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Despite the fact that Libya and Malaysia are located in different regions of the world, the coasts of both countries are lined with several ports which operate in similar environments. Libya is located on the southern side of the Mediterranean basin, a region where many ports are competing to attract large volumes of transhipment traffic as hubs for East-West and North-South trade. Malaysia is located in South East Asia and its main ports are located in the Malacca Straits, one of the busiest and most important areas of the world for international shipping. Hence, about one-quarter of the world's traded goods are carried by vessel through the channel. In addition, it links major Asian economies with the rest of the world. There are many other similarities between the two countries and their ports, some of which will be discussed in depth in this paper. Malaysian ports have grown both quickly and successfully since the end of the 1980s, making them efficient, effective and productive. The strategy of Malaysia was changed at that time, to aim at attracting transhipment cargoes then being served by the port of Singapore. The current situation of Libya's ports is almost the same as that of Malaysia's ports prior to its devolution. This paper aims to benchmark the Libyan case against Malaysia, applying a matching framework in order to determine the lessons that Libya can learn from Malaysia's experience and, hence, to determine what action should be taken by Libya to enhance its port sector and deliver the country's new strategy.
Keywords: Libya, Malaysia, Benchmarking, Matching Framework, Devolution
Despite the fact that Libya and Malaysia are located in different regions of the world, the coasts of both countries are lined with several ports which operate in similar environments. Libya is located on the southern side of the Mediterranean basin, a region where many ports are competing to attract large volumes of transhipment traffic to act as hubs for East-West and North-South trade. Malaysia is located in South-East Asia and its main ports lie on the Malacca Straits, one of the busiest and most important areas of the world for international shipping; about one-quarter of the world's traded goods are carried by vessel through the channel. In addition, the channel links major Asian economies with the rest of the world. There are many other similarities between the two countries and their ports.
In terms of macroeconomics, the GDP per capita of both countries is almost the same, with the component of GDP, as well as rate of GDP growth. Fundamentally an agricultural nation, Malaysia used to rely upon a single source of export income. However, it has succeeded in diversifying its sources of national income. Libya, on the other hand, has long been struggling to move away from an almost total reliance on oil.
Malaysian ports have grown both quickly and successfully since the end of the 1980s, making them efficient, effective and productive. The strategy of Malaysia was changed at that time, to aim at attracting transhipment cargoes then being served by the port of Singapore. The current situation of Libya's ports is almost the same in terms of structure as that of Malaysia's ports prior to the devolution of the sector. This paper aims to benchmark the Libyan case against Malaysia, applying the matching framework in order to determine the lessons that Libya can learn from Malaysia's experience and, hence, to determine what action should be taken by Libya to enhance its port sector and deliver the country's new strategy.
This paper will start with a brief description of the definition and benefits of benchmarking then will provide an overview of the origins of the matching framework, in addition to a discussion of the matching framework component. Section 3 will discuss the macroeconomic and general policies of the two countries, with great attention being paid to the port industry environment, strategy and the structure of the two countries. In section 4, the matching framework analysis will be considered, with some suggestions for Libya. Findings and conclusions will be drawn in section 5.
2. Theoretical Background
In general, benchmarking is about learning from those who have achieved a superior performance, in order to enhance an organisation's or country's performance, and to achieve a satisfactory level of competitiveness. Camp (1989) defines benchmarking as a "positive, proactive process to change operations in a structured fashion to achieve superior performance". He states that the benefits of benchmarking "are that functions are forced to investigate external industry best practices and incorporate those practices into their operation. This leads to profitable, high-asset utilisation businesses that meet customer needs and have a competitive advantage".
A simple and straightforward definition is provided by Harris (1995, cited in Government of Alberta, 2007), who stated that "benchmarking is the art of finding out - in a completely straightforward and open way - how others go about organizing and implementing the same things you do or that you plan to do. The idea is not simply to compare your efficiency with others but rather to find out what exact process, procedures, or technological applications produced better results. And when you find something better to use, copy it or even improve upon it still further".
In the benchmarking process between two countries, Jaklic and Zagorsek (2002) argue that it is necessary to compare countries of similar size, environment, economic structure and institutional framework, and culture; selected benchmarks should also be more successful and competitive countries. At an organisation's level, Camp (1989) argues that benchmarking is a discovery process and a learning experience; it must be performed against leading companies, and account for the required business functions of where they exist. What is necessary is to gain an understanding of a business process that led to good performance in similar circumstances. The question here is what the similar circumstances are, and what the process is which will lead to the better performance of the port sector.
Based on the matching framework of Baltazer and Brooks (2001), the process which leads to better performance is the appropriate matching between the characteristics of an organisation's environment, strategy and structure (figure 1). The matching framework was developed from contingency theory, which itself has its roots in organisation theory and strategic management. The pivotal aspect of the theory underpinning the matching framework is the environment, in particular the operating environment, which has a direct impact on the organisation. The environment, as defined by Miles and Snow (1978), is not a homogeneous entity, but is composed of a complex combination of factors. Underlying theory calls for changes in organisational strategies and/or structure that are attributable to changes in the environment.
