The Shanghai Port Competition Situation - Case Study Example

Name Tutor Institution Date The Shanghai port competition situation (Intra and inter-port competition) The rapidly growing global trade in the past decade resulted to a new round of port advancements leading to the streamlining of the various port networks in addition to the most intensive inter as well as intra port competition. Moreover, there have been remarkable transformations in the approach of the global trade as well as cargo shipment distinguished by the prevalence business to business in addition to the integrated supply chains. Within the port industry, these transformations have come to life due to the rising demand for worthy logistic services as well as the incorporation of the various transportation means including inter or multi-modal transport systems (Gu-Tae et.al, 332). As a result of the demands that come along with the extreme competition within the maritime as well as the port industry that limit profit margins, the port of Shanghai has gone through various considerable structural transformations over the past few decades. In sight of the intra-port competition involving the port of Shanghai, there exists a set of influences which explain the reasons why some regional ports develop an edge as compared to their competitors. These set of influences form the major factors that promote or obstruct port competitiveness involving the port of Shanghai. Among the influences, competition and port cooperation revolving around intra-port competition identifies the major factors promoting or obstructing port competitiveness. Shanghai, Hong Kong and Singapore ports, for instance are often subjected to various challenges coming from other regional ports like Pelapas, Shenzhen, Tanjung and Shenzhen ports in that order (Cullinane, 333). On the other hand, Cullinane et al. (2004) outlined that Shanghai port will hold on to its position as a leading regional hub notwithstanding other adversaries’ present competitive advantages. Within the mainland China the relative competitiveness of the ports has been on the basis of price and quality of service. In particular, Cullinane et al. (2005), confirms again that Intra-regional competition has increased among the China's major ports such as Dalian, Tianjin, Qingdao, and Shanghai will move on taking a leading role. Apart from the explicit reflection of intra-port competition involving the regional maritime as well as port industry giants, inter-port relationships involving the port of Shanghai has been mainly through the influence of generic indicators including transformations in the market shares. All these offer a logical treatment in the interactions between the various ports involved along with the Shanghai port in the inter-port business. Improving transportation economies as well as the expanding market outcomes in hinterlands which gradually overlap has enhanced the competitiveness. The circumstances are inevitably influenced by the various terminal investments from the main container shipping lines as well as pure stevedores. The wide spectrum of players involved lead to competition coming in the way of alliances or in the form of cooperative arrangements between the participants involved in the worthy chain systems against the others. This explains the growth of South China ports affecting the competitive business demand between the inter-port businesses. A large amount of the obtainable port literature has documented that massive competitive pressure crop up as each port seeks out to attract transshipment traffic (World Port Source). Firms have tried to globalize business coverage through mutual ventures, unions as well as acquisitions contained in the liner industry in order to manage the inter-port competitiveness. More over, the use of more and more huge vessels on mainline along with feeder services have assisted to further improve cost effectiveness of the various shipping conglomerates by bringing in scale economies. Consequently, carriers do not only enhance their service quality at down prices to eventual users, but also improve their bargaining powers against other ports. How the port of Shanghai uses marketing to promote its business. The port of Shanghai has been able to use marketing has a mechanism towards promoting its business through the use of various marketing strategies. Among them is through international partnerships. In recent years, they have managed to get into partnerships with top quality ports around the globe. Established port of Shanghai partnerships consisted of: • Georgia Ports Authority • Shimizu, Japan • Sydney, Australia • The Panama Canal Authority Port partnerships form one of the mechanisms that the port of Shanghai development team employs to stretch out to their customers. Such partnerships are of significant gains as they also provide access to the port’s hinterland, for instance Shanghai’s fast growing Yangtze River region. Amongst the various factors that are of great significance for the port of Shanghai in allowing for such partnerships are the possibilities that the various established foreign ports may develop speedily, a similar structure to the port of Shanghai, and a akin to the various business mix(Sydney,22). The partnerships signed on October 11, 2005 in Savanna, for example, allowed all the partners to mutually promote all their water shipping routes as well as enhancing services for their respective customers. The joint ventures also allowed both ports to exchange information as well the know-how in