enhancing port efficiency in malaysia - with abstract (1)

7/28/2019 Enhancing Port Efficiency in Malaysia - With Abstract (1)

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ENHANCING PORT EFFICIENCY IN MALAYSIATHROUGH TECHNOLOGY APPLICATIONS

Mohd Hafizzuddin Md Damiri*

Abstract

As throughput volume grows each year, terminal operators are faced withcontinuous increase in demand for storage space which they have difficultyaccommodating due to physical constraint on space. Reduction in free time is theonly way forward to cut down the idling time of containers and cargos in terminalsfor both imports and exports. Import declaration process need to be simplifiedand pre-clearance obtained prior to discharge of consignment to terminal in orderto accommodate the reduction in free time in container yards to maximum

international standard of 3 days. The use of innovative technology applications tofurther deliver significant enhancements in efficiency and service customization isneeded to facilitate cross-border operations, where Malaysia envisions becomingthe regional logistics hub in Asia, should implement solutions to integratetechnologies required to realize a seamless logistics systems.

Keywords: port efficiency, application of technology, efficient managementsystem, logistics and supply chain, port management.

Container terminal management

Management of container terminal operations is essentially the allocation andscheduling of the expensive resources such as berths, quay cranes, storagespace, yard cranes and container carriers. Each of these resources plays anindispensable role in the interlocking processes in a container terminal. Inadvanced countries, they focus their attention on yard management, since theoperation on storage yard is the most complicated part at the terminal where bothinbound and outbound container flows are handled in this area simultaneously.

________________*the writer is currently pursuing a PhD. in East Asian Studies at the University of Malaya,Malaysia and attached with the Public Service Department (PSD), Malaysia. Paper prepared forthe Malaysian Logistics Council (MLC) in Kuala Lumpur, Malaysia 7 January 2008.

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In Malaysia, container yards are limited in space, since most of the yards arelocated within the ports proximity. Containers inbound and outbound, coupledwith inefficiencies with clearance procedures, further contribute to delays intransporting goods to consignees. Recently, Malaysia has made the move toreduce the period for free storage at ports from 5 to 3 days. This bold effort,

which is supposed to be effective on 1 July 2008 and has been differed to beeffective by 1 January 2009, has sparked numerous concerns on the logisticsindustry and the whole logistics supply chain. Reasons being were toweaknesses within the logistics supply chain, other government agencies(OGAs) not operating on 24-hour basis, and financial institutions, consignees andshipping agents are not operational on weekends and public holidays.

Recent trends have made significant changes and impacts in the maritimeindustry. Fearing of terrorist attacks, acts of saboteur and safety and securityreasons have led countries to implement harsh rules and policies towardsclearance of containers. To make matters more complicated, congestions at

ports in major importing countries have made it difficult to ensure goods reachthe importer just-in-time. It has forced importers and exporters to maintain higherlevels of inventories.

Security consideration has also increased logistics costs, particularly after theSeptember 11 incident. The US in the last 5 to years had implemented, first theContainer Security Initiative, later the Megaports Initiative and lately the FreightSecurity Initiative, all of which imposes additional obligations on shippers forclearance and pre-clearance before the goods are shipped. This has furtherhinder the efficient process of clearing containers at major ports in the world,contributing to much delay and problems to the logistics supply chain.

Establishing an efficient port system

Advanced countries have implemented various systems and relieve certainpolicies to reduce clearance time of containers. They recognized that logisticsenterprises cross-border operation plays an important role for establishment of amore efficient logistics system and have made efforts for improving policyenvironment for logistics enterprises. These countries continue to make efforts tofurther increase efficiency by improving complicated governmental proceduresand regulations as needed.

Malaysia can achieve similar feats by emulating the successes of theseadvanced countries, through the rapid use of technology. Malaysia should alsorealized that it strongly needs to establish a logistics information network system,with which both the government and private companies can access logistics-related statistics, applications, online processes, data and other informationservices to effectively inter-connect logistics network. Therefore, the followingsuggestions to make Malaysian ports more efficient and reliable are outlined forconsideration.

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(i) Tag System/RFID Flow-through Gate System

It is a vehicle RFID on-board unit that works to allow user to drive-throughthe receiver gantry without hassle, by transmitting information between the

device and the entrance/exit gantry system via infrared at the dedicatedlane at ports. The system can detect a vehicle as fast as 40 millisecondsand vehicle throughput is 4 times faster than manual clearance lane.

