Changing Role Of The Ports Commerce Essay

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The objective of this assignment is to provide an overview on the 'Changing Role of the Ports' over a period of time in terms of various functions performed, services offered by the ports, impact of global alliances between ship owners and port service providers, severe competition, containerization, demanding productivity levels on the port operations etc.

Ports, world over, like many other commercial organisations, are constantly changing their functions and roles as the trade changes its dynamic. In the speedy changing milieu, it is necessary to know as to how a port fits into and gets adapted itself to derive the economic benefits for the port, region and the country.

In the above backdrop, an attempt has been made to provide a comprehensive Literature Review concerning the emerging role of the ports with causes of the changing roles and present expectations from the port.

Literature Review:

1. The World Bank, in 'Port Reform Toolkit' (2nd Edition) and (3rd Edition), describing the roles of a port through Administrative model, mentions that firstly, the traditional role of a port was generally under the control of the government. These public ports worked commercially and fulfilled responsibilities towards trade enhancement, employment generation and regional development. 'Service Port' and 'Tool Port' fall in the domain of public port. In a 'Service Port', Port Authority offers the complete range of services (to the ships and cargo) as a comprehensive port solution. Port Authority constructs, develops and maintains the infrastructure and superstructure. All the activities including operation of equipments are carried by the port staff. In a tool port, port authority owns, develops and maintains infrastructure. It also owns superstructure but is operated by private sector. Labour for handling is provided by the port authority.

As the time passed by, the role of the public ports was questioned as they didn't have either expertise or capital to cope up with the increased demand on the port to remain fit in the supply chain. Article finds out that poor quality of services and less productivity are the main reasons making them weak in the global logistic and distribution chain.

To cope up with the increased demand from the port just than the 'public port', the concept of privatization was evolved around 1980. Privatization helped to eliminate the traditional bureaucratic operating procedures and brought about a complete revolution in the port sector through the institutional reforms. Here, the role of the port changed.

Institutional reforms gave rise to the model of 'Landlord port' which strikes a balance between role of Public Authority as owner of the land, providing nautical services and facilities, planner for the future operations, capital investment, regulator of maritime safety and environmental control; and Private Operators who are service providers.

Going further in the reforms, article explains emerging fully privatized ports where the Government no longer plays any role as these ports have complete freedom to take their own decision without government's control and interference in their affairs. Land and waterfront are also privately owned by these ports.

Critical view:

The Article provides comprehensive information about how a port has gone through various transition phases and changing its role from public service port to fully privatized port. Tool Kit is indeed helpful to them who look forward to the institutional reforms in their ports. However, Articles does not specifically discuss changing role of the ports due to impending private monopoly after shifting to massive unregulated privatization.

2. Patrick Alderton, in his book Port Management and Operations (2005), brings out that the intermodalism; industrialization, containerization and increase in the size of the ships are main reasons for the changing roles of a port.

The Author begins with explaining the role of a port as a 'cargo interface' point where handling and passage of the cargo was taking place. These ports were situated on small creeks and estuaries and could easily handle all types of cargo through the small ships. But, later on, with the advent of containerization which brought revolution in the maritime transport, the same role of the port widened and changed into a hub port or feeder ports. Ports modernized their facilities with deeper drafts and container terminals and became the direct-call port. Those ports which could not develop the facilities due to the trade pattern of the country or draft restrictions in handling larger size vessels or lack of capital or inability to adapt to the institutional reforms preferred to remain the feeder ports.

Due to massive industrialization after II world war, the author mentions that Industries such as oil refineries, steel industries, petro-chemical complexes etc. preferred to locate themselves in the port area so as to take the advantage of cheap transport of raw materials. Accordingly, Port changed its role as Industrial port/ maritime industrial development area (MIDAS). It had to deepen drafts, make available the huge land in and around the port area to the industries and adopt speedy cargo handling practices.

Book surfaces other roles of the port such as a Distribution Centre carrying out value adding activities and competing for the cargo; Mercantile Trading Centre attracting banks, brokers and traders; Urbanization and City redevelopment Centre; Maritime leisure base with the activities such as cruise ship terminal, yacht marinas, dockside recreation facilities etc.

Critical view:

This Book has succinctly brought out the various roles played by the port and emphasises that the port always remains to play an economic multiplier in all changing times. In a very simple language, the author carries us through the journey of port evolution. However, the book does not go beyond the role of industrial port. The present roles of the port of value addition, storage, inventory management, consolidation, distribution are not mentioned in the book. The Book also does not portray the evolutionary map of future ports and future imminent possible developments.

3. Khalid Bichou, in his book 'Port Operations, planning and logistics' (2009), while providing extensive understanding on the changing roles of the ports mentions that the ports are seen as a development catalyst for a nation due to their social and economical impact in terms of employment generation, contribution to GDP, industrial development, international trade, environment et al. Along with traditional responsibility, role of the port in 'trade facilitation' is increasing rapidly to reduce the total logistics cost as port plays a major role in a country's logistical and trade efficiency being an important link of the global supply chain.

