THE IMPACT OF DIVISION OF LABOUR IN THE IMPROVEMENT OF PORT PERFORMANCE

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THE IMPACT OF DIVISION OF LABOUR IN THE IMPROVEMENT OF PORT PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Sea ports are the connections between the various routes that link up activities in the maritime sector. These maritime activities are generated as a result of trade and subsequently develop into related activities which induce the continuity of trade and business activities nationally and globally. The growth of sea trade and the evolution from subsistence production to production in terms of comparative advantage has gradually increased the need for transportation that gives the benefits of economies of scale and transportation links or nodes that facilitate the speedy and cost effective distribution of today’s goods. (Alderton, 1995; Hoyle & Knowles, 2000).These needs of global trade have induced the following effects:

• Growth and evolution of shipping

• Growth and evolution of ports

• Related growth in the activities of linked industries in and around the ports

• Total growth of the economy

The business activities in ports are not regarded in isolation but rather as a chain of effects with interrelated performance that has a major effect on shipping and trade. The ineffectiveness of one of these nodes either in delays or unreliability defeats the purpose, advantages or economies of scale gained from sea transport by making it more costly. These factors have raised the need for innovation and expertise in port operations and management. How has this been gradually achieved? Mainly by the drive of private business entities willing to take the risk of investment and operation. Whether this occurred through mergers, takeovers or corporative ventures, the successes and perhaps failures of these ventures by mostly private entities now serve as benchmarks which have been applied to other areas just as successfully. This trend of private participation has facilitated the evolution of ports and shipping in some of the following ways:

– Harbours – reception of vessels and receipt and delivery of cargo

– Growth of ports with adjacent industries adding value to imported or exported cargo

– Multipurpose ports followed by subsequent specialized ports e.g. bulk ports, container terminals

– Purely national to multinational ports

– The evolution of governments

To keep up with the changes mentioned above and to promote and encourage sustenance of the multiplier effects of ports in economies, governments are gradually shifting towards policy and framework which make business easier to thrive (World Bank, 2007a). In effect there is a gradual shift from complete public ownership and management of institutions in countries to partnerships with the private sector. This trend may usually begin with subsidiary business entities and gradually shift towards national key installations. However, governments still have to instil some measures to safeguard the nations’ interest even after the shift. The trend is also characterized by streamlining of public monopolies and the gradual removal of government subsidies to enable generation of authentic competition and general efficiency in activities induced by the possible aspect of failure through non performance. It is important to note that governments or public authorities are characterized by budget restrictions, wider interests and social responsibilities that may not necessarily make it possible to take the necessary strategies or decisions needed to keep up with the changing global nature of port operations and competition. Though they need not necessarily embrace it as a whole, they may to an extent implement those activities that may enhance economic activities in their geographical and socio cultural environment. In effect, the trend has influenced governments by prompting them to create enabling environments for these institutions to operate and thrive; eventually shaping their role towards a more regulatory and legal nature while reverting commercial operational and some managerial issues partly or wholly to private enterprise (Independent Evaluation Group, 2008).

1.2 Statement of the problem

Private sector participation in ports is very broad and in theory most of these strategies are expected to have positive results. Various studies done on different aspects of this topic in the past have concluded with varying results (Song, Cullinane, & Roe, 2001a; Tongzon & Heng, 2005; Trujillo & Nombela, 2000). Some have broadly assessed the effects on management and operations while others have assessed actual effect on productivity using various methods. The results of these studies were very significant and have made it easier for subsequent studies to proceed. Most of the studies however focus on European or American ports and results are still mostly inconclusive as to whether improvement in efficiency may be attributed purely to privatization strategies.

1.3 Objectives of the study

1. To understand the impact of division of labour in the improvement of port performance

2. To understand the relationship between division of labour and the improvement of port performance

1.4 Research questions

1. What is the impact of division of labour in the improvement of port performance

2. What is the relationship between division of labour and the improvement of port performance

1.5 Research Hypothesis

H0: There is no relationship between division of labour and the improvement of port performance

H1: There is a relationship between division of labour and the improvement of port performance

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