RFID tags come in three general varieties: passive, active, or semi-passive (also known as battery-assisted). Passive tags require no internalpower source, thus being pure passive devices (they are only active whena reader is nearby to power them), whereas semi-passive and active tagsrequire a power source, usually a small battery.

To communicate, tags respond to queries generating signals that must not

create interference with the readers, as arriving signals can be very weakand must be differentiated. Besides backscattering, load modulationtechniques can be used to manipulate the reader's field. Typically,backscatter is used in the far field, whereas load modulation applies in thenearfield, within a few wavelengths from the reader. For example, once acontainer is unloaded from the ship for temporary storage, pre-clearancewill be done simultaneously through the Electronic Port Clearance (EPC)system by the calling ship before entering the point of disembarkation (i.e.port of call).

Hauliers and containers exiting the port or free zones can be immediately

cleared electronically. Like SmarTAG system at highways, hauliers andcontainers are fitted with RFID devices and when they pass through thegantry at the entrance/exit points, where containers with pre-clearanceauthorization can be delivered to consignees.

(ii) Electronic Port Clearance

Before a ship can enter a foreign port, a significant amount of paperworkneeds to be done. Several reports and forms have to be sent to, amongothers, the port itself, port state authorities, customs, immigration, healthauthorities and military authorities.

At least 25 documents have to be sent from the ship or the ships agent, inconjunction with a port call. This does not include documents related toservices in port such as cargo on- and off-loading, waste disposal andordering of supplies, nor documents related to customs clearance of thecargo.

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The data requested in many of these documents are fully or almostidentical. As an example, in one port, four different documents withidentical content had to be sent to four different parties. The problem isfurther increased by different countries and even between ports in thesame country. Documents are also often in paper or other non computer-

compatible formats. This requires shore organizations to manually enterthe data into their data systems, which is a time-consuming and costlyaffair.

In addition, it increases the risk of incorrect data entering the systems orthat the wrong forms are sent at the wrong time and thus may causesafety and security problems, as well as increasing the risk ofunnecessary detentions and inspections of the ship.

Advanced countries have adopted the electronic port clearance system.Most European ports have implemented the SafeSeaNet (SSN) system

which facilitates information exchanges between port state authorities andother relevant government agencies. SSN is used to increase safety ofshipping and improve security. In Poland, ports have implemented thePortNET system, which is one of the most extensive single-windowelectronic port-clearance systems in regular operation today. This systemcan handle most of the documents related to ship and consignmentclearance. All this is done through standardized messages and a singleelectronic portal.

If Malaysia could emulate the successes of these systems, the currentSMK-DagangNet system could be revitalized and will reduce Malaysian

ports turnover time and increase efficiency in clearance of containers andcargos.

(iii) Nationwide E-commerce System

Most major ports in the world require seamless integration andinterconnectivity for efficient clearance, delivery and processing containersand cargos to businesses. With technology in place, businesses are ableto connect the whole logistics supply chain to the world.

Malaysia, through Northport and Westport in Port Klang, is the majorgateway for goods in containers or cargos to be shipped in and out,transshipped or break bulk. By setting an example to implement anadvanced computer systems, Malaysian ports can improve services inadvance of customer demand. The ports, therefore, has the flexibility toadapt software to specific customer requirements and the expertise tocreate packages in an ongoing program to develop and keep abreast ofadvances in electronic data interchange (EDI).

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Japan and Korea have adopted a strategy to provide secure, reliable,faster and more efficient services for the processing of businesstransactions with all its customers, suppliers, Free Zone companies andgovernment agencies. They operate with fully equipped, sophisticatedsystems, high bandwidth networking infrastructure and support staff with a

commitment to embracing new technologies that will increase efficiencyand productivity.

Both countries operate two major data centers, one at the port and one atthe customs headquarters. They are connected by high-speedcommunications lines to form a network. In the event of a failure ordisaster at one site, the user community can be switched to the other site.In essence, each site is a backup for the other, while supplying processingcapability at each of the two ports. Additionally, these countries also run adata center at their respective container terminals to support theoperations there.

These two countries implemented several technological systems servicesto facilitate the businesses, as follows:

(i) Container Terminal Management System

This system covers business requirements such as cranebookings, marine, berth and yard operations, containerinventories, activity planning and financial billing. Real timedata from this system is used for producing voyageschedules and other statistics on the Internet. The system

facilitates an integrated inter-port transfer of containersbetween ports within countries. The system is in compliancewith ISO standards and UN location codes.