Broadly speaking, the environment is represented as a component of the circumstances, which should be similar in order to conduct a benchmarking study. The other similarity which it would be wise to consider is the strategy of the organisations or countries analyzed under the benchmarking process. The Malaysian case has been selected to provide lessons for Libya because Malaysia's case matched the three components of the Libyan port sector.
Connor, et al. (2003:23) pointed out that there are two sources of change. External sources of change include those elements of the external environment identified by Daft (1992), namely: economic conditions, government, socio-cultural, international sector, industry, raw materials, human resources, financial resources, market and technology. The internal sources of change include new knowledge learned, new goals and excesses in organisational resources. However, Shrivastava (1994) argues that the environment of an organisation consists of the continually changing competitive marketplace operating within a global economy, and the factors mentioned above represent the forces which impact such an environment.
Uncertainty is the outcome of changes in the operating environment. Daft (1992) described the environment as being of low or high uncertainty. High uncertainty environments consist of a large number of dissimilar factors (complex); these factors change frequently and unpredictably (dynamic). With low uncertainty, these factors work in the opposite way. He further argued that environmental uncertainty represented an important contingency for an organisation's structure and internal behaviour. From an organisational theorist's point of view, adjusting the organisation's structure is the best tool for facing uncertainty. Burns and Stalker (1961cited in daft, 1992) concluded that the uncertain environment needs an organic structure (decentralised, fixable), whilst the mechanistic structure (formalized, centralized structure) is best suited to a stable or certain environment.
Strategic management has different views with respect to dealing with the environment. Porter (1980, 1985) argues that the organisation may change its operational environment to cope with the change; the organisation may choose cost leadership strategy, which is an efficiency strategy, or differentiation, which is an effectiveness strategy. Miles and Snow (1978) argued that the organisation may choose between a defender and a prospector strategy; the former is an efficiency strategy, whilst the latter is innovation. The chosen approach represents a change in the strategy, rather than in the environment itself. However, even if changing the strategy is the solution to facing uncertainty, reengineering the organisation's structure is still highly required. Connor, et al., (2003), Shrivastava (1994), Dobson, et al. (2004) Rosen (1995), Miles and Snow (1978) and Miller (1986) all argue that changing strategy requires changes in the organisation's structure.
The aforementioned theories yielded configuration theory, which was aimed at matching environment-strategy-structure in a way which affected or influenced performance. Quite simply, an uncertain environment needs an organic structure and effectiveness strategy, while a stable environment requires a mechanistic structure and an efficiency-oriented strategy. Subsequently, an alternative configuration to the matching framework presented in figure 1 is introduced in figure 2.
The drive for change for any given organisation is its external environment. The Seaport industry is no exception, as the industry operates in a dynamic environment. The dynamism of the operational environment of the port industry can be attributed to product globalisation, the growth of global trade and technological development in the shipping industry, in addition to port competition (inter and intra). All of these factors are interrelated. The growth of the trade has had an impact on the world container fleet. The schedule of the shipping lines is affected and larger vessels and frequent services are employed (Notteboom, 2007a).
Movement of containers by larger vessels through a hub and spoke system secured an economics of scale for shipping lines and shippers, as they reduced the number of call ports in a given region, the ports they call at are known as hub ports. Thus, Ports in the same region compete aggressively for the transhipment of cargos and for the opportunity to act as a hub (strategic regions). Robinson (2002) stated that ports have to be seen as a component of a value-driven chain system; providing value to different parties involved in the industry. They provide general logistics and value added services. The involvement of different parties with different interests makes the Port industry more complex. The focus today is on extending inland freight distribution, which has become important to enhance the situations of ports in the market (Notteboom and Rodrigue, 2005). Thus, a new approach to port governance has been required.
UNCTAD, (2007) stated that a well-run and efficient port can attract transhipment and not have to depend on domestic supply and demand. Customers (shippers and shipping lines) play an important role in selecting a port of call. For attracting shipping lines to use a port, NG (2006) identified several factors playing important roles; these factors include monetary costs, time efficiency, geographical location and quality of services. Quality of services relates to the effectiveness of ports and as stated by Brooks and Pallis (2008) the effectiveness leads to enhanced competitiveness of ports, efficiency is still important for improving port operation, as stated above effectiveness - oriented strategies need an organic structure. The organic structure is characterised by flexibility and decentralisation of decision making, this can be achieved via implementation of a policy of devolution.
Devolution policy includes privatisation is a response to the dynamism of the external environment of ports and their securing footholds in the market. Although, there are other factors that impact the port industry governance structure; these are the aims and objectives of the government/ port authority including, solving port problems, modernising terminals, introducing new sources of investment, increasing efficiency, reducing port costs and expansion of trade. All or some of these factors have driven the changes in many countries across the world, for instance the U.K government privatised ports to reduce the burden on its shoulders, in other cases such as in Latin America sources of investment were sought via implementation of a devolution approach.
Baltazer and Brooks (2007) stated that the port performance is the outcome of the match or fit amongst the organisation's external operating environment, strategies and structure. A better fit will yield better performance, and a poorer fit leads to unfavourable performance. Performance relates to the achievement of government's goals, whatever those goals may be. As stated by Baltazer and Brooks (2007), the framework is useful for researchers exploring the performance implications of management decisions in areas which affect the framework variables, and for benchmarking the performance and configuration characteristics of different organisations.
