Port Performance Measurement in Practice

Dr. Thomas Vitsounis University of the Aegean & Advisor to the Secreatry General of Ports and Port Planning, Ministry of Development, Competitiveness and Shipping

The need to measure ports performance

! Generation of a highly competitive, complex and dynamic framework ! Port actors in need for efficient adaptation
! Usually endorse new strategic directions

! Port performance is of great importance:

! Monitor how actors adapt to contextual changes ! Monitor whether the strategies they endorse produce the desired outcomes ! Guides port planning

Demings Wheel

What is measured today? (1/2)

Source: Brooks, 2007

What is measured today? (2/2)

Source: Brooks, 2007

What measures Rotterdam

Source: De Langen et al., 2005

How is ports performance measured today?

! Growing scientific interest on:
! Container port studies ! Ports Performance Measurement (direct/indirect)

! Port Performance Studies:

! ! ! ! 1997-2001: 9 academic papers 2002-2006: 43 academic papers 2007-2008: 22 academic papers 1997-2008: 74 academic papers

! The most popular category

Governance and Performance

Governance model (input) Defined by external factors Defined by firm (PA) governance decisions Structure

Performance (output) Internal Performance Eciency

Internal systems & processes

Post-reform Environment

FIT
Strategy

Eectiveness
External (perceived) Performance (e.g. stakeholders satisfaction)

Product- market Scope Strategic Plan

Source: Brooks and Pallis, 2008

! According to Brooks et al. (2011) ! Port efficiency = Doing Things Right ! Port effectiveness = Doing the Right Things

Port eciency
! Measurement of efficiency directly related to the measurement of productivity ! A terminal or a port is regarded as efficient or highly productive:
! if it is able to produce a maximum output for given inputs or uses minimal inputs for the production of a given level of output (Notteboom et al., 2000).

Eciency: Not so easy

! Port services are perishables and cannot be store ! Port services are not standard output of complex procedures with lots of unexpected events ! Even monitoring is not so easy: KPIs and DEA Analysis

Doing things right: Not so easy

Port Eciency
! Frontier approach: Efficient units operating on the cost or production frontier
! Data Envelopment Analysis ! Total Factor Productivity ! Stochastic Frontier Models

! Inputs: Labor, infrastructure, capital ! Output: Cargo throughput

! Internally generated data

! Emphasis on efficiency and financial data at practical level as well

DEA

Performance Indicators
Performance indicators quantify and simplify information for decision-makers and other stakeholders to assess how activities and operations affect the direction and magnitude of change in terms of social economic, governance and environmental conditions.

Performance Indicators
! ! ! ! ! Easily available Goals that are challenging yet realistic Easily quantifiable Strategically relevant Customer focused

Performance Indicators in ports

! Pis can help to create a transparent performanceled ports industry ! Useful for customers and stakeholders ! Difficult to use PIs to compare the different sectors and ports ! Communication across the industry ! Indicators to be set by individual ports ! But still a need to benchmark

Benchmarking
! ! ! ! ! Works well in airport industry High level of difficulty: Need for common set of questions Need for accurate sample of port users Frequency

KPIs for berth operations

! If the schedule, number and characteristics of vessels calling at a port would be known in advance (no uncertainty in demand), berth planning would not be an issue. ! Unfortunately, ships never arrive at ports with a complete regularity and the time to (un)load ships is never constant. ! A survey by Notteboom (2006): in 70-80% of the cases container vessels record a late arrival in one of the ports of call along the East Asia/Europe route.

Time related KPIs

Source: Carriou, 2011

Utilisation KPIs
KPIs - Utilisation rate Abbreviation Indicator (Average)

Berth occupancy (General cargo) Berth occupancy (Containers) Labor utilisation rate

BOR(1)

BOR(2)

LUR

Source: Carriou, 2011

Productivity- Utilization Measures

Most commonly used data easily available
! Quay productivity: Containers or cargo tones / meter / year ! Terminal Area productivity: Containers or cargo tones / m2 / year ! Storage Area productivity: Containers or cargo tones / m2 / year ! Crane utilization: Containers or cargo tones / year (and Percentage of the nominal output)

Ship output KPIs

! Ship output indicators are derived from time-related indicators. ! They measure the rate at which cargoes are handled to /from a vessel in a given period of time.
! ! ! Tons per ship per productive hours Tons per ship per berth hours Tons per ship per port hours

KPIs for yard operations (liquid)

! The discharging rate is governed by the capacity of the ships pumps while the charging rate is governed by the pipeline diameter (mm) from the port.