Book refers various approaches to understand the various roles performed by the ports. While describing the traditional role of the port of cargo handling and storage activities through economic approach the book mentions that these activities were treated as secondary to those of primary activities such as production, storage and inventory management etc. and hence were not given importance. As the ports also functioned with Engineering/operational approach, they were divided into individual units and components rather than an overall port system which had an adverse impact on role and the total efficiency of the ports and made them a bottleneck in the transport chain. However, Logistics and supply chain approach integrates the transport function with other business functions of the firm such as production, storage, inventory management, consolidation, distribution and value-added capabilities such as labelling, packaging, stuffing-stripping etc. Today's ports are manifestation of this approach.

This Book also describes the changing roles of the port based on freight flows. A Gateway (port) is one which brings together different modes of transportation along with warehousing, freight forwarding, customs broking and other logistics services. An Articulation point (port) located at the city, interface with greater flexibility and serves as gateway between spheres of production and consumption centres. Freight corridor Ports are transportation links and have the capacity to accumulate activities of the freight transportation. Freight Distribution Centre (port) is another which serves as location for cargo transfer and distribution to the regional or the expanded market. This role is the combination of Freight corridor and Articulation point.

Critical view:

The Book extensively discusses the various approaches for deciding the changing role of the port. However, book doesn't give a common thread which connects all the factors together to give a overall review on the changing role of the port. Book enhances the knowledge on the minutest details.

4. A report by the UNCTAD Secretariat on Port Marketing and the challenges of the Third Generation Port. (1992) mentions three phases of the changing role of a port 1) from Administration to commercialization, 2) an active and main actor in the world trade and transport system and 3) from transport centre to logistic platform. With these three phases, Report classifies a port in three generations based on three criteria: (a) Port development policy, strategy and attitude (b) scope and extension of port activities, especially in the area of information and (c) integration of port activities and organization.

The first generation port: (changing role from Administration to commercialization)

The port existed before 1960 and worked as interface for cargo between land and sea. Traditional activities such as cargo handling, storing and navigational services were carried out. Investment was mostly on the waterfront infrastructure. These ports enjoyed the monopolistic position being government ports. Labour and capital were the main factors for consideration. The conservative approach isolated these ports for carrying out any other trade and transport activities.

Subsequently due to inefficiently with poor quality of service and monopoly, these ports found themselves incapable of adapting to increasing competition and satisfying foreign trade.

The second generation port: (changing role as an active and main actor in the world trade and transport system)

These ports emerged after 1960 and were regarded as transport, industrial and commercial centers just beyond the scope of interface. This gave rise to the value addition services such as cargo packing, marking, labeling and industrial services like cargo transformation. With this changing accommodative role of port, the industrial clusters like refineries, fertilizers, petrochemicals, iron and steel were developed around the port area to achieve the benefits on transportation and economies of scale. Port was benefitted by huge volumes of cargo.

The third generation port: (changing role from transport centre to logistic platform)

These ports sprang up in 1980s. Large scale containerization, intermodalism and growing requirement of international trade entail these kinds of ports. Port is seen as a dynamic node in the international production/ distribution network giving impetus to the new revenue generating and value adding business. Port became transport centre and logistics platform with additional logistics and distribution services, warehouses and value adding services. They provide industrial /technical services by creating the facilities of ship repairing and other engineering services and facilitate establishing the cargo related industries in the port area to generate more cargo throughput and value addition for the port.

Critical view:

The categorization of the ports based on the generation shows the major focus of the Report. Though it says that it will go beyond the role of public and private port while categorizing generations of ports but if one looks to the changes that the ports required to make to adapt to the changes, it ultimately leads to the reforms of both public and private sector activities.

5. The book 'The Geography of Transport Systems' (2006) by Rodrigue J.P., Comtois C. & Slack B deals with the different aspects of transportation system. While mentioning about the ports, the author has quoted 'Anyport model of Bird (1963)' to understand the development that a port has gone through and roles it has played over a period of time. Initially, ports were small with simple quays located close to the city centre and involved in the traditional cargo handling, storage and navigational activities. After industrial revolution, port changed to accommodate the growing demand of freight and passengers. The infrastructure was changed from simple quays to deeper draft berths. Industrial activities became part of the port activities. Expansion of the ports happened down stream wherein ports involved in various value added and cargo transformation services. With the advent of containerization and need to handle huge bulk cargo, the ports' need for special terminals, container terminal with deeper draft berths and warehousing was felt absolutely important to fit in the supply chain. This phase is referred as 'specialization' in the book.

Critical view:

The book gives the overview of the expansion the ports by mentioning the changes in the infrastructure. But it is not elaborative. It only mentions the 'Anyport' model'. Views of the author are not seen specific. Mention of various infrastructure additions over the period of time is also not found parallel with the port development.


Almost all the books and journals discuss more or less same transformation of roles of ports from traditional cargo handling and storage to modern logistical value addition with different approaches like nature of activities, kind of functions, reforms undertaken to survive in the competition, etc.