Introduction: Port

POINTS INCUDED:
• Hub and spoke model ( small ports act as transshipment points or feeders)
• Why set DC near ports rather inland? (slide 4 and 5)
• Seaports
• Importance of port
• What happens at port
• Observations of port: ports now have to compete for cargo (15)
• Transitions of ship and port size (17)
• Main functions and facility at port
• Port/harbor/dock/locks/ wharf/ jetty/ dolphin/ tug barrows
• Types of port (28)
• total cost of direct-call and feeder alternatives (32)
• Types of port: by function and geography
The role of ‘scale’ in logistics and SCM
• If all the containers in the world were lined up, it would create
a container wall with a length of 108,000 kilometres
• i.e.2.7 times around the earth at the equator
• The volume of freight that can be held in one standard forty
foot container is quite significant: 200 dishwashers, 350
bicycles or 5,000 pairs of jeans
• The shipping cost per unit is thus quite low: Maersk estimate
for freight coming from Asia to Europe it costs £9 per
dishwasher, £5 per bicycle and just £0.35 per pair of jeans
The role of ‘scale’ in logistics and SCM

• Only certain ports can handle ultra large vessels

• There is growing traffic concentration at certain other ports
• Increasingly, many mid-sized ports are playing a feeder role to the very large
ports as hub and spoke networks
• In these networks, the larger vessels ply between the major transhipment
hubs
• The prosperity of the smaller ports is increasingly dependent on the route
strategies of the major shipping lines
 Port Centric Logistics
• Some ports are actively encouraging companies to locate
distribution centres at ports rather than in their traditional
locations which tend to be in geographically central, inland
locations
• Current patterns of (inland) distribution centre location
ignore the fact that most of the freight that passes through
these distribution centres first transits through a port
• Therefore it is logical (and often easier in terms of land
cost, lack of congestion, etc.) to site such distribution
centres at ports
Port Centric Logistics

• One advantage of port centric logistics is that it cuts down on the

number of empty (return) containers on roads by ‘stripping’ (i.e.
emptying) imported containers at the port. This also allows faster
repositioning of containers to another port where they are required
Seaports are areas where there are facilities for berthing or
anchoring ships and where there is the equipment for the
transfer of goods from ship to shore or ship to ship.

To use a more modern jargon, it is a ship/shore interface or a

maritime intermodal interface. From an historical point of
view, the customs facility is important because without it no
international commercial shipment was legally possible.
Importance of Ports for Trading Nations

— The main transport link with their trading partners and

thus a focal point for motorways and railway systems.
— A major economic multiplier for the nation’s prosperity.

Not only is a port a gateway for trade but most ports attract
commercial infrastructure in the form of banks, agencies, etc., as well
as industrial activity.
Ports are the maritime transport locations:

— Where most maritime accidents happen. This is inevitable,

as it is a focal point, usually in shallow water, where ships
converge.
— Where cargo is damaged or stolen. Again this is inevitable
as a port is a place where the cargo is handled and a place
where valuables are concentrated.
One of the initial reasons for building enclosed docks at the beginning
of the last century was to reduce theft. However, with full container
loads reducing handling in port and the increasing speed of
throughput the significance of this element should be reducing.
Ports are the maritime transport locations:

— Where repairs are carried out. Although a port is obviously

the only place where many repairs can be attempted, the
more modern practice of planned maintenance means that
ship-owners can plan at which port the repairs or maintenance
will be done.
— Where most costs are incurred. Although some of these
costs and delays form part of the essential and inevitable
activities of a port, others, such as documentary costs and
delays, are simply part of an historical tradition which
could and should be changed.
Ports are the maritime transport locations:

— Where delays are most likely to occur.

— Where surveys take place.
— Where most shipping services are located , e.g. agents,
brokers, etc. This still seems to be the case in spite of modern
communication systems.
— Where industries are situated. This has greatly accelerated
since the Second World War.
— Where cargoes come from.
— Where customs and government policies are implemented.
Dr Ernst Frankel, in his book Port Planning and Development (1986),
estimates that “… only 40–45% of all transport costs in international
trade are payable for productive transportation. For general cargo the
figure is probably only 33%.”

Much of the extra cost and delay occurs in ports (but is not necessarily
caused by ports).

