Wednesday, October 30, 2019

The impact of increase in lead times in supply chain activities on Research Paper

The impact of increase in lead times in supply chain activities on retail concerns - Research Paper Example However, for this to happen to any supply chain, the management must enforce some of the basic rules that allow them to compress time to enhance their processes and ensure that the clients receive their orders in due time. Precision and accuracy always work positively as they ensure that the time that lapses between the placement of an order and the delivery of the same is as minimal as possible and at the right time (Chen, et al., 2000, p. 436). This does not imply a reduction in the quality just to satisfy demand. Each employer understands that the employees will always work best if motivated and inspired to keep the quality and time as congruent as possible. As such, working hand in hand with them is not only necessary but advantageous because the management will understand what is required to help them achieve the very best within the shortest time possible (Borzath, Warsing, Flynn and Flynn, 2009, p. 78). Pressurizing them may hinder their full potential and thus failure in the production system because they are not satisfied with what they are doing. However, a clever supply chain manager will always seek innovative means through which they can improve the demand chain performance. To achieve this, they may need to include some of the time-proven ideologies such as lead time reduction, forecasting or customer satisfaction matrix. The report herein will explore the impact of lead time reduction and how this affects the services within a supply chain. The report will also offer some recommendations based on the impacts discussed in relation to the Norwich Nordic and Pulp Company as well as the best means of maintaining this trend. Lead Time This is defined by several researchers as the amount of time that elapses between the start of a process and its completion (Chen, et al. 2000; Borzath, Warsing, Flynn and Flynn 2009; de Treville et al., 2004; Shah and Ward, 2007). Every company wants to encompass the whole system in the supply chain from the consumer de mand to customer satisfaction this means that by all means they have to deal with the total cycle time (TCT) or the lead time. This has three major components that are imperative in meeting the customer demand, information flow and material flow. These attributes are necessities and if well intertwined, could offer the best strategy in meeting the demands of the supply chain management system. The consequent reduction of the lead time is very imperative in the creation of a direct leverage on the bottom-line (Shah and Ward, 2007, p. 786). This will help the chain achieve better competition and allow the management to deal with each of the factors from a more informed position compared to before. By allowing this component, the management will be offering a chance for each of the employees to play to the same music hence minimizing delays and maximizing on the time allocated for each activity. When talking about the lead time there are several components that ought to be considered. They include pre-processing, processing and post-processing. Pre-processing includes the determinations made when resources are required and the steps that allow each of them to be filled in order. It also looks at the final product and how it reflects the current order placed by the client (Ketchen and Hult 2006, p. 575). The processing bit looks at the actual manufacturing of the product and making it like the real product that has been ordered. Post-processing looks at the delivery of the order to the client after the order has been manufactured. Each of this is what the lead time has to be measured against based on the benchmarks set by the company. Reducing the process

Sunday, October 27, 2019

Quality Assurance Systems in the Hotel Industry

Quality Assurance Systems in the Hotel Industry Quality assurance systems in the upscale hotel sector 1.  Introduction Quality assurance systems are an important element of any business strategy. As Porter (1985 and 2004) suggests, quality is now seen as a major force for gaining competitive advantage, particularly with the consumer. There is no commercial activity where this is more important than in the hotel sector. As Yavas et al (1995) state, â€Å"the question is no longer whether to have quality assurance programmes, but rather how to make these programmes work,† within this sector of hospitality. It can be argued that in terms of quality assurance systems delivery the hotel sector is in a distinctive position, particularly when it is related to service satisfaction (Parasuraman 1997, Schiffman and Kanuk 2000). Unlike most other industries, where customer contact and engagement during a visit might be fleeting, as happens in retail shop environment, a hotel’s interaction with customers can last from a few hours to several days. Furthermore, as Kandampully et al (2001, p.28) the quality of the hotel product also has to take into account the â€Å"customer-to-customer interactions.† Following a brief literature review, the intention of this essay is to examine quality assurance systems and evaluate the effect that these systems have upon service quality and customer satisfaction within the upscale Hotel market. 2.  Literature Review Quality assurance and management within the hotel environment is focused upon satisfying the customer. Therefore, this review concentrates on the existing literature relating to customer satisfaction and the various methods and frameworks of service quality related to this focus. 