Comparing Information Technology Applications Used in Supply Chain Management at the Port of

Cristobal in Panama and the Port of Savannah in the United States

Brad Ward brad.ward@usm.edu

0- ABSTRACT

The business climate in Panama has been growing at a steady pace despite a global economic downturn. Due to Panama’s geographical significance as a link between the Pacific and Atlantic oceans, international trade through the Panama Canal has propelled the country’s economy to lead Latin America in economic growth. Panama hopes to solidify its growing economy in international trade with the opening of the Panama Canal expansion in 2015. As a result of the increased capacity, the canal would be able to accommodate significantly larger container ships transporting goods between Asia and the Americas. In preparation for this growth, ports along the canal as well as those along the United States gulf and east coasts are investing millions of dollars into their own expansion plans. With the anticipation of a higher volume of containerized cargo, ports are also investing in new technology applications to enhance supply chain management in order to process, screen and deliver customer goods efficiently. The focus of this research is to compare the different information technology applications used in supply chain management at one of Panama’s premier ports, Port of Cristobal, and the United States fastest growing port, Port of Savannah. Information regarding the different technology systems being utilized was obtained through internet research as well as meeting with representatives from the Panama Ports Company that operates and oversees the Port of Cristobal in Panama. The information gathered from these sources has shown that great strides have been made in new technology to assist in supply chain management. The results from this research provides information that will be valuable to decision makers at other U.S. ports in deciding how to handle future growth opportunities by leveraging new information technology systems and methods in regards to supply chain management.

1- INTRODUCTION

Information Technology (IT) is a general term that covers processing of information, as well as software and hardware communication technologies and related services. Information technology generally includes any technology that generates data for enterprise use. (Gartner, Inc.)

Supply Chain Management (SCM) is an area of business that refers to “creating and fulfilling demands for goods and services. It encompasses a trading partner community engaged in the common goal of satisfying end customers.” (Gartner, Inc.)

Ports, whether on land or shore, are defined as a location in which customer goods can be handled and processed using different forms of machinery. (BusinessDictionary.com) “Port locations are selected to optimize access to land and navigable water, for commercial demand, and for shelter from wind and waves. Ports with deeper water are rarer, but can handle larger, more economical ships.” (Wikipedia)

The United States is currently the largest and most technologically advanced economy in the world. The U.S. leads the world in computer advancement, medical science, military technology and aerospace engineering. The economy is traditionally based on private industry and sole proprietorships making decisions in a free market. The government often utilizes the private sector to purchase goods and services. However, the U.S. economy is not without challenges. Economic growth has slowed dramatically as a downturn in global economies, high consumer debt levels, falling home prices, and soaring oil prices has caused the value of the dollar to drop and effect the US trade deficit. (Central Intelligence Agency, 2013) These challenges have caused job growth to grow at the lowest rates since the Great Depression. All though some industries such as health care and computer design have seen growth over the past decade; auto manufacturing, housing construction, and retail trade have seen declines. The U.S. has virtually added no additional jobs in the past ten years. (Norris, 2009)

Despite stagnant job growth in the United States over the past few years, information technology has shown significant growth. Between February 2012 and March 2013, the information technology sector has added 4.96% new jobs. Mark Roberts, CEO of TechServe Alliance states “Based on the data and anecdotal reports I hear from my member companies, demand for IT talent remains very strong with shortages in many skill sets. We continue to believe the sector will remain a bright spot in the economy throughout 2013.” (TechServe Alliance)

Figure 1: IT Job Growth in IT Sector in U.S.

The business environment in the country of Panama is one of rapid growth. This emerging market has a strategic geographic advantage as it holds a convenient link between the Pacific and Atlantic oceans via the Panama Canal. The canal was built by the U.S. Army Corps of Engineers in the early 1900’s. The canal’s ownership was transferred to Panama in 1999.