the various fields of marketing, technology, and engineering in addition to operations. Additionally, the partnerships enhanced friendship, increased trade operations between the ports, improved levels of trade as well as investment coming out of the respective regions. This eventually strengthened business, social as well as the cultural ties. Above all, the deliberate international partnerships also allowed the various parties to perform combined marketing programs, in addition to sharing data, technology and information linked to modernization (Yap, 60). Other than international partnerships, the port has also been able to employ the use of outsourcing logistics. This is to enable them reorganize their business distribution networks as well as achieve competitive advantage over their key adversaries. To the management of the port, outsourcing is viewed as practicable business marketing strategy because it is able to turn non-core tasks over to other external suppliers and this enables companies to pull resources to spread allowing the company to dwell on crucial issues critical to the survival as well as future growth. Integrated logistics therefore enables the port to concentrate on its core competency, marketing and sales, while at the same time offering a significant decline in the overhead costs (Yap 26). How the logistic functions are performed within the port, key elements of the port logistics and relation to terms of port operations. The Shanghai International Port Company is the main operator of the terminals within the port of Shanghai. It is in charge of the various port logistics such as offering facilities meant for the international passengers; piloting and towing vessels; forwarding freight, offering in-port services; renting port equipments and facilities; building, managing, operating port as well as terminal facilities. The various logistic functions are well integrated and are run within the various terminals or branch areas of the port. The Shanghai International Port operates about 125 berths within the port of Shanghai with 82 berths having the capability of accommodating vessels of 10,000 DWT and more. Minsheng controlled company within the Port of Shanghai, for instance, concentrates on handling, storage, and transportation of imports of bulky grains, oils, feeds, exports of rice in addition to other break bulk and bulk cargoes. The terminal has four 10,000 ton berths with a depth of 10 meters and total quay length of 738 meters. The terminal covers up about 17 hectares and comprising two silos with a capacity of 120,000 tons grains (Yap 2010, p.26). It therefore possesses public bulk, break bulk, specific roll-on and roll-off, as well as cruise terminals within the port of Shanghai. It also runs a number of 293,000 square meters warehouses as well as more than 4.7 million square meters storage yards. It also possesses 5143 units of cargo-handling vessels. In every month, more than 2,000 container ships depart the port with their cargo to the globe’s main continents and markets. Container acts as the core of the port’s venture and in the past few years, container traffic within the port rose from 6.43 million TEUs to about 21.7 TEUs. In 2008, it handled approximately 368 million tones of cargo, with 28 million TEUs being containerized cargo irrespective of the financial downturn. The port also consists of special terminal areas meant for hazardous cargo containers, and it also provides container stuffing as well as stripping sheds. More over, as a technology- intensive port, it has several units of cargo managing equipment in addition to ultra-modern information managing systems that control cargo movements. The port’s Nanpu branch runs two terminals and with smooth access to water in addition to land moving networks, it has 10,000 ton deep water berths, two, one-thousand ton berths as well as a 43,000 square meters storage yard. It manages approximately 5 million tons of steel, iron, wood, and other break-bulk in addition to bulk cargoes. The Port’s coal Branch deals mostly with coals and sand and gravel, as well as acting as a shipping agency. It has four terminal management stations in addition to 17 berths and total storage yards of 204,000 square meters. The combined throughput of these berths goes beyond 30 million tons a year. The port’s Xinhua Company deals with foreign freight and manages more than 10 million tons of cargo every year. The cargoes consist of metallic ores, fertilizers, and bulk cargoes consisting of bulky items, steel products, and building materials. The Port’s Zhanghuabang Company which is located about four kilometers away from the mouth of Yangtze of Huangpu River covers a land area of 200,000 square meters. It has three ten thousand ton berths and 540 meters quays. The terminal manages approximately 1.8 million tons of cargo each year and deals mainly with handling containers, steel products, large and heavy equipment in addition to doing installations. The Shanghai Haitong International Terminal on the other hand is the only terminal that manages roll-on and roll-off traffics. It provides all-inclusive logistics services. It accommodates 5th as well as 6th generation roll-on and roll-off vessels. This terminal covers up 265,000 square meters, and has a yard that is able to accommodate 7,000 cars in parking. The terminal provides other services like PDI, battery charging, along with tire inflation. The second phase terminal is hoped to cover up an area of 100,000 square meters and made up of specific facilities