Port choice determinants in a competitive environment

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Port choice determinants in a competitive environment

TONGZON (2002) examines port choice determinant in a competitive environment Based on the related literature survey, amongst shippers located at Malaysia, Singapore and Thailand. In his examination the following factors, port infrastructure, frequency of ship visits, efficiency, location, port charges, response to port user's needs, and port's reputation for cargo damage are presumed to have a considerable impact on the choice of ports. The author conducted a survey among freight forwarders in Malaysia (Penang), Singapore and Thailand (Bangkok). A sample of 47 major freight forwarders was covered by a questionnaire survey, of which only about 25 % responded to the survey.

The first set of questions concerns price in relation to the quality of service and how it affects the port choice process. The result strongly favored the quality of service over price. About 76 % agreed that they won't compromise a minimum level of service. When asked about lower level of service in return to a lower price 32% agreed. 81% agreed that port with regular delays will not be considered for future contracts. When asked about changing the ports, 80% would see if the current port is performing satisfactorily then there is no need to change ports. The survey showed that preserving the reputation of their company the most important consideration in the choice of ports in addition to the goodwill of their clients.

In making a choice, 68.1% of the shippers relied on personal contacts, experience and knowledge. In the sequencing of choices, 74.5% choose the shipping line first. Only 23.4 percent choose the port before selecting the shipping line. Maritime economics & logistics, 2003, 5, (23-39)

Shippers' port and carrier selection behaviour in china: a discrete choice analysis piyushtiwari, hidekazuitoh and masayukidoi

The author analyzed the shipper's and carrier's behavior in China with respect to choice of ports, in attempt to model this behavior by using an empirical model. The author attempted to find an approximation on how the port-carrier combinations market share would change as a reaction to alteration in their key variables. The results indicate conservativeness of the Chinese shippers and forwarders who prefer Chinese shipping lines for the reason that they have larger fleets catering to China and longer relations. The number of TEUs handled can give an indication of congestion in the port and has a negative impact on port choice. The number of berths in comparison to fleet size improves efficiency has positive coefficients. Port distance is important to determine port choice. Based on the author analysis, he argues, if the shipper uses a Chinese carrier then a 1% increase in the distance of a shipper from Dalian, reduces the market share by 7.9%, meanwhile other port-carrier combinations market share increases by 0.95% each. Incase Southeast Asian carrier is chosen by the shipper, this will lead to an 8.62% decrease in Dalian-Southeast Asian carrier combination market share, conversely the market share of all other port carrier combinations increases by 0.23%. The fleet size indicates that shippers are sensitive to changes in the number of vessels in china. 1% increase in the number of vessels of Chinese shipping lines, increases the market shares of those alternatives by around 5.4% to 6.1% depending on the port used.


Chien-Chang CHOU

CHOU in his (2005) COMPARATIVE STUDY OF MODELS FOR PORT CHOICE Studied the fitness of Stackerlberg model, the equilibrium model and the fuzzy multiple criteria decision-making models for port choice, and compared the fitness of each model then he summarized the advantage and disadvantage of each model. Here the authors refer to interviews with 4 shipping companies in Taiwan. The author found out that the results of the comparison of the Stackerlberg model, the Equilibrium model and the fuzzy MCDM model, Show that these three models cannot be used to explain the actual port choices of carriers and shippers well. Finally, he concluded that there is a need to develop a better model for port choice in future researches.

Journal of the eastern Asia society for transportation studies, vol. 6, pp. 907 - 919, 2005 Analysis of hub port choice for container trunk lines in East Asia hui-huang tai &cherng-chwan hwang (2005) analyzed the hub ports performance and change of trunk routes deployment based on statistics of port operations, and operating routes of main shipping lines. Then they investigated the factors of selecting a hub port by shipping lines using a questionnaire survey method. Finally, he uses Gray decision model to estimate the competitiveness of Shanghai, Kaohsiung, Yantian and Hongkong ports from the viewpoints of container liners in East Asia. The questionnaire form was sent out to all the top 20 shipping lines, their branches and key agents spreading in all of the 4 hub ports, including portage and shipping agents, but excluding the freight forwarders that are not dedicated shipping agents of any liner. A total sample of 146 copies of the questionnaire has been sent out, and 91 returned copies of which are examined as valid.

