The new port manager

By Anton Edmunds

2015 February: It is sometimes argued that those involved in port management focus almost exclusively on what is happening within the boundaries of their facilities. However, in an increasingly difficult global economic environment, there is real risk that a fixation on the innards of a port can serve to stymie economic development rather than facilitate growth.

In an era in which economic stagnation and non-competitiveness have a direct impact on the ability of governments to access capital needed to maintain facilities, and rising port charges being seen by some as having a deleterious effect on trade, the emergence of the port management executive as economic development expert has never been more important.

The port executive of the future will be a key cog in the machine that is the economy. And, as a result, he/she needs to be, amongst other things, part economist, part analyst, part psychologist and perhaps most importantly, full partner and stakeholder with the commercial community.

As an economist, the port executive has to have an in-depth understanding of global, regional and national trends. In this role, an understanding of which changes in trade and commerce are brought on by global recession and which are influenced by new entrepreneurial models of business need to be key areas of focus.  An even more intimate understanding of the trends in the transportation industry, including consolidation and the forming of alliances amongst carriers so as to share capacity will be important.

Indeed, all of the above challenge the status quo in terms of port traffic and critically, revenue generation options. Port management executives, less as a steward of a brick-and-mortar institution and more as economic guru, working in tandem with constituents and clients, will be vital to the competitiveness of not only the industry and the port but also the national economy.

As an economist, the port management executive of the future will note that trade and commerce have progressed to a point where even the concept of the supply chain has evolved from a logistics term to one used internally by private sector entities.

The supply chain is no longer just about getting products into customers’ hands. It is the day-to-day interaction within the private sector operation. The broader definition of the supply chain is one that includes planning, information sharing, and value-added activities rather than just shipping.

Challenges

For many private sector companies in the Caribbean and Latin America, today’s competitive battle is how to raise customers’ expectations of service by bringing new products to the market. This is especially important for the many small and medium enterprises that dot our economic landscape and for whom survival depends on being first.  While most ports were built with the larger trading companies in mind and many of those entities continue to import the same goods they have traditionally traded, they do face challenges.

The most competitive among them are those who will effectively manage risk; respond to changes in the economic, technological and trading environment; and, yet be able to exploit new opportunities more effectively than their competitors. Impediments for traditional and new business alike include the price of power. This cost has increasingly impacted, among other things, the storage costs of perishables.

Additional challenges include financial constraints brought on by new international banking compliance rules and regulations, which have crippled the relationship between some Caribbean banks and their US counterparts. The tightening of credit requirements from banks and a resulting shorter payback period are other issues beyond the waterline that the port management executive needs to track.

As an economist and analyst, the new port executive recognizes that this more complex and global distribution network demands an integrated and transparent approach between the private sector and the port management team. The modern port executive also notes that tight and cross-functional coordination between the private sector and the port is critical.

It is understood that not being in the market with product in a timely fashion can mean inability to compete. And the result of such can be the loss of a client for the port, and or a decline in volumes and revenue. The executive with limited knowledge of the speed-to-market needs of the commercial sector will find that instead of being a partner and facilitator for economic growth, he/she wears the tag ‘deterrent to progress’.

It is however as partner that the forward leading port executive probably has the most impact. In is in that role that the executive will be one who integrates processes to streamline operations and offers tailored services as a way to increase customer loyalty and support economic development. It is important to note that while the call for the integration of systems and the use of technology are to be heeded (and implementation of such embraced), systems have to represent the needs of the nuanced economy they were designed to serve. In this regard what might be truly important is depth of knowledge and more interaction with those in the business community and less with the software salesman.

While in countries where there are more than one port facility vying for business, competition often guarantees that port management is more integrated into the wider economy. For single port countries that make up most of the Caribbean, a lax attitude can have dire consequences. In fact, it can be argued that port managers of facilities in single port countries are under even more scrutiny as there is no hiding from perceptions of inefficiency and ineffectiveness.

In addition to opening oneself up to competition from the aggressive air cargo industry, the fact is that port efficiency (inclusive of customs) is a significant metric of all of today’s Doing Business reports and rankings. This makes the economic development role of port management executives crucial to their country’s attractiveness to the investing community.

A Partner

In the evolving trade environment, port managers will engage more intimately with private sector leaders (large and small), less as service provider and more as partner. They will make it their business to understand the internal workings of the operations that their clients lead. They will be willing to adjust their own systems in response to the needs of these groups and the wider economic community.

Metrics of performance traditionally used by the private sector will become tools for guiding port operations.  Issues, such as: how the current global economy impacts the viability of the local corporate entity; the direct impact of the port system on their ability to deliver value and compete; and, how both parties can optimize and integrate their systems will be the common end goal. While such an effort at an integrated approach may serve to help all parties to measure effectiveness of their respective systems, it may well help highlight corporate inefficiencies and, in some respects, there is where the engaged port management executive takes on the role of psychologist. In this ‘psychologist’ role, the manager takes his clients through some of the exercises needed to improve their own performance, rather than allow them to proceed with the assumption that the failures at hand are as a result of factors outside of their control.

The new era of global trade and commerce has ushered in challenges to industry and economies that require a revision of the role of port management executive.  For emerging market economies such as those in the Caribbean, long-term economic success may well partially rest on the ability of port executives to accept and excel at a myriad of new roles. []

By Anton Edmunds *

* Anton Edmunds is Managing Director of The Edmunds Group International, an emerging markets consulting firm.