According to the modern concepts, there are three stages of port development, which are determined by port development policy and strategy, differences in the method of approach, scope of the ports activity and expansion level, and the ports activity integration level.
(a) The First generation port
Until 1960, ports played a simple role as the junction between sea and inland transportation systems. At that time, the main activities in the port region were cargo handling and cargo storage, leaving other activities extremely unrepresented. Such a way of thinking severely influenced related persons in the government and local administration. Also, it even influenced persons related with the port industry, so it was considered that it was enough to develop and invest in only port facilities, as the main functions of the port were cargo handling, storage and navigation assistance. It was for these reasons that important changes in transportation technology were neglected.
(b) The second-generation ports
The second-generation ports are those built between 1960 and 1980, and had a system comprising of government and port authority, so the port service providers could understand each other and cooperate for mutual interests. The activities in these ports were expanded ranging from packaging, labeling to physical distribution. A variety of enterprises have also been founded in ports and hinterlands. Compared to first-generation ports, the second generation ports have a characteristic that freight forwarders and cargo owners had a tighter relationship. We can say that the second-generation ports had begun to notice the needs of customers, but when it came to keeping a long-term relationship with customers, they took a /passive attitude.
(c) The third-generation ports
From 1980, container transportation has been developed quickly, and the new intermodal transport system emerged. The activities of production and transportation have linkage to form an international network. The former services function has been enlarged to include logistics and distribution services. The environment protection facilities are becoming more important, so the ports are developing closer relationships with those in their surrounding neighborhoods. Compared to the past, todays port authorities are focusing on efficiency rather than effectiveness. In the third-generation ports, the needs of customers were analyzed in detail and port marketing has been actively engaged.
The changing role of ports: from traditional services to value-added logistics services
These days, the commercial success of a port could stem from a productivity advantage in traditional cargo-handling service, from value-added service, or from a combination of the two. Productivity advantages come mainly from economies of scale and economies of scope, suggesting that the most productive ports will be those that are equipped to handle large cargo volumes and/or significantly reduce unit costs through efficient management. Shippers and carriers select individual ports not only based on their cargo handling service capabilities, but also on the benefits they are capable of delivering. Unless a port can deliver benefits that are superior to those provided by its competitors in a functional aspect, port customers are likely to select ports based merely on price. This fact raises the question of how a port can achieve value differentiation. In the 1970s, almost every port provided the same basic package of services to almost every customer.
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Nowadays, however, it is more difficult for ports to compete on the basis of cargo-handling service. There has been a convergence of technology within cargo-handling service categories. This means that though new technology may sometimes provide a window of opportunity for productivity improvement, in many cases that same technology is also available to competitors. It is no longer possible to compete effectively on the basis of basic, traditional functions. Thus, there is a need for ports to seek out new means of gaining a competitive edge.
The late 1980s saw the emergence of major changes. Customers began to ask ports to provide a greater variety of services. Providing value-added services is a powerful way for ports to build a sustainable competitive advantage. Shippers and port customers are becoming increasingly demanding. Customers now tend to look at value-added logistics services as an integral part of their supply chain. As a result, ports must attempt to satisfy these needs by offering differentiated services. This poses a particular challenge for port management. Studies show that the most successful ports are those that not only have a productivity advantage in cargo-handling services, but that also offer value-added services.
Answer the questions:
1. Name three stages of port development.
2. What were the main activities in the region of the First-Generation port?
3. Why were important changes in transportation technology neglected in the time of the First Generation port existence?
4. What time did the Second-Generation ports appear? What activities did they include?
5. Comparing to the First-Generation ports, what were the Second Generation ports characterized by?
6. What are the distinctive features of the Third-Generation ports?
7. Are todays port authorities focusing on efficiency or on effectiveness?
8. What place do the needs of customers have in the port marketing nowadays?
9. Why is there need these days for a combination of traditional cargo-handling service and value-added service?
10. What are the most successful ports nowadays according to the fulfilled study?
11. What can you say about evolution of port function?
