Case 07: Case 07: PSA: The World´s Port of PSA: The World´s Port of

CallCall

Presented byPresented byBrian R. HornbergBrian R. Hornberg

Ariane PeschelAriane PeschelOctavian SerbanOctavian SerbanChun-Hung WuChun-Hung WuRho Hee YobRho Hee Yob

Port of Singapore Port of Singapore AuthorityAuthority

Lee Kuan Yew’s insight.Lee Kuan Yew’s insight.PSA was founded in 1964.PSA was founded in 1964.PSA provides services and harbor PSA provides services and harbor

facilities for port of facilities for port of Singapore.Singapore.PSA was incorporated in 1997.PSA was incorporated in 1997.PSA’s mission: World’s Port of PSA’s mission: World’s Port of

Call.Call.

Port of Singapore AuthorityPort of Singapore Authority Reconstructed into PSA Corporation and the Maritime and Reconstructed into PSA Corporation and the Maritime and

Port Authority in 1997.Port Authority in 1997. Portnet.com Ltd. was formed in May 2000 as a subsidiary Portnet.com Ltd. was formed in May 2000 as a subsidiary

of PSA Corporation.of PSA Corporation. Portnet.com’s products:Portnet.com’s products:

1.P-Commerce1.P-Commerce

2.eMart2.eMart

3.eSolution3.eSolution

4.Inforhub4.Inforhub

Problem StatementProblem Statement

Challenges of Challenges of GlobalizationGlobalization

The impacts of The impacts of

privatizationprivatization

Singapore and its Singapore and its EconomyEconomy

Small Country, situated in Southeastern AsiaSmall Country, situated in Southeastern Asia Total Area is 660 sq. kmTotal Area is 660 sq. km Population: 3.5 million PeoplePopulation: 3.5 million People Limited Land, Sea Space, Number of PeopleLimited Land, Sea Space, Number of People Local Market is very smallLocal Market is very small Today, Singapore is a global Hub Today, Singapore is a global Hub Leveraged Leveraged

global Resources, used its Expertise, Skills, global Resources, used its Expertise, Skills, Organization and Technology to build the Organization and Technology to build the World’s Port of Call with high Productivity, World’s Port of Call with high Productivity, Efficiency and global PresenceEfficiency and global Presence

Singapore and its EconomySingapore and its Economy The Government supported the Growth of The Government supported the Growth of

the Economy with offering Special Taxes the Economy with offering Special Taxes or Capitalor Capital

The Port of Singapore is the second The Port of Singapore is the second busiest Port since 1982 with a high busiest Port since 1982 with a high EfficiencyEfficiency

Industrial vs. Network Economy Industrial vs. Network Economy BusinessBusiness

Industrial EconomyIndustrial Economy More Certain and More Certain and

Stable EnvironmentStable Environment Hierarchical Structure Hierarchical Structure

and staticand static Internal Economies of Internal Economies of

ScaleScale Internal Economies of Internal Economies of

ScopeScope Focus on ProductionFocus on Production Development over Development over

DecadesDecades

Industrial vs. Network Industrial vs. Network Economy BusinessEconomy Business

Network EconomyNetwork Economy Changing and Shifting EnvironmentChanging and Shifting Environment New Technology and OpportunitiesNew Technology and Opportunities Big & Small and decentralizedBig & Small and decentralized Extern Network Economies of ScaleExtern Network Economies of Scale Extern Network Economies of ScopeExtern Network Economies of Scope Business Development in only a few Business Development in only a few

yearsyears Focus on DistributionFocus on Distribution Creation of Value develops ExponentialCreation of Value develops Exponential

OBJECTIVESOBJECTIVES

Reduce costs and increase operational Reduce costs and increase operational efficiencyefficiency

Expansion and modernization of Expansion and modernization of infrastructureinfrastructure

Much more integration with global Much more integration with global shippingshipping

Become a global multinational Become a global multinational corporationcorporation

ACTIONSACTIONS The strategy to differentiate the services: The strategy to differentiate the services:

implementing the technology that allows to implementing the technology that allows to operate with high level of productivity and operate with high level of productivity and accuracyaccuracy

The strategy to be specialized in a unique The strategy to be specialized in a unique niche of the port business as a transshipment niche of the port business as a transshipment center.center.

