maritime disruptions management - website...

Maritime Disruptions Management

Research Student: Saut GurningMain Supervisor: Dr. Stephen Cahoon

Second Supervisor: Dr. Owen

Changes, the important issue !!!

in :

- System environment

- Unpredictable events

- System parameters

- Availability of resources

- New restrictions

- System Performance

- New considerations

POSITIVE

NEGATIVE

RISKS

= function (frequency, consequences)

Supply-Chain Risks

Uncertainties Disturbances

Delay Deviation Disruption Disaster

Related to risks as Disruption Risks

Clausen et al.(2001a,

p. 41)

“A state during the execution of the current

operation, where the deviation from plan is

sufficiently large that the plan has to be

changed substantially”.

Yu and Gi (2004)

“Various unanticipated events caused by

internal and external factors which significantly

deviate original plans of a system and

consequently affect its performance severely”

Events in Supply Chain as Supply Chain Disruption

Craighead et al. (2007,

p.132)

“Unplanned and unanticipated events that

disrupt the normal flow of goods and materials

within a supply chain and, as a consequence,

expose firms within the supply chain to

operational and financial risks”.

Disruptions in Maritime

Bearing-Point &

Hewlett-Packard

(2005, p.2)

“The maritime industry is directly

impacted by a variety of disruptions

to the flow of legitimate trade and

travel. These range from minor

weather disruptions to hurricanes

and typhoons, from workforce

shortages to work stoppages and

from security breaches to potential

Terrorist attacks”.

ImpactFrequency

DirectIndirect

MajorMinor

Disturbances

Stage One (delay) or the first stage through which a risk passes is referred to as the delay stage; here the focus is on the recurrent changes displayed by the performance of a supply-chain and the cancelation of previous planned (Wright 2008; Zsidisin & Smith 2005).

Disturbances

Stage Two is the deviation stage when one or more performance parameters of a supply-chain diverge from their estimated or mean value, without significant transformation to original supply-chain structure (Gaonkar & Viswanadham 2007)

Disturbances

Stage Three is the disruption stage which occurs when existing services are unavailable due to direct and indirect factors interrupting the services’ provisions (Gaonkar & Viswanadham 2007; Handfield et al. 2008; Yu & Qi 2004).

Disturbances

The last stage is the disaster stage which results in a service platform being damaged and as a consequence, supply-chain entities are unable to provide services (Chang 2000; Gaonkar & Viswanadham 2007).

Hypothesis of Disruption Stages

Time

Ser

vice

var

iab

el

det

erio

rati

on

Delay Deviation Disruption Disaster

Flat zonal rate

Sacrificing Phase

D2

D3

D1

D4

D5

Maritime Disruptions and its impacts(Explorative Study and Literatures)

TYPE OF MARITIME DISRUPTION RISKSDIRECT INDIRECTSecurity and safety Market

- Ship accidents - Shortage of Demand

- Ship pollution - Shortage of ships

- Political events - Financial Crisis

- Terrorist attack - Trade imbalance

Service related factors Organisation and relationship

- Operational and equipment - Employment / Port Workers

- Competition - Legal and policy

- Fuel and bunkering - Resource

- Electrical shortage - Customs process

- Congestion - Ships inspection

- Infrastructure related factors Environmental

- Communication facility - Severe weather

- Lack of development - Earthquakes

- Inland transport connections - Flood

Summary of factors identified in major studies as causes of maritime disruptions

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NO Disruptive Events

1 Security issues • • • •

2 Political events • • •

3 Rail related operation • •

4 Port strikes • • • • • • • •

5 Customs & administration • • •

6 Severe weather condition • • • • • • • • • • • •

7 Earthquakes • • • •

8 Electrical outages • •

9 Equipment down / shortage • •

10 Empty containers •

11 Ship accidents in port areas • • •

12 Shipping-Port disputes •

13 Port congestion • • • •

14 Ship shortages • • •

15 Fuel and bunkering Costs •

16 Inland accesibilty problems • •

17 Telecomunication system •

18 Shortage of service demand •

Researchers and Factors Identified / Discussed

4

5

8

3

7

6

1

3

8

9

4

5

2

6

7

1

2

3

4

6

1

2

3

5

Ships High Wind Power failure

Accidents

Lack of pilotage Heavy snow

Service & tug-boat and rain

Clearance of

Medical &

Quarantine Checks

Port Strikes / Immigration

Labor shortage

Downstream

intermodal

problems

Ships shortage Cranes Disabled

Hazardous Spill Straddle Carriers

In shops

Low tide level Shortage of chassis Cargo verified Customs

to work vessel By customs Clearance

Severe WaveShip’s Fire Accident Lack of

Roads,

bridges &

Access lanesEarthquake

Shortage of handling Overloaded

equipments Container area

Disruption before Disruption Disruption at Disruption

at Port platformPort Channel in waterways Port Berth

Problems in

nearby port

Coast guard

delaying

boarding and

clearance

II (PORT CHANNEL) III (BERTHING AREA) IV (PORT YARD)

