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SHIPPING CARRIERS PREFERENCES ON PORT SELECTION: A LITERATURE REVIEW

Abdullah Saber Alkhambashi King Abdulaziz University Supervisor: Muhammad Subhan Ishak

Introduction

Ports are essential features of international transportation

Essential to the global product supply chains

Links sea and land transpiration

Recent changes in containerization and supply chains that are stimulating global commerce

Ports are challenged to provide the best cargo handling practices and services to attract many shippers to their ports

Ship specification, operating cost, level of traffic at the port, and the value-added benefits offered to the shippers are factors affecting decision on import and export of cargo

Survey results from regional shippers are used

Ports are very important features in international maritime transportation and global product supply chains presently as they provide an opportunity for the sea to connect with land transportation. However, with recent changes in containerization and supply chains that are stimulating global commerce, ports are challenged to provide the best cargo handling practices and services to attract many shippers to their ports and add Value to the shippers and carrier owners. The decision to choose a preferred port for export and import cargo depends on many factors that include ship specification, operating cost, level of traffic at the port, and the value-added benefits offered to the shippers, among others. Therefore, this graduation project focuses on the factors that shippers and career owners consider when making their preferred port destination. The dissertation uses survey results from regional shippers using Jeddah that ship L.C.L. cargo that carries hazardous and non-hazardous cargo and full containers from Europe east cost to Saudi Arabia. The study was done using Analytical Hierarchy Technique and the participants' comparative scores in which the main factors that influence shippers' port preference are prioritized. A discrete choice model based on alternative factors offered by port authority is used to assess shippers' decisions based on the various shippers and port characteristics. Findings from the study revealed that ship specification, operating cost, level of traffic at the port, and the value-added benefits offered to the shippers affect the decision of the shippers on a preferred port.

Research objectives

Investigation of primary factors that influence the choice of shippers of a specific preferred port.

Development of a decision-making model as they are selecting their preferred port.

Crafting the necessary recommendations of the port of Jeddah authority about the best port management practices hence official are made to understand some of the available factors considered by shippers when selecting the various ports.

Just like it is the case of other academic endeavors, students and researchers conduct research in a specific field to achieve desired objectives. The current study was conducted to achieve three main objectives. Firstly, the study was done to investigate some of the main factors influencing shippers' choice of a preferred port (Lam & Dai, 2012). This will be achieved through the analysis of the four selected factors to provide an understand of how they are of benefit to the shippers.

Secondly, the study was done to develop a decision-making model that can be adopted by the shippers to make a decisions when selecting their port of choice (Lam & Dai, 2012). Finally, the study was conducted to craft recommendations to Jeddah port authority on the best port management practices and help the officials understand some of the factors that shippers consider when selecting a port of their choice. The benefits of making the right port selection to the shippers are also elucidated in this study through a review of the literature. The explained benefits relate to the four selected factors: the cost of operations, level of traffic at the port, subsidies, and other benefits offered to the ship owners, and ship specifications.

Research questions

Central questions exist that guides the research being conducted

What are the major factors that the shipping carrier considers when selecting a preferred port?

How can shippers use multiple objectives decision analysis with a value-focused thinking model to make the port selection?

The current research will be guided by a central question, divided into two sub-questions for the easy analysis of the findings.

What are the major factors that the shipping carrier considers when selecting a preferred port?

How can shippers use multiple objectives decision analysis with a value-focused thinking model to make the port selection?

Significance of the study

Essential to facilitate the management regarding maritime ports within Saudi Arabia alongside Jeddah port

Contribute to the existing literature on the considerable factors on the appropriate port to work with

Saudi Arabia is the leading oil-producing company and exports to various countries in the world

The export is the leading GDP for the government hence should improved

Saudi Arabia is among the middle east business hub

It is a member of the world trade organization implying that it implies that the countries is trading with other countries

The study gives information filing the gap left by other past researchers

In a country where shippers' behaviors literature is limited, the current study is significant to the management of maritime ports in Saudi Arabia apart from the identified Jeddah Port. The study will contribute significantly to the available literature on some of the factors that shippers consider when deciding which port to work with or dock. Saudi Arabia is one of the leading oil-producing and exporting countries in the world (Lam & Dai, 2012). The export of oil and oil products remains the leading source of G.D.P. to the government and needs to be enhanced. In this perspective, it is important to ensure that the country's major ports are functional and preferred by many shippers.

