Logistics services

The quality and availability of logistics services such as customs and border inspection service, logistics personnel skills and management levels, speed of cargo handling, port risks, port safety and other services by LSPs were recognised as important factors for port performance improvement. This section will address the findings on the service elements one by one.

5.8.1 Customs and other border services

Customs service was highlighted by eighteen (90%) of Xiamen interviewees as a critical factor to influence port performance. The interviewees acknowledged that Xiamen customs service had somewhat improved. Big manufacturers such as Dell, Xiahua Electronics Group and You Da Guang Dian, which enjoyed the ―green custom channel‖, were happy with Xiamen‘s customs services. Dell even claimed that they had a very cordial relationship with Xiamen customs and cooperated very well with them.

Customs created and broke customs clearance records to satisfy Dell‘s production in

Xiamen. Border inspection is another service factor but is closely related to customs services to improve port performance.

However, 16 (80%) of the 20 interviewees strongly asserted that Xiamen‘s customs service was poor, although they admitted that certain progress had been made. The border agency requests more documents than in other ports, and more complicated procedures are followed, which has caused slow customs process. The shippers complained that the cost of custom was increased due to waste of time and human resources. The following are examples:

“The slow customs service has affected our company‟s efficiency.”

Interviewee 1, a 3PL Manager

“Lack of direct access to the customs from the companies makes the custom inefficient. In Xiamen, only about 20 companies enjoy the green process to link Xiamen Custom. The advanced IT system is unavailable to integrate the different organisations. Also, as the different departments do not compromise with other departments on the standards, it is too difficult to integrate the system, which also causes customs inefficiency.”

Interviewee 6, a Manufacturer Manager

“We are requested to provide more documents in Xiamen than in other ports. The customs officers do not trust the shippers, which has driven shippers away from Xiamen.”

Interviewee 15, a Manufacturer Manager

The researcher understood from the interviewees that Xiamen customs used to be very stringent. They became strict after the ―4.20 Case‖ which was the biggest smuggling case since the People‘s Republic of China was founded. About 600 important government officers from different levels were involved in the case and were dismissed from their posts, which had serious impact on Xiamen in various aspects. China lost over 83billion RMB over the case. The interviewees thought that customs supervision now is too strict and it has influenced the government work efficiency and slowed down the development of Xiamen. According to the interviewees, the poor customs service is a big problem that hinders Xiamen‘s port development. This is not only a matter of logistics development, but also a matter of politics.

The Humber interviewees did not highlight the importance of customs service, because most of the Humber cargoes go to Europe. For cargoes from one country to another within EU, customs is not necessary due to the duty-free trade. For cargoes to other destinations, customs service is not a problem in the Humber, either. One interviewee from a manufacturer said they declared customs and applied for customs clearance on the website by themselves instead of contracting it to freight forwarders as Xiamen did.

To his understanding, the customs here is very efficient.

The empirical research finds that custom and border services in Xiamen are difficult

service is important for port performance is consistent with the view of Tongzon (2007) and Arvis et al. (2010) who assert the importance of customs policy. It is also found that customs services in UK and China are quite different due to different historic, political and economic contexts.

5.8.2 Skills

The Humber and Xiamen interviewees noted that logistics skills and management levels are important for port performance. With the increasing logistics demand, the demand for logistics personnel with skills and management expertise is increasing accordingly.

The management level plays an important role in logistics development. Whether the policy is implemented efficiently and effectively depends on the ability of the management team. For example, in the early 1980s, Shenzhen, Xiamen, Zhuhai and Shantou were the first four open special economic zones by the Chinese government and Xiamen actually had a better opportunity than Shenzhen. However, Xiamen has developed much slower than Shenzhen for three reasons: the political relationship between Taiwan and Xiamen; culture difference; and difference in logistics skills and management level. This section will address the last reason.

Table 5. 2 Age profile for Xiamen logistics management team

Level Below 22 22-35 35-45 Over 45

Junior 22.30% 69.80% 7.20% 0.35%

Middle 8.23% 62.45% 20.31% 8.68%

Senior 0.48% 24.56% 60.35% 14.61%

Source: Wang and Chen (2008)

Regarding the age of logistics personnel, the interviewee from Xiamen Logistics Association noted that middle level management personnel are young and lack experience, although senior management level are reasonably experienced in terms of age. This is consistent with Wang and Chen (2008), as shown in Table 5.2.

