Subject: Logistics and Supply Chain

Forms: 13 & 14

Unit 2: Shipping and Port Operations

Module 2: Port Operation

Port

A port is a maritime facility comprising one or more wharves or loading areas, where ships load
and discharge cargo and passengers.

Types of Port

1. Marine terminals/ ports are points of transfer for cargo loading and unloading as it is
transferred from ships to rail and trucks. Loading and unloading of ships requires a
variety of loading equipment, knowledge of techniques for lifting and stowing cargo, and
the proper handling of hazardous materials. Types of marine ports include:
 The landlord port model, infrastructure is leased to private operating companies or
to industries such as refineries, tank terminals and chemical plants. The lease to be
paid to the port authority is usually a fixed sum per square meter per year, typically
indexed to some measure of inflation.
 The landlocked port is encircled by land from all sides with a water passage towards
sea or ocean.
 The service port refers to a customs location having a full range of cargo processing
functions, including inspections, entry, collections, and verification.
 The tool port is similar to the service port. The tool port differs only by the private
handling of its cargo operations, albeit the port authority still owns the terminal
equipment.
2. Aviation port is a place from which aircraft operate that usually has paved runways and
maintenance facilities and often serves as a terminal. Types of aviation port includes:
 International port is an airport used by international airlines with flights to and from
different countries.
 Domestic port is an airport that handles only domestic flights within the same
country.
Characteristics of a Port

1. Port Facility- This is a specific location in a port where passengers or commodities are
transferred between land and water carriers or between two carriers; including wharves,
piers, sheds, warehouse, yards, and docks.
2. Communication- A port must have in place communications systems as well as
methodologies utilized to foster quick and easy communication amongst all port
operators and stakeholders.
3. Traffic Services- These are shore side systems which range from the provision of simple
information messages to ships, such as position of other traffic or meteorological hazard
warnings, to extensive management of traffic within a port or waterway.
4. Human Resources- Refers to the labor or work services provided through human beings,
to render port services. Port management is responsible for the conduct and performance
of its workers.
5. Auxiliary Services- This means maritime cargo handling services, customs clearance
services, container station, and depot services, maritime agency services and maritime
freight forwarding services.
6. Navigational Aids- Also known as aid to navigation is any sort of signal, markers or
guidance equipment which aids the traveller in navigation, usually nautical or aviation
travel. Common types of aids include lighthouse, buoys, fog signals and day beacons.
7. Safety and Security- Ports, ships and cargo can be potential targets for terrorism. The
International Ship and Port facility Security (ISPS) is an international regulation that
regulates certain measures taken to ensure the security of ships and port facilities.

Marine Functions

1. Traffic- Refers to safe movement of any type of freight transport operation carried out by
sea or inland waterway.
2. Industrial/ industrial zones- Refers to land that permits the manufacturing of industrial
products, factories, power plants, warehouses and other uses that are important to that
area’s economy.
3. Merchant- Transports domestic and international cargo and passengers during
peacetime, and operate and maintain deep-sea merchant ships, tugboats, towboats, ferries,
dredges, excursion vessels, charter boats and other waterborne craft on the ocean.
4. Logistics/ Distribution- Distribution in logistics refers to the overall management that
oversees the movement of goods from their development to the point of sale or delivery
through sea.
5. Passenger- Is a merchant whose primary function is to carry passengers on the sea.
Aviation Function

1. Passenger- The main role of aviation is to move the flow of passengers and their
baggage efficiently in order to meet the needs of airline operators.
2. Logistics/ Distribution- Distribution in logistics refers to the overall management that
oversees the movement of goods from their development to the point of sale or delivery
through air.
3. Traffic- Air traffic control aims to move aircraft safely through the airspace system by
setting distances apart while moving them from airport to airport using set routes.