Similarly, Saudi Arabia is considered a Middle East business hub with most of the companies that import and export products to other countries, and something requires the ports within the country's waters to be effective and attractive to the shippers. Saudi Arabia is a member of the World Trade Organization (W.T.O.), meaning that the country trade with different countries, strengthening the importance of ports. It is through ports that export goods leave the country and import goods enter the country. Export and imports contribute 33% and 29% of Saudi Arabia's G.D.P. respectively hence stressing the importance of effective port management.

Several preceding studies in this industry have made efforts to understand a shipper's port choice selection criterion. Still, the complexity and dynamic nature of the international trade and logistics industry have kept this area an ongoing research subject. This study will, therefore provide literature that is required to fill the gap left by ongoing studies in this area of maritime transportation study. Although this area of maritime transport has received high concentration and attention in the recent past, the findings of the study will add Value to available literature concerning timing, analysis of the literature, and the subject, and interpretation of the results. To effectively analyze the selected factors that affect the decision on choosing the preferred port, the paper is present in the form of different decision-making factors in port selection criteria.

Limitations of the study

The study encounter several limitations just like other studies do

The sample size was on based on the area investigated and not the entire nation

Insufficient factors investigated as shippers are considering numerous factors when it comes to selection of the most preferred port

Methods for data collection was much sufficient

Researchers’ presence can influence the answers obtained from the respondent

Time became a limiting factor hence a narrowed study

The pandemic affected the study

Like other studies that have been done in this field or area, the current study encountered some limitations, which may have negatively impacted the reliability and validity of the study findings. The first limitation in the current study is that the sample size was insignificant based on the area of investigated coverage. Similarly, the number of investigated factors was insufficient since shippers consider many factors when selecting the most preferred port. Similarly, the other limitation of the study is the method used to collect data from the respondents.

Similarly, the presence of the researcher may have influenced the answers that respondents gave. Time was another notable limitation in this study since the work was needed within a specified time limit. Limited time may have contributed to the narrowed study, which investigated only four factors out of many hence negatively impacting the study findings. Another limitation of the current study was the pandemic we are in the the moment; it makes it hard to do an interview with the workers in the field to take direct information from them. So the pandemic impacted data collecting process hence limiting the study.

General concept

Numerous factors exist that facilitate decision making when shippers are considering port selection

The number of ship calls has been a factor that has been explored by different scholars

Traffic level becomes another essential factor that shippers consider

Ship specification is vital when choosing destination port

Cost of operation is another key factor

The factors are discussed to provide information

Several shippers are considering their safety alongside depth of harbor and others like accommodation

Theories designed to ensure operation of marine ports are also discussed

(Aronietis, Van de Voorde & Vanelslander., 2010, July).

There exist a relatively large number of studies that have focused on investigating some of the factors that shippers consider when making a port selection. Most of the factors that are considered are relative to the efficiency and shipper preferences, although these factors are not modeled or preferred simultaneously (Chou, 2010). Different scholars have focused on different factors throughout their studies, but something that has retained its identity in these different studies is the aims of the shippers' preferences. The number of ship calls has been a factor that has been explored by different scholars (Kurt et al., 2015). The level of traffic at the port has been identified as one of the main factors that shippers look at when selecting a port to work with. Similarly, other port authority offers to the shippers are another important factor that has been explored in the literature to present. Apart from the two leading factors, ship specification is also a very important factor to consider when choosing your destination port. Finally, the costs of operations at the port are one of the main factors that shippers consider when making their preferences.

