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8-27-2011
Analysis on Jingtang container terminal port competition strategy Analysis on Jingtang container terminal port competition strategy
Xiaojiao Du
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WMU-SMU ITL2011
I
World Maritime University
Shanghai, China
Analysis on Jingtang Container Terminal Port Competition Strategy
By
DU XIAOJIAO
CHINA
A research paper submitted to the World Maritime University in
partial Fulfillment of the requirements for the award of the degree of
MASTER OF SCIENCE
2011
©Copyright WMU 2011, DU XIAOJIAO
WMU-SMU ITL2011
II
DECLARATION
I hereby certify that all the material in this dissertation that is not my own work
have all been identified, and that no material is included for which a degree has
previously been conferred on me.
The contents of this dissertation reflect my own personal views, and not
necessarily endorsed by the University.
(Signature):_______
(Date):___________
Supervised by Professor
Shi xin
Shanghai Maritime University
WMU-SMU ITL2011
III
ACKNOWLEDGEMENTS
I am heartily thankful to Professor Shi xin, who gives me some meaningful and
helpful advices during the research defense and give me the possibility to complete
this dissertation. His patience and kindness are greatly appreciated and I have learned
from him not only academically but also the professional ethics.
This thesis would not have been generated without help of Ms.ZHOU YingChun and
Ms.HU FangFang who are in charge of the program support and help me during last
two years. I am grateful to all of the professors of ITL programme , they taught me
basic knowledge of the transportation and logistics industry.
I extremely want to show my indebtedness to my beloved parents, who offered me
full support and encourage during whole my life.
Last but not least, I offer my regards and blessings to all of those who supported me in
any respect during the completion of the project.
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IV
Abstract
As the further development of economy globalization, container transportation, which
nowadays becomes primary world marine mode, has increasingly expanded in
marketing share．Therefore, it inspires harbor industry to actively adapt to this
development orientation with industry structure and policy adjustment and lead to
more and more intensive competition among container terminals.
Bohai Rim locate in northern China coast, the region has the largest inland sea - the
Bohai Sea. The Liaodong Peninsula, Shandong Peninsula and the North China Plain
encircle this 77,000 square kilometers sea. Alongside the Bohai Rim’s 5700
kilometers “C-shaped” coastline, which is nearly one-third of the total coastline, there
are more than 40 bays and more than 20 cities. The ports density and distribution of
sizes formed a unique group of modern ports. Bohai Rim ports’ economic hinterland
covered almost half of China. They are the most important outgoing sea ports for
northeast, north, northwest and east of China.
Jingtang Seaport is the state's first class opening port. In the history of Chinese
seaport construction, Jingtang seaport creates a surprising speed. The construction
work commerced on Angust 10, 1989. It was in 2003 that No.1 and No.2 port areas
had been completed, which own 16 deep-water berths of 15000-ton-class to
50000-ton-class with coal, ore, shipping container, petrol liquefied gas, bulk cement
and so on. The biggest one is 70000-ton class cargo loading and unloading. The cargo
through put of the port is only 79000 tons when simple constructed navigation in 1992,
and 5000000 tons to 20830000 tons since 1998, stepping into the top 20 coastal
seaports in china. Jingtang Seaport awarded May 1.Prize in 2003 becomes a
well-known champion port.
The construction and operation of Jingtang Seaport open up wide space for the
WMU-SMU ITL2011
V
development of its hinterland benefiting from the advantage of seaport, a number of
enterprises make full use of both the domestic and the oversea markets. The seaport
offers high-quality, high-effective, perfect and service for clients, besides,
continuously expanding the scale of company and improve economic benefit. With
70000-ton-class berth in Wangtan Port Area and 250000-ton-class berth in Caofeidian
Port Area completed by the end of 2005, Jingtang Seaport will definitely contribute to
the economic development of its hinterland. (Retrieved from http://www.jtct.cn)
The management of Jingtang Stevedore will face not only the competitions of large
harbors around the area likes Dalian, Tianjin and Qingdao but also the competitions of
numerous subordinate container terminals of Hebei Port group inevitably. Thereby it
is necessary to do further analysis on inner and outer surroundings, make research and
consolidate competitive advantages and submit competitive strategies respectively．
Thus all of these will be significance to both overall developments of Hebei container
transportation and promotion of integrated competitive ability of Tangshan city．
In response to major changes in the international shipping industry, a strategy of
domestic competition and cooperation between ports is a trend and should be adopted.
However, some large ports in Bohai Sea region, effective cooperation between these
ports has not yet formed. Many ports adhere to the "recent attack, far together"
principle. Competition is fierce. It is difficult to fully utilize resources, complement to
each other and the overall regional advantage does not play well. This in-depth study
and analysis of the Bohai Sea ports of internal competition and cooperation issues, on
the Bohai Sea port development prospects group.
This article tries to clarify the basic competitive orientation for Jingtang Seaport in
such industry. These clarifications refer to research results on container transportation
development of experts and scholars worldwide and research of inner and outer
WMU-SMU ITL2011
VI
surroundings aroused with Jingtang container stevedore development. It also
introduces PEST and 5F models to systematically analyze integrated and industrial
surroundings as well as competitive opponents. Under the research of resource,
capabilities and core competitive ability, it clearly defines the competitive ability of
this terminal. Furthermore, with application of SWOT and STP models, and port
competitive ability evaluation analysis form, this article also make comprehensive
analysis between outer surroundings and inner capabilities to recognize the target
market orientation of this terminal．In addition, taking advantage of competitive
strategy alternative analysis forms and domestic container throughput generative
evaluation, this article propose low price and high quality policy, co-operative strategy,
resource integrated strategy, port logistic development strategy and all risks of these
strategies respectively．Base on above analysis, from the point of outer surroundings
and capabilities improvement, this article bring forward four protective measurements
for the terminal management measurement, sea route expeditious construction
measurement and Jingtang supportive construction measurement ． Although
competitive strategies and competitive advantages are no longer new concepts, they
appear to be increasingly important in guidance of enterprise
management．Competitive advantages are the core of enterprise performance in
marketing ． As economy is becoming globalize, from the aspects of strategy
management research, it should pay more attentions on feasible competitive
advantages of the enterprise．The analysis and propose of competitive strategies in
this article will provide some useful reference for the formulation of development
strategies for Jingtang container stevedore．
Key words: Jingtang harbor；Container terminal, Competitive ability evaluation
analysis form
WMU-SMU ITL2011
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Table of contents
DECLARATION .....................................................................................................II
ACKNOWLEDGEMENTS .................................................................................. III
Abstract ................................................................................................................. IV
Table of contents ............................................................................................... VII
List of tables.........................................................................................................VIII
List of figures .......................................................................................................VIII
Chapter 1 Introduction ........................................................................................... 1
1.1 Background Information............................................................................................1
1.2 Literature Review........................................................................................................4
1.3 Main Research Method...............................................................................................5
1.4 Main Research Content ..............................................................................................7
Chapter 2 Development of the External Environment of Jingtang Container
Terminal and Container Transport ...................................................................... 10
2.1 Overview of the Port External Environment................................................................10
2.2 General Environment .....................................................................................................11
2.2.1 Legal & Policy Factor ..........................................................................................12
2.2.2 Economic Factor...................................................................................................14
2.2.3 Technology Factor ................................................................................................16
2.2.4 Social and Cultural Factors.................................................................................17
2.3 Industry Environment ....................................................................................................17
2.3.1 Threat of the Entry of New Competitors ...........................................................18
2.3.2 Threat of Substitute Products or Services..........................................................20
2.3.3 Bargaining Power of Customers .........................................................................20
2.3.4 Bargaining Power of Suppliers ...........................................................................21
2.3.5 Existing Competitors ...........................................................................................21
2.4 Competitive Environment ..............................................................................................23
Chapter 3 Analysis of the Internal Environment of Jingtang Container Terminal
................................................................................................................................ 23
3.1 The Overview of the Enterprise Internal Environment...............................................23
3.2 The resources of the Jingtang Container Terminal ......................................................24
3.2.1 Tangible Resources...............................................................................................24
3.2.2 Intangible Assets...................................................................................................26
3.3 The Core Competence of Jingtang Container Terminal ..............................................26
3.3.1 Location Advantage .............................................................................................27
3.3.2 Cost Advantage.....................................................................................................27
Chapter 4 Development orientation of Jingtang container terminal................... 28
4.1 The SWOT Analysis of the Jingtang Container Terminals. ........................................28
4.2 Target Market Segmentation .........................................................................................30
4.3 Development Position of Jingtang Container Terminal...............................................32
4.3.1 Evaluation of the Government ............................................................................32
4.3.2 Enterprise Self-evaluation...................................................................................33
Chapter 5 Adoption of Competitive Strategy of Jingtang Container Terminal .. 34
WMU-SMU ITL2011
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5.1. Analytical Statement of Competition Strategy.............................................................34
5.2. Strategy of Low Cost Operation ...................................................................................36
5.2.1. Low Cost Operation Strategy based on Cargo Owners ...................................37
5.2.2. Low Cost Operation Strategy based on Shipping Company ...........................37
5.2.3. Low Cost Operation Strategy based on Shipping Agents ................................40
5.3. Strategy of Joint Venture Cooperation.........................................................................41
5.3.1. Strategy of Cooperating with Shipping Companies .........................................41
5.3.2. Cooperate with the Port Companies with the Background as Shipping
Companies......................................................................................................................42
5.4. Resource Integration Strategy.......................................................................................43
5.4.1. Strategy of Internal Resource Integration ........................................................43
5.5. Strategy of Port Logistics Development .......................................................................44
5.5.1. Advantage of Logistics Development in the Port..............................................44
5.5.2. Advantages for the Jingtang Container Terminal in Developing Port Logistics
.........................................................................................................................................45
5.5.3. Plans for logistics development in Jingtang Container Terminal....................46
Chapter 6 Conclusion............................................................................................ 46
Reference: .............................................................................................................. 49
List of tables
Table 3.1 Jingtang Container Terminal's Primary Berths
Table 3.2 Jingtang Container Terminal's Primary Corollary Equipments
Table 4.1 SWOT matrix
Table 5.1 Analytical statement for competition strategy selection
List of figures
Figure 2.1 Container transportation relationship system
Figure 2.2 Jingtang container terminal PEST model
Figure 2.3 Driving forces of industry competition
WMU-SMU ITL2011
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Chapter 1 Introduction
1.1 Background Information
With the advantages of large volume of marine transport, great through capacity, less
restrictions from roads and rail, low freight and so on, ocean transport has become the
most important mode of transport in international trade. Ocean transport accounted for
70% of the total international transport volume. From the sixties last century,
container shipping started to rise in international shipping, and gradually became one
of the world's main modes of transport. Its growing market share prompted port
industries continue to take the initiative to apply to direction which should be
developed to actively adjust the industrial structure and industrial policies. This lead
that the degree of competitive process between container terminal operators becoming
increasingly fierce.