As indicated, ports are places where numerous controls are imposed,

such as documentary controls, finance controls, import controls, etc. For
obvious reasons ports have developed as areas of storage while cargo
waits for distribution, further processing or onward movement.
Multiple Roles of a Port in Japan (1100 Ports: 21 Major:
Yokohama, Tokyo, Kobe, Nagoya and Osaka)
— Distribution centre.
— Industrial zone and energy supply base.
— Mercantile trading centre—attracting banks, brokers and
traders.
— Urbanization and city redevelopment centre.
— Life activity base—this is particularly the case for the smaller
rural ports.
— Maritime leisure base—yacht marinas, dockside recreation
facilities, cruise ship terminal.
Fundamental observations concerning ports

— Ports tend to be large civil engineering undertakings with huge sunk

costs. They also tend to last much longer than the vehicles that use
them. If a ship-owner makes a mistake in the type or size of ship he
buys he can usually recoup his losses by selling his mistake. A port
manager will usually find it more difficult and costly to dispose of his
mistakes.
— A ship is an entity, whereas a port is simply a collection of activities.
This makes it more difficult to talk about ports in general. A small ship
has many technical and operational features in common with a large
ship but it is sometimes difficult to see what a small fishing port in a
developing country has in common with, say, Rotterdam.
Fundamental observations concerning ports

— Most ships and ship operators are international in their

design and ways of working, whereas ports tend to be more
parochial in that they reflect their local commercial attitudes,
practices, laws and working practices.

The duties of, say, the ship’s captain are similar regardless of flag,
whereas the duties of the port harbourmaster can differ considerably
between countries.
Fundamental observations concerning ports

— Since the advent of intermodalism, ports now have to compete for cargo very
much more than in the past—hence the great interest in increasing port efficiency
and value-added activities over the last few years. (Value-added activities are
described by UNCTAD as—“The term added value signifies value newly added or
created in the productive process of an enterprise”.

Loading and discharging are certainly value-adding activities, so are the industrial
services of a port. In a distribution centre, added value can take different forms
such as cargo-consolidation and deconsolidation— providing up-to-date
information on the inventory and cargo movements, stuffing/unstuffing
containers, crating, palletisation, shrink-wrapping, labelling, weighing,
repackaging, etc.”)
Fundamental observations concerning ports

— Ports provide an economic multiplier for a region and many ports

now carry out Economic Impact Studies to determine which aspects of
their work should be encouraged. It should also be remembered that
ports are not only “gateways” for cargo but also obvious sites for
industry, banks, agents, storage depots and distribution centres. They
have in addition been large employers of labour.
— Ports are also an important part of a nation’s transport infrastructure
and must be part of national transport planning, which is why any
national government or local government will wish to have some input
into the general port strategic planning.
Fundamental observations concerning ports
— Up to the mid-nineteenth century ships were small and could approach most
creeks and estuaries. Since then they have grown steadily until the 1950s, after
which ship size increased rapidly. This increase in ship size created problems for
most ports, particularly as regards water depth, the width of dock entrances and
berth length. Many terminals became obsolete.
— The increase in ship size caused changes in trading patterns in order to gain the
advantages of economies of scale. Large ships must trade between large ports, with
ample deep water, leaving smaller ships (feeder vessels) to distribute the cargo to
smaller ports. Ships used to go to the cargo—now cargo goes to the ship. These
large ports are now referred to as centre ports and the trading pattern as hub and
spoke.
It is also important to note that it is the large powerful liner ship-owners who
ultimately decide whether or not a port becomes a centre port, not the port
management. The port management can however create a milieu that is attractive
to the big multinational container carriers.
The main functions and features of a port

Civil engineering features

— Sea and land access.
— Infrastructures for ships’ berthing.
— Road and rail network.
— Industrial area management.
The main functions and features of a port

Administrative functions
— Control of vehicles, all modes, entering and leaving the
port.
— Environmental control.
— Control of dangerous cargo.
— Safety and security within the port area.
— Immigration, health, customs and commercial documentary
control.
The main functions and features of a port

