Logistics and Port Management
C. Bert Kruk
Senior Port Specialist
The World Bank
April 2004
Logistics
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Military origin: Getting the right supplies in the
right place, in the right quantity, at the right time
In transport: Getting the right goods in the right
place, in the right quantity, at the right time at
the least possible costs
Essential: Price / Quality Ratio
Possibility of choice is essential
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Port Competition
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Inter-port competition
Within-port competition
Intermodal competition
Competitive ports should offer selection of
choice of hinterland connections
Example: Dedicated Freight Railway line in the
Netherlands
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Trade Facilitation
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Commonly accepted definition?
Logistics of moving goods through Customs or
more efficiently processing documentation
associated with cross-border trade
Indicators can be useful
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Trade Facilitation Indicators
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Basis for development of further Indicators for
analysis of impact of Trade Facilitation
Guide for project preparation, supervision and
evaluating logistics project performance
Benchmark for regional comparisons
Track effectiveness of domestic reform
processes associated with accelerating Trade
Facilitation
Assist in shaping policy-oriented empirical
research in sectors which suffer from lack of
data
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Need for effective Customs and EDI
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In ‘just in time’ manufacturing, outsourcing and
global production sharing, firms cannot afford
delays with complex and inefficient Customs
rules and lack of modern systems of information
Reduction of trade-related transaction costs can
expand trade and create employment
opportunities
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Some figures
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Hummels (1999): Exporters with 1% lower
shipping costs enjoy 5 to 8% higher market
share
Limao and Venables (2001): Infrastructure
quality accounts for 40% of variation in
transport costs for coastal countries and up to
60% for landlocked countries
Fink et al (2001): Liberalization of provision of
port services and regulating exercise of market
power in shipping could reduce shipping costs
by nearly 33%
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Port Management models
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Public Service Port
Private Service Port
Tool Port
Landlord Port
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Basic Port Management table
Model
Infrastructure Superstructure Cargo
handling
Public
Public
Service Port
Public
Public
Private
Private
Service Port
Private
Private
Tool Port
Public
Public
Private
Landlord
Port
Public
Private
Private
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Examples
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Public Service Port: common model of ports in
developing countries
Private Service Port: usually industrial types of
ports
Tool Port: French model
Landlord Port: Larger, developed ports
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Introduction of Containerization
 Difficult for many developing ports:
• Lack of funds
• High investment costs
• Lack of skilled labor
• High risk investment
 Change in management structure was option
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Other reasons for change
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Higher labor costs
Higher ships’ costs
Globalization of commerce
Introduction of EDI and ICT
Pressure of shipping lines regarding turnaround
time of their vessels
Intermodal and multimodal requirements
Bureaucracy
Possibility to decrease staff and / or labor force
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Sharing the Commercial Risks
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A method often applied is introduction of
(usually) private and often foreign partner
Partner has required skills and often also
sufficient capital
Process is Commercialization, not Privatization
Privatization requires transfer of ownership
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Commonly used methodologies
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Concession: usually leasing of facility to
operator (Joint Venture or single operator)
Management Contract
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Concession
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Operator leases plot for long period of time
Lease is amount of money to be paid per m2
per year (Flat Rate Lease)
Combination of land lease and performance
hardly applied (Shared Revenue Lease)
Lease usually indexed
Long period (> 15 years) to allow operator to
develop business and get return on investments
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Equipment existing terminals
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Operator may buy existing from Port Authority /
Government
Usually at second hand price
Operator will provide new equipment, systems
and facilities from his own resources
Former staff may be contracted by Operator
Operator takes Commercial Risk
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Operator existing facility
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Private single operator, or Joint Venture of new
operator and previous operator (Government /
Port Authority)
Joint Venture: Sharing of Commercial Risks
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Operator new facility
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Option 1: Government invests in infrastructure
and new operator or Joint Venture in
superstructure
Lease can be Flat Rate of Shared Revenue
Other options: BOT or BOO
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Build-Operate-Transfer (BOT)
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New Operator develops new facility
(infrastructure and superstructure) from his own
funds
Operates terminal
Income used to get return in investment
After agreed period, terminal operator hands
over terminal (infra- and superstructure) to
public sector
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Build-Operate-Transfer (BOT) - 2
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BOT period at least 15 years
Handover usually at written-down value
BOT for container terminals hardly used:
income insecurity (competitive market)
