Maritime Logistics Issues - Essay Example

? Maritime Logistics US East and Gulf Coast Port Strikes The US East Coast witnesses a myriad of economic activities within the major ports along the coastal line. In the recent past, news about port workers strike resulted in unprecedented challenges to stakeholders involved in international import-export trade. According to Norilsk (2012), union workers in major ports along the coast demanded a pay increase accompanied by other allowances packages, failing which they planned to stage a major strike within the port facilities. Major stakeholders involved in addressing the strike issue included the US Maritime Alliance and the International Association for Longshoremen. Both parties sought to develop a solution meant to avert a strike, which would cause a substantial economic and social impact on East and Gulf Coast citisens and other business stakeholders. One port in eastern Florida employs approximately 64,000 workers on full-time and casual labour jobs. Staging of a strike means that the port will suffer an economic predicament for an indefinite period of time – certainly until authorities address the workers’ issues. According to maritime statistics, the port generates approximately $1 billion daily in form of gross domestic revenue to the US economy. This means that downing of tools by port workers will affect Florida residents because of the $1 billion revenue gap created on a daily basis. Among the stakeholders affected are export merchants involved in production and sale of agricultural produces. Norilsk (2012) argues that prolonged wrangles between workers and employers in the port will affect Florida farmers and other industrial businesses that depend on the port for business activities. Efforts were made by the Longshoremen Association to pursue federal government into stopping the strike in the event that the parties could not reach an agreement. Despite these efforts, legal proceedings within the Florida judicial system allowed workers to continue with the strike. The courts arrived at this decision after considering the provisions availed by proportionate workers’ right in accordance with the Trade Union Ordinance. Therefore, the next step would be to appraise the economic and social impact that will result from the strike. Ports in Supply Chain Management Maritime technical operations indicate that ports play a significant role in international supply chain management. Supply chain management entails integration of technology, information, and manpower skills in facilitating the movement of products from the producer’s premises to the different types of consumers in the market. Wang (2007) states that the role played by supply chain management at the international business platform became more pronounced as a result of increased globalisation. Currently, these chains enhance synchronisation of business activities between trading partners. Supply chains facilitate flow of goods and information from one region to another. As a result, export companies can acquire relevant information meant to make future business decisions. From an economic perspective, producers will adjust their production likes based on consumer patterns observed in their market segments. On the other hand, consumers will only benefit in their trade relationship if they stay abreast of latest developments within the producers environment. This means that international supply chains are charged with the responsibility of developing and maintaining day-to-day movement of goods and information between trading regions. In the context of international supply chain management, ports play a key role as a source of relevant logistical infrastructure. Ports provide a suitable environment where buyers meet sellers. In this regard, involved stakeholders could adjust their business activities in relation to the dictates of supply and demand witnessed in ports. Supply inclines towards the trends created by the demand of goods and services within the consumer market. In this case, some producers wait for customer orders before manufacturing goods. On the other hand, producers such as farmers involved in agricultural commodities engage in production activities based on forecast demand expectations. Agricultural producers employ techniques of forecasting and collaborative planning in estimating optimal levels of production. Wang (2007) asserts based on the fact that agricultural products are perishable, it means that technical hitches within the marketing and distribution channels result in losses. In this juncture, ports should facilitate movement of goods in order to complete and sustain the international supply chain of perishable products. Ports As Logistical Centres Within the supply chain, ports have featured as the major logistical centres enhancing efficient and economical execution of business activities. According to Kersten and Jahn (2012), relevant statistics from multinational corporations involved in international trade agrees that logistical services provided by ports result in approximately 25% savings from the procurement and supply management processes. Ports provide warehousing services for almost all types of products. Warehousing reduces the risk of goods spoilage and theft, hence enhancing smooth business operations. Ports also facilitate global transportation of goods through efficient freight management by land and sea. In this case, perishable goods and emergency services can reach the consumer market in time. Customs brokerage services at the port ensue that stakeholders control procurement costs. This improves the aspect of cost reduction, which in turn translates into profit maximisation and revenue generation. Additional logistics within the ports include the entire purchase order management. Service providers within the port engage in advising customers on procurement procedures, and even provide information on the reliability of different producers. In this case, ports provide an opportunity where clients can have complete track and visibility of procurements from the point of placing orders to final delivery. According to Kersten and Jahn (2012), ports contain fully developed essential infrastructure including road networks and sea passage channels. This means that goods can be transported safely with minimal risks and damages to purchasing parties. All these logistics facilitate effective management of business practices between involved stakeholders. Effective logistical services at the port ensure creation of a friendly business environment within a nation. This translated into improvement in gross domestic revenue generation, hence enhancing improvement of the economic growth rate. In this context, ports could be termed as one of the main logistical hubs within the international supply, which remains critical in shaping a country’s economy. Business Stakeholders Affected by Strike Producers Such As Farmers One group of stakeholders affected by port strikes is agricultural producers. Agricultural products are perishable