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Port Development

In an effort to describe ports some of the common terms used are; waterfronts estuary, bases, intermodal interfaces, corridors, gateways, hubs and networks, distribution and logistics centers etc. Generally, ports may be defined as any areas of land and water destined to receive sea vessels, trains, airplanes or road connections for loading, offloading, storing and dispatch of cargo. Ports may be small quays for berthing ships or massive centers with many terminals, industries and services meaning that there may not be a universal definition or development plan for any port.

Port development may be defined as all processes of planning and execution of any project aimed at building, operating and maintaining a port. There are various types of ports and the development plans vary as much as the ports vary meaning that every port would have a unique development plan depending on its purpose and aimed usage. According to Captain W. Frederick Bronaugh, Jr. , port development may be assimilated in three main processes namely; modeling, evaluation and training.

In his article, Port development using simulation: a three-step process, Bronaugh, states that in modeling, a digital model portraying the key geographical features of the area, the design, port features and physical structure are outlined to give the projected area to be occupied by the port. The evaluation process can be done by computer aided simulation to evaluate the scenarios of any project objectives to ensure if the end project would meet its objectives. In training the target port staff will be trained to ensure familiarity and knowledge of the port facilities and operations is well understood.

This would ensure effective and efficient handling of the port traffic and operations. The UN Transport and Tourism Division (2001) wrote the following: Faced with increased demands for capital investment in other sectors as well as in ports, it is unlikely that Government’s will be either willing or be able to provide all of the capital required for future port developments. The private sector will need to provide a significant share of the total. (p. 70) On all port operations, there are universal facilities that are provided and that ensure that the port developed is standard.

In this writing, the Port of Melbourne is taken as the case study in port development showing the main processes that may be involved. Considerations made before port development 1. Purpose of port Many ports operate multipurpose facilities and terminals while others service specific trades or ship types. The purpose, mission or objective of any port depends on any or a combination of a land property owner, trader, or developer; an investor in infrastructure, superstructure and/or an operator of part or all of the services to ships or cargo carriers and cargo. 2. Scope of Port market service area

A ports spatial market or hitherland (extent of land area that it serves) can also be used to classify a port(s). Hitherlands vary in size and ports can serve larger hitherlands beyond those located back i. e. the forelands (the area a hub or network a port serves by networking with other feeder ports). 3. Port Ownership In the past, ports were owned and operated by public entities or port authorities but now there is involvement from the private sector. Depending on the port development objective and targeted port functions, one would consider the classification of ports by service, tool, landlord and fully private institutions.

Therefore variations exist in terms of functional, comprehensive and private service ports. Before developing a port, one may have to consider ownership and functions. A port may be fully privately owned, publicly owned or jointly owned by both the public and private sectors. The following are considerations are made in terms of port ownership. a) Landlord ports are those whose infrastructure is owned, developed and maintained by someone but leased to the private sector. Private firms handle their own cargo with their own equipment ensuring strong market leadership and stronger long-terms ties.

The downside of this is possibility of conflict between the private and public sectors interests, overcapacity or footloose. b) With Tool Ports, someone owns, develops and maintains the infrastructure, owns and operates the superstructure (cranes, shed and warehouses), and handles operations and other private sector services. Although this ensures huge investment by the public sector and sometimes non-redundancy, there may be issues of the public and private sectors undertaking cargo operations and management and conflict of equipment assignment operational efficiency arising.

c) With Service Ports’ one ownership, there is development and maintenance of infrastructure and superstructure, ownership and operation of handling equipment as well as operation of all own port functions and customer service. Unity of command and management is ensured, though challenges such as incompatibility of handling operations to administrative duties, the private sector may be hands off the airport and trade unions may have a stronger power may counter its success. d) Private ports are fully owned and operated by the private sector and the regulatory and statutory issues are handled by the public authority.

Management would not be biased to make political decisions and asset and resource management is projected to be of high efficiency. Challenges of monopoly, deviation to profitable activities and not core business as well as risk of footloose may however arise. 4. Port Function Though not comprehensive and exhaustive, port function may be classified as service to ship and service to cargo. Port services are organized around and based on its assets and facilities. 5. Port Operations Port operations may be divided into quay transfer operations, storage operations as well as gate operations.