KPIs for yard operations (bulk)

! Coal and ore terminal capacity of the berth is largely determined by the capacity of loading/ unloading equipment (variability).
! from 2 000 to 8 000 tons/hr for loading ! and from 500 to 4 000 tons/hr for unloading

Service Quality Measures

Data usually not publicly available used by port authorities and operators
! ! ! ! ! ! Ship turnaround (arrival-departure) time Ship service (berth-leave berth) time Ship operation (loading-unloading) time Truck turnaround (terminal in terminal out) time Truck service (gate in gate out) time Percentage of trains leaving at scheduled time

26

Doing the right things

! Not so clear ! Limited information available

Port of RoQerdam
! We conduct an employee satisfaction survey every two years. In the May 2010 survey a score of 7.7 was achieved, our initial target for 2010 was a score of 7.3, the score in 2008 was 7.2. ! We carried out a customer satisfaction survey at the beginning of 2010. The score for general customer satisfaction levels was 7.2, similar to the 2007 result. The target for 2009 was a score of 7.4.

Darwin Port
! Overall Satisfaction with services ! Overall satisfaction with communications

The exception
! Cruise Ports!
! Royal Caribbean International ! Best First-Turn award for customer satisfaction

Dover Port

Selection and Measurement of Port Performance Indicators

Why?
! Performance Measurement is common in other industries:

! For ports only limited information is available: ! Measuring the performance of the port industry is relevant for interaction with policy makers and other stakeholders. It also can assist port development initiatives and contribute to the competitiveness of EU ports.
! Tonnes of cargo handled ! Number of passengers

Objectives
PPRISM aims to identify a key list of sustainable and feasible indicators to monitor the overall performance of the EU port system and assess its impact on the society, environment and the economy of the EU
! quantification is possible in time series in the long term ! measurement of the performance on EU level (not on a port level) ! precisely defined and collected in a coherent manner for different seaports

The PP Dashboard

Port Performance Dashboard - PPD

(Virtual) Easy-to-read textual or graphical representation of a limited number of port performance indicators (PPIs). Contains summarized data Enables users to quickly interpret and understand a snapshot perspective of port sector performance Will monitor trends of significant indicators Will generate overall view of port sector performance

Port Performance Dashboard - PPD

! Delivers summarized key information to large users communities ! Easily adapted to each PAs needs ! Provides actionable business information ! Clearly linked with the strategy/policy objectives ! Alerts users as to where they are ! In relationship to their objectives

Stakeholder relevance
! For (EU) policy makers: relevant information on the performance of the EU port system. ! For stakeholders of the port industry: indicators that respond to stakeholder concerns (e.g. Environmental performance, safety, employment). ! For the port industry: contribution to quality of port policies and societal acceptance of port activities. ! For port authorities: Next to the above mentioned effects, an opportunity to benchmark against EU average (taking into account port specificity, cf. typology indicator)

The PPRISM partners

External Stakeholders

ESPO s Technical Committees

Categories of Indicators
1) Market trends and structure 2) Socio-economic impact 3) Environmental performance 4) Logistic chain& operational performance 5) Governance ! Interrelated and ! Produce an overall picture of the European Port Sector

Inventory and selection process

159 Indicators

Academic partners Academic partners and ESPO Port authorities, through ESPO committees (1st phase) Port authorities, through ESPO committees (2nd phase) Multi-stakeholder response panel assessment FINAL SELECTION

39 Indicators

45 Indicators

42 Indicators

10-14 Indicators Min Number of Indicators

Delphi Methodology
! ! ! ! 2 Rounds Combination of qualitative and qualitative data ESPO Technical Committees ESPO Executive Committee

Output of assessment
5.00 4.50 4.00

Selection Matrix Market Trends Indicators (Mean)

Feasibility (Mean)

3.50 3.00 2.50 2.00 1.50 1.00 1.00

MT VT S. HHI CS AV DC MS TEUH

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Acceptance (Mean)

Top-10 Indicators (1st Assessment)