3. General Benchmarking
3.1 Geographical Location
Malaysia is located in South-East Asia and has a total area of 329,750 sq km and a coastline of 4,675 km. The country consists of two spacious areas, including Peninsular Malaysia (formerly West Malaysia) on the Asian mainland, which is bordered on the north by Thailand, on the east by the South China Sea, on the south by the Strait of Johor, and on the west by the Strait of Malacca and the Andaman Sea. The other part of the country consists of the states of Sarawak and Sabah, known together as East Malaysia, located on the island of Borneo and bordered by Brunei on the north, Indonesia on the east and south, and the South China Sea on the west. Its location means that the country is situated in the middle of seaborne trade between the Indian Ocean and East Asia (see figure 3). Kuala Lumpur is the capital of Malaysia, located in the western part of Peninsular Malaysia. Malaysia is very close to Singapore, and the two countries are separated by the strait of Johor, with a width of only 1 to 5 km. The other feature which enhances the location of the country is the Malacca strait. The strait is one of the most important sea passages, since about 60,000 ships, carrying half of the world's oil and more than a third of the world's traded commodities, pass through it every year. This makes it as important as the Suez Canal or the Panama Canal (Razak, 2009).
Libya is situated in the middle of the Northern coast of Africa. With an area of 1,759,540 sq km, the country is bounded on the north by the Mediterranean Sea, with a coastline of about 1,970 km, on the east by Egypt, on the south-east by Sudan, on the south by Chad and Niger, on the west by Algeria, and on the north-west by Tunisia (Otman and Karlberg, 2007). The major cities of Libya are Tripoli, (the capital of the country), Benghazi (the second largest city) and Misurata. The importance of Libya's location lies in the fact that Libya stands as a crucial link between Europe, Africa and Asia (Salama and Flanagan, 2005). UNCTAD (2008) stated that Libya, Tunisia, Somalia, Eritrea, Sudan and Yemen are the least distant from the international shipping lanes (see figure 3). In addition, Libyan trade depends mainly on the sea. Furthermore, Libya is likely to be the gateway to other African countries which need seaports to serve trade (Ghashat, 2009). In this respect, Libya would be used as an alternative corridor for some landlocked countries. In 2004, the World Food Programme (WFP) used Libya as a corridor for providing aid for Darfur refugees via Chad.
3.2 Macroeconomic and General Policies
Malaysia and Libya are both developing countries with a GDP per capita ranging between $14,000 and $15,000 (CIA, 2008). Malaysia has the most successful economy in South-East Asia, and since the 1970s, it has adapted itself from being a producer of raw materials to being a promising multi-sector economy. It has been successful in this endeavour, and Malaysia is now both a manufacturing and trading nation, with industry representing 43.7% of the country's total GDP. From 2003 onwards, the country has tended to attract investment in different sectors, in order to move the economy towards a value-added production chain.
The success of Malaysia in changing itself from being an agricultural country to an industrial one, and one of the strongest economies in Asia, was due to the implementation of the NEP (New Economic Policy) introduced at the beginning of the 1970s. The main aims of this policy were the reduction of poverty and economic restructuring. In the middle of the 1970s, the country focussed on expanding its industry, and a series of development plans were implemented to achieve these goals. However, from the sixth Malaysian plan, which lasted from 1990 to 1995, more attention was paid to manufacturing, and to facilitating trade and intermediary trade (Mak and KM TAI, 2001).
Industry's activities at that time were financed by foreign borrowing, and the Japanese Yen was the denominated currency (Otman and Karlberg, 2007). In the mid 1980s, the Malaysian government enforced a change in the general policy, in order to deal with the international recession which occurred. Thus, the country liberalised its economic program, with a remarkable emphasis on privatisation. The new policy was implemented carefully and gradually (Otman and Karlberg, 2007).
Libya's economy relies heavily on the oil sector. Oil revenues, coupled with a small population, have provided Libya with one of the highest per capita GDPs in Africa and the Middle East. The oil sector contributed to slightly more than 25% of total GDP between 2003 and 2007, whilst the contribution of the non-oil sector ranged between 72.3% and 76.5%. As a result of dependence on the country's oil sector, GDP is affected by changes in the oil price (IMF, 2006). In general, the Libyan GDP witnessed a constant increase, with fluctuations. I2005, the rate of growth was 9.9%, and in 2008, it decreased to 3.8%, and prospectively, the rate of growth will reach 5.4% in 2010 (IMF, 2007; WFB, 2009).
Based on IMF data, the contribution of the "transportation, telecommunications and storage (TTS)" sector ranges between 9.2% and 10% of total GDP. However, the TTS sector has an average growth of 6.4%. The growth of this sector and other non-oil sectors can be attributed to prioritising the role of the private sector in such activities (CBL, 2008). Prior to this, the country has always been supportive of state-owned enterprises and civil service employment depending on oil sector revenue. However, Since the lifting of sanctions at the beginning of the twenty-first century that had been imposed on Libya by the United Nations from the early 1990s (Otman and Karlberg, 2007), the economy of the country has witnessed remarkable growth, the growth can be contributed to the privatization program announced in 2003. The government has been struggling to reform the regulatory and institutional framework in preparing the economy for a move towards a market economy, and efforts have been devoted to re-engaging the country in the global economy. In addition, Libya has long been struggling to diversify the economy away from the oil sector. In this essence, more attention was paid to developing and upgrading different sectors, such as tourism and fishing. Moreover, lots of economic activities were opened up to the private sector and foreign direct investment (FDI) (Otman and Karlberg, 2007). Distribution of the country's wealth equally between the citizens is another main concern of the government.
