Advances in Maritime Logistics

and Supply Chain Systems

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 Advances in Maritime Logistics
and Supply Chain Systems

editors

Ek Peng Chew
Loo Hay Lee
Loon Ching Tang
National University of Singapore, Singapore

World Scientific
NEW JERSEY LONDON SINGAPORE BEIJING SHANGHAI HONG KONG TA I P E I CHENNAI
 Published by
World Scientific Publishing Co. Pte. Ltd.
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UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

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ADVANCES IN MARITIME LOGISTICS AND SUPPLY CHAIN SYSTEMS

Copyright 2011 by World Scientific Publishing Co. Pte. Ltd.
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Steven - Advances in Maritime Logistics.pmd 1 6/14/2011, 2:01 PM

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CONTENTS

Preface xiii

Part 1: Regional Developments and Performance

Analysis 1
1. Maritime Trade Evolutions and Port City Developments
In Asia 3
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Evolution of Asias Maritime Trade . . . . . . . . . . . . 7
2.1. Ancient maritime trade between India and China,
12001450 . . . . . . . . . . . . . . . . . . . . . . 8
2.2. Maritime networks in colony times,
15001950 . . . . . . . . . . . . . . . . . . . . . . 9
2.3. Asias maritime trade under globalization . . . . . 12
3. Asia Port Developments in the 1990s and Beyond . . . . 14
3.1. Northeast Asia . . . . . . . . . . . . . . . . . . . . 15
3.2. Southeast Asia . . . . . . . . . . . . . . . . . . . . 23
3.3. South Asia ports . . . . . . . . . . . . . . . . . . . 30
4. Factors of Port Competitiveness and Development . . . . 32
4.1. Port location . . . . . . . . . . . . . . . . . . . . . 32
4.2. Port eciency . . . . . . . . . . . . . . . . . . . . 35
4.3. Multimodal network . . . . . . . . . . . . . . . . . 37
4.4. Maritime trade strategy and institutional
settings . . . . . . . . . . . . . . . . . . . . . . . . 39
5. Lessons to be Learnt . . . . . . . . . . . . . . . . . . . . 41
6. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 44
7. References . . . . . . . . . . . . . . . . . . . . . . . . . . 45

v
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2. Recent Development of Maritime Logistics 49

1. Development Trends on Global Container Shipping . . . 49
1.1. Global economic condition and industry
perspective . . . . . . . . . . . . . . . . . . . . . . 49
1.2. Recent trends in container shipping industry . . . 53
2. Liner Shipping . . . . . . . . . . . . . . . . . . . . . . . . 54
2.1. Container liners . . . . . . . . . . . . . . . . . . . 54
2.2. Freight rates . . . . . . . . . . . . . . . . . . . . . 57
3. Ports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.1. Global container terminal operators . . . . . . . . 58
3.2. Leading terminal operators . . . . . . . . . . . . . 60
3.3. Development in transshipment activities . . . . . 64
3.4. Improvement in port performance . . . . . . . . . 65
3.5. UNCTAD liner shipping connectivity
index 2009 . . . . . . . . . . . . . . . . . . . . . . 65
4. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 66
5. References . . . . . . . . . . . . . . . . . . . . . . . . . . 67

3. Scenario Analysis for Hong Kong Port Development

Under Changing Business Environment 69
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 69
2. Literature Review . . . . . . . . . . . . . . . . . . . . . . 72
3. Changing Business Environment for HKP . . . . . . . . . 74
3.1. Changing business environment
in the PRD region . . . . . . . . . . . . . . . . . . 74
3.2. Potential processing trade relocation trends . . . . 75
4. A MIP Model . . . . . . . . . . . . . . . . . . . . . . . . 78
5. Experimental Design . . . . . . . . . . . . . . . . . . . . 81
5.1. Experimental scenarios . . . . . . . . . . . . . . . 81
5.2. Experimental data . . . . . . . . . . . . . . . . . . 81
6. Results, Analysis and Findings . . . . . . . . . . . . . . . 82
6.1. Modeling results at base scenario . . . . . . . . . 82
6.2. Sensitivity analysis . . . . . . . . . . . . . . . . . 83
6.3. Scenario analysis and ndings . . . . . . . . . . . 85
7. Conclusions and Future Work . . . . . . . . . . . . . . . 87
8. References . . . . . . . . . . . . . . . . . . . . . . . . . . 88
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4. Models for Port Competitive Analysis in Asia-Pacic Region 91