2

4

5

8

3

7

6

1

3

8

9

4

5

2

6

7

1

2

3Process

4Terminal & port

Computer system

Crash / down

5

1

4

Flooding

I (PORT V (ADM PROCESS) VI (INLAND)

Diagram of Possible Direct Maritime Disruptive Events

Disruption

In Inland area

Disruption

In port

SCM network

WHEAT SUPPLY CHAIN IN AUSTRALIA AND INDONESIA

Farmers Handlers Processors Distributors

Sub

Wholesalers Retailers Consumers

Farm Scale

Southern-Belt

Wheat Area

High Rain Fall

Special Area

AWB Limited

Grain Pool

Agra-Corp

Premium

Grain

Brooks Grain

ABB

Mortons

Aus-Wheat

Millers For

Animal

Feeds

Millers For

Human

Foods

Processors

For

Beverage

Processors

For Ethanol /

Bio-Fuel

Industrial

Consumers

Big Industry

Small

Medium

Enterprise

Household

End

Consumer

Export

Markets

Domestic

Markets

Agents

Marketers

Freight

Forwarders

Storage and

Handling

Global Supply Chain Networking

National and Local Wholesalers and

Retailers Chains

Food Retail Services and Small Shops

Wholesalers

Third Party Suppliers

THE ILLUSTRATION OF RESEARCH SCENARIO

Farmers Handlers Processors

Maritime Distributors

& Handling


Shipping

Ports

Forwarders

Shippers

Consignees

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Effecting Factors / Affecting issues on three layers of upstream chain

Global and common wheat chain as

research perspective and objective

DISRUPTION

ANALYSIS &

THEORY IN

MARITIME

WHEAT CHAIN

MODELING &

WHAT IF

SCENARIOS

MITIGATION

IDENTIFICATION

&STRATEGIES

USING CASE

STUDY BASED

APPROACH

Focal PointFocal Point

Effecting Factors / Affecting issues on three layers of downstream

1

53 42

Disruption MitigationOther trade chain Maritime Disruption Model

Prepared on Wed, 9/20/2010, 15.30 PM

Logical Process of Maritime Disruptions on Wheat-Trade

Demand Over Supply

Diversification of cons

Natural Problems

Change of Diets

Marketing Arrangements

Severe wave and wind

Political / Security

Inland Congestions

Port Congestions

Strikes

Customs and Quarantine

Shortage of ships

Port Rail Services Post-disruptions

Natural Hazard

Operational

Maritime

Disruption

Mitigation and

Responses

Pre disruption events

On going disruptive events

Basic drivers

In Wheat Chain

Goals

T rend of F OB and C &F P ric e of Wheat from Aus tralia to Indones ia

227 235 224212 219

231

264

341 345 349

384

422

464

434460

474500

530552

170

350

325

302

288273251243

212

0

100

200

300

400

500

600

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6

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US

Do

lla

r P

er t

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F OB

C NF

Natural problems

Demand Factor

+ diversificationSea transport gap

Maritime

Disruptions

Ocean Freight Rates for Grains (USDA 2008)

20

30

40

50

60

70

80

90

100

110

120

130

140

150

Oct-07Aug-07Jun-07Apr-07Mar-07Jan-07Nov-06Sep-06

$/M

etr

ic T

on

X

X

PNW to Japan US Gulf to Middle East (Egypt)

