Port and terminal operation management lecture note’s

CHAPTER 1: INTRODUCTION
1.1. INTRODUCTION
Ports are critical infrastructure resources and serve a key role in the transportation of freight and
people. With more than 80% of international trade by volume being carried by sea, ports are vital
for seaborne trade and international commerce. Ports are the critical nodal interfaces where
maritime transport connects with other modes of transport and where trading, distribution and
logistics activities can take place. Efficient port operations significantly lower maritime and trade
costs whereas delays in ports impose costs on logistics and supply chains through the cost of
warehousing and inventory. Ports also serve as economic catalysts for the markets and regions
they serve, where the aggregation of port services and activities generates socio-economic wealth
and benefits.
In 2008, it was estimated that world ports handled over 8 billion tons of international seaborne
trade of goods loaded (UNCTAD, 2008). Because of trade imbalances, transshipment practices
and other operational considerations, the global port throughput and handling activity would
have exceeded the volume of seaborne trade. For instance, 143 million twenty-foot equivalent
units (TEUs) were handled by world ports and terminals for an estimated 1.24 billion tons of
global container trade in 2007 (UNCTAD, 2008).
A port can range from a small quay for berthing a ship to a very large-scale center with many
terminals and a cluster of industries and services. Ports are dissimilar in their assets, operations,
roles and functions, and even within a single port the activities and services performed are, or
could be, broad in scope and nature. This situation has led to a variety of operational,
management, organizational and institutional approaches to ports, and it is almost impossible to
find a worldwide uniform definition for them. There is indeed a variety of terms describing ports
such as interfaces between sea and land, nodes in the multimodal and inter-modal transport
network, distribution and logistics centers, maritime gateways and corridors, distriparks (a large
area near to ship yards to move cargo) and maritime clusters, and free zones and trading hubs.
Definition of Port
What is a port? A port is a virtual point where network connections start and end. Ports are
software-based and managed by a computer's operating system. Each port is associated with a
specific process or service. Port comes from the Latin word portus, meaning "haven" or
"harbor." Or ‗‘port‘‘ You can hear this sense of a port as a place of safe arrival in the proverb

1
Port and terminal operation management lecture note’s

"any port in a storm." On a ship, the port side is the left side. Port is also a verb, meaning "to
carry."
A port is a maritime facility comprising one or more wharves or loading areas, where ships load
and discharge cargo and passengers. Today, ports are not only a transfer point between sea and
land but also serve as distribution, logistics and production centers. Ports can also serve leisure,
fishing and/or military ships, thus deviating from traditional commercial cargo-ship activities. In
some ports, non-sea-related activities can also fall under the wider definition of ports. For
instance, dry ports are inland logistics centers not directly linked to sea or waterway connections.
Ports are extremely important to the global economy; 70% of global merchandise trade by value
passes through a port. For this reason, ports are also often densely populated settlements that
provide the labor for processing and handling goods and related services for the ports.
Today by far the greatest growth in port development is in Asia, the continent with some of
the world's largest and busiest ports.
All of the Top 10 largest shipping ports of the world are located in Asia; what‘s more seven
of them are Chinese. In this list you‘ll find the biggest container volumes, the largest annual
cargo tonnage and even the world‘s first fully automated shipping port. Here’s a rundown of
the ten largest shipping ports in the world:
1. Shanghai, China
Facts:
 Annual cargo tonnage: 705 million (2017)
 Annual container volume: 43.3 million TEU (2019)
 Area: 3,619.6km²
The Port of Shanghai is the world‘s busiest container port with its 43 million TEU volume. It is
also a critically important transport hub for the Yangtze River region and the most important
gateway for foreign trade. It is also part of the 21st Century Maritime Silk Road, which runs
from the Chinese coast to Singapore, towards the southern tip of India to Mombasa and through
the Red Sea via the Suez Canal into the Mediterranean before ending up in the upper Adriatic
region to the northern Italian hub of Trieste.
Shanghai International Port Group (SIPG) is responsible for operating and managing the public
terminals in the port. SIPG handles domestic, national and international cargo transportation. It is

2
Port and terminal operation management lecture note’s

also responsible for maintaining, manufacturing and leasing containers, as well as building,
managing and operating port facilities.
2. Singapore
Facts:
 Annual cargo tonnage: 626 million (2019)
 Annual container volume: 37.2 million (2019)
 Area: 1, 52 km²
The Port of Singapore is the busiest container transshipment hub and the largest publicly owned
port in the world. Located on the southern end of the Malay Peninsula, 30km south-west of the
Port of Johor in Malaysia, the Port of Singapore offers connectivity to more than 600 ports in
123 countries. The Port of Singapore‖ name refers to the collective facilities and terminals that
conduct maritime trade, and which handle Singapore‘s harbours and shipping. It has been ranked
as the top maritime capital of the world since 2015. Currently the world‘s second-busiest port in
terms of total shipping tonnage, it also transships a fifth of the world‘s shipping containers, half
of the world‘s annual supply of crude oil, and is the world‘s busiest transshipment port.
3. Shenzhen, China
Facts:
 Annual cargo tonnage: 194,9 million
 Annual container volume: 18.91 million
The Port of Shenzhen connects to over 300 ports in over 100 countries. It is located in China and
serves as a base for trade between Hong Kong and Mainland China ( it is located about 37.04 km
from Hong Kong to the south and 111.12 km from Guangzhou to the north).
4. Ningbo-Zhoushan, China
Facts:
 Annual cargo tonnage: 1,17 billion
 Annual container volume: 28. 72 million TEU (2020)
Ningbo-Zhoushan port operates 260 container shipping routes, including over 100 routes
servicing for Road and Belt initiative. The port newly opened 16 sea-rail combined
transportation operation spots and achieved over 1m teu sea-rail container volume for the first
time in 2020.

3
Port and terminal operation management lecture note’s

The port is at the crossroads of the north-south inland and coastal shipping route, including
canals to the important inland waterway to interior China, the Yangtze River, to the north. The
port consists of several ports which are Beilun (seaport), Zhenhai (estuary port), and old Ningbo
harbour (inland river port). The operator of the port, Ningbo Zhoushan Port Co. Ltd. (NZP), is a
listed company, but it is 76.31% owned by state-owned Ningbo Zhoushan Port Group Co., Ltd.,
as of 30 June 2017.
5. Guangzhou Harbour, China
Facts:
 Annual cargo tonnage: 566 million
 Annual container volume: 21.87 million TEU (20)
The Port of Guangzhou is currently the largest comprehensive port in South China. Its
international maritime trade reaches over 300 ports in more than 80 countries and districts
worldwide. The port also incorporates the former Huangpu Port. Moreover, the port serves as an
important economic and transport centre for the Pearl River Delta region and Guangdong
province. On top of that, it is a vital transport hub for industries located in neighbouring
provinces such as Guangxi, Yunnan, Guizhou, Sichuan, Hunan, Hubei and Jiangxi.
6. Busan, South Korea
Facts:
 Annual cargo tonnage: 400 million (2017)
 Annual container volume: 21.66 million TEU (20)
The Port of Busan was established in 1876 as a small port with strict trading between Korea,
China and Japan. It is situated at the mouth of the Nakdong River facing the Tsushima Island of
Japan. By today, it has become the largest port in South Korea. The Port of Busan is a vital
gateway for South Korea, connecting the country to the Pacific Ocean and Asia. It is South
Korea‘s main port, handling about 40% of the country‘s overseas cargo, 80% of its container
cargo, and 40% of Korea‘s national fishery production. Some 130 vessels call at the Port of
Busan each day.
7. Hong Kong, S.A.R, China
Facts:
 Annual cargo tonnage: 281 million (2017)
 Annual container volume: 19,60 million TEU (20)

4
Port and terminal operation management lecture note’s

The Port of Hong Kong, located by the South China Sea, is a deep-water seaport dominated by
trade in containerized manufactured products, and to a lesser extent raw materials and
passengers. A key factor in the economic development of Hong Kong, the natural shelter and
deep waters of Victoria Harbour provide ideal conditions for berthing and the handling of all
types of vessels. It is one of the busiest ports in the world when it comes to the three categories
of shipping movements, cargo handled and passengers carried. The port handled around 18
million TEUs of containers in 2020 and provides about 280 container liner services per week
connecting to over 600 destinations worldwide.
8. Qingdao, China
Facts:
 Annual cargo tonnage: 507 million (2017)
 Annual container volume: 18.26 million TEU (20)
The Port of Qingdao is a seaport on the Yellow Sea in China. It is a complete world port offering
the full range of services including loading, unloading, storage, and logistics for containers and
other cargoes like coal, iron ore, crude oil, grain, as well as a variety of bulk cargoes. The Port of
Qingdao offers international passenger services too.
Moreover, the Qingdao New Qianwan Container Terminal (QQCTN) has become Asia‘s first
fully automated port terminal after servicing its first containership, the 13,386 TEU COSCO
France, on May 11, 2017.
After three years of development, the terminal has completed its first fully automated phase to
upgrade two berths across 660 meters of quay with seven STS cranes operated by remote control,
38 automated stacking cranes (ASCs) and 38 battery-powered automated guided vehicles
(AGVs).
9. Tianjin, China
Facts:
 Annual cargo tonnage: 400 million (2017)
 Annual container volume: 16 million TEU (20)
The Port of Tianjin is the largest port in Northern China and the main maritime gateway
to Beijing. It is the largest man-made port in mainland China, and one of the largest in the world.
It covers 121 square kilometers of land surface, with over 31.9 km of quay shoreline and 151
production berths at the end of 2010. The port trades with more than 600 ports in 180 countries

5
Port and terminal operation management lecture note’s

and territories around the world. It is served by over 115 regular container lines run by 60 liner
companies, including all the top 20 liners.
10. Jebel Ali, Dubai, United Arab Emirates
Facts:
 Annual cargo tonnage: 400 million (2017)
 Annual container volume: 21.87 million TEU (20)
Port of Jebel Ali is a deep port located in Jebel Ali, Dubai, United Arab Emirates. Jebel Ali is the
largest man-made harbour, and the biggest and by far the busiest port in the Middle-East. Jebel
Ali Port is a gateway hub that enables trade across the region and beyond. It is a vital link in the
global trade network, connecting eastern and western markets with North Africa, the Middle
East, and South Asia. It has been voted ―Best Seaport – Middle East‖ for 24 consecutive years.
As an integrated multi-modal hub offering sea, air and land connectivity, complemented by
extensive logistics facilities, the port plays a vital role in the UAE economy. It is a premier
gateway for over 80 weekly shipping services, connecting more than 150 ports worldwide.
1.2. TYPES OF PORTS
A port is defined as an area on both land and water, whether on the sea or river, that provides
facilities for shipping vessels to load and unload their cargo or in other words it can be defined as
a harbour or an area that is able to provide shelter to numerous boats and vessels (transferring
people or cargo), and can also allow constant or periodic transaction of shipment. In simple
words, a port is a place to facilitate loading as well as unloading of vessels. Technically speaking
it is a convergence point between freight circulation domains.
Types of Ports are:
1. Inland Ports-These types of ports are built on comparatively smaller water bodies such
as rivers or lakes. These are used either for cargo purpose or for passengers or for both.
Inland Ports are constructed or naturally maintained ports at the coastline of small
waterways like lake, river or estuaries and rarely seen at sea coasts too.
2. Fishing Ports – As the name suggests fishing port is a port or Harbour for landing and
distributing fish and relies upon the availability of fishes in that region of the ocean. A
fishing port can be an inland port or a seaport.

6
Port and terminal operation management lecture note’s

3. Warm Water Ports- In simple words Warm Water port is a port where water does not
freeze in winter. This prevents from shutting down of ports during winter. This will help
in boosting the economy as trade will happen throughout the year.
4. Dry Ports- Dry ports are defined as inland terminals that can be interconnected with a
seaport via road or rail transportation facilities, and they usually act as centres of
multimodal logistics.
5. Sea Ports- Seaports are the most common types of ports around the world which are used
for commercial shipping activities. These types of ports are built on a sea location and
enable the accommodation of both small and large vessels.
Among all these types of ports, seaports are the largest and busiest type of ports. This is due
to the reason that seaport serves to both cargoes as well as passengers. So more facilities and
equipment are available there which results in the employment of more personnel as a port
authority.
 What are the objectives of a port?
 To provide efficient and reliable services that meet the needs of port users (Port User
means any Cargo Owner, Ship owner or other person using the Port for any purpose
whatsoever).
 To provide and maintain port facilities such as wharves and associated infrastructure
that will meet user needs
 Ports represent a mix of public and private goods.
 Ports generate direct economic benefits (private goods) through their operations, as
well as additional indirect benefits (public goods) in the form of trade enhancement,
second order increases in production volumes, and collateral increases in trade-related
services.
 A port is a transportation hub that facilitates goods movement to businesses in local
communities and worldwide markets1.
 It connects goods to consumers through highways, railroads, air transit, and domestic
marine highways.
 A port is also an area or platform entered into from the sea by vessels, boats, and
ships, which allows for protected staging and anchoring or docking for these ships to
load and unload consignments and continues up towards their destination.

7
Port and terminal operation management lecture note’s

 In a computer system, a port is a connecting device that helps it connect to other

devices in the network or any other hardware.
 What are main activities in a port?
Activities associated with ports include operation of vessels, cargo handling equipment,
locomotives, trucks, vehicles, and storage and warehousing facilities related to the transportation
of cargo or passengers as well as the development and maintenance of supporting infrastructure
(also see inland ports
1.3. The Purpose or the main function of Ports
Ports serve as important transportation hubs that facilitate goods movement in local communities
and worldwide markets. The distribution of freight (including raw materials, parts and finished
consumer products) by all modes of transportation including marine, air, rail and truck. Our
nation‘s ports are an important part of our national economy and intermodal transportation
system.
In addition, to their impact on the national economy, ports also have an impact on local and
regional economies.
The focus of the Ports Primer is on ports, however, many considerations related to ports may also
apply at large intermodal freight facilities that are not near waterways and which are sometimes
referred to as inland ports. Additionally, while this Ports Primer emphasizes the goods movement
aspect of port-related functions, many issues (e.g., idling ships) apply to travel/passenger aspects
of port functions as well. The Role of Ports section includes the following topics:
 The National Economy
American ports are gateways for domestic and international trade. U.S. seaports handle over 99
percent of the country‘s overseas cargo by volume and 65 percent by value, according to The
American Association of Port Authorities (AAPA). AAPA is a trade association representing
public port authorities in the United States, Canada, the Caribbean and Latin America. These
figures are significant, given that the value of all international trade accounts for nearly 30
percent of the U.S. Gross Domestic Product (GDP) to meet increasing consumer demands, more
ships are calling at U.S. seaports than ever before and the ships are getting bigger.
 Port and Port-Related Employment
In many communities, ports are significant sources of local employment. Ports are employers
and also support employment in related sectors such as trucking and rail transportation.

8
Port and terminal operation management lecture note’s

According to the American Association of Port Authorities, deep-water ports in the U.S.
supported 541,946 jobs in 2014. The average salary for these workers was $54,273. In addition,
port activity generated over 23 million jobs in related sectors and through their overall economic
impact on the surrounding communities.
 Intermodal Transportation System
Ports serve as important transportation hubs that facilitate goods movement to businesses in local
communities and worldwide markets. As illustrated in the figure at right, ports can connect
goods to consumers through our highway system, railroads, air transit and domestic marine
highways (water transportation routes). These ports include seaports as well as smaller
intercostal and inland ports that facilitate movement of goods between the seaports and local
communities. Intermodal Transportation refers to movements of cargo between different kinds of
transport modes.
As trade growth continues, ports are considering expanding their internal capacity by increasing
efficiency and investing in infrastructure to support larger ships. Ports may also coordinate with
communities, Metropolitan Planning Organizations, state and federal Departments of
Transportation, and other agencies to expand transportation capacity outside the port to avoid
bottlenecks created by limitations from other modes of transportation.
 National Defense and Emergency Preparedness
In addition to serving as economic drivers and transportation hubs, ports play an important role
in national defense. Fifteen of our commercial seaports have been named Strategic Seaports by
the U.S. Department of Defense (DOD) (see the map at right). These ports can help to support
military deployments because. Strategic Sea ports of the United States of their large staging
areas, connections to rail infrastructure and ability to load non-containerized cargo. Ports can
also use these capabilities to support emergency relief activities, such as from the Federal
Emergency Management Agency, for natural disasters.
The DOD is particularly reliant on Strategic Seaports during military surge operations. For
example, during Operation Iraqi Freedom, the DOD used these ports to load combat vehicles and
aircraft. These operations require Strategic Seaports to have adequate rail infrastructure,
significant staging areas for military cargo and workers skilled in handling non-containerized
military equipment. As our commercial seaports continue to experience increasing levels of

9
Port and terminal operation management lecture note’s

commercial containerized shipping, port staging areas and rail capacity to support military
operations may be strained.
 Homeland Security
Security at ports is an important concern. With so much cargo traffic passing through, it is
important for security measures to adequately monitor and protect the ports while still allowing
an efficient flow of goods. Oversight and responsibilities for port security are divided between
numerous actors and can be complex. In October 2005, the National Strategy
for Maritime Security was approved by the President. This strategy provides plans that address
preparedness, protection, response and recovery for both man-made and natural hazards that
might create security concerns at our nation‘s ports.
Major Shipping Commodities: Leading commodities shipped through ports include:
 Crude petroleum and petroleum  Forest products: lumber, wood chips
products (such as gasoline, aviation  Iron and steel
fuel, natural gas)  Soil, sand, gravel, rock, stone
 Chemicals and related products,  Automobiles, automobile parts and
including inorganic fertilizers machinery
 Coal  Clothing, shoes, electronics, toys
 Food and farm products: wheat and
wheat flour, corn, soybeans, rice,
cotton, coffee
Ports handle a range of commodity mixes. Some ports focus on one type of commodity; some
are more diversified.
1.4. Types of Ownerships
There are five main port management models based on the respective responsibility of the public
and private sectors. They include the public service port, the tool port, the landlord port, the
corporatized port, and the private service port. Each of these models concerns ports with
different characteristics concerning the ownership of infrastructure, equipment, terminal
operation, and who provides port services such as pilotage and towage. While service and tool
ports primarily promote public interests, landlord ports attempt to balance public and private
interests. At the other end of the spectrum, private service ports are maximizing the interests of
their shareholders.

10
 Port and terminal operation management lecture note’s

 Public service ports. The port authority of public service ports performs the whole range of
port-related services and owns the entire infrastructure. They are commonly a branch of a
government ministry, and most of their employees are civil servants. Some ancillary services can
be left to private companies. Because of the inefficiencies, they are related to the number of
public service ports has declined.
 Tool ports. Similar to a public service port, the tool port differs only by the private handling of
its cargo operations, albeit the port authority still owns the terminal equipment. In several cases,
a tool port is a transitional form between a public service port and a landlord port.
 Landlord ports. Represents the most common management model where infrastructures,
particularly terminals, are leased to private operating companies with the port authority retaining
ownership of the land. The most common form of lease is a concession agreement where a
private company is granted a long-term lease in exchange for rent that is commonly a function of
the size of the facility as well as the investment required to build, renovate or expand the
terminal. The private operator is also responsible for providing terminal equipment to maintain
operating standards.
 Corporatized ports. Concerns ports have almost entirely been privatized, except that ownership
remains public and often assumed as a majority shareholder. The port authority essentially
behaves like a private enterprise. This management model is unique since it is the only one
where ownership and control are separated, which lessens ―public good‖ pressures landlord port
authority faces and ―shareholder value‖ pressures private ports face.
 Private Service ports. The outcome of complete privatization of the port facility mandates that
the facilities retain their maritime role. The port authority is entirely privatized, with almost all
the port functions under private control, with the public sector retaining a standard regulatory
oversight. Still, public entities can be shareholders and thus gear the port towards strategies that
are deemed to be of public interest.
Infrastructure Superstructure Workforce Regulation
Landlord Public Private Private Public
Tool Public Public Public Public
(private) (private)
Service (public) Public Public Public Public
Service Private Private Private Private
(private)

11
Port and terminal operation management lecture note’s

CHAPTER 2: CARGOES AND VESSELS

2.1. Definition of Cargo
Technically, "cargo" refers to the goods carried aboard the ship for hire. Cargo is the goods or
merchandise conveyed in a ship, airplane, or vehicle
A cargo ship or freighter is a merchant ship that carries cargo, goods, and materials from one
port to another. Thousands of cargo carriers ply the world's seas and oceans each year, handling
the bulk of international trade. Cargo ships are usually specially designed for the task, often
being equipped with cranes and other mechanisms to load and unload, and come in all sizes.

The word cargo is used collectively it's a singular noun that refers to a group of items. For
example, all of the shipping containers being transported by a ship are its cargo. Such a ship
can be called a cargo ship or a cargo liner. A plane primarily carrying cargo can be called a cargo
plane.

