EBUS609 Adoption of Port Centric Logistics Strategy Assessment Answer

Introduction

In the global commerce context, inland logistics and transportation operations account for a considerable portion of expenses, and they also have significant environmental implications. Supply chain activities are progressively being connected with marine ports in order to be more competitive and sustainable (Seo et al. 2016). As an outcome, seaports have evolved from handling and transhipment hubs to significant supply chain integrators and logistics service providers. Port-centric logistics (PCL) techniques have been widely used as a facilitator of this transition (Notteboom et al. 2020). The Port of Liverpool (POL) is a noticeable seaport in Britain's Liverpool City Locale. It is one of the major ports in the United Kingdom and has a long history of trading, transporting approximately 32 million tonnes of cargo annually. In March 2021, the Liverpool City Region was made a freeport, which gave businesses and businesses new options.

Manchester is one example of an inland market sector that is part of the Port of Liverpool's hinterland. Manchester has excellent road and rail connections to the Port of Liverpool, including the Manchester Ship Canal (Venkatesh et al. 2020). This allows for the efficient flow of commodities by providing a direct waterway link between the port and Manchester. The port also provides a variety of services to Manchester-based enterprises, such as warehousing, distribution, and logistics (Mason et al. 2015). The background of the Port of Liverpool and the Liverpool City Region Freeport (LCRF) will be examined in this research, and a selected inland market region will be used as an example of POL's hinterland. However, the logistics and supply chain operations may also be hindered by the PCL strategies implemented in the region (Hirata et al. 2022). According to the scenario, to propose a PCL strategy for LCRF, the entire hinterland logistics chain and supply chain operations that link the Port of Liverpool to inland markets would need to be analysed.

Analysis of the PCL Approach as a Solution For the Case

Proposing a PCL Approach

Port-Centric Logistics (PCL) is a strategy that emphasises the utilisation of ports as the primary hub for logistics and supply chain activities. A PCL strategy to improve sustainable performance in inland logistics and supply chain activities may benefit the Port of Liverpool, LCRF, and its hinterland (Mangan et al. 2017). The suggested PCL solution for the Liverpool region would entail constructing a network of distribution centres and consolidation hubs inside or near the port. These centres would act as collecting, consolidation, and distribution hubs, minimising the need for long-distance transportation of products.

Figure 1: Proposed PCL approach for the Port of Liverpool, LCRF, and its hinterland

(Source: Self-created)

The diagram above depicts the proposed PCL strategy for the Port of Liverpool, LCRF, and its surroundings. The strategy entails developing a network of distribution centres and consolidation hubs within or near the port (Loh et al. 2017). These centres would be linked to the port and one another by an efficient transportation network comprising road, rail, and canal infrastructure (Adolf et al. 2014). Figure 1 depicts the intended PCL strategy for the Port of Liverpool and its environs. The procedure consists of the following steps:

Step 1: Establish a cooperative logistics network

The first stage is to create a collaborative logistics network that includes all of the region's logistics providers (Mangan et al. 2017). This network will allow the pooling of resources and facilities, resulting in cost savings and better logistical efficiency.

Step 2: Make use of shared warehouse space.

The second phase is to concentrate cargo at common warehousing facilities near the port. This reduces the number of empty containers and trucks travelling to and from the port, lowering transportation costs and lowering carbon emissions (Loh and Thai, 2015).

Step 3: Put reverse logistics mechanisms in place.

The third stage is to put reverse logistics systems in place to collect and reuse packaging materials. This reduces packing waste, resulting in better environmental performance (Wang and Liu, 2019).

Step 4: Use environmentally friendly ways of transportation.

The fourth phase is to replace road traffic with more environmentally friendly means of transportation such as rail or inland waterways (Othman et al. 2022). This will result in lower transportation costs and lower carbon emissions, resulting in better economic and environmental performance.

Step 5: Improve delivery routes

The third phase is to use collaborative logistics and PCL to optimise delivery routes. This will result in lower transportation costs and lower carbon emissions, leading to better sustainability performance.

The Port Centric Logistics (PCL) method is a viable solution for improving the long-term performance of inland logistics and supply chain operations (Mason et al. 2015). Shared warehousing facilities, collaborative logistics, reverse logistics processes, sustainable transportation modes, and optimised delivery routes are all part of the planned PCL strategy for the Port of Liverpool and its surroundings (Hussein and Song, 2021). Companies in Liverpool may cut transportation costs, enhance environmental performance, and improve logistical efficiency by employing this technique.