2.1  Customer satisfaction Academic literature relating to customer satisfaction falls within two main categories, these being the psychological perceptions of the customer and the practical ways in which customer satisfaction can be implemented to help a business achieve its objectives. In the hotel sector, this objective is â€Å"to try and engender a high level of customer satisfaction in order to positively influence our customers repurchasing and communicative behaviour† (Hennig-Thurau and Hassen (2000, p.62). However, to achieve this aim the business has to understand what drives customer satisfaction. Christopher (1984), Holbrook (1999), Schiffmand and Kanuk 2000 and Brennen (2003) all agree that satisfaction is related to the consumer’s perception or judgement of a product experience and value when set against their expectations and the payment made. Zeithaml’s (1998, p.14) describes it as follows, being that â€Å"Perceived value is the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given †¦ value represents a trade-off of the salient give and get components,† in other words the cost paid is measured against the value expected . Therefore, it can be suggested that the greater the service quality the higher the satisfaction (Kandampully et al. 2001, p.8) and, conversely, the higher the price the greater the perception of value. Bostepe (2007) further identifies that, within a service environment such as a hotel, consumer satisfaction does not simply rely upon the quality of service satisfaction received from business employees, although this is an essential element. The physical environment, for example the dà ©cor, bedrooms and other facilities offered, are also elements of the consumer’s perceived value and service satisfaction. If any of these are deemed as sub-standard, particularly when related to the price paid, this will reduce the customer’s enjoyment and levels of satisfaction. It follows therefore that only by concentration upon providing quality within all of these areas of the product will the business be able to assure satisfaction and encourage customer loyalty (Holbrook 1999, p.121), which Porter (1998), Parasuraman (1997) Agrawal (2000) and Harrison (2003) all agree is essential to competitive advantage. 2.2  Methods used to measure customer satisfaction and service quality There are numerous â€Å"quality assurance† measurement systems and standards available for use within the business environment. Customer feedback is one such measurement. Client feedback can be achieved by two methods. The first way is to provide questionnaires that hotel guests are asked to complete before the end of their stay. The second is to rely upon externally conducted questionnaires, interviews and polls, which can be conducted on a continuous basis. However, whilst comments and responses provided by customers may act as a good testimonial for the business (Porter 1998, p.1478), these systems have their drawbacks. In addition to the fact that not all customers might respond, the design of the process itself is often flawed (Kandampully et al 2001) and can therefore be misinterpreted. For example, a simple complaints procedure would not necessarily identify areas of quality success. Secondly, these feedback processes tend to lack definition. Their use may therefore be inhibited by the fact that they do not provide management with sufficient detail to be able to locate and resolve the specific areas of the business where deficiency of service quality is occurring. Furthermore, a system of continuous surveys adds to the business administration costs and, in addition, raises the inherent issue of sampling (Visit Britain 2008 b). Evidence of these limitations can be seen in a recent survey conducted by Visit Britain (2008 a) (see figu re 1). Whilst it is clearly apparent from these results that customer satisfaction in related to encouraging loyalty and retention, as well as being inherently useful in turning existing customers into promotional tools for the hotel, this does not provide management with a detailed analysis of the areas where satisfaction has been achieved or denote what areas were not satisfying. To provide detailed quality service observations therefore, a more robust quality assurance system is required and most of these are based upon variations of the â€Å"Total Quality Management† (TQM) system (Dotchin and Oakland 1994 and Ziethaml et al 2000). These methods are designed to assess and monitor the level of quality being maintained throughout all areas of the business process and its supply chain, from an internal as well as external viewpoint. One such variation, particularly applicable to the hotel industry, is the SERVQUAL method, which originated from the works of Parasuraman et al (1991). 3  SERVQUAL Measurement Kandampully et al (2001, p.68) observe that many academics and practical studies have used SERVQUAL as a â€Å"true measure of customer service† and that it has been â€Å"extensively applied† (Shahin 2005, p.4) in service based organisations. Amongst these service industries will be included the hospitality and hotel sector of the tourism industry. Despite the fact that recent researches have sought to extend the elements of quality measurement with the SERVQUAL model, fundamentally it is still based upon the level of quality assurance to be measured and gained within five key sectors of the business processes, which are: Tangibles Physical facilities, equipment and appearance of personnel. Reliability Ability to perform the promised service dependably and accurately. Responsiveness Willingness to help customers and provide prompt service. Assurance (including competence, courtesy, credibility and security). Knowledge and courtesy of employees and their ability to inspire trust and confidence. Empathy (including access, communication, understanding the customer). Caring and individualized attention that the firm provides to its customers. Source: Sahney et al 2004 The SERVQUAL measurement can be used internally, through measurement against preset quality assurance standards such as the ISO 9001 Quality certification process (BSI 2008) and the â€Å"Star Rating system† operated by Visit Britain (2008) in conjunction with the Automobile Association. In this case the hotel services and processes are measured against pre-determined sets of quality criterion and monitored at least annually by those who regulate these standards. The internal quality assurance programme is also complemented by external consumer questionnaires and interview surveys. The SERVQUAL quality assurance method has been in existence for some years and is â€Å"tried and tested† (Shahin 2005, p.5), making it a firm favourite within the hotel service industry, where managers are comfortable and confident with the outcomes of these measurements. An element of SERVQUAL that is considered particularly important in this respect is the fact that the system and its measurements are monitored and updated on a regular basis (Holbrook (1999), Sahney et al (2004) and Boztepe (2007)), for example annually (Shahin 2005, p.6). Both ISO 9001 and the â€Å"Star Rating† systems conform to these determinants. 4  Quality assurance in Upscale Hotels As will be seen from the following analysis, the â€Å"quality assurance† systems applied to the hotel in terms of both the internal industry â€Å"Star Rating† and external SERVQUAL systems are virtually synonymous in terms of the standards and factors they rely upon for measurement. To maintain their perception as upscale or â€Å"5 star† hotels, in each of these cases the hotel will have to achieve much higher levels of standards. 