3.3 Port Industry Overview
Malaysia's Port Industry. Along the coasts of Malaysia there are several ports, with some of them being federal ports, namely Klang, Johor, Bintulu, Kuantan and Penang. In addition, there are about 18 state ports, with 5 of them being located on Peninsular Malaysia, 6 in the Sarawak state and 7 in the Sabah state.
The main ports of the country are Port Klang, Port of Tanjung Pelepas (PTP) and Penang, which are located in the state of Peninsular Malaysia (figure 4). The state accommodates the majority of the country's population and this represents the most active economic area, having better transportation connectivity. Port Klang is the largest in the country and serves the industrialized region of the country. A 1993 policy of the country aimed to enhance the port and make it a National Load centre. The policy has helped the port to handle about half the national container trade. In 2005 the port was classified as the 12th largest port in the world, with 5,543,927 TEUs. PTP is the transhipment hub of the country and has been one of the fastest growing ports in the world since its operation started in 1999. Penang Port is the gateway to the north region of the peninsular. It has a capability of 25 m.t. annually and serves the Malaysia-Indonesia-Thailand triangle. The port is well connected by different modes of transportation. Johor Port handles a variety of cargos and has storage and logistics facilities. It has attracted major carriers such as Wan Hai, Evergreen and PIL. Kuantan Port and Kemaman serve the oil, chemical, gas and petrochemical industries. The Port of Bintulu is the world's largest single LNG port, with three LNG jetties handling up to 25 m.t. annually. The focus of this paper is mainly on the major container ports of the country (Port Klang and Port of Tanjung Pelepas (PTP)) see figure 4.
External Environment. Malaysia is located in South East Asia, a region which has witnessed a remarkable economic growth, leading to the development of the region's ports. The economic growth of the region has enhanced the importance of the region for the shipping industry; thus, the ports in the country's regions have expanded remarkably, and are competing with each other to attract customers. The ports in South East Asia strategically connect the major economic blocks across the world. Thus, these ports struggle to position themselves as transhipment hubs in the region. The traditional competitor for Malaysian ports is the port of Singapore. Malaysian ports entered the competition in the market when the policy of the country was changed, and aimed at serving the country's own trade and competing for transhipment traffic.
The other factor representing the port environment is the technological development that has occurred in the shipping industry, and the requirements at the port side. However, this factor is common for all ports across the world. The Malaysian economy has been growing remarkably, and the country has adapted from being an agricultural country to a manufacturing and trading country. The local business environment was changed, and such a change required an adjustment in the strategies of the country, in terms of transportation and other sectors which would play an important role in the country's economy. The other important issue for the external environment is the global crises which occurred in 1985, which played an important role in altering the shape of the country's economy in general. The structure of the port sector resulted in it being selected as the first privatised public enterprise.
Strategies. During the government of the country's focus on state building and national integration, the country's trade depended mainly on the port of Singapore. At that time, it was believed that the port of Singapore was more efficient, and provided lower transaction costs than Malaysian ports. As mentioned above, for the sixth plan, which covered the period 1990-1995, more attention was paid to facilitating trade and intermediary trade. Thus, the Malaysian government tended adopted a policy for the port sector aimed at capturing Malaysian cargo and serving it via the country's ports, instead of through the port of Singapore.
For achieving the core of the country's strategies, the state aimed at converting Port Klang to a national load centre, and then a regional hub port and transhipment centre. The aforementioned target was enhanced by the policies of the country, which were aimed at (a) developing and expanding the facilities of the port, (b) utilising the existing port facilities (c), improving the performance of the port (d), and continuing with the privatisation (developing and improving ancillary services, landside transportation and computerising the port operation).
The seventh Malaysian plan (1996-2000) was about enhancing the position of Port Klang as a national load centre and establishing free commercial zones at the port. The most important thing was allowing foreign equity to be invested in dedicated terminal projects (Mak and Km Tai, 2001). The overall strategies can be summarised as capturing local cargo, and serving it through the country's ports, enhancing the competitive situation of the port (by introducing skilled management and building internal capacity), and then competing with the other region's ports in attracting transhipment. In doing so, privatisation was adopted and foreign investors were attracted.
