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PSA Operation Management Assignment Help

Introduction    

PSA was previously called Port of Singapore Authority. Its mission and values statement is shown in Table cs4.1. Starting in 1964, PSA has now become much more than a giant Singapore-based shipping hub entity. In 2007, PSA handled tens of millions of TEUs,1 with volumes growing some 15 per cent from the previous year2.

The signing of the contract to build and operate a major container por t at the Panama Canal i n March 2007 marked another milestone for PSA Inter­ national (PSA) – it extends i ts global  reach to yet another continent, the A mericas. The new container port at the Panama Canal, the world’s  third busiest waterway, is slated to double Panama’s port capacity and enhances PSA’s position  in the fast-growing trade between China and East Coast of America.3

Operation Management Assignemnt Help43

‘I am pleased that we have taken this important step to develop a major port facility on the Pacific coast, in tandem with the widening and expansion of the Panama Canal, which is currently under way’, said PSA chief executive Eddie Teh.

Within a few years -of  its globalization plan, PSA has extended its reach to  25  ports  in  14 countries     in Asia, Europe and  now the  Americas. For the first time in the group’s history, its overseas terminals handled more container  boxes (27.3 million) than the 24.0 million through-put  at Singapore.

However, not all deals were smooth sailing. In March 2006, PSA bowed out of a bidding war with Dubai’s  DP World to acquire Britain’s Peninsular & Oriental Steam Navigation Co (P & 0) after accumulating a 4.1 per cent stake in the British company. In another recent development, the 25-year contract with Brunei’s government in the setup ofMuara Container Terminal (MCT) came to a premature end just six years into its operation. PSA Muara has transferred its port operations knowledge and trained MCT’s port managers in the state-of-the-art equipment.

5

History

PSA was formerly the Port of Singapore Authority, a governmental  body responsible for regu lating, developing, operating and promoting the port of Singapore’s terminals. In 1996, the Singapore government passed a bill to set up a new stat utory board called the Maritime and Port Authority of Singa­ pore (MPA) to take over the port development and regulatory functions. PSA Corporation Limited was incorporated in 1997 to concentrate on container terminal operations.

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As container volumes grew in the 1970s and 1980s, PSA Singapore Ter­ minals had handled more than five million TEUs, making Singapore one of the world’s largest container ports. At present, PSA Singapore Terminals is

the world’s  largest container transshipment hub,  handling about one-fifth of the world’s  total container transshipment throughput, and 6 per cent of the global container throughput.

With an established brand  name in the provision of highly efficient and reliable container handling services, PSA expanded its global reach by setting up its first  overseas venture  in  Dalian, China.  Today, PSA participates  in

25 port  projects in 14 countries, and  handled  a total of 51.3 million TEUs globally in 2006. PSA currently has a network  of 200 shipping  lines with connections to 600 ports  in 123 countries, spanning  half the globe across Asia and Europe.6

PSA was also perceived to be a ‘neutral’ operator that enjoys good relations with many countries, including United States, India and China. In 2006, Pak­ istan announced that it had picked PSA to run its deep-water portofGwadar. The port was constructed with aid from China, and tagged by Western and Indian analysts as an attempt by Beijing to tap on the alliance to extend its reach to the Arabian Sea? With its neutrality and expertise in port manage­ ment, PSA was seen as a perfect fit for the contract.

PSA’s success is demonstrated in yet another year of record gain:  PSA

posted a 14.3 per cent rise, or $1.21 billion, in profit for the year 2006, beat­ ing the records for the previous two years. Besides strong  world economic growth  which fuelled robust  global  trade expansion,  PSA has continually strengthened its leadership  in 2006. This is achieved through  both capacity expansion of existing terminals and investments in new port projects around the world.8  Over the years, PSA has won many internationally acclaimed awards both in operation  excellence and IT innovation  (see Figure cs4.1 for the list of awards).

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As a reflection of its international orientation, PSA adopted a new corpo­ rate structure in December 2003, changing its name from PSA Corporation Ltd to PSA International Pte Ltd and became the main holding company for the PSA Group of companies, including PSA Singapore.

Operational excellence and capabilities

The bulk of the containers that flows through PSA Singapore are transshipment cargo. Transshipment refers to the situation where containers are trans­ ported by a vessel •to an intermediate port, and then sorted and transferred to other ships according to their final destination.

