Port Planning

and Logistics

Innovations: How

Corridors Should

Lead to Open

Doors

Paul E. Kent, Ph.D. , Vice President and Port Specialist, Nathan

Associates Inc., PKent@nathaninc.com

Jacob Greenstein, USAID

Port and Transport Logistics

Chain Efficiency• Initial interest in shipping/transport costs

– Limao and Venables – 10 % increase in transport costs reduces trade volume by 20 %

– Radelet and Sachs – doubling shipping costs slows GDP growth by 0.5 %

• Recent growing (research) interest in port and transport logistics chain efficiency– Clark, Dollar, Micco (2001) – port inefficiency increases distance by

60%

– Wilson, Mann, Otsuki (2003) – efficiency improvement in ports has greater impact than Customs improvements and use of e-commerce

– Hummels (2001): Inventory costs due to transport delays equivalent to 0.8 %/day of delay of the value of the goods being delivered

– Kent, Fox (2004) – assess impact of port inefficiency on welfare – port inefficiency, when mitigated, induces GDP growth by 0.47 percent

– Djankov, Freund, and Pham (2006) -- each additional day required for a shipment imposes “extra” economic distance of 70 km per day

– Fox, Francois, Londoño-Kent (2006) – inefficiency at US/Mexican border has effect of widening the Rio Grande river by several hundred miles

Innovations Leading to

Improvements in Port and Transport

Logistics Efficiency

• FastPath Transport Logistics Diagnostics

Tool

• Intelligent Logistics Systems

• Regulating Ports for Anti-Competitive

Behavior Post-Privatization

Primer on Transport Logistics

Chains and Terminology• Transport system composed of links and nodes

• Links refer to where freight is moved – roads, rail, inland water

transport

• Nodes refer to where freight and trucks are processed – ports,

distribution centers, intermodal yards, border crossings

• TEUs – measure of unit referring to container size – twenty foot

equivalent unit (1 TEU) or forty foot equivalent unit (2 TEUs or 1

FEU)

• Port time – the time a vessel spends in port

• Berth utilization – percent of time a berth is occupied

• Berth productivity – number of containers (“moves”) loaded and

discharged per hour (number moves per crane-hour, number moves

per ship-hour)

• ICD – inland container depot (some times referred to as dry port,

intermodal yard)

• TOS – terminal operating system – computerized process control

system for managing port operations

Major Components of a Port

• Berth

• Yard

• Gate

6

Transport Logistics Chain

Factory

Truck Staging Area(exports only)

Inland Container Depot

Road/Rail/Inland Waterways

Port Hinterland Transport System

Warehouse

N1 N2 N3 N4 N5 N6 N7 N8 N9 N1 N1 N1 N1

L1 (port)

L9a (inland water transport)

L12a (rail)

L2 (port) L3 (port) L4 (port) L5 (port) L6 (road) L7 (tsa) L8 (tsa) L9b L10 (ICD) L11 (ICD) L12b L13 (road)

Port AreaTruck

Staging

Inland

Transport

Inland

Cont.

Depot

Storage/

Distribution

Factory/

Retail

The Cost of Port Inefficiency

• Directly affects freight rates serving the region

– Non-integrated terminal means slower berth productivity at berth

– Ship’s gear = 6-8 moves per crane hour; typical geared vessel with

two cranes means 12-16 moves per ship hour

– Fully integrated terminal = 25-30 moves per crane hour; vessel

served with 2 gantries means 50-60 moves per ship hour

– Assuming vessel loading/discharge volume of 800 moves

• Geared vessel = 50-67 hours working time

• Gantry served vessel = 13-16 hours working time

• Extra time required by vessel in non-integrated terminal = 37-51 hours

– For a 3,000-TEU vessel, hourly ship cost (operating and capital

cost) is about $25,000/day or $1,042/hour at port

– Cost of low productivity: $1,042 x 37 hours = $38,542; $1,042 x 57

hours = $59,394

– Range of extra cost from low productivity = $38,542 - $59,394,

or $48-$74 per move (or $32 - $49 per TEU)

• Understanding importance of ports led to port reform and private

sector participation

Importance of Transport Corridors

• Ports represent only a relatively small share of

total transport cost

• Shippers are increasingly interested in total

transport cost, time, and reliability

• With improvements in hinterland routes, inter-

port competition has evolved to inter-corridor

competition

• Shippers now have more options for getting

merchandise to final destination

• Constraints to corridor efficiency drives cargo to

other options

FastPath – Innovative Tool for Assessing

Performance of Transport Logistics

Chains

• Considers constraints to efficiency along entire transport

logistics chain

• Relevant corridors assessed in terms of time, cost, and

reliability

• Logistics score generated

• Performance of links and nodes compared to global

standards and corridors of other countries

• Effects of improvement options on logistics performance

can be tested to help establish investment priorities

• Applicable to trade facilitation, food security, and disaster

assistance

• Applied to 25 corridors in Africa, 4 in Asia, and 1 in Latin

America

FastPath Schematic of Buenaventura-

Bogotá Corridor

Data Input Screen for Yard

Operation (Time and Cost)