Structure. By 1986, Malaysian ports were totally public bodies. The first step in port devolution was privatising the main port of the country (Port Klang). The port was selected as the first public enterprises to be privatised to test the consequences of the government policy of privatisation (Otman and Karlberg, 2007). At that time, container operations were moved to the first port operating company, called Klang Container Terminal (KCT). The company was a joint venture between Port Klang Authority (PKA) and Konnas Terminal Kelang (KTK), with a 49% and 51% share respectively (Peters, 1995; Khalid, 2007). The new company leased four berths in the port to handle container operations for 21 years. The government of Malaysia then sold 40% of KCT to the public in order to secure benefits for the public and protect it from privatisation (Peters, 1995). After the sale 20% of the company's shares were in the hands of PKA, 40% were with KTK, 5% were sold to KCT employees, and the general public bought 35% of the total. This was the first phase of devolving the sector. The second phase of devolution started in 1990 when an Act on port privatisation was introduced by the government. Such action was taken in order to enhance the efficiency of the country's ports and the insufficiency of the country's port facilities, which was causing a reduction in throughput. About 30% of Malaysia's throughout was being diverted to the port of Singapore (Indran, 1992). Facilitating private sector participation in the port sector was aimed at introducing equity in the sector and helping the country's ports to compete with others (Malaysian Transport Minister, cited in Reyes, 2001).
The introduction of the port privatisation Act paved the way for privatisation of the rest of the country's ports. The federal ports were subsequently corporatised. In 1992, the remaining operational facilities and activities of Port Klang, including the conventional cargo handling facilities, second container terminal facilities, engineering services, marine services, port security and fire services, were devolved to Klang Port Management (KPM). This action represented the second step in the privatisation programme. The third step took place in 1994 when the new facilities on Pulau Lumut Island were devolved to Klang Multi Terminal Sdn. Bhd (KMT), which is known as Westport (Phang, n.a.). Thus, the 1990s witnessed the privatisation of Penang, Kuantan and Bintulu ports. The beginning of the 21st century witnessed a great deal of participation of the private sector in the country's ports and there was an increase in container throughput in Malaysia's ports thanks to the involvement of major carriers in PTP. Maersk Sealand bought 30% of PTP, the new Malaysian port and a year after that, they were followed by Evergreen. After seven years, the Malaysia Internal Shipping Company (MISC) signed a contract with Malaysian Mining Corporation (MMC), which is an investment holding company that now holds 70% of PTP shares. It operates a container terminal at PTP and has become the third biggest customer. In 2009, CMA-CGM, the third largest container carrier became the fourth major customer at PTP (Anonymous, 2009). The private sector is involved not only at PTP, as Hutchison International holds a 30% stake in Port Klang and the port owns FTZ as well, being managed by a foreign company (Jafza, a Dubai- based company).
The Outcomes of Malaysian port devolution. Galal et al. (1994) state that the devolution of Port Klang has brought about a remarkable benefit, with KCT's performance being enhanced notably and profitability grew by 17.7% per annul after 1986, while before the devolution the average annual growth was 4.7%. The government has gained from both the sale of the assets and the tax. Table 2 shows the government's earning from the three stages of the privatisation of Port Klang Port. Employees' wages have increased by 78% and the quality of services have improved, a benefit felt by consumers. The productivity of the port has increased by 76%. The new management has acted to enhance the quality of the labour force and improve skills. Haarmeyer and York (1993) and Galal et al. (1994) point to the fact that the general cost of the ports have been reduced by about half, the number of public-sector container employees enlarged and the level of pensions has increased.
The introduction of the private sector into the Malaysian port sector has helped the country to become a transhipment hub and the participants in the port sector have diverted containers to the country's ports which they operate and manage. The participants taking control of the ports (particularly PTP) has led to an increase in Malaysian port competitiveness. As can be seen from Table 3, container throughput has increased notably at all of the country's ports after the implementation of devolution policy, the growth in container throughput resulted from the
dedicated terminals offered by Malaysian ports to its clients, for instance the Maersk Sealand shifted 2 million TEUs to PTP from Singapore in 2000, a year after Evergreen had shifted 1.2 million TEUs to PTP after signing a deal with the Malaysian port (this containers is transhipment one). More interestingly, privatisation has led to the establishment of Free Trade Zones, which have played an important role in enhancing the country's position as a regional distribution centre. It has also led to a diversification of the activities of ports and the number of companies that provide different services has increased as well.
It is clear that the Malaysian port sector has moved away from being totally public sector, and the role of the Malaysian government post-devolution has been limited to regulation. A regulatory body monitored private sector operations at the privatised ports to ensure they were conducted in a commercial manner. However, there was more than one regulatory body and each one had its own board of directors, headed by a chairman. The new regulatory entities are Port Klang Authority, Johor Port Authority, Bintulu Port Authority, Kuantan Port Authority and Penang Port Commission (Khalid, 2007).
Libya's Port Sector. There are 20 ports located along the almost 2,000 km shoreline of Libya on the North African coast. Some of them are handling different types of cargo except for oil and its derivative (these ports are classified by NPC as commercial ports), and others are oil and industrial ports. However, some of the country's ports engage in handling all sorts of cargo including oil (the majority of cargo handling at these ports concerns oil and its derivatives and are classified as oil ports). The industrial ports were established to serve industry activities. For instance, the Abokamash port was built to serve the Abokamash petrochemicals complex (National Planning Council, 2005). The main ports of the country, as stated by UNCTAD (2008) are, from east to west, Benghazi, Azzuwaytinah, MarsalBurygah, Ras lanuf, As Sidra, Misurata, Elkhoms and Tripoli. The aforementioned ports are a mix of both oil and commercial ones; this paper concentrates exclusively on commercial ports. The NPC (National Planning Council) classifies the country's ports as Major, Secondary, and Regional, Oil, Transit and Tourism ports. The ports of the country that can be classified as Major ports include: Benghazi, Misurata, Elkhoms and Tripoli. Secondary ports include Darnah, Tubrok, Sirte and Zowara (figure 5). The NPC tends to categorize the MarsalBurygah and Ras lanuf ports as secondary ports, but the main activities of these ports are oil and serving the purposes of industry.
