Portfolio of port-centric supply chain disruption threats

• Pages: 1368-1386
• DOI: https://doi.org/10.1108/IJLM-09-2016-0208
• Date: 13 November 2017
• Published date: 13 November 2017
• Author: Hui Shan Loh,Vinh Van Thai,Yiik Diew Wong,Kum Fai Yuen,Qingji Zhou
• Subject Matter: Management science & operations,Logistics

Portfolio of port-centric supply

chain disruption threats

Hui Shan Loh

Centre for Infrastructure Systems, School of Civil and Environmental Engineering,

Nanyang Technological University, Singapore

Vinh Van Thai

School of Business IT and Logistics, RMIT University, Melbourne, Australia

Yiik Diew Wong and Kum Fai Yuen

School of Civil and Environmental Engineering,

Nanyang Technological University, Singapore, and

Qingji Zhou

Maritime Institute, Nanyang Technological University, Singapore

Abstract

Purpose –The purpose of this paper is to provide a risk assessment of port-centric threats that may have

adverse effects on supply chain continuity from the perspectives of port operators and port users, thereby

determining the significance of these threats to supply chain disruptions.

Design/methodology/approach –Drawing on literature review and reported cases, 19 port-centric

disruptive events were identified. Subsequently, surveys were conducted to collect data from 102 port

operators and 123 port users worldwide on the frequencies and consequences of the identified port-centric

disruptive events. Risk matrices were then generated to compare the perspectives of port operators and

port users.

Findings –The results show that threats related to the planning of port resources require the highest level of

attention. This highlights important areas for port managers seeking to improve port resilience and supply

chain continuity through a more prudent management of risks.

Research limitations/implications –The results help port managers understand where they should

establish strategic capability to increase port resilience and enhance sustainability to benefit port users.

However, the study could be further enhanced by evaluating the threats based on different regions of ports

and port users and making recommendations for port operators to undertake.

Originality/value –The findings of this pape r are significant as they provi de an analysis of data gathered

from international po rt operators and port use rs. Risk matrices have be en widely applied in many

industries, yet no stud ies have been conducted to develop a po rtfolio of port-centric risks a t a scale as large

as this paper.

Keywords Risk management, Port management, Port resilience, Port risks, Disruption management,

Risk matrix

Paper type Research paper

1. Introduction

The current trends of supply chain integration and globalization have resulted in the

proximate interactions and relationships between a port and its peripherals. The significant

role of ports in supply chains enhances awareness of port risks and concerns regarding port

resilience. In other words, the effect of a disruptive port event or operation can be felt by

supply chain entities. In this paper, disruptive events originating from ports that bringabout

supply chain disruptions are referred to as port-centric supply chain disruptions(PSCD). Port

operationswith deficiencies that potentiallyresult in supply chain disruptionsare hence called

PSCD threats. Supply chain disruptions cause adverse effects on firms’profitability and

reliability (Blanchard, 2006), hence it is necessary to identify disruption causes that originate

from port operationsto minimize the impact of disruptions, especiallyconsidering the fact that

ports are increasingly integrated into the supply chains (Pettit and Beresford, 2009).

The International Journal of

Logistics Management

Vol. 28 No. 4, 2017

pp. 1368-1386

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-09-2016-0208

Received 10 September 2016

Revised 15 December 2016

30 January 2017

Accepted 31 January 2017

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

1368

IJLM

28,4

The identification of PSCD threats contributes to the logistics industry by increasing

port resilience and ensuring business sustainability. The purpose of studying PSCD threats

from the perspectives of port operators and port users is to ensure rigorous risk assessment

and engender a more operationally realistic view. As port users are directly affected by port

disruptions, their perception of the threats offers valuable insights on how resources should

be allocated to manage the threats. The gaps between port operators’priorities and their

customers’expectations will also be revealed accordingly. Therefore, this paper aims to

study the magnitude of PSCD threats on supply chain disruptions through examining the

frequency and consequences of these threats. The paper is organized as follows. First,

related literature is reviewed to reveal the research gaps. Next, the process used to collect

data for this study is described, justifying the methods employed and detailing the

procedures. The results are then presented in the form of risk matrices showing a

comparison of the threats from both port operators’and port users’perspectives. The paper

then concludes with implications, limitations and directions for future research.

2. Literature review

2.1 Relationships between ports and supply chains

The changing role of ports in the supply chains has been explored widely. Traditionally,

ports were less engaged in hinterland integration and cooperation with the port community.

Pettit and Beresford (2009) and UNESCAP (2002) compared the different stages of port

evolutions, detailing the changes experienced in their transformation into logistics hubs that

are increasingly integrated into supply chains. The characterization of ports now includes

delivering and capturing value in value-driven chain systems (Robinson, 2002); facilitating

the links amongst interacting parties or becoming hubs where value is generated through a

whole range of activities for the purpose of customer retention (Perez-Labajos and Blanco,

2004); re-strategizing into an agile port (Paixao and Marlow, 2003); and being a knowledge-

based global supply chain management center (Wang and Cheng, 2010). However,

challenges also emerge with higher levels of integration (Carbone and De Martino, 2003).

These challenges are in the form of fear of losing control in service provision (Notteboom,

2008); absence of synergies (Bichou and Gray, 2004); unwillingness to foster partnerships

(Notteboom, 2008; Van Der Horst and De Langen, 2008); absence of contractual relationships

with partners (Robinson, 2007; Pallis and Vitsounis, 2011) and discrepancies in expectations

of port authorities and port users (Pallis and Vitsounis, 2011).

The changes in supply chain trends and practices lead to higher port integration. Prominent

changes in supply chain trends such as focus on economies of scale, outsourcing, globalization,

agile logistics, cost rationalization and switching to e-business (Waters, 2007) have an impact on

ports. These trends would result in larger vessel sizes and capacities, port traffic growth, cargo

growth but they could also expose ports to greater scope of vulnerabilities and operational

uncertainties, thereby introducing implications for a port’s new role in supply chains.

These implications are emerging areas of research, including multi-modal connectivity

(Robinson, 2002; De Langen and Chouly, 2004); integration initiatives (Notteboom and

Winkelmans, 2001; De Martino and Morvillo, 2008); value-added services (UNESCAP, 2002);

agility and adaptability (Paixao and Marlow, 2003); information exchange and communication

(Panayides and Song, 2009); port security (Bichou, 2011); and port efficiency (Tongzon, 2009).

The roles and responsibilities adopted by integrated ports demonstrate the intimate relationship

between ports and supply chains. Hence, the implications of ports’roles in supply chains offer

insights to the probable impact of port-centric drivers of disruptions.

2.2 Port risks and their effects

Commonly discussed port-centric operational problems are port accidents (Darbra and Casal,

2004; Pinto and Talley, 2006), port equipment failures (Mennis et al., 2008; Gurning, 2011),

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Portfolio of

PSCD threats