Bohai Rim locate in northern China coast, the region has the largest inland sea - the
Bohai Sea. The Liaodong Peninsula, Shandong Peninsula and the North China Plain
encircle this 77,000 square kilometers sea. Alongside the Bohai Rim’s 5700
kilometers “C-shaped” coastline, which is nearly one-third of the total coastline, there
are more than 40 bays and more than 20 cities. The ports density and distribution of
sizes formed a unique group of modern ports. Bohai Rim ports’ economic hinterland
covered almost half of China. They are the most important outgoing sea ports for
northeast, north, northwest and east of China.
Jingtang Seaport is the state's first class opening port. In the history of Chinese
seaport construction, Jingtang seaport creates a surprising speed. The construction
work commerced on Angust 10,1989. It was in 2003 that No.1 and No.2 port areas
had been completed, which own 16 deep-water berths of 15000-ton-class to
50000-ton-class with coal, ore, shipping container, petrol liquefied gas, bulk cement
WMU-SMU ITL2011
2
and so on. The biggest one is 70000-ton class cargo loading and unloading. The cargo
through put of the port is only 79000 tons when simple constructed navigation in 1992,
and 5000000 tons to 20830000 tons since 1998, stepping into the top 20 coastal
seaports in china. Jingtang Seaport awarded May 1.Prize in 2003 becomes a
well-known champion port.
The construction and operation of Jingtang Seaport open up wide space for the
development of its hinterland benefiting from the advantage of seaport, a number of
enterprises make full use of both the domestic and the oversea markets. The seaport
offers high-quality, high-effective, perfect and service for clients, besides,
continuously expanding the scale of company and improve economic benefit. With
70000-ton-class berth in Wangtan Port Area and 250000-ton-class berth in Caofeidian
Port Area completed by the end of 2005, Jingtang Seaport will definitely contribute to
the economic development of its hinterland.
Jingtang Port is located in northern Bohai Bay. It is the nearest point from Beijing and
Tianjin export ports of the Bohai Bay. It is 80 kilometers southeast from Tangshan
City, 64 sea miles east away of Qinhuangdao Port and west 30 miles from Caofeidian
port. In Dr. Sun Yat-sen's "The International Development of China", Jingtang port
was submitted the proposed "largest northern port" port site. It is also the throat
connection of North China and Northeast China. Beijing-Shenyang,
Beijing-Qinhuangdao, Datong-Qinhuangdao railways running through the whole
territory. Tangshan-Tianjin, Beijing-Shenyang and the coastal highways also running
across the entire territory. It has interwoven into a network of the railway roads, the
traffic is highly developed. (Retrieved from http://www.jtct.cn)
The management of Jingtang Stevedore will face not only the competitions of large
harbors around the area likes Dalian, Tianjin and Qingdao but also the competitions of
numerous subordinate container terminals of Hebei Port group inevitably. Thereby it
WMU-SMU ITL2011
3
is necessary to do further analysis on inner and outer surroundings, make research and
consolidate competitive advantages and submit competitive strategies respectively.
Thus all of these will be significance to both overall developments of Hebei container
transportation and promotion of integrated competitive ability of Tangshan city.
This article tries to clarify the basic competitive orientation for Jingtang Seaport in
such industry. These clarifications refer to research results on container transportation
development of experts and scholars worldwide and research of inner and outer
surroundings aroused with Jingtang container stevedore development. It also
introduces PEST and 5F models to systematically analyze integrated and industrial
surroundings as well as competitive opponents. Under the research of resource,
capabilities and core competitive ability, it clearly defines the competitive ability of
this terminal. Furthermore, with application of SWOT and STP models, and port
competitive ability evaluation analysis form, this article also make comprehensive
analysis between outer surroundings and inner capabilities to recognize the target
market orientation of this terminal．In addition, taking advantage of competitive
strategy alternative analysis forms and domestic container throughput generative
evaluation, this article propose low price and high quality policy, co-operative strategy,
resource integrated strategy, port logistic development strategy and all risks of these
strategies respectively．Base on above analysis, from the point of outer surroundings
and capabilities improvement, this article bring forward 4 protective measurements
for the terminal management measurement, sea route expeditious construction
measurement and Jingtang supportive construction measurement ． Although
competitive strategies and competitive advantages are no longer new concepts, they
appear to be increasingly important in guidance of enterprise
management．Competitive advantages are the core of enterprise performance in
marketing ． As economy is becoming globalize, from the aspects of strategy
management research, it should pay more attentions on feasible competitive
advantages of the enterprise．The analysis and propose of competitive strategies in
WMU-SMU ITL2011
4
this article will provide some useful reference for the formulation of development
strategies for Jingtang container stevedore．
1.2 Literature Review
Strategic management as the core of enterprise management, its theory continued to
be thorough as economic globalization expands. Contemporary strategy research has
not simply cruising in the management of a single category, but also learn and absorb
the philosophy, religion, economics, psychology, sociology, political science, law,
ethics, history, anthropology and other disciplines of study research results, current
research has entered a strategic development stage of the jungle. Internationally, from
the eighties of last century, Prof. Michael E. Porter, from Harvard Business School the
United States, has focused the world's major strategic research results into the
application of industrial economics ideas, putting forward competitive strategy and
competitive advantage ideas of the system. In recent years, written by Michael Porter
"Competitive Strategy Techniques for Analyzing Industries and Competitors" (Porter,
1998a), "Competitive Advantage" (Porter, 1998b) and "the Competitive Advantage of
Nations "(Porter, 1990), which greatly attract and inspire our country's strategic
management theory and practice of those.
In the port industry, since the 90s of last century, with the rapid growth of the
domestic container transport and competition intensified, focused on enhancing
advantages of the port area to speed up the development strategy for Port Container
Transport, container transport strategy research and other fields, industry experts and
academics, and port operators have been active and productive thinking examination
and practice. In the domestic journals "Containerization" and "China Ports", "China
Water Transport" and other industry-related publications designed the insights of
experts at home is not uncommon. Michael Porter's "five forces model" is applied by
a lot of researches and practitioners. In recent years, several major domestic ports are
WMU-SMU ITL2011
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put forward a set of packing transport development strategy for the core business or
strategy. Board chairman of Tangshan port Investment Company Mr. Liu wei min's
article "Development Target & Strategy of Jingtang Harbour District, Jingtang Port"
(Liu, 2005), states deep and detailed thinking of competitive strategies of container
transport issues, which gives some inspiration on the topic of this research to carried
out. Since 2002, China has been carried out the national implementation of the port
management system reform. To 2004, full completion of devolution of major ports
along the China eastern coast has completed and the separation between government
and enterprises has also finished. The wishes of the local government to develop the
port are unprecedented arose， and coastal port infrastructure started thriving.
Competition between port enterprises, especially container transport competition has
entered a new stage. Facing the global and domestic competition, port operators and
industry experts and scholars gave a much more clearly acknowledgement and
understandings are further enhanced on the topic of the port competitive advantage
and strategic importance. I believe the future operation strategy of the port areas will
further broaden and deep-going. The focus of the study will also shift from a wide
range of competitive strategy to how to obtain sustainable competitive advantage.