External Environment. The Mediterranean basin is one of the most competitive port regions in the world, due to the fact that many ports are striving to attract high proportions of transhipment and to act as hubs for the east-west and north-south trade. However, it is quite difficult for these ports to act as hubs for the whole basin, due to the area of the basin itself, in addition to the vast distance between the hub ports and the intended origin/destination ports. The Mediterranean basin is segmented into three distinct regions, namely the Western, Central and Eastern (Zohil and Prijon, 1999). The basin handles about 22 million TEUs a year. There are several important ports located in these regions and that are operating as hubs. They include Algeciras, Valencia and Barcelona in the Western regions, Gioia Tauro, Marsaxlokk and Taranto in the Central part of the basin and the Eastern ports, which include Piraeus, Izmir, Limassol and Damietta, Port Said and Alexandria (Vassilopoulos, 2004), that are in heavy competition with the ports in the Central area.
Gouvernal, et al. (2005) stated that, over the last decade, the region witnessed remarkable expansion and restructuring. More recently, many countries have striven to convert their ports to hubs. For example, Tunisia has reached the final stage of bidding for the building of a 5 million TEUs hub port at Enfida (Hailey, 2009). Tangier port is another example, where Algeria has concessioned its operation to global container terminal operators. These trends have made the environment more dynamic and highly competitive.
As can be seen from figure 3, Libya is located in the central part of the basin, which means it is located in the most competitive part of the basin. More specifically, it can be said that the country is located in the triangle of hub ports in Egypt, Malta, Italy and the Western basin ports. Currently, Libya depends mainly on the feeder vessels which serve the country's trade, so the country's port is not in competition with the rest of the region's ports for transhipment, even though the sector has lost some of its share to neighbouring ports, due to the fact that the country's port sector is less efficient and highly bureaucratic.
Other factors influencing the environment include the political situation, the economic conditions and technological development. Salama and Flanagan (2005) and Ghashat (2009) have pointed to the fact that Libya is a stable country, in terms of its political situation. The economic conditions have been discussed but can be summarised as a dependence on oil, a constant growth rate, slightly increasing trade and an increasing contribution of the non-oil sector to GDP. The other most important thing is the efforts of the government in privatising the public sector and removing the burden of public enterprises from the shoulders of the government.
Despite recent developments in the shipping industry and international logistics, the Libyan port sector has remained largely unchanged, physically and in terms of how it is managed and operated, since the end of the 1970s. This lack of development of the port sector has led to inefficiency and low productivity. Subsequently, the sector has become increasingly unable to cope with the growth in the country's economy and the new technology that has appeared in the market (Ghashat, 2009).
Policy and future aims. Through the current general policy for the transport sector of the country, the government is aiming to increase the capacity of the country's ports, and maintain the infrastructure and superstructure of the sector. The government is aware of the importance of equipping ports with the modern equipment needed to handle unitised cargo, in order to speed up the handling process. Thus, one of the priorities of the government is to provide the sector with such equipment. Providing storage areas inside the ports is considered as well (Annual Report of G.P.C and its Secretariats, 2008). In general, the government seeks to deal with the problems which the sector has long been suffering from, in order to retain existing customers and try to encourage others to use the country's ports; reducing congestion and shortening the time at ports, including bureaucratic time, is still one of the LMTPA's top priorities.
The most important aspect for port sector policy is the ambition of the government for converting the country's major ports to hubs in the Mediterranean basin, competing with other ports in the region, to attract transhipment cargoes as well as serving the local trade. However, not all ports will be converted, only Benghazi and Elkhoms. This policy is not clearly contained in any official document.
Another aim of the government is to exploit the country's geographical location to serve the trade of some landlocked African countries through Libyan ports. Benghazi port was selected to serve this plan, the port being mentioned clearly in a Memorandum of Understanding that was signed between Chad and Libya on August 8th 2009, for using the port as a transit node for Chad import/export of commodities. The port had already been used by the World Food Programme as a corridor for providing aid for Darfur's refugees via Chad in 2004. This experience, and the security and suitability of the climate, in addition to the willingness of the government and the location of the country's ports with respect to the main shipping lanes, along with other elements, may help support the country in becoming such a corridor.
It can be said that the strategy of the sector is going to change as the government aims at changing the role of the country's ports from being a sole node serving the internal market, into an important link in a global chain. It is an ambitious strategy, but there is a need for reviewing the sector's structure in order to achieve it.
Structure. In 1985, the SPC (Socialist Port Company) was established under law No. 21/1985; the company was a 100% government entity, and it became responsible for all kinds of activities and services which were provided by the ports it operated (Ghashat, 2009). The company was responsible for providing infrastructure and superstructure needed in operating and managing the sector, in addition to conduct stevedoring activities. The company is under supervision of the transportation secretary.
In 2006, Misurata port was transferred to the MFTZ, under resolution No. 33/2006 of the General People Committee (Prime Ministry); the new entity became responsible for all of the port's functions. An autonomous new entity, MFTZ became the owner, manager and operator of Misurata Port.