Factors influencing Port Choice

1. Scheduling- When choosing a port, it is important to pay keen attention to the time of
departure and arrival of each vessel. Choosing a vessel with less transit time may increase
the rate of certainty of cargo being delivered safely, and on time.
2. Routing- Although there may be one origin, and one destination, a vessel can travel
through numerous amount of routes. Some routes may be long and some may be short. It
is therefore important to assess to the risk or safety of each route, and if the route to be
taken is suitable for the cargo to be shipped, as well as the final destination of it.
3. Port infrastructure- The port infrastructure is the base for port operations to serve the
vessel, cargo and passengers which pass through ports. Some port infrastructures are
more advanced than others, and may cater to more or offer more diverse services. The
need of the port users will aid in determining which ports’ infrastructure satisfies the
desired needs.
4. Port performance- Some port performances or services may be deemed as poor due to
lack of proper management and proper operation systems. Choosing such a port would be
deemed high risk.
5. Port cost- Ports’ cost may range from relatively inexpensive, to very expensive or
unaffordable. Costs may be incurred due to the services rendered by the port. Security of
cargo, as well as insurance of cargo or vessel during transit, may attract greater charges,
and cause the port cost to be high.
6. Port risk- Where a port is known for constant misplacement, loss, or damage of cargo, it
may be classified as high risk. It therefore means that there is a possibility that cargos do
not reach their destinations. It is important to do background checks on a port, and follow
up on cargos being transported.
7. Type of vessel- Some ports are specially designed to accommodate certain types of
vessels based on their process of loading and unloading. It is important to choose a port
that is suitable for the accommodation of your vessel.
 Port and Terminal Development

Types of Terminals

1. Container- A container terminal’s main function is to allow for the transfer of

shipping containers and cargo between ships and other modes of transport, such as
trucks and trains. Container terminals also act as a checkpoint where ships are
inspected, loaded and unloaded.
2. Break-bulk- Break-bulk terminals can usually consolidate or break up container
loads in a more efficient and cheaper manner than container terminals, and the
warehousing space required for these activities can take up valuable space at a
container terminal. Break-bulk is a general cargo loaded into a ship or transport mode
as individual or bundled pieces, not stowed into a container, or not transported in ship
sized liquid or dry bulk loads.
3. Bulk; Dry/liquid- The term bulk refers to commodities that are transported in very
large quantities. Bulk terminal means any facility which receives bulk products and
loads the product for further distribution into trucks, or other vessels. Dry bulk
terminals are used worldwide as a buffer between either international or
intercontinental transportation and inland or domestic transportation or the other way
around. Liquid bulk terminals are equipped to handle cargoes in liquid and gaseous
forms, such as crude oil, oil products, LNG and LPG. These products are shipped by
oil tankers, chemical tankers, parcel tankers and gas carriers.

Types of Bulk Terminals

Dry bulk, liquid bulk, roll-on-roll-off (RORO), and break-bulk terminals have a diversity of
functions and designs, and a broad range of quay, yard and warehousing equipment.

 Major Dry Bulk Terminal- The term major bulk refers to commodities that are
transported in very large quantities using bulk carriers. Three major components impact
bulk terminal design: supply characteristics, demand characteristics and potential for
economies of scale.
 Minor Dry Bulk Terminals- Minor dry bulk includes cargoes such as fertilizers, sand,
petroleum coke, and metal scrap. While major bulks are often loaded in large bulk
carriers, minor bulks are usually transported by sea in smaller and more versatile vessels
such as handymax ships and coasters.
 Liquid Bulk Terminals- These are equipped to handle cargoes in liquid and gaseous
forms, such as crude oil, oil products, LNG and LPG. These products are shipped by oil
tankers, chemical tankers, parcel tankers and gas carriers
 4. General cargo- The general cargo terminal is designed for cargoes that do not
require special care. The cargo area of the terminal consists of outdoor and indoor
sections.
5. Passenger- Passenger terminal means a transport facility located on a sea or land
transportation line, where people transfer from one mode of vehicular transportation
to another or between carriers within the same mode. Such carriers shall have
regularly scheduled routes, and may include vans, trains, ships, tour buses or boats,
etc.
6. Multi-purpose- This is a complex infrastructure, which offers a combined and
flexible response to the servicing demand of certain types of vessels and cargoes.
7. Dry- It is more inland and connected to a seaport with either a paved roadway or
railway. Dry terminals are terminals where cargo brought over on ships is
transshipped.