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 92
2. Literature Review . . . . . . . . . . . . . . . . . . . . . . 93
3. Port Benchmarking Models . . . . . . . . . . . . . . . . . 95
3.1. Port eciency . . . . . . . . . . . . . . . . . . . . 96
3.2. Port connectivity . . . . . . . . . . . . . . . . . . 100
3.3. Impact of factors on individual ports . . . . . . . 105
4. Conclusion and Discussion . . . . . . . . . . . . . . . . . 111
5. References . . . . . . . . . . . . . . . . . . . . . . . . . . 112

5. Is Port Throughput a Port Output? 117

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 117
2. Port Production Function . . . . . . . . . . . . . . . . . . 118
3. Port Operating Options . . . . . . . . . . . . . . . . . . . 120
4. Port Resource Function . . . . . . . . . . . . . . . . . . . 120
5. Container Port Output . . . . . . . . . . . . . . . . . . . 121
5.1. TEU Throughput and the port
production function . . . . . . . . . . . . . . . . . 121
5.2. TEU Throughput and port cost functions . . . . . 122
6. Port Interchange Service Measures . . . . . . . . . . . . . 126
6.1. Port revenue . . . . . . . . . . . . . . . . . . . . . 126
6.2. Port throughput ratio . . . . . . . . . . . . . . . . 127
7. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 127
8. References . . . . . . . . . . . . . . . . . . . . . . . . . . 128

6. A Framework for Modelling and Benchmarking

Maritime Clusters: An Application to the Maritime
Cluster of Piraeus 131
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 132
2. Conceptual Denition: Cluster Theory
and Maritime Clusters . . . . . . . . . . . . . . . . . . . 132
3. The Concept of Maritime Clusters . . . . . . . . . . . . . 133
4. Spatial Paradigm: The Greater Area of Piraeus . . . . . 137
4.1. The structure of the Piraeus maritime
cluster . . . . . . . . . . . . . . . . . . . . . . . . 138
4.2. The economic footprint of the maritime industry
in the region . . . . . . . . . . . . . . . . . . . . . 140
4.3. SWOT analysis . . . . . . . . . . . . . . . . . . . 141
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5. Methods for Evaluating and Benchmarking Maritime

Clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
5.1. General cluster sizing indicators . . . . . . . . . . 145
5.2. Intra-cluster performance indicators . . . . . . . . 147
5.3 On the use of data and analysis for measuring
performance of maritime clusters . . . . . . . . . . 149
6. Computational Methods for Simulation and Life-Cycle
Management of Maritime Clusters . . . . . . . . . . . . . 151
6.1. Agent-based modeling and simulation . . . . . . . 151
6.2. Modeling case study: the maritime cluster
of Piraeus . . . . . . . . . . . . . . . . . . . . . . 152
6.3. Agent-based modeling toolkit . . . . . . . . . . . 154
7. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 154
8. References . . . . . . . . . . . . . . . . . . . . . . . . . . 156

7. A Performance Evaluation Strategy Towards Dealers

in the Automotive Supply Chain 157
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 157
2. Problems of Dealer Evaluation . . . . . . . . . . . . . . . 158
3. Indicators Denition for Dealers
Performance Evaluation . . . . . . . . . . . . . . . . . . . 160
3.1. Balanced scorecard method . . . . . . . . . . . . . 160
3.2. Evaluation indicators denition . . . . . . . . . . 160
4. Dealers Performance Evaluation via ANP . . . . . . . . 162
4.1. Analytic network process (ANP) . . . . . . . . . . 162
4.2. Enabling factors of dealers performance . . . . . 162
4.3. Procedure of dealers performance evaluation . . . 163
4.4. Method for dealers performance evaluation . . . . 167
5. Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . 168
6. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 169
7. References . . . . . . . . . . . . . . . . . . . . . . . . . . 169