In the same year, the General People Committee (Prime Ministry) issued resolution No. 280/2006, regarding the appointed General Manager for all Libyan ports except Misurata, and authorised them to supervise most of the regulatory functions of the port, and they reported to LMTPA. The previous managers were delegated by the SPC to supervise operation functions. Although the role of the Marine Authority was still not fully understood at that time, and there were notable conflicts between the duties of the Authority and the SPC.
In 2008, the role of the Port Authority was activated and empowered. The Port Authority gained more autonomy (but was not fully autonomous) and more financial flexibility (UK T & I, 2008), the sector became more organised, and the functions of the sector were distributed clearly between the different entities involved in the port sector. Prior to 2008, the SPC was the main player in the sector, acting as the owner of the sector. It tended to contract out some of the sector's functions; for example, the SPC sometimes contracted out the stevedoring function to other companies, such as the Germa Shipping Company. Since 2008, the role of the SPC has been limited to the operator function, although some of its operator functions have been transferred to the hands of the LMTPA. In spite of the activation of the LMTPA role, the involvement of the national government still exists.
The aforementioned situation represents the case for almost all Libyan commercial ports, with the exception of Misurata. MFTZ became responsible for all functions related to the port (Regulator, Landlord and Operators). However, the duty of port state control is still conducted by the LMTPA. The new entity has already leased out one bulk terminal to a foreign cement company; the company became responsible for operating the terminal without making any changes or adding to the infrastructure and/or the superstructure. Such actions illustrate the new autonomy of the MFTZ, especially as this was implemented without any requirement for national approval.
Up until the time of writing this paper, there has been no involvement from the private sector, except for inland transportation, when the trucks which were used to move the cargo belonged to private companies. Some shipping agents owned storage areas outside the ports, but such ownership is not common. It is worthy to note that the rest of the country's ports were still highly centralised, and suffered from bureaucracy.
As can be understood from the above discussion, the aims of the Libyan government are to reduce the burden of the government, enhance the situation of the sector and prepare it for the competition with other ports in the region in attracting an increasing portion of transhipment traffic. Based on a survey conducted by one of the authors, the sector in general is still underperforming in terms of utilising capacity, responding to customer demand and time efficiency, and despite the sector's income, it is still supported by the government, especially in respect of major rehabilitation and investment activities. Moreover, container throughput across all major Libyan ports did not exceed 300,000 TEUs for 2008.
4. Applying the Matching Framework
As discussed in section 2, the starting point for analysis is the environment. Therefore, an analysis of the environments of the two countries at three different points in time will be instigated. The matching framework is applied to try to determine the effects of the changing strategy on the port's environment, and to examine the operational management structure of the port. The Malaysian Port sector environment changed over about 30 years (between the beginning of the 1980s and the middle of the 2000s); this resulted from changes in government strategies. Baltazar and Brooks (2001) classify the environment as exhibiting 'low uncertainty' and 'high uncertainty', while Sanchez and Wilmsmeier (2007) use 'more' or 'less uncertain'. For the purposes of this paper, the environmental condition is referred to as "stable", "uncertain" and "more uncertain" since this best describes the Libyan and Malaysian cases. As the situation of the sector in respect to the task environment has changed three times during the period of the study.
As can be seen from Figure 6, the three configurations are developed for both Libya and Malaysia, equating to each of the time periods under scrutiny. The first configuration of the Malaysian case covered the period before 1986, when the port sector was centralised and did not interact with the external environment. As previously mentioned, Malaysian trade it was served by the port of Singapore. The Libyan port situation was the same before 1999, as the sector was isolated from the external world and did not respond to the external environment, due to the general situation of the country being under United Nations sanctions imposed at the end of the 1980s. During this period, development plans for the ports were stopped and, thus, the sector became unable to cope with the changes which occurred in the external environment. This led to many shipping lines changing their port of call to neighbouring ports in order to avoid the low efficiency of the sector resulting from a shortage in equipment and bureaucratic procedures. Subsequently, a portion of Libyan trade was being served by the ports of neighbouring countries (Ghashat, 2009). The extent to which the operating environment impacts upon an organisation represents the degree of uncertainty. Therefore, it can be said that, during the first configuration of both countries, the environment was stable, as nothing was affected within the port and there was no interaction with the external environment. Therefore, it can be said that for both countries the sector was essentially a closed system.
Between 1986 and the mid-1990s, the strategy of the Malaysian government changed, in order to respond to the international recession. At the beginning of the 1980s, the government believed that the centralised system did not work and, thus, attempted to develop the system into a free market economy, and as mentioned above, the first attempt at privatisation was seen with the Klang Container Terminal.
In the second configuration, the Malaysian port environment changes slightly, and moves from being 'stable' to being 'uncertain', as the sector tries to serve all of the country's trade and cope with developments in the shipping industry. The system was moved from being centrally supported and isolated from the international market (not even competing for local cargo), to being one subjected to market forces. The action taken was within the broad policy of reforming the country's economy. However, as discussed above, there were three steps to privatisation; the second step took place in 1992, and was aimed at enhancing the situation at the port. After that, the policy of 1993 was aimed at helping the port become a national load centre, and the final step was in 1994. The aforementioned era witnessed a great change in the government's policy, with such a change impacting the environment of the sector, as the port became a competitor for Malaysian trade that used to be served by Singapore. With private sector involvement, the sector began to operate in a commercial manner. Development of the port facilities meant responding to technological development. Thus, the sector gave in to market forces and the environment moved from being stable to uncertain. The government still had some control, as the structure was hybrid; a combination of mechanistic and organic.
