Dong-Wook Song

A stochastic frontier model of the productive efficiency of Korean container terminals

A central objective of port privatization and/or deregulation policies is stimulating greater efficiency by engendering a more competitive market and commercial approach to management. Korea provides a prime example of a nation that is implementing such policies. Also, its ports play a pivotal role in world shipping, particularly in the ever-burgeoning container market. The success of these policies in increasing the productive efficiency of Korean container terminals is assessed. The UK container terminal sector provides a useful benchmark for comparison since privatization and deregulation have formed an integral part of UK port reforms for nearly 20 years and the effect on efficiency, having had time to mature, will be much easier to gauge. The stochastic frontier model is justified as the chosen methodology for estimating productive efficiency levels and is applied to cross-sectional data under a variety of distributional assumptions. A panel data model is also estimated. Results are consistent and suggest (1) The degree of private sector involvement in sample container terminals is positively related to productive efficiency and (2) Improved productive efficiency has followed the implementation of privatization and deregulation policies within the Korean sector. Even though not categorical, these conclusions are important because the market for container throughput is internationally competitive and if policies which promote competition between Korean container terminals lead to greater productive efficiency, this will inevitably make the sector as a whole more competitive internationally.

Global supply chain and port/terminal: integration and competitiveness

Much has been said of the importance of port and terminal integration in the supply chain. Authors have stressed the importance of agility to the port environment, which involves being proactive along supply chains, facilitation of intermodal integration, as well as organizational integration and partnership between ports and users. Despite the well articulated importance of the issues, little has been offered in terms of conceptualizations and empirical evidence of what really is meant by port/terminal integration in the supply chain, how such integration can be measured and quantified as well as the extent to which different ports/terminals in the world are integrated in the supply chain and competitive performance implications arising thereof. This paper aims to make a contribution in this respect by (i) reviewing the relevant literature on supply chain integration and port integration in the supply chain, (ii) conceptualizing measures for port/terminal integration in the supply chain, (iii) empirically testing the influence of port/terminal integration in the supply chain on port competitiveness and (iv) outlining the significance and value of the study for port operators, shipping lines, transport providers and for further research.

Regional container port competition and co-operation: the case of Hong Kong and South China

Abstract As the entrepot to the Chinese mainland, the economy of Hong Kong has enjoyed a high growth rate of economic development. When Hong Kong developed its container ports in order to accommodate the regional economic boom, its counterparts in China were left far behind; there was no serious port competition from China. However, as China develops its economy, the port of Hong Kong faces real challenges from Chinese ports, particularly from southern ones. Interestingly, the handover of its sovereignty to China in 1997 caused an issue of competition and co-operation between these ports. This paper aims to examine the possible competition and co-operation of the adjacent container ports in Hong Kong and South China from a strategic perspective.

A conceptual application of cooperative game theory to liner shipping strategic alliances

Since its advent, the liner shipping industry has been characterized by fierce competition and cooperation amongst the member carriers. In recent years, almost all the liners have sought extensive cooperation with others, as reflected mainly by the formation of strategic shipping alliances. Despite this, there are still some liners who prefer the ‘go-it-alone’ policy and have achieved relative success. It seems that cooperation is not always necessary for a liner companys success. It follows that a study that aims to find the rationale behind liner cooperation (or non-cooperation) is of great significance. Over many years of development, game theory has proved to be a useful tool in the study of economics. It is analytically applicable in this market. With these arguments in mind, this paper aims to apply cooperative game theory to analyse co-operation among members of liner shipping strategic alliances. This will involve: (i) presenting a detailed and systematic analysis of liner shipping strategic alliances: (ii) a concise overview of the development of game theory with specific focus on cooperative game theory, and (iii) deducing a conceptual framework through the application of cooperative game theory to liner shipping strategic alliances. The accomplishment of the aforementioned objectives will enhance understanding of inter-organizational relationships and decision-making behaviour in the liner shipping sector.

PORT PRIVATIZATION POLICY AND PRACTICE.

In recent years a significant number of countries have implemented policies aimed at reforming their port industry. In the belief that it will improve efficiency and reduce the heavy financial burden placed upon governments that attempt to support such a capital-intensive industry, privatization has often formed an important strand of such policies. A key claim in favour of privatization is that the transfer of ownership from public to private hands will ultimately lead to an improvement in economic efficiency and, hence, financial and operational performance. This paper investigates the theoretical underpinnings and practical validity of this claim and concludes that privatization is only a partial cure for what ails the worlds ports and that, if implemented in isolation, it simply cannot deliver the much-needed panacea for the industrys woes.