St. Lawrence to Europe/Rotterdam Great Lakes to Italy

Higher

Financial

Costs

Higher

Financial

Costs

Lower

Demand

Transport

Lower

Demand

TransportParadox Links

Higher Interest rate & FluctuateHigher Interest rate & Fluctuate

Insufficient credit for businessInsufficient credit for business

Difficulties to Open Letter of CreditDifficulties to Open Letter of Credit

Global Economic recessionGlobal Economic recession

The Fall of Commodity PriceThe Fall of Commodity Price

Low Level of Shipping FreightLow Level of Shipping Freight

MARITIME

DISRUPTIONS

IDLE OF

SHIPPING

FLEET

LOWER PORT

TRAFFIC

INTERRUPTION

OF PORT

SERVICES

Higher

Financial

Costs

Higher

Financial

Costs

Lower

Demand

Transport

Lower

Demand

TransportParadox Links

Higher Interest rate & FluctuateHigher Interest rate & Fluctuate

Insufficient credit for businessInsufficient credit for business

Difficulties to Open Letter of CreditDifficulties to Open Letter of Credit

Global Economic recessionGlobal Economic recession

The Fall of Commodity PriceThe Fall of Commodity Price

Low Level of Shipping FreightLow Level of Shipping Freight

MARITIME

DISRUPTIONS

IDLE OF

SHIPPING

FLEET

LOWER PORT

TRAFFIC

INTERRUPTION

OF PORT

SERVICES

Global Financial Crisis and Maritime Disruptions

Initial finding of maritime disruption in the period 2006-2008

In Australia

Drought

Insufficient

Rail-linkage

Queuing and

Congestion

at ports

Limited draught

at ports

Shortage of

Containers

Imbalance market

of global dry bulk

fleet over the

demand

Temporary change

from dry-bulk to

containerised

Inland Congestion

Port Congestion

Problems with Inter-Island networks

Lack of inland

accessibility

Higher costs and

longer time

Lack of terminal storages, limited draught of

berth, higher terminal charge, exhausted

customs’ procedures

Severe wave and wind in

ocean environment

Stoppage of ferry /

domestic services to

Inter-island points

Contribute to

Higher price 38-76

per cent of 250-

260 percent of

total selling price

Longer lead time

maximum 30 days

In Indonesia

RESPONSE ON MARITIME DISRUPTIONS

BelawanPriok

PerakTj Emas

BaritoMakassar

Container (TEU)

Bulk (20 tons)

0

500

1000

1500

2000

2500

3000

3500

4000

Cost (US$)Container (TEU)

Bulk (20 tons)

Year Disruption Application Researchers Objectives Methods

Disruption management

strategies

Management topics in maritime operation ISM CR BCM RP

2001 Security on supply Terrorist attack at port Sheffi

Propose postponement delays and

imported inputs Risk Pooling Analysis √ - √ -

chain risk assessment Input limitation

2003 Business Continuity Multimodal application Depak Developed business continuty scenario Continuity cycle - - √

planning of maritime services of a firm facing disruptions

2004 Formal risk assessment Inbound supply after Zsidisin, Carter, Propose formal risk assessment Agency theory √ √ - -

maritime services & Cavinato procedures and techniques

2005 Disruption visibility Port stoppages Blackhurst et al. Propose actions related to disruption Focus group interview √ √ - √

discovery, recovery and redesign Telephone interview,

2005 Analytical framework Port closure Kleindorfer and Measure the implications of Risk Standard logistic √ - √ -

of disruption response Saad Management program data for disruption regression model

management system

2006 Resilient supply chainStoppage of maritime

operation because of

severe weather

Tang Robust strategy of mitigation process Lesson learned from √ √ - -

disruption cases of Nokia, Dell,

Li and Fung.

2006The quantification of

mitigation and

contingency strategies

Blockages of one particular

shipping routes

Tomlin Proposed flexible scenarios of optimal Optimal ordering Policy √ √ - -

disruption-management strategies under Markov chain

2007 Disruption severity Port Strike Craighead et.al Develop warning and recovery planning Complexity analysis √ √ - √

2008 Risk Monitoring system Supply chain port entry Handfield et al. Mapping the high critical nodes Incident report system - √ - -

Supply Chain risk Port Strike event McCormac Develop procedures to estimate Risk Probability Index √ √ - -

assessment event the probability supplier attributes and multi-use matrix

and environment risk Index

KNOWLEDGE EVOLVEMENT ON DISRUPTIONS MANAGEMENT

1. Inventory and Sourcing Mitigation 3. Business Continuity Planning

2. Contingency Rerouting 4. Recovery Planning

Year Researchers Country Stages in Simulation Objectives

maritime flow DEL DEV DISP DST Mitigation Response Recovery Method Assessed I CP CN D