Operational functions
— Pilotage, tugging and mooring activities.
— Use of berths, sheds, etc.
— Loading, discharging, storage and distribution of cargo.
Main facilities and services provided by a port
• Services and Facilities for Ships:
• Arrival and departure , Navigation aids and VTS (Vessel Tracking Service) , Approach channel , Pilotage, tugs and mooring
Gangs, Locks (if tidal), Berths
• Services and Facilities for Cargo
• Basic
• Cargo handling on ship and on quay, Transport to/from storage, Storage/warehousing
• Tallying, marking, weighing, surveying, Surveillance, protection, sanitary measures, Dangerous cargo segregation, Customs
and documentary Control, Receiving and delivery
• Administrative formalities
• Police, immigration, customs, health, Supplies, water, bunkers, Telephone, repairs, medical, waste disposal, Port state
control
• Additional "added value“ services
• Repackaging, labelling, sorting, assembling, Cleaning and preparing cargo, Setting up a logistic network, Setting up a
marketing
• package
• Cargo transfer Opening/closing of hatches Breaking out/stowing
Operational definitions
Port. A town with a harbour and facilities for a ship/shore
interface and customs facilities.

Harbour. A shelter, either natural or artificial, for ships.

Dock. An artificially constructed shelter for shipping.

Breakwater or Mole. A long solid structure, built on the

seaward side of the harbour, for protection against the weather,
rough seas and swell.
Lock. In tidal waters the majority of docks have been maintained at a
fixed depth of water by making the access to them through a lock,
which allows the ship to be raised or lowered as it enters or leaves the
dock.

The advantages are:

1. A constant depth of water can be maintained.
2. Cargo handling between ship and shore is easier.
3. The ship’s mooring lines do not need constant attention.

The disadvantages are:

1. Increase in capital cost. It is also a constructional feature difficult to
alter if changes in ship design make it too short or narrow. This has
been a problem with many ageing ports in tidal waters.
2. Extra time and possible delays for the ship when arriving
and leaving.
Wharf. A structure built along the shore where vessels can berth
alongside.

Pier or Jetty. A structure built out from the shore or river bank on
masonry, steel or wooden piles for berthing ships. It is not a solid
structure and should not greatly impede the flow of tide or current.
However both these terms are often used with considerable variations.

Dolphin. An isolated islet of piles or masonry to assist in the berthing

or manoeuvring of ships.

Stevedore. A person employed in moving the cargo on or off the ship.

This is again a term with many local variations. For instance, in London
it was the term for one of the skilled team who stowed the cargo on
board the ship but after Lord Devlin’s report the many traditional
functional terms used in this area were abandoned in favour of the all-
embracing term “docker”.
Tug. A small power-driven vessel used in ports and harbours to:

— Tow barges and other unpowered craft between required locations within
the harbour. In the early days of sail they were among the first steam vessels
to be developed as they were very useful in helping sailing craft in and out of
port.
— Help large vessels to manoeuvre in and out of locks and on and off their
berths.
— Help in salvage and rescue situations. Many will be equipped with fire
fighting and pollution control equipment.

A modern harbour tug will probably have a bollard pull of somewhere

between 20 to 70 tons.
Legal definitions

Port means an area within which ships are loaded with and/or
discharged of cargo and includes the usual places where ships wait
for their turn or are ordered or obliged to wait for their turn no
matter the distance from that area.

If the word port is not used, but the port is (or is to be) identified
by its name, this definition shall still apply.
Safe Port means a port which, during the relevant period of time, the ship
can reach, enter, remain at and depart from without, in the absence of some
abnormal occurrence, being exposed to danger which cannot be avoided by
good navigation and seamanship.

Berth means the specific place where the ship is to load and/or discharge. If
the word berth is not used, but the specific place is (or is to be) identified by
its name, this definition shall still apply.

Safe Berth means a berth which, during the relevant period of time, the ship
can reach, remain at and depart from without, in the absence of some
abnormal occurrence, being exposed to danger which cannot be avoided by
good navigation and seamanship.
Different types of ports: By function
(A) A cargo interface
(1) Hub or Centre port
(2) Feeder port—to feed and distribute cargo from 1.
(3) Entrepot or transit port.
(4) Domestic port, i.e. a natural outlet for surrounding hinterland.
Hub or Centre port, also sometimes referred to as a mega port, direct-
call port, hub and load centre port, megahub (greater than 4mn TEUs
per annum where a TEU = Twenty-foot Equivalent Unit), superhub
(greater than 1 million TEUs per annum), load centre port, pivot port,
etc.

