Logistics Case Study 12: Supply Chain and Port Logistics City

Logistics Case Study 1
Supply Chain: Port Logistics City
Student
Institution

Logistics Case Study 2
Introduction
According to (Mangan, et al., 2008, p. 30), port logistics center/ city refer to the integration
of a multimodal freight port system in which all inland freight networks are connected to the
main port. In its functioning, a port logistics city connects a city’s economy to its international
target customers or market (Manuj and Mentzer, 2018, p. 220). Basically, a port-logistics city
deals with logistics and value added related operations like storage and warehousing, goods
transportation, the freight trans-shipment and consolidation, assembly, and pre-processing and
light industrial works. The main goal of a port logistics center is consolidating and distributing
goods into and out of certain areas/ regions into diverse global areas (Ducruet & W, 2016, p.
100). As a port logistics city, Melbourne forms the larger focus of this paper. The major
challenges faced by Melbourne Port in its supply chain activities will get discussed in the paper.
Also, the major merits and demerits of deciding to implement cross-docking and trans-loading
strategies in Melbourne will be explained. The third part will include a diagram illustrating how
the cargo rotation strategy will assist in reducing empty container movement problems in a
Melbourne port. Last, a clear argument on whether trans-loading strategy should be used or not
used by other ports will be put forth.
Overview of Melbourne as a Port Logistics City
The Melbourne Port is now the busiest logistics city for both general and containerized cargo in
Australia. During the 1851 to the late 1860s Victorian Gold Rush, Melbourne greatly evolved to
become a key trade center, a port city. This port is located on the Port Philip Bay, near to Yarra
River’s estuary. Earlier on its establishment, cargo being transported to Melbourne had to get
offloaded outside this city and then transport it by either road or rail as ship transport was
impossible since ships could not navigate the river (Sheffi, 2012, p. 66). However, the recent
past dredging of Port Philip Bay has ensured that the shipping channels are deep, thus allowing
bigger ships to the port. As a logistics center, Melbourne has made 2 main transitions namely
consolidation of the use of land as well as the “suburbanization” of its freight operations. Since
July 1, 2013, the Melbourne Port has been under the Melbourne Corporation management-
which is a statutory company established by the state of Victoria.
What are the three major challenges for Melbourne as a port logistics city?

Logistics Case Study 3
As port logistics center, Melbourne gets faced with three major challenges; reconfiguration of
metropolitan freight systems, overreliance over trucks transportation system for fixed destination
and poor infrastructure system in Melbourne (Infastructure Australia, 2015, p. 7). In the
context of supply chain, these challenges are hereby explained:
The reconfiguration of Melbourne’s metropolitan freight systems
Due to reconfiguration of Melbourne’s metropolitan freight systems, transfer of freight both into
and also out of this city has been highly inefficient. The happening of this reconfiguration has
been inefficient because the distribution of population is unequal and this has caused a lot of
empty container movements. According to (Infastructure Australia, 2015, p. 18), empty
container movement increases inland costs of transportation. In the context of this case, a large
population concentration at the east and to the south-east of Melbourne demands that materials
be moved to the logistics clusters from the port. The clusters are established in the western part
of Melbourne- this inhibits the reliability of freight system corridors (O’Connor, 2010, p. 360).
In the roads, Melbourne Port Logistics City has just a one main corridor which connects the west
and the east suburbs. As per the case, a larger population of people stays in the east and south-
east of Melbourne city. This becomes a key challenge to Port Logistics City since these logistics
clusters operate at the west part of Melbourne (Nottenboom & Rodrigue, 2005, p. 298). As
a result of this, a long distance and slow freight flow is caused; thus increasing the transportation
costs of the port. Also, this has created the problem of vacuum container movements in road
which not only escalates inland transportation expenses but also raised demand of empty
containers at the port’s terminals.
Heavy reliance in trucks with fixed destinations
In reference to the case study, the increased reliance over trucks that run in point-to-point work
plan in Melbourne city raises delivery lead time. According to (Nottenboom & Rodrigue,
2005, p. 313), increasing lead time causes stock-outs, disorganized inventory, shipping delays,
variability in lead time, and too many processes problems and all these derail deliver
effectiveness and efficiency. In Melbourne alone, overreliance in trucks with fixed destinations is
making Port Logistics City have shipping delays as the distance from the east and south-east is

Logistics Case Study 4
far from the west part of Melbourne where product shipping occurs (Mangan et al., 2018, p. 41).
Also, the disorganization of shipping inventory makes Port Logistics City to waste a lot of time.
In addition, this overreliance of trucks operating with fixed destinations is creating transportation
bottlenecks as well as reducing the effective use of cars/ vehicles for the Port Logistics City,
Melbourne (Davidson and Leachman, 2012, p. 122). The congestion cost is very huge in
Melbourne. As per Infrastructure Australia, the estimated shipment traffic gridlock expenses as
at 2011 were $13.7 billion; while the projected traffic gridlock to increase in the next 20 years,
by 2031 was $53.6 billion (Ducruet & W, 2016, p. 105). This is a major problem with
Melbourne and a need to adopt other transportation modes such as road/ vehicles a key decision
to think of and make before it gets late. If this trend continues, the Port Logistics City will find it
difficult to meet the market demand and compete by the year 2031.
Direct transfer of shipments to their destination by one transport mode
The Melbourne Port Logistics City predominantly uses tracks in the direct movement of
shipments at their destination. For a big centre like Melbourne, using one mode of transport is
costly and difficult. According to (Rodrigue, et al., 2013, p. 10), a single transport mode for
shipments is difficult to rely upon in big cities, for example in this case Melbourne. Using tracks
as the only mode exposes Port Logistics City to more risks of delays, inconveniences, and
shipment unreliability. This is a risky decision to rely upon for direct shipments to all
destinations since trucks are slow in speed meaning that goods can be delivered late. In case the
trucks breakdown, supply logistics become adversely affected due to delays and this would raise
customer complaints (Apte and Viswanathan, 2016, p. 300).
With one transport mode, freight might to effectively transfer from one truck to another. Other
challenges associated with this reliance on one mode of transportation are the increased risk of
trucks underutilization and the high chances of losing key customers due to delayed and missed
deliveries from the idle trucks (Rodrigue, et al., 2013, p. 16). In case of truck breakdown,
combing mechanical repair and the need to catch up with delivery deadline incurs other
unplanned costs, as idle trucks either to the east and south-east or in the western part of
Melbourne have to be contacted to come and be loaded with the shipments to deliver in their
destination. This is costly and time consuming (Liao et al., 2010, p. 68).