Part 2: Ports and liners operations 171

8. A Yard Allocation Strategy for Export Containers Via
Simulation and Optimization 173
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 173
2. Related Work . . . . . . . . . . . . . . . . . . . . . . . . 174
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Contents ix

2.1. Yard allocation for import containers . . . . . . . 174

2.2. Yard allocation for export containers . . . . . . . 175
2.3. Combined yard allocation . . . . . . . . . . . . . . 175
3. Yard Allocation Modeling for Export Containers . . . . . 176
3.1. Problem description . . . . . . . . . . . . . . . . . 176
3.2. Yard allocation modeling . . . . . . . . . . . . . . 176
4. Yard Allocation Algorithm for Export Containers . . . . 181
4.1. Heuristic algorithm for feasible solution . . . . . . 182
4.2. Procedure of genetic algorithm . . . . . . . . . . . 183
5. Simulation Model . . . . . . . . . . . . . . . . . . . . . . 185
5.1. Simulation framework . . . . . . . . . . . . . . . . 185
5.2. Input parameters . . . . . . . . . . . . . . . . . . 186
5.3. Simulation process . . . . . . . . . . . . . . . . . . 186
5.4. Statistical simulation indices . . . . . . . . . . . . 187
6. Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . 188
7. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 190
8. References . . . . . . . . . . . . . . . . . . . . . . . . . . 191

9. Integration of AGVS in Intermodal Rail Operations

at Deep Sea Terminals 193
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 193
2. Earlier Attempts to Address the Problem . . . . . . . . . 195
2.1. Fixed rail mounted gantry cranes linking ship
to shore crane with stacking area and hinterland
modes rail and road . . . . . . . . . . . . . . . . . 195
2.2. NOELL an approach by K.-P. FRANKE . . . 195
3. The AGV-solution to Integrate Railway Operations
in Deep Sea Terminals . . . . . . . . . . . . . . . . . . . 198
4. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 200
5. References . . . . . . . . . . . . . . . . . . . . . . . . . . 200

10. On the Ongoing Increase of Containership Size 201

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 201
2. Economies of Ship Size . . . . . . . . . . . . . . . . . . . 203
2.1. Modeling ship size economies . . . . . . . . . . . . 203
2.2. Capital related costs . . . . . . . . . . . . . . . . 203
2.3. Labour related costs . . . . . . . . . . . . . . . . . 207
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3. Shipping Costs of Post Panamax Containerships . . . . . 209

3.1. Fixed annual costs . . . . . . . . . . . . . . . . . . 210
3.2. Fuel costs . . . . . . . . . . . . . . . . . . . . . . . 210
3.3. Shipping costs per roundtrip . . . . . . . . . . . . 211
4. The Ongoing Increase of Containership Size . . . . . . . 216
4.1. Development of ship size and trade . . . . . . . . 216
4.2. Factors limiting economies of ship size . . . . . . 218
4.3. A balance between user and producer costs . . . . 221
4.4. Factors aecting development of user costs . . . . 223
5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 225
6. References . . . . . . . . . . . . . . . . . . . . . . . . . . 227

11. A Linearized Approach for Liner Ship Fleet Planning

with Demand Uncertainty 229
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 229
1.1. Background . . . . . . . . . . . . . . . . . . . . . 229
1.2. Literature review . . . . . . . . . . . . . . . . . . 230
1.3. Randomness . . . . . . . . . . . . . . . . . . . . . 232
1.4. Contributions . . . . . . . . . . . . . . . . . . . . 233
2. Problem Description, Assumptions and Notations . . . . 234
2.1. Itinerary . . . . . . . . . . . . . . . . . . . . . . . 234
2.2. Charter strategies . . . . . . . . . . . . . . . . . . 235
2.3. Chance constraints . . . . . . . . . . . . . . . . . 236
2.4. Notations . . . . . . . . . . . . . . . . . . . . . . . 238
3. A Mixed Integer Nonlinear Programming Model
with Chance Constraints . . . . . . . . . . . . . . . . . . 239
4. A Linearized Approach . . . . . . . . . . . . . . . . . . . 243
5. Numerical Example . . . . . . . . . . . . . . . . . . . . . 247
6. Summary and Conclusion . . . . . . . . . . . . . . . . . . 254
7. References . . . . . . . . . . . . . . . . . . . . . . . . . . 254

