Ports in Global Supply Chains

PORTS IN
GLOBAL NETWORKS
Rob Zuidwijk
Associate Professor Supply Chain
Management
MANAGEMENT OF TECHOLOGY AND INNOVATION

ROLE OF PORTS IN GLOBAL SUPPLY CHAINS?
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“Port Vision 2030” downloadable via www.portofrotterdam.com
port as a global hub port as an industrial cluster

PORTS AND GLOBAL SUPPLY CHAINS
Fact: About 11.9 million containers were handled by
the Port of Rotterdam in 2012
Question: How many supply chains have used the port of
Rotterdam as a hub?
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GLOBAL
HUB
Problem
Does “one size fits all” still work?

PORT AS A GLOBAL SUPPLY CHAIN PARTNER
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Source: Port Vision 2030
Source: Ross Robinson (2002) Ports as
elements in value-driven
chain systems: the new paradigm,
Maritime Policy & Management 29(3):
241-255.
“ports must now be seen as elements in
value-driven chain systems [...]
they deliver value to shippers and to
third party service providers; customer
segmentation and targeting is on the
basis of a clearly specified value
proposition; and the port captures
value for itself and for the chain
in which it is embedded.”

SUPPLY CHAIN BUILT ON NETWORKS
Simple framework to organize the discussion
Global supply chains supported by three global networks:
1. Organizational networks
Organizations linked via business relationships: financial flows
2. Logistics networks
Facilities linked via transportation services: goods flows
3. Information networks
Systems linked via communication channels: information flows
“Ports in Global Networks”
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COORDINATION FOR
SUSTAINABLE GLOBAL SUPPLY CHAINS
ORGANIZATIONAL NETWORKS
6

SUPPLY CHAIN COORDINATION
Coordination of decision in supply chains
 Usual objective is better economic performance;
 Less attention for environmental or societal objectives;
 One of the exceptions: closed-loop supply chains in which
people, profit, and planet go hand in hand.
Research Focus
Joint involvement of sea ports and global supply chains in
voluntary or regulated programs to reduce the negative
externalities of logistics processes.
PhD student Xishu Li works on “Green Port Tools” with Rommert Dekker,
Rene de Koster, and Rob Zuidwijk.
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CARBON FOOTPRINT REDUCTION IN SUPPLY CHAINS
Regulated programs
Emission Trading Scheme large emitters in Europe
Voluntary programs
Supply chain wide emission reduction programs initiated by OEMs (Mattel,
SCA) or retailers (Walmart, Tesco)
Why does one need coordination?
 Downstream partners feel the pressure
 Upstream partners best able to reduce footprint
Why is it different from usual supply chain improvements?
 Result of carbon footprint reduction hard to verify; needs certification
 Incentives via constructs such as carbon price
Preliminary work:
Felipe Caro, Charles Corbett, Tarkan Tan, Rob Zuidwijk (2013).
Double-Counting in Supply Chain Carbon Footprinting. Manufacturing
& Service Operations Management 15(4): 545-558.8

CARBON REDUCTION: PORTS IN GLOBAL SUPPLY CHAINS
World Port Climate Initiative
 Environmental shipping index based on ship design;
 Measure of global emissions of vessels;
 Good index results in reduced port dues.
 Ambitions go much further:
“Ports’ carbon footprint inventories can be expanded beyond the
immediate boundaries of the ports to include entire supply chains,
from manufacturers or suppliers through intermodal shipment to
distribution points or even to retail outlets.
This type of expanded disclosure may be required by manufacturers,
retailers, or other participants in the supply chain, and can lead to the
identification of opportunities for efficiency improvements.”
Source: Guidance document “Carbon Footprinting for Ports”, June 2010.
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COORDINATED MANAGEMENT OF SUPPLY CHAIN RISKS
Coordination problem
One organization is facing a particular risk while another
organization is in the position to manage the risk
Example
Freight forwarder wants to expedite goods in an efficient and
secure way, truck carrier controls carriage of the goods
Example
OEM wants to control the quality of its re-used products, third
parties are involved in remanufacturing and may unintendedly
source counterfeit parts
Morteza Pourakbar is now visiting McGill University to study
these types of problems
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SYNCHROMODAL TRANSPORT NETWORKS
LOGISTICS NETWORKS
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PORT AS LOGISTICS HUB: EXTENDED GATE NETWORK
 New business model for container
transport
 A seaport container terminal
operator that extends its gates to
inland container terminals.
 High capacity corridors (Barges and
Trains) to hinterland destinations
 Competition (Cost, Time): Road and
intermodal carriers
Main Network Design Decisions
 Which inland terminals will act as extended gates?
 What capacity, frequency on the corridors?
 What prices for services?
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MODEL OF EXTENDED GATE (DRY PORT) NETWORK
Final Customers
sea
port
dry
port
dry
port
dry
port
• Port-to-port services
• Port to door services
Source: Panagiotis Ypsilantis, Rob Zuidwijk (2013).
Joint Design and Pricing of Intermodal Port -
Hinterland Network Services. Manuscript.
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JOINT DESIGN AND PRICING
 We model joint design and pricing of container transport
services on a network with economies of scale and
transit time constraints
 Port-to-door services are priced independently of route
through the network: Pricing follows competition and
design minimizes costs.
 Port-to-port services design and pricing decisions are
mutually dependent: revenue enhancement by pricing
intermodal transport per (geographical) market segment.
 Transit time constraints: intermodal transport penetrates
markets through frequent services instead of achieving
economies of scale through the use of bigger vessels.
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PhD student Panagiotis Ypsilantis works on the design and planning of
intermodal network services with Leo Kroon, Jan van Dalen, and Rob
Zuidwijk.