2.1.1. Types of Marine cargo traffic

Cargo is usually referred to as goods and products that are transported by air, water, or land.
They can be normal goods like clothing, toys, televisions, computers, or liquid, like wine and
different kinds of oils. Regardless, cargo can be separated into different types. When carrying
cargo, you pay freight to the transporter. It‘s important to work with companies that offer freight
management services to successfully get your cargo.
 The cargoes carried by maritime transportation come into several categories, each requiring
the usage of specialized ships. The two main categories are general and bulk cargo. General
cargo is unitized (carried in defined load units), while bulk cargo is loose (carried in any
quantity).
 General cargo can be sub-divided into three categories:
 Break Bulk. Concerns cargo that is carried in drums, bags, pallets, or boxes. Such ships
are typically geared.
 Neo Bulk (Roll-On Roll-Off: Concerns cargo where each pre-packaged unit is
accountable such as lumber (bundles), paper (rolls), steel, and vehicles. Roll on and roll
off cargo is a combination of road and sea transport, where loaded road vehicles are
driven on to a ferry or ship (roll-on/roll-off ship) and off at the port of destination. Major
benefits of Ro-Ro are reduced handling of the actual goods and packages, competitive

12
Port and terminal operation management lecture note’s

costs for unit loads and schedules services. Commonly called RO-RO, this is any cargo
that has to be rolled on and rolled off the vessel. These include cars, trailers, buses,
tractors, generators, containers, or constructed equipment. When loading them on, they
can be self-driven, towed, wheeled, or placed in a roll-trailer.
 Containerized. The growth of container shipping required creating a new general cargo
category where the cargo is being carried in container load units. This is the cargo that
most laymen are familiar with. Here, the cargo is stored and transported in shipping
containers of different sizes. They can contain toys, clothes, TVs, fridges, refrigerated
goods, and more. The growth of container shipping required creating a new general cargo
category where the cargo is being carried in container load units.
 Bulk cargo can be divided into two categories:
 Liquid bulk cargo. The majority of the liquid bulk carried is petroleum LNG (Liquefied
Natural Gas), representing an emerging segment. Liquid bulk ships are commonly
referred to as tankers. As the name implies, these are cargo in the form of liquid gas or
free-flowing liquid. They are carried in special tanks that are connected to articulated
lines pipes. They include crude oil, chemicals, natural gas, vegetable oil, wine, and more.
The majority of the liquid bulk carried is petroleum LNG (Liquefied Natural Gas),
representing an emerging segment. Liquid bulk ships are commonly referred to as
tankers.
 Dry Bulk cargo. Concerns a wide variety of materials such as coal, iron ore, grains,
bauxite, and sand. This is commonly called general cargo and is not put together in a
container. Instead, the pieces are handled individually and when being shipped, they
could be unpacked or placed in a crate. It involves delivering items for construction or
industrial work. The cargo includes generators, steel rods, wind turbine blades, pipes, and
more.
 Dry bulk cargo is usually homogenous, in large quantities, and unpacked. Some examples
include sand, iron core, grain, gravel, cobblestones, and more. It is usually transported by
shore-cranes or vessels and offloaded with funnels.

13
Port and terminal operation management lecture note’s

It‘s important to know the main types of cargo and where your goods fall in whenever you want
to transport them.
2.2. Cargo vessel in port
Basically, a vessel is anything that can float and can be steered/moved, either by own means
or by other means. Apart from a ship, a floating platform, boats, barges etc. can also be called a
vessel. Any ship or vessel that transports heavy goods and materials from one port to
another is called a cargo ship. These are also known as freighters, and thousands of them swarm
the seas of the earth at any given time because they handle the major bulk of international trade
services.
A vessel is:
 A container (such as a cask, bottle, kettle, cup, or bowl) for holding something
 A person into whom some quality (such as grace) is infused
 A tube or canal (such as an artery) in which a body fluid is contained and conveyed or
circulated
 A vessel is a ship or large boat.
 Is vessel a ship or a container?

14
Port and terminal operation management lecture note’s

2.1.2. Types of cargo vessel

Contents:
1. Dry Cargo Ships 2. Liquid Cargo Ships
 Bulk Carriers (General Cargo Crude Carriers
Vessels) Product Carriers
 Container Vessels Chemical Carriers
 Reefer Vessels Liquefied Gas Carriers
 Ro-Ro Vessels
3. Specialized Cargo Ships
 Passenger Vessels
 Livestock Carriers
 Heavy-lift/Project Cargo Vessels
Modern seagoing commercial vessels come in all shapes and sizes and are designed to carry a
wide variety of cargoes. This article provides a brief overview of the main types of vessels that
sail the world‘s seas and gives some history on how each has evolved.
For the purposes of this article, cargoes are divided into dry, liquid and specialized, with each
of these divided further into subcategories. Dry cargoes include bulk, general and break-bulk,
containers, reefer and Ro-Ros. Liquid cargoes are usually oil-based but may also include Crude
Carriers, Product Carriers, Chemical Carriers, Liquefied and Gas Carriers. Specialized cargoes
include passengers, livestock and heavy-lift/project.
1. Dry Cargo Ships
Historically, dry cargo vessels were the most common vessels in the world‘s merchant fleet.
Known as general cargo vessels, they would be equipped with their own cargo loading
equipment, usually in the form of a derrick lifting device. Cargo would be stowed in different
holds and the speed and effectiveness of the loading/unloading process would depend on the
ship‘s crew and the port workers or ―Stevedores‖. Such ships sometimes operated a regular
service as liners between two or more ports, but could also operate in the ―tramp trade‖ where
vessels would go wherever they were required.
A. break-Bulk Carriers
Also known as General Cargo. For dry cargoes with a high weight to cost ratio such as coal,
grain and ore, economies of scale produced the modern bulk carrier. These vessels are divided

15
Port and terminal operation management lecture note’s

into several separate holds covered by hatches. In port, cargo is loaded by conveyor and spouts,
or by crane and grab. Some bulk carriers are geared (usually a crane is located between each
hatch) to allow the loading and unloading of cargo at berths or landing place without the need for
shore equipment.
For unloading, cranes with grabs are the norm, although specialized equipment may be used for
certain cargoes. When vessels unload using cranes and grabs, personnel and vehicles are often
placed inside the holds to assist the process. Cargo is usually unloaded into hopper barges, and
then transferred by conveyor to silos or open storage. Smaller vessels can often discharge cargo
directly into road vehicles.
Break-bulk, is usually on pallets or in bags. There may be specialized handling facilities for such
cargo, but usually loading and unloading is carried out using cranes and straps (for boxes) or
slings (for bags). These vessels can also carry loose and irregular cargo, in which case the
vessel‘s crew and port stevedores pack the cargo to minimize damage and maximize space.
Although largely replaced by bulk and container carriers, general cargo vessels still operate
throughout the world.
They mostly carry packaged goods but do not have space for containers. They use their own
built-in cranes for loading and unloading operations once at ports.
B. Container Vessel
It is the most common mode of sea freight transport. As the name suggests, these vessels are
designed to carry standard 20′, 40′ and 45′ containers. They can accommodate most dry-load
transport. Their capacity ranges from 85 TEUs (twenty equivalent units) to 15,000+ TEUs. The
biggest container vessel is the Emma Maersk. Gantry cranes are used to load and unload the
boxes.
Containers have become the main way of transporting manufactured goods around the world. A
container can be transferred between truck, train and ship relatively easily and is a standard size
to simplify transportation. Containers can accommodate anything from foodstuffs to electrical
equipment to automobiles. They are also used to transport bagged and palletized goods, as well
as liquids and refrigerated cargo.
Standard containers are measured as TEUs (Twenty-foot Equivalent Units) and are generally 20
feet (1 TEU) or 40 feet (2 TEUs) long. All standard shipping containers are 8 feet wide and 8
feet 6 inches tall. There are also longer, taller and even shorter standard sizes, but these are less

16
Port and terminal operation management lecture note’s

common. Container ships are made up of several holds, each equipped with ―cell guides‖ which
allow the containers to slot into place. Once the first layers of containers have been loaded and
the hatches closed, extra layers are loaded on top of the hatches. Each container is then lashed to
the vessel but also to each other to provide integrity. Containers are usually loaded by specialized
cranes or even general purpose cranes with container lifting attachments. Some small container
vessels are geared to allow self-loading and discharging.
Container vessels are used predominantly on liner routes and are some of the biggest vessels
afloat. Ultra Large Container Vessels (ULCVs) such as the Emma Maersk (lead ship of the
Maersk E-Class vessels) are able to carry approximately 15,000 TEU (depending on container
weight). Large container vessels are restricted by their size to certain ports around the world and
are also unable to transit certain areas due to draft or, in the case of canals, beam restrictions.

C. Reefer Vessels
Ships designed to carry refrigerated cargo and perishable goods such as fruit or meat are known
as ―Reefer Vessels‖. Cargo is stowed in holds which are then sealed and temperature controlled.
Traditional reefer vessels have been largely replaced by the use of reefer containers which are
carried aboard container vessels. Reefer containers need a power source to function and often
require inspection during the voyage.
D. Ro-Ro Vessels
Roll on-Roll off or Ro-Ro vessels come in many forms. They include vehicle ferries and cargo
ships carrying truck trailers. The car carrier is the most commonly-used ro-ro vessels. These

17
Port and terminal operation management lecture note’s

slab-sided vessels feature multiple vehicle decks comprising parking lanes, linked by internal
ramps with access to shore provided by one or more loading ramp. Cargo capacity of such
vessels is measured in Car Equivalent Units (CEU) and the largest car carriers afloat today have
a capacity of over 6,000 CEU.
Ro-Ro ships can be further classified as below:
 Pure Car Carrier (PCC) for cars only;
 Pure Car and Truck Carrier (PCTC) for cars and trucks;
Ro-Ro ships can also combine the Ro-Ro system with other types of cargoes and even with
passengers.
 Vessels that transport containers and wheeled cargoes are called ―ConRo ships” (Ro-Lo);
 Ships that accommodate general cargo and vehicles are known as ―GenRo ships‖;
 Ships that transport passengers along with cars and other vehicles (ferries) are named
“RoPax ships”.

2. Liquid Cargo Ships

These vessels, collectively known as tankers, carry a range of liquid cargoes. Tankers were first
developed in the mid-nineteenth century when ships made of iron allowed liquids to be carried in
bulk, economically and without leakage or outflow. Like bulk carriers, economies of scale have
driven up the size of tankers and today the largest examples have a carrying capacity or
―deadweight‖ of over 400,000 tons.
A. Crude Carriers
The largest ships afloat are the Very Large Crude Carriers (VLCCs) and the Ultra Large Crude
Carriers (ULCCs). These ships are designed to load crude oil and transport it to refineries or
factories (plants) around the world where it can be processed into petroleum products. The
largest crude carriers often load and unload at offshore buoys and terminals as they are too large
to enter most ports.

18
Port and terminal operation management lecture note’s

B. Product Carriers
These vessels, which are generally smaller than crude carriers, transport the refined products
from larger terminals to smaller ports around the world. Products carried include petroleum, jet
fuel, diesel, asphalt, lubricating oil and tar. Smaller tankers are also used to transport non-
petroleum bulk liquids such as molasses and palm oil.
C. Chemical Carriers
These ships usually have deadweight of 5,000-40,000 tons and often have specialized cargo
systems suited to the type of cargo carried. These systems can include heating or cooling
apparatus and advanced cleaning systems to ensure the cargo maintains its purity when loaded
into a multi-purpose tank.

D. Liquefied Gas Carriers

These ships began as converted oil tankers but have evolved into highly specialised purpose-built
vessels. Designed to carry Liquefied Petroleum Gas (LPG) or Liquefied Natural Gas (LNG)
under pressure, the cargo tanks are generally spherical for strength. LNG carriers are usually
larger than those carrying LPG; the largest LNG carriers are the ‗Q-Flex‘ vessels with a gas
capacity of up to 266,000 cubic meters.

19
Port and terminal operation management lecture note’s

3. Specialized Cargo Ships

Most types of cargo could be considered as specialised due to the specific loading, unloading or
stowage arrangements required. Many such cargoes are however, moved with such regularity
and ease that the term ‗specialized‘ takes on a new meaning. For the purpose of this article, it
refers to cargoes that are either difficult to categorize as dry or liquid, or to cargoes that are
relatively difficult to handle.
A. Passenger Vessels
This category includes everything from 10-person foot ferries up to cruise ships able to carry
over 6,000 passengers. Perhaps the most specialized cargo of all, the needs and desires of
passengers have driven the design of the modern ferries and cruise vessels. Ferries, once seen as
‗a means to an end‘ for most, are now lavishly equipped with lounges, restaurants, shops and
entertainment facilities particularly when the ferry is on a relatively long route. The ships have
got larger too. The Ulysses, for example, which runs between Holy head and Dublin, is able to
carry over 1,300 cars and 2,000 passengers.
The first example of ships undertaking a public ‗cruise or voyage‘ can be traced back to the
nineteenth century but cruising gained mass popularity in the latter twentieth century. Many
cruise vessels were originally liners which were sent to warmer climates during seasonal bad
weather on their regular routes. Arguably, the last of the liners is the Queen Mary 2, which still
operates a regular transatlantic service. Today, cruise passengers expect a wide range of facilities
including casinos, gymnasiums, shops, theatres, cinemas, pools, restaurants and bars. The largest
cruise vessels are up to 360 m. long and 60 m. wide. Popular cruising areas are the
Mediterranean, Caribbean and Scandinavia.

20
Port and terminal operation management lecture note’s

B. Livestock Carriers
These ships are often converted from other types of vessel and are equipped with pens for large
numbers of animals. The main considerations during the transport of livestock are adequate
ventilation, food, and water. It is also important that ports that receive these vessels have
facilities to handle the animals. Some livestock carriers can transport up to 120, 000 sheep. A
common route for livestock carriers is Australia and New Zealand to the Middle East.
E. Heavy-lift/Project Cargo Vessels
These vessels are often purpose-built to specialize in the transport of extremely heavy or bulky
objects such as other ships and large industrial components. For instance, these vessels are used
to transport offshore platforms from their construction site to drilling sites. Some heavy-lift
vessels are equipped with high capacity cranes to load at ports without a heavy-lift capability.
Other types are semi submergible, allowing cargo to be floated into position before the heavy-lift
vessel de-ballasts to lift the cargo out of the water. Common project cargoes are wind turbine
blades and towers, quay cranes and industrial machinery. Project cargo vessels are often adapted
to suit their role. ‗Jack up‘ vessels for example are able to put down ‗legs‘ to lift themselves out
of the water. This is commonly used by vessels installing offshore wind farms where stability is
required while the turbine towers are put in place.

21
Port and terminal operation management lecture note’s

2.3. The nature of cargoes

If the nature of cargo is unusual the statement in the bill of lading should not be a very detailed
description of the cargo without an attached certificate from an independent body, such as a
surveyor or laboratory, to ensure that the-cargo matches the description.

The buyer may have purchased goods of a certain description. It is outside the expertise of the
normal shipmaster or port agent to ascertain if the goods match the description in the contract of
sale.

On delivery, the goods may be rejected if there is no match and the carrier may fail to obtain any
freight. Moreover, if the goods as loaded are not as described, any words of such description
should be deleted by the person who signs and issues the bill of lading. For example, in the case
of liquefied petroleum gas cargoes, if the bill of lading, prepared by the shipper, states that the
gas is ―fully refrigerated‖ this may be incorrect if the nature of ―fully‖ is not identified by a
laboratory certificate and check-temperatures.

Difficulties can arise if the bill of lading acknowledges receipt of a container ―said to contain‖
certain cargo. If the cargo is received by the carrier at a ―container freight station‖ and the carrier
―stuffs‖ or ―vans‖ the container, the carrier will be responsible for the description on the bill of
lading of the contents of the container. However, if the carrier receives a container packed by the
shipper or by consolidators or freight forwarders there can be no presumption that the contents of
the container match the description inserted by the shipper into the bill of lading, especially if the
container is ―sealed by the shipper‖, the insertion of such a clause in a bill of lading assisting the
ship-owner from claims by third party bill of lading holders. However, qualified bills of lading
may lead to delay for the shipper and may be unacceptable by him. In situations such as these, it
may be better to omit any unverifiable detail as the only way for a earner to avoid prima facie
liability to consignees or endorsees if the detailed description of the cargo is not accurate.

A bill of lading (B/L or BoL) is a document issued by a carrier (or his agent) to acknowledge
receipt of cargo for shipment. A bill of lading is a standard-form document that is transferable by
endorsement (or by lawful transfer of possession).

22
Port and terminal operation management lecture note’s

2.4. Multimodal port

Multimodal is defined as the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport carrier responsible, However
under a single contract or bill of lading.
North Sea Port is a logistics hub served by inland shipping, road transport, rail and pipeline,
enabling companies to import and export a wide range of goods smoothly and efficiently. North
Sea Port offers numerous options for doing so.

As a multimodal port, North Sea Port distributes the goods that enter the port from all over the
world via inland shipping, rail, pipelines and motorways to the European hinterland and beyond.
The longest rail connection runs all the way to China. For companies, multimodality –
connection to all these transport networks and the ability to use the most appropriate transport
mode for each transport movement – is a very important asset.
North Sea Port is committed to a 'modal shift' towards rail, inland waterway and pipeline in order
to further reduce the congestion and CO2 emissions associated with road transport. As an
industrial port with a relatively large market share in inland navigation and rail transport,
especially inland navigation, the most recent figures show that the modal split in North Sea Port
makes an important contribution to achieving sustainability objectives.

Inland shipping: North Sea Port is located at a junction of European inland waterways, which
fan out in the direction of the Netherlands and Belgium, towards Germany in the east and
southwards to France. Over 50% of all transport between the port and its hinterland is conducted
via inland shipping. This unique position makes North Sea Port a true hub for transporting goods
over inland waterways by barge – and a sustainable and efficient alternative to road transport. An
extremely wide range of goods are transported by rivers and canals. There is a growing market
for parties that ‗bundle‘ containers before they are transported on to other ports by barge.

Road transport: North Sea Port is located at the junction of the most important European
motorways: the E17 (which runs north-south) and the E40 (east-west). Excellent motorway links
around the port area provide access to quays and industrial sites. Only 1/3 of hinterland traffic is
now moved by truck. We want to reduce this share even further in the near term.

23
Port and terminal operation management lecture note’s

Rail: Many wharves and industrial sites have their own tracks and sidings. And North Sea Port is
also connected to the European rail network. Rail transport offers an attractive alternative to road
transport. At present, 7 million tonnes of goods are transported by rail every year at North Sea
Port, accounting for just under 10% of hinterland transport.

Pipelines: Some 15 to 16 million tons of products are transported by pipeline in North Sea Port
alone each year. Studies are underway to see how we can further increase transport by pipeline
and so provide another alternative to road transport. For seagoing ships, North Sea Port offers
permanent liner services to Central and South America, along with services to nearly the entire
Mediterranean region and European coast for the short sea sector. There are numerous inland
shipping and rail connections as well, including a permanent rail connection between North Sea
Port and China. North Sea Port has a number of multimodal terminals to serve these modalities.

2.4. The port system

A port is a virtual point where network connections start and end. Ports are software-based
and managed by a computer's operating system. Each port is associated with a specific process or
service. Port system contains:
A. The Quay site/System B. Gate System and C. Yard System
A. the Quay site/System
The physical infrastructure of the quay site includes berth’s length, draft and structure,
which may differ according to the type of ship and cargo handled.
In Ro-Ro and ferry ports, ramps (shore or ship based) are used for cargo and vehicle transfer
between ship and quay. In most other terminals, the crane is the main equipment used for ship
loading and unloading. It can be either mounted on the ship (ship-mounted cranes) or located on
the quay (ship-to shore cranes: STS). In dry bulk terminals, cargo is usually transferred between
the ships holds and the storage area (open storage, silos, sheds, etc) by means of belts or

24
Port and terminal operation management lecture note’s

conveyors. For liquid bulk terminals, a distinction must be made between loading and
discharging terminals. In loading terminals, loading arms and hoses are used as conveying
devices between vessels and loading platforms, while buoy and single point moorings are used
for vessel loading in off-shore terminals. In unloading terminals, cargo is normally discharged by
ship‘s pump but terminals provide additional capacity in the form of booster pumps. For break
bulk and general cargo operations, ship‘s mounted cranes (gears or derricks) are employed in
under-equipped ports or where there is limited containerized traffic. Where there is significant
container traffic, STS container cranes (or port trainers) are used instead. Modern cranes have a
higher load capacity and are equipped with several extendable spreaders, which allow them to
handle multi-container picks (e.g. twin and tandem lifts) in a single move.
B. Yard System
A terminal’s yard is the area where cargo storage, stacking, transfer and distribution take
place. Not all terminals require separate yards (e.g. passenger and ferry terminals), but when
they do the yard‘s configuration, layout and handling equipment will have a direct impact on the
process-flow and efficiency of terminal operations. From an operational view, yard operations
may be categorized into horizontal transport and storage/staking modules. For instance, the yard
area in liquid bulk terminals is used for intermediate and long-term storage of oil and other
liquefied cargo, which is then transported by pipelines to refineries and inland destinations (e.g.
the national grid). For car terminals, the yard serves as a warehousing and storage area for cars,
trucks and other automobile vehicles before being sent to final customers. The total storage area
of sheds and warehouses depends on a number of factors, in particular.
 The cargo stowage factor
 The average stacking height
 The floor space required for cargo handling and access by the relevant
equipment in use.
For container terminals, yard configuration and layout determines the stack profile and the
movement of containers between stack and quay and between stack and gate, while handling
equipment are the machines used for horizontal transport and stacking. The choice of the
appropriate container handling system is based on several criteria such as:
 The size of operations,  Labour costs and availability of
 Required stacking density skilled labour.
 Land available,

25
Port and terminal operation management lecture note’s

As discussed in Chapter 3, containers are stacked and stored in the yard according either to
segregation or to scattering strategies, each using a range of container classification criteria such
as destination (inbound, outbound, transshipped),status (FCL, LCL, empty), type (special,
refrigerated, dangerous, etc) and size
(TEUs, FEUs, non-standards).
C. Gate System
Gate operations are designed to efficiently control access into and out of a terminal or port
facility through land interfaces, which may be further subdivided into train and truck interfaces
(or interchange points). Components of gate planning and management include:-
 Advance booking  Cut-off times
 Arrival schedule  Validation check and control, and
 Pick-up and delivery  Gate-in/gate-out monitoring.
Conventionally, the gate process is manual where a lane clerk identifies the import/export cargo
and feeds information via radio or another hand device to the terminal‘s management system.
Inflow labour cost areas, the manual gate system can be cost effective, however the system is
also time consuming and prone to human errors. Today, modern gate operations are implemented
and managed using electronic and automated solutions for truck and container detection, size
recognition and verification, congestion status, cut-off control and other relevant operations.
Available technologies include CCTV cameras, card readers, RFID tags and sensors and
other mobile data and digital imaging technologies.
2.5 The development of containerization
Container shipping is the most optimal method of shipping freight through sea routes. The
history of containerization is a development that can be pinpointed to the mid-20th century.
Pioneered by an US-based conveyance businessman Malcolm Mclean, cargo containers were
fashioned in a bid to simplify the long-drawn processes involved in shipping of cargo through
sea routes.
The extremely lengthy processes primarily meant that the cargo had to be suitably dismantled or
separated before it could be loaded into the ships. This meant that effective labor was wasted in
the initial dismantling and the later assembling procedures and huge amounts of cargo had to be
sub-divided merely because of technical restrictions and there was absolutely
no standardization in the entire shipping processes.

