Comparative Analysis Between Port Of Melbourne And Port Of Shanghai

Background and container operations of PoM and PoS

Describe about the Comparative analysis between Port of Melbourne (PoM) and Port of Shanghai (PoS).

The Port of Melbourne is Australia’s largest container port and is also a vital economical asset for businesses and people in entire Victoria and South-East Australia. It has two international terminals and many berths to handle cargo.

The Port of Melbourne was brought under the Melbourne Harbor Trust in the year 1876, which in the year 1978 became the Port of Melbourne Authority. It was headquartered in the Harbor Trust building in the Melbourne Market Street, until it moved to its WTC-1983 west of the Spencer Street Bridge.

Melbourne has a wide range of facilities including Australia’s largest international container terminal and automotive terminal at Webb Dock. Station Pier caters for cruise ships as well

Port of Melbourne was created by Focus on reactive OPS management & rebuilding. Port of Melbourne has a massive trade, which more than 2.6 million containers being handled annually; they have around 1500 motor vehicles per day on an average which gives them trade value of approx 90 million revenue tones (LoBianco, 2011). The Port is spread across 40 commercial berths. Number of ships visiting annually is more than 3000. The port has a capacity of 25 kms of waterfront and 150000 hectares of port waters. They have facilities of Hydrographic survey and among that; Pangal is the largest container vessel at Melbourne’s port.

Port of shanghai was first recognized as city by Yuan Dynasty in 1297. In 1684, ships were allowed to use this port by giving customs duty and by 1735 it became very well-known port in the region. It was opened for the international trade in year 1842. Port’s first factory was established after Second Sino-Japanese War. In 1949, China took its control. It has seen lot of economic development after 1991 with the help of central government (Shanghai International Port(Group) Co., Ltd., 2016).

Shanghai is presently the world’s busiest container port (Associated Newspapers, 2013). It has 3 container terminals Wusongkou Port, Waigaoqiao Port and Yangshan Deepwater port” which are located at different locations. The Yangshan Deepwater port is under construction and right now it is in its 4th phase of construction and is expected to be complete by 2020.   At Present, 1200 container ships depart across 250 ports throughout the globe (Wang, 2013).

The Port of Shanghai is being managed by the Shanghai Port Authority. Its oldest terminal is Wusongkou and is mainly used for domestic vessels. For International trade, Waigaoqiao terminal is used. Yangshan is the latest addition which is also the only Deepwater port. Yangshan terminal is expected to be built by 2020 and soon after that will be competent of handling 20 million shipping containers per year with a 25-kilometer belt where 70 vessels can dock at a single time (Kable, 2016).

Operational challenge faced by both PoM and PoS

Shanghai Port operates 24*7 and all 7 days a week with more than 40,000 staff. Out of them 23,000 are full time employees and 19,000 port workers – and an annual container traffic increase by 35 percent. Shanghai Port is also a key part of the central government’s national development scheme.  The Government has to keep focus on logistics at the port so as to give better client service and fulfill their needs (Hall, 2015).

The Port of Shanghai is a significantly vital transport hub for the “Yangtze River” and the gateway for all the foreign and international trade. It serves the Yangtze economically developed remote areas of Zhejiang and Henan regions with its vast population and very strong commercial base (Bank, 2010).

The Port of Shanghai handled more than 700 million tones of goods last year .The port has an area of more than 4 square kms. This expansion has been largely due to construction of the Yangshan Deepwater port. That port can shift more than 15 million containers in a year (Kable Team, 2016).

With the advancement in technology, the world has become a Global village and so the demand for exports is increasing day by day. This has given ports new opportunities, but along with it, they also have to face many challenges. Ports have to keep a pace with rapid changes and also to adapt themselves to the constantly changing needs of the customers which are their biggest challenge.