These operations will determine the scope and extent of work to be done in the port development. 6. Berth assignment and port capacity When planning to develop a port, one may need to consider the availability of sufficient berths commonly challenged by the random pattern of ships arrival as well as limitation in the number of berths in the port. One major consideration has to be the maximization of the efficiency of facilities/equipment. 7. Quay equipment Crane design and operational efficiency, performance of drivers and labor, ship type and stowage plans are some of the main considerations to be made on this.

Operational features of port equipment may be one other factor to be taken into consideration when planning for port development. Budgeting for microprocessors and automated systems may be necessary to reduce the cycle time. 8. Yard stacking systems Yard stacking systems may be configured by combining or automating them. Some yard stacking systems to be considered in the port development process are: • Tractor-trailer (chassis system) • Straddle carrier direct system • Straddle carrier relay system • Yard gantry system (RTG and RMG) • Front end loader (lift truck) system Compiled with quay and gate layout as well as operating systems, each of

the above systems, shows different and unique technology that requires suitable operating systems for stacking, retrieval, dispatching and routing allocations. 9. Estimates of the port capacity This is the part of working out the projected target operational efficiency of the port in regards to its requirements and objective. • Berth capacity – before calculating/computing the maximum output, analysis of ratios of operations. The ports maximum output will be calculated by the following formulas and to increase the capacity one only needs to make alterations on the work time / service time.

This will show usage of the port. • Storage capacity – storage capacity will depend on the dwelling time i. e. the time the yard and port sheds will be occupied, and, the type of cargo. Stowage factor defines the area occupied by one tonne of goods. Storage surface = Tons X stowage factor X Dwelling time/365 When planning for the development of a port, many considerations must be made and the above 8 factors are just a tip of the iceberg of the scope of work involved in port development. When it comes to port planning there are many modules to be taken into consideration. These modules are:

1) Operational planning – planning of the resources to be allocated to port processes and activities and management of port information on a daily and/or short-term basis. Configuration of the berth’s availability, capacity and physical features needs to be taken into account. Planning for resource allocation and management of cargo data is core in ship planning. In yard planning, one needs to be alert concerning the yard operations and routing of vehicles on certain pathways. Location and relocation of cargo container by type, status, dimension, capacity and flexibility of equipment factor needs to be taken into account in port development.

2) Strategic port planning – in this phase the port developer will prepare a formal document that outlines the organization’s long-term objective, formulate the objectives and give guidance to the implementers of the strategies through business plans. 3) Forecast port traffic – this will help outline the kind and tonnage of all commodities that will be moved through the port, how these commodities will be packed and carried and what type of cargo carriers (e. g. ships), tonnages and frequency of port calls will be made with the forecasted traffic.

This will help the developer customize the port to suit its functions. The Port of Melbourne’s traffic forecasting would be a great example to use in this sense. During the traffic forecast the Port of Melbourne Corporation considered the trade forecast to be able to make strategic estimates of short-term and long-term facility and port growth requirements. Some of the considerations that were made were based on the international containers, Tasmanian trade, motor vehicles, break bulk, dry bulk (especially cement and grain) and liquid bulk (especially crude oil).

Growth in trade would translate to growth in traffic which would then lead to the increase in the facilities that would be required at the port. Increase in all these trade elements exerted pressure on the board to make expansion and growth plans for the port to ensure the port systems and facilities exhibited the flexibility that would well handle fluctuations in traffic effectively and efficiently (Port Development Plan 2006 – 2035, pp. 27-40) 10. Environmental and Social Principles to be followed

The environmental and social principles to be followed must be considered in the port development plan. The environment may not only encompass the ecosystem but also the communities and all social settings that may be impacted. The Port of Melbourne was planned and developed with all consideration made on the impact of the port development to the City of Melbourne and its surroundings. If the port is seen as to add value to the community, then its long–term development plans would be supported by not only the community but the target stakeholders as well. Planning for container terminal development

Appropriateness of layout, configuration and operating system are some of the long-term considerations to be made when planning for container terminals. The process of getting the right container terminal has many tasks that must be efficiently, effectively and exhaustively planned and executed. These tasks are: 1) Traffic forecast and terminal throughput estimations – this involves estimation of the number of cargo carriers that will dock at the port and the number of containers that will have to be handled at the port. This helps calculate the number of facilities that will be required.