12. Ship Emissions, Costs and Their Tradeos 257

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 257
2. Background . . . . . . . . . . . . . . . . . . . . . . . . . 260
3. Some Basics: Algebra of Emissions and Fuel Cost . . . . 267
4. A Simple Logistical Scenario: Factors and Tradeos . . . 268
5. The Cost to Avert One Tonne of CO2 . . . . . . . . . . . 281
6. The Port Time Factor . . . . . . . . . . . . . . . . . . . . 283
7. Speed Reduction at SECAs . . . . . . . . . . . . . . . . . 287
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8. SECAs Continued: Eect on Modal Split . . . . . . . . . 290

9. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 292
10. References . . . . . . . . . . . . . . . . . . . . . . . . . . 293

13. Exploring Tanker Market Elasticity with Respect to Oil

Production Using Foresim 297
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 297
2. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . 300
3. Simulation Results . . . . . . . . . . . . . . . . . . . . . . 308
4. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 311
5. References . . . . . . . . . . . . . . . . . . . . . . . . . . 313
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PREFACE

Over the recent years, maritime logistics and supply chains have witnessed
tremendous growth rates around the world, notwithstanding the recent
economic downturn. Maritime transportation accounts for the majority of
international trade and it has become a vital factor for the economic health
of many nations. In emrging economies, more new ports have also been
developed to tap into the global maritime logistics network. The global
landscape of the martime industy is changing rapidly and this has generated
many issues which are worthy of more in-depth research. In particular,
topics related to maritime logistics and supply chains have been drawing
immense attention of both academia and industry.
The objective of this book is to reect the recent developments in
maritime logistics and supply chains, and to examine some research issues
concerned with quantitative analysis on port competitiveness and decision
support for maritime logistics and supply chain systems. Twelve papers
have been selected for publication after a thorough peer review. The papers
are categorized into two main areas: regional developments and performance
analysis; and, ports and liners operations.

Regional Developments and Performance Analysis

The rst paper by Xue-Jing Yang, Joyce M.W. Low and Loon Ching Tang,
tracks maritime trade evolution in Asia from the thirteenth centuries to the
post-World War II, followed by an examination on the contemporary devel-
opment of some major Asia ports. Some factors aecting port competition
and development are identied and reviewed. Their study concludes with
their beliefs that maritime trade industry in Asia is promising and positive
future economy trends will continue despite recent concerns over rising oil
prices.

xiii
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xiv Preface

The paper by L. H. Lee, E. P. Chew, L. Zhen, C. C. Gan, and J. Shao

presents the recent development in Maritime Logistics during the recent
economic crisis. The recent development of container shipping industry has
shown the following trends: (1) The size of the largest container vessel and
the average vessel size are both increasing. (2) Transshipment handling
has become more and more signicant globally. (3) Global container
terminal operators are increasing their market share. (4) Liner companies
are adopting more rigorous measures to reduce cost and stabilize freight
rate.
Hong Kong port had been the worlds busiest container port during the
1990s and early 2000s. However, in recent years, its growth slowed down due
to rising competition from mainland ports. Abraham Zhang and George Q.
Huang perform some scenario analysis for Hong Kong port development
under changing business environment, so as to understand the relationships
between business environment factors and potential relocation trends by
using a mixed integer programming model.
A study on port benchmarking in Asia-Pacic region is performed
by Ek Peng Chew, Loo Hay Lee, Jianlin Jiang and Chee Chun Gan.
Some models for port competitive analysis are proposed from three
perspectives: port eciency, port connectivity, and the impact of various
factors on individual ports. The authors examine the three perspectives by
presenting a model and a case study for each perspective. Data envelopment
analysis technique, a port connectivity analysis framework, and a network
ow model are proposed and employed to investigate the above three
perspectives respectively.
Wayne K. Talley investigates the question: is port throughput a port
output in port economic production and cost functions? His study disagrees
on this statement. The author proposes the port throughput ratio the
ratio of cargo interchanged to the total time incurred in interchanging the
cargo, for measuring the output of a port.
The paper by Vassilios K. Zagkas and Dimitrios V. Lyridis proposes a
framework for modeling and benchmarking maritime clusters. The authors
investigate the factors that contribute to the decisions of companies from
key maritime sectors to be established in a specic area that evolves into a
network of rms. Agent-based modeling technology is employed to simulate
the networking process within maritime clusters and managing their life
cycle. This study gives an insight of rm survival strategies within the
cluster, optimum timing for new entrants in the cluster and overall cluster
management.
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Preface xv