As for educational qualification, most of the logistics personnel had qualifications from colleges and universities. However, among senior level managers or directors, few people held a Master‘s or doctorate degree, but they actually had commercial experience which is more important than higher degrees. The finding is also consistent with secondary data by Wang and Chen (2008), as shown in Table 5.3.

Most logistics companies in both the Humber and Xiamen are very small with less than 30 staff. According to the statistics provided by the Logistics Office of the Xiamen Government, 70% of the logistics companies are small. Although some people have

some knowledge about logistics planning, transport scheduling, warehouse management and freight forwarding, their knowledge is biased. Most of them do not know current logistics operations management, logistics system design and scheme, nor do they know logistics information systems. Two interviewees noted that logistics training lags behind and logistics skills are inadequate in Xiamen. At management level, the top levels do not have much knowledge and experience as well, as logistics developed late in China.

Table 5. 3 Education profile for Xiamen logistics management team

Level Doctor Master Undergraduate High school Below high school

Junior 0 0 78.86% 21.12% 0.48%

Middle 0.52% 1.28% 85.65% 12.65% 0

Senior 2.13% 6.76% 89.85% 1.25% 0

Average 0.88% 2.58% 84.89% 11.67% 0.39%

Source: Wang and Chen (2008)

In the Humber, according to Skills for Logistics (2009), the Yorkshire & Humber region has around 215,300 employees (9% of the regional employment) working in the logistics sector. The investigation shows that there is a pressing need to improve levels of literacy and numeracy skills within the Humber logistics workforce. In terms of qualification, 52% of the workforces are below National Vocational Qualification (NVQ) Level 2, 14% have attained NVQ Level 2, and 33% are above NVQ Level 2.

The report also shows that leadership and management skills need to develop across the sector to improve port performance.

Ten other interviewees held a similar view that this region lacks skilled people in logistics. The Humber region‘s skills are below the national average. Skills for Logistics are trying to promote high level of management skills and considering catching people at younger ages to ensure that logistics are basics in their career.

Skills and management capability were identified as important, although both The Humber and Xiamen lack the logistics personnel with skills and expertise.

5.8.3 Speed of cargo handling

Sixty per cent of Xiamen interviewees and fifty per cent of the Humber interviewees held the view that speed is very important in logistics services. Interviewee 13 said,

“Speed of cargo handling is critical. As the increasing scale of vessel size requires faster ship loading and unloading. The number of terminals is fixed. If the speed is slow, the ship would occupy the berth longer, which will delay the next vessel calling. If such cases happen frequently, the carriers would seek for other ports to call rather than wait.”

Interviewee 11 said,

“Yantian‟s operations efficiency with high speed has saved much time for the port and carriers, which has resulted in bigger profit for the port and carrier.”

Speed of cargo handling is an important service factor. It could contribute to port efficiency at the vessel calling, departure and cargo movement. Speeding up handling can fasten the total loading/unloading speed and shorten the vessel stop time at the port.

5.8.4 Risks and safety

Sixteen (40%) of 40 total interviewees realised that risk (such as congestion, delay) and safety management were explicitly important for port performance. Some interviewees in Xiamen highlighted safety for long distance drivers, as most traffic accidents happened because of tired drivers. Due to time constraints, they did not explain the importance in detail. Although there are legal restrictions for drivers to take a break of 20 minutes after every four hours in China, in many cases, the regulations are not so well implemented as in UK. The interviewees understood risk and safety as a common sense of obvious and critical importance.

5.8.5 Services by logistics service providers

Both the Humber and Xiamen interviewees recognised the importance of services provided by LSPs, and they are happy with the services of warehousing, freight forwarding and cargo handling.

Interviewees from the two port regions acknowledged that logistics services such as customs, speed, skills, risk and safety management are important for port performance.

The finding is in line with Murphy et al. (1991, 1992), UNCTAD (1992) and Tongzon (1995).