such as warehouses meant for vehicles and their components(Public-Private Infrastructure Advisory Facility,135) The Port’s Boashan Terminal Branch manages 2.9 million tons of cargo each year. It deals mainly with servicing containers, bulk and break-bulk cargoes, steel products, as well as massive cargoes. It occupies 525 thousand square meters and has quays totaling 780 meters in length. Serving the Hangzhou-Jiaxing-Huzhou region, the Longwu Branch is found on the upper region of Huangpu River. It has nine cargo vessel berths, with five container berths, in addition to 20 interior barge berths. Covering about 740,000 square meters within the Port of Shanghai, the Longwu Branch is occupied in many activities that comprise of cargo management, freight agency services, water and land transport of goods, in addition to manufacture along with machine maintenance. Scope of Port Performance Measured by the Management The Shanghai International port logistics has developed a reputable as well as a continuing agency relationship with more than about 20 world known shipping liners and offers all-inclusive shipping services to both its local and international customers. This is on its major international shipping agency platform based in Shanghai. It is the largest local container transshipment organization in Shanghai port, handling and operating the local container feeder send off centre, in addition to offering coastal lines shipping service to its customers. With the good supportive relationship along with other dominant shipping liners, Shanghai International port logistics has developed pubic shipping booking stand to provide certified agents of global top liner shippers including Maersk, NYK, and OOCL among others (Public-Private Infrastructure Advisory Facility132) Warehouse and Storage Service The Shanghai International port logistics also owns multi-functional logistics stations found in Pudong, Yangshan Deepwater as well as Puxi. The port management boasts of sophisticated logistic facilities endowed with superior functions along with first class level. Waigaoqiao Bonded Logistics Zone for instance is found in northern Waigaoqiao Free Trade Zone and is the foremost pilot unit accepted by the respective State Council for a mutual operation in port as well as trade zone. And with 380,000 square meters of ultra-modern logistic warehouses along with 140,000 square meters container shipment area, the zone offers an annually container managing capacity of about 0.8 million TEUs. Puxi logistic stations are based in Anda road, Gongqing and Baoshan, covering an area of approximately 200,000 square meters, with container yards making up to 70,000 square meters. They have a capability of offering a 24 hour warehouse function, empty as well as loaded container stacking, container departure, bulk cargo shipment, oil tank refrigeration in addition to mass building of reefer container. In an area of about 1.12 million square meters, Yangshan Deepwater Port logistics park is linked to East China Sea Bridge, bordering the Harbor New City. As the closest and devoted container storage area of Yangshan Deepwater Port, it offers logistics worthy services including warehousing, refrigeration services, processing in addition to shipment (World Port Source). Transportation & distribution service        Having  in excess of  900  container  trucks  along with  in excess of  100  vans and  unique  trucks  for heavy lift and extra-large cargo, The Shanghai International port logistics is a competent carrier for various hazardous goods as well as toxic cargos and has the capability of  offering  transportation of all sorts of dry ,  reefer and hazardous goods along with other extraordinary containers .  All vehicles are outfitted with GPS gadgets and are therefore under 24 hours surveillance of electronic business stand of the Company. The Shanghai International port logistics is proud of its marvelous transportation team that satisfies various types of cargo and necessities of customers and provides safe and punctual distribution of service for customers across the Yangtze River.   Stevedoring  The Shanghai International port logistics management brags  of owning a committed  terminal  along with  Huangpu River ,  covering an area of 66 , 000  square  meters, and expanding to the coastal line of about 900 meters .Besides   the  proficient loading machinery, the terminal is endowed with 9 kilo-ton class berths , 125,000 square meters of container storage area and 1 6,700 square meters of warehouse in order to provide container managing , destuffing, repairing and warehousing as well as loading and unloading of piece bulk cargo and steel products.     Heavy-lift and Dangerous Cargo transportation   The Shanghai International port has been occupied with warehousing, loading up, distribution as well as shipping of chemical products and dangerous goods for quite a long time. With proficient  hazardous goods logistics regions established each  logistics  bases ,  the  Company  has  had  tremendous experience  in the shipping of chemical products as well as dangerous goods. Additionally, The Shanghai International port logistics has bought a piece of land estimated at 8 hectares to construct a 23,000 square meters warehouse  where  its  unique transport  vehicles  outfitted  with  GPS  along with VDR gadgets are able to offer proficient chemical  logistics services .  The Shanghai International port logistics has  become the outsourcing logistics  service provider for world top chemical  enterprises  such as SECCO Shanghai ,  BASF ,  Bayer China, Arkema  and etc(World Port Source) .  