Due to increased demand for cargo shipped between Asia and the Americas, the need to expand the canal to accommodate larger ships arose. By 2015, a larger canal should be completed that will nearly double the current capacity and solidify Panama’s growing economy. The dollar-based economy is based on a strong services sector that contributes 75% of the GDP. Services such as logistics, banking, insurance and tourism provide most of the job opportunities. In 2012, unemployment dropped from 12% to 4.4%. (Central Intelligence Agency, 2013)

Figure 2: Panama Canal locks (Source: wikipedia.com)

Information technology is a growing sector of job growth in the developing country of Panama. In the last ten years, Panama has built a robust infrastructure in telecommunications providing quality connectivity over a large network. Panama acts as a “Digital Bridge of the Americas” in which many of the submarine fiber optic cables converge and allow connectivity between North America, South America, and Caribbean nations. Panama’s government has worked to pass laws allowing incentives for international companies to setup call centers in technology parks around the country. These technology parks also house high tech data centers that provide a safe location for servers and storage systems to support the large banking and logistics operations in Panama. (Ministry of Commerce and Industry)

The focus of this report is to compare Information Technology applications in supply chain management at the Port of Cristobal in Panama and the Port of Savannah in the United States. More specifically, this report compares how new applications can be leveraged to improve efficiencies in supply chain management.

2- INFORMATION \ DATA COLLECTION APPROACH(S)

Information and data contained in this report was gathered in two methods: using various sources on the internet as well as interviews with representatives from the Port of Cristobal in Panama. Using keywords in the Google search engine that pertain to the topic allowed access to certain databases that would provide necessary information to complete the project. Slight changes in search criteria could result in differences in the outcome. The keywords used in this project are presented in Table 2. These keywords were used after several preliminary searches

with a variety of keywords related to the subject. The databases used in this project are presented in Table 1.

Table 1. Databases: Name, URL, Location and Information used to SearchDatabase's Name URL Information

CIA –The World Fact Book

https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html

Business Environment of the United States as well as Panama

Gartner http://www.gartner.com/it-glossary

Definitions of Information Technology, Supply Chain Management,

BusinessDictionary.com http://www.businessdictionary.com/definition/port.html

Definition of “port”

WebOpedia.com http://www.webopedia.com/TERM/E/enterprise_application.html

Definition of application in regards to an enterprise.

Ministry of Commerce and Industry

http://www.mici.gob.pa/pdf/MICI_20ingles.pdf

Information regarding Information Technology in Panama

Puget Sound Business Journal

http://www.bizjournals.com/seattle/blog/techflash/2012/04/it-job-growth-reaches-new-high.html

Information regarding job growth in Information Technology sector in the U.S.

TechServe Alliance http://www.techservealliance.org/pressroom/documents/IndexreleaseApril2013.pdf

Information regarding job growth in Information Technology sector in the U.S.

New York Times http://www.nytimes.com/2009/08/08/business/economy/08charts.html?_r=0

Information regarding job growth in Information Technology sector in the U.S

Georgia Port Authority http://www.gaports.com/LearnMore/PortsandGuideDirectory/InformationOnTimeOnTarget.aspx

Information regarding current information technology applications used at the Port of Savannah

RFID Journal http://www.rfidjournal.com/articles/view?3225

Information regarding RFID technology installed at the Port of Savannah

Propeller Club of Savannah

http://www.propellerclubsavannah.com/index_files/Page426.htm

History of the Port of Savannah

Table 2. Sample Keywords/Phrases Used for Internet SearchKeywords

Georgia Ports Authority Port of Savannah

U.S. Business Environment Panama Business EnvironmentSupply Chain Management Information Technology Sector in US

Panama Information Technology Jobs

The second part of data collection included interviews with representatives from the Port of Cristobal. These interviews gave an opportunity to get key information regarding the current information technology applications implemented at the Port of Cristobal to facilitate supply chain management. Information Technology Applications can be defined as “applications -- or software -- that a business would use to assist the organization in solving enterprise problems.” (WebOpedia.com)

In order to obtain the necessary information, a presentation was given to the group about the Port of Cristobal, followed by an opportunity to interview representatives by asking questions specific to the operations at the port. The interview allowed an opportunity to gain information on the specific information technology applications used at the Port of Cristobal. In order to capture the information, a cell phone was used to record video of the presentation. Information gathered from the interview was used to complete the findings in this report. Questions asked as part of the interview are presented in Table 3

Figure 3. Interview Instrument

.Table 3. Interview Questions Asked

Interview Questions

What are the various types of information technology systems in place at the port to track goods?