Direct delivery in a cost reduction environmentDirect delivery in a cost reduction environment World-class operations and regional and global World-class operations and regional and global

transshipment port. transshipment port.

PERFORMANCEPERFORMANCE

Unloading of 2,001 containers in 9 hour Unloading of 2,001 containers in 9 hour and 51 minutes;and 51 minutes;

Loading and unloading 243 containers per Loading and unloading 243 containers per hourhour

By comparison, only some of the world’s By comparison, only some of the world’s ports surpassed the limit of 100 containers ports surpassed the limit of 100 containers per hour.per hour.

PSA handles an average of 500,000 TEUs PSA handles an average of 500,000 TEUs per year, in comparison with other ports per year, in comparison with other ports 200,000-300,000 TEUs. 200,000-300,000 TEUs.

VENTURESVENTURESKeppel Distripark – provided logistics, Keppel Distripark – provided logistics,

distribution and inventory management distribution and inventory management PSA BoxCare – provided repair, servicing, PSA BoxCare – provided repair, servicing,

maintenance, cleaning, painting, and maintenance, cleaning, painting, and inventory managementinventory management

PSA ReeferCare – provided specialized care PSA ReeferCare – provided specialized care perishable goodsperishable goods

PSA ProCare - provided specialized care for PSA ProCare - provided specialized care for unmarked cargounmarked cargo

PSA ChemCare – provided safe handling of PSA ChemCare – provided safe handling of hazardous cargohazardous cargo

PORTNET.COMPORTNET.COM

Subsidiary of PSA CorporationSubsidiary of PSA Corporation

Leveraging PSA’s operational Leveraging PSA’s operational and IT expertiseand IT expertise

Provided Web-based IT software Provided Web-based IT software and a “community network”and a “community network”

AWARDSAWARDS

2000 Computerworld Smithsonian 2000 Computerworld Smithsonian LaureateLaureate

1994 Salzberg Concept Medallion Award1994 Salzberg Concept Medallion Award

1989 Innovative Application of IT Award1989 Innovative Application of IT Award

COMPETITIONCOMPETITION

Regional level – Malaysian ports – in Regional level – Malaysian ports – in special Northport and Westport from special Northport and Westport from Klang;Klang;

Global level – vertical integration by Global level – vertical integration by

container shipping lines; example: container shipping lines; example: Maersk-Sealand. Maersk-Sealand.

PROBLEMSPROBLEMS

limited landlimited land

limited sea spacelimited sea space

limited people limited people

high level of fixed costshigh level of fixed costs

NETWORK ECONOMIES OF SCALENETWORK ECONOMIES OF SCALE

Signed two contracts: first with Port Signed two contracts: first with Port of Seattle – USA and the second with of Seattle – USA and the second with Sinport Sinergie Portuali – ItalySinport Sinergie Portuali – Italy

Transshipment - a more complex Transshipment - a more complex process than direct point-to-point process than direct point-to-point shipping shipping

NETWORK ECONOMIES OF SCOPENETWORK ECONOMIES OF SCOPE

Spending of three decades to build Spending of three decades to build the most sophisticated technology the most sophisticated technology and operating infrastructureand operating infrastructure

Participation in 13 ports in 8 Participation in 13 ports in 8 countriescountries

3 KEY PROCESSES3 KEY PROCESSES

–Pre-arrival process for vessels Pre-arrival process for vessels and trucksand trucks

–Vessel loading, unloading, and Vessel loading, unloading, and yard storage yard storage

–““Flow-Through” gate process Flow-Through” gate process

EFFICIENCY & QUALITYEFFICIENCY & QUALITY

CITOS CITOS

Port.net Port.net

PSA cranes PSA cranes

PSA was restructured in two private entities:PSA was restructured in two private entities:– PSA Corporation PSA Corporation – Maritime and Port Authority Maritime and Port Authority