1.3 Main Research Method
The study is based on the subject of the container shipping industry of the Bohai sea
rimland ports analysis, with the use of PEST model to study the external
environment of Jingtang Container Terminal in general; apply the "five forces model"
to study the main factors which are affecting the industrial structure and have a clear
image of the basic industry environment; through the SWOT method to analyze the
opportunities, threats, strengths and weaknesses that Jingtang container terminal is
facing; the use of STP model is for target market segments; the use of port
competitiveness evaluation form is to quantify the competitiveness of the Jingtang
container terminal from the customer point of view to submit their development
WMU-SMU ITL2011
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orientation. Based on the above analysis, this article will bring out competitive
strategy and guarantee measures. The research project's main characteristics are as the
following:
1. Focus on a systems analysis. Use systematic scientific thinking as a guide to do
the analysis of the industrial structure. With the study of internal relations between
macroeconomic factors and micro factors which are affecting industrial structure to
determine the importance of each factor and to explore the quantitative and laws of
these factors. Besides, this essay will also have a discussion of interactions between
various factors and the law of changes correlation analysis and description.
2. Combination of qualitative analysis and quantitative analysis. In the research, the
author strives to detailed data analysis to infer the basic environment industry,
forecast the direction of industrial development and establish a port competitiveness
evaluation system. The main aim is to quantify competitiveness of Jingtang container
terminal and, with the theoretical basis of qualitative analysis, this paper tries to fully
validate and support issues this study concluded.
3. Combination of theory and practice. The essay tries to combine industry analysis,
competitive strategy, competitive advantage, marketing theory, practice and the
specific port management to achieve scientific and practical results with application
of theory as a research tool.
4. Emphasis on case studies. The paper studies container port operation decisions
both at home and abroad, strategy formulation and implementation of relevant cases
in particular, to identify problems and analyze problems. With comparisons between
different ports' actual situation, we may draw conclusions for reference and analysis.
5. Focus on the application of interview. The research aim of this subject focus both
WMU-SMU ITL2011
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on the literature research and analysis and also on the specific content of the subject.
With the help of industry experts and port operators and other responsible persons, the
author is able to conduct special interviews to enrich research ideas and also enable
the subject of increased availability.
6. Field-oriented research. This topic needs more research to grasp the situation of
container port operations at the scene, which spends a certain amount of time and
energy to study the process of container terminal operations analysis.
1.4 Main Research Content
This essay based on the external environment and internal environment analysis of
Jingtang container terminal, makes clear understandings of opportunities and
challenges of Jingtang container terminal. With the use of target market segments of
Jingtang Container Terminal, the article is specifically targeting the development
position of Jingtang Container Terminal. According to the principle of maintaining
competitive advantage, this paper also gives advice on what competitive strategy
Jingtang Container Terminal is proposed to be taken of and further proposed the
implementation of competition policy guarantee measures.
Main Structure and Content:
Chapter 1 Abstract
This chapter mainly introduced the background information and the meaning of
choosing this topic, as well as domestic and international literature review and
researches related to the main content.
Chapter 2 Development of the external environment of Jingtang container terminal
and container transport
By using PEST model, this chapter analyzed the overall external environment of
WMU-SMU ITL2011
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Jingtang container terminal; through the application of the "five forces model", this
research analyzed the industry environment. Furthermore, the paper also studied the
main competitors' four diagnostic elements: main future objectives, the existing
strategies, planning ideas and ability to carry out.
Chapter 3 Analysis of the internal environment of Jingtang container terminal
This chapter mainly studied three aspects of Jingtang container terminal's internal
development environment: current enterprise resource, capability and core
competitiveness. Based on this analysis, this chapter brought up three core
competitiveness of Jingtang container terminal: geographical advantage, water
collection and distribution advantages and cost advantages.
Chapter 4 Development orientation of Jingtang container terminal
Using strengths, weaknesses, opportunities and threats analysis, this chapter further
clarified the overall development situation of Jingtang container terminal. By
segmentations of target market, this chapter defined the target market; through the
perspective of customer needs analysis, evaluation of port competitiveness system can
be built up and the competitiveness of the Jingtang container terminal were able to be
evaluated. Besides, based upon the above analysis, the developing orientation of
Jingtang container terminal is proposed.
Chapter 5 Adoption of competitive strategy of Jingtang container terminal
With the use of port competitive strategies selection table method, this chapter
proposed that Jingtang container terminal should clearly focused on enhancing the
overall competitiveness of ports in the implementation of low-cost operation strategy,
the joint venture strategy, the port resource integration strategy and port logistics
development strategy. Related strategies are also described and analyzed in this
chapter.
WMU-SMU ITL2011
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Chapter 6 Conclusion
This chapter summarizes research work.
Development of the environment of
Jingtang container terminal and
container transpo
rt
Analysis of the internal environment of
Jingtang container terminal
Analysis of the external environment of
Jingtang container terminal
Development orientation of Jingtang
container terminal
Adoption of competitive strategy of Jingtang
container terminal
WMU-SMU ITL2011
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Chapter 2 Development of the External Environment of Jingtang
Container Terminal and Container Transport
2.1 Overview of the Port External Environment
Ports as one of the most important parts of the basis industry in national economy, is
the link hub between inland transportation and marine transport. Ports are recognized
as the country's economic throat by those coast states. With the acceleration of global
economic integration, many ports put increasing efforts into construction and
development to meet the needs of international trade. The role of modern ports is
becoming to be the controller of three-dimensional transport and the center of the
integrated transport system. Container transport, as one of the most important parts of
port transportation system, presents interactively in such a system.
Figure 2.1 Container transportation relationship system
Therefore, the relevant external environment has important implications on the port
development.
External environment of port can be divided into three main levels: the general
environment, industrial (industry) environment and competitive environment.
Container transport
system
Port transport system
Traffic & transportation
system
The national economy
operation system
The national development
strategy
International
macroeconomic situation
WMU-SMU ITL2011
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The overall environment analysis focuses on the future. The overall environment
includes those factors that affect an industry and business in the broader social
environment. It can be divided into six areas: population, economy, law and policy,
social cultural, technology and global environment. Analysis of the overall
environment, its main purpose is to follow changes in external factors and trends to
help companies identify opportunities and threats.
Analysis of the industry focuses on environmental impact of corporate profits ability
to understand the conditions and factors. Industry environment analysis mainly
studies the threat of new entrants, the bargaining power of suppliers, bargaining
power of buyers, threat of substitutes and competitors' situations. Compared with the
general environment, industry environment has more direct impact the impact on
competitive advantage.
Analysis of the major competitors is aimed to track and predict actions, reaction and
purpose of competitors. Through the analysis of competitors, one can understand the
future purpose, the current strategy, ideas and ability of competitors. This can help a
company to understand, comprehend and predict the actions and motives of
competitors in order to take initiatives in competitions. Here are three aspects where
Jingtang container terminal were described and analyzed from the external
environment.
2.2 General Environment
In general, enterprises are faced with the overall environment including six major
aspects: population, economy, law and policy, social cultural, technology and global
environment. Specifically to the port industry, the focuses are economic, legal, policy,
technology and the global environment. The global environment as the most macro
factor has been much discussed so in this paper we do not describe it in details. The
WMU-SMU ITL2011
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above factors can be displayed for visual awareness through the PEST model.
(Reviewed from http://en.wikipedia.org/wiki/PEST_analysis)
Figure 2.2 Jingtang container terminal PEST model
2.2.1 Legal & Policy Factor
Macro policy and legal environment including a series of heterogeneous content such
as country's economic, political and legal. This essay only studied a number of policy
and law factors which have direct relationship with and impact on the development of
Jingtang container terminal. These factors are: the government port policy, port
management system reform and the influence of Law of Port.
1 Influence of the government port policy
(1) National port policy
According to the 12th Five-Year Plan (2011-15), further improvement of the layout of
coastal ports will be carried out and ports' services will significantly expand. The
formation of a rational layout, logistical support, effective service, safety and
environmental protection, advanced management system for the modernization of
Legal & policy
factor
Jingtang container
terminal
Economic factor
Social & cultural
factor
Technology factor
WMU-SMU ITL2011
13
ports will be developed. Port structure will be further optimized and the number of
deep-water berths will reach to 2214. The adaptive ability degree (port capacity /
throughput actually completed) will reach to 1.1.
Besides, issues like orderly advance the coastal port infrastructures, optimize the
structure and layout of coastal ports, make efforts to expand the port functions,
enhance the protection of the port capacity and service levels are also mentioned.
Improve the level of optimization of port layout, develop transport systems of major
cargo port layout such as coal, imported crude oil, imported iron ore and container to
enhance the modernization level of coastal ports. Advance to promote the construction
of container transport system: to grasp the construction of the rhythm, give full play to
existing facilities capacity, take steady progress in the construction of route container
port and corresponding development of regional port, feeding Port Container Terminal.
Accelerate the formation of domestic container transport system. According to
planning, by newly built and tapping the potential, the new container terminal
capacity will be of 58 million TEU. (Reviewed from
http://finance.people.com.cn/GB/14747341.html)
(2) Local port policy
From a macro point of view, according to China's strategic goal of national economic
and social development, based on Hebei Province's "first one, two main" strategic
requirements, Jingtang Port must take development as the theme, structural
adjustment as the main line, deep reform and technological progress as the driving
force, and constantly improve the functionality and expand production scale and
improve the port services standards to achieve sustainable development of Jingtang
Port. From the point of transport demand, northern China will import 61.57 million
tons of ore. Import of crude oil has also exceeded 1 billion tons, which is also need
large-tonnage berths. With the international container and the gradual development of
large-scale ship trends, we also need large-scale container terminal.