4.1  Star Rating system Although the Star Rating system is formatted in a slightly different way to SERVQUAL, the quality elements of this process are still graded in a similar manner. The main difference is the fact that there are minimum quality requirements before the hotel will even be considered for a rating. However, even these equate to the tangible element of the SERVQUAL system (figure 2). Once the minimum entry requirements have been met, to assess which star level is applicable to the establishment independent inspectors will monitor five quality bands and award a quality percentage to each. These percentages determine what rating the establishment has achieved (figure 3). Figure 3 Quality bands for star rating Source: Visit Britain (2005, p.6) Furthermore, this standard of quality has to be achieved across a range of five product elements, which include cleanliness, service, food quality, bedrooms and bathrooms. Simply complying in one of the areas is not sufficient to earn the highest star. Therefore, if the hotel fails to achieve the required 85-100% standards during an annual monitoring it risks its rating being downgraded to four stars or a lower standard. For instance, in the example shown below (figure 4), despite the fact that the hotel being monitored has achieved the five star requirements in three of the five bands, its failures in the other two would demote it to a four star hotel. Figure 4 Quality bank achievement Source: adapted from Visit Britain (2005, p.7) 4.2  SERVQUAL system When using the SERVQUAL system, which is largely based largely upon the results of customer satisfaction surveys, although all hotels would be looking to achieve the maximum â€Å"service quality† satisfaction level of 100% in terms of the overall scoring, there is a significant difference in the way this would be achieved when related to the different standard of establishments. To provide an example of how this equates in practice, the following is a comparison between the SERVQUAL requirements of a 5 star hotel against lower rated hotel, such as the budget Travelodge hotel chain (figure 5). Figure 5 SERVQUAL comparisons It is apparent from the above comparison that the 5-star establishment requires their quality of service to be more balanced, in other words no one area of their product should be delivering a lower quality of service than any other. However, with the budget chain, which operates on a low cost strategy that eliminates much of the human resources and food elements, these specific areas are shown to have less importance to the business, but need to be compensated by increased levels of satisfaction in other areas of quality if the business is to remain successful. 4.3 Findings What is immediately apparent from the analysis of the two quality assurance systems identified above as being used within the hotel sector is their compatibility. This not only applies to the systems per se, but also to the measurement of the results. In both cases an upscale hotel would need to achieve a balanced score with high ratings in all of the quality determinants if it is to maintain its market position and be perceived by the potential customer as a quality (5 star) hotel. Conversely, the lower quality hotels pay less attention to those areas of the standards that are more directly related to the quality of service provided by their human resources, relying instead upon other elements to satisfy customer quality perception, such as low cost (Porter 2004). Whilst it could therefore be stated in simple terms that quality assurance is related to the price being paid for the product, what research such as that conducted by Shahin (2006), Ziethaml et al (1990) and Holbrook (1999), and the fact that all hotels, irrespective of their standards, operate quality assurance systems, shows is that price is simply one element required to fulfill customer satisfaction needs. Whatever price is being charged for the hotel product the customer will still weigh the experience received against the value they expect from the product enjoyed at that price (Zeithaml 1988 and Parasuraman et at 1994). A customer who decides to spend a greater amount of his or her disposable income on arranging to stay in a 5-star hotel will have a much greater value expectation than one who chooses a budget hotel stay. The former will expect the service quality to exist in all aspects of the hotel product. This includes the dà ©cor and the ambiance of the environment, the facilities that are being offered, including meals and room service, and the performance of the hotel’s human resources. If these quality expectations are not met that customer will perceive that they have not received value for money and therefore will view the experience as less than satisfactory. Therefore, they will be unlikely to promote the hotel in a positive manner to others or re-use it. 5  Conclusion It is apparent that in the case of an upscale or5-star hotel the combination of the industry â€Å"Star Rating† and â€Å"SERVQUAL† quality assurance systems will have a significant impact upon their service quality and the level of customer satisfaction achieved from using the product. In terms of the â€Å"Star Rating† system, the higher the star rating the greater the expectation of the customer in terms of their perception of the quality that will be found in this establishment. Therefore, the five star establishments are likely to attract customers who wish to avail themselves of the higher quality experience. With regard to the external â€Å"SERVQUAL† system of measurement, because these are results from customer experiences, the greater the levels of quality achieved in the areas measured, the more likely it is that customers will be retained and act as recommenders to other potential customers. In both cases therefore, it can be concluded that the quality assurance system is designed to achieve competitive advantage by attracting additional market share, thus improving the hotel’s revenue and profitability levels. References Agrawal (2000). Managing service industries in the new millennium: Evidence is everything. Paper presented at the AIMS Convention on Service Management Berry L L and Parasuraman, A (1991). Marketing Services: Competing Through Quality, Free Press. New York, US Boztepe, Suzan (2007). User Value: Competing theories and models. International Journal of Design, Vol. 1, Issue. 