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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 contai.............
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