26
Port and terminal operation management lecture note’s

Malcolm Mclean circumvented this protracted cargo transportation issue by modifying the basic
structuring of a Second World War tanker vessel. The initial cargo containers utilised in the
vessel were modified as well, and were wheel-less truck-carts. The entire success of such a novel
initiative however depended on whether the modified truck-carts laded with cargo could be
successfully placed into the vessel and thus transported to the necessary destination.
Exceeding expectations, the ingeniously devised contraption proved to be a huge success. This
success meant that for the foreseeable future, shipping cargo bulk or otherwise could be carried
out with the least possible problems.
With the extent of containerized operations and technological developments in the same
increasing almost every day, it wouldn‘t be wrong to say that cargo movement in the present
times cannot be visualized to fruition in the absence of container shipping.
Containerization originated several centuries ago but was not well developed or widely applied
until after World War II. It dramatically reduced the costs of transport, supported the post-war
boom in international trade, and was a major element in globalization1. Four major paradigm
shifts have taken place within containerized freight distribution systems, leading to their growing
level of intermodal integration. These include the containerization of maritime transport systems,
inland transport systems, intermodal and Trans-modal operations, and the integrated global
shipping network.
The Four Revolutions of Containerization:
Four major paradigm shifts (or revolutions) have taken place within containerized freight
distribution systems, leading to their growing level of intermodal integration:
 Phase 1: Containerization of maritime transport systems. At first, the introduction of
the container and its diffusion within maritime systems took place with the gradual
introduction of specialized ships and port facilities. This was particularly the case from
the mid 1965s when standardization resulted in common container size and latching
systems. The efficiency of port transshipments improved, and inland services, dominantly
relying on trucking, began to be established. Still, maritime services tended to be on a
point-to-point basis and between major ports.
 Phase 2: Containerization of inland transport systems. Subsequently, containerization
started to diffuse inland, mainly to improve the continuity already established within
maritime transportation, particularly with the setting of pendulum services. The

27
Port and terminal operation management lecture note’s

introduction of double stacking rail services in the mid-1980s required the setting and
redesigning of inland container rail terminals in North America. The adoption of the
container in Europe gained momentum when an intermodal system started to emerge in
the late 1970s. For example, the shift from conventional and highly irregular barge
services to scheduled and reliable container services in the second half of the 1970s gave
impetus to a fast containerization process along the Rhine basin up to the main ports of
Rotterdam and Antwerp.
 Phase 3: Intermodal and Trans modal operations. Since containerization expanded to
cover maritime and inland transport systems, the next phase dominantly aimed at
improving its overall efficiency. This efficiency is mainly based on the reduction of the
number of times a container is handled as well as the velocity at which intermodal and
trans modal operations are performed. Also, the growth in containerized shipments
placed additional pressures on intermodal transport systems, which for the maritime
segment resulted in the setting of transshipment hubs (also known as intermediary hubs)
acting as intermediary locations between major systems of maritime circulation. Growing
intermodal volumes handled at ports favored the setting of satellite terminals and trans
loading. Inland transport systems accommodated a growing amount of traffic, which in
many cases resulted in the setting of large inland freight distribution centers (inland
ports).
 Phase 4: Integrated global shipping network. The prior phases (or revolutions) have
permitted the setting of a global shipping network that is increasingly integrated. Further
evolution of this network involves the setting of a high capacity circum equatorial route
(CER), being the main support of east / west trade interactions. The route would link a
series of transshipment hubs where north/south flows would be collected. This network is
still in emergence.

28
Port and terminal operation management lecture note’s

CHAPTER 3: CHARTERING AND BULK CARRIAGE

3.1. Ship Chartering
Ship chartering is the hiring out the use of a ship by a vessel owner to another company, the
charterer, for the transportation of goods. Chartering enables ship owners to maximize their
investments by leasing out their ships for revenue while third parties get maritime transport
for their cargoes without having to invest in a vessel, cutting capital outlay.
The charterer
The term ‗‗chartering‘‘ refers to the arrangement of the use of vessels and containers for the
purpose of the transport of cargo by sea.
Chartering is an activity within the shipping industry whereby a ship-owner hires out the use of
their vessel to a charterer. The contract between the parties is called a charter party. The three
main types of charter are: demise charter, voyage charter, and time charter.
What is chartering? They refer to the process of hiring or leasing a vessel, aircraft, or other
means of transportation for a specific period or purpose. It involves temporarily using the
vehicle, typically with crew and fuel, to transport goods, passengers, or both.

In some cases a charterer may own cargo and employ a shipbroker to find a ship to deliver
the cargo for a certain price, called freight rate. Freight rates may be on a per-ton basis over a
certain route (e.g. for iron ore between Brazil and China), in Worldscale points (in case of oil
tankers) or alternatively may be expressed in terms of a total sum - normally in U.S. dollars - per
day for the agreed duration of the charter.

A charterer may also be a party without a cargo who takes a vessel on charter for a specified
period from the owner and then trades the ship to carry cargoes at a profit above the hire rate, or
even makes a profit in a rising market by re-letting the ship out to other charterers. Depending on
the type of ship and the type of charter, normally a standard contract form called a charter party
is used to record the exact rate, duration and terms agreed between the shipowner and the
charterer.
Time charter equivalent is a standard shipping industry performance measure used primarily to
compare period-to-period changes in a shipping company's performance despite changes in the
mix of charter types.

29
 Port and terminal operation management lecture note’s

Types of Chartering
Types of Chartering
There are several types of chartering arrangements, depending on the specific industry and
transportation mode involved. Here are some common types:
1. Ship:
 Voyage Charter: It hires a vessel to transport goods or cargo from one specific port to another.
The payment is usually based on the cargo volume or weight, and the charterer covers additional
costs like port fees and fuel.
 Time Charter: As mentioned earlier, this involves hiring a vessel for a specific period. It pays a
daily or monthly fee, and the ship-owner covers the vessel‘s operating costs. Also, it usually has
more control over the cargo and ports of call during the charter period.
 Bareboat Charter: A bareboat charter leases the vessel without crew or provisions. It assumes
full responsibility for operating and maintaining the ship during the charter period.
2. Aircraft:
 Ad-Hoc Charter: This refers to chartering an aircraft on a one-time or as-needed basis. It could
be for business travel, tourism, emergencies, or special events.

 Wet Lease: In a wet lease, the aircraft charter with crew, maintenance, and insurance are
included. The lessor provides a complete package, and the lessee pays a fixed fee for the agreed
duration.
 Dry Lease: In a dry lease, the lessee rents the aircraft without crew, maintenance, or insurance.
The lessee assumes responsibility for operating the aircraft and covers related costs.
3. Vehicle:
Vehicle chartering typically involves road transportation and can include options such as bus
chartering or car rental for specific purposes like group travel, events, or transportation services.
These are just a few examples of chartering arrangements, and the specific terms and conditions
can vary based on the industry, transportation mode, and the agreement between the charterer
and the owner or lessor.
The three main types of charter are:
A. A demise charter, or bareboat charter, is an arrangement for the hiring of a vessel whereby
no administration or technical maintenance is included as part of the agreement. The
charterer obtains possession and full control of the vessel along with the legal and financial

30
Port and terminal operation management lecture note’s

responsibility for it. The charterer pays for all operating expenses, including fuel, crew, port
expenses and P&I (Protection and indemnity insurance) and hull insurance. In commercial
demise chartering, a subtype of bareboat chartering, the charter period may last for many
years and may end with the charterer acquiring title (ownership) of the ship. In this case, a
demise charter is a form of hire-purchase from the owners, who may well have been the
shipbuilders. Demise chartering is common for tankers and bulk-carriers.
In a bareboat charter, also known as a demise charter, the charterer rents the vessel without
crew or provisions. It assumes full responsibility for operating the vessel during the charter
period, including navigation, maintenance, and crewing.
B. A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a
discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The
owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment
for the use of the vessel is known as freight. A voyage charter specifies a period, known
as laytime, for loading and unloading the cargo. If laytime is exceeded, the charterer must
pay demurrage. If laytime is saved, the charter party may require the ship-owner to
pay dispatch to the charterer.

C. A time charter is the hiring of a vessel for a specific period of time; the owner supplies the
vessel and crew, but the charterer selects the ports, route and vessel speed a significant
determinant of CO2 emissions. The charterer pays for all fuel the vessel consumes, port
charges, commissions, and a daily hire to the owner of the vessel. The charterer in this sense
takes full commercial control of the vessel during the time charter period. Operation of the
vessel itself remains with the owner. In a time charter, the vessel hires for a specified period,
typically weeks or months. Also, it pays a daily or monthly fee and provides the cargo or
passengers. The ship-owner retains responsibility for the vessel‘s operation and covers its
operating costs, such as crew wages, fuel, and maintenance. They also exist in the aviation
industry, where companies or individuals can lease an aircraft for a specific duration or flight.
Similar to ship, aviation chartering can be done on a bare-boat or time charter basis. It is a
flexible option that allows businesses or individuals to access transportation services without
needing ownership or long-term commitments. Also, It commonly uses in industries like
shipping, logistics, oil and gas, tourism, and events, where temporary transportation needs arise.

31
Port and terminal operation management lecture note’s

Benefits of Chartering
Chartering offers several benefits for businesses and individuals alike. Here are some of the key
benefits:
A. Flexibility:
They provide flexibility in terms of scheduling and routes. Businesses can tailor the chartering
arrangement to their specific needs, choosing the most suitable vessel, aircraft, or vehicle and setting
the departure and arrival times according to their requirements. Also, this flexibility allows for
efficient planning and adaptability to changing circumstances.
B. Cost-Effectiveness:
They can be a cost-effective solution compared to ownership or long-term commitments. Instead of
investing in the purchase, maintenance, and operation of a transportation asset, chartering allows
businesses to access transportation services as needed, avoiding upfront capital expenditures and
ongoing maintenance costs.
C. Access to Specialized Equipment:
They provide access to specialized vessels, aircraft, or vehicles that may not be readily available for
purchase or ownership. This particularly benefits industries with specific transportation requirements,
such as heavy cargo shipping, offshore oil and gas operations, or medical evacuation services.

D. Time Savings:
They allow businesses to save time by avoiding the complexities and delays associated with
acquiring, maintaining, and managing transportation assets. Instead, they can focus on their core
operations while relying on experienced chartering service providers to handle the logistics.
E. Customization:
They offer the opportunity to customize the transportation experience to meet specific needs.
Businesses can select the appropriate vessel or aircraft size, interior configuration, and amenities
to cater to their requirements or the preferences of their clients or passengers.
F. Risk Mitigation:
They transfer certain risks and responsibilities to the owner or lessor. For example, in a time charter,
the shipowner typically bears the costs and responsibilities related to crew wages, maintenance, and
insurance. This allows businesses to mitigate risks and concentrate on their core activities without
being burdened by the complexities of transportation operations.

32
Port and terminal operation management lecture note’s

G. Increased Reach:
They enable businesses to expand their reach and operate in new markets or locations without
establishing a permanent transportation infrastructure. It allows for the efficient movement of goods
or passengers to various destinations, facilitating business growth and market penetration.
It‘s important to note that the specific benefits may vary depending on the industry, transportation
mode, and the terms of the chartering agreement. Businesses should carefully evaluate their needs
and consider the advantages and limitations of chartering before making a decision.

Limitations of Chartering
While chartering offers several benefits, it also has certain limitations that should be
considered. Here are some common limitations associated with chartering:
A. Availability and Scheduling:
The availability of suitable vessels, aircraft, or vehicles for chartering can sometimes limit, especially
during peak seasons or in remote areas. Scheduling conflicts may arise if the desired transportation
option is booked or unavailable for the required dates or routes.
B. Cost Variability:
The cost can vary depending on the demand-supply balance, fuel prices, seasonal fluctuations, and
specific requirements. Prices may fluctuate, making it challenging to estimate and control
transportation expenses over the long term.
C. Limited Control:
While they offer flexibility, it also means that the charterer has limited control over the
transportation assets. In time charters, for example, the ship-owner retains operational control of the
vessel, including decisions on routes, speed, and crew. This can restrict the charterer‘s ability to
make real-time adjustments or prioritize specific operational preferences.
D. Reliance on Third Parties:
They involve relying on third-party owners or lessors for transportation assets and services. This
introduces an element of dependency, and any issues with the owner‘s financial stability, operational
capabilities, or maintenance practices could potentially impact the charterer‘s operations and service
quality.
E. Lack of Ownership Benefits:
Unlike owning transportation assets, chartering does not provide the long-term benefits associated
with ownership, such as potential asset appreciation or equity buildup. Businesses that require
consistent and predictable transportation capabilities might find ownership more suitable in the long
run.

33
Port and terminal operation management lecture note’s

F. Operational Constraints:
In some cases, the arrangements may come with certain operational constraints. For example, in a
bareboat charter, the charterer assumes full responsibility for the operation and maintenance of the
vessel, which may require specialized expertise and resources. This can be a limitation for businesses
lacking the necessary capabilities or experience.
G. Potential Disruptions:
Like any form of transportation, it is subject to potential disruptions such as adverse weather
conditions, mechanical failures, or regulatory changes. These disruptions can result in delays,
additional costs, or the need to find alternative transportation solutions.
It‘s essential for businesses to carefully evaluate these limitations and consider their specific needs,
operational requirements, and risk tolerance before opting for chartering as a transportation solution.
Assessing the pros and cons will help determine if they align with their overall business strategy and
objectives.
3.2. Break-bulk cargos
In shipping, break-bulk, break bulk, or break bulk cargo, also called general cargo, is goods that are
stowed on board ship in individually counted units. Traditionally, the large numbers of items are recorded
on distinct bills of lading that list them by different commodities. This is in contrast to cargo stowed in
modern intermodal containers as well as bulk cargo, which goes directly, unpackaged and in large
quantities, into a ship's hold, measured by volume or weight. In shipping, break-bulk, break bulk,
or break bulk cargo, also called general cargo, is goods that are stowed on board ship in individually
counted units. Traditionally, the large numbers of items are recorded on distinct bills of lading that list
them by different commodities. This is in contrast to cargo stowed in modern intermodal containers as well
as bulk cargo, which goes directly, unpackaged and in large quantities, into a ship's hold(s), measured by
volume or weight (for instance, oil or grain).

Stevedores on a New York dock loading barrels of corn syrup onto a barge on the Hudson River. Photo
by Lewis Hine, circa 1912

34
 Port and terminal operation management lecture note’s

The term break-bulk derives from the phrase breaking bulk, a term for unloading part of a
ship‘s cargo, or commencing unloading the cargo. Ships carrying break-bulk cargo are often
called general cargo ships.
Break-bulk/general cargo consists of goods transported, stowed and handled piecemeal to some
degree, typically bundled somehow in unit loads for hoisting, either with cargo nets, slings,
or crates, or stacked on trays, pallets or skids. Furthermore, batches of break-bulk goods are
frequently packaged in smaller containers: bags, boxes, cartons, crates, drums, or barrels/vats.
Ideally, break-bulk cargo is lifted directly into and out of a vessel's holds, and this is mostly the
case today. Otherwise, it must be lifted onto and off its deck, by cranes or derricks present on
the dock or on the ship itself. If hoisted on deck rather than straight into the hold, lift able or
rollable goods then have to be man-handled and stowed competently by stevedores. Securing
break-bulk and general freight inside a vessel includes the use of dunnage. When no hoisting
equipment is available, break bulk has traditionally been manually carried on and off ship, over a
plank, or it might be passed from man to man via a human chain.
Since the 1960s, the volume of break-bulk cargo has enormously declined worldwide in favor
of mass adoption of intermodal containers.
Break bulk cargo is a general term that refers to any products or goods stored on a cargo ship
within individual units. A further classification is that this form of cargo is not stored in
containers, with the term stemming from breaking up a portion of the ship‘s space with these
products.
This form of cargo facilitates easy loading and unloading, with break bulk being an efficient
cargo choice for smaller ports that don‘t have the capacity to unload larger containers.
Difference between bulk and break bulk
The core difference between bulk cargo and break bulk cargo stems from how the items are
stored. While the terms are often used interchangeably within the industry, there are differences
between them.
 Break bulk cargo - This form of cargo is placed into small packages; whether that be drums,
pallets, bags, crates, or any other slight container. When ships store this kind of cargo, they are
often referred to as break bulk vessels and will be equipped to lift, transport, and unload these
smaller packages.

35
 Port and terminal operation management lecture note’s

 Bulk cargo - This form of cargo is any loose form of storage. Instead of being separated into
individual packages like with break bulk cargo, these products will be loaded directly onto the
ship. Most commonly, bulk cargo is for minerals like coal or iron ore, or large amounts of
farming produce, like grain.

Across these two categories of cargo, the only difference is their storage condition.

Break bulk vs container shipping

When a company needs to move objects internationally by sea, they have a range of options
available to them. Within the shipping industry, two of the most common methods of
transportation are break bulk and container shipping. Unlike break bulk shipping, when shipping
within a container, companies have the option to control the conditions of their items. As they‘re
not directly exposed to the air, they are much more secure, with containerized cargo being an
incredibly precise method of transportation.
While both are viable options, they both have distinct pros and cons that favour them for certain
practices. For example, containerized shipping has become popular due to three main reasons:
 Safety - Often held in metal or wooden containers, any cargo transported in this method results
in a much safer movement of products. Instead of leaving products out in the open, where they
could be lost or even stolen, a standard container is locked and very secure, meaning companies
are certain that all of their products will arrive safely.

 Management - Containers have the additional benefit of total management, with their internal
conditions being changeable due to whatever they‘re holding. For example, if a company is
shipping food, shipping companies can temperature control the container to ensure that food is
maintained in optimal conditions.
 Flexibility - Alongside safety and management, another common benefit of using containers for
shipping is the fact that they can hold essentially anything. From uniform packages to large
movements of food, anything that can fit in a container will work perfectly. This flexibility is
perfect in an industry as wide as logistics, with the global demand to move items favouring this
versatility.
While container shipping has a range of benefits and is one of the most widely used
transportation methods, it still falls behind break bulk shipping when it comes to certain goods.

36
 Port and terminal operation management lecture note’s

Pros and cons of break bulk shipping

Of course, considering break bulk shipping has been around for such a long period of time, it has
become a streamlined process. With the development of this shipping format, many pros have
become well-established within the industry.
There are many benefits of break bulk cargo shipping. Typically, the main benefits are:
 Package flexibility - One of the main benefits of break bulk shipping is the ease involved.
Without having to split goods into well-balanced containers, companies can ship absolutely
anything they would like at once, with less time for collection and packing, leading to a fast
delivery along the supply chain. This also comes in handy when a company wants to ship
oversized items, with the open-air approach making this an easy method of moving goods
worldwide when they are inconveniently shaped or sized.
 Global reach - When companies store their products within containers, there is a certain
implication about the labour-intensive offloading process. Typically, containers require high-
capacity deck cranes to take them off the ship and back on. Due to this, many ports around the
world still cannot host container ships. On the other hand, break bulk is an incredibly accessible
form of shipping as it can be unloaded with ease and without the need for heavy cranes or
specialized equipment.
 Faster - Considering that companies don‘t need to organize the compartmentalization of their
products into containers, break bulk cargo shipping is often one of the faster transportation
methods. This is because logistics companies can load cargo directly onto the ship, collect all the
projects in their designated product pits, and then get started with the movement process. Saving
a few days on each side of the journey for unloading and loading can make a big difference to
companies that work on tight margins.
Equally, as this was one of the first international shipping formats, breaking bulk has long been
an established form of transporting a range of packaging types. With the history behind this
method, you‘ll be able to find a port in almost any part of the world that supports bulk shipments
in this format.
However, that doesn't mean that break bulk cargo is the perfect shipping method. Over time, the
world is moving away from break bulk shipping. Since cargo ships move around 95% of the
world‘s cargo, the favoring of other shipping formats like containerized shipping has led to a
decline in the popularity of break bulk.

37
 Port and terminal operation management lecture note’s

This reflects some of the general problems that companies will encounter when relying on this
form of bulk freight transport:
 Expensive - As break bulk cargo is commonly associated with oversized packages, one of the
downsides is that shipping can be more expensive. This is also the case due to the fact that
unitized cargo is neatly packed into containers, meaning shipping companies can organize the
ship to transport as much product as possible. However, break bulk normally takes up a large
amount of the ship without the ability to add verticality by stacking many loads on top of each
other.
 Physical Labour - One of the most common downfalls of break-bulk is that, while it may not
need a crane to facilitate the unloading process, it does often include a range of physical labour.
With this in mind, the unloading process at a port can cost a lot more money, making this another
factor to consider when receiving the final bill for shipping.
 Security - As break bulk transportation is completely open-air, there is a real reality of products
going missing during the journey, being stolen, or breaking due to knocking against other
packages. As there is no uniformity to the conditions in which the cargo is stored, it‘s not
unlikely that security within this shipping method can be less secure.
Yet, even with these cons in mind, many of the most common items shipped using the break bulk
method are minerals or less-precious items, making the downsides minimal.

Break bulk shipping step-by-step

If you need to get packages around the world, one of the easiest ways of doing so is working
with a well-established logistics partner that offers break bulk shipping. That said, before you
send inquiries, you should ensure that your products are a good match for this shipping format.
While companies can pay for whatever format of shipping they would like, if your products are
more suited to containerized shipping, then it‘s best to go for that.
What types of commodities break bulk shipping is meant for?
Typically, bulk cargo favours a specific set of products that are durable and need to move around
the globe on a huge scale.
 Non-uniform - A common product that‘s shipped via this method is anything that cannot fit into
containers. These could be packages that are a range of different sizes or products that are
difficult to manage and move.

38
 Port and terminal operation management lecture note’s

 Liquid bulk - Another form of break bulk shipping is liquid bulk, where oil or other liquids are
transported around the globe. Due to the less secure nature of this shipping format, this typically
doesn‘t extend to hazardous liquids.
 Minerals - The most common segment of materials you‘ll find on a break bulk container ship
are raw minerals. Everything from iron ore and coal to grain and salt could be included in this
list. As these need to be moved in huge quantities, losing a little on each shipment isn‘t a huge
cost to the business and won‘t cause problems.

