Economic, strategic benefits from variety reduction

If the machines do not work efficiently and well, all the time, the port is not dependable.

Regardless of how well protected the harbour; the extent of berthing; the organization of the yard or the tidiness of the warehouses, when the ship comes alongside the machines must work well or the entire investment in port infrastructure is for nought.

Cargo handling equipment require substantial capital outlay. And in the maritime sector, as in any other, the old adage holds true: nothing good is cheap and nothing cheap is good.

The Caribbean is a unique maritime theatre in that there are dozens of ports operated by a diversity of sovereign states. Each makes its own decisions about what equipment to purchase and from whom. No two ports are identical and there is little by way of intra-regional cooperation around standardisation of equipment. Port authorities and terminal operators, from one country to the next, are guided by different factors and considerations in making decisions about equipment selection and acquisition.

Price then may not be the only determining factor. In one terminal, the good reputation of the brand may be given more weight than the price of the equipment. In another, the history of the relationship with the supplier may be the determining factor. Previous experiences with a particular brand or, otherwise, brand loyalty may be influencing factors in determining what equipment to buy. However, all else notwithstanding, price will always be a factor and for good reason. Money is always scarce.

Decisions based only on price are not likely to result in a reduction in the variety of brands and systems. Savvy negotiation and the aggressiveness of the seller will likely influence price. On the other hand, variety reduction for consistency, interchangeability and maintenance, over time drives costs down. Indeed, there are economic as well as strategic benefits to be derived from variety reduction.

Port authorities are best advised to exploit opportunities to reduce the variety of brands and systems they purchase. By exchanging information with other regional terminals and documenting past experiences it is possible to reduce the variety of brands operating on the terminal.

The cost benefits and productivity gains from variety reduction can be substantial and these should be explored aggressively. []

  • First published October 1, 2015

Mike Jarrett, Editor-in-Chief