FastPath Price Data Entry Screen for

Buenaventura-Mediacanoa Road Link

Time, Cost, Reliability and Logistics

Scores for Export Containers

Existing Conditions and Norms

Export Containers

Impact of Reducing Congestion Delay

by 30 Minutes at Each Point

• 6 road bottlenecks

• Bogota-Buenaventura Route– Total volume = 351,322 TEUs

• Imports – 175,661 TEUs

• Exports – 32,934 TEUs

– Import truck trips - 112,696 TEUs

– Full export truck trips: 22,226 TEUs

– Empty TEU export truck trips: 71,363 TEUs

– Total truck trips in both directions: 206,285

• Reducing congestion delay by 30 minutes at each bottleneck: total potential saving time is 3 hours. Current travel time between Buenaventura and Bogota = 30.5 hours, assuming 10 hour rest time

• With travel truck reduction and resulting truck productivity improvement, same volume of containers could be handled using only 185,995 truck trips (vs 206,285)

• If original number of trucks remains constant, number of additional cargo volume that could be transported is thus about 34,500 TEUs

• Assuming a 100 truck company, operating costs reduced by 8 percent

Comparing Results with Other

Corridors

Logistics

Component

Tema-

Ouagadougou

Laem

Chabang-

Vientiane

Dacca-

Chittagong

(a)

Durban-

Nelspruit

(a),(b)

Maputo-

Nelspruit

I N B O U N D

Overall logistics chain 51 64 59 63 62

Port 55 55 49 60 51

Road transport 55 70 58 65 51

Border post 1 73 (Ghana) 67 (Thailand) n/a n/a 73 (Mozambique)

Border post 2 20 (Burkina Faso1) 63 (Laos) n/a n/a 73 (South Africa)

O U T B O U N D

Overall logistics chain 62 66 54 68 60

Port 72 65 52 70 57

Road transport 70 70 58 65 51

Border post 1 53 (Ghana) 67 (Thailand) n/a n/a 67 (Mozambique)

Border post 2 53 (Burkina Faso) 63 (Laos) n/a n/a 63 (South Africa)

1 Idem foot note 6

Benefits of Comparative

Measurements

• Allows for benchmarking against other

corridors, including rivals

• Enables benchmarking against previous

years’ performance to gauge impact of

interventions (or not)

• Scenario testing allows for assessing

impact for various interventions

• Encourages competition

Smart Thinking – Intelligent Logistics System

Port/truck staging area Dry port

Source: Intelligent Logistics System concept developed by Paul E. Kent, Ph.D., Nathan Associates Inc.,

PKent@nathaninc.com

Components of Intelligent Logistics

System

• Network of dry ports and truck staging

areas

• Monitoring and control IT technologies

– GPS/smart seals, data exchange

technologies

• Services to trucks, cargo, and drivers

Monitoring Shipments

Control center SPRC

INTERNET

RADIO SURVEILLANCE WITH GPS AND

LINKED REPEATERS THROUGH ETHERNET

VHF repeaters

with IP link

Blue arrow, link between

truck & GPS radio, also

with telemetry

Freight Corridors Colombia

Medellin

Truck Staging Area / Dry Port

Services Offered at Truck Staging

Areas and Dry Ports• For the cargo

– check in/dispatch

– GPS monitoring/control

– container storage

– smart seals

–Consolidation/deconsolidation

– warehousing

– customs clearance

• For the trucks– truck repair

– environmental permits

– sales – tires, fuel, spare parts

– parking

– GPS monitoring/control

• For the truck drivers– electronic bulletin boards for freight

bookings

– cafeteria

– food store/pharmacy

– hotel

– communications center (internet/phone)

– dispatch

• Ancillary services– Banking

– Offices for logistics services –

freightforwarding, ships’ agents, etc.

Benefits of Integrated Truck Staging

Area/Dry Port Approach

• Reduces urban congestion

• Reduces fuel costs

• Reduces pollution

• Reduces equipment capacity requirements

• Increases equipment utilization rates

• Decreases freight costs

• Decreases traffic congestion on freight corridors

• Reduces road maintenance costs

• Enhances security of trucks, cargo, and drivers

• Enhances driving safety

• Reduces insurance costs

• Creates local employment opportunities

• Reduces total logistics costs

• Enhances global competitiveness

Services offered at truck staging

areas and dry ports

• For the cargo– check in/dispatch

– GPS monitoring/control

– container storage

– smart seals

– Consolidation/deconsolidation

– warehousing

– customs clearance

• For the trucks– truck repair

– environmental permits

– sales – tires, fuel, spare parts

– parking

– GPS monitoring/control

• For the truck drivers– electronic bulletin boards for

freight

bookings

– cafeteria

– food store/pharmacy

– hotel

– communications center (internet/phone)

– dispatch

• Ancillary services– Banking

– Offices for logistics services –

freightforwarding, ships’ agents, etc.

Benefits of integrated truck

staging area/dry port approach

• Reduces urban congestion

• Reduces pollution

• Decreases freight costs

• Decreases traffic congestion on freight corridors

• Reduces road maintenance costs

• Enhances security of trucks, cargo, and drivers

• Reduces insurance costs

• Reduces AIDS risk

Integrated Transport Logistics +

Security = Efficiency

Benefits to investors

• Captive cargoes, trucks, and truck drivers – 1,500 trucks call Buenaventura each day!

• Various revenue generation activities

• Truckers and shippers are “encouraged” to enter this secured transport logistics chain (fined for truck parking violations in cities, more inspections required, etc.) –less market risk to investors