Whereas these factors as mentioned earlier dictate the preferences of the shippers, few studies have been done to explore how they contribute or affect shippers at the port. Studies have also shown that most of the shippers consider their safety, depth of the harbor, and other factors such as accommodation, road network, and others when choosing their preferred port. This section explores some of the literature that has been published on this subject (Kurt et al., 2015). The section will explore four main factors that the researcher identified as the most important to consider when choosing a port of destination and will use Jeddah port as a case study. The section will also explore some of the issues that shippers or port employees face, which negatively impact port efficiency (Kurt et al., 2015). The section will also explore some of the theories that have been designed for operations of marine ports, and finally, the section will provide a summary of the main issues discussed or explored and the possible study conclusion based on the literature review synthesis.

General concept

Jeddah port

Saudi Arabia is one of the countries that lie along the Arabian Peninsula, and it occupies the largest part of this peninsula

The country is situated in the western part of Asia and borders U.A.E., Oman, Kuwait, Jordan, Iraq, Qatar, Bahrain, and the red sea

It is the lead trade hub in western part of Asia

Jeddah contains the largest seaport in Saudi Arabia

It contributes to the economy of Saudi

The second largest natural port and the busiest one found in Arab countries.

Saudi Arabia is one of the countries that lie along the Arabian Peninsula, and it occupies the largest part of this peninsula. It is a country located western part of Asia, and it borders U.A.E., Oman, Kuwait, Jordan, Iraq, Qatar, Bahrain, and the red sea (Ali et al., 2011). Jeddah port is strategically located along the red sea coast along with latitude 21° 28' N and longitude 39° 10' E, as shown in figure 1 below. Saudi Arabia is a leading business partner in the region and internationally because of its strategic location. It is also a member of the World Trade Organization (W.T.O.) (Zahran et al., 2017). As one of the leading trade hub in the western part of Asia, the country has developed many seaports to enhance its international business opportunities. Jeddah Islamic Seaport is one of the leading ports in Saudi Arabia.

Jeddah port is located at the center of western Asia international routes, which link East to the West, as shown in figure 2 below. Best on the Saudi Arabia seaport raking, Jeddah port is the biggest and leading seaport in Saudi Arabia (Ali et al., 2011). Jeddah port is important as it has contributed to the Saudi economy and Jeddah as a commercial city. Jeddah port is not only the busiest port in the region, but it is the second biggest natural port found in Arab countries. Saudi Arabia is known to be the single biggest oil exporter, which makes Jeddah port the biggest storage of oil and exporter of oil at the same time (Mahfouz et al., 2020). The port handles approximately 65% of the country's imports apart from being the biggest export route from Saudi Arabia. Given the activities at this natural seaport, the Saudi Arabia's government has installed more than 1700 cargo handling equipment at this seaport. Apart from the shipping services offered at the port, Jeddah port has 62 berths equipped with state of the modern art equipment, ship repair, and building yard, and many warehouses (Mahfouz et al., 2020). The berths are designed to handle all types of cargos, including bulk and small cargos. The port has eight terminals, with a total handling capacity of 130 million tonnes.

General concept

Various logistical and challenging issues within the seaports such as

Trucker shortages since the available trackers may not handle the cargos present within the seaports hence should solved soon

High sea tidal which delays and causes accident that are seen in the seaports

Congestion within the seaport hence it also delays the movements of ships in and out of port

The cargo volume being received at the ports has increased significantly

Ship alliances have become a problem as they result in assortments of ships that carry various cargos

An efficient port will attract a high level of ship traffic because it will be the preference of many shippers in the region hence increased revenues. However, seaports are still faced with many challenges, which deter effectively and operations efficiency at the ports. Some of the challenges include a shortage of the trucker, lack of chassis, an alliance of the ships, high sea tidal, port footprints, and congestion. Trucker Shortages

Another big challenge that has refused to fade at the seaports is the shortage of truckers. Most of the ports do not have enough truckers to handle the cargos that they receive daily causing ship traffic congestion. These is both operational and legal issues that need to be solved soon. In this perspective, lawmakers should enact policies that will not only allow the formation of more trucking companies, but that will make cargo trucking cheaper and faster to ease congestions. Laws that can be enacted to encourage investment in the trucking business include tax reduction and a few restrictions and regulations that the drivers. Congestion at the Ports

