Literature Review of Horizontal Collaboration in the Maritime Industry: Ports and Terminals

A critical literature review


Master's Thesis, 2012
34 Pages, Grade: A

Excerpt

Table of content

Abstract

List of figures

List of tables

Chapter 1 - Introduction

Chapter 2 - Literature review
2.1. Concept of collaboration
2.1.1. Definition
2.1.2. Ways of collaboration
2.1.3. Horizontal relationships
2.1.4. Horizontal collaboration
2.1.5. Horizontal collaboration in the maritime industry
2.2. Collaboration initiatives
2.3. Drivers
2.4. Benefits
2.5. Barriers
2.6. Effective management of collaboration initiatives
2.7. Conclusion

Abstract

This literature review investigates horizontal collaboration initiatives of ports and terminals. It includes the identification of concepts, drivers, benefits and barriers. Moreover, it examines how collaboration initiatives can be managed effectively.

The study shows that ports and terminals collaborate in the field of marketing and business development, operations, administrative, regulatory and spin-off.

Organizations are forced to collaborate by following drivers: Bargaining power of shipping lines, increased efficiency in sea-transport and hinterland-connections, as well as increased requirements of shippers and shipping lines.

The benefits of collaborating can be classified in the sections efficiency / cost reduction, knowledge and competency, positioning of the company, as well as marketing and service benefits. Social benefits and green benefits have also been discovered.

The main barriers are anti-competition regulations and discrepancies between partners, strategic fit and different interests.

The top three factors of effective collaboration management are regular face to face meetings, integration of information and trust.

All in all this literature review makes several contributions to the rarely available literature of horizontal collaboration in the maritime port and terminal industry.

List of figures

Figure 2.1 - Scope of collaboration

Figure 2.2 - Relationships between competitors

Figure 2.3 - Horizontal co-operation and the level of integration

Figure 2.4 - Three types of logistics collaboration

Figure 2.5 - Value net concept

List of tables

Table 2.1 - Opportunities for ports to cooperate

Table 2.2 - Co-operation activities between ports

Table 2.3 - Drivers of collaboration initiatives

Table 2.4 - Benefits of collaboration initiatives

Table 2.5 - Barriers of collaboration initiatives

Table 2.6 - Efficient management of collaboration initiatives

Chapter 1 - Introduction

Several trends, such as globalisation, the growth of shipping alliances, the growing size of vessels and the development of intermodal transportation, have caused competition amongst ports and terminals to become intense (Song, 2002, 2003, 2004; Wortelboer-Van Donselaara and Kolkmana, 2010; Lee and Song, 2007). Nowadays, a port cannot maintain a monopoly status as it did in the past. To adapt to increasing competition, ports and terminals are forced to implement new strategies (Song, 2004). One approach to remain competitive in the changing business environment is the implementation of collaborative initiatives between ports. By collaborating with other ports and terminals, benefits can be obtained that cannot be achieved alone. Due to this relatively new development, literature regarding collaborative practices within the port industry is quite rare. Detailed investigations regarding the drivers, benefits, barriers and facilitators are, with a few exceptions, completely absent.

2. Chapter 2 - Literature review

This section assesses the existing literature and establishes what research has been published in the field of collaboration between ports and terminals. It is written as a critical review and thus makes judgements in terms of value and organizes as well as summaries the findings and ideas of other researchers that are of value into a review. According to Saunders, Thornhill and Lewis (2009) a critical review is of importance as it improves knowledge of a research area and demonstrate awareness of the current state of knowledge in a subject. In addition, it shows how this research fits into the research area.

Firstly this chapter defines the term collaboration and reviewed the general concept of collaboration. Secondly the topic has been narrowed down to collaboration issues and concepts in the maritime industry of ports and terminals. The last subsections focus on collaborative initiatives, drivers, barriers and factors on which effective management is based on.

2.1. Concept of collaboration

2.1.1. Definition

The literature provides several definitions for collaboration which varies to a certain extent. It has to be noted, that the term "collaboration" is used interchangeably with other terms like "co-operation" or "alliances".

