analysis of random disruptive events in shipping and...
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Analysis of Random Disruptive Eventsin Shipping and Port Operations
INTERNATIONAL FORUM ON SHIPPING, PORTS AND AIRPORTS (IFSPA) HONGKONG, 24-27 MAY2009
Saut Gurning
ResearcherNational Centre for Portsand Shipping
Australian Maritime College
Dr Stephen Cahoon
Head of DepartmentDepartment of Maritime andLogistics Management
Australian Maritime College
WHEAT SUPPLY CHAININ AUSTRALIA AND INDONESIA
Farmers Handlers Processors DistributorsSub
Wholesalers Retailers Consumers
Farm Scale
Southern-Belt
Wheat Area
High Rain FallSpecial Area
AWB Limited
Grain Pool
Agra-Corp
PremiumGrain
Brooks Grain
ABB
Mortons
Aus-Wheat
Millers ForAnimalFeeds
Millers ForHumanFoods
ProcessorsFor
Beverage
ProcessorsFor Ethanol /
Bio-Fuel
IndustrialConsumers
Big Industry
SmallMedium
Enterprise
Household
EndConsumer
ExportMarkets
DomesticMarkets
Agents
Marketers
FreightForwarders
Storage and
Handling
Global Supply Chain Networking
National and Local Wholesalers and
Retailers Chains
Food Retail Services and Small Shops
Wholesalers
Third Party Suppliers
MARITIME POSITION IN THE WHEAT SUPPLY CHAIN
Farmers Handlers Processors
Maritime Distributors
& Handling
Wholesalers Retailers Consumers
Shipping
Ports
Forwarders
Shippers
Consignees
Effecting Factors / Affecting issues on three layers of upstream chain
Focal PointFocal Point
Effecting Factors / Affecting issues on three layers of downstre am
RESPONSE ON MARITIME DISRUPTIONS
Makassar
Banjarmasin
SurabayaSemarang
Jakarta
Singapore/Malaysia
Medan
Brisbane
Sydney
MelbourneAdelaide
Perth
Main shipping routeFeeder route toIndonesia
Makassar
Banjarmasin
SurabayaSemarang
Jakarta
Singapore/Malaysia
Medan
Brisbane
Sydney
MelbourneAdelaide
Perth
Main shipping routeFeeder route toIndonesia
Container (TEU)
Bulk (20 tons)
0
500
1000
1500
2000
2500
3000
3500
4000
Belawan Priok Perak Tj Emas Barito Makassar
Cost (US$)
Container (TEU)
Bulk (20 tons)
Supply-ChainRisks
Uncertainties Disturbances
Delay Deviation Disruption Disaster
Related to risks as Disruption Risks
Clausen et al.(2001a,p. 41)
“A state during the execution of the currentoperation, where the deviation from plan issufficiently large that the plan has to bechanged substantially”.
Yu and Gi (2004)
“Various unanticipated events caused byinternal and external factors which significantlydeviate original plans of a system andconsequently affect its performance severely”
Events in Supply Chain as Supply Chain Disruption
Craighead et al. (2007,p.132)
“Unplanned and unanticipated events thatdisrupt the normal flow of goods and materialswithin a supply chain and, as a consequence,expose firms within the supply chain tooperational and financial risks”.
Disruptions in Maritime
Bearing-Point &Hewlett-Packard(2005, p.2)
“The maritime industry is directly
impacted by a variety of disruptions
to the flow of legitimate trade and
travel. These range from minor
weather disruptions to hurricanes
and typhoons, from workforce
shortages to work stoppages andfrom security breaches to potential
Terrorist attacks”.
ImpactFrequency
DirectIndirect Major Minor
Stages of maritime disturbancesand recovery periods
Time
Serv
ice va
riabl
ede
terio
ratio
n
Delay Deviation Disruption Disaster
D2
D3
D1
D4
D5
Summary of factors identified in major studies ascauses of maritime disruptions
Aka
ha 1
986
Ros
e et
al.