The introduction of mega-ships has posed a big problem to the already existing port congestions problem at the seaports. Recently, many ship owners have moved from the traditional small ships too wide and large ships with a greater capacity. High Sea Tidal

Delays and tragic accidents have been witnessed in many seaports in the past. These accidents and delays have been occasioned by unpredicted seal tidal, which hinders the movement of ships and other seaport operations, leading to delays and accidents. Ship Alliances

Whereas the idea to form ship alliances was good at the beginning as one way of achieving less costly shipments and ease transportation of cargos, they have become a problem today for many port authorities.

Methodology

Research design

A list considered by shippers was developed when deciding on port preferences

The criteria for review was found in the literature review

After listing, the A.H.P. model was used to place the study problem

Survey form was developed for shippers within the region of Saudi Arabia

Survey spreadsheet was used by the participants

Analysis of the collected data commenced

(Bird., 1988)

To achieve the current project's purpose, the following methodology was adopted to synthesize findings after collecting data.

I first developed the list of factors that are considered by the shippers when making port preferences. The factors selection or listing criteria was founded on the review of the literature and the knowledge gained from the field of maritime transport so far. Secondly, after listing the factors that were to be considered, the study problem was placed in A.H.P. model context, and the survey form was developed for shippers from the Saudi Arabia region, specifically from the Jeddah Islamic Seaport in Saudi Arabia. The participants used the survey spreadsheet to input their comparative scores. The fourth step was to analyze the data collected from the survey, and prioritize the factors that were essential to the shippers' port preference using A.H.P. framework. Finally, the results were presented, validated, and a summary based on the section findings

Methodology

Analysis of Analytical Hierarchy Process model

It is a methodology that is used to measure items based on the pairwise framework

It is a framework that enables the researcher to measure uncountable factors based on their relative terms

Uses predetermined scale to compare factors

The model makes an organized decision

The problem statement if placed on the top of the hierarchy

The element in the upper position is compared to the element immediately below it

The A.H.P. is a seven steps process that begins with the development of a pairwise comparison spreadsheet and ends with the formation of a vector table

Analysis of Analytical Hierarchy Process model

The Analytical Hierarchy Process is a methodology that is used to measure items based on the pairwise framework. It is a framework that enables the researcher to measure uncountable factors based on their relative terms (Saaty, 2008). The framework compares the factors using a predetermined scale with absolute judgments that compare inferior factors with prime factors. The A.H.P. framework makes an organized decision because of the clearly defined problem of the research. The research problem is defined, and the decision hierarchy is created from top to bottom (van Dyck & Ismael, 2015). The problem statement is placed at the top of the hierarchy structure and is followed by other levels to the lowest level. The element in the upper position is compared to the element immediately below it. The priority of the item is developed based on the possibility of the item to achieve the goal of the process, and alternatives' priorities are derived based on their performance. To enable the comparison, the framework provides numbers I scale, which shows how many times the item is important as compared to the other item. To determine how the other elements contribute to the goal, a weighing, and the adding mechanism is used to identify the priority of other items. In this process, the multidimensional scale issue in the research is converted to a one-dimensional scale issue.

The A.H.P. is a seven steps process that begins with the development of a pairwise comparison spreadsheet and ends with the formation of a vector table. It is a systematic process that incorporates all the seven steps to come up with understandable outcomes or results

Findings and results

Since Jeddah Islamic Port was our case study port, more ports were identified for comparison, and they included Jeddah Islamic Port, king Abdulaziz Port Dammam, King Fahad Industrial Port Yanbu & more.

Shippers prefers ship specifications 3 times less as compared to the costs of operations

Jeddah port is the most preferred by the shippers based on the costs of operation at 34.1%, and Jubail Commercial Port is the least preferred at 7.9%

The results were summarized using the relative importance score from the four main criteria which included ship specification, costs of operations, level of traffic at the port, and value-added services offered by the port

results show that most of the shippers prefer the costs of operations when making a port selection. The preference is followed by the level of traffic at the port at 23.3% and ship specification at 16.2% I that order. The least considered factor is Value added benefits offered by the port authority at 11.7% and followed by efficiency at the port at 10.1%.

