Marketing communications for seaports: a matter of survival and growth

Perhaps the most critical issue facing seaports is their survival and growth in today's highly competitive environment. Seaports are facing challenging times as the once monopolistic position of having captive markets diminishes. This situation is being replaced by growing sections of the hinterland now being considered by competing seaports as being contestable. In effect, for many business opportunities, captive and contestable hinterland regions are blurring resulting in attracting and retaining trade throughput becoming a major key to seaport survival and growth. One strategic tool that seaport management can utilize to both attract new customers and retain current customers is the use of marketing communications. An examination of the literature on marketing communication efforts by seaports tends to focus mainly on advertising and activities more suited to promoting physical products. Instead, this paper argues the need for a much broader approach to marketing communications that takes into account the challenges of seaports that are service-based businesses. That is, there tends to be a greater need for marketing communication efforts to be able to tangibilise the intangible service offered by seaports to reduce perceptions of increased risk and uncertainty on using another seaport. The purpose of this paper is to examine the benefits to seaports of managing marketing communications strategically and holistically for effective outcomes. More specifically, this paper explains the role of public relations, publicity, personnel selling, sales promotions, word-of-mouth communications, electronic communications, and the management of the seaport's servicescape and the sources of physical evidence provided by seaports in developing a broader and services-based approach to marketing communications. This includes thinking wider than attracting and retaining customers as being the purpose of marketing communications but to also include informing and educating other stakeholders such as employees and the local community about the benefits provided by the seaport. Also discussed is the necessity of a consistent message being provided by all marketing communication activities to customers and stakeholders that results in the development of a desired image of the seaport and appropriate positioning of the seaport in relation to competitors. To facilitate discussion, results from a recent empirical study of the Australian seaport sector are used.     

The impact of dry port operations on container seaports competitiveness

The concepts of intermodal logistics and distribution networks have made integration of the inland freight distribution system essential for an efficient container seaport system. Inland components, such as dry ports, which exist within the seaport system, have become important in shaping the performance and competitive strategies of container seaports. Owing to the importance of interdependence between dry ports and container seaports, this paper aims to investigate the impact of dry port operations on container seaport competitiveness. It conducted an empirical study in Malaysia through 120 online surveys to key stakeholders of dry ports, including freight forwarders, shippers, seaports, rail operator, shipping lines, and haulers. The data collected were analysed using exploratory factor analysis (EFA). The results from EFA show that Malaysian dry port operations have impacts on seaport competitiveness. These include enhancing seaport performance, increasing service variations for seaports, improving seaport-hinterland proximity, increasing seaport trade volume, and enhancing seaport capacity.     

后方陆域窄小的海湾港口发展模式

海港大型化、深水化发展要求港口大型船舶提供更深的水域和更广的后方陆域。在深水岸线资源紧缺的情况下,探讨了水深条件良好而后方陆域窄小的海湾港口发展模式,通过建设物流通道来扩展港口活动的空间,从而带动地区经济的发展,并从集聚角度论证了该发展模式能有效降低社会物流成本。     

The relations between dry port characteristics and regional port-hinterland settings: findings for a global sample of dry ports

This paper aims at defining generic characteristics of dry ports by carrying out an analysis using a large sample of dry ports from around the world. The dataset includes details on 107 inland terminals worldwide. All dry ports in the database have been selected from studies in the extant literature before being shortlisted to fit our research scope. Data collected include terminologies used, actors driving the development, terminal throughput, total area, services provided and the relation with the corresponding seaport(s). Using statistical analysis, the paper examines how dry port parameters are influenced by (1) a different terminal set up, like sea-driven and land-driven development, developed and developing system, dry port functions; (2) specifications of the seaport with which the dry port is connected, i.e. seaport traffic, connectivity, utilization, etc. and (3) the transport leg linking dry ports and seaports. The findings could be applied to the planning and development of inland nodes from the perspectives of different stakeholders.     

