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Michael Porter’s Five Forces Model Analysis

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The role of PSA as a port has changed a lot over the years. They not only handle the shipping of goods, but they are also providing logistic management solutions to their clients. It is no longer enough just to handle the shipment of goods. PSA has a whole range of services to help their customers keep track of their consignments and to ensure timely delivery. The details of the different types of services provided are discussed in the previous sections.

One of the main reasons for PSA success is the strategic location of Singapore as a world leading port to handle the global import and export of goods. There are few neighbouring ports that have the same advantage in geographical location that are close rivals to PSA. They are namely:

– Port of Tanjung Pelepas (PTP)

– Port Klang

– Jurong Port

Similarly, in order to keep competitive with PSA, all the other rival ports are also providing logistic management services to their clients. IT plays a critical role in helping the different ports to differentiate the services that they provide. All the major players mentioned above have online services and solutions for their customers. In order for PSA to stay ahead of its competitors, constant innovation to bring value-added services to its customers is an important part of its marketing strategies.

The implementation of Portnet gives PSA such competitive edge. For example, PSA customers only have to go through a single web portal to make arrangements to have their goods shipped into Singapore. With the necessary supporting documents, the linkage with Tradenet provides different government agencies, such as Ministry of Trade, MPA etc. to receive the application quickly and reliably. Application can be approved in matter of days, as compared to competitors, which usually take weeks. Furthermore, Portnet also provides other value-added services, such as forming of a virtual e-community of parties in shipping and port-industry, including freight-forwarders, hauliers, shippers etc. that will relieve customers’ hassle of looking for one.

Analysis of the major players in the industry

Port of Tanjung Pelepas (PTP)

Similar to PSA, its port has a very strategic location that enables it to capitalize on the rapid development in Malaysia and South East Asia. It is easily accessible via an excellent network of highway and rail links to Peninsular Malaysia, Singapore and Thailand. Also, it is accessible by navigation wholly within Malaysian waters. It is adjacent to the same confluence of major shipping routes that sustain Singapore as the World’s leading port. Located at the doorstep of Johor’s dynamic development, it is equipped with the ample space advantage over PSA for continuous development well into the next century.

In terms of the facilities PTP provides, it does poses as a very strong competitor to PSA. PTP currently offers 6 berths of 360 metres each, offering a total of 2.16 km of linear wharf length. Directly behind the berths is the port’s container yard. With approximately 110,000 TEUs storage capacity, it is one of the largest storage facilities in the region. The container yard also has over 1,400 reefer points and provision for further expansion, thereby enhancing the port’s attractiveness towards reefer trade. There is also a segregated area for dangerous goods.

In order to stay competitive, PTP has invested heavily in Information Technology. PTP’s state-of-the-art IT solution encompasses virtually every aspect of port operations including container management, marine safety Freezone Information Processing System and the Vessel Clearance System. The system guarantees easy access to all port users via leased lines, dial-up or web-based access for submission of data, declaration and general enquiries.

The Container Management System forms the core system in PTP and is utilised for yard planning, vessel planning and for facilitating container movement. Input of data is possible via dial-up, web access or through usage of EDI transmission. For marine safety, PTP has implemented its own Vessel Tracking System called RAPADS (Radar Information Processing and Display). RAPADS provides vital information to the Marine Department in handling marine activities. Utilising the vessel tracking system, the Marine Department enables smooth traffic flow in the channel ensuring greater safety.

PTP has also initiated a system with the Customs Department called GCAMS (Gate Control and Monitoring System). GCAMS ensures smooth flow for gate transactions and integrates Customs Declaration System with PTP’s Container Management System to provide seamless information exchange between Customs and other government agencies with PTP as the port operator. With GCAMS, Customs can hold or release containers for import or export through their system without any manual intervention.

The custom-designed Free Zone Information Processing system facilitates submission of manifest and other Free Zone related declarations. PTP’s role as a Free Zone Authority also ensures a faster and highly efficient approval process once data is received from customer premises. The electronic Vessel Clearance System (VCS), developed in-house is the first of its kind in the nation. The electronic VCS facilitates one data submission from shipping agencies where the data is then automatically transmitted to the respective government agencies. Usage of the system has saved significant time for shipping agents enabling them to provide government agencies with information in advance. PTP’s fully dual redundant Integrated I.T. Network system is backed by high powered servers ensuring 24-hour round the clock availability throughout the year.