Across these three categories, you‘ll find the vast majority of products that use break bulk
shipping.
Break bulk cargo packing
When shipping by break bulk, you‘re going to have to first determine the format of shipping
you‘re going to want to use. While the vast majority of break bulk cargo shipped in the open air,
they are normally stored in:
 Crates  Slip sheets  Bulk bags
 Pallets  Bales  Barrels

Depending on the item you‘re looking to ship, you‘ll first have to choose one of these formats.
Once you‘ve decided on the most effective format, you‘ll have to choose a trusted logistics
partner that operates within a dock close to your facility. With them, you‘ll be able to organize
the packaging and pickup of your products, with them taking care of the actual loading process.
Break bulk cargo unloading
Much like the loading process, the responsibility of unloading break bulk cargo typically falls to
the port that you‘re working with. Once you‘ve decided on where you need to get your packages
to go, the vast majority of logistics partners will allow you to use their network of labour and
equipment around the globe.
You‘ll be given a particular date that your cargo is likely to arrive, allowing you to track your
packages across the globe as they‘re unloaded. The process is fairly mechanical, with unloading
cranes, transport vehicles, and manpower being at the forefront of the unloading step of
logistics.

39
 Port and terminal operation management lecture note’s

Key considerations in break bulk cargo

The term break bulk is used fairly interchangeably within this industry, but it does extend beyond
just general cargo and should only be used in the correct situations.
If you believe that break bulk is the right option for your business, you should consider the
following:
 Consideration and planning - Break bulk cargo shipping requires a great deal of planning. Be
sure that you establish a plan before preparing your first bulk shipment.
 Airtight packaging - One of the best ways to ensure your products stay safe and stay whole by
the time the ship arrives at its destination is to use airtight packaging.
 Consult with the manufacturer - Make sure you‘ve discussed the potential methods you could use
to deliver your products with your manufacturer. If there are packaging options that support
international shipping, be sure to discuss and implement them.
 Logistics partners - Having a great logistics partner can save your business a lot of work.
Consult several different options and see which most aligns with your products.
Especially if you need to transport large quantities of materials or products across the globe,
break bulk is an affordable and efficient option that your business should definitely consider.

Conclusion
Of all the forms of international shipping, bulk carriers are one of the most popular, with
breaking bulk being an incredibly common shipment format. Due to the various benefits,
combined with the flexible and convenient loading and unloading process, most ports around the
globe facilitate break bulk cargo.
With this in mind, it's no wonder that the supply chain still heavily relies on break bulk cargo
shipping, with this industry being a pillar of globalization and the international movement of
cargo.
Break-bulk ocean shipping is a common method used to successfully transport cargo or goods
that cannot fit in standard-size shipping containers or cargo bins. Instead, cargo is transported in
bags, boxes, crates, drums, barrels, other handling equipment, or is simply rolled, lifted, or
pushed onto a ship or barge.
Break-bulk ocean shipping is a common method used to successfully transport cargo or goods
that cannot fit in standard-size shipping containers or cargo bins. Instead, cargo is transported in

40
Port and terminal operation management lecture note’s

bags, boxes, crates, drums, barrels, other handling equipment, or is simply rolled, lifted, or
pushed onto a ship or barge.
Examples of common break-bulk goods include reels and rolls, steel girders, structural steel,
heavy or oversized goods, manufacturing equipment, construction equipment and vehicles.
Though the containerization method is one of the more popular shipping methods, break-bulk is
noticing an influx of interested shippers with oversized items.
According to Global Security, break-bulk and bulk is projected to make up half of all cargo (by
volume) entering or leaving the U.S. and will make a large portion of the shipping market in
2020. Major changes aren‘t expected to come to break-bulk; therefore, the demands on port
infrastructure, vessel safety, and law enforcement will remain stable.
Carriage in bulk means the carriage of solid substances, material or articles without
packaging. Carriage in bulk means the carriage of an unpackaged solid which can be
discharged; NOTE: Within the meaning of ADN, the carriage in bulk referred to in ADR is
considered as carriage in packages.
bulk carriage means the commercial movement of mineral oil products in tanker trucks or
railway wagons or tanker ships. The movement of mineral oil products in containers that are
removed from the means of transport together with the mineral oil products shall not be
construed bulk carriage;
Here are the top four benefits of break-bulk shipping:
 The ability to move oversized and overweight items that won‘t fit in a container or cargo.
 Reduction in time spent on deconstruction and reconstruction so that items are ready for
dispatch.
 Goods can enter smaller ports that typically would be unable to accommodate larger
container ships or tankers.
 Goods don‘t have to be combined in a container; therefore, items can be shipped
separately.
3.3. Bulk carriages A bulk carrier or bulker is a merchant ship specially designed to
transport unpackaged bulk cargo—such as grain, coal, ore, steel coils, and cement—in its cargo
holds. Since the first specialized bulk carrier was built in 1852, economic forces have led to
increased size and sophistication of these ships. Today's bulk carriers are specially designed to
maximize capacity, safety, efficiency, and durability.

41
Port and terminal operation management lecture note’s

3.4. Tanker
Tanker is:
 A cargo ship fitted with tanks for carrying liquid in bulk.
 A vehicle on which a tank is mounted to carry fluids
 Also: a cargo airplane for transporting fuel
 A member of a military tank crew
A tanker (tank ship) is a ship designed to transport or store liquids or gases in bulk. Major types
of tank ship include the oil tanker, the chemical tanker, and gas carrier. Tankers also carry
commodities such as vegetable oils, molasses and wine. In the United States Navy and Military
Sealift Command, a tanker used to refuel other ships is called an oiler (or replenishment oiler if it
can also supply dry stores) but many other navies use the terms tanker and replenishment tanker.
Tankers were first developed in the late 19th century as iron and steel hulls and pumping systems
were developed. As of 2005, there were just over 4,000 tankers and supertankers
10,000 LT DWT or greater operating worldwide.
Tankers can range in size of capacity from several hundred tons, which includes vessels for
servicing small harbours and coastal settlements, to several hundred thousand tons, for long-
range haulage. Besides ocean- or seagoing tankers there are also specialized inland-waterway
tankers which operate on rivers and canals with an average cargo capacity up to some thousand
tons. A wide range of products are carried by tankers, including:
 Hydrocarbon products such  Fresh water
as oil, liquefied petroleum gas (LPG),  Wine
and liquefied natural gas (LNG)  Molasses
 Chemicals, such as ammonia, chlorine,  Citrus juice
and styrene monomer

Tankers are a relatively new concept, dating from the later years of the 19th century. Before
this, technology had simply not supported the idea of carrying bulk liquids. The market was also
not geared towards transporting or selling cargo in bulk; therefore most ships carried a wide
range of different products in different holds and traded outside fixed routes. Liquids were
usually loaded in casks hence the term "tonnage", which refers to the volume of the holds in
terms of how many tuns or casks of wine could be carried. Even potable water, vital for the
survival of the crew, was stowed in casks.
42
Port and terminal operation management lecture note’s

Carrying bulk liquids in earlier ships posed several problems:

 The holds: on timber ships the holds were not sufficiently water, oil or air-tight to prevent
a liquid cargo from spoiling or leaking. The development of iron and steel hulls solved
this problem.
 Loading and discharging: Bulk liquids must be pumped - the development of efficient
pumps and piping systems was vital to the development of the tanker. Steam engines
were developed as prime-movers for early pumping systems. Dedicated cargo handling
facilities were now required ashore too - as was a market for receiving a product in that
quantity. Casks could be unloaded using ordinary cranes, and the awkward nature of the
casks meant that the volume of liquid was always relatively small - therefore keeping the
market more stable.
 Free surface effect: a large body of liquid carried aboard a ship will affect the ship's
stability, particularly when the liquid is flowing around the hold or tank in response to the
ship's movements. The effect was negligible in casks, but could cause capsizing if the
tank extended the width of the ship; a problem solved by extensive subdivision of the
tanks.
Tankers were first used by the oil industry to transfer refined fuel in bulk from refineries to
customers. This would then be stored in large tanks ashore, and subdivided for delivery to
individual locations. The use of tankers caught on because other liquids were also cheaper to
transport in bulk, store in dedicated terminals, then subdivide. Even the Guinness brewery used
tankers to transport the stout across the Irish Sea.

Different products require different handling and transport, with specialised variants such as
"chemical tankers", "oil tankers", and "LNG carriers" developed to handle dangerous chemicals,
oil and oil-derived products, and liquefied natural gas respectively. These broad variants may be
further differentiated with respect to ability to carry only a single product or simultaneously
transport mixed cargoes such as several different chemicals or refined petroleum
products.[1] Among oil tankers, supertankers are designed for transporting oil around the Horn of
Africa from the Middle East. The supertanker Sea wise Giant, scrapped in 2010, was 458 meters
(1,503 ft) in length and 69 meters (226 ft) wide. Supertankers are one of the three preferred
methods for transporting large quantities of oil, along with pipeline transport and rail.

43
Port and terminal operation management lecture note’s

Tighter regulation means that tankers now cause fewer environmental disasters resulting from oil
spills than in the 1970s. Amoco Cadiz, Braer, Erika, Exxon Valdez, Prestige and Torrey
Canyon were examples of accidents. Oil spills from tankers amounted to around 1,000 tonnes in
2020 from three incidents (an all-time low), down from 636,000 tonnes from 92 incidents in
1979 - a fall of 99.8%.
Tanker capacity
In 1954, Shell Oil developed the average freight rate assessment (AFRA) system, which
classifies tankers of different sizes. To make it an independent instrument, Shell consulted
the London Tanker Brokers’ Panel (LTBP). At first, they divided the groups as General
Purpose for tankers under 25,000 tons deadweight (DWT); Medium Range for ships between
25,000 and 45,000 DWT and Large Range (later Long Range) for the then-enormous ships that
were larger than 45,000 DWT. The ships became larger during the 1970s, and the list was
extended, where the tons are metric tonnes:
10,000–24,999 DWT: Small tanker
25,000–34,999 DWT: Intermediate tanker
35,000–44,999 DWT: Medium Range 1 (MR1)
45,000–54,999 DWT: Medium Range 2 (MR2)
55,000–79,999 DWT: Long Range 1 (LR1)
80,000–159,999 DWT: Long Range 2 (LR2)
160,000–319,999 DWT: Very Large Crude Carrier (VLCC)
320,000–549,999 DWT: Ultra Large Crude Carrier (ULCC)
Tanker, ship designed to carry liquid cargo in bulk within its cargo spaces, without the use of
barrels or other containers. Most tankers carry either crude oil from oil fields to refineries
or petroleum products such as gasoline, diesel fuel, fuel oil, or petrochemical feedstock from
refineries to distribution centers. Some tankers with special food-grade holds, pumps, and other
handling equipment can carry molasses, edible oil, and even wine in bulk. Specialized ships for
transporting liquefied natural gas and fruit juices are often called tankers, though on these ships
the cargo is actually carried in large refrigerated containers that fit into the hold.
Crude-oil and petroleum-product tankers vary in size from small coastal vessels about 60 metres
(200 feet) long, carrying from 1,500 to 2,000 deadweight tons (dwt), up to huge vessels that
reach lengths of more than 400 metres (1,300 feet), carry as much as 550,000 dwt, and are the

44
Port and terminal operation management lecture note’s

largest ships afloat. (Deadweight is the total weight of cargo plus such necessary supplies as fuel,
lubricating oil, crew, and the crew‘s life support.) Between these two extremes are various size
classes, though the exact specifications for each class vary among sources. Common
tanker designations, in descending order by size, are:
Ships that carry liquid cargo (most often petroleum and its products) in bulk are made distinctive
by the absence of cargo hatches and external
4. Ultra large crude carriers (ULCCs). The very largest ships, these have a length in the
neighborhood of 415 metres (1,350 feet) and a capacity of 320,000 to more than 550,000
dwt. They carry from two million to well more than three million barrels of crude.
5. Very large crude carriers (VLCCs). These ships, with a length of some 330 metres (1,100
feet), have capacities between 200,000 and 320,000 dwt. They carry in the area of two
million barrels.
6. Suez max. The largest ships that can transmit the Suez Canal, these tankers are some 275
meters (900 feet) long and have a capacity of 120,000 to 200,000 dwt. They carry about
800,000 to more than 1,000,000 barrels.
7. Aframax. The maximum size of vessel to use the Average Freight Rate Assessment method
for calculating shipping rates, these tankers are around 240 metres (790 feet) long and have
capacities of 80,000 to 120,000 dwt. They carry roughly 500,000 to 800,000 barrels.
8. Panamax. The maximum size that can transit the Panama Canal, these tankers range in
length between 200 and 250 metres (650 and 820 feet) and have capacities of 50,000 to
80,000 dwt. They carry 350,000 to 500,000 barrels.
9. Handymax, Handysize, Coastal, and other classes. These ships have capacities of less than
50,000 dwt and lengths up to approximately 200 metres (650 feet).
Tankers of 100,000 dwt and less can be crude-oil (―dirty‖) carriers or product (―clean‖) carriers.
The Aframax tankers are often referred to as the ―workhorses‖ of the world tanker fleet, as they
carry large quantities of crude from many producing regions and are able to use most port
facilities. The very largest tankers (the ULCCs and VLCCs and some of the Suezmax carriers)
are commonly called ―supertankers.‖ These are always crude-oil carriers, usually plying routes
between large producing areas such as the Persian Gulf and major markets in Asia, Europe,
or North America. The Suezmax tankers can reach their Atlantic destinations via the Suez Canal,
whereas ULCCs and all but the lightest VLCCs must round the Cape of Good Hope.

45
 Port and terminal operation management lecture note’s

Experience with supertankers has shown that the direct cost of transporting oil goes down as the
size of the tanker increases, apparently without limit. However, an important obstacle to building
the largest vessels is the lack of suitable shore facilities for them. For this reason only a handful
of ULCCs have been built.
Beginning in the 1960s, great concerns about pollution were raised by a series of disastrous
accidents involving supertankers, including the 1967 grounding of the Torrey Canyon off
Cornwall, England, the 1978 breakup of the Amoco Cadiz off Britanny, France, and the
1989 grounding of the Exxon Valdez off Alaska, U.S. The oil spills from these vessels caused
great damage, and political reaction led to strict rules on the construction and operation of oil
tankers.

Most notably, in 1973 the International Convention for the Prevention of Pollution from
Ships (known as MARPOL) was adopted by the International Maritime Organization, an agency
of the United Nations to which some 170 countries belong. A series of amendments to MARPOL
have worked toward establishing a worldwide tanker fleet in which all but the smallest ships
have double hulls or some suitable equivalent. (In a double-hulled ship, the sides and bottom
consist of two layers separated by a space sufficient to reduce the chance that an
incident breaching one layer will breach the other.) After 1996 all new tankers were delivered
with double hulls or some alternative, and by 2026, according to the terms of the MARPOL
amendments, all but the smallest single-hulled tankers are to have been rebuilt to a double
configuration or are to be retired.
Four Types of Tanker Ships
1. Gas Tanker: This type of ship falls into two main divisions according to the two main cargoes
concerned i.e (Liquefied natural gas & liquefied petroleum gas carriers). they are built with
double hull in which the inner one are either box or cylindrical shape , while the side tankers can
serve as ballast tanks which stabilize the ship. This type of ship uses stem engine for proportion.
2. Oil Tanker: there are also two types on this category of tanker ships, i.e (crude oil and
product tankers). They have two longitudinal bulkheads which run through the entire length of
the cargo space, providing three athwart ship compartments. The pump room are been place
forward of the engine room which enables fast and high discharge rate of the cargo. They use
motor engine (diesel engine) for proportion.

46
 Port and terminal operation management lecture note’s

3. Combine Tanker: Combination tankers are type of tankers designed to carry both dry and
liquid bulk cargoes. These cargoes are ranging from Oil, bulk, ore and oil/ore. Also been
propelling by motor engines.
4. Bitumen Tanker: this type of ship is specifically built to handle the produce of at high
temperature. The construction or arrangement are done in such a way they are built to carry
double bottom and wing tanks to isolate the bitumen from the shell, and attached with more
elaborate heating coils or tubes than in a normal tanker. They are also propelling by motor or
stem engines.
3.5 Liquid bulk carriages
Bulk liquid, or liquid bulk cargo, is a liquid transported in large volumes in tanks on ships, cargo
planes, or trailer trucks. The carrier vessels transporting these liquids must have the necessary
equipment to load and unload them safely, and also to keep them pure during transit. Liquid
bulk cargo is carried unpackaged in any quantity and usually transported by ships that are commonly
referred to as tankers which are built specially to make the loading and unloading process become
easy.
Loading Process of Liquid Bulk Cargo
Liquid bulk‘s loading process tends to be more complicated than other types of cargoes. First of
all, it takes more times to clean the tanker if the liquids are leaked out from the vessels. After the
ship arrives at the dock, the ship‘s officers and representatives of the terminal will check the
cleanliness of the tankers. Once they approve, the loading process can be started.
When loading crude oil cargo, it is crucial to check the presence of water. If it is found, the note
of protest should be made. During the loading, shipping, and unloading process, daily checks
regarding the tank ullages, temperatures, and inert gas pressures should be carried out and
carefully recorded. If the liquid bulk cargoes are hazardous, temporary warning in the English
language is displayed at a certain place where the passersby can easily notice it.
Variety of Liquid Bulk Cargo
Liquid bulk cargo is generally classified into edible, non-edible, hazardous and non-hazardous
liquids.
 Hazardous liquids including petroleum, LPG (liquefied petroleum gas), LNG (liquefied natural
gas) and chemicals. There are different types of hazardous cargoes, that is fire hazard
(determined by boiling point, flash point, and auto-ignition temperature of liquids), marine

47
 Port and terminal operation management lecture note’s

pollution hazard (liquids would likely cause damage to the marine environment which is usually
determined by bioaccumulation, risk to human health, and reduction of amenities), and air
pollution hazard (based on emergency exposure limit of the liquids)
 Non-hazardous liquids, including vegetable oils, cooking oils, milk, juices, and other liquids that
do not possess a potential risk to organism and environment.

 Edible liquids or food products. Type of liquids that can be eaten safely by humans. Most of
them are non-hazardous, such as wine, edible oil, juices, etc.

 Non-edible liquids, contrary to edible liquids. Some of them are non-hazardous (glycerin,
aqueous dyes, etc.) and others are hazardous (LPG, LNG, etc.)
Advantages and Disadvantages of Maritime Liquid Bulk Shipping
Liquid bulk cargo can be transported by air, land, or maritime. In most shipment, the maritime
route is used. The main reason is the large capacity of tankers. It is possible to carry up to 2
million barrels of oil by using supertankers. Compared to another route, maritime shipping has
lower freight costs and delivery times. While it has significant advantages, maritime shipping has
considerably high risk and losing a little part of cargoes at sea can bring disaster to the
environment. Furthermore, not every dock is ready to receive up to one billion pounds of liquid
bulk cargoes.

CHAPTER 4: STRATEGIES FOR PORTS

4.1. Cooperation Agreements between Market Players
Market Players (stake holders) in the port
In the primary market, there are four key players: corporations, institutions, investment banks,
and public accounting firms. Institutions invest capital in corporations that seek to expand and
grow their businesses, while corporations issue debt or equity to institutions in return for their
capital investment. Households are buyers in the market for goods and services. Households
exchange income for goods and services. Businesses are sellers in the market for goods and
services.
Port Coordination (organization) and Cooperation (collaboration)
Ports can develop cooperation and coordination strategies providing an integrated
transportation service beneficial to actors involved in port supply chains.

48
Port and terminal operation management lecture note’s

1. Coordination (organization) of Port Activities

Port cooperation is a strategy to improve port performance. Due to port regionalization,
imbalances in port capacity and the competition in broader geographical regions form the key
drivers of cooperation between ports, especially between those in proximity. Port cooperation
sustains existing maritime links or establishes new services integrated into door-to-door logistics
chains. It is also perceived to lead to specialization in cargo or ship types, and organization and
pooling of hinterland transport facilities, and, in many cases, to an improvement in output.
The purpose of port coordination and cooperation strategies is for a port authority to formalize its
expansion through a more active landlord function. The key drivers for the setting up of
coordination mechanisms include capital investments to accommodate increased traffic through
the involvement of supply chain actors at the port and in the hinterland. Land scarcity, oligopoly
in terminal operations, and negative externalities of port development, such as environmental
impacts, further stimulate port authorities to a more active role. Port authorities have designed
coordination strategies to align the various supply chain actors using integrated approaches and
develop cooperation strategies with other port authorities.
Globalization and the growing complexity of supply chains are encouraging port authorities to
undertake strategies aiming at a better level of coordination of their hinterland that involve:
Strategies Used by Port Authorities to Coordinate their Hinterland
 Coordinate operations of freight actors.
Usage of incentives  Optimal usage of transport chains.
 Usage of preferential tariff structure.

 Vertical integration (along transport chains).

 Horizontal integration (between competitors).
Inter-firm alliances  Alliance between a maritime shipping company and a terminal
operator (vertical).
 Equipment / container pools (horizontal).

 Vertical integration where an actor decides to penetrate a new market.

Organizational
 A maritime shipping company involved in port terminal operations.
scope
 A port authority developing an inland port.

49
Port and terminal operation management lecture note’s

 Public/private partnerships to create logistic zones.

Collective action  Each actor contributes within its realm of expertise.
 Development of port community systems.