If operator is linked to major shipping line more
chance of success
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Build-Own-Operate (BOO)
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Basically same principle as BOT, but
No pre-determined date of handing over of
facility to Government / Port Authority
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Management Contract
 Experienced operator provides expertise (staff
and means) to existing or new terminal
 Operator is paid agreed Management Fee
 Possibility of Contract:
• Under-Performing: Penalty
• Over-Performing: Bonus
 No Commercial Risks for Management
Contract party
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Regulatory Function
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In all options some form of Regulation essential
High level authority to control articles of
agreement between public and private parties
Not complying: Penalties
Involves intervention in functioning of markets in
terms of setting or controlling tariffs
Also deals with control of market and fair and
competitive behavior and practices
Regulation essential in case of monopoly or
significant market power
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Port Performance Indicators
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Useful tools to obtain insight in performance of
port or terminal on comparative level
Definition of Indicators important for comparison
Most commonly used Indicators:
• Ship Productivity
• Ship Waiting Time
• Cargo Dwell Time
• Cargo Handling Charge
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Ship Productivity
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Total number of moves (containers) or tons
(break-bulk and bulk cargoes) divided by total
number of ship hours in port
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Average Ship Waiting Time
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Total number of hours or days vessels wait for a
berth (buoy-to-berth time) divided by total
number of hours ships are at berth
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Average Cargo Dwell Time
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Product of cargo handled and period of time
(hours or days) between moment of unloading
of cargo and time cargo exits port or terminal
(for export cargo) divided by total quantity of
cargo handled
Import cargo: vice-versa
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Cargo Handling Charge
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Total charges for handling of given quantity of
cargo in units or tons divided by total number of
units of tons handled
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Examples of Container Ship
Productivity
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Average container gantry crane productivity for
multi-berth terminal and Berth Occupancy
Factor (BOF) in range of 50%: 60 to 70,000
moves per year
PSA record 2000: handling of 1,375 moves in 6
berth hours, or 234 moves or 376 TEU per
berth hour
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Top 5 Operators 2002
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Hutchison
Port of Singapore Authority
AP Moeller
P&O Ports
Eurogate
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Total: 103 mio TEU, or 37% of world total
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37 mio TEU
26 mio TEU
17 mio TEU
13 mio TEU
10 mio TEU
Hutchinson Whampoa Limited
FELIXSTOWE
ENSENADA
KWANGYANG
HARWICH
THAMESPORT
BUSAN
ROTTERDAM
HONGKONG
LAZARO CARDENAS
DAMMAN
VERACRUZ
FREEPORT
MANZANILLO
KARACHI
BALBOA
CRISTOBAL
DAR ES SALAAM
BUENOS AIRES
RANGOON
PORT KLANG
LAEM CHABANG
March 2004
Cbk/wb
SHANGHAI, WAIGAOQIAO, YANTIAN, BEILUN,
JJIANGMEN, NANHAI, SHANTOU, XIAMEN,
ZHUHAI
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JAKARTA
APM Global Terminals
SHANGHAI
BREMERHAVEN
YOKOHAMA
NEW ORLEANS
AARHUS
KAOSHIUNG
KOBE
CONSTANTZA
ROTTERDAM
GIAO TAURO
TACOMA
ALGECIRAS
BALTIMORE
OAKLAND
PELAPAS
CHARLESTON
LOS ANGELES
PIPAPAV
ONNE PORT
SAVANNAH
HOUSTON
PORT
EVERGLADES
MARCH 2004
CBK / WB
PORTSMOUTH
MIAMI
PORT ELIZABETH
KINGSTON
BUENOS AIRES
JACKSONVILLE
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SALALAH
LAEM CHABANG
PORT SAID
Port Reform Toolkit
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Comprehensive document produced beginning
of this century
Update of practical examples in FY 2004-2005
Download from web:
www.worldbank.org/transport
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Trade Logistics Agenda
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Trade Facilitation and Competitiveness
Transit Logistics and Ports
Border Crossing and Clearance Management
Customs Reform
Multimodal Transport
Transport Security
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Trade Facilitation and
Competitiveness
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Economic Benefits of Trade Facilitation
Logistics Costs and Export Earnings:
Geography, Competitiveness and Poverty
Facilitation Performance and Competitiveness
Index
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Transit Logistics
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Port Efficiency
Bilateral and Regional Transit Agreements
Landlocked Developing Countries Access:
Corridor Agreements
Transit Guarantee Systems :
Customs/Insurance/Operators (TIR, TIF and
similar)
Cost/Benefits of Transit Trade for Transit
Countries
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Border Crossing Management
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Single Window Environment
Adjacent Border Posts
Border Monitoring Systems
Inland Clearance Facilities
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Customs Reform
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Streamlining and Harmonization of Procedures
Information Technology and Electronic
Processing
Risk Assessment Methods: Security with
Facilitation
Integrity Programs
Training / Capacity Building : Customs Officials /
Private Operators
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Multimodal Transport
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Legal Aspects
Regulatory Framework
Liability Regime of MTO
Implementation/Amendments of/to MTO
Regimes
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Transport Security
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US Regulations: CSI, 24 hour-Rule
IMO Revised Standards: ISPS Code
Supply Chain Security Concept
Security with Facilitation
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Thank you for your attention
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