Container Port Efficiency In Emerging And More Advanced Markets


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Project and Seminar Material for Transport Management Technology

Container Port Efficiency In Emerging And More Advanced Markets


Chapter One


Introduction

1.1 Background Of The Study

Nigeria is indeed one of the greatest maritime nations of the world; this is confirmed by both the local maritime operators and foreign maritime operators. Ports are supposed to be security zones and policed as such to prevents crimes mainly theft, smuggling among sabotage attacks, stowaway. In olden days, theft as merely limited to petty pilferage and broaching of cartons by Dockers only tilling their pockets that would neither attract attention nor cause appreciable loss to the cargo consignee. The crime latter escalated to piracy onboard vessels at anchorage. Crews were violently robbed and cargo stolen, with some measure of success in checking piracy at anchorage, attention shifted to the ports proper. There are many port agents both conventiona1l recognized law enforcement agents and the fadeless ones purporting to be government officials seeing to the general security of our ports These notwithstanding the ports are being easily accessible to a multitude of hoodlums now popularly known as “what rats” and syndicates of other malefactors actors who have made the ports their homes. They vandalize the lighting system to enable them carry out their natural and notorious activities. Any degree of crimes can now be perpetrated by these hoodlums acting in cohorts with some of the security agents, and port official. Crewmembers going ashore are sometimes violently attacked and robbed within and outside the ports. Cargo theft has grown from breaking any types of package within the ports to complete disappearance of container out of the ports. Cargos are being successfully cleared from the port by spurious owners. Ships are boarded by unauthorized persons who steal both cargoes and ship property including those relate to safety. What a criminal act! Vehicular cargoes are more vulnerable to plunder age because of the attention they attract. They are loaded with some goods that are not made parks where they normally await clearing. They are securely locked and then keys are handed to security officials for safety. But most of these vehicles with or without undeclared goods are mysteriously opened and their valuable parts are stolen Clearing of cargoes is a process which the shippers, freight forwarded and consignees thinks is as difficult as the head of the camel having to pass through the eye of1the needle The customs long room is being made too “long” for clearing agents Problems with all department involved in the clearing start from the usual indifferences to work, the officials thinking that they are doing the agents favour The agents must “co-operate” with the officials, otherwise their entries will either be unnecessarily delayed further or completely lost in the labyrinth of bureaucracy Having survived the voracity these official and the goods released the clearing agent face the cast ordeal of having to “settle” all other port agents and officials even with authentic release documents Some of the security men still go outside the ports to intercept and tort the consignee for “settlement” Coupled with factors like high port tariffs, port insecurity is now causing Nigerian ports serious loss of clientele to neighbouring ports. Lome and Cotonou for example, although in charter parties and ordinary contracts of affreightment where carriage of goods by sea Act 1971 does not apply to the operating bills of lading. Ship owners can exclude liability for loss of or damage to cargo arising from piratical acts generally the Act (COGSA “71”) does not provide such that Nigeria has joined the club of port stigmatized as dangerous in insurance circle. Consequently, ship owners and shippers pays higher premiums for ships and cargoes, a burden that is ultimately passed to the public consumers.

If Nigeria must grow both politically and economically, there are needs for an efficient and effective security system for safety of cargoes id ship including the crews. There should be both the activities of the appropriate authority and the private sectors to ensure that security at the port be maintained.


1.2 Statement Of The Problem

Crewmembers going ashore are sometimes violently attacked and robbed within and outside the ports. Cargo theft has grown from breaking any types of package within the ports to complete disappearance of container out of the ports. Cargos are being successfully cleared from the port by spurious owners. Ships are boarded by unauthorized persons who steal both cargoes and ship property including those relate to safety. What a criminal act! Vehicular cargoes are more vulnerable to plunder age because of the attention they attract. On this background the researcher wants to investigate efficiency and effectiveness of security agencies in Nigeria ports


1.3 Objective Of The Study

The purpose of this study includes:

  1. To highlight the importance of port agents in ports.
  2. To evaluate the performances of port agents in ports
  3. To focus attention on factors influencing the efficiency and effectiveness of port agents in Nigeria ports

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: there is no importance of port agents in ports
    H1: there is an importance of port agents in ports
  2. H02: there are no factors influencing the efficiency and effectiveness of port agents in Nigeria ports
    H2: there are factors influencing the efficiency and effectiveness of port agents in Nigeria ports

1.5 Significance Of The Study

This study will give clear insight on efficiency and effectiveness of security agencies in Nigeria. The study will be beneficial to students, Nigeria port authority and the general public. The study will also serve as a reference to other researchers that want to embark on this study.