1997
Cha
ng
2000
Ram
age
2001
Wat
anab
e 20
02C
onn
olly
200
4A
lexa
nde
r and
Irw
in 2
005
Bea
ringP
oint
200
5C
hu a
nd H
anse
n 2
005
Coy
et a
l. 20
05D
avis
et a
l 200
5E
arly
-War
ning
200
5F
ritte
lli 2
005
Kle
indo
rfer a
nd S
aad
2005
Arn
old
et a
l. 2
006
CS
A 2
006
Shu
ltz 2
006
Auc
klan
d 20
07B
usi
ness
Lin
e 2
007
CB
C 2
007
Con
rad
et a
l 200
7D
rum
200
7H
eger
200
7M
ahb
ub 2
007
Pe
ttit 2
007
Reu
ters
200
7Y
ank
2007
Bro
wn
200
8G
urni
ng
2008
Hor
lock
200
8R
ober
t 20
08S
aidi
200
8S
eba
2008
Str
atfo
r 20
08
Tod
d 20
08T
suki
mor
i and
Juk
wey
200
8W
right
200
8N
ight
inga
le, 2
008
N O D is ru p tiv e E v e n t s1 S e c u rity is s ue s • • • •
2 P o litic a l e v e n ts • • •
3 R a il re la te d op e ra t ion • •
4 P o rt s t rik e s • • • • • • • •
5 C us tom s & a dm inis t ra ti on • • •
6 S e v e re w e ath e r c on dit io n • • • • • • • • • • • •
7 E a rthq u ak e s • • • •
8 E le c t ric a l ou ta g e s • •
9 E q uip m en t do w n / s h orta ge • •
1 0 E m pty c o nta in er s •
1 1 S h ip a c c id e nts in po rt a r ea s • • •
1 2 S h ipp in g-P or t d is pu te s •1 3 P o rt c o n ge s t ion • • • •
1 4 S h ip s h or ta g e s • • •1 5 F ue l a n d b un k e rin g C o sts •
1 6 In la nd a c c es ib ilt y p rob le m s • •
1 7 Te le c o m u n ic at io n s y s te m •
1 8 S h orta g e o f s e rv ic e de m a nd •
R e s e a rc h e r s a n d F a c to rs Id e n t if ie d / D is c u s s e d
Maritime Disruptions and its impacts
TYPE OF MARITIME DISRUPTION RISKS
DIRECT INDIRECTSecurity and safety Market
- Ship accidents - Shortage of Demand
- Ship pollution - Shortage of ships
- Political events - Financial Crisis
- Terrorist attack - Trade imbalance
Service related factors Organisation and relationship
- Operational and equipment - Employment / Port Workers
- Competition - Legal and policy
- Fuel and bunkering - Resource
- Electrical shortage - Customs process
- Congestion - Ships inspection
- Infrastructure related factors Environmental
- Communication facility - Severe weather
- Lack of development - Earthquakes
- Inland transport connections - Flood
Maritime disruptions in theAustralia-Indonesia wheat supply chain
In Australia
Drought
InsufficientRail-linkage
Queuing andCongestion
at ports
Limited draughtat ports
Shortage ofContainers
Imbalance marketof global dry bulk
fleet over thedemand
Temporarychange from dry-
bulk tocontainerised
Inland Congestion
Port Congestion
Problems with Inter-Island networks
Lack of inlandaccessibility
Higher costs andlonger time
Lack of terminal storages, limited draught ofberth, higher terminal charge, exhausted
customs’ procedures
Severe wave and windin ocean environment
Stoppage of ferry /domestic services to
Inter-island points
Contribute toHigher price 38-76 per cent of
250-260 percentof total selling
price
Longer lead timemaximum 30
days
In Indonesia
RESPONSE ON MARITIME DISRUPTIONS
Makassar
Banjarmasin
SurabayaSemarang
Jakarta
Singapore/Malaysia
Medan
Brisbane
Sydney
MelbourneAdelaide
Perth
Main shipping routeFeeder route toIndonesia
Makassar
Banjarmasin
SurabayaSemarang
Jakarta
Singapore/Malaysia
Medan
Brisbane
Sydney
MelbourneAdelaide
Perth
Main shipping routeFeeder route toIndonesia
Container (TEU)
Bulk (20 tons)
0
500
1000
1500
2000
2500
