ENHANCING PORT EFFICIENCY IN MALAYSIA THROUGH TECHNOLOGY APPLICATIONS Mohd Hafizzuddin Md Damiri*

Abstract As throughput volume grows each year, terminal operators are faced with continuous increase in demand for storage space which they have difficulty accommodating due to physical constraint on space. Reduction in free time is the only way forward to cut down the idling time of containers and cargos in terminals for both imports and exports. Import declaration process need to be simplified and pre-clearance obtained prior to discharge of consignment to terminal in order to accommodate the reduction in free time in container yards to maximum international standard of 3 days. The use of innovative technology applications to further deliver significant enhancements in efficiency and service customization is needed to facilitate cross-border operations, where Malaysia envisions becoming the regional logistics hub in Asia, should implement solutions to integrate technologies required to realize a seamless logistics systems. Keywords: port efficiency, application of technology, efficient management system, logistics and supply chain, port management. Container terminal management Management of container terminal operations is essentially the allocation and scheduling of the expensive resources such as berths, quay cranes, storage space, yard cranes and container carriers. Each of these resources plays an indispensable role in the interlocking processes in a container terminal. In advanced countries, they focus their attention on yard management, since the operation on storage yard is the most complicated part at the terminal where both inbound and outbound container flows are handled in this area simultaneously.

________________
*the writer is currently pursuing a PhD. in East Asian Studies at the University of Malaya, Malaysia and attached with the Public Service Department (PSD), Malaysia. Paper prepared for the Malaysian Logistics Council (MLC) in Kuala Lumpur, Malaysia 7 January 2008.

In Malaysia, container yards are limited in space, since most of the yards are located within the ports proximity. Containers inbound and outbound, coupled with inefficiencies with clearance procedures, further contribute to delays in transporting goods to consignees. Recently, Malaysia has made the move to reduce the period for free storage at ports from 5 to 3 days. This bold effort, which is supposed to be effective on 1 July 2008 and has been differed to be effective by 1 January 2009, has sparked numerous concerns on the logistics industry and the whole logistics supply chain. Reasons being were to weaknesses within the logistics supply chain, other government agencies (OGAs) not operating on 24-hour basis, and financial institutions, consignees and shipping agents are not operational on weekends and public holidays. Recent trends have made significant changes and impacts in the maritime industry. Fearing of terrorist attacks, acts of saboteur and safety and security reasons have led countries to implement harsh rules and policies towards clearance of containers. To make matters more complicated, congestions at ports in major importing countries have made it difficult to ensure goods reach the importer just-in-time. It has forced importers and exporters to maintain higher levels of inventories. Security consideration has also increased logistics costs, particularly after the September 11 incident. The US in the last 5 to years had implemented, first the Container Security Initiative, later the Megaports Initiative and lately the Freight Security Initiative, all of which imposes additional obligations on shippers for clearance and pre-clearance before the goods are shipped. This has further hinder the efficient process of clearing containers at major ports in the world, contributing to much delay and problems to the logistics supply chain. Establishing an efficient port system Advanced countries have implemented various systems and relieve certain policies to reduce clearance time of containers. They recognized that logistics enterprises cross-border operation plays an important role for establishment of a more efficient logistics system and have made efforts for improving policy environment for logistics enterprises. These countries continue to make efforts to further increase efficiency by improving complicated governmental procedures and regulations as needed. Malaysia can achieve similar feats by emulating the successes of these advanced countries, through the rapid use of technology. Malaysia should also realized that it strongly needs to establish a logistics information network system, with which both the government and private companies can access logisticsrelated statistics, applications, online processes, data and other information services to effectively inter-connect logistics network. Therefore, the following suggestions to make Malaysian ports more efficient and reliable are outlined for consideration.