2, pp.55-63. Brennan, Ross (2003). Value in Marketing: Confusion or Illumination? Available from: http://mubs.mdx.ac.uk/Research/Discussion_Papers/Marketing/dpap%20marketing%20no25.pdf (Accessed 22 December 2008) BSI (2008). ISO 9001Quality. Available from: http://www.bsi-global.com/en/Assessment-and-certification-services/management-systems/Standards-and-Schemes/ISO-9001/ (Accessed 22 December 2008) Chetwynd, Catherine and Knight, Jenny (2007). Time to capitalise on falling hotel occupancy. The Times. London, UK. Christopher, M. (1996). From brand values to customer value. Journal of Marketing Practice: Applied Marketing Science, Vol. 2, Issue.2, pp.55-66. Dotchin, J.A and Oakland, J.S (1994). Total Quality Management in Services: Part 3: Distinguishing perceptions of Service Quality. International Journal of Quality reliability Management, Vol. 11, Issue. 4, pp.6-28 Gale, B. T. (1994). Managing customer value. Free Press. New York, US. Harrison, Jeffrey S (2003). Strategic Management: Of Resources and Relationship. John Wiley Sons Inc. New York, US. Hennig-Thurau, Thorsten and Hansen, Ursula (eds) (2000). Relationship Marketing: Gaining Competitive Advantage Through Customer Satisfaction and Customer Retention. Springer-Verlag Berlin Heidleberg. New York, US. Holbrook, M. B. (Ed.). (1999). Consumer value: A framework for analysis and research. Routledge. New York, US. Kandampully, Jay., Mox, Connie and Sparks, Beverley (2001). Service Quality Management in Hospitality, Tourism and Leisure. Haworth Press. New York, US. Kotler P (1999). Marketing Management: Analysis, Planning, Implementation, and Control (Millennium ed.) Englewood Cliffs, N J; Prentice-Hall, 279-317. Parasuraman, A. (1997). Reflections on gaining competitive advantage through customer value. Academy of Marketing Science, 25(2), 154-161. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1991), Refinement and reassessment of the SERVQUAL scale. Journal of Retailing, Vol. 67, pp. 420-450. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1993), Research note: more on improving service quality measurement, Journal of Retailing, Vol. 69, No. 1, pp. 140-147. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1994), Reassessment of expectations as a comparison standard in measuring service quality: implications for future research, Journal of Marketing, Vol. 58, pp. 111-124. Porter, M. E. (1998). Competitive advantage: Creating and sustaining superior performance. Free Press. New York, US Porter, M.E (2004). Competitive Advantage. Techniques for Analysing Industries and Competitors. Free Press. New York, US Sahney, S., Banwet, D.K., and Karunes, S. (2004), A SERVQUAL and QFD approach to total quality education: A student perspective, International Journal of Productivity and Performance Management, Vol.53, No.2, pp. 143-166. Schiffman, L g and L L Kanuk (2000). Consumer Behaviour. FT Prentice Hall, New Jersey, US. Shahin, Dr. Arash (2005). SERVQUAL and Models of Service Quality Gaps: A Framework for Determining and Prioritizing Critical Factors in Delivering Quality Systems. Available: Visit Britain (2008 a). UK Market Profile 2007. Available from: http://www.tourismtrade.org.uk/Images/UK_DMarketing_tcm12-22850.pdf (Accessed 21 December 2008) Visit Britain (2008 b). Britain Inbound: Overall Market Profile. Available from: http://www.tourismtrade.org.uk/Images/InboundFINAL_2008_%20BritInbound3F_tcm12-40935.pdf (Accessed 21 December 2008) Visit London (2005). Hotel Accommodation; Quality Standards. Available from: http://www.qualityintourism.com/content/pdfs/Standards/Hotel%20Standard%20INT.pdf (Accessed 21 December 2008) Yavas, U., Yasin, M and Wafa, m (1995). Front and back-stage strategies in service delivery in the hospitality industry: a conceptual framework. Market Intelligence Planning. Vol. 13, Issue, 11, pp.22-26 Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketin,, Vol. 52, Issue. 3, pp.2-22 Zeithaml, V.A., Parasuraman, A. and Berry, L.L. (1990), Delivering quality service; Balancing customer perceptions and expectations. The Free Press, New York, NY.

Friday, October 25, 2019

spanning tree protocol :: essays research papers

Spanning Tree Protocol Spanning tree protocol is a protocol that prevents loops that are not wanted in a network. In order for a network to work properly it has to have only one active path between two network stations. If there are multiple active paths between stations loops can and will occur. When loops occur, there can sometimes be duplicate messages in the network. The loops are created by the network and if the devices that connect the network segments are all configured to forward, they will continuously forward frames into an endless network loop. If there are enough loops going then a frame will not reach its destination. The reason duplicate messages occur is because sometimes switches will see situations appear on both sides of it. When this occurs that is when spanning tree protocol comes in. In order to shut down the loops bridges and switches exchange BPDU messages with other bridges and switches to detect loops and then remove them by shutting down selected bridge interfaces. BPDU is short for bridge protocol data unit. Bridge protocol data units are part of the spanning tree protocol and they help describe and identify the parts of a switch port. The bridge protocol data unit allows switches to obtain information about each other. All the switches gather information from each other by exchanging data messages. In order for them to exchange messages they have to elect a root switch for the topology. The root switch has to be unique. The way they elect they have to have a unique switch for every local area network segment. To exchange messages they have to remove all loops by putting them in a backup state. Now to talk about states there is 5 different states. Two of the five states do not participate in frame forwarding. Frame forwarding is what the three main states do. The three main states are listening, learning, and forwarding. The other 2 are blocking state and disabled state. When you enable the spanning tree protocol the network goes through the blocking state and then the listening state and learning state are enabled after being turned on. If the protocol is properly configured the ports are stabilized to the forwarding or blocking state. The blocking state does not participate in the frame forwarding. It removes frames that are received from the attached segment. It also discards frames from another port for forwarding.