2) Estimation of the proportion of the various categories of containers – as containers vary in status, type and dimension, there will also be related land requirements for all container variations. 3) Average dwell time estimates calculated by evaluation of the distribution of the container categories and the time that will be used for inspection, document preparation and fulfillment of all port requirements. This helps estimate the container terminals required to reduce the time a cargo carrier spends on the port and ensure high throughput and efficiency of port utilization.

4) Estimation of the required container yard area calculated through consideration of the container dwell time, container type, stacking operations container access and safety spaces e. t. c. 5) Estimation of the required port area involving estimation of the space for aprons, interchange areas, gates offices and operational and administration areas that will be needed. Allowances of up to 20-30% should be made for variations such as future expansion that may be necessary, seasonal port traffic variations and peak factor.

In all these factors, port development requires adequate time to plan execute and no rush measure should be taken no matter how quick the need for the port may need to be satisfied. Several issues may have to be considered and projections made on possible challenges that may be faced during port development will help plan for risk management and how well to counter any given setbacks when they occur. Port development funding Before a port can be developed, there should be extensive sourcing of funding and identification of the main investor in the project.

Several considerations are then made to identify the most suited investor for the port development project. The private and public sectors may be considered in the port development depending on the port purpose and ownership that will ensure efficient and effective running of the port. Different types of funding and/or investments may be considered. In the past port development funding was done by a government or public entity. Currently, determination of the port development investor would be necessary since there are various methods of that may be available to ensure availability of a port.

The port developer may lease land or port assets or the right to use them for a given period of time. Lease contracts and leasehold agreements have then to be made. Flat rate leases, minimum maximum rates and shared revenue leases may also be considered to determine the most efficient method of ensuring the port is available. Depending on the port operation period, short-term or long-term, options explored must be both efficient and cost effective to ensure return on investment.

This means that when making plans to develop a port, there has to be a clear outline of the type of investment or port availing method that would be used to ensure servicing the needs. Before a port development project is undertaken, one must ensure that return on investment has been fully explored. For this to be successfully accomplished, there are effective methods that can be used. Projections of cash or revenue to be accrued from the port should be able to cover for the costs and expensed incurred when developing the port.

If the estimated revenue to be generated is higher than the cost and expenses of port development then the project may be deemed to be viable. In this case, only the cash related expenses and revenues are to be considered in the calculations to ensure elimination of factors that may beyond the control of the developer. Before an investor can be brought on board they will consider the payback time. This is done by comparing the value of the investment against the average annual cash flow. This will also help asses the viability of undertaking the port development project.

Any port developer would then be advised to analytically look at the port’s projected functionality in terms of the hitherland and foreland to ensure that it will pay for the costs and expenses of development. This information should then be shared with the probable investor to convince them of making the investment. The overall economic impact of the port is one other method of analyzing whether or not to go ahead with the port development project. In this case, it means that benefits of the port are not only to the investor but the community and national economy.

By analyzing the port impact, the developer will then asses whether the port will be fully or partly funded by the public sector or in future by a regional or international institution. This will ensure that short-term and long-term port funding requirements are taken care of and covered in the port development plan. While direct port impacts are to organizations within and directly linked to the port, indirect impacts are those organizations located round on near the port such as factories importing or exporting through the port, cargo processing and distributing centers e.

t. c. All these will have some consideration made on them when making the port development plan. There impact on the efficiency, effectiveness and progress of the port may be significant to necessitate consideration in the port development plan. The port economic impact may be deemed as the most important consideration to be taken into account when planning for the development project. In any project there has to be a planner, an analyst to project all impacts of the projects, a plan on how all the project execution processes have to be executed.

In all this proper planning is the essence of successful project accomplishment. The ports impact on the economy will therefore justify the continuity of planning and project execution. In financial planning, the port impact may be measured in terms of impact on employment and impact on national wealth. Calculations of this impact may be in direct flow or mass calculations. All these help determine the return on investment that may be given as an estimate against the investment expenses. To start a port development project, there are general processes that may have to be followed.

One of the processes is to outline the essence of the project, the objectives, goals, vision and mission of the port. By doing this, there will be assurance of justifying the need for undertaking the project. The next step that may have to be considered is the availability of funding for the port development project. This may be from public or private sectors, however, there must be evidence of return on investment given to the probable port development investor to convince them of what they would gain by investing in the project.

