Seaport development: A study on customer attraction to...

Business Management Dynamics Vol.1, No.8, Feb 2012, pp.08-19

©Society for Business and Management Dynamics

Seaport development: A study on customer attraction to Westport, port klang, Malaysia Noorlee Boonadir1, Jagan Jeevan, N.Muhammad Aslamm and Saharuddin Abdul Hamid

Abstract The Porter’s 5 Forces of Competitive model provides a simple perspective for assessing and analyzing the competitive strength and position of a business organization. The development and growth in port and shipping industries were effected the economy of Malaysia. With the located of Malaysia at East-West International Trade Lanes, it is being the Westport as a regional hub and national load centre at Port Klang with the commercial environment and infrastructure is now competitive. This study is aims to identify the most effective strategy, how to handle the threat among the clients to develop new entrant. With this research, it is utilizing by Porter’s 5 Forces as methodology framework. These objectives based on SWOT analysis with conducted by using a few procedures and using the factor analysis to identify the component that influencing the factor of SWOT. This study expected to gain the effective strategy for competitiveness in Malaysian port, especially for Westport.

Key words: Competitiveness Forces, New entrants, Suppliers.

Available online www.bmdynamics.com

ISSN: 2047-7031

INTRODUCTION

This concern has involved about the economic competitiveness in more general sense especially for

developing the port industrialized. Improving the competitiveness is central to raise the underlying rate

of growth the economy and enhancing living standards. When turning to the competitive strengths of the

port, the emphasis of existing research is on the aspects related to efficiency strategy, effective strategy

and cost effectiveness. The development and growth in maritime industries have a significant impact to

the economy of Malaysia. Recently, there are 13 major ports in Malaysia and Port Klang is one of the

largest ports in this country. It is strategically located at East-West International Trade Lanes, Malaysia’s.

(Port Klang Authority, 2006). Port Klang is ranked among the top 20 container ports of the world and has

trade links with over 180 countries and more than 500 ports. For this research, the main focus on

Westport as well as a study on new entrants at Westport, Port Klang, Malaysia. Westport was chosen as a

manner location because of several factors, which is a major container port or national load centre in

Malaysia (Port Klang Authority, 2008), when compare with other port in Malaysia, Westport had where

of high revenue for years. Please refer to below table.

Insert table 1 here

The achievement and success of Westport was influenced by several factors, with development and

growth in port and shipping industries in Malaysia. Additionally, Westport as a regional hub and

national load centre at Port Klang with the commercial environment and infrastructure is now

competitive (Port Klang, 2006).

This paper based on The Porter’s 5 Forces of Competitive model provides a simple perspective for

assessing and analysing the competitive strength and position of a business organization. However, this

model was adopted from China Shipping Industry in order to measure their competitiveness advantages

at ports by Huang Peng & Zhang Xueyue (2004). Even though there are five elements in Micheal E.Porter

Competitiveness Forces Model, thus study will only focus on one variable of that namely is new

entrant/clients. It’s perform that Westport as a supplier in this elements were identify the efficient

strategy to handle the treat of the existing clients, to develop the new entrant in Westport were focus on

1 Department of Maritime Management, Faculty of Maritime Studies and Marine Sciences, Universiti Malaysia Terengganu

(UMT) 21030, Mengabang Telipot, Kuala Terengganu, Terengganu Darul Iman, Malaysia. E-Mail: [email protected]

http://www.bmdynamics.com/

mailto:[email protected]



the shipper or lines company as a new entrant in Westport. Even the best port operation would need to

enhance their service because the competitors will be gains to be the best.

Even the suppliers operation is already designed, and the activities was in smooth planning and in

controlled, however it still not yet complete and can be maintain here because the new entrants always in

this industry. No matter how well the supplier managed the operation, there will always be a more for

improvement. The remainder of this paper is structured as follows. First, a literature review will be

presented, followed by a section outlining the methodology of the research. Subsequently, results will be

presented followed by a discussing the findings as well as the conclusions.