(ii) Synchronous Planning and Real-time Control System

SPARCS complements the CTMS for ship and yard planningusing expert systems. It also supports equipmentscheduling, dispatching and execution of planned jobs.Utilizing state-of-the-art Global Positioning System (GPS)technology for pinpoint accuracy in locating containers, itproduces a graphic tracking display of container movementsanywhere in the terminals and distributes the information toMobile Data Terminals in every container handling vehicle inthe port.

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(iii) Smart Rail System

This system is based on Digital Global Positioning System(DGPS) which facilitates the operation of the Rubber Tire

Gantry (RTG) cranes currently in use in the terminal andensures that container positioning within the yard can beeffectively accessed automatically and immediately. Theleading technology also facilitates the automatic steering ofthe RTGs as they traverse the yard en route to their nextlocation. Each RTG is fitted with a DGPS antenna and givena correct signal from a base station located at the cranesection. This method ensures accuracy within 20mm.

(iv) Container Freight Station System

The system computerizes the entire operations of the stationincluding receiving containers, un-stuffing, segregation andpalletizing, storage and delivery to customers. Offeredmainly for Landing Craft Logistics (LCL) consolidators, itprovides for the tracking of consignments from receipt todelivery, quick responses to queries, better turn around timecargo delivery and accurate statistics. CFSS also feeds backcargo information to Manifest and Documentation System(MDS) to enable fast and accurate document clearance inthe Documentation Station.

(v) Electronic Documentation and Manifest System

Shipping lines and agents will use this system to transmitcargo manifest details, where 100 percent data is processedelectronically. The data will also be interfaced with Customsfor processing Bill of Entry and Delivery Order which hashelped eliminate input errors and waiting time.

(vi) Financial Management System

Being an enterprise-wide system, the system is beinginterfaced with all major vertical applications. The system isdesigned to be web enabled, employing state-of-the-artthree-tier network computing architecture.

(vii) Commercial Management Information System

This system provides port management and customers withup-to-date volumes and trade data information, which assists

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planning and decision making. CMIS is installed atcustomers sites to provide unlimited access to theirstatistical data.

Benefits

The benefits of removing non-trade barriers can be substantial. Variousresearches indicated that the trade benefits of improving port efficiency and thecustoms environment in Malaysia can be several times greater than the tradeeffects from reducing tariff barriers. Improvements in trade-facilitation measures,such as harmonization of customs procedures and systems, can yield benefitssimilar in magnitude to those of non-tariff barriers.

The initial port efficiency level in Malaysia is much lower, and hence theimprovement is greater; since the port efficiency levels of Singapore and Jakartaare much closer to the worlds average, the improvements are seen greater than

ever. Similar patterns are seen for improvements in customs environments increases in trade are greater for countries that initially had lower levels ofefficiency. Clearly, therefore, a significant advance can be achieved by simplyimproving procedures, before even getting into the lowering of tariffs and theremoval of non-tariff barriers.

Conclusion

Instead to always compare with Singapores PSA, in terms of competitivenessand efficiency in Southeast Asia, Malaysia should look towards emergingeconomies and development of their ports and infrastructure, such as Thailand,

Viet Nam, China and India. These countries are rapidly moving and takingmeasures such as separating regulator and operator functions, corporatization,investment and cooperation, mergers and acquisitions, branding and marketing,development and so forth, to become a brand known within the region.

Most major ports of the world have a well-developed hard infrastructure in termsof the number of container terminals, container berths, cranes and adequatestorage facilities, and the quality and effectiveness of the cranes, port/inter-portinformation systems, approach channels and sophisticated inter-modal transportsystem. For soft infrastructure, skilled port management and the provision of awide range of port-related and ship related services are very effective. Renownedports have adopted a remuneration system that encourages high productivity andcooperation, rather than confrontation, from port workers. By tying remunerationto performance, the system encourages high productivity and dedication.

By having adequate hard and soft infrastructures, Malaysian ports in PortKlang and Tanjung Pelepas will increase the level of competition from itsneighboring ports and grow influence to shipping lines to establish their regionaloffices. It will also allow ports in Malaysia to lower its charges at the domestic

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front while at the same time, pursuing ventures in port management in othercountries. However sweet it may sound, Malaysian ports will still face challengeswhich other ports in the region do not, in this increasingly competitive portenvironment.

At the same time, the need to have several e-service providers will ensurehealthy competition and will give options to users and logistics operators tochoose the best service that money can buy and more bargaining power to them,instead of monopolization and ineffectiveness which will burden the industry dueto high inefficient operating costs.

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