Because there are many ports in Saudi Arabia that have different characteristics, it was essential to evaluate the factors based on different ports. Since Jeddah Islamic Port was our case study port, more ports were identified for comparison, and they included Jeddah Islamic Port, King Abdulaziz Port Dammam, King Fahad Industrial Port Yanbu, King Fahad Industrial Port Jubail, and Jubail Commercial Port. To complete this section, I compared the factors that shippers prefer in a port in different ports in the Saudi Arabia region. The results show that Jeddah port is the most preferred by the shippers based on the costs of operation at 34.1%, and Jubail commercial port is the least preferred at 7.9%. A similar analysis is repeated for the port. remaining three factors, including Value-added services offered by the ports, ship specification, and level of traffic at the port. The preferred port in Saudi Arabia based on the ship specification factor is unique since the ports almost have equal preference b the shippers. However, Jeddah port still leads as the most preferred port by the shippers who consider ship specification as a factor when choosing port at 24.1%, and it is followed closely with Jubail port at 21.3%, and the least preferred port based on this category is King Abdulaziz at 9.6%. After evaluating the four primary factors that were selected for this study for the port selection criterion, the results were summarized using the relative importance score from the four main criteria which included ship specification, costs of operations, level of traffic at the port, and Value-added services offered by the port. The weight value of each factor was calculated, and the results are presented

Results

The results in the table 5 above indicates that costs of operations with 38.5% is one of the most essential factors that shipper consider when making port preference

It is proved that ports play a key role in the movements of goods and services hence the cost is creating an impact on the transportation of goods and services

It interfere with the inventories of the exporters and importers, most especially when the interests involved are also produced locally

The results of the analysis show that the jeddah port has increased its popularity among the shippers because of its most competitive operational costs

Represent shippers' choice of a port based on the value added benefits offered at the port

Ship specification is a major consideration of the shippers when making a decision relating to port selection

This section of the research paper will discuss and validate the results using the literature review's knowledge. The results in the Table 5 above indicates that costs of operations with 38.5% is one of the most essential factors that shipper consider when making port preference. Based on the literature review, it is true that ports play a significant role in the movement of goods, and the costs of shipping and other operations at the port will dearly impact the transport and the price of the goods transported. This will interfere with the inventories of the exporters and importers, most especially when the interests involved are also produced locally. The results of the analysis show that the Jeddah port has increased its popularity among the shippers because of its most competitive operational costs. The results indicate that the Jeddah port is more competitive concerning the costs of operations as compared to other ports in the Saudi region at 34.1%. shippers' choice of a port based on the Value added benefits offered at the port. Value-added benefits included other services that are provided by the port, including training, repair of the ship, handling of empty containers, among others such as repacking for re-export. Considering this factor, the results show that the Jeddah port is preferred by many shippers because of the Value added services they offer to the shipper at 32.1%. According to the study that was done. shippers will choose one port over the other because of the Value added services they offer to the shippers, such as space for ship repair and space for repacking the goods for re-export. The results can be validated based on the high level of investments and the immense capacity that is exhibited by the Jeddah port. the bulkiness and size of the ship and the cargo volume it can transport at once. The results of the analysis indicate that ship specification is a major consideration of the shippers when making a decision relating to port selection. In relation to ship specification, the results suggest that Jeddah port is still preferred by many shippers because of its deep natural harbor at 24.1%. Studies have shown that Jeddah port has deep docks in the region, which can anchor any type of ship. The port is also said to have many terminals and berths which can accommodate both small and big ships with a large volume of containers.

conclusion

primary factors that influence the choice of shippers of a specific preferred port

The factors include

Ship specification-the vastness of the ship, ship model, size of the ship, nature of the ships' docking port, among others

Value-added benefits to the shippers- repairs, loading bay, training, storage, repacking and re-exporting yards

Costs of operations-port charges, other levies, towage charges, delivered price, custom charges

Level of traffic at the port-delays, loading, and offloading problems

Port infrastructure-port facilities, equipment for operations, hinterland transport, trucking

Port efficiency, offloading and loading efficiency, information communication

Loss and damage frequency, security at the port, regulations, and policies from the government

List of Factors

Although the shippers' factors in making port preferences were predetermined by the researcher, other factors that cropped from literature analysis were also included in the list of factors. The following are the factors that shippers consider when making a decision to choose a specific port.