In the Libyan case, after 1999, sanctions were lifted and the country tried to reposition itself in the international economy. Development plans resumed, and reforming the country's economy became the priority. In order to enhance its performance, many public sector enterprises were privatised, and the economy of the country has since witnessed remarkable growth. At the port level, unremarkable changes have happened. This included re-organising the sector through activation of the port authority role. The sector has faced pressure, as the volume of trade and container throughput is constantly increasing. Modernising the sector is seriously considered to help the sector cope with the developments occurring in the market, and the most important thing which happened in this era (1999-2009) was the establishment of the Misurata free trade zone, when the Misurata port become totally under the control of the new entity, leading to intra-port competition.
The third configuration covered the era of the mid-1990s to the 2000s for the Malaysian case and for the future in the case of Libyan ports. The future aims of the Libyan government were to position Benghazi and Elkhoms ports as hubs in the region, and to use the Benghazi port as a transit node for landlocked African countries. These efforts will require a high level of carrier satisfaction, and the ports will need to provide more than just basic services. Trying to be a hub in the Mediterranean region will lead to competition with other ports in the region for transhipment traffic. The region is already very competitive, and there are countries close to Libya which have already positioned their ports as hubs, such as Malta, Egypt, as well as others such as Tunisia trying to do so.
The environment will be more uncertain. Customer satisfaction plays an important role in helping countries become a hub, and as an effectiveness strategy is related to customer satisfaction, an effectiveness-oriented strategy is more suited to an uncertain environment. Theoretically, a more uncertain environment, together with an effectiveness strategy requires an organic structure. From the mid-1990s, Malaysia faced up to competition by allowing foreign equity to participate in dedicated terminals. This represented a remarkable change in the sector's structure. The sector succeeded in term of serving and competing for the country's trade. The competition in the case of Malaysia went beyond serving the national trade, when the country established a new port in 1999. The terminals at the port are dedicated terminals, which helps the country compete aggressively with traditional competitors in the region. Since that time, many important customers of Singapore's port, such as Maersk-Sealand and Evergreen, were attracted by PTP, the new port of Malaysia. Such attractions helped the country position itself as a hub in the region, and the two ports discussed are ranked amongst the top 20 ports in the world. The strategy of the Malaysian government led to changes in the structure of the ports, and the sector was moved from being a mechanistic/organic structure, to being almost totally organic, as characterised by flexibility and decentralised governance.
Malaysia has achieved a satisfactory outcome From the devolution of its port sector these outcomes include lessening the burden of modernising the port for the government, rise in profits from the port, expanding the ownership of the public sector, serving all the country's trade, and the second phase helps the country to enhance the sectors competitiveness and attract transhipment. The country dealt with the required changes in its strategy by applying an organic structure. Libya aims to serve the whole country's trade, rehabilitee and modernise the sector, which is the same objective as Malaysia prior to its devolution. Another goal of Libya is to become a hub in the Mediterranean region, competing for transhipment traffic and to create a new competitive environment for the sector. By applying the matching framework over different time scales, it has been shown that Malaysia matched the sector's strategy and structure with the environment when the organic structure was adopted, such organic structures took on different, starting with offering shares to employees and the public, ending with dedicated terminals offered to shipping lines, and later helping the country to become a hub in the region. Libya should do the same, in order to achieve their future goals.
From the Malaysian case it can be said that the implementation of devolution policy has been driven by changing government policy and pursuing more strategic goals. The goals and policy of the government have altered the operational environment of the sector and opened it up to the external environment which is already highly dynamic.
Malaysia introduced the private sector into its ports, which led to a lessening of the burden on the government, and the loyalty of the customer was secured as the customer took control of the terminals (dedicated terminals) and became responsible for efficiency and effectiveness. As a result, container throughput was increased over time and the trade of the country was being served by its ports, along with new transhipment traffic. As Libyan policy changes, and the impact of this is felt on the operating environment, the strategy and structure of Libya's port sector should be adjusted in a way which responds to the new environment.
For the future, the organic structure would appear to be the best choice for Libya's port sector (at least selected ports). However, there are different types of organic structure, and their impact varies; not all of them will lead to the desired outcomes. Daft (1992) argued that the organisation is an instrument for accomplishing tasks which benefit everyone. Therefore, investigating port stakeholders' prospects is necessary for securing the effectiveness of the selected structure. Through such investigations, a balance between interests may be achieved. Further research is required to investigate Libyan ports' stakeholder prospects.
An interesting discovery is that the port sectors of both Malaysia and Libya were almost closed in the first configuration, whilst in the second; they became semi-open as they started to interact with the operating environment. The third configuration tells us that the ports of Malaysia became totally open, as they became fully involved in competition. For Libya, the situation may be the same, subject to the organic structure being chosen.
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