The Possible Impacts Related With Port Performance Business Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Port has been considered as the core of urban economic development over the last centuries, for not only it provided transport services to satisfy their clients; but also brought massive economic benefits to local economic as well (Shipping and World Trade, 2009). Nowadays, the operation of port industry has been upgrade to a whole new level that port industries will continuingly facing with unprecedented challenges under intensified competition though worldwide and dealing with increasingly high requirements of port infrastructures at same time. However, besides of ever-growing pressure and stress in port industry, ports still related closely with the huge benefits which largely based on port performances. Undoubtedly, there are certain numbers of factors which decided the efficiency of ports can be taken into consideration, directly or indirectly, such as port operating environment, factor of demand and supply, developing opportunities and support from government, but the fundamental and crucial factor that ports avoid losing their competitiveness always start from the location of port industry. How to effectively improve the operating environment of port and set an appropriate location up to the point so the port resources and its full potential can be exploited afterwards is the top priority for every single port operators (Wei, Z., 2008). The fact is the port like Rotterdam Port and Hong Kong, the most well known ports in the world which sets a series of good records can proved clearly that the significant position of port location occupied a special status in shipping industry. This paper focus on the importance about port location and several factors which could largely influence port efficiency and more importantly, with examples that how these factors working together as a competitive system in port industry and achieve its own "interests" in the globalization of the world economy.

Understanding of port location

The original understanding of port location came from a famous German scholar called Gorz (E.A. Kautz) who brought a theory about harbor location in 1943 (Yu, L., 2005). He realized that there are three main factors that influenced the finally choice of port location, consisted by transportation costs, labor costs and capital investment (Yu, L., 2005), which not only closely related with fundamental elements of urban transport system, but also play a basic and important role in the developing process of hinterland. Specifically, the relationship and transport links between hinterland and port have been improved in a certain extent; certainly occurred more on goods flow in hinterland (Tongzon, J.L., 2007). Nowadays, with a growing trend of large-scale and deep-water ship-based requirements in international transportation, the port location became the premise of well development in port industry. The location of port vitally interrelated with the formation and development of the natural condition of ports, modernization level of local transport status, the industrialized degree of local port as well, moreover, the connection between ports and hinterland. Apparently, port authority also needs endeavored to adapt to an ever changing environment to maintain its leading market position (Chang, Y.T., 2008). That is to say, if we refer all kinds of resources and economic worth of operating capacity in actual coastal port together as the value of port location, then, it can be logically leading to the connection between economic activities of attractiveness and competitiveness in port performances, which reflecting the varieties affects that port location brought to the specific parts of port operation (Chang, Y.T., 2008).

Research of port location is not to find out the best location of specific port but to located the resources of certain port, more importantly, to have ability match with each other, so economic value can be achieved during the port performances in appropriate market orientation which have been set up before. With further understanding, port location is the reflection of attractiveness and competitiveness based on the arrangement of relevant resources and economic activities.

Discussion about the volume and forms of cargo in port operation which influenced by three major factors of port location

The decision of port location can be influenced by several interrelated elements which all need to be taken into consideration; however, three main factors in following pages will focus on: geographical position of port, natural sources of port and developing conditions of hinterland which are the main factors among others.

geographical position of port

The Geographical position of port has a remarkable impact on port location. Firstly,

The distance between actual position of port and major international shipping channel should be minimized as short as possible. The closer distances between coastal port and major international shipping sea-lane, the shorter time-consuming from vessels to enter the harbor; such convenient and swift mode of berthing could easily attract more cargos to transition thus largely increased the volume of port operation (MPAa, Online sources). A real good example was set by world-renowned port of Singapore. Singapore port is located in a regional center of Southeast Asia, next to the shipping thoroughfare of Pacific and Indian Ocean, not mention the primary import and export exit of southern Malacca Strait. Vessels from Europe, the Middle East and Australia or from South Asia to East Asia are all required to pass through Singapore port, such perfect geographical position helps it became the most famous and distinguished international shipping center worldwide (Lee, S.W. and Song, D.W., 2007). Secondly, with large number of different routes of trunk liner in coastal port, the shipping activities around the world becomes more flexible, more importantly, the time and expenses are reduced significantly due to the perfect connection of shipping network. Similarly, this benefits the port throughputs by providing multiple choice of services and shipping lines to meet requirements from customer in a maximum way (Lee, S.W. and Song, D.W., 2007). In addition, the transport system between land and sea is also an important factor that affects port location directly. The well-arranged accessibility of transportation network by road, waterway and railway are influenced shipping capacity hugely, because the main businesses that port operation dealing with are round-trip of cargos with hinterland and transit shipments. An efficient transport links between coastal port and economically developed areas will maintain a competitive and secure status in port industry (Chang, Y.T., 2008).