At the  container  terminal  in Singapore,  the  containers  from  arriving vessels are offloaded  to prime movers by cranes and  transported to other berthed  ships  or  to  the yard  for storage  according  to  their size, weight, category  and  destination. This way, the containers from different ports bound for the same destination can be loaded onto one ship, reducing the number of trips the vessel needs to make. Similarly, goods from one pore bound for multiple different ports can be sorted and transshipped from Singapore.

Due to the high fixed cost of infrastructure and equipment, the volume handled is crucial to achieve economies of scale and profitability. This is where the operational efficiency and high connectivity of PSA comes in as a key competitive element. Due to Singapore’s strategic geographical location, • PSA provides about 200 shipping lines with connections to 600 ports in 123 .••• countries. This means that shippers will easily find a ‘connecting’ service to a destination port from Singapore rather than to locate a direct service from the port of loading.

Since 1999, the container throughput in Singapore grew steadily from 15.9 million TEUs to 24.8 million TEUs in 2006 (see Figure cs4.2), making Singapore one of the busiest ports in the world in 2005 (see Figure cs4.3). Equally impressive is the overseas operations of PSA in Europe, China and other parts of Asia. Their combined throughput of27.3 million TEUs in 2006 is a year-on-year increase of 30.2 per cent.

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Technology and systems

PSA is known for its operational excellence. To stay competitive and trans­ ship goods in the shortest time possible, PSA continuously upgrades its tech­ nology and container-handling infrastructure  to ensure the highest quality of services are provided to its customers. In-house software was developed to manage and  track more than 60000 TEUs per day and ensure that all aspects of its operations run efficiently and reliably, 24 hours a day, 365 days a year.

At  the  heart  of  PSA’s  operations  is  two  real-time e-commerce and computer-integrated terminal operations systems: PORTNET® and CITOS® (Computer Integrated Terminal Operations Systems).

PORTNET® system

Developed in 1984, PORTNET® is a port community system that integrates services to shipping lines, hauliers, freight forwarders, shippers and local government agencies. The web-based system enables 100 per cent end-to­ end information workflow and enables the customers to book berths, order marine services, transact bills and receive alerts, and track their vessels and cargo on a real time basis. Its 8000 users generate 90 million transactions on average annually.9 To serve its various customers better, Portnet.com Pty Ltd was created  as a subsidiary company to PSA in 2000.

Other solutions are offered by Portnet.com are outlined below.

EZShip

This is a transshipment facilitation system for both main line operators (MLOs) and feeders. It is an Internet-based system that provides a synergistic linkage with the PORTNET system and is customisable to shipping lines’ in-house systems, thus eliminating the need for data re-keying and maintain­ ing data integrity and timeliness. Using a personal computer, customers can log in to EZShip and view details like containers assignment to vessels, vessel space management, receive automated event alerts,  process inter-ship in line billing and customize  their reports.

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Global equipment management system (GEMS)

This is an e-business solution for container owners. It maintains information of a shipping line’s container stock at container terminals, on-dock depots, external depots, inland depots and offshore sites, providing real time tracking of container or equipment stock and movement globally to the shipping lines, allowing them to plan ahead and assist in reducing repositioning of the containers. The system provides online submission of repair estimates by depots and online approval of repair. It also manages contracts with leasing companies and shipping lines, and gene rates overdue and overstaying reports for containers in depots, transit, port, and shippers or consignees premises.

Throughput analysis and vessel information system (TRAVIS)

This is a web-enabled management reporting tool to help shipping lines and shipping agents to track their throughput, transshipment volume, dwell time and vessel performance .The system automates the tedious datacollection and entry and generates reports that can be used to analyse transshipment of vessel voyage and connection patterns. Dwell time and vessel performance reports can also be generated for shipping lines to check the container dwell times and connection rebates, vessel rates and crane intensity rates. Throughput reports can also be customised to provide customers with throughput information of their containers, slots and vessels.

ALLIES

This  is a suite  of modules  that  facilitate  co-ordination and  collaboration among  shipping  alliance partners. ALLIES include modules for load  track­ ing  and  reporting, re-selling and  sublefting of slots, online  approval  for loading  of special containers and online exchanges of slots and containers. This value added ser vice enhances the shipping  network, which in turns pro­ vides added incentives for the shippers to transship their cargo through  PSA Singapore.

