specific reference to the management of port logistics. Organisational integration, however, has dealt with the process of logistics re-organisation of large global players, created by means of different forms of vertical and horizontal integration. With reference to this issue, the debate on the competitive struggle between large terminal operators and shipping companies for the control - through mergers and acquisitions - of the container market, and the role the port authority should play in order to avoid dominant positions in the port, is particularly interesting.

Supply chain integration is the extent to which a firm (read port) is strategically interconnected and aligns with its supply chain partners. Integration with suppliers and customers enables firms to manage the smooth and efficient flow of products through the supply chain, and provides access to resources and capabilities at supply chain partner that otherwise may have been costly to develop internally.

These two areas of study extend the field of analysis to the role and integration modes of ports within global transport systems, but they underline the passive role traditionally played by ports in relation to the strategic choices of other port community operators, with obvious effects on their bargaining power and, more in general, on their development strategies. In this respect, it has been shown that ports are mere “pawns in the game” within global transport systems and that the power of liner shipping affects port development.

Under this perspective, terminals and their management, though crucial for port competitiveness, should not represent the only element in the development of port policies, as they link the success or failure of the port to the strategic choices of global players such a terminal operators and shipping companies. Such a passive position of the port does not guarantee a long term and sustainable positioning and should be replaced by a dynamic and more proactive role in this new competitive scenario.


(Courtesy: Marex Media)

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