Port Klang

Port Klang is situated on the west coast of Peninsular Malaysia, about 40 km from the capital city, Kuala Lumpur. Its proximity to the greater Klang Valley – the commercial and industrial hub of the country as well as the country’s most populous region ensures that the port plays a pivotal role in the economic development of the country. Based on a Government directive in 1993, Port Klang is currently being developed as the National Load Centre and eventually a hub for the region.

With a number of load centring and hubbing strategies pursued since 1993, the facilities and services in Port Klang are now synonymous to those of World class ports. The port has trade connections with over 120 countries and dealings with more than 500 ports around the world. Its ideal geographical location makes it the first port of call for ships on the eastbound leg and the last port of call on the westbound leg of the Far East-Europe trade route.

Port Klang has facilities catering to a diversity of cargo types ranging from containerised, conventional, liquid bulk, dry bulk as well as hazardous cargo and LPG. It has three gateways – South Port, North Port and West Port – encompass a total length of berths, both existing and under planned development is 16 km.

Port Klang has a vessel traffic management system (VTMS) under the supervision of the PKA that was implemented in order to ensure greater navigational safety in the port waters. This system will make available information on vessels transiting the harbour such as cargo onboard, last and next port of call and the vessel’s particulars. The centre also provides an attending pilot accurate information on the vessel’s position and the density of traffic converging on the same destination, thus enhancing passage planning.

There is also a Vehicle Transit Centre that provides services such as pre-shipment and pre-delivery inspections, a computerised vehicle tracking system, minor repairs and insurance coverage. Its facilities include a yard which can receive up to 40,000 vehicles, a body repair shop, wrapping cover bay and a bay for fitting accessories.

However, as compared with PTP, its use of Information Technology to gain competitive advantage is relatively less aggressive.

Jurong Port

Jurong Port is Singapore’s only dry bulk cargo-handling port. They are the world’s largest common-user cement terminal, with a capacity in excess of 4 million tonnes a year. It has Singapore’s largest multi-storey, drive-up warehouse – Jurong Logistics Hub with Singapore’s deepest berth depth of up to 16 metres, catering to vessels of up to 150,000 deadweight tonnes.

Jurong Port has developed Jurong Logistics Hub to meet the logistics needs of customers. The hub is a multi-storey drive-up warehouse which allows 45-foot containers to be trucked to every level, right to the doorsteps of customers and under all weather conditions. It is strategically located , just minutes away from the Port, Jurong Island, Jurong Industrial Estate and Tuas industrial zone.

The ultra-modern warehouse comprises 118,000 square metres of warehouse space and 6,200 square metres of office space. Jurong Logistics Hub’s customers include multi-national corporations and logistics providers such as Sony, Volvo, Translink, Loreal, Dell Computers and LTH.

Jurong Port also have a private online services that are catered only its customers called JP Online.

Expansion into a world business

As we can see, PSA is facing strong competition from its neighbouring ports. Is the competition only coming from neighbouring ports? PSA is spreading its wings into the world. In the past, the world seems too large to be conquered, but with the advancement in technology, the world is seemingly smaller. PSA aims to serve not only Asia but also the total population in the world. With such a vision, its definition of competitors should also be shifted to a global perspective.

In order to retain its position as the world’s busiest port, it should be looking at the number 2 player in the market, Rotterdam. Although Rotterdam is still a distance away in terms of the tons of shipping handled as compared to what PSA is handling in Singapore, there is no room for taking breathers as time wasted may mean more competitors are another step closer to catching up with PSA.

Despite the global vision, it is important for PSA to keep the neighbouring ports in check because one of its key success factors is its strategic location. This is also the strong advantage that its neighbouring competitors possessed. IT is definitely one of its competitive advantages over the rest and in order for it to stay that way, PSA has to continue to be a leader in innovation and communication.

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