The Shipping And Port Marketing Commerce Essay

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With more than 80% of international trade by volume being carried by sea, ports are vital for seaborne trade and international commerce (Bichou, 2009). To meet this potential volume, ports are facing challenges and changing their roles from traditional core activities to non core activities. This paper will review some articles and book and find out the opinion of the authors on changing role of ports, and finally, will draw a conclusion on basis of the opinion of the reviewed articles and book.

Alderton (2005) mentioned that the intermodalism in trade pattern has made more challenging the ports' jobs and has increased the competition for cargo and developed interest in increasing the efficiency of ports by introducing value added services, and by this way a port is playing role as economic multiplier for its region. The writer in his study also mentioned that the increase of ships size has changed the trading pattern as hub and spoke to gain economies of scale where large ships trade between large ports referred to as centre ports and, to become a centre port, depends on decision of ship owners not on the decision of port management. The writer further mentioned that the growth in world trade has changed the ports in financial and logistics thinking. As a result, ports are developing new port locations for building terminals and some large powerful ports such as the ports of Singapore and Hamburg are investing their profits and skills in other parts of the world. On the contrary, large shipping groups are also involving in port investments as the author added. Thus, respond to the changing pattern of ship technology and world trade are changing in financial and logistics thinking of ports (Alderton, 2005).

Mangan, Lalwani and Fynes (2008) mentioned that increased in trade and growing trade towards globalization of productions has changed the role of ports from traditional transshipment hub to important logistics node. The authors in their study have mentioned that various trends in maritime trade have impact to various trends in port sectors and the ports have the roles related in port development and ownership, the evolution of global port operators (GPOs), the link between ports and economic growth, and the role of ports in the supply chain and the emergence of ''port-centric logistics''. The authors mentioned in their study that many governments have extracted them from business of port operations by concentrating on monitoring and subsiding responsibilities. The authors also mentioned that the mega shippers are looking for carriers who provide efficient and cost effective services. To response these shippers and to the need for integration in the international supply chain and cost reduction a number of GPOs have emerged who pressurize ports to reduce container terminal cost and to improve port efficiency. Moreover, the authors observed in their study that the inter port competition even among more distant ports, has increased, and in future, the competition will be between a handful of logistics chains. On the other hand, the authors described the port as key component for determining the overall competitiveness of national economies. Additionally, the authors mentioned that instead of providing berths to ships and other traditional core activities ports are recognizing that higher profit margins can be made from non core activities such as, port-centric logistics as distribution centre and other value adding services at a port. Thus, according to Mangan, Lalwani and Fynes (2008), for integration in the international supply chain ports are in pressure from carriers to improve their efficiency and to reduce costs to meet the demand of influential shippers. The changing of traditional activities in roles of ports is enabling to gain higher margins from non core activities (Mangan et al, 2008).

Notteboom and Winkelmans (2001) studied that a constant reassessment of port management strategies is required due to the dramatically change in the market environment in which ports operate. The authors found that, the outsourcing trend of European manufacturers caused the shipping lines to move into to provide additional value added services and thus, shipping lines become the logistic partner of the manufacturer. They observed that to provide door to door service shipping lines are demanding dedicated terminals, liner owned agencies and their involvement in inland transportation. In their study, further they found that shipping companies include bigger container vessels and better service to the clients to maximize the profit by shrinking the cost through technological innovation and an increase in the scale of operations. In their opinion, these trends face the ports challenges to accommodate the large port clients, to secure investment, to deal with increased port competition, to deal with possible drawbacks of load centering like instability in the port industry, the unfair distribution of costs and benefits of load centering, diseconomies of scale in load centres. They also studied that, in the 21st century those seaports will succeed who has competitive advantage by differentiation, directed towards economies of scope. Additionally, their study observed that although the port has no direct impact on cargo flows, ports can play an important role in structural changes of logistics by providing value-added logistics and logistics polarization, by developing the information systems, by active participating in the planning and or implementing the intermodal transport services, and by port networking. Thus, a constant reassessment of port strategies is required to meet the challenge of 21st century (Notteboom and Winkelmans, 2001).

The World Bank (2007) mentioned that the continuous failure of public ports have made understand the governments that they have to rely on private sectors to meet the demand of global distribution chain. The study also observed that there are four main port administration models where each models have some merits and demerits. The four models are Public Service Ports, Tool Ports, Landlord Ports, and Fully Privatized Ports as mentioned in the study. It also studied that the merging of terminal operators and major shipping companies has become a threat of Ports by demanding dedicated terminals as their requirement is to control whole transport chain with competitive edge. The report also mentioned that sometimes major clients keep pressure on ports to provide dedicated terminals or to reduce the port operating cost, otherwise they might switch to other ports' competitors, for example, the switch over of Maersk Line operation from Port of Singapore to Port of Tanjung Pelepas as they did not meet the demand of Maersk for dedicated terminal. The World Bank in its further study found that due to the changes in logistics pattern ports are no more only the node of transport chain but also part of integral logistics chain. The competition technique and consumption pattern has made the port to provide value added services to maintain and improve competitive position of ports. Thus, according to The World Bank (2007), ports have to be responding to the integral logistics chain to maintain and improve competitive position of ports.

UNCTAD (1992) mentioned that development of trade and transport has made the ports the integral part of the word trade and international transport chain. The report also mentioned that the changes in world trade pattern, emergence of world transport system have changed the role of many ports from public administration to commercialization and become an active and main actor in the world trade and transportation chain. The report suggested that ports should be aware of the opportunities and risks of the changing world economy and have to change their roles by shifting from a traditional transport centre to a logistics platform by adding value added service and turning them into integrated transport centres for international trade. The report further mentioned that major ports in North America, Western Europe and some Asian countries are trying for developing their business by providing necessary distribution facilities to the port users. The report further mentioned that the changing pattern of world trade has increased the inter port competition, and a port may lose its business overnight even if trade remain stable. On the other hand, the report suggested that for survival in this competitive situation ports have to be competitive in cost and quality of services, and port marketing is a good tool for winning the situation by making known the ports services to the port users and also by learning from port users continuously. Thus, UNCTAD (1992) found that the changes in world trade pattern and the emergence of world transport system have made the changes in ports' roles by providing distribution facilities to the port users. Additionally, the report suggested that port marketing can be a good tool for winning in the competitive port competition.


Changes in the world trade pattern, growing trend of globalization production, and strategic changes in transport and shipping are changing the role of ports from their traditional roles to non shipping activities. Taken as a whole, the literatures and book reviewed, it appears that the role of ports has been influenced by integration in the international supply chain, intermodalism in the trade pattern, information technology including containerization. These factors are causing the increase of inter port competition even far distant and enabling the ports to gain higher margin by engaging non core activities of port (Mangan et al, 2008). On the other hand, The World bank (2007) and Notteboom and Winkelmans (2001) have warned that ports are facing challenges and risks to accommodate the large port clients as they are becoming the logistics partner of manufacturers.

In my opinion, the reviewed literatures and book have been developed to extend of structural changes of logistics world wide, and has further emphasized to expand port roles from traditional core activities to non core activities. However, the limit area between port's core roles and non core roles are not studied. Besides the findings, future research may be replicated to decide the limits between traditional port activities and non core activities of ports.