Operating  as  the agent for both  import as well as export ,  combined  land-sea  transportation  and  shipment managing of heavy-lift and extra-large cargo and bulky cargo ,  the Shanghai International port operates as the external window of the Heavy-lift  Cargo  Receiving  and  Transportation  Center  of  Shanghai International port for instance, it has distributed imported extra-large cargo with a value of USD900 million for the Shanghai Maglev development Project. The Company has the capability to provide complete- process service scheme with respect to exact needs of the cargo owners (World Port Source). The Shanghai International port management applies too the triple line approach as a mechanism of measuring how well they are progressing as an organization. To them this is in reference to their impact on the people, the planet as well as the profit. The triple line approach therefore captures a wide set of criteria measuring their achievements not by merely counting economics but also the impacts they put on the ecological as well as social lives. They therefore view their commitment towards corporate social responsibility as well as ecological matters as a commitment to some form of triple line approach. Strengths The Shanghai International port is positioned as the leading hub of choice for major shippers as well as shipping liners and the perfect location wide distribution of activities citing outstanding hinterland connectivity, unrivalled maritime accessibility as well as an extensive choice of excellent logistic services to choose from. In addition to these, it is forging straight connections to various places by offering comprehensive information on the feasible connections, time in addition to service providers to engage in the various forms of hinterland transportation. It has also been able to set up itself as a commanding presence in all its main hub ports of the Yangtze River (World Port Source). Opportunities There is hope for a projected increase in the volume at the Port of Shanghai, up by about 16% in terms of volume, after the 13.6% contraction during the slump faced in 2009. The growth is thought to level off quite quickly. At the Port of Ningbo Zhoushan, for instance, there is a projection of the volume going up by a very strong 27%. In terms of box traffic, the Port of Shanghai is anticipated to see 10.6% container handling growth (Sydney, 19). Threats to the Port Of Shanghai The threat factor facing the port of Shanghai along with other China ports in addition to shipping forecasts is related to the downside, and this is characterized to a greater-than-expected double-dip global financial downturn in 2011.This is made worse by the political situation resulting from the outbreak of a US-China trade war. Mutual trade sanctions between Washington and Beijing may lead to quite high level drop in mutual trade volumes. Another threat concerns the port security such as the underwater threats, terrorists attack as well as threats against the supply chains. Recommendations Ports are going through rising demands with quick turnaround of the various vessels from clients with the rising ship sizes. The Shanghai International port management, in this case, ought to increase port performance so as to satisfy the ever increasing demands of their customers. They should strive to make considerable advancements in container management, even with the coming of tandem as well as triple lift cranes. These cranes still do not come with either double or triple productivity, just marginal improvements for they are not capable of finishing every process with the most favorable carrying capacity. The port must benchmark itself against heavyweights such as the Singapore Port and Hong Kong Port which form the globe’s top container ports in relation to volume (Public-Private Infrastructure Advisory Facility 167). Consolidation within the logistics industry has moved on to put a great influence on the market composition. It is therefore also of great necessity to provide increased capacity as well as wider global networks so as to equal the ever rising cargo capacities in addition to globalized supply chains of their various chains(Sydney 2008.P.22) Work Cited: Cullinane, K, Teng, Y and Teng-Fei, W .Port Competition between Shanghai and Fuzzy Process to Container Port Competition: Policy and Strategic Implications”, Journal of Business and Economics, 2006, Volume 33, (4). Gu-Tae, Y & Dong-Wook, S, ”Transportation: An Application of the Hierarchical Ningbo: Maritime, Routledge, 2005, Volume 32, (4), pp. 331-346(16). Retrieved on August 29 from http://www.springerlink.com/content/4k681u0418r13668/ Public-Private Infrastructure Advisory Facility. Port Reform Toolkit. World Bank Publications, Pp 167-203, 2003. Pinder, D and Slack .Shipping and Ports in the Twenty-first Century: Globalization, Technological Change and the Environment Series, Routledge 2004, Pp.164-257. Sydney, B.J. The Future of the Port of Shanghai: A Geological Study, “North-China herald" Office, 2008, Pp.22 Shanghai International Port (Group) Co. Ltd. About Port of Shanghai.Retrieved on August 29 from http://www.portshanghai.com.cn/en/channel1/channel11.h World Port Source. Port of Shanghai. Retrieved on August 29 from http://www.worldportsource.com/ports/CHN_Port_of_Shanghai_411.php Yap, W.Y .Container Shipping Services and Their Impact on Container Port Competitiveness, pp.25-95 Asp / Vubpress / Upa, 2010, Pp.25-95. Read More