Performance plan

Some observers suggest that for terminals to truly know how well they are performing, the best method is to look to carefully-calculated KPIs. One firm believer is Claude D’Alessio, principle IT consultant at Portside Solutions in Sydney Australia, who says well-managed terminals need to have productivity and cost information at their fingertips in order to understand whether they are being profitable or not.

“Just because productivity is up or high alone, doesn’t mean the terminal is making money,” he says.

“Part of KPIs is dealing with and tackling delays. Delays can push your costs up, even if productivity is good. Generally it is a good idea to look at historical data and trends to identify where your delays come from and deal with them.

“So we need to quantify and categorise these delays then work out how they affect our profitability so that we can focus our resources and set up the appropriate KPIs to tackle and make changes in order to get back to an acceptable profit margin.

“One thing I think it’s important to notice is that terminals that have adopted KPIs in a successful manner and are profitable have ‘repetitive and consistent procedures’. It may be predictable and perhaps boring but if it is making money it’s OK … remaining profitable and competitive is the name of the game is our business.”

Simulated reality

Mr D’Alessio says a tool that can help the terminal setting realistic KPIs is simulation. KPIs can be entered in the simulation tool for a period of time using all of the main elements of terminal performance (including crane/equipment moves per hour, equipment limitations, special handling, and so on).

This information will prove valuable for operations and terminal managers to measure existing operational procedures, identifying gaps and introducing operational improvements to address shortfalls. There is always a process that can be fine-tuned, equipment that can be used in a better way, labour rostering set up more efficiently, etc.

He cites terminals which have adopted KPIs and have benefitted from it, as including the Port of Doralhe, where the TOS system that was running the port was analysed.

“The data and the information gathered by devising KPIs was used to look specifically at areas like system response and performance when processing EDI messages, processing trucks at the gate, vessel and yard planning performance.

“Data gathered indicated that the current TOS was underperforming. A new TOS was then chosen. The new stevedoring system resulted in an increase in the annual container throughput of up to 600,000 units and 20% profit increase.”

Another example was DP World’s Port Botany, Australia). “The data resulted by setting up the KPIs indicated that we needed to improve crane performance. By looking at some of the specific areas … we were able to increase the GMPH (gross moves per hour) to 30 per quay crane.”

Good practice

Another fan is Cameron Simmons, principal in Simmons Maritime Consulting, who has for the past two years been under contract to Portia Management of Liverpool UK working as a project manager/senior consultant on international port projects in Qatar, Saudi Arabia, India, and Lebanon. He recently led a project for a major US port in the development of an asset management improvement strategy.

“It is good business practice to evaluate and track performance. In today’s fast-paced terminal environment, most terminal operators are finding that KPIs can be utilised in areas other than operations.

“Each operational area should be tasked with compiling their own KPIs. Vessel, yard and gate are the three main areas but we are now seeing many terminals utilise KPIs in non-traditional areas such as HSE, asset management and marketing.

“For example, the senior management needs to know the cost/TEU for each container handled. A major driver in that cost is the equipment maintenance and the equipment cost.”

The KPIs should extend to road and rail connections which are key drivers in the operation at any terminal.

Aim low

As to how to set up the KPIs, Mr Simmons says data compilation needs to be done at the lowest level possible and then shared up the chain of command, so that one KPI can become data for other higher-level KPIs.

Do KPIs have to change to be relevant across a range of terminals, such as mainline ports, transhipment terminals, and smaller regional feeder ports?

Mr Simmons says each terminal will find different areas to utilise different KPIs. “That is especially true of transhipment ports versus end-user ports. KPIs such as dwell time become more important in ports that have containers sitting on site waiting for importers to take delivery. Transhipment ports usually do not have that problem since a majority of their cargo is reloaded on another vessel quickly.”

As to concrete examples of ports which have benefitted from this approach, Mr Simmons says Beirut used KPIs to a great degree. “Their business changed from an end-user facility to a major transhipment port a few years ago and they have had great success using KPIs to help them increase the yield of their terminal.”

Total visibility

Doug Moyer, port crane sales manager, Americas for Control Techniques Americas, believes that KPIs are a relevant tool throughout the entire organisation.

“In a competitive industry, which the port industry is, it is absolutely critical to continuously evaluate and improve your processes. The key to measurement and optimisation is determining what to measure.

“KPIs can sometimes conflict and everyone has to be on the same page to resolve those conflicts.

“The bigger question is whether the industry has common KPIs. I see no reason for that. The shipping lines, and the shippers, should measure the performance of their suppliers – the terminals.”

However, KPIs aren’t something that can be evaluated from the outside, says Mr Moyer. “You need a thorough understanding of the process to pick what can/should be measured and controlled.

Staff involvement

“You can bring in an outside consultant to ‘coach’ the terminal’s staff in analysing the processes, determining what information can be collected and how to normalise that information, but the terminal staff must be involved because they know the processes.

“You have to be able to normalise data across different types of operational situations and processes.

“For example, the number of container moves per hour per vessel isn’t a good measurement without normalisation because it is so heavily dependent on the ship loading plan and the average container position. KPIs are unique for every company – they have to be unique to be effective.”

What about when the terminal drills down into specific areas of operation, looking to analyse for example crane performance? How important are KPIs then?

“From a crane perspective, you need to measure everything that impacts productivity, not just the crane. Crane motor speeds and acceleration times impact the cycle time, of course, but it doesn’t matter how fast the crane is if the operator is waiting on a chassis or waiting for the cones to be inserted or removed.

“The operator can also impact productivity – lifting too high or using a square path or not controlling the sway or taking too long to land on a container (especially on the vessel).

“All of these things can be measured, but like all measurements, they need to be normalised, or the comparison is meaningless and the variable can’t be effectively controlled.”

And do ports understand the correct way to measure crane productivity? Not necessarily, says Mr Moyer.

“I have not seen many terminals that do a good job in measuring crane productivity in a way that can be used to improve said productivity. You rarely see people involved directly with cranes that have a good understanding of statistical analysis tools.”