1995 Parlar, Wang & Canada Manufacturers, retailers - x x - - x - Time-homogeneous Period inventory - x - x

Gerchak and Wholesalers Markov chain pattern Level

2002 Jason et al. USA Shipping Channel - - x x x - x Probabilistic risk Probablity of oil - x - x

analysis spill accidents

2004 Conrad USA Port Operations - x x - x x - Long-term economic Port security x - x -

and Queing problems vaibility and risk action plan and

assessment method long term

economic impact

2005 Pachakis and USA Port operation - - x x - x x Seismic Hazard and Downtime analysis - x - x

Kiremidjian Risk assessment analysis and revenue loss

impact

Brian, Erera, and USA Port Operations - - x x x x - Markov Decision The impact of - x - x

White Model with value temporary port

interation algorithim closure

Merrick, Van Dorp, USA Short-sea shipping - - x x x - - Bayesian simulation Model framework - x - x

& Dinesh technique for maritime

uncertainties

2006 Pinto and Wayne USA Port Operations - - x x x x - Risk-based assessment Total loss in - x - x

and risk-based return-on throughput of

investment incident until port

operations restored

Tomlin Canada Manufacturers, retailers - x x - - x - Four-state continuous Average costs - x x -

and Wholesalers time of Markov Chain Functions

2007 Gaonkar and Singapore Port Operations - x x - x - - Simple integer Risk propagation x - - x

Viswanadham and Manufacturers quadratic Markowitz in supply chain

model

2008 Garcia USA Port Operation and - x x - - x x Rerouting Impact x - x -

Inland Transport

2008 Guerrero, Muray, USA Port and Vessel traffic - x x - x x - Large scale integer Restoration/ x - - x

and Flood area programming recovery process

Simulation Needs System ModelRisk Stages

Modelling of maritime risks and its application to supply-chain

Fundamental Approach of Supply-Chain Risks

Uncertainties

Contingency Planning

Stochastic Models

Robust Optimisation

Pure Rescheduling

Disruption Management

Real-time Optimisation

Deviation Costs

Multi-criteria decision making

Returning to Original Plan

Multiple Solutions

Partial Solutions

Multi-criteria decision

making for maritime

Markov-Chain Decision

Process

23

Markov Decision Processes (MDPs)

• MDPs is a decision-theoretic planning and learning problems.

• An MDP is a model M = < S, A, T, R > consisting

a set of environment states S,

a set of actions A,

a transition function T: S A S [0,1]

T(s,a,s’) = Pr (s’| s,a),

a reward function R: S A R .

• A policy is a function : S A.

• Expected cumulative reward -- value function V: S R .

The Bellman Eq.: V(s) = R(s, (s)) + s’T(s, (s),s’) V(s’)

Surveys (mail & in depth telephone interviews)

Items of Research GoalsMethods & Targets

in Australia in Indonesia The Scenario of Survey Questions

Far Col Mil MarOp MarOp Proc Dis Ret

Q.1. Are shippers and consignees aware of the

Mail Survey Telp interview

Output expectd from various question types

disruption that may occur in the maritime Expected targets Dichotomous Checklist Range Open Likert Total

leg of the wheat supply-chain? Ended

A. Disruption Process (including delay, deviation) x x x x √ √ √ √ Recognition & types 1 1 - - - 2

B. Consequences (costs and lead-time) x x x x √ √ √ √ Average level of value - 1 1 1 1 4

C. Frequency (occurency) x x x x √ √ √ √ Probabilistic value - - 1 - - 1

D. Maritime contribution (shipping, port and FF) x x x x √ √ √ √ Categories of events - - - 2 2

E. Dominant and maritime recurrent events x x x x √ √ √ √ Important events - - - - 1 1

Far Col Mil MarOp MarOp Proc Dis Ret Awareness of disruption Sub Total Questions for Q1 10

Q.2. Are shippers and consignees in wheat

Mail Survey Telp interview


supply-chain implementing supply chain risk Expected targets

assessment or mitigation strategies to minimise Dichotomous Checklist Rank Open Likert Total

disruption events in maritime of both countries Ended

F. Commodity transferred x x x x √ √ √ √ Types of wheat products - 2 - - 1 3

G. Risk assessment strategy x x x x √ √ √ √ Classification and its focuses - 2 - - 1 3

H. Acceptable Consequences x x x x √ √ √ √ Identify the accepted level 1 1 - 1 - 3

J. Mitigation process x x x x √ √ √ √ If exists or not & its stages 1 1 - 1 - 3

K. Contigency plan x x x x √ √ √ √ The detailed goals of minimising - - - - 1 1

L. Respon actions x x x x √ √ √ √ Prevention based and others - - - 1 1 2

M. Information sharing x x x x √ √ √ √ Interactions level with others 1 1 - 1 - 3

Far Col Mil MarOp MarOp Proc Dis Ret Recognize & distinguish responses Sub Total Questions for Q2 18

