Improving port performance: From serving ships to adding value in supply chains

Traditional measures of measuring port performance have focused on servicing ships, cargo handling and equipment and asset utilisation. While these measures remain valid, and in many cases important, they now explain only part of the raison d’être of ports. Of all supply chain participants, ports face some of the most diverse challenges as they adapt to new commercial environments. These include the introduction of supply chain management, global sourcing, logistics outsourcing and new flexible business practices. To cope with these challenges, ports have adopted a variety of new strategies. One of the main strategies which is of particular interest is the integration of ports into the supply chain through activities such as value-added service provision, cooperation with other supply chain members and intermodal service intensification. However, integration does 10 not take place equally in every port and the degree of integration varies by cargo type, trade flow and the wider range of overall commercial requirements. This paper focuses firstly on the degree to which ports are integrated into supply chains and secondly on the impact of port performance on overall logistics effectiveness. A conceptual model is presented which explores the relationship between port supply chain integration and performance. Traditional measures of port performance are reviewed in order to provide a context for the conceptual model. Primary investigation in the form of semi-structured interviews forms the core of this research. The subjects of the interview programme were academics and representatives of port operating companies and port authorities. The findings suggest that ports are positively integrating into supply chains in order to acquire competitive advantage and perhaps to diversify their portfolio. It is also shown that integration of ports into supply chains takes place to different degrees and in different ways, driven by a variety of motives