SYNCHROMODAL TRANSPORTATION
Adapted from: The future of freight transport: ECT’s vision on sustainable and
reliable European transport. Europe Combined Terminals, October 2011.15

BOOKING OF SYNCHROMODAL TRANSPORT CAPACITY
Amodal booking
 Booking of transportation without specifying the mode of
transport in advance;
 No signal to commit specific transport capacity.
Questions amodal booking
 How to source transport capacity?
 How to price transport capacity?
Research Focus
The design, planning, and execution of synchromodal
transportation services under new business models
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AVAILABLE TRANSPORT CAPACITY
Question
How to compare transport capacity on road, rail, and inland
waterways in order to manage overall transport capacity?
Road: use of infrastructure by autonomous vehicles under
traffic conditions
Rail: regulated allocation of paths to specific train services
Question
How to determine the opportunity costs of putting a container
on a truck instead of a train?
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INTER-ORGANIZATIONAL SYSTEMS
IN LOGISTICS
INFORMATION NETWORKS
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“DATA PIPELINE” FOR GLOBAL SUPPLY CHAINS
New business model for Customs
 Beyond existing voluntary customs programs (CTPAT, AEO);
 Customs: access to supply chain operational data via data pipeline;
 Customs improve risk profiles;
 Move from transaction based to audit based risk assessment;
 Supply chain partners improve compliance;
 Supply chain partners improve operational performance?
“Allowing traders to supply information once in a seamless integrated
process and minimising the burden on business by utilising
commercial systems and data streams must be the right direction.
And we must build partnerships with economic operators in order to
understand each other’s business [...]”
Source: David Hesketh (2009). Seamless electronic data and logistics pipelines shift
focus from import declarations to start of commercial transaction. World Customs
Journal 3(1): 27-32.
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CARGO INFORMATION SHARING FOR INTERNATIONAL LOGISTICS
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Better capacity utilization
Less empty container movement
Decoupling maritime/ continental flows

VALUE OF INFORMATION IN TRANSPORTATION
Value of (sharing) information
 Widely studied in context of inventory management;
 Less attention in context of transportation management
Example
Information on container release times stimulates use of barge
and rail instead of truck and improves trade-off between
efficiency and reliability
Rob Zuidwijk and Albert Veenstra (2013). The Value of Information in Container
Transport. Transportation Science. Accepted for publication.
Research Focus
Study of the value of (cargo) information in freight (container)
transportation
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PORT COMMUNITY SYSTEM
≈ ?
PhD student Irina Romochkina works on
governance modes for Port Community
Systems with Peter van Baalen, Eric van Heck,
and Rob Zuidwijk

PORT COMMUNITY SERVICES
Rail planning
The service Rail planning ensures optimal exchange of information surrounding the processing of trains and
their cargo in the ports. Rail operators, traction suppliers, rail terminals, sea terminals and rail infrastructure
operators stand to benefit. The information exchange in the service allows them to work more efficiently. It
allows the processing of trains to become considerably more streamlined, saving the sector around 50,000
phone calls a year. On average it takes 1 1/4 hours less to process the administration associated with a
train.

PRICING OF SERVICES ON A PLATFORM
 Users are both producers of data
and consumers of services
 The platform provides an
infrastructure
 The services provide value to the
users
 The platform provides value to the
services
 What prices should the users pay
and how should these revenues
be distributed among services and
platform?
Factors
 Structure of interdependent
services
 Service value dependent on
adoption rate of users
Service
1
Service
3
Service
2
price/fee
User
2
User
1
User
3
value
Platform
data/infrastructure
contributions
= -
Price computed from contributions
and value

SUMMARY
Ports act in global supply chains built on organizational,
logistics, and information networks
Research focus
 Coordination for sustainable global supply chains;
 Synchromodal transport networks;
 Inter-organizational systems in logistics.
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CONTACT DETAILS
Prof. dr. Rob A. Zuidwijk
Associate Professor Supply Chain Management
Rotterdam School of Management
Erasmus University
Email rzuidwijk@rsm.nl
Web http://rzuidwijk.wordpress.com
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Ports in Global Supply Chains

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