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2 Influence of port management system reform
Management is an eternal theme for enterprises. The port management innovation is
to make the port development keeping pace with the times, constantly adapt to
environmental change, adjust and improve themselves and continue to maintain a
competitive advantage and achieve sustainable development. What’s more, as central
government announced documents of the introduction of deepening the reform of port
management system, in accordance with the socialist market economic system, further
mobilize and bring into play the port construction and management of all aspects of
the initiative, give full play to the market's basic role in allocating resources to
promote the comprehensive competitiveness of the port to adapt to the national
economy and foreign trade development needs. Directly under the dual leadership of
the central and decentralized local port management, separate administration from
business, further mobilize local government to have enthusiasm of port construction,
make clear the port enterprises independent market players and promote the
establishment of modern port system.
3 Influence of Law of Port
Port Law of The People's Republic of China regulates legal obligations and
responsibilities at the level of the legal norms of port planning, port construction, port
operation, port management. It not only gives constraints of operation activities of the
port enterprises, but also protects the legal rights of the port enterprises, which
effectively promoted the healthy development of the port industry.
2.2.2 Economic Factor
To some extent, the economic environment and policy environment are closely related.
Specifically to the port industry, the analysis of economic factors mainly focused on
the macroeconomic environment and hinterland economic environment.
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1 Macroeconomic environment
China will still be in its golden period of development. The fast trend for
industrialization, urbanization, knowledge informationization, infrastructure
modernization and economic globalization going on now are all inter-linked. They
support and strengthen each other and are the five major forces driving China's
development. The Chinese economy will continue to maintain relatively fast growth
with a potential annual growth rate hitting 8-9 percent. The financial crisis has not
swayed Chinese economic progress too much, although it has caused temporary
difficulties. But this won't affect China's long-term economic growth trend. The crisis
has in effect become strong evidence that China's ability to cope with external strikes
has greatly improved over the years.
2 Hinterland economic environment
Jingtang port international container terminal has vast hinterland of resources located
in the heart of the Bohai economic circle. It is also an important part of the "big
Beijing strategy". Depend on the back of Beijing-Tianjin-Tangshan,
Beijing-Chengde-Zhangjiakou Delta Economic Zones, the port is the key
development area of Hebei Province's "one line, two sides " development strategy.
The port has vast hinterland and sufficient sources of goods. Direct economic
hinterland of Tangshan is an important energy, raw materials base and an area which
is rich of variety of agricultural products. Tangshan city has formed the coal, steel,
electricity, building materials, machinery, chemicals, ceramics, textiles, papers and
food ten pillar industries. And it is also communication and transportation hub and
goods distribution center between Northeast and North China, which means that there
are plenty supply of export goods. Indirect Jingtang Port hinterland may cover north,
northeast and northwest areas, especially with the Strategy of the Western
Development, more attention will be put on communication and cooperation with the
western provinces like Shanxi, Shaanxi, Inner Mongolia and other places to establish
closer relationship and expand the service radius. With the Bohai Sea region's rapid
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economic take-off, Jingtang Port as an important part of the area will play an
increasingly important role.
2.2.3 Technology Factor
Technology factors described in this article mainly refers to the new technology which
has impact on production and operation of the port and its operations.
1 Scaling-up of containerized vessels
To improve transport efficiency and reduce transportation costs, the current trend of
large-scale container ships has been very clear. From 1968 the first generation of
container ships to 1997 the sixth generation container ships, the loading capacity grew
rapidly from less than 1000TEU to over 8000TEU. Now the even larger 10000TEU
container ship also put into use. Large-scale container ships require higher level of
port's natural conditions and greatly improved handling equipment. Take loading and
unloading equipment for example, the sixth generation container ships are more than
45 meters wide, 18 rows of containers are arranged on deck. This requires the
terminal must has quay cranes of 60 meters extended from above the loading bridge to
obtain berthing capacity with the sixth generation container ships. This requires that
the port must have the appropriate equipment and facilities.
2 Channel depth condition
Under conditions of large-scale container vessel development requirements, to meet
the requirements of all-weather navigation of fifth and sixth generation container
ships, port's channel depth must be over 15 meters and channel width should be no
less than 250 meters to meet the two-way navigation requirements. Jingtang Container
Terminal's channel depth is 12 meters and channel bottom width is 160 meters. The
channel conditions cannot meet the development needs.
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3 Port automation and control system
Container terminal port operations mainly depend on the Intelligent Information
System Technology. Handling, storage and device control are achieved through the
computer system automation management. Particularly for those high degree of
automation equipped containers, promoting the port machinery and equipment of
condition monitoring and fault diagnosis technology plays an important role to
improve the container in good condition and availability of equipment.
2.2.4 Social and Cultural Factors
In the port industry, social and cultural factors mainly reflected in the employment
concept of value orientation and other aspects of life concept. Jingtang container
terminal is facing the problems of lacking water, exotic biological invasion and threats
of marine biological resources. Environmental protection is also a considerable extent
affecting the construction, production and management of container terminal. Thus,
this field covers a wide range of complex factors.
2.3 Industry Environment
Industrial environment is the key of an enterprise's external environment. It directly
affects the competitive advantage and access to excess profits. Michael Porter's five
basic decision factors of industrial environment or the five forces are: the threat of the
entry of new competitors, the bargaining power of customers (buyers), the bargaining
power of suppliers and the intensity of competitive rivalry (Porter, 1998a).
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Figure 2.3 Driving forces of industry competition
2.3.1 Threat of the Entry of New Competitors
Two factors are mainly considered for potential entrants enter into a particular
industry: The first is entry barriers and the second is revenge prediction from current
businesses of the industry. On one hand, due to a scarcity of deep water port coastline,
the deep water coastline resources have been planned completely (Porter, 1998a).
Moreover, coupled with huge investment in building a modern major port and the
project must receive government support and other factors, the barriers to entry are
much higher. This means that the number of potential entrants is limited, but their
strength is strong. On the other hand, the whole port container traffic industry is still
in its infancy, competitors have not yet taken strong countermeasures. This issue will
be further discussed in later chapters. According to the actual situation, Jingtang
container terminal's main potential competitor is Caofeidian port.
New competitors
Industry competitors
Competition between
existing enterprises
Customers
(
B
uyers)
Suppliers
Substitute products
or services
Bargaining power Bargaining power
Threat of substitute products or
services
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Caofeidian located on the west bank of Tanghai County coast of Bohai Bay, right in
Tangshan Luannan Caofeidian Island. It is adjacent to Beijing-Tianjin cities group, 60
kilometers south of Tangshan, 210 kilometers east of Beijing, 110 kilometers of
Tianjin, 150 kilometers east of Qinhuangdao. Caofeidian has excellent conditions and
regards as "the rare diamond port site" by media. 600 meters away from the southwest
and the south side of the island is the site of Bohai Bay's main tidal channel of deep
waters. 500 meters in front of the island, the water depth has reached 20m ~ 30 m, and
-25 meters deep waters go right through the Bohai Strait. Tianjin Port's international
waterway passes through the front of the island. Caifeidian port is the only natural
harbour in Bohai Bay which doesn't need excavation of waterways and basin.
Furthermore, the port can be constructed to large deep water port without dredging
maintenance. Caofeidian port is in the forefront of the Economic Rim.Its development
and construction will help to improve the layout of the Bohai Sea deep water ports
and conducive to advancing to the coastal industrial layout of Beijing, Tianjin and
Hebei.
Caofeidian port and Jingtang have many similarities such like they both have vast
hinterland, the construction land doesn't need demolition, their construction costs are
low, the water depth of the two are deep and they both have steep shore, the two
ports are ice-free and silt and so on. Therefore, both ports look like twins. Neither of
them can be ignored. In order to develop their own characteristics, the right strategy
has to be found. The two ports' features are very clear. 30 million tons level ships can
be stopped at Caofeidian port while only 10 million tons level ships can be stopped at
Jingtang port. The ideal direction of development is that Caofeidian port focus on the
development of economy with local characteristics-major ports, large industry and
large circulation. Meanwhile Jingtang port can do relatively small. (Reviewed from
http://www.scfdport.com)
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2.3.2 Threat of Substitute Products or Services
Compared with shipping transport, its main substitute transportation services are
highway, railway, aviation and pipeline.
Highway: Due to the distance of cargo transportation which should go through ports
is relatively long, highway does not have a substitution effect. But for the transport
between ports around the area, highway transport has a substitute effect.
Railway: Railway primarily regarded as part of collection and distribution system, the
substitution effect is not obvious.
Aviation: Because of the high cost of air transport and traffic volume is very small,
only small volume of time-demanding and high-valued cargo generated substitution.
Pipeline: As the pipeline and container transport different types of goods, pipeline
transportation does not have the substitution effect.
2.3.3 Bargaining Power of Customers
Ports' customers are mainly shippers and shipping companies. Generally speaking, the
stronger customer bargaining power is, the more disadvantages a port will take.
1 Shipper
The port density of round Bohai area is very high so port and transport services show
a buyer's market. Shippers always choose ports of high service efficiency and low cost.
Moreover, as the investment system of terminal integrated, part of shippers get
involved in port operations by acquisitions and other ways. Thus the shippers not
only take the initiative in the port market, but also might become potential market
entrants.