1.6 Scope And Limitation Of The Study

The scope of the study covers efficiency and effectiveness of security agencies in Nigeria ports. The researcher encounters some constrain which limited the scope of the study;

a) Availability Of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities


1.7 Definition Of Terms

Efficiency:

Efficiency is the ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste

Effectiveness:

Effectiveness is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression.

Security Agency:

A security agency is a governmental organization which conducts intelligence activities for the internal security of a nation

Port:

A port is a maritime commercial facility which may comprise one or more wharves where ships may dock to load and discharge passengers and cargo


Chapter Two


Literature Review

The most easiest and cheapest of all modes of cargo transportation is the shipping mode and this is due to its ability to handle cargo of large volume which is almost four times the capacity that rail and air transportation could carry [1]. Maritime transport therefore remains the most important form of international transport in terms of trade enhancement when compared to other form of transportation. The Containerization of this cargo is the process of using a standard box known as containers to transfer these goods from ship to the yard. This involves the use of powerful cranes, berths, tractors, trailers, and straddle carriers.

Steenken et al. [2] stressed the importance of container terminals being able to guarantee a speedy operation to reduce delay in goods organization, planning and control strategies employed. Among these are the strategies to be employed on securing the port and delivery to the ships, trains, and trucks and consequently reducing the transportation time. These operations are not without its security challenges and the efficiency of a given terminal therefore primarily depends on the internal security. Due to the expensive nature of securing containerport facilities, it is therefore desirable for the port administrators to make better decision in order to optimize their performance and thereby increasing the productivity of the terminal by minimizing the cost and time of operation.

This study is therefore to address the security challenges faced in the day-to-day operation of a container-port and the impact this has on the overall efficiency of its administration.

Every day, more than two million commercial container shipments move in the seas, and security plays a vital role in ensuring the fluidity of trade and commerce through cargo shipping. Maintaining or upgrading seaport security therefore requires a combined effort of video surveillance, access control, perimeter detection, management software, building technologies, and proper people and processes [3].

This research work focuses on the security challenge and its effects on the overall operational efficiency of the container-port. The need then arise to study and evaluate how the changing security policies affects the ports performance in terms of time and cost expended on the import and export of goods. Consequently, a security system for a seaport requires a great deal of flexibility and adaptability to function properly. Although security is always of paramount importance, a seaport is first and foremost a commercial enterprise, and interruption in the free flow of cargo and equipment has material and expensive ramifications. It is now of great necessity to critically access the security policies in place and recommend the best way to reduce the operational cost and time expended on security in order to improve the demand for shipping and make it more attractive to the importers, exporters and the cargo carriers. This research work is limited within the spectrum of a container-port only with the view to address the security challenges facing the day-to-day running of the port and to analyze the impact this have on the overall efficiency of port establishment.


Preamble

The revolutionary development of container handling has increased the efficiency of worldwide trade (by about 9.5% per year) in the last thirty years and will continue to do so at an 8% growth rate in the coming years [2]. An increasing demand for container transportation therefore results in various issues, including risk of terminal congestion, delivery delay, and economic loss.

The main role of a container terminal major is the transfer and storage of containers. In a container terminal, it is important to guarantee fast operations to reduce delays in delivering goods to ships, trains and trucks, and consequently, to reduce sea, and road or rail transport time. Therefore, container terminals have a fundamental role in the interchange between roads, railway and sea networks, and therefore they are usually equipped with modern equipment, advanced transport systems and up-to-date information and communication technologies. In this context, the efficiency of a given terminal depends on its internal organization according to its planning and control strategies [4].


Basic operations in a container-port

The general overview of operations in a container terminal was described by Pesenti et al. [5] and the main operations of a typical container port classified into seven basic operations which include the following:

  1. Maneuvering of ships between anchorage areas and berths;
  2. Berthing and de-berthing of ships;
  3. Positioning of cranes alongside ships;
  4. Loading and unloading of containers;
  5. Moving containers between the berth and the yard;
  6. Configuring and operating the yard;
  7. Moving containers between the yard and the gate.

The complexity of operation in a container port makes the matter of security issue encompassing more than the physical protection of facilities alone. But on a broader note, it addresses the control of some basic operation to obtain a high degree of efficiency, and these may include traffic control, personnel and cargo inspection and overall protection of the territorial waters. The major challenge is the integration of these interwoven operations and provision of easy interactions between these operations [6].