Q.3. Are current risk mitigation and detection

Online Focus Group Online Focus Group


processess in maritime operations effective Expected targets Dichotomous Checklist Rank Open Likert Total

in wheat supply-chain systems ? Ended

N. Approach to identify potential disruptions x x x x √ √ √ √ Various prevention methods 2 - 1 - - 3

P. Propagation effect on SC performance x x x x √ √ √ √ Orientation to up/down stream 2 - - 1 1 4

R. Response analysis x x x x √ √ √ √ Response objectives into time frames 1 1 1 - 3

S. Recovery plan x x x x √ √ √ √ Important factors of recovering plan 1 - 1 - 1 3

T. Redesign plan x x x x √ √ √ √ Sifnificant variables of new planning 1 - - 1 - 2

U. Effective mitigation process x x x x √ √ √ √ Detail stages and indicators - 1 - 1 1 3

Far Col Mil MarOp MarOp Proc Dis Ret Operational & real time effectiveness Sub Total Questions for Q3 18

Far: Farmers; Col: Collectors; Mil: Millers; MarOp: Maritime Operations ; Proc: Processors ; Dis: Distributors; Ret: Retailers

Using Studio 8 Academic of Powersim

Wheat in SupplyChain

Initiation Rate

Transport Fleet

Delivery Rate Distribution Rate

Initial Fleet Rate

Unloading Time

Wheat Processingutilisation

Effect of Utilizationon Inland transport

Time

New Order Rate

Port Performance

Port CapacityUtilisation

Effect of CapacityUtilization onHandlind rate

Effect of ShipmentRates on

Distribution

Shipping rate

Effect of Wheatprices

Wheat ProcessingCapacity Normal Wheat

Delivery Time

Scenario

Normal Freight Rate

Average NewWheat Order Rate

Average SC-time

Average NewWheat Order Rate

Normal WheatDelivery Time

Causal Loop Diagram

Maritime

Transport

Rate in

Australia

Australia

Chain

Port

Utilisation

and

Performance

Wheat

Production

Initiation Rate

New Wheat

Order Rate

Inland

Cost

rates

Ship

Turnaround

Time

Indonesia

chain

Distribution

Process

Inland

Capacity

Utilisation

S S

S

SS

S

SS

O

O

O

O

R1

B3

B1

B2

Maritime

Transport

Rate in

IndonesiaS

B4

Parameters in Maritime Disruptions Model

• Wheat Supply-Chain Performance Indicators (time, costs, and unit volume) .

• Maritime Operational Performance

Throughput

Service Capacity

Service Platforms

• Decision Support Indicators in mitigation, response, recovery

• Continuity Target and Plan

Jan 01, 2008 Jan 01, 20585

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whv

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Reference

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ea

t in

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ain

Non-commercial use only!

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110

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whv

Current

Reference

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nsp

ort F

lee

t


Jan 01, 2008

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USD/da

Current

Reference

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ipp

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ra

te


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8

whv/yr

Delivery Rate

Distribution Rate

Initiation Rate


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whv/yr

Current

Reference

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ea

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ain


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whv

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nsp

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Current

Reference

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0.5

1.0

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2.0

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whv/yr

Delivery Rate

Distribution Rate

Initiation Rate


Jan 01, 20080

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Current

Reference

Ne

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ate


With

Effective

Mitigation

Without

Effective

Mitigation

Temporary Results of Maritime Disruption of Global Credit Crunch on Wheat Supply-Chain

Farmers Handlers Processors

Maritime Distributors

& Handling


Shipping

Ports

Forwarders

Shippers

Consignees

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Tim

e, costs

, volu

mes

Effecting Factors / Affecting issues on three layers of upstream chain

Global and common wheat chain as

research perspective and objective

ANALYSIS

FRAMEWORK OF

MARITIME

DISRUPTIONS

WHEAT CHAIN

MODELING &

WHAT IF

SCENARIOS

MITIGATION

IDENTIFICATION

&STRATEGIES

USING CASE

STUDY BASED

APPROACH

Focal PointFocal Point

Effecting Factors / Affecting issues on three layers of downstream

1

53 42

Disruption MitigationIn the 78 wheat routes Maritime Disruption Model

maritime disruptions management - website...

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