natural sources of port

The natural conditions of port are particularly importantly as well, for the precondition of speed and reliability in port activities stems from the solid foundation of port areas which can only given by nature. Firstly, With the advancing technology in shipbuilding industry and highly superiority of the sea transport cost, merchant ship gradually tuning to the trend of large-scale development, the natural condition of water, sediment deposition, topographical feature and geological conditions are not only vitally interrelated with the prosperity and liveness of port efficiency, also determined the direction and properties of port development in the future (Leggate, H., 2005). That is to say, as modern ships gets bigger, more and more small or medium-sized ports will lose their competitive strength by not suitable for large types of vessels. Singapore port which grown rapidly in these years, again, would be a good example. The advantageous of its nature location and nautical accessibility gave it a strategic importance for becoming the busiest port in the world (Lee, S.W. and Song, D.W., 2007). The excellent originally natural of harbor with perfect position related with three major trunk lines make Singapore port became the famous transit hub through the world. with this solid foundation of port location, Singapore's vessel arrival tonnage (1.6 billion gross tons/GT in 2008), container throughput (29.9 million Twenty-Foot Equivalent Units /TEUs), cargo throughput (515.3 million tones), bunkering volumes (34.9 million tones) and fleet size(43.7 million GT), all hit new records in the second part of 2009 (MPAb, Online sources), this is result of well strategies and operation with precondition of abundant nature sources.

The chart 1 and chart 2 below shows the fleet growth of dry bulk carriers and oil tanker between 2008 and 2009. It is clearly that both types of fleet have dramatic growth in largest range of size, for dry bulk carrier fleet; there even was negative growth about 1.2m dwt in the mainly small size of ship fleet (10-39,999 dwt) ( SSY, 2010). Such heightened growth of large volume fleet supply set the main direction of port development in future years that with development recent economic, ultra-large volume of ships have become an inevitable trend, with an increasing number of large ship fleet came into international trade routes, the ports with well natural conditions would be much more competitive in international trades market (SSY, 2010).

Source: SSY, Consultancy & Research Ltd

Chart 1: Dry bulk carrier net fleet growth from 2008 to 2009

Source: SSY, Consultancy & Research Ltd

Chart 1: Oil tanker net fleet growth from 2008 to 2009

In the second place, natural conditions and engineering geological conditions of port land-area not only exert obvious impact on the construction and engineering capacity scale of port performances, but also with the port layout of waterway and a series of port-related activities as well. The limitation of natural conditions in port land space usually brought a huge discount to the economic results of business trades.

developing conditions of hinterland

Economic hinterland is the area which dealing with cargo throughput and passenger distribution activities with local port. It is not only provide the import and export goods to the local port, it also dealing with capital flows, industrial transfer as well as technical and information sharing center. Basically, the port performance reflecting the development intensity of its hinterland, in the same way, prosperity appeared in hinterland determined the good prospects for the future of port (Tongzon, J.L., 2007). Actually, the decisive fact of hinterland for port performance has been discovered earlier in "harbor location theory" during 1943, also brought up by Gorz. the theory successfully link the port and hinterland together to calculate the minimum cost of overall transport expenses, then choose the appropriate location of port to reach the decision that the harbor location mainly determined by the development of the hinterland. For instance, Hong Kong became to the famous port in the world due to a three-stage model which based on the special trail for the load center and its unique relationships with its dramatically dynamic hinterland (Lee, S.W. and Song, D.W., 2007). What is more, the strong growth in the Asia-Pacific region creates a high demand for container transportation, such characteristic makes Hong Kong became the biggest container distribution center in the first place. However, with a powerful hinterland city being support as strong backing to become competitive is the major reason that Hong Kong became one of the biggest container-centre ports worldwide (Lee, S.W. and Song, D.W., 2007).


From above discussion we can come to the conclusion that port location plays a significant role among port efficiency and port performance. However, the competitiveness from port performance is not only comes with suitable environmental condition, solid geographic position as well as effective connection with port hinterland, it is also depend on how to combining these strengths from port location, to responses the various of requirements from shipping lines and consistently change to adapt the ever changing environment. Because in certain occasion, ports with well arranged external conditions could also fell behind in industry due to fail of creativity.

Besides that, the competitiveness of port performance also lies in the well arrangement of different modes of transportation which links to the port location, as a network. However, take everything into account, the role of port location certainly matter in the port industry, for it provide the foundation of port performance, but how to use the strengths brought by to creative profits matters more in business, both now and future.