(i)

Tag System/RFID Flow-through Gate System It is a vehicle RFID on-board unit that works to allow user to drive-through the receiver gantry without hassle, by transmitting information between the device and the entrance/exit gantry system via infrared at the dedicated lane at ports. The system can detect a vehicle as fast as 40 milliseconds and vehicle throughput is 4 times faster than manual clearance lane. RFID tags come in three general varieties: passive, active, or semipassive (also known as battery-assisted). Passive tags require no internal power source, thus being pure passive devices (they are only active when a reader is nearby to power them), whereas semi-passive and active tags require a power source, usually a small battery. To communicate, tags respond to queries generating signals that must not create interference with the readers, as arriving signals can be very weak and must be differentiated. Besides backscattering, load modulation techniques can be used to manipulate the reader's field. Typically, backscatter is used in the far field, whereas load modulation applies in the nearfield, within a few wavelengths from the reader. For example, once a container is unloaded from the ship for temporary storage, pre-clearance will be done simultaneously through the Electronic Port Clearance (EPC) system by the calling ship before entering the point of disembarkation (i.e. port of call). Hauliers and containers exiting the port or free zones can be immediately cleared electronically. Like SmarTAG system at highways, hauliers and containers are fitted with RFID devices and when they pass through the gantry at the entrance/exit points, where containers with pre-clearance authorization can be delivered to consignees.

(ii)

Electronic Port Clearance Before a ship can enter a foreign port, a significant amount of paperwork needs to be done. Several reports and forms have to be sent to, among others, the port itself, port state authorities, customs, immigration, health authorities and military authorities. At least 25 documents have to be sent from the ship or the ships agent, in conjunction with a port call. This does not include documents related to services in port such as cargo on- and off-loading, waste disposal and ordering of supplies, nor documents related to customs clearance of the cargo.

The data requested in many of these documents are fully or almost identical. As an example, in one port, four different documents with identical content had to be sent to four different parties. The problem is further increased by different countries and even between ports in the same country. Documents are also often in paper or other non computercompatible formats. This requires shore organizations to manually enter the data into their data systems, which is a time-consuming and costly affair. In addition, it increases the risk of incorrect data entering the systems or that the wrong forms are sent at the wrong time and thus may cause safety and security problems, as well as increasing the risk of unnecessary detentions and inspections of the ship. Advanced countries have adopted the electronic port clearance system. Most European ports have implemented the SafeSeaNet (SSN) system which facilitates information exchanges between port state authorities and other relevant government agencies. SSN is used to increase safety of shipping and improve security. In Poland, ports have implemented the PortNET system, which is one of the most extensive single-window electronic port-clearance systems in regular operation today. This system can handle most of the documents related to ship and consignment clearance. All this is done through standardized messages and a single electronic portal. If Malaysia could emulate the successes of these systems, the current SMK-DagangNet system could be revitalized and will reduce Malaysian ports turnover time and increase efficiency in clearance of containers and cargos. (iii) Nationwide E-commerce System Most major ports in the world require seamless integration and interconnectivity for efficient clearance, delivery and processing containers and cargos to businesses. With technology in place, businesses are able to connect the whole logistics supply chain to the world. Malaysia, through Northport and Westport in Port Klang, is the major gateway for goods in containers or cargos to be shipped in and out, transshipped or break bulk. By setting an example to implement an advanced computer systems, Malaysian ports can improve services in advance of customer demand. The ports, therefore, has the flexibility to adapt software to specific customer requirements and the expertise to create packages in an ongoing program to develop and keep abreast of advances in electronic data interchange (EDI).

Japan and Korea have adopted a strategy to provide secure, reliable, faster and more efficient services for the processing of business transactions with all its customers, suppliers, Free Zone companies and government agencies. They operate with fully equipped, sophisticated systems, high bandwidth networking infrastructure and support staff with a commitment to embracing new technologies that will increase efficiency and productivity. Both countries operate two major data centers, one at the port and one at the customs headquarters. They are connected by high-speed communications lines to form a network. In the event of a failure or disaster at one site, the user community can be switched to the other site. In essence, each site is a backup for the other, while supplying processing capability at each of the two ports. Additionally, these countries also run a data center at their respective container terminals to support the operations there. These two countries implemented several technological systems services to facilitate the businesses, as follows: (i) Container Terminal Management System This system covers business requirements such as crane bookings, marine, berth and yard operations, container inventories, activity planning and financial billing. Real time data from this system is used for producing voyage schedules and other statistics on the Internet. The system facilitates an integrated inter-port transfer of containers between ports within countries. The system is in compliance with ISO standards and UN location codes. (ii) Synchronous Planning and Real-time Control System SPARCS complements the CTMS for ship and yard planning using expert systems. It also supports equipment scheduling, dispatching and execution of planned jobs. Utilizing state-of-the-art Global Positioning System (GPS) technology for pinpoint accuracy in locating containers, it produces a graphic tracking display of container movements anywhere in the terminals and distributes the information to Mobile Data Terminals in every container handling vehicle in the port.

