Functional Types of Port Centric Logistics

Functional Types of Port Centric Logistics

The first functional type illustrates the standard export-oriented paradigm, where the container port is the pivot for an export-oriented platform. This is particularly prevalent in East Asia, where offshoring has substantially influenced port development towards the setting of large manufacturing clusters. First-tier port-centric logistics are dominantly focused on the consolidation of loads and container stuffing. Since there are more exports than imports (in addition to the different composition of imports versus exports), an important component of first-tier logistics is the repositioning of large pools of containers between importers and exporters, many of which being empty. Second-tier logistics are oriented along with manufacturing activities, having a close relationship with the port to provide for their inputs (parts) and outputs (finished products).

The second functional type of port-centric logistics is the least common but represents a value proposition in a global economy where the importance of connectivity is increasing. It relates to major transshipment hubs as intermediary locations that connect deep sea and feeder shipping networks. Notable examples include Dubai, Singapore, and Panama. Under such circumstances, the port becomes a distribution platform servicing a region by stocking parts and finished goods, assembly and customization services, and light manufacturing. New forms of interactions can also occur, particularly when maritime and air cargo operations are jointly used in supply chain management. The joint connectivity of both air and maritime networks creates multiplying effects since there are additional sourcing and distribution options through air/maritime transloading.

The third functional type of port-centric logistics is import-oriented, which is common in North America and Europe. Since the import of retail goods dominates, first-tier port-centric logistics rely on container destuffing and the deconsolidation of loads for specific distribution centers. Like export-oriented platforms, there is an active container repositioning market trying to reconcile inbound and outbound logistics. Transloading is also an important logistics activity with the contents of container load units transferred into domestic units, such as between 40-foot ISO containers and 53-foot domestic containers in North America. Since inbound logistics has a significant retail orientation, second-tier port-centric logistics involves assembly and customization and various forms of distribution, such as fulfillment and postponement.