Thursday, October 24, 2019

The Four Types of Essay Organization

* The four types of essay organization that was discussed in the course readings were topic, time order, space order, and informative process. The characteristic that makes these essays expository for topic expository develops by topic systematically organizes information about topic in the most logical fashion. Time order developed by time order involves the sequential or chronological organization of information form one period to another. This types of expository developed arranges information according to date or specific time, for instance, from the earliest to the most recent or vice versa.Space order an expository essay developed by space order involves the spatial organization of idea. This arrangement refers to information that deals with location of people, places, or things. Finally, the informative process developed by informative process may best be described as how essay, or demonstration. * How to distinguish space organization from time organization or informative pro cess organization is that space organization arranges deals with people, places or things.And informative just involves step-by-step process, with arranged in their natural order, for example, â€Å"How to Write an Expository Essay†. * The organization of each essay can help the reader understand the subject matter because it helps defines and understand of each type of expository essays. * The essay I read that had the most effective organization was â€Å"A Soul as Free as the Air: About Lacy Stone†; because the essay explained everything about Lacy Stone by giving examples and details about her life.It also was developed in the four basic expository essay format with the topic giving the information about the whole essay, and with the time order it basically arranged everything and order that happened in her life, space order it stated how she lived her life in different place, and also the time she spent, and as for informative process the essay was basically writt en step by step giving details about the whole essay. * The type of essay organization that is suitable for my essay topic is topic because it would contain systematically organize information about a topic in the most logical fashion.

Wednesday, October 23, 2019

Trends in Maritime Transport and Port Development in the Context of World Trade

Trends in Maritime Transport and Port Development in the Context of World Trade Carlos M. Gallegos 1. Structural changes in international trade and the evolution of maritime transport have a direct impact on port growth and expansion. Therefore, these elements and their recent characteristics must be examined, since they provide the frame of reference in which port reform in Latin America and the Caribbean has been carried out. These factors also determine future port development. A. Globalization, production, trade, and ports 2.Globalization, or the expansion of markets and hence of the economic prospects of societies, is taking place not only because of the supra-national nature of markets, but also because of the flow of foreign investment and the strategies of multinational enterprises. These multinationals today account for two-thirds of global exports of goods and services and nearly 10% of domestic sales worldwide. 3. In this environment of increasing interdependence in the wo rld, the international division of labor is changing as a result of structural changes in trade and unprecedented mobility of international capital.However, while the integration of goods and services and capital is progressing at a rapid pace, integration of the labor market is much slower. In addition, ever more sophisticated technologies are being disseminated, in a framework of spectacular streamlining in communications and telecommunications. The development of information technology has, in turn, boosted productivity and, in many cases, worker income. In general, electronic transactions and communications technology have been the necessary complement to full internalization and globalization and their major impact on production and world trade. . In mid-1999, developing countries began to recover from the 1997-1998 financial crisis in Asia, which had a severe impact on countries in Latin America. This recovery was spurred on in particular by growth in domestic demand in the Un ited States and other developed countries, low interest rates, and the Asian recovery. As a result, overall growth in gross domestic product (GDP) rose 3% (similar to growth in the developed countries). Countries are now back on the road to growth they embarked upon in 1993 that was interrupted in 1998. The global economy is projected to grow 3. % in 2000 (but only 3% in the developed countries). 5. In 1999, Latin America and the Caribbean recorded the worst economic indicators of the decade, due primarily to downturns in the Argentine and Brazilian economies. The region went into a recession (a drop on average of 0. 6% in GDP). The region’s estimated growth rate for 2000 is nearly 4%, spurred on particularly by sustained growth in recent months in Mexico, Central America, and the Caribbean. 6. The global economic recovery in the second half of 1999 was also reflected in the upturn in world trade. World commodity exports in 1999 were valued at US$5. 6 billion — up 3. 5 % from the previous year when a negative rate of 1. 6% was posted. Export volume also grew, however at a similar rate to the previous year’s growth of 4. 5%; and for the third consecutive year, the average price of commodities fell (excluding oil). 7. World trade in services rose 2% in 1999, after last year’s sluggishness, with exported services valued at US$1. 3 billion, and there was a moderate rise in the international price of those services. 8. The regions of the world and the individual countries responded with quite varied demand and growth in their product in 1999.The situation in Latin America and the Caribbean was rather unique. 9. With the 1999 recession, the volume of Latin American and Caribbean imports fell 2% on average. However, performance in the region varied greatly by country. Imports rose 15% in Mexico, but fell 12% in the rest of the region. Similarly, the region’s exports grew 7% in 1999, but in Mexico the figure was almost double (13. 7%) . We should recall that almost 90% of Mexico’s exports (85% of which are manufactured goods) are to the US market, compared to 30% of exports from the rest of Latin America (40% of which are manufactured goods). 0. Intra-regional trade was also affected and fell considerably. The MERCOSUR countries experienced a downturn of 25% and the countries in the Andean Community, 28%. 11. Regarding the importation of services, the slowdown that began in 1998 persisted, and in 1999 there was a 9% drop on average (a 9% increase in Mexico, but a 13% drop in the remaining countries). 12. The outlook for the volume of world trade in 2000 is better; it is expected to rise 6. 5%, which is higher than the average increase in world production.Trade indicators are expected to improve in Latin America and the Caribbean, because of higher oil prices, increased investment in the region, better commodity prices and, especially, a major recovery in exports in general. 