In the past ports tended to be either simply large major ports dealing with
international trade or smaller local ports serving the needs of their own
hinterland with mainly coastal or short-sea shipping. As inland transport
developed, larger ports became larger and smaller ports smaller. The advent of
intermodal transport and larger ships meant a change in the economics of
international transport. Cargo began to move by feeder ships or inland
transport modes to large hub or centre ports where large fast container ships
moved the containers to other strategically located hub ports around the
world.
The concept of hub ports has developed since it was first
introduced a couple of decades ago. Originally the general
consensus seemed to be that the hub port would naturally be
formed by the largest container port in the region or the port
for which ships had the most cargo.

However, ideas are changing, and we are now seeing hubs

located at an intermediate point along a pendulum route with
zero local cargo to offer, e.g. Malta (Marsaxlokk), Freeport
Bahamas and Salalah. Such ports as these tend to be
interchange ports for large vessels rather than hub and spoke
ports for large vessels and feeders.
According to an H. P. Drewry Report in 1997, 78% of container throughput at the
Port of Singapore in 1996 consisted of trans-shipment containers, while at
Algeciras it was 90%. The same report estimated that two-thirds of the rise at the
20 major hub ports was not due to global traffic growth but caused by an
increase in trans-shipment. It was also estimated that between 1980 and 1990
the number of trans-shipment containers had been growing at an average of 14%
per annum. In 2003 it was estimated that 82% of all containers are trans-shipped.

As the large international liner companies are the major decision-makers when it
comes to designating a hub port, they will not want one port to achieve
monopoly status in a region. One would anticipate therefore that they will
endeavor to ensure that at least two ports of hub port status are competing in a
region to safeguard their bargaining position.
Relationship between total cost of direct-call and
feeder alternatives

One of the major points of discussion concerning ports is whether this division of ports into
centre ports and feeder ports will continue indefinitely. It may be that it is a passing phase of
development in the early stages of the growth of containerization, together with unbalanced
global trade at the end of the twentieth century.
If the volume of trade is large enough, distribution via feeder vessels is obviously not the
optimum solution. On the one hand, trading between centre ports enables the carrier to take
advantage of the economies of scale offered by large container ships. On the other hand,
there are the extra costs and potential delays caused by having to re-ship the containers on to
a smaller feeder ship for distribution.
The. The volume in this context is, for a particular port, volume of traffic therefore becomes
the decisive factorthe number of obtainable TEUs per week by a shipping line in relation to a
specified maritime route. Thus a shipping line should use feeder services as long as the traffic
at its disposal on a maritime route is fewer than “x”TEUs per week (both import and export).
Professor Shuo Ma suggested in the early 1990s that between an Asian and a European port, x
= 580.
Different types of ports: By function
(B) A MIDAS (Maritime Industrial
Development Area) (also known in France
as Zones Industrielles Portuaires (ZIP))

(5) Large industrial zone with its own marine transport terminal.
(6) Customs free port.
(7) Oil port.
MIDAS

This was a term that became part of port jargon in the mid-1960s to
cover the port development which had been taking place gradually
since the Second World War. Industries such as petrochemicals, oil
refineries, steel works saw the advantages of locating themselves in
port areas to take advantage of cheap transport of bulk raw materials.

For this to occur there had to be deep-water access, available land and
demand for the product.
Different types of ports: By function
(C) Specific ship/shore interface
(8) Naval port.
(9) Fishing port.
(10) Specific Commodity Export Port
Specific Commodity Export Port
Specific Commodity Export Port, for example (quoting 2000 tonnages):

Coal:
Qinhuangdao (China) 83.8 million tonnes
Richards Bay (South Africa) 68.9 million tonnes
Hay Point (Australia) 69.4 million tonnes
Port of Virginia (USA) 20.3 million tonnes

Iron Ore:
Tubarao Praia, Mole (Brazil) 68.3 million tonnes
Port Headland (Australia) 68.5 million tonnes
Dampier (Australia) 65.9 million tonnes
Saldanha Bay (South Africa) 24 million tonnes
Narvik (Norway) 11.8 million tonnes

A large port such as Rotterdam can be many of these.

Different types of ports: By geographic type

(1) Coastal submergence—New York and Southampton.

(2) Ryas (submerged estuaries)—Falmouth, Rio.
(3) Tidal estuaries—Bristol, London, Antwerp.
(4) Artificial harbours—Dover.
(5) Rivers (non-tidal)—Montreal

The recognition of a geographic type may give an insight into its operating
advantages or disadvantages, e.g. a tidal estuarial port will probably require
more expensive surveying and dredging than a closed dock system.
The port of London is a good example of an estuarial port.