Freight Supply Chain Research Articles

Seaport network performance measurement in the context of global freight supply chains

Abstract A global distribution channel with a reliable freight transport system is essential in the contemporary world economy. Acting as trade facilitators, seaports are important players in the system. The study of the role of ports in supply chain management has recently drawn increasing attention from researchers and industry professionals alike. However, prior works mainly gathered the views from ports and terminals. To the authors’ knowledge, no attempt by previous empirical studies has been made to cover the perspective from shippers and logistics providers, who are obviously taking a serious role in the process of global freight movements as major stakeholders. It becomes thus imperative to assess a port’s supply chain orientation and performance from the perspective of the port users in the supply chain. Studying ports in the network context would be even more beneficial to capture the complexity needed to understand port performance and its interaction with various stakeholders. Drawing reference from multi-disciplinary fields, this paper aims to fill in the gap by developing a so-called unified framework for analysing port’s integration in global freight supply chains including shipping line networks, hinterland and intermodal transport network, and even urban network. The framework embraces a wider group of stakeholders involved, for example, terminal operators, port authorities, shippers, shipping companies, inland transport providers, freight forwarders/logistics service providers, cities and other ports in the networks. A port that is a key node in these networks simultaneously would be able to create and sustain value for port stakeholders. Port authorities and operators can refer to the framework as their network performance indicators so as to obtain a better understanding of the various considerations in a port’s network performance and to assist in positioning the port within the complex dynamics in the context of global freight supply chains. Finally, the framework developed in the paper can serve as a guide to empirical examinations of an emerging theme - a network-oriented performance by seaports along global freight supply chains - leading to various possible channels in future research.

Value migration and profit pools in port-oriented freight systems: the implications for new patterns of efficiency

Port-oriented supply chains and landside logistics marketplaces continue to be restructured and rationalized. Profit pools have rapidly changed and value has migrated, and is migrating, to new functionalities, creating tensions, new patterns of demand and new bases for efficiency in freight systems. Further, and critically, the new functionality of elements in supply chains underwrites new power relationships that effectively condition not only the ability of firms to deliver and capture value but also to impact on the level of integration within supply chains and the efficient outcomes that might be expected from such integration. This paper focuses on these issues. It explores the concept of value migration in selected industries in order to demonstrate underlying and generic principles, and then argues that these principles are no less applicable, and indeed they are exceptionally valuable, in demonstrating the nature of value migration in port-oriented freight systems and supply chains.

Implications of growing electronic commerce for freight transportation: A case study of the United States

Recent advancements in information and communication technologies have led to the rapid growth of electronic commerce market. In the United States, e-commerce retail sales for 2002 reached $45.6 billion, indicating an increase of 26.9% from 2001 while total retail sales increased 3.1% during the same period. Although e-commerce sales account for only 1.4% of total sales in this country, forecasts show that the magnitude of digital economy will continue to expand. The logistical requirements of e-commerce goods that extend to each customer's address stimulate greater complexity in traditional supply chain management, potentially causing higher costs for freight supply chain participants. To harness the economic potential of e-commerce, it is important to encourage the development of a freight transportation system that will support its steady growth, while avoiding the possible negative effects from the changes in freight transportation. Due to the intrinsic nature of e-commerce goods, advances in home delivery have the potential to promote the growth of e-commerce as well as to create sustainable urban freight transportation systems. Based on the case study of the United States, this paper presents an in-depth discussion of the key challenges arising in home delivery operations, and proposes potential solution strategies that will lead to more efficient and reliable home delivery systems.

Impact of Temporary Seaport Closures on Freight Supply Chain Costs

A decision model designed to help stakeholders quantify the productivity impacts of temporary closures of a container seaport on global supply chains is presented. Such closures have many potential causes, including natural disasters, labor disruptions and shortages, and security-related disruptions. Temporary closures result in highly variable product delivery lead times and thus increase supply chain inventory management costs. The decision model is a Markov decision process that determines an optimal inventory management policy and its resultant long-run average cost for a firm operating a supply chain that uses a seaport subject to unexpected closure. Since short port closures typically lead to ships waiting to off-load containers, a simple deterministic queuing approach is used to model port freight processing dynamics. The results of a numerical study indicate that the expected length of a seaport closure more negatively affects supply chain productivity than the probability of closure, for example, causing increases in expected supply chain inventory holding and penalty costs of up to 136%. Furthermore, supply chain firms that do not properly account for port closures during inventory planning can expect significant inventory holding and penalty cost increases, which in some cases eliminate positive operating income. The results indicate the importance of contingency planning and disruption management for all stakeholders, including private firms and public agencies. In addition, results of the study point to the economic importance of investment to increase the processing capabilities of highly utilized seaports immediately following a port closure, when resultant congestion is at its worst levels.

Impact of Temporary Seaport Closures on Freight Supply Chain Costs

A decision model designed to help stakeholders quantify the productivity impacts of temporary closures of a container seaport on global supply chains is presented. Such closures have many potential causes, including natural disasters, labor disruptions and shortages, and security-related disruptions. Temporary closures result in highly variable product delivery lead times and thus increase supply chain inventory management costs. The decision model is a Markov decision process that determines an optimal inventory management policy and its resultant long-run average cost for a firm operating a supply chain that uses a seaport subject to unexpected closure. Since short port closures typically lead to ships waiting to off-load containers, a simple deterministic queuing approach is used to model port freight processing dynamics. The results of a numerical study indicate that the expected length of a seaport closure more negatively affects supply chain productivity than the probability of closure, for example, causing increases in expected supply chain inventory holding and penalty costs of up to 136%. Furthermore, supply chain firms that do not properly account for port closures during inventory planning can expect significant inventory holding and penalty cost increases, which in some cases eliminate positive operating income. The results indicate the importance of contingency planning and disruption management for all stakeholders, including private firms and public agencies. In addition, results of the study point to the economic importance of investment to increase the processing capabilities of highly utilized seaports immediately following a port closure, when resultant congestion is at its worst levels.