Appropriate infrastructure and changing customer need: Due to the increasing demand of imports and exports, ports has to come up with new strategies keeping in mind the challenges it has to face like limited land for expansion, competitive prices, continuously changing needs of clients, logistics services, complex supply chains, logistics costs. Responsibilities of organizations are changing from mere port operators to global logistics service providers.

Shanghai port has three terminals Wusongkou Port, Waigaoqiao Port and Yangshan Deepwater Port. Out of them Yangshan is the newest addition (right now under construction) to Shanghai Port and the only Deepwater port (Wang, 2013).  All these terminals are scattered in different areas which makes it really difficult to manage. Yangshan port in the new addition is the only deepwater port and is under construction right now. This project is expected to be completed by 2020. This port is expected to make revolutionary changes in the port of shanghai. It will be competent of handling 25 million shipping containers a year, with a 20-km wharf, where 50 vessels can dock at one point of time (Port of Shanghai Team, 2016).

Comparative analysis describing the impact(s) of the identified challenge

Although, Shanghai port has big port size and growing Yangtze River Delta, but it is still not considered a one of the top ports of the world  like that of  “Hong Kong” or “Singapore” because of lack of  well-known services (The Fraser Institute, 2002). This thing suggests that only size and concrete are not enough to make a world class organisation, but other things also like ship classification services, logistics, safety service, education and training, science and security technology, advocacy services, human resource services.

Port of Melbourne is also facing a lot of capacity issues. Earlier there were very few players in the market like Patrick and DP World. They faced very limited competition due to which they were not very keen to expand operations or bring strategic changes to give quality services to customers. As a result, the ports were not ready to face future container capacity problems.

Due to the above mentioned challenges that are mentioned above have many impacts on the port business.

Firstly, they are not able to meet the capacity demands. Due to lack of proper infrastructure capacity, ports are not able to make pace with the trade growth. Some shipping companies have made changes in technology as per customer’s demands and so are able to handle more freight in less time. This has given rise to interstate competition between ports.

Also, we have seen ownership changing of many companies who are in this industry. Port of Melbourne’s value is expected to be $6 billion. Australia’s economically 2nd largest state Victoria is expected to win this bid, which is for 50 year lease to operate the port of Melbourne (Pallas, 2009). They are planning to build an infrastructure underground rail tunnel to remove rail level crossings and similar other projects. Due to this many financiers and builders are showing interest for these upcoming projects.

Land encroachment due to residential and commercial development is also impacting port expansions. Ports have a limited land area, but in order to expand they need more land which is not available due to these encroachments on waterfront land so port options for the future are few. It may also have an adverse impact on port as other than direct port activities, it also needs space for cleaning equipment, maintenance, truck marshalling, quality control, storage, information services and some open space.

With the changing demands of customers, they now look for improved safety and security measures for the goods and also in port’s functions and operations (N Davidson, 2016). They want a smooth transition of their goods under safe and secure conditions.  Port should be able to effectively manage ships that are in port water, activities related to transfer of cargo, development activities, movements towards the port and from the port, berthing activities, emergency management plans etc.

According to a report, the trading is increasing by 6% yearly at the port of Melbourne (Birrell, 2014). Australia has also built many rail systems to connect ports that can make land bridges for efficient transport of goods. Otherwise with this much of growth every year, this can lead to congestion on the ports with will lead to much chaos. So the port facilities have to be very quick in their expansion projects and should make the most out of the current resources.

Investment in infrastructure: With the changing needs, capacity and infrastructure needs are increasing. Expansion is the call of the hour. The Port of Shanghai has already started with the development of Deepwater port Yangshan with a vision to accommodate big and massive container ships. China’s government is also very supportive. In 1985, it declared Yangtze River Delta as a special economic zone. It has opted liberal policies in order to attract foreign investments. Some of such practices are investing in solid infrastructure, tax rebates, lower tariffs and less government interference. Since these ports handle large amount of containers, coal, metal and crude oil, which needs lots of space and infrastructure to handle. So much of government interest and support in the past decade shows that it has worked for the port development and waterways network is continuously growing which also leads towards the economic growth of the country (World Port Source, 2016).