Factors Affecting Port and Terminal Development

The development of port and terminals may be influenced by various reasons:

1. Planning and design- Port planning and design involve the strategic port planning
process, data collection and forecasting stakeholder relations management in ports,
and the evaluation of port development plans and projects.
2. Navigation- The development of ports and terminals involves dredging deep
channels through reef areas for safe navigation.
3. Dredging and disposal- Dredging involves removing sediments from the bottoms of
the navigable waters to maintain navigation channels and docks. The sediments are
usually dewatered on land, and the water is usually treated before discharge back to
the water body.
4. Coastal impact- Coastal zones are relatively fragile ecosystems. Fishing, agricultural
activities, development of infrastructure, tourism related activities, etc., may
contribute to rapid degradation of coastal habitats and resources.
5. Environmental impact- Waste from ships and other port activities can result in loss
or degradation of habitat areas and can also harm marine life.

Roles of Government in the Management and Operations of Ports

Governments are usually responsible for establishing, developing and operating ports to
facilitate trade, transforming the seaside into facilities where goods are loaded and unloaded.
The role is not only limited to port ownership, such as owning and controlling wharves and
jetties, but includes acting as regulator. The Government implements rules and regulations
which governs the operations of ports. Ports are expected to comply with these rules or face
the consequences. Such laws include:

 Port Authority Act

 The Harbor’s Act
 The NRCA Act (1990)
 The Land Acquisition Act
 The Town and Country Planning Act
 The Local Improvements Act
 The Wildlife Protection Act
 The Fisheries Industry Act

Failure to comply to these laws attracts various consequences ranging from fine or
imprisonment, to forced closure.

Port Authority

The Port Authority of Jamaica is a stator corporation established by the Port Authority Act of
1972. It is the principal maritime agency responsible for the regulation and development of
Jamaica’s port and shipping industry. The Port Authority is responsible for the safety of all
vessels navigating the ports of entry and regulation of the tariffs charged on goods passing
through the public wharves.

Private Sector Management Contract

These contracts are most suitable for medium to large scale building or civil engineering
works, where the design of the project has been provided by the employer, i.e. the client. The
PSC is based on the employer-designed public works contract and have been drafted with the
objective of achieving fair and balanced allocation of risk between the parties in order to
promote long-term sustainable efficiency in the industry.

Privately Run Ports (sufferance wharves)

This is a licensed private wharf where dutiable goods may be kept until the duty is paid. It is
any place other than an approved place of loading or unloading at which the Commissioner
may allow any goods to be loaded or unloaded. A sufferance wharf is a wharf licensed and
attended by Customs.

Memorandum of Understanding Between Government and Private Sector

Operational Management

A memorandum of understanding is a type of agreement between two or more parties. It

expresses a convergence of will between the parties, indicating an intended common line of
action. Similar to a contract, a memorandum of understanding is a proof of agreement.
However, an MOU need not contain legally enforceable promises. While the parties to a
contract must intend to create legally binding agreement, the parties to MOU may intend
otherwise. If one party fails to carry out their part to the MOU, the other cannot take him to
court. An MOU should clearly state the following:

 What parties are involved

 The context of the agreement
 The proposed date of when the agreement will become effective
 The contact details of all relevant parties
 The broad purpose of the agreement
 What each party is hoping to achieve

Role of Stakeholders In the Efficient Operation of a Port

Agents

They arrange crew, purchase supplies needed by the vessel, and negotiate any work needed
with the local port suppliers. They also help support the safety and security of vessel related
operations. And they must submit any report or applications needed to comply with port
requirements.

