The quest for performance measurement has always been a key issue for ports. Port managers, whether port authorities or terminal operators, need to organise complex processes in an efficient and effective way in order to find the best ways to capture value for their customers and address the concerns of stakeholders.
For many, port performance has been associated with operational efficiency alone. Physical quantities of items used, levels of effort expended, scale or scope of activities, and the efficiency in converting resources into port services have always captured centre stage. Indicators like berth occupancy, revenue per tonne of cargo, capital equipment expenditure per tonne of cargo, vessel turn-around time and number of gangs employed have been used for decades as means to benchmark current performance against prior-year performance and against competitor performance, so as to deliver efficiency objectives.
However, improved efficiency does not necessarily lead to improved competitiveness, for competitiveness is also a product of effectiveness in delivering desired services to both customers and users. If a terminal operator wishes to improve its cargo-handling efficiency so as to improve berth utilisation through faster vessel turnaround, it may also improve its effectiveness as vessel time at berth decreases and the customer may be more satisfied with the shipping line’s performance. However, if that terminal operator improves its asset utilisation by leaving more vessels at anchor so as to minimise its own downtime, its asset utilisation is improved but the customer’s service expectations may not have been met. In this case, efficiency has come at the expense of effectiveness.
The importance of measuring perceptions
Stakeholders’ perceptions of the ports they use are increasingly vital for correcting both operational and governance flaws that the port’s network might experience. Measuring users’ perspectives helps managers to understand the current situation and eventually address issues so as to improve experiences with the port. Insight into what is most important to a port’s users provides managers a two-pronged tool: firstly it assists ports in setting priorities, e.g. pointing out areas needing the greatest investment for improvement (against those where investments are less effective); and secondly, it identifies those areas where a port already delivers value, and therefore the port could benefit from marketing initiatives to raise awareness.
In the supply chain world, this is not an easy task. Effectiveness is related to the objectives of those users seeking it. Port user groups might rate a port’s effectiveness in service delivery differently, i.e. a port that is rated highly by the shipping lines may score poorly when rated by cargo owners or its own supply chain partners, or vice versa.
Effectiveness measurement in practice
Not surprisingly, port authorities and others increasingly acknowledge the importance of measuring the effectiveness component of port performance in the supply chain. In recent times, on both sides of the Atlantic, we were invited to develop tools that will lead to such measurement.
In September 2013, European ports, via the European Sea Ports Association (ESPO), associations representing port users (shipowners, shippers and their agents), and port service providers (terminal operators, pilots, tug operators) joined academics to undertake a multi-year project that will develop and pilot test the measurement of port users’ perceptions.
As part of a wider project targeting the monitoring of the European port sector called PORTOPIA, European ports and port policy makers aim to identify evaluation criteria of port services that are most important to different groups of port users and to evaluate which of these criteria different user groups use to determine whether a port’s performance is effective in meeting their needs. In the long-run, the actual measurement of how different users evaluate the port(s) they use will provide useful data on the performance of European ports as seen by user groups and the opportunity to interpret the data for performance management.
Lessons from North America
The process of finding the right user indicators for port effectiveness began in 2008. Following a pilot implementation that examined Canadian users of three Canadian and two US ports, the second pilot moved solely into US territory and examined service delivery effectiveness for American users. The final phase was implemented through the AAPA Customer Service Initiative, and collected user evaluations of the performance of seven North American container ports, each with more than 250,000 TEU in volume.
Participating ports supplied user lists for direct solicitation of users, and two surveys were developed, one for the East Coast with four East Coast ports listed and one for the West Coast with three ports listed. The team at Dalhousie University completed the work in December 2012, with the input of over 200 port users – 39 shipping companies and 48 supply chain partners and 119 cargo owners or their agents provided their insights based on their experiences with port service.
Each port participating in the study received (from the research team) a confidential report with the results for each of their user groups. Their individual results were framed in a Determinance / Importance-Performance Gap Spacei to explain to ports (and in particular the management team) the meaning of what respondents said in a way that is easily understood and provides actionable data for developing strategic plans for investment and marketing.