Infrastructure Australia said that they were facing challenges to support (livability, productivity) Australia’s major cities, meets the needs of rapidly growing exports and improving the quality life and financial position of rural people. Due to this they came up with the conclusion that in order to deal with the long term growth plans and to keep pace with the increasing goods to be shipped, the urgency to improve infrastructure is at its peak and very important for Australia’s productivity.  Port of Melbourne cooperation designs long term strategies for the Port of Melbourne which includes its infrastructure development as well (Port of Melbourne Corporation, 2016).

Enhancing Supply Chain Management: Even with the current infrastructure, Port of Melbourne is not giving the optimal output. Which means there is some sort of mismanagement of the resources available like human resources or material resource? So there is an urgent need to check the current supply chain practices. Also, stakeholders of the company can speak to the people who are involved in different processes of the whole system about their requirements. Also, there need to be an open dialogue with them in case they are facing any problems and tactics to address them (Niamhhoran, 2016). Based on this, numerous concrete steps must be undertaken to develop the operational capacity of the Port of Melbourne, ensuring that it could adapt to the demands of the global market, and carry out its main role in the economic growth and development of Victoria.

So there are two ways to address this problem:

Open dialogue with people - This will reduce the communication gap because there are certain ground realities that only actual people who are working can tell and not the management. So such communication will help management to identify issues and to address them. In this way people will also gain confidence on the management and then will work together and not as independent units. There will be smooth working between one department and the other as they all will work for one objective (Nairn, 2015).

Integrate Innovation and Technology: Management has to go through the practices of all the departments once again so as to know where changes can be done for improvement. Also new technology can be can be integrated where ever possible to make the processes more efficient and productive.

Conclusion

In this report, we have done a comparative study between the Port of Melbourne and Port of Shanghai. Port of Melbourne is one of the leading container ports of Australia and nearly 36% of Australia’s containers are handled from this port. Being one of the leading port of Australia, it has some key responsibilities to fulfill like to enhance international trading activities, improve the port’s facilities in order to compete with other world class ports, train and protect its human resource, enhance business performance.

The Port of Shanghai is also one of the world’s busiest container ports. It has three container terminals (Wusongkou Port, Waigaoqiao Port and Yangshan Deepwater port) which are located at different locations. It is located in China, which is the world’s fastest growing economy. This adds a lot of added on responsibility on this port. Its third terminal, i.e. Yangshan port is still under construction and is expected to be fully built by 2020. China had a far sighted vision to build this port in the light of growing needs for exports and to be prepared for the increasing port traffic (Federal Highway Administration, 2014).

Dealing with the new environment is not very smooth for these ports as they were not so efficient in their working and lacking appropriate infrastructure. So they have to face many challenges which we have identified in this report like continually changing customer needs, infrastructure, Logistics, shortage of land space for expansion, port congestion, complex supply chains, managing the ports that are located at different locations etc. These challenges affect the ports in many ways and thus we have identified the impact of these challenges on the organizations. One of the major impacts is that the ports are not able to fulfill their capacity demands which are causing congestion at the ports, land encroachment by the ports in the nearby land to meet its day to day needs like cleaning area, warehousing etc.

Keeping in mind the above the above challenges and the adverse impact they have on the working of these ports, we have proposed a few solutions that can control the situation.  Firstly ports should improve their infrastructure to meet the growing demand of cargo to and from the ports. Also, to keep the cargo, more space is required for warehouse purpose. Shanghai is already building its third terminal that will benefit a lot to control ship traffic. Port of Melbourne co-operation (POMc) is also making many strategic plans based on its forecast of the future needs of the port. 

Secondly, we have studied in reports that these ports are not able to give optimal productivity with the current infrastructure and resources also. That means they are also facing operational issues. So reworking on the current supply chain process and improving them with innovation and technology can help the ports to meet its needs.

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