LITERATURE REVIEW

Westport is being developed as a regional hub and load centre at Port Klang, Malaysia, Westport

presently has 6 container berths in operation, and by year 2000 shall have a total of 16 container berths.

When fully developed Westport will have 30 berths stretching over 11 kilometers of coastline. Westport is

designed to handle fifth generation Post Panamax Vessels of 5,000 TEUs and above. The natural depth is

14 to 17 meters of water, and is designed for ships of up to 80,000 tonnes displacement. In addition to

container facilities, Westport can also handle break-bulk and liquid cargos. Westport is complete with

bunkering, tugs and pilotage facilities, and container and yard gantries. With this, Port Klang is ideally

placed to capitalize on both the international and domestic markets. Port Klang is ranked among the top

20 container ports of the world and has trade links with over 180 countries and more than 500 ports. The

commercial environment and infrastructure in Port Klang is now competitive, befitting the role of

Westport as a regional hub and load centre (Port Klang, 2006).

The relationship between export and economic growth is a prevalent condition that economic literature

supports, showing that nations with an export-led strategy have a more encouraging economic growth

than those that still focus on other pattern of import substitution (Papadopoulos; Malhotra 2007). The free

zone concept refers to an arrangement providing free trade environment aimed to boost the economy of

the host country in terms of new jobs, foreign direct investment (FDI), export and import activities,

technology transfer and of management know-how, industrialization and regional development. The

concept of having a free zone is not a universal phenomenon, the extension of incentives differ from

country to country based on zone type and country governance (Mireille, Amanuel, 2010).

There are many services provided by Westport, Malaysia, Container Freight Station (CFS) function to

give services to the shipper of Less Than Container Load (LCL/Break Bulk) and even containerized cargo

finds the services useful, then Westport offer the other common-user warehousing and storage facilities

and dedicated users have invested heavily in a variety of modern handling equipment, warehouses, silos

and similar storage facilities to meet the requirement of their customers. The warehousing facilities

comprising of the Transit Shed A, Transit Shed B, Warehouse D, Warehouse E, Warehouse F, Warehouse

G and Warehouse H with totaling 380,000 sq.ft. Of covered warehouse space (Westport Malaysia, 2010)

There are two distriparks in Westports, which is Diperdana, and Westports Distriparks located within

Free Commercial Zone area. These facilities are available to port users for long and short-term use. They

are well developed industrial warehouse premises, convenient and economical as they connect to more

than 300 global ports. These distriparks are located within main highways and is within access through

the Peninsular. It is connected to the railway network system giving access to northern areas up to

Bangkok, Cambodia, Vietnam and down to southern tip of Malaysia & Singapore (Westport, Malaysia,

2010).

Westport’s reefer platforms provides good infrastructure for electricity cabling and allows staff easy

access to attend to plug in and plug out operations. A reliable power source ensures uninterrupted

supply of electricity to ensure highest cargo integrity and immediate power supply to reefer containers



which require immediate attention. Westport’s has a special dedicated section which caters for 1236

Refrigerated Twenty Foot Equivalent Container units spread out amongst its five container terminals.

Our reefer care is supported 24 hrs round the clock by two teams of competent and well trained

technicians. Besides that, here, has related services, including monitoring the refer units to ensure that

predetermined temperature are maintain, cleaning of the refer container and inspection for ensure the

refer containers are in good condition before and after using according to the clients (Westport, Malaysia,

2010).

Westport also equipment with marine facilities, Westport got resources and the quantity of pilots is 27

with the capability of handling of any size of ships, then, tugs is 5 with the capability with maximum

bollard pull of 60 tonnes and the pilot boats is 5 items with the capability can speed up to 25 knots.