Customs Brokers

A customs broker owes a duty to the state to maintain its constitution and laws. A customs
broker shall maintain proper accounts and observe proper accounting principles in the
conduct of his business, especially in regard to accounting for all revenue and of his clients.
Customs ensure smooth flow of information regarding clearance. They also assist in
preparing quotations for international shipments, preparing discrepancy reports for stations
overseas and assist in export documentation and booking.

Freight Forwarders
A freight forwarder or forwarding agent is a person or company who, for a fee, organizes
shipments for the shipper by liaising with carriers. A forwarder does not move the goods but
acts as an agent in the logistics network. The main responsibility of the freight forwarder is to
arrange the movement of the cargo to its final destination point. Apart from that, the freight
forwarder must prepare and process the documents for the international freight forwarding.

Stevedoring Companies

Stevedoring is a term which is derived from the word stevedore. Stevedore refers to the act of
loading or offloading cargo to and/or from a ship. A person or company engaged in such act
is known as a stevedore.

Terminal Operators

A terminal operator is responsible for the safe, efficient and quality-conscious unloading and
loading of cargos from vessels in seaports.

Haulage Companies

Haulage companies are concerned with the commercial transport of goods by road, rails and
sea.

Trade Unions

One of a trade union’s main aims is to protect and advance the interests of its members in the
workplace. The typical activities of a trade union include providing assistance and services to
their members, collectively bargaining for better pay and conditions for all workers, working
to improve the quality of public services, political campaigning and industrial action.

Roles of Ports in Logistics

 Ports serve as important transportation hubs that facilitate goods movement. The distribution
of freight (including raw materials, parts and finished consumer products) by all modes of
transportation including marine, air, rail and truck, to businesses in local communities and
worldwide markets.

1. Value Added- Service providers at the port provide value-added activities for all types of
goods, tailored to the customer. In addition to unloading and loading goods, many port
companies offer other services including freight forwarding, customs administration,
transport, etc.
 Trade Facilities- Generally, trade activities are carried out in trade facilities. These
are local premises which are dedicated to long-term use locations for pursuing trade
activities. They may be very different in their use and design, ranging from offices to
factories, stockyards, shopping malls, restaurants and petrol station.
 Economic Zones- A special economic zone is an area in which the business and trade
laws are different from the rest of the country. They are located within a country’s
national borders, and their aims include increasing trade balance, employment,
increased investment, job creation and effective administration.
 Facilitating Multi-Modalism- Multi-modalism is the process of operation/providing
a door-to-door/ warehouse-to-warehouse service to the shipper embracing two or
more forms of transport, and involving the merchandise being conveyed in a unitized
form in the same unit throughout the transit. It involves scheduled/dictated service.
Forms of modalism included:
 Containerization- Road/sea/rail
 Land-bridge- Trailer/truck-Road/sea
 Land-bridge- pallet container-road/sea/air
 Trailer/truck- road/sea
 Swap body-road/rail/sea/road

Impact of Logistics in Social Development

Definitely, although not obvious, shipping affects the daily lives of the majority of the world
population. The socio-economic implications of logistics undoubtedly affect the social
development of cities. With the implementation of sustainability in the supply chain, and not
only think of a commercial profit but in an overall benefit in mind, the impact it is having on the
ecosystem. Solutions, research and discussion topics to open an academic contribution is
interesting, that would open up discussions.

Job Creation
Logistics industry provides significant macro contributions to national economy by creating
employment, and creating national income and foreign investments. Jobs in logistics include
International Logistics Coordinator, Warehouse Manager, Transportations Analyst, Distribution
Manager, Inventory Officer, Purchasing Officer, etc.

Poverty Reduction

The creation of employment and development of new skills is a benefit of logistics which aids in
the reduction of poverty.

Infrastructural Development

Logistics directly contribute to economic activity through investment in warehousing, road, rail,
sea and air transport. Logistics allows for improved infrastructure such as roads, railways,
airports, ports, highways, warehousing infrastructure, and testing facilities.