Are the handheld devices used connected through wireless?

The interview was conducted with a representative from the Port of Cristobal. Questions were asked to Mariano Sossa, the administrator of the Port of Cristobal along with the assistance of one of their training coordinators.

Figure 4. Interview Session

Figure 5. Interview Session

3- CASE STUDY

The Port of Cristobal is located on the Caribbean side of Panama. This important location serves as a gateway to the eastern entry point of the Panama Canal. The port has been in commercial operation sense approximately 1851, but began the transformation into a world-class container port in 1997. Efforts to expand the port began in 2005 where over 3500 meters of quay, 10 gantry cranes, both Panamax and Post-Panamax, increased port capacity of up to 1.5 million TEU’s. In future phases of expansion, nearly 700 meters of deep-water quays, six hectares of warehouse space and seven additional gantry cranes will be added. Once expansion efforts have been completed, the Port of Cristobal will be a mega port similar to its counterpart, the Port of Balboa, on the Pacific side of the Panama Canal. (Panama Ports Company)

Figure 6. Location of Port of Cristobal (Source: worldportsource.com)

As the port continues its efforts to expand, the need for tracking customer’s goods safely and efficiently have become even more important. The Port of Cristobal is managed by the Panama Ports Company (PPC). PPC employs several types of information technology applications to improve efficiency and provide its customers with 24 hour access to information regarding the location and status of their goods. Several messaging systems are used to track products as they are processed through the port. BAPLIE (Bay Plan \ Stowage plan Occupied and Empty) is a message system that transmits information to agents, tonnage centers, dock workers, and captains about the location and means of transportation of goods. CODECO (Container gate-in / gate-out) is a messaging system that allows the terminal and depot to keep track of the movement of goods around the port as they are delivered and picked up by inland modes of transportation, such as rail or barge. COARRI (Container Discharge/Loading) is another type of messaging system that gives reports to the container terminal on containers that have been loaded or unloaded from seagoing vessels. In addition to the messaging systems, PPC also offers REFCON. This system allows monitoring of refrigerated containers with sensors connected to networks that report information about refrigerated goods as they are transported around the world. PPC provides its work force with handheld devices that utilize wireless networks allowing them immediate access to all the different applications. This allows information to be viewed and updated immediately. (Panama Ports Company)

The Port of Savannah is located in the U.S. state of Georgia. The port is at the entrance to the Savannah River and provides direct access to the Atlantic Ocean. The first dock was built in this location in 1744 as the new Georgia colony was being formed. It was not until 1945, that the Georgia Ports Authority was formed and took over the operation of the port. During the 1950’s, the Georgia Ports Authority purchased the Garden City terminal and Ocean terminal and transformed them into a modern sea port able to support larger container ships. In 2009, the terminals were expanded to support the Post-Panamax ships. (Propeller Club of Savannah) The Port of Savannah is the fourth largest and the fastest growing container port in the United States. As of 2012, the Port of Savannah handled more than 2.9 million TEU’s in throughput making it the highest volume in the ports history. (Savannah Chamber of Commerce)

Figure 7. Location of Port of Savannah (Source: city-data.com)

The Port of Savannah is the United States fastest growing container port. With the rapid increase in business, managing all the containers as they come and go with best-of-breed technology is critical to the efficient movement of goods. Bill Sutton, the Georgia Port Authority Director of Information Technology, attributes quality customer service to the importance of cutting edge information technology. “Our sole purpose is to support the movement of containers, so from an IT perspective, the ever-changing nature of how trade moves is driving us to be a lot more pro-active in how we meet our customers’ information needs.” (Georgia Ports Authority) Various technologies are used in meeting this goal. Radio Frequency Identification (RFID) technology was installed in the port to track shipments as they moved through the port. RFID tags are distributed to the ports customers so that they can be affixed to the containers. Sensors are mounted throughout the ports roads, gates and cranes. As tagged containers pass the sensors, information is transmitted to the application systems providing precise, real-time location information on goods for port employees, as well as its customers. (Racheldor, 2007)