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2 Shipping company
Big shipping company has not only strong transport capacity but also has strong
group of cargo network. At present, competition between ports mainly lies in two
aspects: one is to constantly meet the needs of scaling-up of container ships by
improving port handling capacity; the other is to attract large container liner
companies to call at the port, or directly affiliate with major shipping companies to
jointly operate port services. Meanwhile, some large international liner companies are
getting to the direction of full logistics services such as COSCO and China Shipping.
They also actively involved in base port construction.
2.3.4 Bargaining Power of Suppliers
For port companies, the suppliers are mainly engaged in port equipment, port facilities,
port information systems development and port energy supply companies and so on.
Due to the current port suppliers are numerous, the port suppliers' market shows a
characteristic of buyer's market, so the bargaining power is not strong.
2.3.5 Existing Competitors
Jingtang port’s existing competitors are Tianjin and Qinhuangdao ports.
1 Tianjin port
Tianjin Port, which locates near to Beijing, is China's largest artificial port. The harbor
area is nearly 200 square kilometers. In 2008 the throughput reached to 0.354 billion
tons and container throughput was 8,500,000 TEUs. Now Tianjin ranks the 5
th
of
world top ten ports. Tianjin Port is about to invest 7.0 billion this year to speed up port
construction. During the first ten months of last year, Tianjin Port cargo throughput
totaled 334 million tons. As Tianjin Binhai New Area was included as part of the
country's overall strategic layout, Tianjin Port is facing a good opportunity for future
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development. According to the blueprint for Binhai New Area, Tianjin Port will be
built as an international container hub towards the north-east Asia and radiates west
Asia, the largest bulk cargo trunk port in northern China and international logistics
hub and resource allocation.
By 2020, Tianjin Port’s cargo throughput will reach to 400 million tons and container
throughput 20 million TEUs, its grade level of waterway will be up to 30 tons.
Currently, TCT (Tianjin port Container Terminal) has opened more than 20
international routes to more than 300 ports in more than 160 countries and regions,
such as Japan, Korea, Europe, the United States, the Mediterranean, the Persian Gulf,
Taiwan, Australia, Hong Kong, Singapore and so on. TCT also opened the ring
regional within the Bohai Sea and domestic trade coastal transport. (Reviewed from
http://www.tianjin-port.com)
2 Qinhuangdao port
Qinhuangdao New Port Container Terminal is engaged in Qinhuangdao Port and the
sole subsidiary of the container business Qinghuangdao port. It was co-founded by
Qinhuangdao port, China Shipping and Dalian Port Group. It has three container
berths and the designed annual capacity is 650,000 TEUs. The port can provide
loading and unloading services for the fifth-generation container ships. The yard area
is 360,000 square meters and the dedicated container packing and unpacking space is
40,000 square meters. The dedicated railway warehouse (MDA Class Warehouse
standards, cotton can be stored) and road warehouse (D warehouse standards) occupy
1.3 million square meters. The storage conditions are in line with national export food
inspection and quarantine requirements, port environment has achieved national
standards. Port side warehouse has special railway line connected with the national
railway network and has the capacity of loading and unloading train. The packing
point is adjacent to the pier, which means the procession does not need second
transition of goods costs can be saved. The port's business scope has covered the
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radiation of Xinjiang, Inner Mongolia, Liaoning and other places. Cooperated with a
number of shipping companies, the port has opened nine container liner routes and
become main trade port of domestic transport routes. (Reviewed from
http://www.portqhd.com)
2.4 Competitive Environment
Understanding and analysis of competitors are central tasks to clarify and maintain the
competitive advantage of Jingtang Container Terminal's. Competitor analysis is for
the purpose of understanding the actions competitors may take in real terms. The
analysis could help us to predict what competitors will do in future? What competitive
advantages do we have? How it will change the relationship between us and
competitors? Elaboration of these issues constitutes an important part of this article.
According to "12th five-year plan", Tianjin Port will continue to transform the
economic development pattern, enhance the level of scale and comprehensively
promote the four major industries. Estimate shows that to 2015, Tianjin Port cargo
throughput will reach to 550 million tons, container throughput will increase to 17
million TEUs, the port land area will expand to 130 square kilometers, level of
waterway will be 30-ton channel. Until then, the port's industrial cluster will begin
to take shape and its international shipping and logistics center functions will be
further enhanced.
Chapter 3 Analysis of the Internal Environment of Jingtang
Container Terminal
3.1 The Overview of the Enterprise Internal Environment
Looking for the enterprise's advantages in business, it is not only necessary to be
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aware of the enterprise's external environment and what the enterprise will do in this
specific external environment, but also necessary to study the enterprise's internal
environment to analyse the various resources, capabilities and competences that the
enterprise owns, to find and verify the core competence.
3.2 The resources of the Jingtang Container Terminal
3.2.1 Tangible Resources
Tangible resources are referred to be the visible and quantizing properties.
1 Natural Resources Jingtang Port is located in northern Bohai Bay. It is the nearest
point from Beijing and Tianjin export ports of the Bohai Bay. It is 80 kilometers
southeast from Tangshan City, 64 sea miles east away of Qinhuangdao Port and west
30 miles from Caofeidian port. In Dr. Sun Yat-sen's "The International Development
of China", Jingtang port was submitted the proposed "largest northern port" port site.
It is also the throat connection of North China and Northeast China. Beijing-Shenyang,
Beijing-Qinhuangdao, Datong-Qinhuangdao railways running through the whole
territory. Tangshan-Tianjin, Beijing-Shenyang and the coastal highways also running
across the entire territory. It has interwoven into a network of the railway roads, the
traffic is highly developed. Jingtang Port has #10, #11, and #22 three berths.
#10, #11 berths’ quay length is 557 meters and water depth is
12.5 meters. #22 berth quay length is 350 meters and water depth is 16 meters.
The three berths approved through capacity is 60 million TEU, the port land area is
about 310,000 square meters.
2. Tangible Resources The tangible resources of the port mainly presents in quay berth
and mechanical equipments, especially for the professional equipments, such as
loading bridge, rubber tyred gantry crane and stacker driving etc, that the container
terminal mainly depends on.
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3.
Table 3.1 Jingtang Container Terminal's Primary Berths
Projects Scale
Berth 3 (60 million TEU)
Frontage 907m
Land area 310,000m
2
Harbour basin width/depth of water 600m/-12.5m
Channel width/depth of water 160m/-16m
Material source: http://www.jtct.cn
Table 3.2 Jingtang Container Terminal's Primary Corollary Equipments
Equipment Facility Mar. 2011
Loading & unloading
bridge
8
Gantry crane 6
Stacking machine 2
Container truck 150+
Front handling crane
9
Fork lift truck
24
Material source: http://www.jtct.cn
3 Organizational Resources
The analysis of organizational resources in this text is divided into entity organization
and process organization. Entity organization is mainly related to level and span,
differentiation and integration, line and function, centralization and decentralization,
responsibility and limitation, rigidity and elasticity. Process organization includes
decision and execution, coordination and control, restriction and stimulation,
maintenance and innovation.
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Seeing from the organizational structure of Jingtang Port, this company adopts the
line structure, which mainly shows in the single line command, concentration of
power, the appointed limits of power relationship between superior and subordinate
and the general manager is request to be all-powerful manager. This is related to the
port field operation management which the Jingtang Port is mainly engaged.
3.2.2 Intangible Assets
1. Human Resources. The human resources are presented in the member's knowledge
structure, internal cohesive force, management capability and internal organization
mechanism etc. Because Jingtang Container Terminal is the key to the container
transportation development in the whole Jingtang Port, the Jingtang Port Group
chooses top members in the operation management of Jingtang Container Terminal.
The whole team has been optimized in knowledge structure and youth. If they are
excellent in the human resources development and stimulation mechanism, then the
company's human resources will have more advantages.
2. Innovation capability. The port's innovation mainly shows in the timely
generalization of the application of new technology, standard and equipments etc. The
modern port has the obvious advantage.
3. Reputation Because the Jingtang Container Terminal is harbour district, the brand
effect in market is obvious. It has good reputation resources.
3.3 The Core Competence of Jingtang Container Terminal
The core competence is what produces the resource and capability of competitive
advantage for enterprise compares to competitor. As the source of competitive
advantage of enterprise, the core competence makes the enterprise oversteps the
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competitor in the competition. The above article has been put a systematic general
explain to the resource and capability of Jingtang container terminal. But not all the
resource and capability can be the core competence of enterprise. To judge if the
resource and capability of an enterprise can be the core competence or not must be
accord with four conditions, such as: Whether has the capability of value or not?
Whether the scarcity capability or not? Whether it is hard to be imitated by the
competitor? Whether is irreplaceable or not?
3.3.1 Location Advantage
Bohai Rim locate in northern China coast, the region has the largest inland sea - the
Bohai Sea. The Liaodong Peninsula, Shandong Peninsula and the North China Plain
encircle this 77,000 square kilometers sea. Alongside the Bohai Rim’s 5700
kilometers “C-shaped” coastline, which is nearly one-third of the total coastline, there
are more than 40 bays and more than 20 cities. The ports density and distribution of
sizes formed a unique group of modern ports. Bohai Rim ports’ economic hinterland
covered almost half of China. They are the most important outgoing sea ports for
northeast, north, northwest and east of China.