Port integration in global supply chains: measures and implications for maritime logistics

The aim of this article is to define and empirically develop measures of seaport integration in global supply chains and to infer implications for maritime logistics. A literature review identified four key parameters hypothesised to be part of the higher-order construct of ‘terminal supply chain integration’ (TESCI). Data for operationalizing the conceptualised variables were obtained via a large scale survey of container terminal operators. A model was developed and validated using confirmatory factor analysis. The validated parameters of the higher-order construct of ‘TESCI’ included ‘information and communication systems’, ‘value-added services’, ‘multimodal systems and operations’, and ‘supply chain integration practices’. The study provides implications for maritime logistics by focusing on key parameters such as determination of costs, revenues, performance, productivity, and competitive advantage for international supply chains.

Defining maritime logistics hub and its implication for container port

Since the hub-and-spoke concept was introduced to the aviation market after the US airline deregulation in the late 1970s, it becomes a primary distribution model employed by leading international logistics companies. This pattern drives the companies to consolidate shipments on the large scale at major terminals (i.e. hub) and to redistribute the smaller scale of shipments to their respective destinations via radial links (i.e. spoke). In the field of logistics and supply chains, however, the hub concept has been often introduced in various terms in accordance with functionality: for example, logistics centre, logistics zone, freight terminal, distribution centre and warehouse. Such a heterogeneous terminology on the concept of logistics hub seems still in usage by practitioners and academics alike. Having recognised this rather ambiguous concept and definition in the literature, this article attempts to define the concept applicable to the maritime industry by synthesising existing studies/perspectives and examine its possible implications.

Coopetitive networks, knowledge acquisition and maritime logistics value

Knowledge acquisition may help maritime operators to maximise maritime logistic value. The operators can acquire knowledge through being embedded in a coopetitive (viz. mixture of cooperation and competition) network. This paper aims to examine how effectively maritime logistics operators coordinate the inter-organisational coopetitive relationships in order to acquire knowledge. The paper also diagnoses the effectiveness of the acquired knowledge on the improvement of maritime logistics value. A theoretical framework is established to show the relationships among factors and is empirically examined through both an explorative interview method and a Delphi survey analysis. The findings show that (i) a high level of cooperation in a coopetitive network facilitates knowledge acquisition, (ii) competition in the network has, to some extent, promoted the positive impact of the cooperation on knowledge acquisition, and (iii) the acquired knowledge has a positive influence on the improvement of maritime logistics value.

Container terminals in South Korea: problems and panaceas

Korea has achieved remarkable economic growth over the last three decades. This has largely been due to the adoption of export-oriented economic policies. This economic development has resulted in a rapid increase in export and import cargos. Since the foreign trade of Korea is carried predominantly by sea transport (approximately 99.8% in terms of volume), ports play a crucial role in this process. Although recent port developments are aimed at keeping pace with ever-growing seaborne cargoes, problems persist, especially insufficient port capacity and inefficient management and operations. As a consequence, the ports of Korea suffer from serious port congestion. This problem is particularly acute in Pusan, the fifth largest container port in the world. In the past, all ports in Korea were controlled and administered by the Korea Maritime and Port Administration which was a public port authority. In August 1996, the Korean government established a new government organization, the Ministry of Maritime Affairs and Fisheries (MMAF), with a remit to control and manage its seaports and other related activities and to improve management efficiency in the maritime area. As a way of solving problems related to port congestion and other sources of inefficiency, the new MMAF has launched several new port development schemes. In this context, this paper will discuss (1) the extent of congestion in Korean ports, especially Pusan, the major seaport of the country; and (2) governmental and commercial reaction to solving the problems, including measures such as new port development schemes aimed at attracting private and foreign finance. From this analysis, a strategy for port development in developing countries may be inferred.

Knowledge management for maritime logistics value: discussing conceptual issues

This paper introduces the concept of maritime logistics value as one of the most significant strategic goals that maritime operators want to achieve. The value is reflected in operational efficiency (e.g. reducing lead time and business costs) and service effectiveness (e.g. flexibility, responsiveness and reliability in the service). Drawing from key theories and practices in strategic management such as knowledge-based perspective and social network embeddedness perspective, this paper adopts a knowledge management strategy as a way to create and sustain the maritime logistics value. A conceptual framework is established for the exploration of the way to acquire knowledge and the effectiveness of the acquired knowledge in maximising the maritime logistics value. Following the parameters of this framework, the positive relationship between social networks, knowledge acquisition and maritime logistics value is identified, and its relevant theoretical and practical implications are discussed.