13. Foreign trade has gained ext raordinary strength and importance in the development strategies for the Latin American and Caribbean economies. Its expansion and growth is the engine of their economic growth. This is expected to continue, and what’s more the export structure is expected to be geared towards manufactured goods with high value added.Since nearly 90% of trade in this region is shipped by sea, port development is of the utmost important. B. Characteristics of maritime transport 14. Below are some of the characteristics of maritime trade traffic for containers, liquid and dry bulk cargo, and tourism (US$3. 5 billion). 15. Despite the changing, adverse conditions in production and world trade mentioned above, transport of maritime trade continued to grow in 1999, but only by 1. 3% — a slower rate than in previous years (2. 2% in 1998 and 4. 1% in 1997). This was the lowest level recorded since 1987.The volume of world trade transported on the seas was over 5. 1 billion tons, a similar fig ure to the previous year. Growth estimates for 2000 are roughly 4%, similar to 1997. 16. Containers. Use of containers has been on the rise since their introduction in 1956, and this market has the best growth outlook in the sector. As a result, high-capacity ships have been built; today more than 60 have a capacity over 5,000 20-foot equivalent units (TEUs). Container traffic was an estimated 190 million TEUs in 1999; of that amount the Port of Singapore moved 15. million TEUs. Studies forecast 6% annual growth in container traffic through 2005, as a result of continued expansion of the use of containers by the shipping industry in developing countries; increased trade in manufactured goods and products with a higher value added; the trend towards globalization by multinational manufacturers; and growth of megaships and the resulting rise in feeder and ferry traffic. 17. Liquid cargo. A total of 2. 159 million tons of liquid cargo was loaded in 1999, with an annual rate of change o f less than 1. 3%.Oil continues to be the main component, accounting for nearly 70% (roughly 1. 5 billion tons annually), followed by liquid gas and petrochemicals. Double-hull 300,000 ton supertankers are used the most to transport crude oil between its main axes, i. e. Asia, the United States, and Europe. 18. Dry bulk cargo. Maritime transport of trade in dry bulk cargo includes most notably: iron ore, coal, grain, bauxite/aluminium oxide, and phosphates. In 1999, together they represented 1. 233 million tons with an annual rate of change of 2. 8%; 70,000-ton bulk carriers are also important in this type of traffic.Many shipping companies build panamax ships to measure with cranes to load and unload bulk cargo, which reduces transport costs. Bulk cargo is still the largest segment of maritime transport, representing almost one fourth of total freight loaded annually. 19. Tourism. The cruise ship industry had grown and received massive investments in recent years. It is estimated t hat over 7 million persons will take a cruise this year, a similar figure to last year, and the American market is the main consumer. Recently, high-tonnage ships have been built, such as the Royal Caribbean Voyager of the Seas, at 130,000 tons with he capacity to hold 3,115 passengers, inaugurated last November, and the Royal Caribbean Explorer of the Seas, which has the same characteristics and began service in October 2000. Regionally, the recipient markets are most notably the Caribbean and the new market in the Southern Cone. Ports are competing to attract these passenger ships and face the challenge of having the appropriate port infrastructure in place, as well as the complementary service facilities that passengers require, such as taxis, buses, guides, and shopping centers. This is certainly a growing market in every respect, but a very competitive, capital-intensive one.C. The shipping industry: characteristics and prospects 20. The main shipping lines in the world, such a s Maersk Sealand, Evergreen, P&O Nedlloyd, Hanjin, Cosco, and many others serve the most complex, profitable routes in the world, including some in Latin America and the Caribbean. 21. The 25 most powerful shipping lines control almost 60% of container transport capacity in world trade. In addition to growing concentration of container activity in the hands of the largest, most powerful shipping lines, there is an unrelenting process of consolidation and the forging of alliances among the main shipping lines.In other words, they are growing larger every day, but have also decided to work together. The two most powerful alliances that were recently renewed are the Great Alliance (among NYK, Hapag Lloyd of Germany, the Anglo-Dutch company P&O Nedlloyd, Orient Overseas Container Lines (OOCL) of China, and the Mediterranean Shipping Company (MSC)) and the New World Alliance (among Mitsui OSK Lines (MOL) of Japan, APL/Neptuno Orient Lines (NOL) of Malaysia, and Hundai Merchant Marine (HM M) of Korea) which have focused primarily on reorganizing the main trade routes.The sphere of action of these alliances is broader, involving a global strategy and ground services. This raises questions about the ability of certain container port terminals to survive and particularly about whether or not the conditions for perfect competition are present in these markets. 22. Another characteristic of this industry is the production and servicing of mega container vessels. The number and size of postpanamax container vessels will continue to grow, which will increase the transport of containers, reduce stops in the main routes, and therefore increase the services of feeder ships.Ship capacity will continue to rise, and ports will have to adjust to their size. In 1999, over 120 postpanamax ships were operating. Maersk has ships that can transport nearly 7,000 TEUs (K and S classes) and 8,000-TEU ships are due out soon. Germanischer Lloyd is planning to operate a mega container ship o f 15,000 TEUs by 2010, when the volume of container trade is expected to be double the current figure (roughly 200 million TEUs). The ship would cover the East-West route and feed ships of 4,000 and 5,000 TEUs.This would reduce the number of port movements, but requires ports with enormous capacity. 23. Changes in container terminal operators. With the expansion of the container industry, the structure and organization of terminal operations have changed. Today there are three categories of container terminal operators: (i) port authorities that have decided to become directly involved in handling containers, such as the public ports of Singapore and the Virginia Port Authority or the private ports of Felixtowe or Freeport.However, this category has been on the decline with the emergence of port corporations; (ii) private port terminal operating companies involved in a process of concentration, including stevedoring. The 15 main operators have expanded their activities outside of th eir ports of origin, associating themselves with large stevedoring groups (e. g. PSA Corporation, Hutchinson, ECT, P&O Ports, and SSA); and (iii) the shipping lines that have decided to control and manage their own container terminals. This decision was made for two main reasons.The first was for strategic reasons, because these global transporters are involved in hub and transshipment ports and therefore need to control their operations, including docking priority and guaranteed availability of equipment for use. The second was to reduce costs, i. e. for savings, based on economies of scale and better control of terminal expenses. 