After identifying an investor, the next process may be to identify the best location for the port, the sufficiency of the location area and probability of spacing for future expansion of the port if need arises. Land may be acquired through public means where the government authority comes into play or by private sourcing and acquiring of the land. Other facilities such as yards, berths, container storage space, and cargo processing terminals e. t. c will then be designed to suit the functional requirements of the port.

The port functions are the determinants in the design and functionality of the facilities required. This then means that proper outlining of the port functions must be undertaken and an exhaustive and complete list of tasks that will be handled at the port shown clearly. Legalities to be followed, preparation of the legal and all required documentation and ensuring that all the paper work is done and completed would be the next step in the port development plan. Contact agreements between the investor and the port developer may be one batch of paperwork that may need to be done and completed on time.

This means that the port developer will have to consider the timeline to the date of opening the port to ensure that all legalities are taken care of. Outlining the project plan will then take place to ensure that all processes that would be involved in the development of the project are outlined in detail and the right skilled individuals or teams are assigned their tasks or processes to execute and accomplish. A knowledgeable supervisor would then be identified to ensure that the project is well executed.

Proper monitoring of the port development project is crucial to ensure that there is not deviation from the goals and objectives of the project. In the end, one must acknowledge that in any project, proper planning is the base and foundation for successful execution and accomplishment of the project objectives. Finding the right plan and skill to ensure that the plan is followed well is the key to successful port development. The port development plan would then contain the architectural and functional outline of the finished port so as to give a guide to what would be expected.

This would boost port popularity, attracted traffic and ensure effective and efficient usage of the port. This then translates to return on investment and future funding for expansion or advancement plans. Case Study According to the Port of Melbourne Corporation (2006), the Port of Melbourne is Victoria’s most important assets. Handling over 40% of Australia’s international container trade, the port is a key driver of Australia’s economic growth states the Port of Melbourne Corporation (PoMC). They corporation wrote that:

The port contributes over $5. 4 billion to the Victorian economy each year and provides jobs for more than 18, 000 Victorians on activities attributed to the movement of ships and cargo through the port and indirectly generates jobs for a further 62, 000. In the corporation’s port development plan, it’s revealed that there were nine main steps carried out in port development planning. By identifying changing elements such as technology, increase in container growth, limited nature of the port land supply, increase security and safety measure e.

t. c, the corporation was able to formulate the strategic framework to guide future development of the port considering the improvement of the port operations. The Port of Melbourne development plan constituted of the trade forecasts, assumptions and analysis of future infrastructure needs, development strategy of all precincts within the port, development strategy for port transport network, development strategy for Melbourne portal and finally the commercial strategy for delivery of future needs.

Consultation with stevedores, shipping lines and importers and exporters, was undertaken to better understand their likely investment and growth expectations as port users and tenants. Potential implication and input to the Port Development Plan (PDP) was sort with the state government and its agencies, local council representatives and managers (cited in the Port of Melbourne Corporation Port Development Plan, pp. 17). Generally speaking, the advantages of a port, its minimized disadvantages respec¬tively, are the basis of every successful strategy.

Their planning requires a reli¬able analysis of the economic, technological, demographic/social/cultural, po¬litical and ecological environment which are subject to continual changes. However, no competitive advantages can be determined without a precise and neutral analysis of the following: the organization (port) strengths and weak¬nesses, competition strengths and weaknesses, key factors of the market suc¬cess and finally all changes in the environment (Mezak et al. , 2001). References Bichou, K. (2008). Port Operations Planning and Strategy, London. Port of Melbourne Corporation (2006).

Port Development Plan 2006 – 2035, Retrieved April 20, 2009, from http://www. portofmelbourne. com/global/docs/draft_pdp_full. pdf Captain W. Frederick Bronaugh, Jr. Port development using simulation: a three-step process. Transport and Tourism Division (2001). Maritime Policy Planning Model, Regional Shipping and Port Development Strategies. Retrieved April 20, 2009, from http://www. unescap. org/ttdw/Publications/TFS_pubs/pub_2153. pdf Mezak, V. , Peric, A. , Jugovic, A. (2001). The long-term port development strategy. Retrieved April 20, 2009, from http://www. pfri. hr/pomorstvo/2006/02/01_mezak_peric_jugovic. pdf

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