Globalization and the growing complexity of supply chains are inciting port authorities to
undertake strategies aiming at a better level of coordination of their hinterland:
Usage of incentives. Coordinate operations of freight actors so that the usage of transport
chains and the underlying assets is more optimal. It can involve using a preferential rate
structure for customers that provide a minimum volume or that meet a level of reliability.
Inter-firm alliances. Concerns two types of alliances. The first is vertical integration
(along transport chains) where, for instance, a maritime shipping company and a terminal
operator can agree to better coordinate their services. The second is horizontal integration
(between competitors) where, for instance an equipment or container pool can be
established to improve the level of asset utilization.
Organizational scope. Vertical integration process where an actor decides to penetrate a
new market to expand or add value to its activities. For instance, a maritime shipping
company can be involved in port terminal operations. Also, a port authority could be
involved in the development an inland port as a strategy to alleviate congestion and expand
to market potential of its hinterland.
Collective actions. A series of strategies under the leadership of the port authority such as
the setting of public/private partnerships to create a logistic zone. Each actor contributes
within its realm of expertise. The development of port community systems is also a
collective action that is receiving attention.
The development of inland ports and logistical zones appear to be an emerging paradigm. Still,
port authorities tend to be reluctant to undertake partnerships with inland ports, mostly out of
concern of losing added value activities and employment. Also, inland ports may promote port
competition by offering access to new freight corridors and can thus challenge the fundamental
hinterland of a port and its related cargo. However, there is an increasing level of coordination
between port authorities and inland ports, particularly among the largest ports.

50
Port and terminal operation management lecture note’s

Coordination Mechanisms in seaports

2. Cooperation between Ports
A. Emerging cooperation schemes
Cooperation between port authorities governing different ports, as well as cooperation between
terminal operators and between other service providers, does not exclude intense competitive
behavior. Since the 1990s, cooperation has been increasingly common, aiming at more
flexible traffic distribution patterns. An early example includes Rotterdam and Baltic Region
ports that began cooperating in the early 1990s to strengthen their competitive positions.
Cooperation expanded to a strategy including a broad spectrum of initiatives aiming to:
 Better use assets in terms of efficiency, scale, and scope.
 Improve competencies.
 Gain a positional advantage by offsetting the undesirable effects of competition.
For larger ports, cooperation might facilitate landside coordination of hinterland
connections through neighboring load centers. The centrally located load center ports may face
difficulties maintaining their competitive position. A key reason is a continuously changing port–
hinterland relationship. The advent of port regionalization, where the performance of major
seaports is interrelated with the development and performance of inland networks and value-
added activities in the port hinterland, brings port development to a larger geographical scale
beyond the port perimeter.
Many load centers face local land scarcity and the infrastructure needed to make efficient inland
connections, conditions exacerbated by diseconomies of scale (i.e. inland congestion),
environmental constraints, and local opposition to port expansion. Competing services in
51
Port and terminal operation management lecture note’s

terminal, rail, and barge operations have brought challenges in terms of providing effective
regional operations and efficient infrastructure use. Coordination leads to the more effective
bundling of container volumes towards the hinterland. This allows deeper hinterland penetration
and promotes intermodal transportation through higher service frequency and better utilization of
shuttle trains and barges.
For smaller ports on the periphery, the rationale for cooperation is to bring more centrality to
those ports and the region in which they are located. This can be achieved by increasing the
volume of the specific hinterland and maritime transport services and a better configuration and
working environment for maritime operations and hinterland transport chains.
B. Port networking
Port networking for market segmentation and the coordination of functions can prevent port
authorities from wasting scarce resources on inter-port competition. For a port range serving a
limited overlapping hinterland, there are two reasons why ports might cooperate.
 First, there may be substantial duplication in the services leading to over-competition.
 Second, there are gaps in the ability of the port range to serve the specific needs of shippers.

Alternatively, cooperation may mean an agreement to specialize in service at one port while not
duplicating that service at another. Cooperation benefits lead to strategic alliances among ports
premised on the belief that seamless customer service does not require ownership of all the assets
and results from managerial values that accept cooperative behavior. In this context, in several
parts of the world, such as the European Union, public funding has made cooperative port
development projects popular and even led to more permanent forms of association between
ports.
Cooperation includes training, technical exchanges, port management assistance, sharing
information on port development and environmental programs, promoting mutual logistics
services, and articulating a common position at international forums. This occurs between ports
in the same geographical region, aiming at the joint development of infrastructure, regional
promotion and marketing, and common approaches to environmental issues. Cooperation
between larger and smaller ports is also frequent, as regional cooperation aims to enhance
particular trade corridors.
There are at least two ways that port cooperation expands beyond adjacent ports. The first
is cooperation between the two ends of a logistics corridor to optimize freight flows between
52
Port and terminal operation management lecture note’s

the two regions. The second is agreements to exchange information on port activities,
management, organization, and technology. There are also adjacent ports forming alliances, such
as the ports of Seattle and Tacoma forming the SeaTac Alliance, or neighboring terminals
forming cooperation agreements.

Typology of Port Authorities cooperation

C. Merging of port authorities

In some cases, the cooperation between port authorities can reach an advanced stage and take the
form of port authority mergers. Port authority merger or full integration is the most far-
reaching form of co-operation. Port authority mergers at the national or regional level can be
found worldwide. In some cases, these involve mergers between ports of similar sizes, such as
the Ningbo-Zhoushan port in China or Hamina-Kotka in Finland. In other cases, a larger port
authority merges with smaller ones such as for Port Metro Vancouver in Canada (Vancouver and
Fraser), Valencia port in Spain (Valencia, Sagunto, and Gandia), the integration of the port of
Dordrecht in the Rotterdam Port Authority (the Netherlands) and the 2021 merger between the
ports of Antwerp and Zeebrugge (Belgium). There also exist particular cases of regional
integration of port authorities at a regional level, such as the creation of port system
authorities in Italy and the integration of Chinese ports at the provincial level.
Cross-border mergers of port authorities are rare. The formation of Copenhagen Malmo
Port (CMP) was the first cross-border merger in Europe. One of the main drivers behind the
merger between the Danish port of Copenhagen and the Swedish port of Malmo was realizing
the fixed Oresund link between Denmark and Sweden, basically wiping out all short-distance

53
Port and terminal operation management lecture note’s

ferry activity between both ports. Another cross-border merger is the creation of North Sea
Port following the 2017 merger between Ghent Port Authority in Belgium and Zeeland Seaports
(Terneuzen and Flushing) in the Netherlands.
Port authority mergers can result from a decision or policy imposed by the national, regional, or
provincial government (top-down such as in Italy or China) or be initiated by the port authorities
themselves (bottom-up). Compulsory or voluntary top-down mergers are thus mainly driven by
(national) policies. The core goal is to reduce the administrative burden and the recurrent
jurisdiction overlap when port authorities are in proximity. The merged entity is expected to be
more effective. Bottom-up mergers are more a response to market pressure, inter-firm ties
(global terminal networks, vertically integrated carriers), and common threats or market
challenges. The Rhine-Scheldt Delta region in Belgium and the Netherlands provides a good
example of bottom-up mergers between port authorities.
There are numerous possible drivers for port authority mergers, including:
 To avoid duplication of facilities and unnecessary competition through a more
comprehensive planning process that rationalizes the use of assets of the merged
authorities.
 To respond to mounting market and financial pressures and opportunities. For
example, consolidation among the ocean carriers has brought pressure on individual ports
to make investments to handle larger ships and remain competitive, while port
sustainability and energy transition present unique opportunities for merged ports.
Overall there exist several possible impediments (barriers) to port authority mergers:
 Administrative and cognitive borders at the national, provincial, even local level
underline differences in port governance models in terms of socio-economic effects on
decision-making (political and commercial) combined with top-down government
interference.
 Unfounded pressure on ports to specialize their activities after a proposed merger.
 No clear win-win situation with unclear or unfair distribution of costs and
benefits of the proposed merger.
 Inter-personal factors such as the lack of trust between key decision-makers.
 Lack of decision-making power of initiators.

54
Port and terminal operation management lecture note’s

 No clear business case internally (profitability, development potential) or externally

(towards port users and broader port community).
 Belief in expanded cooperation and coordination efforts to address the common issues
instead of a merger.
4.2 Developments within ports
Port planning and development involve the strategic port planning process, data collection and
forecasting, stakeholder relations management in ports, and the evaluation of port development
plans and projects.
Port development and productivity play a crucial role in economic development and regional
connectivity in Asia and the Pacific. Over the recent years, the rates of economic and trade
growth in the Asia-Pacific region have shown to be higher than the world average and this
situation is expected to continue, although to a lesser degree. The rate of growth of the maritime
and port traffic, which is driven by global economic growth and international trade, is likely to
decline slightly due to the global economic downturn and difficult trade relations, but the growth
trend is expected to be maintained. The shortage of ports‟ capacity directly hinders international
trade, prompting Governments to seek to ―unlock‖ the capacity constraints in and around ports.

In many cases, the port territory (seabed and land) is owned by Government, which, in principle,
should enable greater facilitation of trade and policy implementation, bringing wider economic
benefits at the local, national or regional level. This theory is challenged by fiscal reality.
Increasingly competing calls on the public budget mean that Governments do not have the
financial resources to spend, or the inclination to commit available funds, to unlock port capacity
constraints and to improve efficiency. Unlocking capacity constraints and improving efficiency
at ports can be achieved through various techniques, enhancing port capacity and associated
inland logistics (through infrastructure enhancement or development) and increasing the
efficiency of marine and inland operations (through infrastructure enhancement and service
innovation).

Competition between ports (and between terminals within ports) also drives efficiency.
Competition in the shipping industry has an impact on port development with the shipping
industry exerting pressure on ports to invest in order to accommodate increasingly larger vessels.
Because ports are valuable assets, and the port capacity, in itself, is valuable, there is a strong

55
Port and terminal operation management lecture note’s

interest from the private sector to invest in their development, as demonstrated by the
development of trans-shipment ports around the world (including the world‘s largest ports in
Singapore). New ports and new port infrastructure are being increasingly developed with the
involvement of the private sector, comprising some of the world‘s most known companies. This
brings also a wider dissemination of global best practices, leading to increased quality of service,
improved efficiency of operations and improvement in the allocation of public spending.

What are the phases of port development?

Three major steps can be identified in the port development process identified by Any port
(figure 1): setting, expansion and specialization. The three phases depict well port development
processes, especially in large traditional ports
What factors determine the development of a port?
The level of port market development is mainly affected by the level of economic development
and the degree of socialization of transportation services. The development and distribution
of hinterland economy and manufacturing industry affect the market distribution and demand
levels
Ports are catalysts for economic development as they enable trade and support supply chains.
Port investments have economic benefits that can be direct, indirect, or induced
What are the major problems of port?
If you are a keen follower of emerging trends, you will note that most ports are plagued with
problems like clearance delays, inadequate investments, captivity issues, increased freight
rates, lack of effective strategies, and inappropriate international mandates.
CHAPTER 5: Market Players in Ports
5.1 Port Authorities
Port authorities are public or private entities that are empowered to carry out the administration,
development, management, and operation of port land and infrastructure. They are typically
legally limited to the financing, construction, and operation of facilities and projects involving
rivers, lakes, oceans, and other waterways, such as canals, harbors, docks, wharves, and
terminals. Port authorities are tax-free corporations funded by user fees and/or proceeds from
tax-free bonds. In the United States, port authorities are instrumentalities of state or local
government established by enactment or grants of authority by the state legislature. Port

56
Port and terminal operation management lecture note’s

authorities are involved in port management and the promotion of the port they manage. With the
increasing presence of private operators, the role of port authorities has evolved.

A port authority is a public or a private entity that, whether or not in conjunction with other
activities, under national law or regulation is empowered to carry out the
(i) administration, (iv) (iv) operation of the port land and
(ii) (ii) development, infrastructure and
(iii) (iii) management, and, occasionally, (v) (v) The coordination and control of
port operation activities.
Historically, port authorities were governmental or quasi-governmental public institutions
established in order to address:
The need to manage property rights in waterfront areas.
The need to plan port development.
The provision of public goods, which, like navigation safety, cannot be denied to users
who refuse to pay while consuming services that are unlikely to be provided by the
market.
The need to take into account both positive and negative externalities.
The need to promote the efficiency of local monopolies in port services provision, which
have the potential to generate economic rents.
As part of the port policy formation tasks, national or state legislation defines ownership,
institutional structures, level of autonomy, level of strategic freedom, and, frequently, the
composition of the governing body of a port authority. Within the given powers and strategic
freedoms, port authorities define their goals and activities in order to fulfill objectives set by
their regulators. Port authorities generally have specific strategic goals that relate to their
responsibilities and functions. Given the differences in institutional structures (i.e. the norms and
the rules of an economy) and market environment, the strategic goals may differ. The common
strategic goal of port authorities is competitiveness, but a number of other strategic goals are
either explicitly or implicitly linked with this primary goal:
Contribute to local, regional, and national economic growth.
Create employment.
Facilitate trade.
Maximize throughput volumes.
Maximize the added value of the port as a whole or individual companies.
Generate income and profits.
Integrate ports with their foreland and hinterland.
Promote sustainability.
As entities, port authorities combine public and private goals and can be characterized as hybrid
or shared value organizations. Fully public institutions or private port authorities are
uncommon, but secondary ports generally have public port authorities. Similarly, the absence of

57
 Port and terminal operation management lecture note’s

a port authority is rare. There have been cases where ports, including the real estate, were fully
privatized. Ports are managed by the private companies that have bought them (e.g. the United
Kingdom), the centralized national management and regulatory functions (e.g. Colombia), or
public institutions assigned to provide oversight (e.g. Hong-Kong). The Port Authority of any
country is a government or semi-government public authority which builds, maintains and
operates critical transportation and trade assets at the seaports.
In short, the seaport authority facilitates the management of millions of people working in the
harbour and maintains or supervises vessel movement. The London Port Authority was the first
port authority. It came into action in the year 1908.
Port Authority controls, legalizes and manages all the port and marine services, facilities and
activities within the concerned country waters. It also includes vessel traffic management,
maritime safety improvisation, and facilitating security and environmental management at the
port.
Functions of Port Authorities
The conventional roles of a port authority are those of a landlord, a regulator, and an operator of
the port:
 As a landlord, a port authority manages the port assets under its jurisdiction. This commonly
concerns the provision of infrastructure such as piers and the dredging of waterways. This was
commonly done with public funds that port authorities were able to levy.
 As a regulator, a port authority sets the planning framework, namely fees, subcontracting
services, and safety, as well as the enforcement of national and port-related rules and regulations.
 As an operator, a port authority provides day-to-day services to ships (e.g. pilotage and towage)
and merchandise (e.g. loading/unloading and warehousing).
Traditionally, port authorities performed one or more of these functions, with the variance
defined by local port development traditions. The determining variables were the centralization
level of port governance-related decisions and the extent of private operations. Since the late
1990s, changes in the business and political environments within which ports
operate transformed these functions:
 Devolution of governance has supported the notion that Port Authorities act as corporatized
and/or commercialized entities that define autonomously at the local level the planning,
development, and management of activities at the respective port(s) under their responsibility.

58
 Port and terminal operation management lecture note’s

 Concessioning has reduced the port authority role as an operator since this role is increasingly
assumed by specialized terminal operators renting terminal facilities over long periods of time
(up to 30 years). The dominant rationale behind this process was that port authorities tended to
have poor performance levels in their terminal operations. As a a result, port authorities have to
manage ports where operations are provided by several service providers including global
terminal operators having terminal assets in a wide variety of markets.
 Cluster governance is an emerging and extensive trend where the port authority assumes
leadership in activities that conventionally were outside its jurisdiction. These include the setting
up of inland terminals and logistics zones (directly or in partnership), various strategies to
monitor and improve performance (such as stakeholder relations management, marketing
strategies, and internationalization activities), setting up port community systems, promoting
environmental and social initiatives, and being involved in training and education for port-related
employment as well as facilitating relations with its surrounding urban areas.
 Growth of port activities and port regionalization have introduced further goals related to
economic, social, and environmental sustainability and the need to secure the social acceptance
of port operators; a practice commonly referred to as ―securing the port‘s license to operate‖.
Along with new business-oriented approaches in public management, these changes
progressively altered the strategic role of port authorities. This revision of the role of port
authorities refers to two strategies. The first is the positioning of port authorities within the new
institutional setting of port governance. The second relates to the functions and activities of the
management entities in modern ports to advance their competitiveness. In many cases, the
involvement of port authorities in operations lessened or was even abandoned. Port authorities
started undertaking a number of additional functions. Like many organizations, ports now have
environmental, social, and governance obligations, in addition to their responsibility for the
promotion of trade. Environmental responsibilities (including mitigation measures) have led to
greater coastal planning involvement, the management of inland traffic flows, and urban land-use
planning. Social responsibilities increased concerns about the distribution of the costs and
benefits of port development. The existence of multiple stakeholders leads to gradual changes in
port governance arrangements and how decisions are made.
The strategic choices of port authorities do not imply that their centrality is challenged. On the
contrary, it remains intact, even though the new governance settings are at the core of the

59
Port and terminal operation management lecture note’s

landlord model. Port authorities are corporatized; assume responsibilities for commercial and
financial affairs, investments in new development projects, mid-term business planning and
implementation, and autonomous setting of long-term objectives.
There has been a significant increase in the functions that port authorities can be called upon to
undertake, although not all of them do this.
When they do, they opt to act as:
Conservators of the existing port ecosystems.
Facilitators of broader interaction between economic and societal interests within the port
and beyond the port perimeter, trying to engage in strategic regional partnerships.
Entrepreneurs, combining the main features of the facilitator with a more outspoken
commercial attitude, with the potential to advance the prospects of the port(s) they manage.
Τhe facilitating or entrepreneurial roles of port authorities are associated with:
Adopting a corporate culture based on transparency, entrepreneurship, and
accountability is free of political interference that encourages an entrepreneurial approach
coupled with strict financial discipline and sound risk management. This has even led to
developing a function supporting new service development by private port companies and
knowledge-based institutions in some ports.
A strategy of increased flexibility and adaptability, moving beyond long-term infrastructure
plans and endorsed by critical stakeholders.
A permanent and constructive relationship with stakeholders, including the business
community, government agencies, non-governmental organizations, and local community
interest groups, provides the social acceptability that port development companies need to get
the permits necessary to operate and expand.
A port development strategy that is not confined to within the geographical boundaries of
the port but builds partnerships and networks beyond the port boundaries to enhance port
competitiveness.
Port Authority Responsibilities:
A. The port authority as a landlord
The landlord port model involves private sector operations in the port area. The port authority
manages public infrastructure and advances the prospects of the entire port cluster. Among its
many other responsibilities, the port authority is the curator and the authorized manager of the

60
Port and terminal operation management lecture note’s

port land and adjacent aquatic surfaces to be leased to the private sector. The port authority acts
as the landlord, and is commonly the regulatory body responsible for the technical management
of the port area and several public authority functions. In contrast, port operations (especially
cargo handling) are carried out by private companies. Infrastructure is leased to private operating
companies and industries such as refineries, tank terminals, and chemical plants. Private port
operators provide and maintain their superstructure, including buildings (e.g., offices, sheds,
warehouses, container freight stations, workshops) and dock labor. This has become the
dominant model in larger and medium-sized ports.
As a landlord, the port authority must optimize the use of its domain (the total area, land, and
aquatic, under the statutory responsibility of the port authority) by earmarking port areas for
specific uses, awarding concessions and authorizations to a selected mix of
companies, monitoring and managing the implementation of concession agreements, and
adopting an appropriate pricing system.
A landlord port authority might opt to perform its roles acting as the conservator that focuses
on passive traffic, real estate, and area management. It can decide to be the facilitator who
operates as an active broker that mediates business-to-business relations with other actors,
including customers (users) and stakeholders. Within a regional approach, it develops strategic
partnerships within or beyond the port perimeter. In the largest ports, a port authority might be
the entrepreneur landlord that acts as the active developer. Simultaneously, it is directly involved
in commercial business-to-business negotiations and investments beyond the port perimeter,
collaborating with other port authorities as part of an internationalization strategy.
The situation is far from being uniform. On the one hand, the port authority is a concessionaire,
managing leased port areas. Often, leasing account for 50% of the total port revenue. In these
instances, the port authority has fairly limited autonomy in setting concession prices, port
operator authorization fees, wharfage charges, and other dues. At the same time, it does have the
responsibility for generating a fiscal surplus. On the other hand, many other port authorities are
still described as landlords but often provide services and develop strategic activities that are not
generally associated with this role. These port authorities act with more autonomy and a more
business-like structure, with a broader strategic scope and more business-like goals. The shift
of focus from macro-level goals to goals at the firm level underlines their entrepreneurial role.

61
Port and terminal operation management lecture note’s


The Main Activities of Landlord Port Authorities


Port Governance Tasks Technical Management of Port Areas
B. The port authority as an operator
In ports that continue to have a predominantly public character, known as service ports, the port
authority acts as the operator offering a complete range of services required for the functioning
of the seaport system. The port owns, maintains, and operates every available asset (fixed and
mobile), and cargo-handling activities are executed by labor employed directly by the port
authority. They are under the direct jurisdiction of public agencies such as a ministry, such as
transport or maritime), a Chair (or Director-General), and a Board of Directors, including civil
servants appointed by and directly reporting to the public agency.
Port authorities also retain operating functions in some ports where the private sector has
assumed, via concessions, leases, or outright selling, the responsibilities to operate terminals. In
these cases, the involvement of port authorities in operations maintains a shareholding in private
62
Port and terminal operation management lecture note’s

companies providing services and the provision of public or specialized services. Otherwise, port
authorities do not act as operators. They are limited to either applying or even to monitoring the
implementation of mechanistic or dynamic concession policies of terminals to third parties.
C. The port authority as a regulator
Port authorities are the port level regulators, undertaking and monitoring several public
authority governance functions. Acting as conservators of a given port, or port system, they take
care of the application and enforcement of regulations set by other policy-makers, such as
national administrators responsible for port policy set by international organizations, such as the
International Maritime Organization. These include regulations concerning operational safety,
the implementation of local or international safety and security codes (i.e. the ISPS Code), and
protocols and rules governing the provision of auxiliary services. Often, port authorities adopt
port-specific rules aiming to secure the implementation of these regulations. In several cases, and
for specific regulations like navigation, and law and order, they are assisted by the Harbor
Master or the coastguard. Port authorities also regulate financial revenues by having full or
partial control of port tariffs.
Beyond being active in creating mechanisms that facilitate implementation and monitoring
compliance, port authorities can develop their own rules. Environmental management is one such
field where port authorities are increasingly active in developing initiatives to advance
sustainability. The adoption of differential charging methods (i.e. offering lower charges to
environmentally friendly ships) is an example of a method currently used to promote the
sustainability of port operations.
As part of internationalization strategies, port authorities have tried to capitalize their expertise
as regulators. They are moving towards an entrepreneurial role linked with the
commercialization of their expertise and tools available into other ports and creating financial
revenues on a commercial basis.