According to Daugherty et al. (2006, p.61) "collaboration involves two or more independent companies working together to jointly achieve greater success than can be attained in isolation". This definition is clearly focused on the objective, which is supposed to be a "greater success". This focus is also part of the definition from Lupgens (2004 cited in Wortelboer-Van Donselaara and Kolkmana, 2010, p.271), which states that "co-operation is a relation between two or more parties with compatible or additional interests or aims where the relationship is foreseen to be of reciprocal advantage". Both definitions focus on the mutual gain as an output of the collaboration initiative. But a question has to be asked about the input of such initiatives as no definition mentioned this. The definition of UNCDAT (1996, p.3) helps to answer this question. The organization describes collaborations as "joint activities carried out by at least two parties who are reciprocally committed. Each party commits resources such as financial resources, know-how or time, etc., and draws advantages from the co-operation such as financial savings, improvements in quality of services, increased market share, etc.". In contrary to the other explanations, this definition describes the input and the output as "reciprocally committed" and therefore provides a comprised definition.

Mentzer, Foggin and Golicic (2000) diversified the terms collaboration and cooperation. According to an interview with supply chain executives, the authors conclude that collaboration includes much more about information-, knowledge-, riskand profit-sharing than co-operation. Anyhow, all definitions highlighted the importance of aimed objectives i.e. profit or greater success in general.

The importance of the collaboration objective can be strengthened by Wortelboer-Van Donselaara and Kolkmana (2010, p.271), who pointed out that "co-operation between companies is not an aim in itself, but a means to reach a certain objective". Regarding the objective one can diversify in tangible and intangible objectives. On one hand, Sandberg (2007) claimed, that researchers found lowered total costs, improved service and shorter lead times as the main objectives. On the other hand, more intangible effects like the objective to strength the market position and increase competitiveness can be seen as a driving force to setup collaboration initiatives.

2.1.2. Ways of collaboration

Barratt (2004) provides a framework with various ways of collaborating. The ways can be mainly categorized into two forms; vertical and horizontal (Figure 2.1). Beside the horizontal and vertical form, Simatupang and Sridharan (2002) defined the lateral form of collaboration.

In a supply chain context, the vertical form includes collaboration with customers, suppliers and internally (Barratt, 2004). Vertical collaboration within the port industry mainly deals with supply chain integration of ports and includes activities like providing value added services, integration of transport modes and IT-systems, building a relationship with shipping lines, and inland transport providers (Song and Panayides, 2008) as well as providing dedicated terminals to shippers (Bichou and Gray, 2005).

The horizontal form of collaboration is a relationship between competitors, non- competitors or internal departments (Barratt, 2004). In the port industry, this way of horizontal integration is often conducted due to port co-operation and mergers (Bichou and Gray, 2005).

By comparing horizontal and vertical collaboration, Bengtsson and Kock (1999, p.178) stressed that "horizontal relationships between competitors have not been analyzed to the same extend as vertical relationships". This general statement seems to be also valid for the port industry as Bichou and Gray (2005, p.85) maintain that "horizontal integration strategies were less common in the past but are gaining more support in recent years". Furthermore, Bengtsson and Kock (1999) argue, that vertical relationships are easier to capture due to their nature of economic activities among supply chain members. "Horizontal relationships, on the other hand, are more informal and invisible" (Bengtsson and Kock, 1999, p.178). Nevertheless, both types of relationships can be equally valuable for a firm.

Regarding the internal form of collaboration (across functions), Barratt (2004, p.32) pointed out the importance of internal collaboration by saying that many companies see external collaboration as a "fresh battlefield which is free of many of the longstanding internal disputes".

The lateral form of collaboration is a combination of the horizontal and vertical form and mainly aims "to gain more flexibility by combining and sharing capabilities" (Simatupang and Sridharan, 2002, p.19).

illustration not visible in this excerpt

Figure 1.1 - Scope of collaboration (Barratt, 2004)

2.1.3. Horizontal relationships

Bengtsson and Kock (1999) investigated in horizontal relationships and developed a framework of four different types (Figure 2.2).

illustration not visible in this excerpt

Figure 2.2 - Relationships between competitors (Bengtsson and Kock, 1999)

At first, the co-existence relationship includes only social and information exchange. No economic exchange is taking place, and the companies are reaching their goals by themselves. In the competitive relationship, both companies have same sources, same aims and same customers. This results in an action-reaction pattern. Bengtsson and Kock (1999) call this relationship a "zero-sum game". Within the type of co-opetition relationships, companies are collaborating in some fields while at the same time competing in other fields. When co-operating, tight links are established between both companies including economic-, information- and social-exchange.