5.00 Enviromental Management System 4.80 Maritime Traffic Market Share Reporting Corporate Responsibility Autonomous Management Vessel Traffic Direct Employment Strategic Environmental Aspects 3.60 Concentration Ratio 3.40 3.50 3.70 3.90 4.10 4.30 4.50 4.70 4.90 Availability of Port Community System

4.60

4.40

Acceptance

4.20

4.00

3.80

Feasibility

Top-10 Indicators (2nd Assessment)

5.00 Maritime Traffic Ex. of Env. Management Programme Ex. of Inventory of singificant enviromental Aspects Ex. of Enviromental Policy Vessel Size 4.20 Existence of Environmental Report 4.00 Existence of Objectives and Targets Ex. of Inventory of legislation Concentration Ratio-HHI Market Share 3.40 3.50 3.70 3.90 4.10 4.30 4.50 4.70 4.90 4.80

4.60

4.40

Acceptance

3.80

3.60

Feasibility

Results
Field of expertise
Member of a local community adjacent to a port 2% NGO 3% Trade union 2% Other (please specify) 10%

Port authority 30%

Academics and/or consultants 19%

Terminal operator 7%

Government 6% Barge transport 1% Shipper 4% Shipowner 7% Technical-nautical services 6%

Rail transport Road transport 1% 2%

N=338

Market Trends & Structure

Concentration Ratio / Herfindhal - Hirschman Index Call Size 3.45 3.57

Average Vessel Size

3.65

Market Share

3.71

TEU Throughput per Gross Hectare

3.72

Degree of Containerization

3.88

Modal Split

3.93

Vessel Traffic

3.97

Maritime Traffic 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90 4.00

4.02 4.10

Acceptability and feasibility

Socio-Economic Impact
Financial Health 3.47 Training per FTE 3.55

Direct Gross Value Added per FTE

3.62

Investments

3.67

Indirect Gross Value Added

3.73

Indirect Employment

3.78

Direct Employment

3.93

Direct Gross Value Added 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90

3.97 4.00 4.10

Environmental Indicators
Total Water Consumption Amounts of Waste Produced Reference to ESPO Code of Practice in Port Policy Carbon Footprint Existence of an Inventory of Legislation Ex. of an Environmental Report Ex. of an Environmental Management Programme Ex. of Environmental Training Ex. of Objectives and Targets Ex. of an Inventory of Significant Environmental Aspects Ex. of an Environmental Monitoring Programme Ex. of an Environmental Policy 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90 3.43 3.59 3.67 3.67 3.78 3.81 3.85 3.86 3.86 3.88 3.98 3.98 4.00 4.10

Logistics & Operational Perf.

Ship Turnaround Time 3.74

Maritime Connectivity

3.75

On-Time Performance

3.78

Mean Time Customs Clearance

3.82

Quality of Port Community Systems

3.83

Intermodal Connectivity

3.84

3.68

3.70

3.72

3.74

3.76

3.78

3.80

3.82

3.84

3.86

Governance Indicators
Port Authority Employee Productivity 3.36 Integration of Port Cluster 3.46

Reporting Corporate Social Responsibility

3.54

Market Openness

3.57

Port Authority Investment

3.62

Autonomous Management

3.67

Levels of Safety

3.93

3.00

3.10

3.20

3.30

3.40

3.50

3.60

3.70

3.80

3.90

4.00

Top-10 Indicators (3rd Assessment)

Ex. of an Inventory of Significant Environmental Aspects Degree of Containerization Levels of Safety Direct Employment Modal Split Direct Gross Value Added Vessel Traffic Ex. of an Environmental Monitoring Programme Ex. of an Environmental Policy Maritime Traffic
3.80 3.85 3.90 3.95 4.00 3.88 3.88

3.93

3.93

3.93

3.97

3.97

3.98

3.98

4.02 4.05

Next steps
! Next steps:
! A pilot, to test data availability and the calculation method ! Recommendations to European Commission on how to establish a working European port performance dashboard

Conclusive remark
! Short term:
! Create a culture of performance measurement ! Getting the indicators right (learning process with stakeholders) ! Design the organizational structure behind the dashboard

! Medium to long term:

! Analyse and understand port system performance indicators linkages with policy, socio-economic and technological development ! Support tool for decision-making and evaluation in the EU port industry