Factors affecting port operations and efficiency

In a world faced with the challenges of growing competition and globalization, the way a port industry could meet the customer’s desire is by ensuring satisfactory service delivery. A port could only continue to be relevant to customers if it operates with minimum delay, utmost efficiency and at a reasonable cost to users. There are so many factors militating against an efficient running of ports operations.

Uzanya [7] Opined that the presence of so many government agencies in the port, all performing the same duty of physical examination of cargo causes delay in cargo clearances as well as high cost of doing business in Nigerian ports. According to him these illegal government agencies engage in money extortions from clearing agents and shippers thereby escalating the cost of clearing goods in the port. He compared the delay witnessed in clearing goods in both Cotonou and Lagos ports as three days in Cotonou as against seven days or more in Lagos port. Uzanya [7] Concludes that no amount of patriotism could make a shipper abandon a port where he could obtain quicker and cheaper services for where he would waste time, hence, the preference of Cotonou port to Lagos port by Nigerian shippers. According to U.S Department of Transportation [8], corruption is the greatest headache the ports in Nigeria have to tackle in order to remain relevant to the economic growth. This situation can only be achieved under an atmosphere of transparency, accountability and commitment to universal accepted ethical standard which will lead to universally accepted operational standard in terms of port costs and operational delay in the ports. He listed the following as reasons why corruption persists in some ports of the world and Nigeria in particular.

  1. Inadequate supply of crafts and plants which encourages some private inducement for serves to be rendered.
  2. Cumbersome documentation system which makes room for manipulation and collusion with relevant interests to deprive the port authority of relevant revenue. Dilapidated state of port infrastructure that result in reduced capacity utilization thus causing dock stacking of containers and unholy bargains for preferential treatment.
  3. Low labour productivity and volatile dock labour environment fraught with extortion and indiscipline.
  4. Delay in posting bills to ledgers and acknowledging payment for personal gains.
  5. Deliberate delay in performing official duties in order to elicit gratifications.
  6. Late submission of shipping documents especially in the area of manifest submission and application for ship Entry Notice (SEN).
  7. Submission of false documents and/or incorrect information e.g. under declaration of ship and cargo tonnage. Wrong declaration leads to faulty planning and preparation of cargo discharge, reception and clearing.
  8. Unholy, alliance between the shipping companies and stevedoring companies/labour and between clearing agents and stevedoring companies giving rise to non-declaration of services enjoyed e.g. extra and optional services.
  9. Incursion of miscreants into the ports thus jeopardizing port security.
  10. Deliberate manipulation of Debit Notes (DN) to avoid payment of correct charges and even times earn unmerited credit balance.
  11. Faking the port authority’s receipts of payment, indicating that bills rose had been paid where the reverse is the case.
  12. Vandalization of port and navigable facilities e.g. buoys plants and equipment.
  13. Employment of sub-standard vessels on the sea routes resulting in accidents whose wreckage deter ships from accessing the entry channel easily and/or damage to port infrastructure and cargoes.
  14. Indiscriminate litigation and the resultant high incidence of detentions of vessels at the berths thus delaying incoming vessels and prolonging the average turnaround time of vessels at the ports.
  15. Unholy hurry to enjoy services thus resulting in abridging of laid down regulations and creating conducive atmosphere for bribery giving and taking.
  16. Supply of incomplete number of men in labour gangs and claiming pay for the full gang.
  17. Altering of or use of forged documents commonly referred to as Machined outside (MO) by clearing agents for cargo delivery in order to avoid payments of import duties and the due shore handling charges.

According to Uzanya [7], delay is the worst item of cost to a ship and this occurs at an alarming rate in Nigerian ports. Some factors which constitute delay factors include:

  1. Illegal strikes by dock workers
  2. Port agents interfering with ship and cargo handling operations.
  3. Lack of trucks and Lorries as well as rail wagons for direct delivery.

Major security challenge in container-ports

There is a dramatic increase in the various maritime crimes, such as smuggling of drugs and migrants, theft, and in-transit hijacking of entire containers. According to Gwandu [9], the maritime crime is being committed by highly organized and sophisticated criminal groups with the ability to exploit the international commercial shipping trades. Port security department must therefore be adequately prepared to counter the various security threats bedevilling the port and its operations. The various security threats are:

  1. Cargo Theft;
  2. Drug Smuggling;
  3. Money Laundering;
  4. Sea Robbery;
  5. Maritime Terrorism;
  6. Alien and Stowaways Smuggling.

Security policies on container-port operation

Port security refers to the defense, law and treaty enforcement and counterterrorism activities that fall within the port and maritime domain. These include the protection of the seaports, inspection of cargo and general maritime security against drug trafficking, deft, and stow-away.