Potential Contributions/Benefits and Challenges/Disadvantages of the Proposed PCL Approach

Potential Benefits

The inland logistics and supply chain operations' sustainability performance can be improved in the following four ways with PCL.

To begin with, PCL may save considerable transportation kilometres, save transportation costs, and increase “supply chain integration and efficiency” (Acciaro, 2015). Previously, a shipment would be delivered to the shipper after passing through the port for distribution, being cleared, and travelling by truck 100 miles to a distribution centre in the interior (Wang et al. 2016). The shipment is simply transported door-to-door using the PCL from the dockside to a nearby warehouse, where it is cleared and delivered to the shipper.

Second, with PCL, inland distribution centres do not have to return empty containers or packages to the port. As a consequence, the containers and packages that need to be returned are at the port, where they can be brought back to the ship for shipping in a more effective manner (Vejvar et al. 2018). It significantly aids shipping companies in lowering the expense of void compartment moves as well as the cost of storing the remaining empty containers in the northern part of the UK. Customers will have quicker and cheaper access to important export markets.

Thirdly, PCL will assist in alleviating traffic congestion and relieving pressure on rail and road transport. The UK's current logistics strategy is unsustainable given the country's continuing increase in container throughput (Lee et al. 2019). The fact that the northern ports don't have enough capacity, that rail freight is reaching its limit, and that traffic on the roads is damaged.

Challenges

First, as depicted in Figure 2, the supply chain at Liverpool Port includes a large number of participants, such as downstream liner companies, upstream cargo owners and suppliers, intermediate road carriers, and maritime ancillary service providers (Alamoush et al. 2021). There are competing interests and varying sizes among the members (Ng and Lio, 2014). As a result, Liverpool Freeport ought to form a community of interest by forming partnerships with all of the supply chain's participants to expand resources and build on each other's strengths to get the most out of the supply chain as a whole (Mangan et al. 2017). The initial cost of applying the PCL technique may be a prohibitively expensive, necessitating investment in new facilities and technology. The PCL approach's effectiveness is dependent on the cooperation of logistics businesses, which may be difficult to establish.

Figure 2: Key members of the port supply chain

(Source: Self-created)

Last but not least, the Liverpool Freeport faces difficulties due to the large amount of non-clean energy generated by all of the heavy machinery. With cloud computing, Liverpool Freeport can monitor each power socket's emissions and energy consumption using artificial intelligence algorithms (Notteboom et al. 2020). The system will automatically notify the port office of the necessary action in the event of a significant shift in energy consumption.

Key Facilitators/Enablers and Assessment Criteria/factors of Applying the Proposed PCL Approach

Key Facilitators/Enablers

The following are significant enablers or facilitators of using the PCL approach:

1. Government assistance: Government assistance can subsidise infrastructure and encourage logistics businesses to collaborate (Notteboom et al. 2020).
2. Shared vision and goals: When logistics businesses share a common vision and set of goals, it makes collaboration and coordination easier (Loh and Thai, 2015).
3. Technological innovation may boost the efficiency and sustainability of logistical operations, making the PCL method more practical.

Assessment Criteria/Factors

The assessment criteria or elements listed below can be used to evaluate the success of the PCL approach:

1. Cost savings: The PCL technique achieves cost savings that can be evaluated and compared to the cost of standard logistical practices (Feibert et al. 2017).
2. Environmental impact: The PCL approach's decrease in carbon emissions may be studied and compared to typical logistical practices (Mason et al. 2015).
3. Logistics operations' efficiency may be quantified using indicators like lead time, inventory turnover, and order fulfilment rates (Du et al. 2019).

Conclusion

In conclusion, goods transit from the Port of Liverpool to the Manchester (hinterland) area has several hurdles, including distance and customs requirements. However, using a Port-Centric Logistics (PCL) strategy for inland logistics and supply chain operations helps overcome these difficulties and improve sustainable performance. The suggested PCL strategy entails constructing a network of distribution centres and consolidation sites inside or near the port, which can cut transportation costs, increase supply chain efficiency, and lower carbon emissions. This technique has the potential to boost the competitiveness of enterprises in the automotive sector and the overall economy.