63
Port and terminal operation management lecture note’s


Port Governance Tasks Public Authority Functions
4. The Port Authority as a Cluster Manager
A. Cluster leaders
In a contemporary setting, port authorities are hybrid organizations that act and develop beyond
the management of the activities within their jurisdiction. Port management entities are
increasingly acting as community and port cluster managers engaged with stakeholders and
investing in facilitating activities like information technologies, promotion and marketing of the
port, and training and education activities.
While cargo handling is the core of port activities, geographically concentrated and mutually
related transport, logistics, production, and trade activities in the port zone and the surrounding
areas, forming a port cluster. These activities, centered around a distinctive economic
specialization, develop in each port, with all stakeholders benefiting from competitiveness
improvements. Port authorities increasingly have an active role in improving this
competitiveness by increasing the cluster‘s internal cohesion and generating agglomeration
effects and competition with the hinterland.
Port clusters consist of a substantial number of firms and their evolution producing cluster
externalities, such as port marketing, labor inflow, education and training, and hinterland access.
64
Port and terminal operation management lecture note’s

Some of these externalities might be addressed on an ad-hoc basis, yet most require shared
investments. This is because the threat of free-riding prevents the cooperation of competing
firms, and, as a consequence, insufficient investments with joint benefits are made. The need for
collective action follows, with the port authority standing as the institutional arrangement to
address these collective action problems.
Within a port cluster, the port authorities act as the leading firm and the broker that is trusted
to resolve the emerging collective action problems. These initiatives would not be present
otherwise, either because the scale of operations is small and natural internal monopolies exist in
many seaports, or because specific actions might not be taken on by firms that operate within the
cluster but prioritize their very own interests. The role of the port authority is to increase
investments in collective action problems and secure capital. The port authority might advance
public-private partnerships, joint responsibility, and joint funding with other stakeholders to
achieve this goal. The trust stakeholders have in the port authority can lower transaction costs,
enable cooperation, and investments, and also innovation.
Ideally, for a port authority to effectively perform its cluster manager role, it should be self-
sustaining, have the autonomy to set prices, make investment decisions and prioritize the goal of
maximizing the performance of the port cluster. While port authorities might seek to advance the
competitiveness of the cluster, the situation differs between ports. In some cases, the optimal
amount of joint investments is very substantial, while in other ports, private industries may invest
relatively more, and the extra investments needed are relatively limited. The better the cluster
governance, the more competitive the port cluster is.
B. Stakeholder relationships management
Stakeholder relationship management practices are important in advancing the prospects of the
port cluster. They cover monitoring critical topics, involving stakeholders, and implementing
strategies. According to their priorities, port authorities proceed to identify and classify various
stakeholders, evaluate their potential influence on port operations development and
planning, prioritize stakeholder relations, and then manage the ties between the organization
and the most influential stakeholders.
A port stakeholder‘s classification includes ten different categories that refer to both internal and
external groups that are part of the broader port cluster. Community groups and civil society

65
Port and terminal operation management lecture note’s

organizations are also included through their increasing attention to port activities, expansion
patterns, and development plans. The main stakeholders include:
1. Shareholders such as public or private organizations, firms holding an equity share in
the port authority or allowed to appoint directors and executives of the port authority
board.
2. Port services providers such as pilots, mooring and towage operators, customs, and the
coast guard.
3. Concessionaires such as terminal operators with concessions in the port areas, or other
concessionaires related to warehouses, industrial areas, logistics platforms, malls, and
commercial areas.
4. Carriers such as shipping lines and tramp operators.
5. Employees and trade unions such as people working at the executive and operational
level in the port authority and in public institutions, labor pools, and port-related firms,
such as forwarders, ship agents, and customs brokers.
6. Port users such as freight forwarders, ship agents, brokers, road hauliers, railway
companies, and logistics providers.
7. Passengers such as people using port facilities for commuting, travel (ferries), and
tourism (cruising and yachting).
8. The financial community such as credit and financial institutions providing financial
resources to support port investments and development.
9. Local community and societal groups of interest such as people and organizations
located in the vicinity of the port areas and affected by port operations and business. The
category also includes individuals or groups defending specific special or environmental
causes.
10. Regulators such as local, regional, national, and international institutions setting up the
institutional and governance frameworks within which ports operate.
To achieve their growth targets, port authorities interact with stakeholders and other ports,
developing coordination and cooperation strategies.
 First, the growing complexity of supply chains is encouraging port authorities to
undertake strategies aiming at a better level of coordination of their hinterland. Port
Authorities act as leaders in bringing together the various supply chain actors to provide,

66
Port and terminal operation management lecture note’s

through coordination strategies, an integrated transportation service beneficial to all the

actors but especially to the port.
 Second, ports develop cooperation strategies with other ports, which might be
competing ports located in geographic proximity or ports located in different port
regions. In the context of the latter strategy and within an entrepreneurial approach, port
authorities of the largest ports are involved in internationalization strategies as well.


Port Cooperation Coordination
5. Port Authorities’ Role in Cruise Ports Governance
Port authorities have assumed a different role within each of the cruise port governance models.
They perform as entrepreneur, facilitator, or conservator. The role of the facilitator is qualified as
less or more active, depending on several port strategy and structure variables, including the role
of the port managing entities co-existing at the cruise port.
Four cruise port governance models are present in the Mediterranean and its adjoining seas, the
second major cruise market in the world. Each model assumes a different role for the managing
entity of the cruise port. All models co-exist with a contextual environment of apparent
complexity and dynamism.

67
Port and terminal operation management lecture note’s


Cruise Ports Governance Models
The port authority can be an active leader and an entrepreneur on all different fronts (model
A). These are primarily large ports, in terms of passenger movements, without the presence of a
cruise terminal operator. The port authority is responsible for the planning, development, and
operation of the cruise port. It is also the entity leading overall promotion and marketing efforts.
These ports tend to target premium cruise lines more than those that belong to other groups.
Their strategy usually includes receiving feedback from passengers, applying cancellation
policies for cruise lines that do not call according to schedule, and seeking public funding to
develop infrastructures supporting cruise activities.
Large marquee homeports can be marked by the presence of an active investor (model B).
Commonly, an International Cruise Terminal Operator (ICTO) manages and operates the
terminal. The port authority is closer to the role of the facilitator of the ICTO strategic actions.
The operator also acts as an investor and develops the port, either alone or with the facilitation of
the port authority. The latter is more likely to have made direct investments, while the operator
decides autonomously on new investments in capital assets. Just like model A, these are ports
receiving feedback from passengers as part of their strategy. At the same time, they tend to
develop without establishing partnerships with other cruise ports, terminals, or cruise lines.

68
Port and terminal operation management lecture note’s

The role of the port authority can also be that of a facilitator, though less active (model C).
Ports in this group usually have the terminal operator leading marketing and promotional
activities. There is no significant relationship of this model with particular port features (i.e., port
type). Instead, both the port authority and the cruise terminal operator jointly advance port
planning. The entities operating cruise terminals tend not to make direct investments, with such
investments remaining a public sector responsibility.
There are smaller cruise ports where the port authority maintains a passive managerial
role (model D). This is pthe entity that, in practice, assumes the role of the conservator by taking
responsibility for all marketing and promotional activities. It also tends to develop strategic
partnerships with other cruise ports, terminals, or cruise lines. The strategy of these ports is also
rather conservative. They usually do not apply berth allocation policies, nor do they receive
feedback from passengers. These ports rarely target hosting the contemporary mass cruises
market segment, and most of them do not have a formal collaboration with those responsible for
other transport modes. Even if terminal operators are involved in port operations, they usually do
not decide autonomously on new investments.
5. Ownership of Port Authorities
Seaports remain predominantly under public ownership, and this is reflected in the ownership
of port authorities. For most port authorities, particularly in North America and Europe, full
ownership by the state or the municipality remains predominant. Only a few port authorities
combine ownership of different government levels, such as state-municipality or province-
municipality. Mixed public-private ownership is rare, with the public sector owning the majority
of shares and limited private shareholder participation. Port authorities listed on the stock
exchange remain an exception. Full private ownership, where one or more private parties owns
both the port authority and the land, is only found in the UK and New Zealand.
Despite perceptions, successive port governance reforms in recent decades have opened port
services to private actors, but ownership of port authorities has not changed substantially. In
Europe, financial and economic crises put pressure on national budgets in the 2010s and
impacted port ownership, leading to the privatization of some port authorities. In 2016, the major
Mediterranean port of Piraeus in Greece was acquired by China‘s Cosco Group, which took a
67% stake in the shares of the listed Piraeus Port Authority. In 2018, the second largest port of
Greece, Thessaloniki, was acquired by a consortium led by a German investing Fund (Deutsche

69
Port and terminal operation management lecture note’s

Invest Equity Partners), Terminal Link (a company owned by CMA-CGM), and China Merchant
Holdings International (International Terminal Operator) which also bought 67% of the listed
Thessaloniki Port Authority. The deal also included Koper in Slovenia, and Constanza, in
Romania.
Port authorities are also moving towards more independent private management. European
ports provide several examples illustrating this trend. The Port of Amsterdam was officially
corporatized in 2013 to a limited liability company with the City of Amsterdam as the main
shareholder. Finnish ports have been limited liability companies since 2015, and as of 2016, the
Port Authority of Antwerp, the second-largest port in Europe, became a corporation under public
law. According to a 2016 survey of the European Sea Ports Organisation, 51% of the port
authorities in Europe were already structured as independent commercial entities companies, and
44% were still independent public bodies with their own legal framework and different degrees
of functional and financial dependency from public oversight. While operating under different
legal forms, these two main categories may share similarities such as self-financing and
commercial and entrepreneurial behavior to increase market share and attract private investment.
They may also share the same levels of influence from public authorities through participation in
the governing board of the port. At the same time, four out of five port authorities were fully or
partially subject to commercial law and governed by specific laws and acts.
Organization of Port Authority:
Port authority comprises of following Departments:
1. Supervisory Board: It is the highest Department in the port authority which supervises all the
activities of the following departments.
2. Executive Board: This Department is the most crucial department of port authority as it
makes and executes all the decisions regarding maintenance, control, security and organizational
operations. It has two main components, namely:
President and chief executive Officer: The main functions of the President and Chief
Executive Officer are as follows:
 Corporate Affairs and Corporate Strategies: They have to look after all the corporate
affairs and make strategies for improving corporate relations.
 Human Resources: They have to appoint crew members, labour at the port and work for
their improvement by regular performance appraisal.

70
Port and terminal operation management lecture note’s

 Communication and External Affairs: They have to manage internal and external
communication on port and work to enhance International trade.
 Internal Audit: They have to maintain Internal Audits as well.
 Legal Department: They have to legalize trade and cater to all legal matters.
The President and Chief executive Officer are to manage the following sub-departments:
i) Executive Vice President and Chief Financial Officer and
ii) Vice President and Chief Operating Officer
i) Executive Vice President and Chief Financial Officer: They have to cater to all the matters
related to Finance, Procurement, Digital Business Solutions, Digital and Information technology,
Innovation, etc. They also have to look after the Faculty Service Centre to manage working
personnel and their services.
ii) Vice President and Chief Operating Officer: They head Harbor‘s Master division and work
primarily for Harbor Development. They manage all the assets and also work for environmental
Management.
5.2 Terminal Operators
A terminal operator is a person who assists with various tasks in a manufacturing or storage
environment, or the safe and efficient movement of cargo and passengers through an
airport. Terminal operators may operate machinery, inspect equipment, and follow safety and
health regulations. Terminal operators can be public or private entities that own, lease, or operate
the terminals. Ports are composed of specialized terminals designed to handle a specific cargo
type. An increasing number of port terminals, serving either cargoes or passengers, are managed
by operators maintaining an international portfolio.
1. Port Terminals
Ports are mainly multifunctional entities, but this characteristic is often the result of the
combined activities of a number of specialized terminals, each dealing with specific goods and
commodities such as containers, grain, oil, or iron ore. Thus, a port is a combination of terminal
facilities, each developed to fulfill a specific function and sometimes serving a single user, such
as a petrochemical plant. The main types of port terminals include:
 Break-bulk. Concerns cargo that is carried in drums, bags, pallets, or boxes. Also
referred to as general-purpose facilities that have a combination of open storage space
and warehouses. Historically, most port terminals were built as multipurpose facilities, as

71
Port and terminal operation management lecture note’s

most commercial cargo was carried in a break-bulk form. It was only in the late
nineteenth century that ship specialization became dominant, allowing specialized
terminal facilities.
 Dry bulk. Relates to cargo that is not packaged and transported in large quantities that
are limited by ship size or existing demand. The main commodities involve coal, iron ore,
and grain, which require specialized equipment and storage facilities. This specialization
level implies that the terminal cannot handle bulk products other than those it was
designed and equipped to handle. Thus, a grain terminal cannot handle other commodities
even if the pier can accommodate any ship class.
 Liquid bulk. Commodities transported in liquid form require specialized transshipment
equipment and storage facilities. The most common liquid bulk terminal facilities are
designed to handle oil and petroleum products.
 Containers. Terminal facilities are designed only to handle a single break-bulk standard
transport unit, the container. Container terminals have come to dominate the port terminal
landscape because of the large variety of goods that can be carried in containers. They are
capital-intensive and require a large footprint due to the storage requirement of
containers.
 Ro-Ro. Handles vehicles that are rolled on and off a vehicle carrier. Require ramps, but
standard vehicle carriers commonly have their own ramps. The most important footprint
of a ro-ro terminal is the parking space used to store vehicles. Also, include ferries that
carry a combination of vehicles and passengers and, as such, require rather extensive
parking space while vehicles are waiting to roll onto the ferry.
 Passengers. Historically, passengers were handled at multipurpose facilities as liner ships
also carried freight. Ferry terminals are a specialized component in many ports part of a
domestic ferry network, such as in Greece and Japan. The emergence of the cruise
industry has been associated with the setting up of cruise passenger terminals that can be
extensive at turn port facilities such as Miami and Barcelona.
Although terminals may share a related port site, they often have no particular commonality in
terms of the supply chain they are servicing. There is the potential that a multi-terminal port may
not be an integrated entity, with its presence merely being coincidental. Still, terminals share
common maritime and inland infrastructure.

72
Port and terminal operation management lecture note’s

Types of Port Terminals

Elements of the Maritime Land Interface

Outside commercial issues related to the demand for cargo, port terminals depend on a specific
range of equipment, and this equipment requires a footprint and a configuration. Terminal
equipment is highly commodity-specific as some terminals can only handle one commodity or a
limited range of cargoes. For instance, an oil terminal can only handle crude oil bulk shipment
through specialized equipment and storage facilities. This equipment would not be able to handle
other forms of liquid cargo.

73
Port and terminal operation management lecture note’s

Three fundamental categories of port terminals, equipment, and design characteristics can be
found:
 General cargo. Unitized cargo that can be carried in batches and handled by three
specialized terminal types with specific equipment and design considerations. Since
break-bulk and container terminals handle unit cargoes, they are designed around the lift-
on/lift-off principle, requiring cranes and storage areas. Vehicle terminals, a type of neo
bulk terminals, are operated on the roll-on/roll-off principle and are dominated by
parking areas. The design of general cargo terminals is a balance between the average
throughput and the related storage requirements.
 Bulk cargo. Loose cargo carried in loads that are limited only by demand, ship size, and
storage capacity. The bulk terminal is where this system is synchronized. Liquid bulk and
dry bulk depend on different transshipment and storage techniques and are two distinct
categories of bulk terminals with design considerations. Bulk terminals tend to be
specialized to handle a single commodity, such as coal, grain, iron ore, natural gas, or
petroleum. Each of these commodities has unique equipment, storage, and design
considerations.
 Passengers. Ferry and cruise terminals are a small segment of port terminals. Ferry
terminals are mainly roll-on/roll-off facilities with direct connectivity to the road system.
Larger facilities require significant parking areas, but infrastructures and equipment are
simple, with mooring areas and ramps. Recently, the growth of the cruise industry has led
to the emergence of specialized cruise terminals that include passenger handling facilities
and parking areas. Cruise terminals might also be involved in freight activities with the
procurement of cruise ships.
Each terminal acts as a key node in the maritime-land interface, allowing maritime and inland
systems to interact. The balance between market demand, ship capacity and frequency, and
hinterland distribution requires a variety of footprints and design considerations.
2. Global Terminal Operators
A. Private involvement in port terminal operations
As late as the 1980s, public ownership and operation were the dominant models. While the
forms of port governance differed greatly, from the municipally-owned ports in Northern Europe
and the United States to the state-owned ports in France, Italy, and much of the developing

74
Port and terminal operation management lecture note’s

world, public ownership was dominant, and publicly managed port operations were prevalent.
The institutional entry barriers for port terminal operations were remarkably high and limited to
specific services. This contrasted with the shipping industry, where private ownership was
almost universal. Containerization particularly underlined how operationally deficient public port
authorities adapted to growing time and performance requirements imposed on intermodal
transport chains. The changes, slow at first, came from two directions:
 First, there was the belief that the transport industry as a whole should be divested to the
private sector to promote competition. Ports were among the many sectors targeted by
economic liberalization policies.
 Second, there was a policy recommendation from the World Bank that developing
countries would do well to free their highly controlled port industry by
issuing concessions to organizations able to modernize their port industries and better
manage operations. To facilitate required changes, the World Bank created a Port Reform
Tool Kit.
These developments helped create what has become a global snowball of port government
reforms, commonly known as port devolution, as the public sector relinquished its role in a
function it had formerly assumed. It made governments more open to considering reforming port
governance and offering better conditions to ensure privatization. The growing demands for
public and private investment in ports, precipitated by the growth in world trade, and the limited
abilities of governments to meet these needs because of competing investment priorities, were
key factors. Thus, while few were willing to go as far as the UK in the total privatization of
ports, many countries were willing to consider awarding concessions as an intermediate form of
privatization, leading to various forms of public-private partnerships.

Conditions for Port Privatization

75
Port and terminal operation management lecture note’s

Forms of Port Terminal Privatization

B. Typology of port holdings
Privatization has stimulated an almost global trend toward awarding port operational
concessions, especially for container terminals. The reasons container terminals were
particularly prone to concessioning were related to the fast growth of international trade
requiring massive and rapid capital investments. If the opportunities to award operational
concessions can be seen as an increase in demand, growth has also been greatly affected by an
increase in the number of companies seeking concessions, with many becoming large port
holdings.
Port holding. An entity, commonly private that owns or leases port terminals in a variety of
locations. It is also known as a port terminal operator.
Transnational terminal holding companies are grouped into three categories:
 Independent stevedores. Port terminal operators that expanded into new markets to
replicate their expertise in terminal operations and to diversify their revenue
geographically. PSA International, with headquarters in Singapore, is the largest global
terminal operator coming from a stevedore background, followed by Hutchison Ports,
with headquarters in Hong Kong. Stevedores account for about 50% of the hectares
controlled by terminal operators worldwide.

76
Port and terminal operation management lecture note’s

 Maritime shipping companies. Invested in port terminal facilities to help support their
core maritime shipping business. In many cases, hybrid structures are formed with
separate business units or sister companies active in liner shipping or terminal operations.
The terminal facilities can be operated on a single-user dedicated base or alternatively
also be open to third-party shipping lines. APM Terminals, a Maersk Line sister
company, is the largest global terminal operator from a maritime shipping background.
Shipping lines account for about 31% of the hectares controlled by terminal operators
worldwide.
 Financial holdings. Include various financial interests ranging from investment banks
and retirement funds to sovereign wealth funds attracted by the port terminal sector as an
asset class, and with revenue generation potential. The majority have an indirect
management approach, acquiring an asset stake, and leaving the existing operator to take
care of the operations. Others will directly manage the terminal assets through a parent
company. DP World, a branch of the Dubai World sovereign wealth fund, is the largest
global terminal operator coming from a financial background. The main reason why
financial holding companies became interested in having port terminal assets in their
portfolio is that they were perceived to have a high-value proposition. Holdings account
for about 19% of the hectares controlled by terminal operators worldwide.

Typology of Global Port Operators

77
Port and terminal operation management lecture note’s

Value Propositions behind the Interest of Equity Firms in Transport Terminals

The setting up of specialized terminal operating companies is not a recent phenomenon. Many
ports in Europe and the United States had already been awarded to local cargo handling
companies through concessions and lease agreements. Because they were relatively small and
locally based, with only a few exceptions, they did not participate in the global growth of
concession awards opportunities. The exceptions were Stevedore Services of America (SSA),
already active in several US West Coast Ports, which obtained concessions to operate facilities in
Panama and several other smaller ports in Central America; Eurogate, a joint company formed
by terminal handling companies from Bremen and Hamburg and Contship Italia, that obtained
concessions in Italy and Morocco.