Customers or clients refer to the user that using the services from Westport, there are many type or

categories of clients at Westport, that is consist of Haulage Company, freight forwarder and shipper or

Liner Company. Haulage Company refers to the company that offering transportation services for the

movement of goods by road between two specified points. Haulage or trucking is the preferred choice for

shippers especially for inland movement of cargo. The container haulage operation by road is a dedicated

form of transport, which is designed to haul only containers. There are around hundred of haulage

companies in Westport and the biggest haulage company is Kontena Nasional Bhd, MISC Haulage

Services Sdn Bhd, Konsortium Logistic Bhd, Diperdana Corporation Bhd, Dayang Mewah Sdn Bhd and

Multimodal Freight Transportation Sdn Bhd. (Ports World Sdn.Bhd., 2001).

The freight forwarder refers to the person or firm which facilitates the movement of cargo. It’s also called

a forwarding agent and it a third party logistics providers which have the expertise that allow them to

prepare and process the documentation and perform related activities pertaining to international

shipments. Forwarders provide a variety of services, which has evolved over a period of time. Firstly,

they provide clearing and forwarding services as an agent of shipper, secondly, they provide additional

services such as cargo consolidation, road haulage and custom clearance as a principal. (Tae Woo Lee,

2005). There are many freight forwarders handle both export and import, it may also act as customs

brokers and there are more 500 freight forwarding agencies at Port Klang, such as Maersk (M) Sdn Bhd,

Tamadam Sdn.Bhd., Kontena Nasional Bhd, MISC Bhd and Felda Bhd. (Steve Scoot, 2002).

A shipper or liner company refers to the vessel habitually employed on a regular schedule besides

loading and discharging at specified ports. Liner carrying both industrial and consumer products such as

fertilizers, textiles, oils, wheeled vehicle, electronic and machinery components and others, this company

is business that operates ships that it may or may or not own. There are 31 main liner companies at

Westport and the biggest company is CMA-CGM, China Shipping Container Lines (CSCL), Evergreen,

Maersk-Sealand, Nippon Yusen Kaisha (NYK), Hapag Lloyd, Orient Overseas Container Lines (OOCL),

Hanjin, COSCO, Hyundai Merchant Marine Corporation and P&O Nedloyd (Annual Report of Westport,

2006).

The new entrants sometimes enter industries with higher quality products, lower prices and substantial

marketing resources. The strategist’s job therefore is to identify potential and to handling the new

entrants entering the market, to counterattack as needed and capitalize on existing strength and

opportunities (Fred R.David, 2009). Porter (2008) says that barriers to entry are the costs or legal

requirements needed to enter a market. These barriers protect the companies already in business by being

a hurdle to those trying to enter the market. In addition to up-front barriers, a new competitor may

inspire established companies to react with tactics to deter entry, such as lowering prices or forming

partnerships.

The competitive position of a port in relation to other ports is the criterion which most profoundly

influences its fortunes in the longer run. This well-known principle of port geography and economics



reflect the fact no port is an isolated phenomenon, but belongs to a port group, hierarchy or complex

which is functionally interrelated on a local, national or international scale. A port is also a dynamic

phenomenon, changing in its morphology, functions and status over time. In national or regional terms,

the character and functions of the various ports in a complex or hierarchy are likely to changes as a result

of the differential impact of factors affecting port growth. (Taaffe et al., 1963).

A true maritime nation is one which has the capability to fully exploit its God given maritime

endowments to enhance its socio-economic standing among the community of nations. In this regard,

though Malaysia has all the makings of a maritime nation, strategically located at the centre of

shipping lane and a large sea area rich in fishery, oil and gas resources, it has yet to optimize all these

attributes to qualify as a maritime nation in the true sense of the word (Port Klang Authority, 2006).

METHODOLOGY

In this study, the method that researcher choose of this research is by using an interview, then by an

observation of internal and external of Westport environment as a secondary data, after that create the

questionnaires after using the SWOT analysis to full fill the objectives to be achieve and identify the

respondent to response the questionnaires as a primary data. The type of this sampling is stratified

sampling, this sample is obtained by taking samples from each stratum or sub-group of a population.

The sample of 100 respondents from eight different departments in Middle Level of Management at

Westport was used to analyze in next step by using factor analysis.

Factor analysis is primarily used for data reduction or structure detection. The function of data reduction

is to remove redundant variable from the data file and to examine the underlying relationship between

the variable, with this analysis we can find the strength of Westport and come out with the strategies that

combine from the SWOT factors.