References

Acciaro, M., 2015. Corporate responsibility and value creation in the port sector. International Journal of Logistics Research and Applications, 18(3), pp.291-311.

Adolf, K.N., Liu, J.J., Adolf, K.N. and Liu, J.J., 2014. Logistics, Supply Chain and Port Evolution. Port-Focal Logistics and Global Supply Chains, pp.58-76.

Alamoush, A.S., Ballini, F. and Dalaklis, D., 2021. Port sustainable supply chain management framework: Contributing to the United Nations’ sustainable development goals. Maritime Technology and Research, 3(2), pp.137-161.

Du, K., Monios, J. and Wang, Y., 2019. Green port strategies in China. In Green ports (pp. 211-229). Elsevier.

Feibert, D.C., Hansen, M.S. and Jacobsen, P., 2017, December. An integrated process and digitalization perspective on the shipping supply chain—A literature review. In 2017 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM) (pp. 1352-1356). IEEE.

Hirata, E., Watanabe, D., Lambrou, M., Banyai, T., Banyai, A. and Kaczmar, I., 2022. Shipping digitalization and automation for the smart port. In Supply chain—recent advances and new perspectives in the industry 4.0 era. IntechOpen.

Hussein, K. and Song, D.W., 2021. Sustainably integrated port supply chains: concepts and propositions. International Journal of Logistics Research and Applications, pp.1-23.

Lee, P.T.W., Kwon, O.K. and Ruan, X., 2019. Sustainability challenges in maritime transport and logistics industry and its way ahead. Sustainability, 11(5), p.1331.

Loh, H.S. and Thai, V.V., 2015. Management of disruptions by seaports: preliminary findings. Asia Pacific Journal of Marketing and Logistics, 27(1), pp.146-162.

Loh, H.S., Thai, V.V., Wong, Y.D., Yuen, K.F. and Zhou, Q., 2017. Portfolio of port-centric supply chain disruption threats. The International Journal of Logistics Management, 28(4), pp.1368-1386.

Mangan, J., Lalwani, C. and Fynes, B., 2017. Roles for seaports in the context of varying supply chain strategies: the development of port-centric logistics. Developing Sustainable Collaborative Supply Chains, 43, p.585.

Mason, R., Pettit, S.J. and Beresford, A., 2015. A case study approach to port-centric logistics: the seaport versus inland location dilemma.

Mason, R., Pettit, S.J. and Beresford, A., 2015. A case study approach to port centric logistics: the sea port versus inland location dilemma.

Ng, A. and Liu, J., 2014. Port-focal logistics and global supply chains. Springer.

Notteboom, T., van der Lugt, L., van Saase, N., Sel, S. and Neyens, K., 2020. The role of seaports in green supply chain management: Initiatives, attitudes, and perspectives in Rotterdam, Antwerp, North Sea Port, and Zeebrugge. Sustainability, 12(4), p.1688.

Othman, A., El-gazzar, S. and Knez, M., 2022. A framework for adopting a sustainable smart sea port index. Sustainability, 14(8), p.4551.

Seo, Y.J., Dinwoodie, J. and Roe, M., 2016. The influence of supply chain collaboration on collaborative advantage and port performance in maritime logistics. International Journal of Logistics Research and Applications, 19(6), pp.562-582.

Vejvar, M., Lai, K.H., Lo, C.K. and Fürst, E.W., 2018. Strategic responses to institutional forces pressuring sustainability practice adoption: Case-based evidence from inland port operations. Transportation Research Part D: Transport and Environment, 61, pp.274-288.

Venkatesh, V.G., Zhang, A., Deakins, E., Mani, V. and Shi, Y., 2020. Supply chain integration barriers to port-centric logistics—An emerging economy perspective. Transportation Journal, 59(3), pp.215-253.

Wang, G.W., Zeng, Q., Li, K. and Yang, J., 2016. Port connectivity in a logistic network: The case of Bohai Bay, China. Transportation Research Part E: Logistics and Transportation Review, 95, pp.341-354.

Wang, J. and Liu, J., 2019. Vertical contract selection under chain-to-chain service competition in shipping supply chain. Transport Policy, 81, pp.184-196.

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