LOG357 Port & Terminal Management

Study Unit 3
Seaport Operations and Management
Dr. YAP WEI YIM
 Objectives

• At the end of this study unit, you are expected to:

– Appraise the different management and ownership structures of seaports.

– Discuss the evolution of seaport management.
– Critique the various types of port concession models.
– Discuss port performance from the economics perspective.
– Examine the issues related to seaport performance measurement and
benchmarking.
– Appraise port performance using suitable techniques.

Prepared by WY Yap for SUSS

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 Objectives

• At the end of this study unit, you are expected to:

– Appraise the different management and ownership structures of seaports.

– Discuss the evolution of seaport management.
– Critique the various types of port concession models. Self study

– Discuss port performance from the economics perspective.

– Examine the issues related to seaport performance measurement and
benchmarking.
– Appraise port performance using suitable techniques.

Prepared by WY Yap for SUSS

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 Objectives

• At the end of this study unit, you are expected to:

– Appraise the different management and ownership structures of seaports.

– Discuss the evolution of seaport management.
– Critique the various types of port concession models.
– Discuss port performance from the economics perspective.
– Examine the issues related to seaport performance measurement and
benchmarking.
– Appraise port performance using suitable techniques.

Prepared by WY Yap for SUSS

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 Economic perspective of port performance

• Expansion of Terminal Burchardkai, cost of €60 million.

Heutige
Current
Situation
Situation in 2006

Spur 18 Verkehrs- undand

Lagerbereich Straddle
18mm
10 m

Track Traffic storage area

ca.

Carrier
Straddle Carrier

Source: Hamburg Port Authority

Nach
After
After extension
Ausbau
Extension

Track 35 m Traffic area Storage area with

Straddle Carrier gantry cranes
New quay construction

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 Economic perspective of port performance

• Engineering optimum – defined as maximum throughput that a seaport can

physically handle under certain conditions.

• Economics perspective – port performance indicators are choice variables, i.e. under
the control of port management. If economic objective is to maximise profits, port
management would select values for port indicators that would result in maximum
profits for the seaport.

• If a seaport seeks to maximise profits, its profit function may be written as:

Profit = Port Price Charged x Port Throughput – Minimum Costs

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 Economic perspective of port performance

• Generalised port price:

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 Economic perspective of port performance

• Generalised port price:

Price/Cost
Total Supply of All
Competitiveness Shipping Lines
based on price
charged to users of
shipping lines
δ Xt
γ Xt Profit maximising
Competitiveness equilibrium QS  λ  αC
based on cost ACXt
incurred by
shipping lines PXt* E*
ACXt E**
PXt** = MCXt Equilibrium under
perfect competition

λ Xt Total Demand of All

α Xt Shippers
MRAXt Q (TEU)

-λXt 0 ω QXt* QXt** δ Xt QXt(MAX) Xt

2 Port QD  δ  γP
Capacity
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 Economic perspective of port performance

• Generalised port price:

Price/Cost Supply of ASC by
Competitiveness based on shipping line “A”
price charged to users of
shipping line “A”

Competitiveness δ AXt
based on cost γ AXt Profit maximising
incurred by equilibrium
shipping line “A”
E* ACAXt
PAXt*
ACAXt E**
PAXt** = MCAXt Equilibrium under
perfect competition
λ AXt
α AXt

Demand for services provided

by shipping line “A”
MRAXt Q (TEU)

-λAXt 0 AXt QAXt* QAXt** δ AXt QXt(MAX) AXt

2 Port
Capacity
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 Objectives

• At the end of this study unit, you are expected to:

– Appraise the different management and ownership structures of seaports.

– Discuss the evolution of seaport management.
– Critique the various types of port concession models.
– Discuss port performance from the economics perspective.
– Examine the issues related to seaport performance measurement and
benchmarking.
– Appraise port performance using suitable techniques.

Prepared by WY Yap for SUSS

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 Seaport performance and measurement

• Performance indicator evaluation

Conciseness Redundancy and overlap among selected indicators should be
limited.

Consistency with Indicators should be consistent with the port’s operating

objectives objectives, i.e. they affect these objectives.

Data availability Information relating to the indicators should be available,

collectible at reasonable time and cost.

Measurability Indicators should have a continuous as opposed to discrete unit

of measurement.

Minimisation of Values of the indicators should be under the control of port

uncontrollable factors management.

Robustness Indicators allow for the port to be evaluated under various

scenarios.

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 Seaport performance and measurement

Equipment cargo handling rate (rate at which ships are loaded and discharged)
perspective number of ships and amount of cargo handled
containers handled per crane
cargo handled per man-shift
number of employees
average age of the labour force
average hours worked per week by employees
labour idle time
Berth average delay to ships while alongside
perspective average delay to ships waiting for berths
ship turnaround time
cargo dwell time
Port utilisation cargo tonnage handled
truck queuing times at port gates
facility utilisation (as % of total available time)
Accessibility Percentage of time that the port’s channel adheres to authorised depth
and reliability and width dimensions and is open to navigation
expected probability of damage to ships/loss of ship property while in
port
expected probability of damage/loss to shippers’ cargo while in port
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 Demand for air travel

• Multi-port performance evaluation

DEA-BCC

DEA-CCR

Source: Wang et al. (2007)

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 Seaport performance and measurement

• Multi-port performance evaluation

• Main advantages of DEA approach:

– Both multiple outputs and multiple inputs can be analysed simultaneously.
– Extraneous factors that have impact on performance can be incorporated.
– Possible for different combinations of outputs and inputs.
– No need to pre-specify a functional form.
– Efficiency is measured relative to the highest level of performance within the
sample.

Prepared by WY Yap for SUSS

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 Objectives

• At the end of this study unit, you are expected to:

– Appraise the different management and ownership structures of seaports.

– Discuss the evolution of seaport management.
– Critique the various types of port concession models.
– Discuss port performance from the economics perspective.
– Examine the issues related to seaport performance measurement and
benchmarking.
– Appraise port performance using suitable techniques.
Self study

Prepared by WY Yap for SUSS

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 Activity 3.1

• Consider the landlord port model for the new Tuas mega. What aspects of the
concession agreement would MPA consider to be the most important?

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 Activity 3.2

• With reference to your local port authority, which performance indicators do you
think are the most relevant and critical? Explain your reasons for the choice of
selection.

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 Activity 3.3

• Try applying the DEA model to assess which of container ports in Southeast Asia are
the most efficient.

DEA-CCR DEA-BCC

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 Activity 3.4 – Reflect on this

• Environmental issues have become significant concerns in the management of

seaports.
• Identify three technologies or processes that seaports have implemented to address
this concern.
• How effective are these technologies/processes?
• Can you do better if you are the CEO of the port authority?

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Thank you for your attention.
Contact details:
wyyap@suss.edu.sg
+65 9642 1971