Port economic impact model (PIM) and its planning applications

The provision of adequate port capacity has been essential for Korean economic development, as its foreign trade has been predominantly seaborne. In this respect, efforts have been directed to the development of seaports in order to provide a sufficient level of service for greater national control of foreign trade. The port planning and development process in Korea, however, has not been a total success. This is underlined by the fact that the seaport industry in Korea has not coped with the increased demand, and total seaport capacity has lagged behind need. This paper examines the validity of the port input-output model (PIM) as predictive tool to future planning. Further the value of the PIM as a forecasting tool to the port transport industry in Korea is identified.     

Logistics resources in seaport performance: multi-criteria analysis

Studying the logistics resource relationship within the framework of the overall performance of the main Iberian seaports performance, this article discusses how to apply the linear additive multi-criteria analysis (MCA) model and principal component analysis (PCA) to such an industry. The model incorporates the contribution of two different performance indicators—operational performance and physical capacity—measured by several indicators. First, we gather the 2009 annual data on the total cargo throughput of 16 seaport container terminals. The PCA method is then applied to attain the loading factor of each indicator and to normalize the redundancy in indicators and thereby generate meaningful results. We correspondingly find (a) operational performance contributed 48.77% while the physical capacity contributed 51.23% to overall performance; (b) the majority of seaports reveal a direct proportionality between their positioning in terms of physical capacity and their overall performance positioning; (c) this relationship changes whenever the difference in indicator value proves significant; and hence (d) this model demonstrates both its applicability and reliability in the case of the Iberian seaport industry and the relevance of encouraging multiple decision-makers to carefully consider identifying key criteria out of a given set of alternatives.     

Financial and environmental impacts of hypothetical Finnish dry port structure

One main theme of European Union’s in transport policy statements has been the increased role of railways in the reducing environmental impacts and costs of transport activity. One option to increase the modal share of rail transport is to utilize the dry port concept, particularly applicable to general cargo. At the Port of Gothenburg (Sweden) use of this concept in combination with rail transport has led to a reduction of CO₂ emissions, and lower transport energy costs. The main objective and motivation of this research work are to examine through analytical models, how this same dry port concept could be implemented in the Finnish transportation network, with estimates of the benefits being gained.The research method of this study is macro gravitational models of distribution. Main input data for the models are distances and population in the area. The approach aims to research, how relative transport costs behave by increasing the number of dry port distribution locations. For the actual computation work the authors apply linear integer programming. Based on the results, the authors argue that relative transport costs can decrease considerably by increasing the number of dry ports, up to the level of six locations. This is considerably less than what is the current situation in Sweden. The found solution also differs from Sweden as the fragmented Finnish seaport system enables using numerous seaports instead of one, which further decreases inland transportation distances and volumes considerably. At the same time forthcoming sulphur emission reduction regulation (for sea transports) might impact the transportation network structure by decreasing sea transport and the number of seaports used. This might lead to a further increase in land-based hinterland transport.     

Public goods and the public financing of major European seaports

Seaports are recognized for their importance in facilitating trade growth and associated economic development. These attributes often give rise to the notion that seaports, or infrastructure elements of seaports, are public goods. Public goods are regarded as goods or services which a market acting in isolation might have difficulty in providing, or at least providing in sufficient quantity and/or at a competitive price. An important element of a public good relates to its non-rival consumption, the implication being that it is impossible to exclude anyone, whether they pay or not. Key questions this paper seeks to address are, what constitutes public goods in seaports, to what extent is it necessary for the public sector to provide these goods, and can such intervention lead to market distortion in respect of competing ports? The paper describes the more common examples of public goods in seaports. This is followed by discussion of public and private sector investment at major north European seaports. The paper considers the potential for market distortion due to public sector expenditure on so-called public goods in seaports, and proposes that a more cohesive policy for major ports, particularly those very large containerports serving a common European hinterland, is necessary in order to deliver a sustainable transport system in the long term.     