In recent years, ports in the Bohai Sea region have been rapidly developed. Bohai Sea
region now has built a port transport system which regards Dalian, Tianjin and
Qingdao as the main hubs, including ports like Yingkou, Qinhuangdao, Jingtang,
Yantai, Rizhao, Dandong, Jinzhou, Weihai, Lushun, etc.
3.3.2 Cost Advantage
Due to Jingtang container terminal has the location advantage which makes Jingtang
container terminal has occupied the very favorable position in comprehensive cost of
port. Jingtang port is very near to various main economic regions compares to the
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other ones.
Chapter 4 Development orientation of Jingtang container terminal
The second chapter studies the analysis of the external environment of the
development of Jingtang Container Terminal and container transport, propose
competitors which the Jingtang Container Terminal are faced with, such as Tianjin
and Qinghuangdao. The third chapter analyzes the internal environment of the
Jingtang Container Terminal, which clarifies the inner resources, capabilities and core
competitiveness (regional advantages, collection and distribution advantages, cost
advantage) of the Jingtang Container Terminal. On the basis of the foregoing analysis,
this chapter will mainly use SWOT analysis, to further clear its potential, weaknesses,
opportunities, threats, and in accordance with the Subdivision of the market, to meet
customers' needs, proposes the development orientation of the Jingtang Container
Terminals.
4.1 The SWOT Analysis of the Jingtang Container Terminals.
On the basis of the foregoing analysis of Jingtang Container Terminals' internal and
external environment, this chapter will mainly use SWOT analysis, to intergrate its
strengths, weaknesses, opportunities and threats.
1. Strengths
(1)the advantage of location
(2)advanced port facilities and equipment, efficient terminal operation
(3)close to the supply generates, the low overall costs
(4)obvious advantage of water transport
2. Weaknesses
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(1)It has not effectively established reputation in the market; the attraction for
shippers and shipping companies is not strong enough.
(2)It has not found effective means in supply organization yet.
(3)The ability of marketing management is not strong.
(4) Waterway navigation conditions need to be improved.
3. Opportunities
(1) The overall economic environment continues to improve, and the demand of the
container transport economic hinterland is vigorous.
(2)The market port operations are gradually regulated.
4. Threats
(1)The first mover advantage of Tianjin Harbor is obvious, and it has large market
share. The competitive pressure of Jingtang is very heavy.
(2) Diversity cargo in small terminal makes the gathering functions of the Jingtang
difficult to show.
(3)There is need for improvement in the efficiency of customs clearance.
Table 4.1 SWOT matrix
Strengths Weakness
Internal
Environment
(1)the advantage of location
(2)advanced port facilities and
equipment, efficient terminal
operation
(3)close to the supply generates,
the low overall costs
(4)obvious advantage of water
transport
(1)It has not effectively
established reputation in the
market; the attraction for shippers
and shipping companies is not
strong enough.
(2)It has not found effective
means in supply organization yet.
(3)The ability of marketing
management is not strong.
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(4) Waterway navigation
conditions need to be improved
Opportunities Threats
External
Environment
(1) The overall economic
environment continues to
improve, and the demand of the
container transport economic
hinterland is vigorous.
(2)The market port operations
are gradually regulated.
(1)The first mover advantage of
Tianjin Harbor is obvious, and it
has large market share. The
competitive pressure of Jingtang
is very heavy.
(2) Diversity cargo in small
terminal makes the gathering
functions of the Jingtang difficult
to show.
(3)There is need for improvement
in the efficiency of customs
clearance.
4.2 Target Market Segmentation
A company cannot operate in each market to meet various needs, or even impossible
to perform perfectly in a large competitive market. Therefore, the Jingtang Container
Terminal in the PRD market, must find their own target market, and through a clear
target market, find the market position of the Jingtang Container Terminal.
In terms of Jingtang Container Terminal, through the target market subdivision, on the
one hand, it can make full use of enterprise resources and capabilities to provide
customers with services and to seek development under a clear target market; on the
other hand, in the stage of development to minimize conflicts with the strong
competition for the initial development of Jingtang Container Terminal to create a
relatively good external environment.
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Market is composed by the customers. So customers are different in many ways,
which determines a variety of methods can be used to segment the market. According
to marketing theory, market Subdivision according to different variables, can be
divided into geographic Subdivision, demographic Subdivision, mental breakdown,
behavior subdivision. Jingtang Container Terminal mainly provide customers for the
economic hinterland container transport services they need, which means they faced
a specific customer groups, so this paper uses geographic Subdivision to segment
the market of Jingtang Container Terminal.
The second chapter has mentioned the economic hinterland of the Jingtang Container
Terminal. In general, the direct economic hinterland of Jingtang Container Terminal is
Tangshan city. However, Tianjin, Beijing and Hebei have basically formed a relatively
stable pattern of market share, especially Tianjin Port has occupied the eastern region,
and by virtue of geographical advantages, forming the eastern region strong and solid
attraction. The attractiveness of Jingtang Container Terminal to this region is weak.
If the Jingtang Container Terminal treats this region as a target market, it is not only
difficult but will lead to cut-throat competition between ports, which is not conducive
to the Jingtang Container Terminal's operation. Moreover, seeing from the current
layout, the existing container terminals are the mainly large-scale along the east coast,
while in the western region have not formed a large-scale container terminal.
STP
Segmenting
Targeting Positioning
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4.3 Development Position of Jingtang Container Terminal
According to the basic information of Jingtang Container Terminal, the external
environment analysis, evaluation of the target market and customer perspective of
Jingtang container terminal capacity on the basis of comprehensive analysis, the
following points are tips that Jingtang port might take:
1. Jingtang Container Terminal has emerged competition force with strong
development potential;
2. In the round Bohai port group , the relationship between Jingtang and Tianjin
container terminals is just as the relationship between follower and industry leaders;
3. In the the round Bohai port group, Jingtang Container Terminal plays a strategic
role of the attacker among small container terminal;
4. Jingtang Container Terminal should increase the sale amount in target market, and
take advantage of the abundant container supply from hinterland and actively
introduce liner route to make the formation of scale in order to improve the entry
barriers to potential competitors;
5. The current role of Jingtang Container Terminal is regional market, and it should
accelerate the development, change to the trunk port, and ultimately become a
regional hub.
4.3.1 Evaluation of the Government
Tangshan is accelerating the construction of modern city, starting to optimize the
layout of urban space and adjust urban functions to realise the city's transform into a
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modern coastal city along the coast. However, there is a big gap between the current
lack of port capacity and the requirements of urban development. The lack of
conformity with the status of the central city port functions will inevitably lead to the
significant defects in overall function of the central city .Therefore, the construction
of deep-water port of Jingtang District has become an urgent need to optimize the
industrial layout and adjust the function. Jingtang Container Terminal will be able to
get the completion of the gathering as a modern urban center with more powerful
radiation. At the same time, relying on the development of Jingtang modern container
terminal port to develop coastline industrial zone, will help to add the economic
development potential capability, and is also a keypoint to recreate a new Tangshan
Port. The local government's force on the development of Jingtang Container
Terminal operations should be recognized.
At present, Tangshan is taking a new development strategy to realize industrilization.
The transfer of industrial layout has taken shape. Many key industries are located in
Jingtang port industrial zone.
The local government's development position of Jingtang Container Terminal is:
support implementation strategy to complete the functional and industrial layout
adjustment, to enhance radiation and the drive function of Jingtang container terminal.
4.3.2 Enterprise Self-evaluation
Jingtang Container Terminal is the stress of the development of the Jingtang port and
an important measure to enhance Jingtang port's competitive power. Facing with
fierce market competition, the market position of Jingtang Container Terminal is:
using advantages of location and scale, enhancing the attractiveness of hinterland
container transport, striving to achieve the feeder port to the trunk port changes, and
eventually becoming a regional hub. It will service for the modern container transport
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and logistics industry development in the region.
Chapter 5 Adoption of Competitive Strategy of Jingtang Container
Terminal
Last chapter analyzes the positioning of container delivery development in Jingtang
container terminal with the view to selecting the competition strategy that is suitable
to the external and internal environment so as to consolidate the advantages and grasp
opportunities. By applying competition strategy selection method, this chapter
compares the Jingtang terminal with Tianjin and Qinhuangdao ports, initiates
corresponding strategies, describes and analyzes the selected strategies.
5.1. Analytical Statement of Competition Strategy
By combining the analyses made in the previous chapters about the Jingtang container
terminal and the opponents, the chapter selects the factors such as technologies, cost,
scale, efficiency, service, ship route, capital, logistics and market reputation, etc.,
applies selective analyses of the competition strategy and ascertains the competition
strategy for Jingtang container terminal.
Procedures of analyses: at first, we set the scores for each factor among the divisions
of 1 to 10. If the target company and the opponent company get the same score in an
analytical factor, for example, the two parts all get 8 points in technology, it means the
two parts are both excellent at technology. If the strategies of technology update are
further implemented, it will be a waste of funds without the possibility of getting
much of benefit. The essence of the theory is short board effect. Therefore, under
certain background, selection of the key factor that affecting the corporate
competitiveness and making improvements are of great importance for the
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improvement of the general corporate competiveness.
