Port Logistics In The International Trade Commerce Essay

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Ports is developed for many thousand years in many countries and become one of the important transportation for the international trade. In study by Reynold (2006) on "Reshaping a port's strategic role: adapting to challenges & changing trends", he shows the dominant concept of role of ports. Refer to figure 1, it shows that, initially, port was as the public agencies and managing the export and import between countries. When the focus was on improving internal efficiencies then it was growing as independent competing business, which means ports become a business entity and performance has been measured. The focus was changed to achieving network efficiencies and ports become as an elements in a logistics system. It is increased to vertical and horizontal integration. See figure 2, today's port environment is involving the global containerised supply chain. The new concept inaugurated namely Port-centric Logistics.

As mentioned by Falkner, 2006; Wall, 2007; Analytiqa, 2007; Mangan et.al 2008; port-centric logistics as the provision of distribution and other value-adding logistics services at a port. Port-centric contributes the growth of developing activities in port and offers more values in supply chain.

Aims of study

The aim of the study will be fulfilled by 3 major points.

Specifying the port-centric logistics activities in Port Klang. Which means, determine the significant potential for Port Klang to keep going more port-centric logistics activities.

Identified and an attempt of such freight through a port-represents the use of the port just as node in a supply chain

Investigate whether logistics activities offer the value-adding through these supply chains before and after the shipment passes through the Port Klang.

Problems and research questions ( Issues and hypothesis )


Leagile Supply Chain

Leagile, which is the combination of the lean and agile paradigms within a total supply chain strategy, is one of the recent trends in logistics and supply chain management. (Naylor et al, 1997) A key element of this supply chain model is "decoupling point" which separates the lean processes from the agile processes (Manson-Jones et al, 2000). The basis for this concept is that while Lean, with its efficiency focus, is more suited to relatively stable markets where cost an issue, Agile, with its focus on responding quickly to market needs, is better suited to quickly changing markets such as fashion goods. Complex products having uncertain demand being better suited to a project management style of control, gave birth to the fourth quadrant as 'leagile'. (Jones, 2004)

In Leagile, the view is that both lean and agile practices can be employed within supply chains for certain types of products, i.e. those where the production lead-times tend to be quite long in relation to the delivery lead-times imposed by the market. The interface between the application of the lean and agile approaches in the leagile supply chain, i.e. the de-coupling point, is the separation between the 'front end', i.e. responding to customer orders, and the 'back end', i.e. manufacturing to forecast. (Jones, 2004)

Lean Supply

Agile Supply



Flow of material

Decoupling Point

Source: Lecture Slides

Hence, using the leagility and decoupling points, is very helpful in the analysis of the supply chains and in the identification process of innovative supply chain designs. However, because of specific characteristics of different products, the applicability of this concept is restricted.

The food industry in Netherlands, especially poultry and the electronic manufacturers in Thailand are all successfully using Leagile.

Vendor Managed Inventory

Vendor Managed Inventory

The major element of a VMI is the shift of inventory decision making from the downstream supply chain firm (i.e., the buyer) to the upstream supply chain firm (the supplier). A VMI program usually includes the sharing demand forecast or database for cost, use of a software platform, well-develop communications, and buyer and supplier share or aim the same objective (Dong et. al, 2007). Appendix 9 shows supply chain and VMI structure. Supplier and retailer should working together to plan inventory management objectives, risk sharing parameters and liability levels with using VMI (Dong et. al, 2007). Probably VMI can be defined as a supply chain management technology because it is frequently used with other supply chain management component, for example EDI. Disney et. al. (2003) also illustrate the functional of VMI as shown in Appendix 10. It is shows the flow of information up the supply chain from customer to factory through retailer, distributor and warehouse. Retailer controls the inventory level with using VMI concept and share with distributor. Then, it also shows flow of material down the supply chain. <- haslina

Appendix 9: Supply Chain and VMI Structure

Appendix 10: Functional of VMI

VMI is also one of the recent trends that emerged in logistics and supply chain management. The supplier is responsible to follow up the customer's sale and take care of the distribution stock and inventory levels, this is one of the main reasons companies use VMI (Taras, 1999). A holistic view of inventory levels is taken in the supply chain with a single point of control which enables a vendor to manage stock replenishment at their facilities enabling customer to eliminate echelon in the supply chain. Hence VMI improves demand visibility to reduce the effect of demand fluctuations ( Mangan et al,2006, pg 262).

The important factor for the VMI to work is that the data exchanged between the supplier and the distributor should be frequent and accurate. This is done mostly by the Electronic data interchange or EPOS. The figure below shows how VMI system works.

(Robert, 2005)

Strategic Fit

While describing and define the right supply chain for each model, all the decisions must achieve the strategic fit. Strategic fit means the supply chain strategy and competitive strategy must have aligned goals. (Chopra, Meindl). It is meaning the company must design or structure the supply chain which suitable for each models to meet customer's satisfaction.

Source : (chopra, meindl)

Table 1 : Functional Products VS Innovative Products

Table 2: Efficient VS Responsive

Source : Chopra, Meindl

Potential contribution to scientific development

Since that port-centric logistics is a new concept of ports, there is lack of study has been done. In addition the contribution to the body of knowledge, the types of demand pattern in supply chain such as lean and agile will be use to conduct the study which is very new in port-logistics area. In this research, the complexity of roles turn to be high and it is consistent to the new trend in ports environment.

2.0 Literature Review

Port -centric logistics has now become the industry standard, challenging much of the conventional wisdom of inland cargo movement and creating a broader approach to hinterland distribution ( Hutchison Ports (UK), 2009).

A high successful innovation, port-centric logistics has evolved into a series of mature relationships with importers and cargo owners, together with third-party operators and ensures that the very best supply chain solutions are specified and consistently delivered (Hutchison Ports (UK), 2009).

3.0 Research Methodology

The first phase of this research's approach is literature-based (Theoretical and deductive) and in a second phase the focus is set on the empiric (case study) side by enumerates the logistic activities in Port Klang. Hence this research involves empirical quantitative data (e.g. performance figures of Port Klang). Furthermore qualitative research data (e.g. in forms of interviews and personal observations) provide the analysis with additional practical examples, perspectives and understandings of the conducted case study. After all both types of data (qualitative and quantitative) are vital for the evaluation of the performed trial because only both sources combined provide the study with sufficient evidence that explains and distinguishes the performance development of Port Klang.

4.0 Work Plan
















Review of Literature Review

Research Proposal

Identify value chain

Develop literature review

Develop methodological framework


Develop the questions

Data Collections


Data analysis and Model Development


Write the thesis

5.0 References

(Reynolds, 2006) http://tem.msomail.co.uk/assets/GuyReynolds.pdf

6.0 Appendixes

Figure 1: Role of Ports

Source : Reynold (2006)

Figure 2: Current trend for Ports Environment

Source : Reynold (2006)

Role for Ports enhancing the Supply chain:

In modern supply chain port plays more than just a point of entry. The ports can be facilitated to provide value added services to enhance the efficiency of the supply chain. The table illustrates the various strategic roles for port in different strategies of supply chain. Provision of Warehouse facilities and other value added services will enhance the effectiveness of the supply chain to adapt to different supply chain demand characteristics.

Source: Christopher et al. (2006)

Suggestions for ports in the context of different supply chain strategies by Mangan et. al (2008),

Figure 2