Influential factors in the design of port infrastructure tariffs

ABSTRACT

The main aim of this article is to examine the factors influential to the practical process of port infrastructure tariff design. The analysis is based on the survey data of 67 seaports representing the Australasian, East Asian, European, North American and South American regions. Exploratory factor analysis (EFA) was first carried out to identify the factors influential to the selection of the infrastructure tariff design model. Subsequently, confirmatory factor analysis (CFA) was used to confirm the relationship between the variables. The findings showed that demand, knowledge about pricing theories, the dynamics of port and shipping sectors (including competition and ship size), pricing objectives and port cost consideration are influential factors in infrastructure tariff design. Most ports use a mix of pricing approaches including price discrimination, cost-based pricing and market-based pricing. Ports are aware of the basic pricing approaches but have limited knowledge of their application. Based on the results of analysis, policy implications for port management in designing port infrastructure tariffs, limitations and recommendations for future research are discussed.     

Economic policies and seaports: The economic functions of seaports

This paper argues that the economic functions of seaports are to benefit those whose trade passes through them, i.e. through providing increments to consumers' and producers' surpluses. Whilst recent developments in the technologies of seaports (containers, bigger ships, more rapid handling of bulk cargoes) have increased technical efficiency, they have also provided such economies of scale as to reduce some opportunities for competition and, therefore, the probability that cost reductions are actually passed on in this way. For this purpose port costs need to be considered in their entirety, i.e. as generalized transport costs per tonne, comprising money, time and the risks of loss, damage and delay. Such cost reductions will lead to expanded trade in a variety of ways.

This statement of the economic function of seaports is contrasted with views that they should try to increase employment in their locality, or that they should maximize profits.     

The new governance structure of French seaports: an initial post-evaluation

France undertook a large port reform in 2008, which came into force in 2010–2011. It mostly applies a landlord port model to major French seaports, with the prediction that doing so will restore competiveness. This article presents the 2008 port reform, discusses why it was needed, notably with regard to the underperformance of container traffic, and details how new governing bodies are sharing their responsibilities amongst themselves. To this end, a textual analysis of the agenda items for the governing bodies created since 2011 of the largest French seaport, Port of Marseille, provides a means to compare the items discussed by the former management bodies. This analysis identifies a trend, in which the supervisory board focuses on global issues, the advisory board addresses local issues, and the board of directors considers internal issues. Even if ongoing, this transition creates favorable conditions to work more efficiently and may represent a step toward the better performance of French seaports.     

Methodological solutions for increased efficiency of modelling and simulation of seaports and inland freight terminals

The paper outlines the results of research aimed at developing an efficient simulation modelling capability for seaports and inland freight terminals. By providing the domain-oriented process of simulation modelling with a uniform and coherent methodological basis and integrating it with artificial intelligence concepts, it was possible to construct a powerful tool—Transnode. This is a decision-support expert system which enables efficient and fast modelling and simulation of any seaport or inland freight terminal, or a group of terminals, large or small, multipurpose or specialized, at optional scale. It produces simulation results which enable a comprehensive analysis of the port or inland terminal to be made as an element of the total transportation framework. Both methodological aspects of the developed solutions and practical features of the Transnode system are discussed in the paper.     

Entry barriers in seaports

The different types of entry barrier in seaports are analysed and the policies and practices to reduce them are discussed in this paper. In most seaports, economic, regulatory, and geographical entry barriers are substantial and increasing in complexity as ports become embedded in supply chains and multilayered networks with multiple entry-levels. Various entry barriers in seaports are identified through an overview of the relevant literature and their presence is confirmed by empirical data describing them. The case is then made for lowering these barriers. This would be desirable from an economic point of view, since lower barriers strengthen the contestability of markets and increase the level of intra-port competition. The latter might yield substantial benefits, such as fostering specialization and preventing the abuse of market power. Finally, low entry barriers would facilitate the faster implementation of new technologies and business models. In the third part of the analysis, policies and practices designed to reduce entry barriers are examined. The implications are discussed of current national and supranational (EU) policy initiatives aimed to liberalize service provision in seaports. Other (de)regulatory policies that could contribute to the reduction of entry barriers are analysed.     