Table 5.1 Analytical statement for competition strategy selection
(1)
Evaluated
Factor
(2)
Jingtan
g
Termin
al
(3)
Tianjin
Termin
al
(4)
Qinhuangda
o Terminal
(5)
Necessit
y in
Improvin
g the
Status
Quo
(High –
Medium
– Low)
(6)
Capabilit
y and
Speed
(High –
Medium
– Low)
(7)
Capabilit
y of
Opponen
ts (High
–
Medium
– Low)
(8)
Coping
Strategy
Technolog
y
8 8 6 Low High Medium Maintai
n
Cost 8 6 6 High High Low Improve
Scale 8 10 4 Medium High Medium Maintai
n
Efficiency
8 9 6 Medium Medium Medium Maintai
n
Service 7 9 7 High Medium High Catch-U
p
Ship
Route
6 10 8 High Low High Catch-U
p
Capital 8 9 6 Low Medium Medium Maintai
n
Logistics 6 9 8 High Medium High Catch-U
p
Reputatio
n
7 10 6 High Medium High Catch-U
p
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Analyzed from the results got from above table, cost is the core competition
advantage of Jingtang container terminal, ship route is the main competition
disadvantage of Jingtang container terminal, port comprehensive service level, port
logistics and market reputation are in need of further improvement. Market reputation
and port comprehensive service level are largely depending on the shipping frequency
and security guarantee. The major international lines will consider the container
capacity and the cost of port operation. The port operation cost will not only have to
meet the demand of the owners of the cargos, but also have to meet the demand of
shipping companies. Therefore, the various factors are independent yet interconnected.
By the comprehensive assessment of the above factors, this author of the article
believes that Jingtang container terminal should make the selections as follows for the
concrete competition strategy: strategies operation in low costs, joint capital
cooperation, port resource integration and port logistics development.
5.2. Strategy of Low Cost Operation
Obtaining of maximum profits or minimum operation cost are the objectives of almost
every business owner and consumer. For the port and related companies, it mainly
indicated in the low cost service demand by the cargo owners and the shipping
companies for the port. The low cost strategy is the commonest and most effective
strategy in market competition. Port cost accounts for about 40% of the entire
transportation cost of the containers so the port cost will affect the port influential
power directly. Because of the special regional advantage, the Jingtang container
terminal has obviously low cost for comprehensive services. Therefore, in the initial
business start of Jingtang container port, insisting on low cost service is of great
importance in attracting the shipping companies to start ship lines and attracting the
central region container cargos.
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5.2.1. Low Cost Operation Strategy based on Cargo Owners
The essence of low cost operation strategy based on cargo owners is to design low
cost operation for the cargo owners. In port transportation, the cost for cargo owners
is mainly indicated in the cost for the cargo transportation from the production place
(destination) to the port, storage charge in the port, operation charge in the port, long
distance transportation in large ships and the relevant national port charges (port
construction charge and cargo dues), etc. Analyzed from the change of costs,
regulated national port charges, long distance freight in large ships cannot be given in
favorable prices by the port companies. Therefore, Jingtang container terminal can
only give favorable prices to the cargo owners in port storage charge and port
operation charge. In the two aspects, the port can provide low cost and high quality
service by specific service policies. In concrete operation, the first is to make full use
of the storage space advantage of Jingtang container port and provide free storage
period for the container owners; the second is to implement period charge for the port
operation to encourage the cargo owner to increase the amount of containers so as to
reduce the unit transportation cost. For the cargo owners, in the aspect of
transportation, mainly give the subsidy for the rapid land transportation in Jingtang
terminal. There are two kinds of subsidies; the first is to refer to the methods taken by
Ningbo and Qingdao governments in encouraging the central land containers by
reducing or exempting the high way pass charges, actively get the government
support, reduce the cost for the container trailer in Jingtang port high ways. The
second is that the Jingtang port company can provide certain amount of subsidy for
the transportation of container trailer in Jingtang high way by Jingtang Port Company.
5.2.2. Low Cost Operation Strategy based on Shipping Company
The essence of the low cost operation strategy based on shipping companies is to
provide low comprehensive cost for the shipping companies, which is mainly
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indicated in the two aspects as follows:
1. Reduce the port cost reasonably. The most feasible solution for the Jingtang
container port in exploring major lines is to attract the ocean liners starting to dock in
Jingtang container terminal. Consider from the prospective of liner shipping
companies, the company must consider the saving and added costs of docking in
Jingtang container terminal to ascertain the minimum container amount.
The port should give the most favorable price to the ocean liner companies docked in
Jingtang container terminal. Besides the cargo handling costs, other port costs such as
towboat costs and piloting charges also account for large proportion in the port costs.
Therefore, in order to attract the shipping companies to initial ship routes, the port can
reduce the other port charges appropriately, or give certain favorable prices or
discount to the ocean shipping companies.
At the same time of providing favorable price, the port should also guarantee the
service quality and service efficiency in various aspects, such as to equip with cargo
handling equipment to meet the demand for operations in large ships, provide single
ship operation line and increase the operation amount per hour. In addition, the
container transportation is not only involved in cargo owners, ship owners and port,
but also road transportation, ocean transportation, loading and unloading storage,
clearance and inspection. Port should play the role as a platform, combine the customs,
commodity inspection, shipping companies, cargo owners, ship agents and cargo
agents, coordinate the relations of various steps, improve port environment, construct
unimpeded transportation channel and establish optimized supportive storage and
equipment by port information.
It is noticeable that the port charges should be kept in a stable level without the
frequent changes of prices or increase the price for large proportions. If the price is
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too low, the port investment return period will be too long, imposing negative impacts
on the equipment update and enlargement of scales of the port. Therefore, although
low cost strategy is the most effective competition strategy, the port should not
depend on the strategy excessively. The port charge cannot be kept in the low level
forever, which can be adjusted when the ship line capacity has reached to the expected
profitability. For instance, the port can make agreement to collect different levels of
charges in accordance with different levels so as to protect the profit of the port
companies and realize mutual benefit. It should be alerted that the port should avoid
the situation that the ship company regards the profit surrender as the way of earning
extra money and finally result in the ineffectiveness in reducing cargo transportation
costs.
2. Purchase or guarantee shipping space. In order to encourage the shipping
companies to explore shipping routes, Jingtang container terminal can purchase or
guarantee the shipping space. Purchasing shipping space means that the port
companies buy the part of the shipping space for the container liners docked in the
port and pay the freight for part of the shipping space. Guaranteeing shipping space
means that port companies promise to the container liners docked in the port to
provide a stable loading and unloading amount for each line and give subsidy for the
shortage if the amount is not achieved. The essence of the above method is that the
port companies take the burden of shipping companies actively and assume part of the
business operation risk for the shipping companies. In doing so, the port companies
should not just wait for the resources, but also to collect the resources in the market
actively. Although guaranteeing of shipping space hides risks, it also ushers in
challenges. It can overcome the disadvantage for the ineffective response to the
market and more importantly, control their destinies so as to be active and priority in
market promptly.
Purchase or guarantee of shipping space can ensure the profit of the shipping
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companies. The same with the low cost strategy, the strategy of purchase or guarantee
of shipping space is to provide the capacity for the companies to explore liners.
Compared to the low cost strategy, however, the purchase or guarantee of shipping
space will have greater effect, indicating the determination and honesty of the port to
the shipping companies. It means to give the promise to the shipping companies,
which will not reduce the worries and risk of the shipping companies, but also
establish the good reputation of the port. But in the same time, the risks of this
strategy cannot be ignored (for example, the shipping companies may be too depend
instead of collecting cargo sources actively). In adopting this strategy, the port should
seize up the situation and know the background of the shipping companies. At first, it
should be clear about the minimum container amount of the shipping companies, the
amount of container collection in the preliminary stage by the shipping companies,
the own cargo collection capability and the related subsidies, etc.
5.2.3. Low Cost Operation Strategy based on Shipping Agents
In port operation practices, the shipping agents are playing very important roles
among cargo owners, ports and shipping companies. By being agent of the cargo
transportation business for the cargo owners, the agents do business with ports and
shipping companies. Therefore, to some extent, the shipping agents master the cargo
sources directly so as to achieve the objective and method of transportation. The
knowledge of the low cost operation strategy of the shipping companies includes: the
shipping agents are entrusted by the cargo owners in being agent for the cargo
transportation. In the premise of meeting the demands of the cargo owners, the agents
will select the venue for loading and unloading in ports with larger difference in
freight transportation contract and port comprehensive costs for their own benefits.
Therefore, whether they can achieve relatively high difference price, i.e. increase the
benefit of the agents, is of great importance in attracting container cargo sources. But
in the port transportation service market, shipping agents are in large amount in small
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and scattered scales. Compared to part business owners, the single shipping agents
have weaker capability in negotiation, which will be ignored by the port business
owners. In this unclear background, Jingtang container terminal should adopt certain
measures to actively improve the attraction and instruction of the shipping agents. The
concrete measures include:
1. In accordance with the amount of containers in Jingtang container terminal
controlled by the shipping agents, establish the way of charges by period, provide
favorable prices for the main shipping agents to encourage the shipping agents to give
priority to the Jingtang container terminal.
2. Sign the rebate agreement with the main shipping agents for regular container
amount. The main contents are to determine a certain period of time (mostly one year),
determine a certain amount by the negotiations of the port companies and shipping
agents. Based on the agreed amount, if the container amount is higher than the
expected amount, the port company will provide a certain amount of rebate.