The paper in this group by Min Chen, Wei Yan and Weijian Mi
propose a performance evaluation strategy for dealers in the automotive
supply chain. The performance evaluation strategy is developed from four
dimensional criteria, i.e., the nancial condition, customer satisfaction,
internal processes and self-innovation. The analytic network process (ANP)
technique is employed to analyze the surveyed data. By comparing with
traditional performance evaluation strategies, their approach can eliminate
such disadvantages as time delaying and benet orientation.

Ports and Liners Operations

Container yard management is essential for the eciency of terminal
operations. A yard allocation strategy is proposed in the paper by Wei
Yan, Junliang He, Daofang Chang. By using the objective programming,
the proposed model is based on a rolling-horizon strategy, which aims at
allocating export containers into yard. For solving the model, a hybrid
algorithm by using heuristic rules and genetic algorithm is employed.
A simulation model, which embeds the yard allocation model and algorithm,
is also developed to evaluate the proposed system.
The paper by Bernd H. Kortschak examines the integration of railway
links with other functions in a deep sea terminal. Currently, railway links are
often operated separately which incurs additional costs when transferring
containers and hinders the competitive strength of rail versus road links.
An integrated AGV system is proposed to improve productivity and enable
faster transshipment times.
In the paper by Simme Veldman, the author conducts a statistical
analysis of economies of ship size. This study shows that economies of ship
size, expressed as the elasticity of costs as a function of ship size, dier only
slightly from those of ships up to Panamax. For avoiding too high cost for
users, the increase in size has to be in balance with the combined increase
in trade volumes and the number of port pairs between coast lines to be
connected. The study draws a conclusion that the ongoing increase in ship
size will continue.
In the paper by Qiang Meng, Tingsong Wang and Shahin Gelareh, a
linearized approach is proposed for liner ship eet planning under demand
uncertainty. The authors develop a mixed integer nonlinear programming
model for the problem; then the fuel consumption cost of a ship is
approximated by a linear function with respect to its cruising speed. Hence
a mixed integer linear programming model can be built to approximate the
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xvi Preface

originally proposed nonlinear programming model. Numerical examples are

performed to assess the linearized approach.
The paper by Harilaos N. Psaraftis and Christos A. Kontovas studies
ship emissions, costs and their tradeos. The authors investigate various
tradeos that may impact the cost-eectiveness of the logistical supply
chain, and propose some models that can be used to evaluate these tradeos.
Their study validates that speed reduction can lead to a lower fuel bill and
lower emissions, even if the number of ships is increased to meet demand
throughput. In addition, cleaner fuel at SECAs may result in a reverse cargo
shift from sea to land that has the potential to produce more emissions on
land than those saved at sea.
By using a simulation tool named by FORESIM, P.G. Zacharioudakis
and D.V. Lyridis study the future tanker market freight levels in relation
to current market fundamentals and future values of demand drivers.
The authors follow a systems analysis seeking for internal and external
parameters that aect market levels. By using the proposed methodology,
decision makers can measure the behavior of future market as long as twelve
months ahead with very encouraging results. The output information is
potentially useful in all aspects of risk analysis and decision making in
shipping markets.

Concluding Remarks
This book has greatly beneted from the cooperation among the authors,
reviewers and editors. We would like to express our sincere thanks to them.

E.P. Chew
L.H. Lee
L.C. Tang

December 2010, Singapore

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PART I

REGIONAL DEVELOPMENTS
AND PERFORMANCE ANALYSIS