24. The provision of port-to-port logistical services. As shipping lines (e. g. Maersk Logistics, Evergreen American Corporation) participate in ogistical service solutions, they absorb them or forge associations with these intermodal service providers to ensure consistent, regular service, meeting the client’s demands through the port-to-port supp ly chain. This range of logistical services, which includes the consolidation of containers, documentation services, and storage and distribution, will continue to expand and improve every day and will have a greater impact on reducing costs and enhancing efficiency. 25. Information and communications technology and electronic commerce.Port services will step up their use of computerized systems and information technology, such as the Electronic Data Interchange (EDI) system and the Internet. The increase in transport capacity will require immediate data on the exact location and status of cargo, as well as on all logistical and institutional aspects of port operations. In light of these requirements, all port and shipping industry sectors will continue to invest in new systems and channels of communication.The industry will be moving towards a paperless world in which all types of information are handled electronically. 26. Use of the Internet for electronic commerce is also import ant. That industry has shown impressive growth of 68% in the last year. This mode of commerce is affecting how the transport industry does business, and theories abound regarding its impact on the maritime port industry. Internet commerce was one of the topics discussed at the WTO negotiations, and the issue of taxes on e-commerce is still under study. 27.These characteristics and trends in the shipping industry are the result of the development of the world economy and globalization, resulting in demand for new standards of efficiency for maritime transport and creating new challenges for the world’s ports. D. Economic reforms and trade challenges for ports in the region 28. Macroeconomic reforms. The region has undertaken a series of macroeconomic reforms that prioritize export promotion, putting aside import substitution, which has been considered detrimental since the 1970s. 29.Important tariff reforms have been adopted that include marked drops in tariffs on finished pro ducts, and even lower levels for inputs for exportation; the adoption of fewer tariff tiers, with a single flat tariff; and the establishment of a positive, effective protection mechanism. This promotes the generation of value added, instead of punishing it. In terms of exchange rates, the various fixed exchange rates were eliminated, which were arbitrary and ignored market criteria. Real exchange rates govern currency exchange today.Tax reform has also been tackled, but not with the necessary vigor. Domestic taxes on income, assets, use, or value added are now contributing more to national public treasuries, replacing taxes on foreign trade as the main source of revenue. There is still a long road ahead for tax reform in most countries. Attracting foreign capital is another important element on the list of reforms that have sped up the growth of our economies, by helping external resources to complement low domestic savings and finance projects in new productive sectors.State refor ms complete the picture; they are an effort to redirect state leadership in the economic development process, where the state goes from being a major player, monopolist, and executor of economic activity to playing the role of a regulatory, control body that works with the private sector. State reforms also include the privatization of public agencies (ports have been in the forefront here) and other public institutions, such as customs. 30. Almost all governments in the region have made a major effort to move forward with economic liberalization, trade opening, and export promotion, allowing for major growth in the 1990s.Nonetheless the imbalance in wealth distribution, the inability of large segments of the population to overcome extreme poverty, and the still weak reforms of institutions and some branches of government are disturbing, destabilizing elements that are reflected in the serious economic malaise that many countries in the region are experiencing today. 31. FTAA 2005. The heads of government of the Hemisphere agreed at the Summits of Miami (1994) and Santiago (1998) to promote the Free Trade Area of the Americas (FTAA), in order to form a broad market stretching from Alaska to Tierra del Fuego that would be the largest international consumer arket, with 800 million inhabitants. Negotiations on customs rebates are geared towards complying with this date, and this mechanism is expected to substantially increase inter-American trade, thus intensifying the flow of hemispheric port traffic. 32. European Union. The policy of strengthening trade relations, particularly between South America and Europe, has been gaining major momentum; for example, trade negotiations with MERCOSUR are being promoted. Other plans, such as the free trade agreement between Mexico and Europe, confirm the trend towards increased trade between these two regions in the medium term. 33.Subregional integration systems. Another factor that has accelerated the flow of trade is the existence of several subregional integration systems, such as the Andean Community of Nations (CAN), MERCOSUR, the Central American Common Market (CACM), or the Caribbean Community (CARICOM). They must speed up subregional trade, but must also support the formation of the FTAA and facilitate the standardization of different trade policies. All of this will translate into increased movement in maritime and hemispheric port traffic. It is noteworthy that, at the Andean level, over 50% of commodities were shipped by sea in 1999. 4. Strengthening international trade negotiations. The World Trade Organization (WTO) tried unsuccessfully to promote a new round of trade negotiations at its Third Ministerial Conference in Seattle in November 1999. The proposed work program for the next five years consisted in negotiations on liberalizing trade in agricultural products, services, food security, electronic commerce, and other topics. Even though the differences of the developing and developed countries could not be bridged, important progress was made, indicating that a new round could be launched soon.The developed and developing countries also gave clear signs of their intent to continue with a policy of trade opening and economic liberalization, and there are no signs of a rebirth of protectionism. These indicators strengthen the foundation for the future growth and expansion of world trade. 