When intermodal containers entered the scene in the late 1950s, they changed everything related to transporting goods. As the primary method for moving large quantities of freight over land and sea, containers now play a significant role in both supply chain optimization and the influence this has on a company’s bottom line.
However, optimizing shipment times and overall container efficiency isn’t as straightforward as it may sound, since there are so many factors and players involved. There are specific nuances within the industries that move freight using this method, and in the era of COVID-19 nothing related to the supply chain is as it used to be.
Since it would impossible to cover all the related dynamics, here we’ll focus on a common denominator within the global supply chain when it comes to containers: the role of port performance.
More specifically, we’ll examine how port efficiency affects the global supply chain; factors that influence it; and tools your organization can use to assess the performance of ports around the world to inform strategies for optimizing shipment times and overall container efficiency.
The Backbone of World Trade
Referring to maritime shipping as the “backbone of world trade” Statista cites estimates that about 80 percent of all goods are shipped by sea. A March 2021 report by KPMG concurs, noting that maritime trade accounts for “more than 90% of the world’s commerce.”
Numbers such as these are reflected in trends found in the Review of Maritime Transport: 2020 published by the United Nations Conference on Trade and Development (UNCTAD), which cites a near tripling in maritime trade over the past few decades due to globalization.
How Port Efficiency Affects the Global Supply Chain
Port efficiency has a tremendous impact on all who interact with this hub of trade activity. In Port Economics, Management and Policy, Dr. Athanasios Pallis and Dr. Jean-Paul Rodrigue refer to port efficiency as “the operational performance of ports and the maximization of the produced output with given resources or the production of a given output with limited possible resources” and cite specific factors used to measure it—including berth occupancy and turnaround time.
Underscoring how the continuum of trade impacts port efficiency and vice versa, the authors note that efficiency measurements like these and others “span within a performance continuum from maritime operations to terminal and hinterland operations” and that all of these dimensions are interrelated—since what isn’t working well in one will most likely impact the others.
This dynamic is also true along the supply chain continuum that extends in either direction from the port, as Pallis and Rodrigue note: “This performance is too important to be measured at the terminal level since the facilitation of cargo arriving, staying, and leaving the terminal through various bundle services stand as vital functions in integrated transportation chains.”
When it comes to maritime operations, they note that one component that impacts port performance is maritime access, which includes:
Average anchorage time—during which ships are waiting for a berthing slot to become available.
Average ship turnaround time (i.e., ship dwell time)—which refers to the amount of time it takes to service a ship after it’s docked.
On the other hand, terminal operations are influenced by factors that include:
Crane performance—which is a critical factor that impacts the amount of time a ship spends at a port.
How efficiently containers are moved in and out of the storage yard.
The “average yard dwell time for inbound, outbound, and transshipment cargo,” which is influenced by how long it takes trucks to enter the terminal and pick up or drop off cargo.
Gate performance, which “concerns the efficiency of tasks related to document processing and security inspections,” and is reflected by the average gate waiting time.
Performance of rail loading/unloading equipment, for docks that have rail facilities.
Hinterland operations are described by Pallis and Rodrigue as involving “all the transport and distribution activities servicing the port’s customers.”
Noting that the most important factor in hinterland operations is the capacity for local roads connected to the port to handle related traffic, they cite street-level congestion as a major factor that impairs port performance “related to many of the supply chain management strategies of the port’s customers.”
Container Terminal Efficiency
Another major factor that impacts port performance is container terminal efficiency—which is influenced by the number of container movements required during:
This animation from Allyn International provides a simple overview of basic port operations.
Container port animation – how a shipping container port works – logistics training
Source: Train Learn Grow on YouTube
A port’s connectivity performance “relates to its capacity to integrate within maritime supply chains and the operational function of a port as a node in transport networks.” Within a supply chain framework, Pallis and Rodrigue cite factors that include:
Maritime connectivity: “The connectivity of a port with container services (liner shipping) and other regular services (i.e. Ro/Ro connectivity) to third destinations.”
Intermodal connectivity: “The connectivity of a port with intermodal container transport services to and from hinterland destinations.”
On-time performance of sea-going vessels and those using road, rail, and inland waterways.
Mean-time customs clearance.
A helpful tool to evaluate the connectivity performance of ports is the Liner Shipping Connectivity Index (LSCI) first created by UNCTAD in 2004. The country-level LSCI provides the maritime connectivity trends of 178 countries from 2006 to 2019 and is released annually.
An overview of 2020 LCSI data is available in UNCTAD’s 2020 E-Handbook of Statistics.
UNCTAD also offers two related datasets that provide stakeholders with insights into the performance of specific ports:
Another UNCTAD resource—published in August 2020 and entitled, “Ports in the global liner shipping network: Understanding their position, connectivity, and changes over time”—provides a concise but detailed look at port dynamics and various shipping options that stakeholders may find valuable.
In the current era in which the world is emerging from COVID-19 lockdowns, port congestion has become a big problem that industry experts say may go on for months. Largely, this is due to changes that were put into place to adapt to the impact of the pandemic which upended typical procedures.
In that light, tools such as those provided by UNCTAD can help inform decision-making regarding shipping options and adjustments that may be needed to optimize shipment times and overall container efficiency.
The Role of Logistics Experts
Another critical tool to help you navigate the challenging waters of maritime trade?
Partnering with a logistics company that possesses the supply chain expertise and technical support needed to help you effectively manage the complex dynamics involved.
At CLN Worldwide, we believe the best customer experience is with a co-managed supply chain solution.
Here’s how it works. You schedule a call with us, we will analyze the current market you’re navigating, and then create an effective supply chain strategy that we will then integrate and execute together.
Call us today, so you can stop wasting your time with regulatory delays and start trusting the efficiency of your supply chain to scale your business.