3000
3500
4000
Belawan Priok Perak Tj Emas Barito Makassar
Cost (US$)
Container (TEU)
Bulk (20 tons)
Year Disruption Application Researchers Objectives MethodsDisruption management
strategies
Management topics in maritime operation ISM CR BCM RP
2001 Security on supply Terrorist attack at port SheffiPropose postponement delays andimported inputs Risk Pooling Analysis √ - √ -
chain risk assessment Input limitation
2003 Business Continuity Multimodal application Depak Developed business continuty scenario Continuity cycle - - √planning of maritime services of a firm facing disruptions
2004 Formal risk assessment Inbound supply after Zsidisin, Carter, Propose formal risk assessment Agency theory √ √ - -
maritime services & Cavinato procedures and techniques
2005 Disruption visibility Port stoppages Blackhurst et al. Propose actions related to disruption Focus group interview √ √ - √discovery, recovery and redesign Telephone interview,
2005 Analytical framework Port closure Kleindorfer and Measure the implications of Risk Standard logistic √ - √ -
of disruption response Saad Management program data for disruption regression model
management system
2006 Resilient supply chain Stoppage of maritime
operation because ofsevere weather
Tang Robust strategy of mitigation process Lesson learned from √ √ - -
disruption cases of Nokia, Dell,
Li and Fung.
2006The quantification of
mitigation andcontingency strategies
Blockages of one particular
shipping routes
Tomlin Proposed flexible scenarios of optimal Optimal ordering Policy √ √ - -
disruption-management strategies under Markov chain
2007 Disruption severity Port Strike Craighead et.al Develop warning and recovery planning Complexity analysis √ √ - √
2008 Risk Monitoring system Supply chain port entry Handfield et al. Mapping the high critical nodes Incident report system - √ - -
Supply Chain risk Port Strike event McCormac Develop procedures to estimate Risk Probability Index √ √ - -
assessment event the probability supplier attributes and multi-use matrix
and environment risk Index
STRATEGIES TO RESPOND TOMARITIME DISRUPTIONS
1. Inventory and Sourcing Mitigation 3. Business Continuity Mgt Planning2. Contingency Rerouting 4. Recovery Planning
Understanding Maritime Disruptions on Wheat -Trade
Natural Hazard
Operational
Maritime DisruptionManagement
Model
Discovery
Basic drivers Stages
Goals
IndustryCharacteristics
Disparitiesbetween trade
Pre-DisruptionsEnvironment
Wheat ChainStructure
MaritimeOperations
Existing PracticesOf SC operators
Market / EconomicsDevelopment
Initial reactions
Response group/Chain responses
Options available
Decision made
RecoveryPerformance
Wheat-ChainRedesign
Readiness /Mitigation
INTERNATIONAL FORUM ON SHIPPING, PORTS AND AIRPORTS (IFSPA) HONGKONG, 24-27 MAY2009
CONCLUSION
• Maritime leg of supply chains require more
attention
• Further research required on maritime disruptions
• In particular the wheat supply chain
• Types of disruptions
• Direct and indirect
• Who is affected
• Mitigation and contingency strategies
14
Thank you
Saut Gurning
ResearcherNational Centre for Ports andShipping
Australian Maritime College
Dr Stephen Cahoon
Head of DepartmentDepartment of Maritime andLogistics Management
Australian Maritime College