In addition to RFID tags, wireless technology systems are used throughout the port allowing employees to stay connected no matter where they are located. Optical Character Recognition (OCR) systems are also used to read tags and capture written information by transferring it to a digital format. All this information is accessible from WebAccess – the first of its kind for U.S. ports. This web interface allows customers to access all the information relevant to their goods as the container is moved throughout the port. Information includes “automated e-mail or fax notifications of fully customized information on such critical issues as pre-advise gate access, cargo status, shipment events, vessel schedule changes, container and equipment availability, terminal conditions and cargo documentation.” The Georgia Ports Authority also operates a Client Relations Center which provides training to its customers on how to use the systems and allow a one-stop-shop for questions or concerns. (Georgia Ports Authority)

4 – Results and Results Impact

The information technology applications used to facilitate efficiency in supply chain management as well as those applications importance for quality customer service were compared between the Port of Cristobal in Panama and the Port of Savannah in the United States. The comparison of port side applications, such as wireless networks and product tracking devices helps to explain the advantages or disadvantages of different systems and how they help in the supply chain. Customer services applications, such as web access and customer service call centers are also compared between the ports and how they assist in creating consistent quality customer service.

The Panama Ports Company, operating company of the Port of Cristobal, as well as the Georgia Ports Authority, the government group managing the Port of Savannah, both demonstrate the importance of cutting edge technology in driving business. Some of the key areas where they are similar are outlined in Table 4. Both ports track goods as they are moved throughout the port. The Port of Cristobal has checkers at each location that makes note of the where the goods are. At the end of the route, a report can be produced that shows the times that the container was unloaded, moved and reloaded. Both ports also use wireless infrastructure throughout the facility in order to facilitate information being uploaded to the main office efficiently. The similarities in these results are important because we can see that different ports in different countries operating under very different conditions have a unified approach to how to use information technology to improve the movement of goods and provide excellent customer service.

Table 4. Similarities Criteria Port of Cristobal Port of Savannah

Product Tracking Checkers at each location where container moves

Goods are tracked using RFID tags at each location.

Wireless Infrastructure Used for handhelds to communicate back to office.

Users wireless for all communications, from handhelds to RFID tags.

All though both ports have similar methodologies for using information technology applications for supply chain and customer services, they also show some differences. The key differences are outlined in Table 5. The Port of Cristobal does not seem to be as advanced as that of Savannah. They do not offer a web presence for customers to be able to see their goods being moved in real time. They do not have a “one stop shop” for customers to call when there are issues. It was noted that the technology at the Port of Balboa, the Pacific side, has more technology and that eventually the Port of Cristobal would be adding more systems. The differences in these results are important because they help outline where a particular port may want to change their approach or implement new technology that other ports are using to better integrate between one another.

Table 5. DifferencesCriteria Port of Cristobal Port of SavannahWeb Presence Does not offer online

checking for customersHas an advanced system where customers can see goods moving through port in real time.

Customer Training Does not offer anything for the customers on

Georgia Ports Authority has a central location to help customers

training due to lack of web presence.

understand how to use the tools available on the web site to track goods and place inquiries if needed.