The aforementioned low cost operation measures have their own focuses. They are
interconnected, which can be combined to achieve the maximum effect.
5.3. Strategy of Joint Venture Cooperation
5.3.1. Strategy of Cooperating with Shipping Companies
By attracting the shipping companies to join the company, the port can connect the
profits of shipping companies with that of the port and form the stable strategic
partnership. As partners, the port company should understand the difficulties of the
shipping companies in the beginning of the ship route exploration and provide
assistance, such as help the shipping companies to get cargos and help the shipping
companies to prepare the network for cargo collection. Strategy of joint venture
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cooperation is conducive to realizing the win-win strategy between port and the
shipping companies. By profit connection, the pure buyer and seller relation turns into
partnership relations that the two parties crave for the mutual benefit and assume
mutual risks. The shipping companies will not only consider the management of ships,
but also the management of ports because the port company has the mutual benefit
with the shipping companies. In exploring ship routes, the shipping companies will
prefer the port they invested and are more willing to assume the possible losses in the
starting phase. But in selecting the shipping companies, the port should select the
shipping companies with solid strength, avoid the narrowness in selecting and lead the
fact that only few shipping companies choose to dock in the port.
5.3.2. Cooperate with the Port Companies with the Background as Shipping
Companies
For the port, cooperation with port companies with the background as shipping
companies is a kind of investment by introducing in strategic partners, which will be
conducive to the sustainable development of the port. The newly established port
should strengthen the cooperation with shipping companies, attract the shipping
companies to locate in the same place and explore shipping routes. The investment of
shipping companies can butter both sides of one's bread. In the first place, it can
obtain benefit in port management, and in the other place, it can serve for their own
ships. The shipping companies can obtain favorable prices by docking in the port
invested by the companies so as to save some port charges. When the ships dock in
the port invested by themselves, they can enjoy full independency without being
controlled by others. The shipping companies can also accelerate the speed in
transforming to the logistics by investing port. The combination of port and shipping
companies is good for the integration of various steps of logistics. The port can
provide customized service and value added service to the cargo owners, which will
be useful for consolidating of cargo sources and enlargement of market shares. In
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addition, in the same time of enlargement of containers, the situation that the
transportation capability exceeds the demands is more severe so that that shipping
companies are confronting with more severe risks. By involving in the port
management, the shipping companies can disperse the operation risks. Therefore,
large shipping companies in the world mainly choose to cooperate with ports.
A little supplement here: with the maturity of port management of shipping companies,
the objective of investing in port experiences the changes of two periods. At first, the
main objective for the shipping companies in investing port is to serve for the ships
docked in the port. With the deepening of market extent and adjustment of business
strategy, at present, most shipping companies have separated the shipping companies
and the port management and establish two independent companies to be responsible
for their own losses and profits. The two companies are interconnected and
independent. The companies will pay more attention on the prospective and profit in
the role of port management and consider the implementation of third party business.
5.4. Resource Integration Strategy
5.4.1. Strategy of Internal Resource Integration
The internal resources here refer to the resources for Hebei Port Group. Jingtang
container terminal is the key port in Hebei Port. Therefore, further integration of
internal resource allocation and optimization of the configuration of container
terminal to make targeted adjustment are of great importance to the large scale
development of Jingtang container terminal. Most of the cargo ports in the Group are
located in the downtown area in small scales, which are limited by the depth of the
water and have shortage in future development. Most of them do not have
professional container berth and machinery equipment. The current equipment is so
weary with shortage in development potentials. The disadvantages of the necessary
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resource and scattered resource in the integration of internal resources are mainly
expressed in the following aspects: The scattering of container terminal location leads
the shortage of supervision strength of the port inspection units, reduce the efficiency
of customer declaration, which will not be conducive to the scale development of
container transportation.
The concrete integration measures are: to ensure the positive development of the
container transportation in the region, make full play of the functions and roles of
established container port in the Jingtang container terminal, adjust the distribution of
internal container ports in accordance with scientific requirements. The advantage of
internal resource integration is that: it is conducive to integrating scales and
strengthening the general competitiveness of Jingtang Port, be conducive to the
transformation of the old port city, the supervision of the port, improvement of port
environment and the rapid development of the Jingtang container terminal. Therefore,
the Jingtang Port should combines the development positioning of the Jingtang
container terminal in the future and reposition the container operations in the port so
that it can exert the own advantages and establish integrated container transportation
strength.
5.5. Strategy of Port Logistics Development
5.5.1. Advantage of Logistics Development in the Port
In modern economy, logistic is regarded as the third profit source after the reduction
of material consumption and labor consumption. It has become an important factor in
affecting the social and economic development and enjoying the high attentions in
various aspects. Analyzed from space transference from the starting point to the
destination of the raw materials and products, the core functions and basic
requirements of modern logistics and modern transportation still have close
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connections. As the intersection and breaking point of water and land transportation
and the portal and channel for the foreign and domestic markets, ports have become
the connection for comprehensive transportation system and international shipping
network with very important status in modern logistics as the important foundation for
the development of modern logistics industry.
The main advantages for the port to develop logistics industry are that: as the
connection of transportation, ports are the distributing center of materials and cargos,
doing business with transportation and material department directly with the
comprehensive functions of “gathering, distributing, storage and transportation”,
which can be convenient for the implementation of comprehensive services. The large
scale port, freight yard, warehouse and machinery in the harbor have excellent
material transferring capability. The ports have close connections with various kinds
of transportation, with rich customer resources and centralized information. The
employees in the ports have experiences in fundamental logistic operation, etc.
5.5.2. Advantages for the Jingtang Container Terminal in Developing Port
Logistics
Except for the common advantages of the ports in developing port logistics, Jingtang
container terminal has also got its own characteristics and advantages as follows:
1. Location advantage
Located in the geometric center of round Bohai area, it is close to the economic
hinterland. The hinterland has enjoyed constant and rapid economic development.
2. Infrastructure advantage
The water depth in Jingtang container terminal is excellent. The machinery is
advanced and the port storage yard is wide enough.
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3. Regional industrial advantage
As the core economic hinterland of Jingtang container terminal, the central and
eastern region of the area has diversified industries.
5.5.3. Plans for logistics development in Jingtang Container Terminal
1. Encourage and support the importer and exporter to establish their own warehouses
in the logistics garden in the back of the port to do business of distribution, or
establish warehouses jointly with the importer and exporter and conduct dispatching
business by applying the existing facilities in the Jingtang container terminal or by
expanding new facilities.
2. Establish joint venture with the importer and exporter, shipping merchants or other
investors to provide the services of inland transportation, declaration, inspection,
packaging, inventory management and order processing, etc.
3. Attract wholesalers, auto and electric manufacturers to establish commodity
exchange center and factories in the logistics gardens in the port so that that exchange
activities, factory dispatching and storage of the manufacturers can be realized in the
port.
4. Get the government support actively with the plan of establishing shipping trading
center in the back of the Jingtang container terminal.
Chapter 6 Conclusion
As the basis of corporate operation developing strategy, the corporate operation
strategy study has practical meaning to guide companies’ actual economic activities.
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Operation development strategy, especially competition strategy has distinct features
in different stages. This article has raised some points and measure on how Jingtang
container terminal could have accurate orientation and carry out proper & feasible
competition strategy in serious market competition in the angle of improving the
whole competitiveness of round Bohai area. The purpose is to fully make use of the
advantage of Jingtang container terminal and gain sustainable competitive advantage
in the shortest time period. This article would get the following conclusion:
1. Even faced with serious port competition, Jingtang container terminal has
outstanding location advantage for its superior geo-position, which would bring
support for container capacity and for its future development and the advantage of
comprehensive low transportation costs;
2. In order to achieve scale advantage in short time, Jingtang container terminal
should have clear development orientation, give full play to its core competitiveness,
take strategies of low price operation, joint investment cooperation, resource
integration, logistic expansion to enhance its core competitiveness in the shortest time
and promote its operating development.
3. Apply “multi-factor dynamic analysis” to predict the potential scale of the port
container, and turn TEU prediction to production prediction. This action is based on
the following conception: port capacity is determined by productive power (port
facility) and input factors (operating cost) as well as user demands. As a significant
factor, customer demand will be a variable for port capacity, which is not totally
controlled by the port itself, therefore, it’s not reasonable to used port capacity to
assess the port output and location and do scale economy analysis to check port cost
structure.
4. Set up port competitiveness evaluation system and specific index based on
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customers’ demand and apply them in relevant port evaluation practice, combine the
qualitative & quantitative analysis of port competitiveness together. It’s important to
enrich the port competitiveness research.
Above all, the strategy rather than strategic research is not one-sided; on one hand, the
strategic research is complex and broad, while the author still needs to learn how to
control the whole situation, on the other hand, the author has the interest of practical
problems and how to solve them, while the specific strategy research will provide a
good foundation and platform for future’s strategic research.
Personal ability is not enough for free control of the theory, and my own management
work has consumed lots of energy, therefore, the research of this subject is inevitably
influenced by previous research, and the theory application is not deep enough.
Meanwhile, as the competition theory is growing, it’s hard to absorb and learn from
the latest theory research. Therefore, there’s some defects, weak points and personal
tendency in the article.
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