KNOWLEDGE/TRAININGKNOWLEDGE/TRAINING

–TRAININGTRAINING

–CORE OF VALUES CORE OF VALUES

INFORMATION VALUEINFORMATION VALUE

–Consultancy services Consultancy services

–Consulting projectsConsulting projects

CUSTOMER’S STRATEGYCUSTOMER’S STRATEGY

–Customer First Program Customer First Program –Direct involvement of top Direct involvement of top managementmanagement

–Creating of key customer Creating of key customer managersmanagers

–E-commerce solutionsE-commerce solutions

PRIVATIZATIONPRIVATIZATION

Initial Public Initial Public Offering (IPO)Offering (IPO)

BondsBonds

Transferring the Transferring the assets assets

DIRECTIONSDIRECTIONS

the energy and resources for growing the energy and resources for growing the core businessthe core business

providing world-class integrated port providing world-class integrated port and logistics servicesand logistics services

better meeting the customers’ better meeting the customers’ requirementsrequirements

increasing the application of increasing the application of technology technology

e-commerce solutionse-commerce solutions

Benefits from IT based Benefits from IT based InfrastructureInfrastructure

Pre-arrival Process for Vessels and Pre-arrival Process for Vessels and Trucks Trucks

Vessel Loading, Unloading, and Yard Vessel Loading, Unloading, and Yard StorageStorage

Flow-Through Gate ProcessFlow-Through Gate Process

Benefits from IT based Benefits from IT based Infrastructure (cont.)Infrastructure (cont.)

Pre-arrival Process for Vessels and Pre-arrival Process for Vessels and Trucks Trucks – Enable subscribers to conduct business at a Enable subscribers to conduct business at a

rate of 69 million transactions per yearrate of 69 million transactions per year– Minimize waiting timeMinimize waiting time

– Achieve optimal deployment of port space Achieve optimal deployment of port space and resources and resources

Benefits from IT based Benefits from IT based Infrastructure (cont.)Infrastructure (cont.)

Vessel Loading, Unloading, and Yard Vessel Loading, Unloading, and Yard Storage Storage – Enable a ship to make up for delaysEnable a ship to make up for delays

– Fast speed for loading and unloading Fast speed for loading and unloading

– Help operate cranes and vehiclesHelp operate cranes and vehicles– Provide real time operator informationProvide real time operator information– Enable online management reporting and Enable online management reporting and

decision supportdecision support

Benefits from IT based Benefits from IT based Infrastructure (cont.)Infrastructure (cont.)

Flow-Through Gate Process Flow-Through Gate Process – Automatic information registration in Automatic information registration in

less than 25 secondsless than 25 seconds– Handle 8,000 container truck daily with Handle 8,000 container truck daily with

a peak volume of 700 trucks per houra peak volume of 700 trucks per hour– Fast process for trucker, 30 minutes Fast process for trucker, 30 minutes

Business InfrastructureBusiness Infrastructure

Level 3: Portnet Community LinkagesLevel 3: Portnet Community Linkages

Business InfrastructureBusiness Infrastructure

Level 2: Real-Time Management, Level 2: Real-Time Management, Coordination, and ControlCoordination, and Control

Business InfrastructureBusiness Infrastructure

Level 1: CITOS Enabled OperationsLevel 1: CITOS Enabled Operations

New VenturesNew Ventures

PSA Port Care ServicesPSA Port Care Services– Box CareBox Care– Reefer CaseReefer Case– Pro CarePro Care– Chem CareChem Care

Portnet.comPortnet.com– P-CommerceP-Commerce– eMarteMart– eSolutionseSolutions– InfohubInfohub

Future VenturesFuture Ventures

Initial Public Initial Public OfferingOffering

No Change in No Change in Business PlanBusiness Plan

SingaporeSingapore

Questions ?Questions ?