This is an area of increasing concern from administrator of maritime industry. Many measures were proposed in an effort to stem the perceived security threats. According to Acciaro and Serra [10], this measures taken have the potentials of changing the port operations and may lead to a significant increase in shipping cost and time. Hence needs then arise to make a trade-off between the consideration of the economic point of view and the perceived threat to port operation.


Important parameters used as port security measures in NPA

The following are the parameters used as maritime security measures in container-port operations. These factors have a great impact on the internally generated revenue of the Nigeria Port Authority. These measures have a quantifiable cost impact on the output of the NPA. Comparing these factors with the total revenue of the Nigeria Port Authority will enable us estimate quantitatively their cost implication and subsequently their impact on the operational efficiency.

Perimeter wall fence:

Each port has a perimeter wall fence in order to prevent unauthorised persons from gaining entry into the port.

Access Control:

The access control gates are manned by NPA Security operatives. All the port users are properly screened at the gate to ensure that only those with port permit and have genuine business to carry out are allowed access to the port.

Light:

The entire port premises are well illuminated at night for the safety of the vessels in our ports. There are also back-up generators in the event of power failure.

CCTV:

There are Closed Circuit Televisions installed all over the ports to monitor the activities of port users. The CCTV is been manned 24 hours by the Security Department and the Port Terminal Operators (PTC).

Patrol:

A combined team of NPA Security Personnel and Port Police carry out joint patrol of the common user area and water front’s at regular intervals.

Port Pass:

The Security Department is saddled with the responsibility of issuing port permit to port users to enable have access to the port to carry out their lawful activities within the ports.


The principle of operational efficiency

Operational efficiency can be defined as the ratio between the input to run an operation and the output gained from the operation. When improving operational efficiency, the output to input ratio improves [11]. This study will take into consideration a single-factored operational efficiency is given as:

POUTPUT / PINPUT

The Inputs parameters are typically money (cost), people (headcount) or time/effort of all activities and materials expended on the port security. In contrast the outputs is typically the revenue, margin, cash), headcount productivity, innovation, quality, speed and agility, complexity or opportunities arising in the overall port operations.

The terms operational efficiency, efficiency and productivity are often used interchangeably. An explanation to the difference between efficiency and (total factor) productivity was elucidated as a continuous improvement of operations in an establishment offering goods and services. This is not limited to this alone; it can also be applied to port operation to evaluate their performance. Hence operational efficiency is a performance based tools [12].

Measuring operational efficiency in container-ports: In order to obtain the effect of certain security input in container-port operation, we need to measure it in term of cost incurred on all security issue. And since operational efficiency is about the output to input ratio, it should be measured both on the input and the output side. Quite often, various management measures primarily on the input side, e.g. the unit production cost or the man hours required to produce one unit. Even though important, input indicators like the unit production cost should not be seen as sole indicators of operational efficiency. When measuring operational efficiency, a company should define measure and track a number of performance indicators on both the input and output side. The exact definition of these performance indicators will vary from industry to industry, but typically these categories are covered. This is very applicable in measuring the port operational efficiency. The important parameters employed to measure and evaluate the impact of security on port operational efficiency is given below:

  • Input: Operational expenditure on all security activities in a container-port
  • Output: Internally generated revenue, quality, and growth of the port per annum.

Comparing and improving operational efficiency: When improving operational efficiency of container-ports, a few common alternatives available are:

  • Same for less, i.e. same output for less input;
  • More for same, i.e. more output for same input;
  • Much more for more, i.e. much more output for more input;

It is a common misconception that costs, in absolute terms, are always cut when improving operational efficiency. It is true for the “same for less” alternative, but not for the two other alternatives. It can be operationally efficient to increase cost – as long as the output (revenue) is increasing more.

An example of a same for less alternative is when container-port reduces its total security personnel (and thereby reducing personnel cost) while still producing the yearly revenue. Also example of a ‘more for same’ alternative is when the port authority reduces its revenue without using spending more on the security resources. This can be achieved through use of quality management systems, addressing quality in existing training programs for personnel or introduction of higher quality requirements.

An example of a much more for more alternatives is when a manufacturing company invests in a new production plant which will enable them to produce products with a higher level of refinement than what could be produced in the old production plants. These products can be sold with a premium that more than compensates for the additional cost. Another example of “much more for more” is when a service company invests in expanding its customer service in order to increase customer satisfaction and customer loyalty.


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Research Topic: Container Port Efficiency In Emerging And More Advanced Markets

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