Container Terminals of the World’s Major Terminal Operators 2019

78
Port and terminal operation management lecture note’s

Container Terminals Controlled by Independent Stevedores 2019

Container Terminals Controlled by Shipping Lines 2019

79
Port and terminal operation management lecture note’s

Container Terminals Controlled by Financial Holdings 2019

Beyond the three main categories, other types of companies are also involved in container
terminal operations:
 Freight transport companies. They are involved in a wide range of freight services,
such as shipping agents, freight forwarders, road and rail transport companies, and third-
party logistics service providers. Examples include Bollore, Arkas (Turkey), Wilson
(Brazil), Kuwait Gulf Link, Rennies (South Africa), Korea Express, Nippon Express,
Severstahltrans (Russia), and Kontena Nasional (Malaysia).
 Construction companies. Primarily large engineering firms that have become involved
in container terminal concessions through Private Finance Initiatives or attempts to
secure terminal construction contracts. Examples include Acciona (Spain), Gammon
(India), Tribasa (Mexico), Tucuman (Brazil), Samsung Corp, and Hyundai Development.
 Equipment manufacturers. Small specialist companies that have moved into
concessions from their original base in equipment servicing. It is worth noting that none
of the major manufacturers of container terminal equipment (quay cranes, RTGs) have
been involved in bids for terminal concessions. Being involved in terminal operations
could be perceived as an unfair competitive practice since they would be providing

80
Port and terminal operation management lecture note’s

equipment to competing operators. Examples include Portek (Singapore), ABG Heavy

Industries (India), and Mi-Jack (USA).
 Property developers. These are companies based mainly in Hong Kong and Southeast
Asia, and have diversified from commercial/residential developments into the provision
of concessioned infrastructure. Examples include New World, Fairyoung, Henderson
(HK), Metro Pacific Investment Corp, and Brisas del Pacifico (Colombia).
 Industrial conglomerates. These are either diversified holding companies or large
manufacturers (such as steel or cars) regarded by their governments as national
champions with the management ability to develop strategic assets. An important subset
of this group comprises wealthy or well-connected individuals or families who have
become involved because of their links to governments. For example, the Motta and
Heibron families in Manzanillo (Panama), the Suharto family in Indonesia, and Dato
Ahmad Sebi at Westports in Port Klang. Other examples of industrial conglomerates
include CITIC (China), Syanco (Saudi Arabia), FIAT, Mitsui, Tusdeer, CSN (Brazil),
Razon Group (Philippines), Evyap Group (Turkey), and John Keells Holdings (Sri
Lanka).
Several companies operating container terminals are multi-faceted, often belonging to larger
corporate entities covering a wide range of economic activities. Their categorization depends
on how far back one goes in tracing the chain of ownership. The farther back the beneficial
ownership of a concession is traced, the more complex and fragmented the ownership structure
becomes. APMT, for example, whilst trading as an independent terminal operator, has close
links to Maersk Line. Similarly, until its sale to institutional investors, Dradagos, the Spanish
port and logistics Services Company, formed part of the ACS Group. ACS‘s activities include
construction, energy supply, environmental engineering, industrial services, and concessions in
other modes of transport. In addition, some corporate structures are deliberately opaque to
minimize commercial risks, taxation, or exposure to publicity.
C. Global terminal operators
Like many multinational corporations, global terminal operators are market seekers who
expand their business opportunities through entry into new markets. A terminal can grow
organically, but this is a rather slow process. A much faster growth rate can be achieved by
acquiring terminal facilities in new markets. From the 1990s, a few companies became major

81
Port and terminal operation management lecture note’s

global terminal operators controlling a multinational portfolio of terminal assets. They mostly
originate from Asia, with four large companies dominating, three coming from a stevedore
background and one from a shipping line:
 Hong Kong-based firm, Hutchison Ports (HPH), part of a major conglomerate
Hutchison Whampoa.
 PSA International (PSA), the government-owned operator of the port of Singapore.
Note that the Port of Singapore Authority (PSA) was formed in 1964. In 1997, PSA was
corporatized and renamed PSA Corporation Limited. The company kept the name PSA,
which is no longer an acronym. In 2003, PSA International Private Limited became the
main holding company for the PSA Group.
 DP World (DPW), which is mainly part of a sovereign wealth fund created by the
government of Dubai to invest the wealth derived from oil trade.
 APM Terminals (APM), as a parent company of the world‘s largest shipping line;
Maersk.

Container Terminals Operated by APM 2019

82
Port and terminal operation management lecture note’s

Container Terminals Operated by HPH 2019

Container Terminals Operated by PSA 2019

83
Port and terminal operation management lecture note’s

Container Terminals Operated by DPW 2019

The setting up of global terminal operators took place in three main waves:
 The first wave included companies like HPH, P&O Ports, and SSA, which expanded
their operations on a geographical scale, thereby benefiting from the port privatization
schemes in many regions across the world. HPH, which originated as a terminal operator
in Hong Kong, first purchased Felixstowe, the largest UK container port. It developed a
portfolio of more than 50 terminals worldwide, including in Rotterdam and Shanghai.
 As soon as the strategies of the pioneers proved to be successful, the second wave of
companies started seeking expansion internationally, such as PSA, CSX World
Terminals, and Eurogate. PSA has actively secured concessions in China and Europe,
including Antwerp and Genoa. Like HPH, PSA originates from globally-oriented ports
offering limited local terminal expansion opportunities. Local operators were thus
encouraged to manage the constrained assets efficiently and to look abroad for expansion
opportunities.
 The third wave of terminal operators emerged when major container carriers entered the
terminal industry in an effort to support their core business. This also included financial
holdings such as DPW that have grown through acquisitions, such as P&O Ports and
CSX World Terminals, and by securing concessions in new markets. Shipping lines have

84
Port and terminal operation management lecture note’s

also participated in terminal concessions but to a lesser extent. The most important is the
in-house terminal operating company of Maersk; APM Terminals. Besides, Evergreen,
COSCO (via COSCO Shipping Ports), MSC (via its majority shareholding in TIL –
Terminal Investment Limited), and CMA-CGM (via its majority shareholding in
Terminal Link) hold port terminal leases. A global pattern of concessions is evident
between the dedicated terminal operating companies and the shipping lines.
A concentration of ownership among four major port holdings is taking place. While mergers
and acquisitions are usually successfully completed, there are cases where they have triggered a
regulatory response. For instance, in 2006, DPW acquired the terminal assets of P&O
(Peninsular & Oriental Ports), further consolidating its global holdings. However, DPW was
constrained to rescind the American assets of this transaction (terminals in Baltimore, Miami,
New Orleans, New York, and Philadelphia) to the holding AIG (Ports America) due to political
controversy; a Middle Eastern holding operating major American port terminals was perceived
negatively in the post 9-11 context.
Despite being global, large terminal operators have a strong regional orientation, which indicates
their transnational level. Global container terminal operators show varying degrees of
involvement in the main cargo handling markets around the world. Complex and geographically
diversified portfolios were established in virtually every freight market of the world. The
container terminal has become a fundamental node in global freight distribution, with the
managerial and operational expertise offered by global holdings an important element in its
performance in terms of capacity and reliability.

Largest Global Container Terminal Operators by Equity Based Throughput 2017

85
Port and terminal operation management lecture note’s

Regional Share in the Terminal Portfolio of the Largest Global Terminal Operators 2018
3. The Strategies of Container Terminal Operators
The rapid expansion of terminal operating companies is a strategy that reflects two economic
forces. First, the entry of former terminal operators into the global system represents
a horizontal integration process. The companies, constrained by the growth limits of their own
ports, seek to apply their expertise in new markets and seek new income sources. Second, the
entry of shipping lines into terminal operations is an example of vertical integration. The
companies seek to extend their control over other links in the transport chain. There is a third
strategy mainly followed by holdings having a strong financial orientation, portfolio
diversification in which terminal assets feature.
Several strategies explain the growth of global terminal operating companies and their diffusion
as key stakeholders in port terminals:
 Profitability. By modernizing port operations, mainly through better equipment,
information systems, and management, port holdings can increase the profitability of
their terminal assets. Because of their scale, management, and efficiency, global terminal
operators tend to be more profitable than a single terminal operating firm. For instance,
HPH achieved a 35% per year return on investment in the early 2000s. Port management
was very lucrative, inciting others to expand existing assets and new players to enter the
field. Since 2010, profit margins in terminal operations have become thinner, further
underlining the advantage of efficient terminal operation practices.

86
Port and terminal operation management lecture note’s

 Financial assets. Port holdings have the financial means to invest in infrastructures as
they have a wide variety of assets and the capacity to borrow large quantities of capital.
They can use the profits generated by their profitable terminals to invest and subsidize the
development of new terminals, thus expanding their asset base and operating revenues.
Most are listed on equity markets, allowing access to global capital, which supports the
freight transport sector as a source of returns driven by traffic growth fundamentals. This
financial advantage cannot be matched by port authorities, even those heavily subsidized
by public funds. In other cases, terminals have become financial assets that can grow
more valuable as the traffic they handle increases (additional revenue). Financial
holdings, such as retirement funds, have considered transport and port terminal assets for
their portfolio.
 Managerial expertise. Port holdings excel in establishing procedures to handle complex
tasks such as the loading and unloading sequence of containerships and all the intricacies
of terminal operations. Many have accumulated substantial experience in terminal design
and the management of containerized operations in a wide array of settings. Therefore,
they are able to transfer managerial expertise to new terminals. Being private entities,
they tend to have better customer service and considerable flexibility to meet the needs of
their clients through service differentiation. This also includes the use of well-developed
information systems and the capacity to quickly comply with legal procedures related to
customs clearance and security.
 Gateway access. From a geographical standpoint, most port holdings follow a strategy to
establish privileged positions to access hinterlands. By doing so, they secure a market
share and can guarantee a level of port and often inland transport service to their
customers. This can also be seen as a commercial strategy where a ―stronghold‖ is
established, limiting the presence of other competitors and creating a monopoly situation.
Gateway access thus provides a more stable flow of containerized shipments since
gateways tend to endure as global connectors. The acquisition of a new port terminal is
often accompanied by the development of related inland logistics activities by companies
related to the port holding.
 Leverage. A port holding is able to negotiate favorable conditions with maritime
shippers and inland freight transport companies, namely around rates, access, and level of

87
Port and terminal operation management lecture note’s

service. Some are subsidiaries of global maritime shipping lines (such as the A.P. Moller
group controlled by the shipper Maesrk). In contrast, others are directly controlled by
them (such as Evergreen), so they can offer a complete logistical solution to international
freight transportation. They are also better placed to mitigate pressures from port
authorities to increase rents and port fees. The ―footloose‖ character of maritime shippers
has for long been recognized, with the balance of power more in their favor than it is of
the port authorities they negotiate with.
 Traffic capture. Because of their privileged relationships with maritime shipping lines,
port holdings are able to capture and maintain traffic for their terminals. The decision to
invest is often related to knowing that the terminal will handle a relatively secure number
of port calls. Consequently, the level of traffic and revenue can be secured more
effectively.
 Global perspective. Port holdings have a comprehensive view of the state of the industry
and can interpret political and price signals to their advantage. They are thus well placed
to influence the direction of the industry and anticipate developments and opportunities to
offer global solutions to terminal requirements in ports around the world. Under such
circumstances, they can allocate new investments (or divest) to take advantage of new
growth opportunities and new markets.

Vertical and Horizontal Integration in Port Development

88
Port and terminal operation management lecture note’s

The Strategies of Port Operators

The growth of transnational terminal operating companies has resulted in a concentration of
ownership. In 2018 the top seven global terminal operators accounted for 34.5% of global
container port activity in terms of equity-based throughput. Perhaps most important is that they
are now dominant in the most important container ports in the world and wield monopoly power
in many smaller ports. There is strong evidence that performance has improved in most ports due
to concessioning to global terminal operators. The question is whether to regulate the further
concentration of power, leaving several maritime ranges having to deal with a limited number of
terminal operators that are in a position to impose oligopolistic fees and charges.
4. Cruise Terminal Operators
A. The emergence of cruise terminal operators
Until the COVID-19 pandemic, the cruise industry experienced remarkable growth rates. Since
the 1990s, the global growth rate of the cruise industry has endured despite economic cycles of
growth and recession or other events disrupting cruise tourism, such as hurricanes. This growth
rapidly reshapes the cruise industry, with private operators entering the business. Liberalization
and internationalization in the cruise terminal business have become a trend similar to what
occurred in the container terminal sector. Ports started to see cruises as more than an ancillary
activity of secondary importance.
The presence of specialized cruise terminal operators has expanded. Along with service and
other upgrades, the essential infrastructure for cruise terminal operations is also changing
rapidly. Specialized cruise terminals replace multipurpose or temporary docking facilities. The
bigger cruise ports develop via a terminalization strategy, – the evolution of autonomously
operating terminals of considerable size; the terminals at Cruise Port Barcelona, the biggest port

89
Port and terminal operation management lecture note’s

in Europe; and the size of cruise terminals in North America provide illustrative examples. New
cruise terminals are built, and existing facilities are upsized and upgraded, imposing additional
investments on the host port or terminal operator. Aiming to effectively respond to calls for
upgrading cruise terminals, while safeguarding public spending, port authorities started to seek
the active involvement of third parties to finance, construct, operate, and commercially develop
cruise facilities. Private entry in cruise terminals has been facilitated by the port governance
reforms applied to all port activities, with governments establishing a more commercialized
environment for port operators.
This development has resulted in new opportunities for several firms, such as cruise lines and
specialized cruise terminal operators, wishing to undertake new or additional investments in the
cruise business, and sometimes to follow a path of internationalization. The concessioning of
cruise terminals to third parties and the development of new terminals have become common
practices. In some ports, cruise lines are directly involved in the financing, building, and
operations of terminals. In other ports, local cruise terminal operators, which are often also port
agents, are progressively joined by other companies that have developed interests in taking
control of cruise ports and specialized purpose vehicles (SPVs) built by terminal operating
companies. Eventually, international players emerged. As cruise activities in ports gain
additional operational autonomy, public authorities are pursuing partnerships with third parties to
finance and develop growth strategies.

Global Cruise Passengers Carried 1990 2019

90
Port and terminal operation management lecture note’s

Terminalization of Cruise Ports Cruise Port Barcelona

Size
of Cruise Terminals in North America

Cruise Terminal Operators Typology and Drivers of Market Entry

91
Port and terminal operation management lecture note’s

B. Strategies of cruise terminal operators

The growing commitment of investors in the funding and management of cruise ports has
reached levels comparable to what is being experienced in cargo ports, particularly container
terminals. In the long term, this might affect the interactions between ports and cruise lines,
changing bargaining power relations between cruise lines and port authorities, and the structure
of cruise itineraries, as well as development strategies, such as initiatives to address the existing
seasonality of cruise activities or attract higher spending cruisers. The leading actors involved in
cruise terminal operations include:
 Cruise lines that are expanding vertically into terminal operation to support their core
activity.
 Pure cruise terminal operators that are expanding horizontally in new markets.
 Third parties such as Chambers of Commerce, shipping agencies, travel operators, and
logistics companies entering for a specific opportunity such as local economic
development and simple diversification.
Cruise lines exploit the opportunities offered and undertake aggressive growth strategies, often
entering overseas locations. In the Mediterranean market alone, Royal Caribbean Cruise Lines
has emerged as the most active. The company operates cruise terminals in four different
countries, such as Italy (Civitavecchia, La Spezia, Naples, Ravenna), Portugal (Lisbon), Spain
(Barcelona), and Turkey (Kusadasi). Costa Crociere is present in France (Port of Marseille) and
Spain (Port of Barcelona), and MSC Cruises operates cruise terminals both in France (Port of
Marseille) and Italy (Port of Naples).
Cruise lines prefer to focus their terminal investments in turnaround (home) ports with a high
level of transport accessibility for tourists and cruisers. The key facilities are airports and high-
speed rail stations from which most cruisers arrive. This has resulted in the ―fly and cruise‖
model, where cruise passengers are directly picked up and checked in at the airport. In contrast,
transit ports (ports of call) are selected for their touristic highlights and landmarks. The interest
of international cruise lines in the financing, building, and terminal operations, which emerged in
the early 2000s, is part of a vertical integration strategy. The main drivers of their strategies
include the need for cost control and improvement in service quality and reliability, the need to
defend their core assets financially, and the search for additional bargaining power in

92
Port and terminal operation management lecture note’s

negotiations with local public authorities. Such vertical integration is experienced in other
shipping sectors and is a means for achieving competitiveness along the supply chain.
Pure cruise terminal operators are investors who pursue horizontal integration and
internationalization strategies to reach economies of scope and geographic diversification.
Similar drivers trigger the entry of real estate and infrastructure managers, which rely on
technical and managerial competencies developed in their core business to generate cross-
sectorial synergies.
C. The internationalization of cruise terminal operators
More recently, cruise terminal operators started expanding overseas.
International Cruise Terminal Operators (ICTOs) are companies holding at least a share in
one cruise facility located in a foreign country, and emerging as the main actors driving industry
privatization.
Global Ports Holding (GPH) is a major ICTO established in 2004 as an international port
operator with a diversified portfolio of cruise and commercial ports. It started as a cruise terminal
operator in Turkey and now operates 21 ports in 13 countries, including nine ports in six
Mediterranean countries. As of 2019, GPH facilities handled 14 million passengers, accounting
for a 24% market share in the Mediterranean. The group also offers commercial port operations
specializing in container, bulk, and general cargo handling. Another ICTO, Creuers Del Port
Barcelona S.A., was established by the Port of Barcelona and then extended its cruise terminal
portfolio to Asia (Singapore). The internationalization of cruise terminals might create an array
of international actors managing global portfolios of facilities, comparable to what has happened
with the rise of global container terminal operators.
Global Container Terminal Operators (GTOs) have recently assumed responsibilities for
cruise terminal operations. This has been the outcome of the acquisition of majority stakes and
ownership of entire ports. For instance, China Cosco Shipping became the owner of the master
concession in Piraeus, and Terminal Link (CMA CGM) took over the concession in
Thessaloniki, both ports and important container terminal facilities, but also cruise ports. Further,
in 2017, DP World was awarded the concession to operate the port of Limassol, another
important cruise destination. This trend is emerging even though cruise terminal activities are not
part of their core business but a derived responsibility that may provide an incentive to acquire
additional assets.

93
Port and terminal operation management lecture note’s

Given the pivotal role of cruise terminals in touristic global value chains, entities responsible for
port destination development, such as Chambers of Commerce, and tourism-related firms, such
as shipping agencies and travel operators, have become involved. Cruise facilities operations are
seen as a tool to promote local and regional business or to support tourism. In some cases, such
entities establish hybrid companies responsible for the management and operation of cruise
ports. For instance, CCI Nice Cote d‘Azur is an entity operating cruise terminals in several
French Riviera ports. Several port companies are corporations with a public-ownership
background that paved the way for the cruise business launch and facilitated a higher private
equity commitment. Some of them entered the market predominantly in search of economies of
scope and new business opportunities. For this purpose, they often exploited formal and informal
ties with local public entities and institutions, rejecting the option of seeking foreign investments.
Financial investors, who are less directly involved, might be attracted by high growth rates and
profitability in the cruise business. Specialized financial institutions, such as banks, insurance
companies, and private equity (PE) firms, are searching for a reasonable risk, return
maximization, and maturity of investments. They may see cruise terminals as attractive assets for
diversifying their business portfolio, contributing to a higher degree of financialization of the
port sector. The attractive features of port terminals include the long-term economic life of the
assets, the monopolistic or oligopolistic nature of the industry, and the possibility of partially
transferring risk to host governments through public-private partnerships.
An emerging trend has been the setting up of dedicated facilities where the cruise shipping
company is directly involved in the development of the cruise terminal as well as co-located
amenities. Examples of this practice are the private islands in the Caribbean, which are reserved
exclusively for a cruise company. The most prominent include Labadee (Royal Caribbean) in
Haiti, Coco Cay (Royal Caribbean), Half Moon Cay (Holland), Castaway Cay (Disney), Princess
Cay (Princess), and Great Stirrup Cay (Norwegian) in the Bahamas. These private facilities are
all within one cruise day from the home ports of Florida, offering the option of short 3-4 day
cruises to a quiet and safe destination. They are all enclaves within their respective host
countries.
5.3 Other Market Players
Marketing is a core function of seaport management, positively impacting cash flow, profits,
production levels, market share, and the overall image of a port and the related cluster.

94
 Port and terminal operation management lecture note’s

1. Ports and their Customers

Marketing and customer relationship management are among the ―beyond the landlord‖
functions of port authorities that are gaining momentum. The various forms of communication,
trade and business development, local community liaison, and customer relationship
management are major components of the overall marketing effort. A fact-finding report that
surveyed European port authorities revealed that 81% of them lead promotion and marketing
activities for the ports under their management. A study of 70 cruise ports in the Mediterranean
Sea found that 71.4% of the port authorities are leaders in port marketing.
Marketing is the process of defining, developing, and delivering value to
stakeholders depending on distinctive competencies. By adopting a market-driven approach, a
port authority provides various marketing solutions for each stakeholder in the port community
and beyond. Marketing strategies developed by port authority‘s deal with networks of
stakeholders, the members of which are categorized into three groups:
1. Business-related stakeholders (e.g., shipping lines, shippers, terminal operators, logistics and
forwarding companies, transport services providers). These are market players affecting (and
being affected by) Port Authorities‘ strategies to pursue their marketing objectives.
2. Societal groups and local communities seeking sustainable port growth in harmony with the
territory and its citizens.
3. Institutional stakeholders are involved in meaningful interactions with port authorities on
matters linked to several policy issues, legislative interventions, and public interests.
Each stakeholder represents a target for marketing activities, whereas groups of the latter
(portfolios of marketing actions) head towards specific marketing objectives. A successful
marketing strategy focuses on identifying the key business relationships through which a port
can deliver value to (internal and external) stakeholders, based on its distinctive competencies.
When such marketing actions are not effective, ports are probably unable to cope with an
additional demand.
The potential value for stakeholders generated through marketing efforts develops in line with
the main functions that a given port authority undertakes, such as landlord, regulator, operator, or
community/cluster manager. Following the evaluation of internal strengths, competitors, the
business ecosystem, and the social community, the endorsed marketing strategies are associated

95
 Port and terminal operation management lecture note’s

with a portfolio of actions based on the capabilities of the port authority. Port authorities define
value propositions via actions that might relate to one or more marketing processes aiming to:
 Define value (e.g. identifying the needs, positioning the offers).
 Provide value (e.g. products/services development, defining the price, selecting and choosing
the distribution channels).
 Communicate value (e.g. sales force messages, promotion, advertizing, PR, media planning).
Port authorities deal with a multitude of public and private stakeholders, frequently dispersed
over a wide geographic space, who exercise a multi-directional influence on their actions. The
borderless natures of modern supply chains and port clusters evolution have their own
implications for port marketing strategies:
 It is rarely the case that actors operate or develop alone within the port cluster. Irrespective of
size, the bundling of operations and the clustering of activities facing related issues by endorsing
a collective action logic is essential, irrespective of the market niche.
 Even though port authorities are physically bounded in their own territorial jurisdiction, they
deal with players in distant and multiple locations. They want to influence their behavior and
generate business opportunities. This occurs regardless of any physically limited extension of
port operations or the intrinsic normative limitations of port authorities.
 The fuzzy geography of the decisional chains of some stakeholders, such as multinational
corporations, might interact with port authorities through multiple decisional units based in
geographically distant locations. The existence of multi-layered decisional units (i.e., local
offices, national branches, regional and global headquarters) complicates marketing interactions,
given diverse representatives within the same multinational corporation.
 Marketing has reference to actors with diverse cultural backgrounds as well as economic and
institutional environments. Port authorities interact with players having diverse legal natures
(e.g., public bodies, public companies, private companies, individual citizens, trade associations),
interests (private vs. public), geographic location, and strategic ambitions (local, national,
international). Such diversity might generate problems of market adaptation and make the
dialogue with stakeholders less fruitful and constructive.
Thus, marketing efforts developed by port authorities are increasingly complex and require the
commitment of specialized and highly qualified managers.