commodities with a limited life span. In this case, products should reach consumers within the shortest time possible. In the US East and Gulf Coast, export of farm products remains one of the key business activities. As insinuated earlier, farmers produce a given quantity of products with the expectation that supply and demand at the time of marketing will favour their business practices. In this context, forecasting considerations do not usually take into account unprecedented effects caused by port workers’ strikes. This means that farmers exporting agricultural goods will have to store their perishable products at warehouses for longer times that expected. This leaves farmers with the uncertainty of strike wrangles and increased costs of warehousing products such as fruits and vegetables. On the other hand, available transport options including airlines increase marketing costs tremendously. This may scare off consumers and ends up damaging business reputation of agricultural producers. According to Peng (2011), prolonged boycott by port workers means farmers will not be able to supply goods to consumers in time, hence ending up suffering a loss. Widespread loss of potential revenue from farm exports magnifies into an economic scale when all farmers are affected within a nation. Therefore, port strikes affect farming and other industrial producers substantially. Shipping and Transport Sector The other group of stakeholders affected is the transport and freight service providers. In this context, economic implications to this group result from a sudden change in customer base and unfavorable adjustment within the supply chain. Strikes within the port mean that all business activities involved will have to stop. According to Peng (2011), there will be no more clearance of import and export freight packages by the customs department. Consequently, transport stakeholders will experience a sudden and significant loss of their customers. According to Norilsk (2012), statistics shows that the port of Florida generates approximately $5 billion in transport related activities alone every month. In addition, the same cargo-related activities provide both temporary and permanent employment opportunities to about 30,000 Americans. In this regard, sea cargo transportation remains one of the major wealth generators within the community living near ports. International shipping merchants will also suffer a blow from loss of their loyal customers within the affected base. As a result, they may be forced to consider looking for new tenants elsewhere. Based on this extrapolation, a sudden change in business activities will cause both economic and social discomfort among the transportation stakeholders. Consumers As the integral partners in business activities, consumers will also experience the negative impact created by port strikes. Wang (2007) notes that shortage of goods and services within a business environment will invite negative forces attributed to supply and demand curves. In the event that agricultural goods cannot reach a certain market segment, retailers within that segment will consider alternative sources of the same products. This means that import merchants dealing with agricultural products and any other affected commodity will source them from expensive exporters from other ports. In this context, there will be a situation whereby an increase in procurement costs will translate to a corresponding increase in retail prices. Consumers will have to dig deeper into their pockets in order to buy the same products. As a result of unaffordable pricing of goods, consumers may decide to abandon their plans of purchase and consider alternative options. Therefore, prolonged port strikes and disagreements will subject consumers to tough economic conditions and financial hardships created by shortage in supply. Solutions to Port Strikes With respect to numerous unprecedented worker strikes in ports, supply chain management should adopt appropriate measures meant to address any eventuality. Contingency measures should be installed to ensure that strikes do not significantly affect delivery of goods and services to customers. According Kersten and Jahn (2012), supply chain and port managers should engage in continual improvement of their systems to enhance versatility during difficult times. One appropriate solution for handling strike situations is improvement in goods reception and dispatch capacity. Ports should build large warehouses and faster clearance channels in order to increase inward delivery of goods. In times of strikes, the large and full warehouses will serve the purpose of supplying goods to consumers for a longer period of time than small warehouses. On the other hand, expansion of dispatch capacity eliminates threats posed by striking transport workers. Longer trailers could be used to deliver products to customers. According to Blecker (2013), such huge trailers with large capacity will ensure a few drivers delivering large quantity of goods at once can perform a considerable amount of work. In this context, port authorities could hire freelance drivers to perform delivery duties for a temporary period of time. This will off-set the gap created by striking transport workers, hence ensuring timely delivery of goods and services to consumers. In addition, supply chain managers should consider automating inventory and delivery channels. This can be achieved by integration of information technology systems in warehouse management and customer communications channels. In the event of a strike, a few IT specialists can be hired to perform inventory management services on behalf of striking employees. According to Peng (2011), utilisation of electronic systems will ensure efficient release of goods from warehouses and communication with customers, informing them of imminent deliveries. Improvement in warehouse management and transport channels will cushion port activities from effects created by strikes. In this context, automation and expansion of storage and distribution facilities will provide considerable solutions to strike related circumstances. Therefore, effective implementation of such contingency measures will ensure timely delivery of goods and services to customers during strikes. References Blecker, M. (2013, April 06). Role of Ports in Economic Development. Gujarat Maritime Board. Retrieved from http://www.gmbports.org/emusing_forth_edition/apr11/ip_economic_development.htm. Kersten, W. & Jahn, C. T. (2012). Maritime logistics in the global economy: Current trends and approaches. New York: BoD –Books on Demand Publishing. Norilsk, D. P. (2012, September 12). US farmers warn that dock strike would bring economic catastrophe. Lloyd’s List Containers. Retrieved from http://www.lloydslist.com/ll/sector/containers/article407201.ece Peng, C. E. (2011). Advances in maritime logistics and supply chain systems. Indianapolis: World Scientific Press. Wang, J. (2007). Ports, cities and global supply chains. Pittsburgh: Ashgate Publishing, Ltd. Read More