5 – Summary

The focus of this report is to compare the different information technology applications used in supply chain management at one of Panama’s premier ports, Port of Cristobal, and the United States fastest growing port, Port of Savannah. Due to the increased container business both ports expect to see after the Panama Canal expansion is complete, they are investing millions of dollars into their own expansion plans. With the anticipation of a higher volume of containerized cargo, they are also investing in new technology applications to enhance supply chain management in order to process, screen and deliver customer goods efficiently. Information and data contained in this report was gathered in two methods: using various sources on the internet as well as an interview with a representative from the Port of Cristobal in Panama. Most research online was done through various search engines and gathering information from company web sites. During a site visit at the Port of Cristobal, questions were asked to Mariano Sossa, who is the primary administrator of the port. This interview was also documented with a video recording using a video recording device. This report was intended to outline the key similarities and differences in various information technology applications used at the different ports. Each company has leveraged port side applications, such as wireless networks and container tracking devices to improve efficiency for supply chain management. Each port has also placed a focus on quality customer service by making information available to customers using a web interface. All though both ports use technology in a similar fashion, a few key differences, such as a lack of real time tracking for customers demonstrates where one port may be more advanced than another. The importance of this report can benefit those that are entering logistics and trade occupations as they can be more aware of the different technologies being leveraged at some of the world’s busiest ports. Knowing the strengths and weaknesses of these technologies will help in future port planning and constructions projects, as some of the items in this report can be incorporated into the design. Some additional work that could be done to this report would be to explore other similar ports in the United States as well as those in Asia to create a comprehensive picture of the technology used for tracking goods as they are shipped around the world.

6 – References

BusinessDictionary.com. (n.d.). What is port? definition and meaning:. Retrieved April 14, 2013, from http://www.businessdictionary.com/definition/port.html

Central Intelligence Agency. (2013, April 10). CIA - The World Factbook: Panama. Retrieved April 14, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/pm.html

Central Intelligence Agency. (2013, April 10). CIA - The World Factbook: United States. Retrieved April 27, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

Gartner, Inc. (n.d.). IT (information Technology) Definition | Gartner:. Retrieved April 14, 2013, from http://www.gartner.com/it-glossary/it-information-technology/

Gartner, Inc. (n.d.). Supply Chain Management (SCM) Definition | Gartner:. Retrieved April 14, 2014, from http://www.gartner.com/it-glossary/supply-chain-management-scm/

Georgia Ports Authority. (n.d.). Information On Time + On Target. Retrieved 04 13, 2013, from http://gaports.com/LearnMore/Articles/InformationOnTimeOnTarget.aspx

Ministry of Commerce and Industry. (n.d.). Panama Investment Opportunities [Brochure]. Retrieved April 14, 2013, from http://www.mici.gob.pa/pdf/MICI_20ingles.pdf

Norris, F. (2009, August 7). Off the Charts - In Last Decade, a Lack of Job Growth in the Private Sector. Retrieved April 14, 2013, from NYTimes.com: http://www.nytimes.com/2009/08/08/business/economy/08charts.html?_r=0

Panama Ports Company. (n.d.). Panama Ports Company. Retrieved May 5, 2013, from http://www.ppc.com.pa/technology.php

Panama Ports Company. (n.d.). Panama Ports Company. Retrieved May 5, 2012, from http://www.ppc.com.pa/cristobal.php

Propeller Club of Savannah. (n.d.). Port of Savannah and History. Retrieved May 18, 2013, from http://www.propellerclubsavannah.com/index_files/Page426.htm

Racheldor, B. (2007, April 11). Georgia Ports Authority Hopes RFID Will Boost Efficiency, Throughput. Retrieved May 18, 2013, from http://www.rfidjournal.com/articles/view?3225/3

Savannah Chamber of Commerce. (n.d.). Savannah Chamber. Retrieved May 18, 2013, from http://www.savannahchamber.com/economic-development/georgia-ports-authority

TechServe Alliance. (n.d.). TechServe Alliance - IndexreleaseApril2013. Retrieved April 14, 2013, from http://www.techservealliance.org/pressroom/documents/IndexreleaseApril2013.pdf

WebOpedia.com. (n.d.). What is enterprise application? Retrieved May 4, 2013, from http://www.webopedia.com/TERM/E/enterprise_application.html

Wikipedia. (n.d.). Port - Wikipedia, the free encyclopedia:. Retrieved April 14, 2013, from http://en.wikipedia.org/wiki/Port