96
Port and terminal operation management lecture note’s

2. Marketing Objectives and Actions

Ports pursue a spectrum of marketing objectives. The scope of port marketing
encompasses five mainstream categories of objectives:
1. Secure additional investments.
2. Enhance additional demand.
3. Exploit non-core business opportunities.
4. Build solid community liaisons.
5. Enhance institutional dialogue.
The first three refer to business-to-business relations. Another objective resides in business-to-
community relationships. The fifth refers to the port relations with institutions and their
administrators. These marketing objectives are mutually linked, whereas marketing actions are
often required to support each other for achieving objectives that, despite appearances, are not
stand-alone.
With marketing objectives closely interconnected, the interplays developed between port
authorities and major stakeholders might have further implications compared to what their
geographic and functional positioning might imply. A port authority may generate cross-
fertilization effects that materialize due to the synergies and economies of scope in committing
resources and capabilities to marketing actions. At the same time, any given stakeholder
might be involved as a co-creator in marketing actions.
Port Marketing Objectives

97
Port and terminal operation management lecture note’s

Marketing Objectives of Port Authorities

The port authority might select from multiple combinations of stakeholders and marketing
actions emphasizing the distinguishing features of their value proposition and market image.
With port marketing efforts targeting different market segments and combinations of
stakeholders, the marketing actions to be used is complex. The port authority can potentially
select any combination as an objective and then serve it via suitable marketing
actions, committing core resources, skills and competencies, and physical and financial
resources, as well as time constraints. With marketing objectives inextricably linked and
marketing actions often supporting each other, the generation of cross-fertilization effects might
be produced due to synergies and economies of scope in committing resources and capabilities to
marketing actions.

Port Authority Marketing Strategies and Stakeholder Types

98
Port and terminal operation management lecture note’s

3. Increasing Customer Loyalty

Despite the best of intentions and efforts when developing relationships, customers may defect to
other ports. The main reasons behind this change in port choice are related to inadequate service
or often just the impression of being treated with indifference. Retaining or reclaiming
customers can be accomplished through a number of complementary strategies.
A. Communication with customers
It is of paramount importance to occasionally survey customers, preferably via direct verbal
communication, to discover satisfaction levels about the port and find out how the port service
compares to the competition. This form of market research should be approached
systematically and regularly to understand changes in customer satisfaction levels. Issues to
discuss include the degree of satisfaction with the services provided, perceptions of value for
money, port efficiency, feedback on the available information (e.g. web site), potential growth in
terms of tonnage through the port as well as changes to their needs and requirements, feedback
on customer service, and in general, the day-to-day issues creating operational problems for
customers.
To further assist with customer communications, some ports have developed a visitation
program for the chief executive, board members, and senior managers to meet and gather
information with current and prospective customers locally, nationally, and internationally, with
the objective of better understanding customer requirements.
The formation of port user groups is another effective means of communicating with a broad
range of customers. These groups tend to be consultative and information-sharing mechanisms to
provide feedback and maintain communication between the port and its customers, including
stevedoring companies, tenants, shipping companies, shipping agents, and community groups.
Matters discussed at these meetings may range from operational and policy issues, infrastructure
developments, strategy, and environmental management.
B. Listening to front-line people
The customer contact people are often the first to hear what bothers customers and are better
positioned to identify customer needs and concerns. They are not only physically or virtually
close but may have developed a personal bond with the customer. Understanding that front-line
employees continually interact with customers and influence customer satisfaction levels should

99
 Port and terminal operation management lecture note’s

highlight the importance of employing customer-focused staff and providing them with at least
fundamental training in marketing.
C. Service failure recovery
The true test of commitment to customer satisfaction is how the port responds when mistakes are
made or there is poor customer service. A complaint may arise because the business has not
delivered on the promises made in marketing communications. Labor strikes in ports or severe
delays due to operational issues are typical events triggering poor customer service. When
assessing poor performance, the reality is conditioned by customer perception. Three
major types of service failures exist:
 Failures of the core business where there have been inadequate responses to service delivery
system errors.
 Poor or no responses to customer needs and requests.
 Unsatisfactory employee behavior, such as being abusive, poor attitudes, being discriminatory,
and not considering cultural norms.
A recovery from poor service delivery can convert even frustrated customers into loyal
customers. Companies should invest in implementing problem-solving and follow-up on service
recovery strategies since both significantly enhance corporate image. However, the opportunity
for service recovery is sometimes missed because employees are not empowered or have
insufficient training to address the error promptly and appropriately.
D. Identify potential defectors
Observant ports can detect potential defectors early in the process. There are several
indicators that a customer might defect:
 Slower returns of customer approval requests.
 Access to upper-level management decreases.
 The flow of customer data slows down.
 Plans for future work become progressively shorter-term.
 One or more of the products or services are discontinued.
 The volume of business (TEUs, cargo tonnage, or passenger number) is gradually reduced.
Effective inter-port competition creates opportunities for customers to defect. In many cases, a
triggering event causes a customer to leave, often coinciding with a window of opportunity

100
Port and terminal operation management lecture note’s

created in a rival port. When competition levels are low, and no alternative ports are available,
the customer becomes captive, making defection very difficult.
In the port industry, port executives should invest in research to understand the real reasons why
their customers leave or stay. Price, changing needs, and customer service levels are common
reasons.
E. Complaint management
Loyal customers tend to be more forgiving. Therefore the port can occasionally make a mistake
and still not lose customers. Receiving customer complaints can be considered
positively because they provide an opportunity to address the problem, solve it, and retain
customers. Essentially a customer who complains indicates to the service business that it wishes
to remain a customer and is willing to give it a second chance. Therefore, ports should make it
easy to complain. Complaints can be encouraged by providing customer feedback surveys and
speaking to customers directly about any concerns they may have. Asking for feedback from the
customers is itself a loyalty-generating process.
Furthermore, good complaint management can only be achieved if the service provider uses
a formal system to monitor, process, and follow up on customer complaints. This assumes, for
instance, a corporate environment in which employees are encouraged to report customer
complaints instead of an environment in which employees hide complaints because they fear
penalization from senior management.
F. Capitalize on positive communication
A benefit of retaining highly satisfied customers loyal to the business is that they spread positive
word-of-mouth communication (WOM). This factor, along with a critical reputation in the port
industry, is a key source of information for new clients. Social media and new communication
tools have increased reliance on online information seeking, leading to the growing importance
of electronic word-of-mouth or eWOM. If many customers spread positive word-of-mouth
communication, promotion costs to attract new customers are lowered. Customers believe word-
of-mouth communication to be less biased and more credible than traditional marketing
communications. However, concerns have been expressed about the reliability of eWOM due to
possible manipulation, disinformation by rivals, and the utilization of fake eWOM. Negative
eWOM can lead to so-called online firestorms, seriously undermining a port reputation.

101
Port and terminal operation management lecture note’s

G. Usage of exit barriers

One way to give the port authority a chance to respond is to make it difficult for the customer to
leave. Erecting a simple barrier to departure allows a port manager to determine what is wrong
and fix it before the customer leaves. However, trying to lock customers in does not guarantee
port loyalty.
A similar outcome may be achieved by using service guarantees and customer service
charters to offset the difficulties of service recovery. Although this may represent a potential
cost to the port, service guarantees may increase customer loyalty.
Port authorities confronted with a highly competitive market environment might use concession
agreements as a way to lock in terminal operators or consortia between terminal operators and
shipping lines. The granting of dedicated terminals combined with favorable port dues and
strict throughput guarantees can also reduce the risk of defection.
H. Customer differentiation
Customers do not have an equal value to the port business. Ports become increasingly
dependent on external coordination and control by actors who extract a large share of the
economic rent produced by ports and are often motivated by creating shareholder value. Given
the increasingly footloose character of its traffic, it might be inappropriate for a port to try to
keep traffic at any cost. If powerful actors in a specific logistics chain exert strong pressure on a
port because of economic rents generated elsewhere in the chain, it might be relevant for the port
to opt out of this chain.
Due to changes in the competitive environment, current positioning, and desired target markets,
customers should be assessed to ensure they match the stated objectives and value
proposition. Segmentation analysis can assist in distinguishing between customers and ensuring
the port can serve customers efficiently, effectively, and importantly, profitably for mutual value.
Port managers can attribute a risk profile to each of the customers. Certain customers can be
very valuable for the port as a whole. Losing them could trigger effects on other customers
because of vertical linkages between companies (e.g. a feeder company might stop calling
because a mother vessel is changing the port of call) or leader/follower dynamics (e.g. if a
leading company leaves a port, some followers in the market might be eager to do the same).

102
Port and terminal operation management lecture note’s

Risk profile of port customers

Port managers should determine the lifetime value of the customers and divide them into high,
medium, and low lifetime value segments. They should also determine the likelihood that the
customer will leave by dividing the customers into three defection classes.
The customers a port should be most concerned about are the four most important boxes,
priorities A and B. Those with the highest lifetime value and the highest probability of defecting
are the priority A customers. Priority C customers are the low lifetime value or loyal customers
who will never leave. Once the port manager has identified those customers with the highest
retention value, the manager can do something as simple as making sure those customers are key
accounts.
I. Pricing strategies
A pricing strategy tailored to the individual needs of the customer is a key factor in developing
relationships and loyalty. This implies the economic perspective on port pricing should be
complemented by elements from marketing and relationship management linked to the different
requirements of each major segment.

103
Port and terminal operation management lecture note’s

CHAPTER 6: Maritime Documents

6.1 Definition and Functions of Maritime B/L
Bill of lading is a document issued by a carrier to a shipper, confirming the particular good that
has been received on board as cargo transporting it to a destination and delivering it to the
consignee.
The word ‗lading‘ means ‗loading‘. It refers to the loading of cargo aboard a ship. Simply put,
the Bill of Lading or BoL or B/L is a receipt.
It acts as a receipt issued by the carrier (or an agent) when the shipment is fully loaded onto the
vessel.
A B/L is used as proof of shipment for customs, insurance, and also as proof of fulfilling a
contractual obligation.
The document acknowledges that the carrier (or the agent) has received the goods (cargo or
shipment). Though the British term refers strictly to shipping, the American definition is not as
strict and can be applied to the transportation of any type of good. To ship any cargo, a BoL is
required and acts as a receipt and a contract. A completed BOL legally shows that the carrier
(agent) has received the shipment as described and is now contractually bound to deliver the
goods in good condition to the consignee. In a sense, it is a service level agreement between the
freight company and the client. In case of a dispute, Bill of Lading becomes a very vital piece of
documentary evidence. For this reason, all parties have to ensure that all details are filled
accurately with no scope of error. It is a standard-form document that is transferable by
endorsement or by legal transfer of possession.
Bill of lading Functions :
 The information in a Bill of Lading (B/L) documents the actions of the carrier throughout
the shipment.
 Information like where the shipment is going, the piece count, how it has been billed, and
also how the freight has to be handled on the dock and trailers.
 It could be on a prepaid or collect basis.
 A BoL serves these purposes: As a cargo receipt: This is the primary purpose of a B/L.
 It acts as a receipt issued by the carrier (or an agent) when the shipment is fully loaded
onto the vessel.

104
Port and terminal operation management lecture note’s

 A B/L is used as proof of shipment for customs, insurance, and also as proof of fulfilling
a contractual obligation.
 The bill of lading as a receipt of goods is valid proof that the freight company has
received the goods from the shipper in proper condition.
 As evidence of the contract of carriage: The B/L from the carrier (or the agent) to the
shipper can be used as evidence of the contract of carriage.
 It is proof that the carrier has received the goods and upon the receipt, the carrier would
deliver the goods.
 In this case, the B/L would be used as a contract of carriage. The contract is irrevocable
and the carrier cannot give external evidence to the contract which is accepted by both
the carrier and the bona fide transferee. As title: When the buyer is entitled to received
goods from the carrier of the shipment, the B/L acts as a document of title for the goods.
 BoL gives the holder of the BoL the right and liabilities to transfer it to someone.
Different Types of Bill of Lading
There are many types of Bill of Lading which can be divided into many 4 main categories.
A) Based on Carrier
1. Master BoL: It is issued by the shipping carrier companies.
2. House BoL: It is issued and signed by the freight forwarder.
3. Switch BoL: It is also issued by the carrier or its agent in exchange for the first set of BoL. It
cannot be issued until the first BoL is inactive.
B) Based on Payment
1. Straight BoL: This is used when the money for the goods has been paid in advance and so a
carrier needs to deliver the correct merchandise to the right party.
2. Bearer BoL: It is a bill stating that delivery shall be made to the party holding the bill. The
creation of such a bill may be explicit or if an order bill fails to nominate the consignee then it
can be considered as one whether in its original form or through an endorsement in blank. A
bearer bill can be negotiated by physical delivery.
3. Order BoL: When shipping merchandise prior to payment, a carrier is required to deliver the
merchandise to the importer. Under such a situation order bill lading is used and at the
endorsement of the exporter, the carrier may transfer title to the importer. These order bills of
lading can be traded as a security or they may be used as collateral against pledged loans.

105
Port and terminal operation management lecture note’s

4. Surrender BoL: Here the importer does not pay the bank until the maturity of the draft under
the relative credit which works under the term ‗Import Documentary Credit‘. The bank
undertakes to remit the payment to the seller on behalf of the buyer. To receive the payment, the
seller must present the documents specified in the terms of the documentary credit to its bank
during the validity of the documentary credit. This direct liability is called the Surrender Bill of
Lading.
C) Based on Shipment Condition
1. A Clean BoL: This is one which states that the cargo has been loaded on board the ship in
apparent good order and condition.
2. Claused Bill of Lading: It is also known as a soiled bill of lading. Such a bill of lading bears a
clause or notation suggesting that the goods were received by the carrier in poor or damaged
condition. D) Based on Mode of Transportation 1. Inland BoL This allows the carrier to transport
the consignment by road, air, or rail across the land. 2. Ocean BoL It is used when cargo has to
be sent overseas across seas.
3. Through BoL: This B/L enables the carrier to carry the cargo across different distribution
centers. It can need an inland or ocean BoL
4. Multimodal BoL: It is used in the case where more than one mode of transportation will be
used. Legal Frameworks and Conventions Governing Bill Of Lading Common law regarding the
carriage of goods by sea; The Hague-Visby Rules are applicable ―only to contracts of carriage
covered by a bill of lading or any similar document of title insofar as such document relates to
the carriage of goods by sea‖.
Important Terms in Bill of Lading:
Shipper/Exporter: This information is provided by the shipper. It includes the full name and
address of the shipper/exporter.
Consignee: This information is furnished by the shipper. It includes the full name and address of
the final recipient of the shipment.
Notify Party: This information is furnished by the shipper which has the full name and address
of the party to be notified of shipment status. This may be the consignee or a clearing/forwarding
agent that handles the clearance on behalf of the consignee.

106
Port and terminal operation management lecture note’s

Mode of Initial Carriage: It mentions the transportation mode where the carrier first receives the
goods until the port of loading. This could be any mode of transport like land (truck/train) or
waterway or multiple.
Place of Initial Receipt: It mentions the location where the carrier takes possession of the cargo.
It is mostly the city with the zip code.
Vessel Name: It is the vessel name and voyage number which will be delivering the cargo to the
consignee at the final destination. This is usually the mother vessel that completes the main
journey.
Port Of Loading: This port where the cargo will be loaded on board the ship. Port Of Discharge:
This is the port where the cargo will be arriving.
Point and Country Of Origin: It is the point and country of the shipment origin.
Place of Delivery by Carrier: It is the city where the carrier will be delivering the shipment to the
consignee.
Booking No.: It is a unique number for each shipment provided by the shipper. Bill Of Lading
No.: It is a unique control number to reference the Bill of Lading.
Forwarding Agent/FMC No.: It has the complete details of the freight forwarder and its license
number.
Export References: Reference number is provided by the shipper to identify his cargo internally
in its organization such PO number.
For Delivery of Goods Please Present Documents to: This has the complete detail of the shipping
agent at the destination who handles cargo release.
Domestic Routing/Export Instructions: It is the actual terminal where the cargo will be loaded
onto the shipping vessel.
Freight Payable At: This could be ‗Origin‘ or ‗destination‘ depending on whether freight has
already been prepaid or will need to be paid upon collection at the destination.
Type of Movement: This mentions if it will be Door-to-door or CY/CY or CFS/CFS or CY/CFS
or CFS/CY Marks & Numbers/Container Numbers (information to be provided by shipper):
These are the markings that are on the outer packing of the shipment for identification purposes.
For FCL (Full Container Load), it is the container number, and for LCL (Less than Container
Load), it is the label on the outside part of the carton or the pallet.

107
Port and terminal operation management lecture note’s

No. Of Packages: The shipper provides this number. Again, for FCLs, this will be the number of
containers and for LCLs, this will be the number of packages.
Total Number of Pkgs: The shipper provides a total of packages.
Description Of Packages And Goods: Again, this information is provided by the Shipper which
mentions the description of the packages, the specifics of the commodities to shipped in its
smallest units, the type of packages, and the quantity per package. The shipper also adds the
handling instructions like Fragile/Glass or temperature awareness or up arrow labels or Hazard
labels or special handling labels.
Gross Weight: The total gross weight (kilograms) for each item per line is mentioned by the
shipper. In case of shipping to/from the US, then both kilograms and pounds are listed.
Measurement: For FCL, this information is not needed generally but for LCL, the shipper needs
to mention the dimension of each package being shipped.
Freight Charges: It mentions the full list of freight charges such as ocean freight, terminal
handling, etc. Prepaid: The amount that has been prepaid by the shipper is mentioned in this
section which is the ocean freight price and other extra charges at the origin.
Collect: It is the amount that needs to be paid for cargo collection. If the freight prices has not
been prepaid, then that amount needs to be collected along with the DTHC charges (Destination
Terminal Handling Charges) and other any local charges.
By & Dated: These are the Signature or stamp by the individual representing the shipping line.
Disadvantages of Paper Bill of Lading Though paper BoL serves a very important role in the
shipping industry, it comes with some inherent risks associated with paper system costs,
authenticity, and delay. Let‘s explore each aspect closely.
1) Costs: The cost of paper used for B/L can range anywhere from 5-10% of the total value of
the goods carried each year1 or 15% of the physical transportation costs2.
2) Authenticity: A BoL can be easily forged due to the sheer number of parties involved and the
complex shipping process. This can lead to theft or other illegal things.
3) Delay: BoL is sent using a mail system which is slow compared to the modern transportation
system used for cargo delivery. The carrier can only deliver to the cargo when the consignee
produces the original BoL. In case of the dealy ion receiving the BoL by the consignee, the
carrier has to deliver the goods in return for a letter of indemnity. This adds extra administrative
load on the carrier and the liability still hangs on it. Electronic Bill of Lading Electronic BoL

108
Port and terminal operation management lecture note’s

presents an ideal solution to the disadvantages of a paper BoL but has met some resistance due to
various reasons. But slowly, more and more companies and organizations are adopting electronic
BoL. In 2015, BIMCO, the world‘s largest international shipping association, added an
electronic bill of lading clause to its NYPE 2015 time charter form. The International Group of
P&I Clubs also gave approval for three electronic trading systems: Bolero, e-title, and essDOCS.
Advantages of Electronic Bill of Lading The electronic bill of lading or e-bill has the potential to
addresses many of the drawbacks of the paper BoL system.
1) Electronic BoL is fast. In fact, electronic BoL can be sent instantly via the internet to any
destination which lowers the administrative costs and delays that plague the paper B/L. In the
case of multiple transfers of ownership during the transport, an electronic bill of lading can be
even more effective.
2) In an electronic bill of lading the modifications or corrections can be made very efficiently
and cost-effectively as compared to the traditional BoL.
3) Electronic BoL provides a higher level of security which minimizes any chances of forgery.
The introduction of blockchain has made this system even more secure and unpenetrable by
hackers.
4) As mentioned earlier, paper BoL is very expensive. Electronic BoL saves paper and costs
involved in mailing BoL physically to different locations.
Disadvantages of Electronic Bill of Lading
1) A paper Bill of Lading is a physical document of title which can be negotiated and transferred
as the possession of the boL is proof of title to the cargo. This is not the case so for Electronic
bill legally speaking.
2) Electronic BoL needs to be accepted and adopted by all the parties involved. Therefore, it has
taken time to take off.
3) Electronic and internet-based systems are susceptible to hacks, malware attacks, viruses, e-
theft, and internet/computer outages. Why Is Bill of Lading Important? Particularly related to the
case of a buyer, the bill of lading is used as a document of title. Suppose a buyer is supposed to
receive goods from a carrier. The bill of lading then acts as the document of title for the goods.
Two types of Bill of Lading can be used as a document of title.
 They are straight bill of lading and order bill of lading. Legally, a seller cannot sell
anything that is not solely entitled to him. So if the goods he is trying to sell turn out to

109
Port and terminal operation management lecture note’s

be encumbered, maybe due to mortgage or charge or is stolen property, the bill of lading
will prevent him from being granted the full title of the holder. The Bill of lading can
also be used as evidence of a contract of carriage between a carrier and a shipper.
Basically, when a bill of lading is used as a cargo receipt, it is issued by the carrier when
the goods have been loaded onto the vessel. Conclusion So far the maritime industry has
been reliant on paper. Despite the inefficiency that comes associated with paper bills of
lading the community has shied away from electronic bill of lading (eB/L) which is the
legal functional equivalent of a paper bill of lading, due to their traditional nature.
However, it has been proposed that Block chain technology is the answer to the
necessity for a speedy, hassle-free, and reliable trade transaction.
6.2 Parties in Maritime B/L

110