Social Services

Like any other economic activity or business, logistics has a duty to give back to the community
or country through sponsorships, awards, scholarships, etc.

Impact of Logistics in Economic Development

Logistics contribute to economic development by allowing firms to capitalize on comparative

cost advantages in the production of goods and services by efficiently transporting goods to the
market. It also allows for fair investment in warehousing, road, rail, sea and air transport.
Logistics plays an important role in supporting and sustaining economic growth, in a form where
the economic growth is the significant demand-pull towards logistics.

Increased GDP/ Gross Domestic Product

GDP is a measurement that seeks to capture a country’s economic output. Countries with larger
GDPs will have a greater amount of goods and services generated within them, and will
generally have a higher standard of living. For this reason, many citizens and political leaders see
GDP growth as an important measure of national success, often referring to GDP growth and
economic growth interchangeably. Logistics allow for increased supply due to the increased
demand for export. This increase in supply resulted from increased productivity, which in turn
increases the GDP. The formula for GDP is R = N/D; where R = Real GDP, N = Nominal
GPD and D = GDP deflator. OR GDP = C + G + I + NX. C = Consumption or all private
consumer spending within a country’s economy, including durable goods (items within a
lifespan greater than a three years), non-durable goods (food and clothing), and services. G =
Total government expenditures, including salaries of government employees, road
construction/repairs, public schools and military expenditure. I = Sum of a country’s investments
spent on capital equipment, inventories and housing. NX = Net exports or a country’s total
exports less total imports. OR Income Approach. GDP = Total National Income + Sales
Taxes + Depreciation + Net Foreign Factor Income.

Balance of Payment

Balance of payment of a country is the difference between all money flowing into the country in
a particular period of time and the outflow of money to the rest of the world. The formula for
Balance of Payments is current account + capital account + financial account + balancing
item = 0. Current Account represents a country’s imports and exports of goods and services,
payment made to foreign investors, and transfers such as foreign aid. The capital account keeps
track of the net change in a nation’s assets and liabilities during a year. The capital account’s
balance will inform the economists whether the country is a net exporter of capital. Financial
account is a component of a country’s balance of payments that covers claims on or liabilities to
nonresidents concerning financial assets. Financial account components include direct
investment, portfolio investment and reserve assets broken down by sector. A balancing item is
an accounting construct obtained by subtracting the total value of the entries on one side of the
account (resources or changes in liabilities) from the total value of the entries on the other side
(uses or changes in assets).

Increased Per Capita Income

Per capita income is a measure of the amount of money earned per person in a nation or a
geographic region. Per capita income is used to determine the average per-person income for an
area and to evaluate the standard of living and quality of life of the population. This is calculated
by dividing the country’s national income by its population.

Balance of Trade
The balance of trade is the difference between a country’s exports and imports of goods. A
positive balance of trade is also known as a trade surplus which occurs when a country exports
more goods and services than it imports. A trade deficit occurs when the imports exceed the
exports.

Inter-Sectorial Collaboration

This is the coming together of different people, organizations and sectors to work together to
understand and solve complex issues.

Environmental Impact of Logistics on Development

Logistics transportation emits high greenhouse rates. Transport and road traffic, in particular,
produce fine particles that pollute the outside air, which is dangerous to humans and the
ecosystems. Also, sea transportation can be equally catastrophic. Sinking ships and oil spill
disasters can have irreversible consequences on the ecosystems of oceans and sea coasts. This is
dangerous as large vessels ma scrape the sea floor and damage ocean habitat which threatened
aquatic species and cause may cause them to disappear in the long term. Another environmental
impact connected to logistics and supply chain sector is the excess wasteful packaging attached
to the industry. They produce harmful gases that affect the environment and increase the amount
of plastics thrown in the ocean every day.