According to the definition of collaboration, which has been made at the beginning, co-existence and competition relationships cannot be treated as collaborative relationships. Consequently the dissertation focuses on co-opetition and co-operation. Both forms include joint activities and can therefore be treated as horizontal collaboration.

2.1.4. Horizontal collaboration

The general definition of collaboration has been discussed at the beginning and need now to be specified for horizontal relationships. The European Union (2001, p.2) claims that "a co-operation is of a `horizontal nature` if an agreement or concerted practice is entered into between companies operating at the same level(s) in the market". Therefore, the level of the market in which firms are operating can be considered as the specifying factor.

Within the literature there are many authors presenting several types of collaboration in terms of the intensity (Lambert, Emmelhainz and Gardner, 1996; Zinn and Parasuraman, 1997; Spekman, Kamauff and Myhr, 1998; Muckstadt et al., 2001; Gulati and Kletter, 2005). Most of them are mentioned in a supply chain context. Due to the statement of several authors, that not supply chains but networks compete against each other (Christopher, 2005; Pfohl and Buse, 2000), the classification of Lambert, Emmelhainz and Gardner (1996) will be presented in this dissertation which focuses on networks. They developed a classification for the vertical form of collaboration, later on Visser (2007) and Cruijssen, Dullaert and Fleuren (2007) adapted it to the horizontal form of collaboration (Figure 2.3).

illustration not visible in this excerpt

Figure 2.3 - Horizontal co-operation and the level of integration (adapted from Cruijssen, Dullaert and Fleuren, 2007)

The classification shows that there is a minimum and a maximum level of collaboration (Arm´s length and horizontal integration). Arms length relationships consist of one-time exchanges or multiple transactions, a sense of joint operations is not present. Type 1 co-operations include jointly coordinated activities, which are limited in terms of time, strength, closeness etc. Type 2 co-operations have a long- term horizon and the involved organizations are planning and conducting integrated activities. Type 3 co-operations can be seen as "forever" as the organizations see the other firm as an extension of itself; activities are very close integrated. Horizontal integration includes merger activities and joint ventures (Lambert, Emmelhainz and Gardner, 1999). As this dissertation follows the definition of collaboration made by UNCDAT (1996), where joint- operations and planning are elementary components of the collaborative initiative, all types of collaboration except the arm's length type will be investigated.

Vos et al. (2003) as well as Wortelboer-Van Donselaara and Kolkmana (2010) identified a classification and maintain that collaboration can take place at the operational, coordination and strategic level. Vos et al. (2003, cited in Visser, 2007) defines different types of collaboration by three characteristics, which are scope, objective and horizon (Figure 2.4). According to him, operational collaboration uses the existing network and deploys activities more efficient within a short time horizon. Consequently the time horizon is extended in the coordination collaboration form which reduces costs by coordinating two organizations. Finally at the strategic level of collaboration, partners invest together to restructure the network and work together on a long term basis.

illustration not visible in this excerpt

Figure 2.4 - Three types of logistics collaboration (Visser, 2007)

2.1.5. Horizontal collaboration in the maritime industry

Within the port collaboration-specific literature, Hwang and Chiang (2010) identified two types of port co-operation which are in line with the distinction made by Bengtsson and Kock (1999) (Figure 2.2). This are complementary co-operation and co-opetition. Hwang and Chiang (2010) explain that "complementary co-operation is developed as a port needs another port and it also can create situations where ports may complement one anthers competitive advantage". Relationships between hub and spoke networks are one example mentioned by Yap and Lam (2004).

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Details

Title
Literature Review of Horizontal Collaboration in the Maritime Industry: Ports and Terminals
Subtitle
A critical literature review
College
Heriot-Watt University Edinburgh
Course
Maritime Logistics and Supply Chain Management
Grade
A
Author
Year
2012
Pages
34
Catalog Number
V205850
ISBN (eBook)
9783656333883
ISBN (Book)
9783656334415
File size
689 KB
Language
English
Tags
Maritime logistics, supply chain management, cooperation, co-operation, co-opetition, coopetition, collaboration, partnership, logistics, ports, terminals, maritime industry
Quote paper
Christian Schwab (Author), 2012, Literature Review of Horizontal Collaboration in the Maritime Industry: Ports and Terminals, Munich, GRIN Verlag, https://www.grin.com/document/205850

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