CargoD2D 10

This is a one-stop In ternet-based  global freigh t reservations system for the shipping community. It facilitates  the matching  of shippers’ cargo trans­ portation req uirements  to offers from various logistics players in the entire end-to-end supply chain such as wa ehouse operators, trucking companies, inter-modal operators, shipping lines and terminal handling agents.

CITOS® System

With about 60 vessels of different sizes calling on any given day and 90 per cent of them arriving out of schedule due to weather conditions or delays from other port operations, PSA is able to ensure ‘berth on arrival’ with its CITOS® (Computer Integrated Terminal Operations) System. This is an Enterprise Resource Planning (ERP) system that manages container handling during loading, unloading and storage.

Besides optimising the allocation of resources,CITOS® alsogeneratesship stowage plans and yard layout plans for container stacking based on factors such as ship stability, weight and destination of container and other special requirements such as refrigeration and handling of flammable or danger­ ous goods. The system tracks the location of each container-.and facilitates efficient retrieval. The CITOS® System helped PSA Singapore handle some 24 million TEUs of containers in 2006.

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Flow-through gate system

The paperless Flow-Through Gate system processes a haulier in 25 seconds, which is the world’s fastest time. This is done through Container Number Recognition System and Auto-Paging.The Flow-Through Gate system han­ dles an average traffic flow of 700 prime movers per peak hour, and 8000 prime movers per day.

The fully automated  and paperless process clears prime movers going into the port within 25 seconds through the use of highly automated and streamlined processes. When a truck arrives at the gate, the system auto­ matically picks up the signal from the transponder on the truck’s cabin. The container number is captured by the Container Number Recognition System via the CCTVs at the gate. The weight of the truck (taken at the weighbridge), driver’s identity, truck’s identity and the container number are verified against the system and cleared. The automatic paging system then informs the driver the exact position in the yard where the container will be stacked.

Moving forward

Leveraging its expertise in terminal operations, PSA has successfully emerged as one of the busiest ports in the world and the world’s port of call. However, competition in port operations has heated up over the years, notably from neighboring Malaysia’s Port of Tanjung  Pelepas (PTP) and the threat from Hong Kong and Shanghai ports. PTP, being in close proximity to Singapore, had in particular diverted some cargo volume when PSA’s major customers Maersk Sealand and Evergreen Marine Corporation  moved their operations there. As an indication of its success, PTP posted a record throughput of 2.24 million TEUs in the first six months of 2006. In addition, Malaysia is also promoting  PTP as the preferred port for customers by integrating PTP to the Port Free Zone which houses logistics and manufacturing  industrial centers.

Besides competition in the area of lower costs, more and more shippers are also working on vertically integrating their operations by requesting for a stake in the port and operating their own terminals. PSA had been reluctant to negotiate as this directly impacts its core business of terminal operation.

Yet another challenge lies in the ever increasing vessel capacity. While normal Panamax vessels carry between 3000 and 5000 TEUs, bigger post- Panamax vessels (named as they can no longer pass through the Panama Canal) carry between 4500 and 9800 TEUs. Super post-Panamax vessels like Emma Maersk, which at 397m length and 56 m width, can carry 11000 standard containers or 15 per cent more than its closest rival, China Shipping Container Lines’ Xin Los Angeles. With such big capacities, these ships can potentially bypass transshipment hubs like PSA and ship the cargoes directly to the destinations.

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The global shipping landscape has changed significantly with the increasing privatization of ports by many countries. While PSA has performed well thus far, aided in part by the booming China trade, the task of managing a global corporation  amid growing competition  becomes more and  more challenging and complex.

Looking ahead, how can PSA further leverage on its operation expertise and technology to compete in the competitive and volatile global sea trade business? Is PSA helping to turn its partners into formidable competitors? Can suitable and qualified  managers be recruited fast enough  to run  its rapidly expanding global operations, and what can be done to retain human talent within PSA? Can PSA sustain long-term growth and perhaps launch an IPO?

Note: DWT- Deadweight Ton is the displacement at any loaded condition minus the lightship weight. It includes the crew, passengers, cargo, fuel, water, and stores.

Source:  US Department of Transportation Maritime Administration,

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