Entry barriers in seaports

The different types of entry barrier in seaports are analysed and the policies and practices to reduce them are discussed in this paper. In most seaports, economic, regulatory, and geographical entry barriers are substantial and increasing in complexity as ports become embedded in supply chains and multilayered networks with multiple entry-levels. Various entry barriers in seaports are identified through an overview of the relevant literature and their presence is confirmed by empirical data describing them. The case is then made for lowering these barriers. This would be desirable from an economic point of view, since lower barriers strengthen the contestability of markets and increase the level of intra-port competition. The latter might yield substantial benefits, such as fostering specialization and preventing the abuse of market power. Finally, low entry barriers would facilitate the faster implementation of new technologies and business models. In the third part of the analysis, policies and practices designed to reduce entry barriers are examined. The implications are discussed of current national and supranational (EU) policy initiatives aimed to liberalize service provision in seaports. Other (de)regulatory policies that could contribute to the reduction of entry barriers are analysed.     

Dynamics of Russian dry ports

The transportation of cargos in containers has been intensively developing over the last decades. The world pace of growth in container transport is about 11% annually while in the Russian Federation from 2003 to 2007 the average growth was 21%. Container transportation is going to increase due to the construction of huge infrastructure projects for the Winter Olympics games in Sochi 2014, which implies the transportation of the required material flow. Foreign car assembly on Russian territory is developing, supplied by component parts delivered from Japan and the Republic of Korea, as well as from China that now bring 21.3% import container transport to Russia. About 60% of Russian container traffic passes through seaports Saint Petersburg, Novorossiysk and Vladivostok. The scenarios for increasing capacity to meet demands ahead are enhancing the productivity of seaports sites or leading to the creation of terminals in the hinterland. Although the phenomenon of dry ports is spread all over the world, in Russia none of the seaports has sufficient number of these facilities. The inland terminals of Russian seaports will be analysed from a dry port perspective. Despite the impediments, there are ecological and economical benefits that are discussed in the article. The advantages to the transport chain suggest that dry ports are a promising area for Russian seaports’ welfare.     

Comment Some reflections on port competition in the United States and western Europe

'Port competition' is a rather puzzling expression. This paper approaches it literally, searching for precise meanings. In seaports that contain complex and changeable mixtures of public and private enterprise, who competes and why? The answers to these questions are not conclusive but suggestive indications are found in the US, UK and northwestern Europe. Finally, we discuss what seem to be the key influential factors which may impact on the competitiveness of a port.     

Maritime policy and management--30 years issue for Prof. James McConville Editorial: IMO--The economics of intimidation

Organizational Effectiveness (OE) is a rather new concept in the port business literature and not widely studied before. From the systems perspective, this concept focuses on the goals of the organization, the resources needed to achieve these goals, and the relationship between the organization and its environment. The reason behind choosing a systems approach is the significant role of seaports as open systems affected by changes and developments in world trade, supply chain and logistics trends, maritime transport, and technological developments. While seaports are multi-faceted organizations that constitute different interdependent and integrated units in their structure, they can also be regarded as the subsystems of the supply chain system. As being the social and technical systems, port organizations have unique characteristics that should be examined in detail to assess their effectiveness. To assess the effectiveness of port organizations, principally a set of effectiveness measures applicable to seaports should be determined. The main aim of this study is to assess the relative importance of the main effectiveness criteria in seaports and to determine the significance of main inputs and port subsystems which can be referred as the means to achieve effectiveness. By using the systems approach, the inputs, the processes, and the outputs of the port organizations are clearly defined with a conceptual model. Thirty-three statements have been developed under the main categories in the systems model and a two-round delphi survey is conducted, and qualitative analysis of the experts’ opinions is carried out. The results of the delphi survey show that the main port inputs are port infrastructure, equipments, technology, and port labor; the major port processes are ship and cargo operations together with the logistics services, safety and security, information technologies, and marketing; and the most important effectiveness measures for the seaports are productivity, efficiency, service quality, adaptability, information and communication management, profitability, human resource quality, and customer satisfaction.     

Transport pricing and Public-Private Partnerships in theory: Issues and Suggestions

This chapter offers a theoretical examination of the following questions: what are the issues that arise when Social Marginal Cost Pricing is to be incorporated in Public-Private Partnerships (PPPs); and how may these issues be dealt with?We first briefly discuss Public-Private Partnerships in transport: what are the defining characteristics and what are the main types that exist in the different modes of transport? Next we consider the economics of Public-Private Partnerships, in particular from the viewpoint of incentives. Subsequently we identify and examine the issues that arise when Social Marginal Cost Pricing is to be incorporated in PPPs as a regulation with regard to pricing in the transport sector. Lastly, we investigate the possibilities of resolving these issues.     