35. Customs facilitating trade. Similarly, the World Customs Organization (WCO) is making progress in technical areas that facilitate trade, which favors the expansion of world trade in the short and medium terms.Significant progress has been made towards adopting revised standards on the origin of traded goods; the new and revised version of the Convention on Simplification and Harmonization of Customs Procedures (â€Å"Kyoto Convention†); standards for applying the Code to assess the value of goods in customs according to transaction value criteria; the ongoing amendments under the Harmonized Commodity Description and Coding System; and the application of new information and communications technology.All these customs instruments are essential complements for facilitating and expanding trade in our countries. E. Port actions for port development 36. Port reforms. The port sector in the region has exhibited change, but in different ways and to different degrees in each country. Generally speaking, the sector has been regulated and national port policies set, which in many cases had been absent. State monopolies in port operation and administration have been revised, by either totally or partially decentralizing port activity to local governments and/or granting the private sector concessions.Labor constraints have been overcome, and port authorities have therefore been playing a different role. This new environment is reflected in the revision of port tariffs, seeking to develop a more efficient, more flexible port system that is swifter, safer, and cheaper. The experts attending this event will more clearly and objectively illustrate how port systems operate in different countries in the Hemisphere. 37.I would like to reaffirm that, port reforms must be sped up for greater port efficiency and competitiveness, particularly in countries that have not yet done so, regardless of the ownership model the governments decide to adopt, since international trade will not wait, and the countries’ growth and development can not be put off because of undefined policy. Delaying this reform will only result in higher social costs in the medium term. While it is important to define a port system — be it public, private, or a combination of the two — it is essential to have the means and facilities or achieving levels of efficiency to be able to adapt to the requirements of world trade and compete successfully. Landlord ports are the most common arrangements in the region. That is where port authorities cease to serve as p ort operator, provide the necessary infrastructure, and grant concessions to the private sector to operate complementary services and terminals. Generally, in this situation, the central government grants financing to the sector, such as direct subsidies and credit guarantees. In general, this model promotes higher-quality service delivery. 38.The impact of ports on promoting national economic development. This is another consideration that I would like to reiterate, with a few examples of what is being done in other developing countries that have made progress in port reform. These countries have concessionaires and private terminal operators and have been adversely affected by the various financial crises. Their development strategy also depends heavily on exports. However, strategic development plans and specific recommendations are in place to strengthen the role of the port sector to ensure significant recovery of the national economy.They include: (i) operators reviewing their operating costs to eliminate unnecessary expenditures; (ii) enhancing the efficiency and productivity of port operations, particularly by shortening the time needed for container movement by crane or using more cranes for ships with higher cargo volume and employing information and communications technology in daily operations, bearing in mind the growing volume of cargo being moved and the corresponding volume of communications that must be executed; (iii) conducting more aggressive marketing campaigns to raise the volume of cargo sent directly from the country’s ports to its final destination; (iv) implementing infrastructure projects aimed at raising port capacity in the medium term; (v) conducting equipment and port facility maintenance campaigns to continue to ensure efficient operations; and (vi) continually revising the role of port authorities to cover changes in the market. In light of these reforms, their role is focused on planning and regulating port activity, fa cilitating the transport chain, controlling and supervising the activities of private enterprises by developing information systems, and promoting and working with the port community and foreign and international institutions. 39.Take into account trends and developments in the maritime industry and port operators in order to adjust port development strategies to the world challenges of this century. (i) Global port operators will continue to expand to new geographic areas and will maximize the use of technology to create worldwide port networks that can offer consistent levels of services and modes of operation. More alliances will be forged among port terminal operators to promote economies of scale and use of global capacity. (ii) Since capital investments will be high, only the most powerful enterprises with significant financial resources will remain in these alliances. iii) Port facilities will acquire new and better standards and advanced technology in order to serve mega shi ps. (iv) Container storage capacity must be improved through new systems and new facility designs. (v) There will be significant investment in communications and information technology for a world run electronically. 40. Finally, partnership for development. This mechanism will be crucial for the future of regional port activity, given the urgent need for information exchanges for decision-making in port operations on shipping companies and port operators, as well as on producing projects to be implemented jointly and meeting market requirements in general. Bilateral and multilateral cooperation must increase.The Organization of American States (OAS) has an Inter-American Committee on Ports (CIP) which serves as a forum for dialogue for the governments of all countries in the Americas and the port authorities, but also for port operators, shipping lines, and commercial, industrial, financial, academic, and scientific entities. Use of this mechanism is an effective, low-cost option f or strengthening hemispheric cooperation among ports in the Americas and contributing to their development. Port forums, such as those offered by the Andean Committee of Water Transport Authorities (CAATA) and the Association of Caribbean States (ACS), among others, work along the same lines for cooperation and to achieve port efficiency, which our government authorities must use to the fullest. 41. Conclusion. Ladies and gentlemen, my goal has been to provide you with up-to-date information on the ever-changing world of ports.What we are seeing in the world’s ports today we could never have envisioned 25 years ago, like 8,000-TEU megaships or ports with great capacity to move containers, such as the Port of Hong Kong with 16. 2 million TEUs per year. However, we often consider 25-year blocks in long-term investments in the maritime port industry. Changes in the industry in the next quarter of a century will be even more dizzying and spectacular, and our ports will have to ad apt. 42. In this globalized world and in our corner of the world where 90% of our trade goes through ports, it is the responsibility of the governments, operators, shipping companies, service providers, and workers to work together to support the development of both our ports and our economies. Let’s forge an efficient, competitive inter-American alliance for the future of our ports! CIP00106E