Ship specification-the vastness of the ship, ship model, size of the ship, nature of the ships' docking port, among others.

Value-added benefits to the shippers- repairs, loading bay, training, storage, repacking and re-exporting yards, etc.

Costs of operations-port charges, other levies, towage charges, delivered price, custom charges, among others.

Level of traffic at the port-delays, loading, and offloading problems, among others.

Port infrastructure-port facilities, equipment for operations, hinterland transport, trucking, among others.

Port efficiency, offloading and loading efficiency, information communication, cargo volume at the port, connection links, container handling, and the reputation of the port.

Loss and damage frequency, security at the port, regulations, and policies from the government, shipment handling capacity, and services offered by the port.

conclusion

Development of a decision-making model

The analytical hierarchy process model provides a multi-criteria decision-making framework to the shippers selecting the port

It is a framework that used paired comparison to compare one item over the other based on the characteristics of the item

Qualitatively, the framework decomposes the research problem to a class of elements that are then analyzed

The framework compares the factors using a predetermined scale with absolute judgments that compare inferior factors with prime factors

(Ali, Elazein & Alian., 2011)

the Analytical Hierarchy Process model provides a multi-criteria decision-making framework to the shippers selecting the port. It is a framework that used paired comparison to compare one item over the other based on the characteristics of the item. It is both a quantitative and qualitative method that is commonly used to solve decision-making problems. About quantitative design, the set of characteristics associated with a specific item are prioritized to differentiate them from each other based on the Value of their attributes. Qualitatively, the framework decomposes the research problem to a class of elements that are then analyzed. It is believed that the shipper is in a dilemma on which port to choose based on the preferred factors that the port provided. AHPA framework will allow the shipper to place relative weight on each factor and then conclude by making a rational decision. The goal of the paper is to identify the factors that the shipper will consider when making a port selection. In this perspective, the right port and the other ports in the region will be based on the two problems with similar A.H.P. issue structures. Finally, ship specification, costs of operations, level of traffic, and other factors listed in this section will be compared with the two selection structures.

conclusion

Crafting the necessary recommendations of the port of Jeddah

Port authorities need to implement the necessary changes which are responsible for enhancing competitiveness

Port managers need to review their existing port policies and learn from other competitive ports worldwide to improve their efficiency and performance

Shippers are expected to conduct thorough research and surveys to identify ports that will give them more benefits than others

Managers must understand some of the factors that shippers consider when deciding on the port to work with

The implication of the current study findings to port authorities, managers, and operators are that they need to implement changes that will enhance their competitiveness at the port. Port managers need to review their existing port policies and learn from other competitive ports worldwide to improve their efficiency and performance. The current findings also have significant implications for the shippers. Shippers are expected to conduct thorough research and surveys to identify ports that will give them more benefits than others. It is, therefore crucial for then managers understand some of the factors that shippers consider when deciding on the port to work with so that they can make decisions that will improve the effectiveness and competitiveness of their ports.

References

Ali, A. A., Elazein, E. M., & Alian, M. A. (2011). Investigation of heavy metals pollution in water, sediment, and fish at Red Sea-Jeddah Coast-KSA at two different locations. J. Appl. Environ. Biol. Sci, 1(12), 630-637.

Aronietis, R., Van de Voorde, E., & Vanelslander, T. (2010, July). Port competitiveness determinants of selected European ports in the containerized cargo market. In Proceedings of IAME 2010 Conference. (Lisbon).

Bird, B. (1988). Implementing entrepreneurial ideas: The case for intention. Academy of Management Review, 13(3), 442-453.

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