Container terminals in South Korea: problems and panaceas

Korea has achieved remarkable economic growth over the last three decades. This has largely been due to the adoption of export-oriented economic policies. This economic development has resulted in a rapid increase in export and import cargos. Since the foreign trade of Korea is carried predominantly by sea transport (approximately 99.8% in terms of volume), ports play a crucial role in this process. Although recent port developments are aimed at keeping pace with ever-growing seaborne cargoes, problems persist, especially insufficient port capacity and inefficient management and operations. As a consequence, the ports of Korea suffer from serious port congestion. This problem is particularly acute in Pusan, the fifth largest container port in the world. In the past, all ports in Korea were controlled and administered by the Korea Maritime and Port Administration which was a public port authority. In August 1996, the Korean government established a new government organization, the Ministry of Maritime Affairs and Fisheries (MMAF), with a remit to control and manage its seaports and other related activities and to improve management efficiency in the maritime area. As a way of solving problems related to port congestion and other sources of inefficiency, the new MMAF has launched several new port development schemes. In this context, this paper will discuss (1) the extent of congestion in Korean ports, especially Pusan, the major seaport of the country; and (2) governmental and commercial reaction to solving the problems, including measures such as new port development schemes aimed at attracting private and foreign finance. From this analysis, a strategy for port development in developing countries may be inferred.     

Programming, optimal pricing and partnership contract for infrastructures in PPPs

The development of various forms of public-private partnerships for the financing, building and operating of public infrastructure has not fundamentally altered the economic calculations involved. This chapter examines to what extent it is necessary, however, to change the way that government uses socio-economic and financial evaluations, whether to optimise investment programming or pricing. Ensuring a coherent match between these two types of optimisation can provide a principle for determining the optimal programming price.We begin by showing that when projects are financed by both users (toll revenues) and taxpayers (subsidies), it is socially beneficial to plan these investments on the basis of the net present value (NPV) provided by each unit of public money invested. This NPV/subsidy ratio must obviously be higher than the public-funding scarcity coefficient or else the investment would destroy more wealth than it would produce.One of the ways of improving this ratio is also to optimise the toll level, since increasing it can lower the subsidy but has an adverse impact on the user surplus, it is essential to set the optimal toll.In the case of an approved project considered in isolation, we show that the optimal toll depends upon the public-funding scarcity coefficient. If there is no scarcity, the optimal toll is zero. As public-funding becomes scarcer, the optimal toll draws closer to the toll that optimises revenue.In the case of a programme of several projects subject to budget constraint, we show that the optimal toll no longer depends upon the public-funding scarcity coefficient and that there are several scenarios depending on the relative values of the maximum revenue and the total cost of the project:

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when, whatever the toll, revenue can no longer cover over half of the cost, it is socially beneficial to choose not to levy any toll;

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when there is a toll that covers the total cost, the operator may be left free to set it at the level he sees fit, with the issue of how the profits are to be shared between the franchisee and the franchisor being settled separately;

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when the maximum revenue of the project falls between half and all of the total cost, the value of the toll that maximises the welfare function is lower than the revenue-maximising toll and must therefore be set for the private operator by government.

Thus, the partnership contract must be given a different content in these three cases of optimal pricing.

Preamble

Most of the theoretical studies devoted to optimising public investment programming and infrastructure pricing have, since the work of Jules Dupuit (1844), focused on the salient issues of the transport sector, even though this work was relevant to all sorts of public infrastructure. The analysis presented in this paper deals with transport economics, but in line with this tradition, is also applicable to any field in which public-funding is combined with commercial revenue. For example, the question of determining how the financing of an opera should be shared between taxpayers and opera-goers raises the same type of issues as the optimal combination of tolls and subsidies for financing a motorway project. This report will be focused on these issues. We shall see that certain precautions are called for in investment programming together with some new thinking on pricing principles.