How Can Logistics Reduce Environmental Impact

Logistics is known for its high level of sustainability in the industry. Still, green logics, also
known as environmental logistics, aims to reduce the carbon footprint of logistics operations,
lower air, soil, sound, and water pollution, and use raw materials sensibly. Some ways to reduce
threats of logistics are as follows:

1. Optimize Routes- Route optimization software can analyze critical logistics issues such
as vehicle availability, traffic conditions, and labor availability for loading and unloading.
Logistics operations can optimize and streamline routes to reduce carbon emissions with
automated route planning.
2. Sustainable Packaging- Change your regular plastic packages to biodegradable ones.
Use paper tapes, recycled materials, newspapers, air peanuts and seaweed packaging.
Using sustainable packaging will reduce transportation costs, expand your customer base
and improve your brand image.
 3. Ensure Materials are Recycled- Encourage your shipment recipients to recycle all
appropriate packaging when delivered to the final destination. Put clear instructions on
packages to state that packages are to be recycled.
4. Kitting and Reducing Packaging- Use the kitting process to compile individual items or
component parts into a ready to ship package instead of sending seven different products
in seven different packages. This will reduce cost not only for you and your company, but
also for your customers.

Improvement in the Built Environment

Logistics allow for improvement in the environment through the building of facilities and
infrastructure to accommodate the trade of goods and services amongst countries. This operation
increases the country’s competitive advantage, but also destroys protected areas, and some of its
habitats. Government, however, has implemented rules which speak to destruction of residential
areas, protection of marine lives, etc.

Cultural Impact of Logistics on Development

As manufacturing operations are relocated around the world, the efficient movement of goods is
becoming more and more important. Logistics providers are responsible for the movement of
goods and face different cultural challenges in each region that these goods move. People must
realize and accept cultural differences to develop strong working relationships.
Misunderstandings, loss of money, and loss of contracts can occur if cultural differences are not
accepted.

Organizational Culture

The team of employees that strives for the realization of a common goal is what every company
needs, and the success of a business depends on the way of functioning and thinking of that
team. The organizational culture shapes the way the employees think, react and behave. Business
practices have shown that the organizational culture oriented to employees, action and challenges
is an important determinant of improving all business performance indicators, including supply
chain integration. The dimensions of organizational culture affect internal integration, integration
with customers and integration with suppliers, determining the generation of the key goal of
supply of the right product, at the right place, at the right time, and at reasonable costs.

Adoption of Best Practices

Cultural change in the workplace is inevitable. There is no one-size-fits-all process for creating a
positive culture; however, there are some things business leaders can do to ensure their
workforce is centered on the organization’s mission, vision and values. Some ways in which
leaders can drive positive cultural adoption and strategies to improve employee performance are:

1. Communicate- One of the most important factors to consider during a culture change is
how the company shares the message. When associates hear senior leadership
communicate the company’s values and beliefs and then at in accordance with them, they
feel happy and values by their employer.
2. Demonstrate- Leaders who talk the talk must also walk the walk. Culture should be the
driver behind what the leader does and the decisions they make. The adage actions speak
louder than words, applies to executives who live the corporate ideals, so that others can
see.
3. Encourage- During formal and informal coaching sessions, a leader can point out how an
individual’s role supports the corporate purpose and impacts their customers. People
crave purpose in work. They want reassurance that what they are doing is making a
difference.
4. Recognize- Team members are great listeners, provide sound advice and consistently
work with integrity. Unofficial leaders are well respected, and others follow them
because of the way they act. They should receive recognition for leading by example to
bring value and support the corporate culture.
5. Connect- Don’t forget the ‘human’ side of interactions with direct reports. Individuals
are pressed to do more while still being isolated. Coaching sessions that do not begin and
end with some personal connections can erode an employee’s positive feeling about their
company and manger.
6. Perpetual- Building a positive corporate culture is work that never ends. When steps are
deliberately taken to help employees clearly understand and feel more closely tied to the
organization’s beliefs behaviors and purpose, success will follow.

Cultural Re-orientation

Cultural Assimilation

Political Impact of Logistics on Development

Political Will

Stakeholder Consultation
Ratification and Implementation of International Policies (W.T.O)