Based on the analysis of collected statistics, there are heaviest container flows between the East Asia and North America in the global liner shipping market. It is clear that there exist competition among hub ports in this region, especially among Shanghai, Kaohsiung, Yantian and Hongkong. The result of questionnaire survey indicates that among the 18 influential factors that might affect liners' hub ports choice, the most important factors are handling efficiency and draft of harbor that belong to the internal factors of ports, cargo source of hinterland and frequency of routes that belong to the external factors of ports, and the saving in operating cost for shipping lines. The author concluded that more sophisticated method in company with more data collection work is recommended for further study, in order to obtain more persuasive result.

Port choice and freight forwardersJose L. Tongzon Available online 29 April 2008.

The author examined the key factors in port selection in order to determine their relative importance, using a survey method applied to freight forwarders. The survey was conducted among a sample of freight forwarders located at the industrial and logistics centers of Malaysia (Penang) and Thailand (Bangkok). The findings suggest that such factors as high port efficiency, good geographical location, low port charges, adequate infrastructure, wide range of port services, connectivity to other ports, adequate infrastructure and others are important in the port selection process. Their relative importance, however, differ, with port efficiency considered as the most important factor. These findings provide an empirical support that port efficiency is the most important factor in the port selection from the perspective of the freight forwarders. To a certain extent the findings in this study therefore lend empirical support to the proposition that ports are not viewed by the freight forwarders in isolation but are considered together with other requirements associated with the movement of cargoes across the port-oriented supply chain. It therefore supports the new approach that models port choice within the framework of a port as an element of a supply chain which can provide us with a better understanding of the determinants of ports choice.

Although the survey has been limited to a sample of freight forwarders in Southeast Asia and selected ports, the results provide a useful empirical contribution to this increasingly important issue of port choice. MAGALA, M., & SAMMONS, A. (2008). A New Approach to Port Choice Modelling. Maritime Economics & Logistics, 10, 9-34.

MAGALA and SAMMONS (2008) looked at the port of choice from different angle that shippers no longer choose a port per se, but rather a supply chain a package or bundle of logistics services, in which a port is just an element albeit an important one of the system. He suggests a new and more effective analytical framework within which the modelling of port choice can be conducted and shipper choice decisions well understood.

The authors argue that the availability and suitability of a particular pathway is governed by a number of spatial, temporal and logistical factors including the availability of a shipping line, land transport, accessibility, connectivity and alignment with shipper needs and strategy. It follows then that when choosing a pathway a shipper will consider not only the possible combinations of ports of origin and destination, but also the availability of shipping lines, routes, land transport and a host of other logistics factors. Since all these elements are part of the pathway, in other words, the choice of a port is a byproduct of a choice of a logistics pathway in which the total logistics cost is a major supply chain consideration.

Furthermore, the authors discuss two key theories the first is based on systems theory and the second on the economic and marketing theory of bundling. The theories share a number of similarities but the way they explain how things work is different though not necessarily contradictory.

The modelling approach the author suggested two different modelling approaches, the first uses discrete choice models based upon revealed choice data. Revealed choice data provides information about past choice decisions individuals made on the subject of interest. The second approach uses choice models derived from stated choice experiment data and it is very useful for situations where the subject of interest is the behaviour in the presence of new situations. A key assumption is that decision-makers behave rationally (although admittedly bounded) and will always choose those alternatives that yield maximum utility or satisfaction.

The author concluded that in the current business environment in which ports compete as part of supply chain, the approach shipper's use is based on selecting a port as an item in a logistics package, often assembled and offered to the shippers by the 3PLs or supply chain integrators. Within this view, he suggested that the discrete choice modelling provides the right modelling framework to handle both the system and the port choice. Particular specification of a model will be context dependent but the universal paradigm is that a port is chosen not in isolation but rather as an element of a supply chain system.