(iii)

Smart Rail System This system is based on Digital Global Positioning System (DGPS) which facilitates the operation of the Rubber Tire Gantry (RTG) cranes currently in use in the terminal and ensures that container positioning within the yard can be effectively accessed automatically and immediately. The leading technology also facilitates the automatic steering of the RTGs as they traverse the yard en route to their next location. Each RTG is fitted with a DGPS antenna and given a correct signal from a base station located at the crane section. This method ensures accuracy within 20mm.

(iv)

Container Freight Station System The system computerizes the entire operations of the station including receiving containers, un-stuffing, segregation and palletizing, storage and delivery to customers. Offered mainly for Landing Craft Logistics (LCL) consolidators, it provides for the tracking of consignments from receipt to delivery, quick responses to queries, better turn around time cargo delivery and accurate statistics. CFSS also feeds back cargo information to Manifest and Documentation System (MDS) to enable fast and accurate document clearance in the Documentation Station.

(v)

Electronic Documentation and Manifest System Shipping lines and agents will use this system to transmit cargo manifest details, where 100 percent data is processed electronically. The data will also be interfaced with Customs for processing Bill of Entry and Delivery Order which has helped eliminate input errors and waiting time.

(vi)

Financial Management System Being an enterprise-wide system, the system is being interfaced with all major vertical applications. The system is designed to be web enabled, employing state-of-the-art three-tier network computing architecture.

(vii)

Commercial Management Information System This system provides port management and customers with up-to-date volumes and trade data information, which assists

planning and decision making. CMIS is installed at customers sites to provide unlimited access to their statistical data. Benefits The benefits of removing non-trade barriers can be substantial. Various researches indicated that the trade benefits of improving port efficiency and the customs environment in Malaysia can be several times greater than the trade effects from reducing tariff barriers. Improvements in trade-facilitation measures, such as harmonization of customs procedures and systems, can yield benefits similar in magnitude to those of non-tariff barriers. The initial port efficiency level in Malaysia is much lower, and hence the improvement is greater; since the port efficiency levels of Singapore and Jakarta are much closer to the worlds average, the improvements are seen greater than ever. Similar patterns are seen for improvements in customs environments increases in trade are greater for countries that initially had lower levels of efficiency. Clearly, therefore, a significant advance can be achieved by simply improving procedures, before even getting into the lowering of tariffs and the removal of non-tariff barriers. Conclusion Instead to always compare with Singapores PSA, in terms of competitiveness and efficiency in Southeast Asia, Malaysia should look towards emerging economies and development of their ports and infrastructure, such as Thailand, Viet Nam, China and India. These countries are rapidly moving and taking measures such as separating regulator and operator functions, corporatization, investment and cooperation, mergers and acquisitions, branding and marketing, development and so forth, to become a brand known within the region. Most major ports of the world have a well-developed hard infrastructure in terms of the number of container terminals, container berths, cranes and adequate storage facilities, and the quality and effectiveness of the cranes, port/inter-port information systems, approach channels and sophisticated inter-modal transport system. For soft infrastructure, skilled port management and the provision of a wide range of port-related and ship related services are very effective. Renowned ports have adopted a remuneration system that encourages high productivity and cooperation, rather than confrontation, from port workers. By tying remuneration to performance, the system encourages high productivity and dedication. By having adequate hard and soft infrastructures, Malaysian ports in Port Klang and Tanjung Pelepas will increase the level of competition from its neighboring ports and grow influence to shipping lines to establish their regional offices. It will also allow ports in Malaysia to lower its charges at the domestic

front while at the same time, pursuing ventures in port management in other countries. However sweet it may sound, Malaysian ports will still face challenges which other ports in the region do not, in this increasingly competitive port environment. At the same time, the need to have several e-service providers will ensure healthy competition and will give options to users and logistics operators to choose the best service that money can buy and more bargaining power to them, instead of monopolization and ineffectiveness which will burden the industry due to high inefficient operating costs.

*** END ***