RESULT AND DISCUSSION

Insert table 2 here

This table shows the reliability test for actual study, from the table, its shows the reading value of

reliability test for actual is 0.666 which implied a relativity high internal consistency. It means the

reliability for the questionnaires is useful.

Insert table 3 here

Table 3 above shows the KMO and Barlett’s test of SWOT part, the value is 0.784. The KMO value is

higher (0.5-1.0) means the value is indicate factor analysis is appropriate. Otherwise, the significant value

of Bartlett’s test of sphericity of SWOT is 0.00, means that is not have the significant different there. The

result is having strong value.

Insert table 4 here

Table 4 above show the value of total variance explained, as far as the eigenvalues are concerned,

Eigenvalues represents the total variance explained by each other, it means, seven components to be

extracted because it have eigenvalues greater than 1.0.

Insert table 5 here

Table 5 shows the value of the rotated component matrix, the component loading with same number,

when a variable loaded on two or more factors include it, with the factor where it has higher value. The

seven factors were chosen with the higher value that already underline. From this table, the seven

components that already chosen with the factors were rotated into this seven components show in the

table.

Insert table 6 here



Table 6 above, show the variable that loaded on seven factors includes it with the factor where it has

higher value means higher than 0.6. From the table it show seven main factors that include with various

variable, for first factor the variable is include with of bad relationship with customer with value of 0.619,

limited website information, with value of 0.647, then with time management with value is 0.701, high

cost with value is 0.711 then not relevant purchasing of new equipment with value is 0.785 and outdated

technology is 0.710.

There is have seven factors in this SWOT part, it is service quality, stakeholder, service efficiency, service

development, efficient management, future revenue and health and safety management. This all factor,

has its own components that affect operations in Westport and to continue to be the best ports in

Malaysia and to maintain its position of port in the world.

The component that including into service efficiency is component of latest technology, then it make to

smooth operation flow and it can be maintain the good reputation of Westport. Each of the components

comprising each factor plays an important role for the strength factor to Westport it is service efficiency.

From using the latest technology or always update their technology, as a example in operating

equipments in container services, Westport Malaysia has received 55 more prime movers as part of the

port’s on-going expansion programmed to cater for container volume growth. (2011, The Star).

In this study, the second factor of become a strength at Westport is efficient management in Westport.

This factor also becomes an internal factor of strength at Westport. The component that include in this

factor is good human resources management, skilful and well-trained workers and stability of company

achieve. With proven by this receiving award by Human Resources Management Team of Westport its

shows Westport already manage their human resource capital with professional and well-organized of

management (Westport, 2010). The Human resources Management adheres to the principal strength of an

organization closely associated with leaders and workers. In this study, the results show that the efficient

management is the internal strength for Westport to push Port Klang to be among the best 10 ports in the

world.

Even though, the ranking always be a better position, Westport must be prepared to face the prospect of

the next nearest competitors, such as Port of Tanjung Pelepas. Willingness of people with advanced skills

and knowledge to be prepared for a more efficient port management and efficiency. This is because

employees are the most important strengths in an organization. Clear, well-planned, high-impact

messages can help employees to not only see the connection between their work and these successes, also

understand how they support overall organizational performance, which ties directly to engagement

levels (Harter, 2002). Employee engagement is powerfully linked to a range of business success factors.

Westport already creating an environment where the most talented, qualified people want to be

employee at Westport and stay to work here, every employee thrives with everyone think in unique way

and with colleagues will be top-notch, with diverse backgrounds and experiences with one thing in

common, to contribute to the success of Westport’s (Westport, 2010).

In this part, strengths and opportunities offered by Westport is the existing advantages obtained by the

Westport, however, it is necessary to maintain and should always be consistent with the improvement of

circulation now. For the weaknesses and threats facing the Westport, it should be overcome by the

strengths and the opportunities available to reduce the problem to be faced by the Westport because of

the weakness and threats. Westport also needs to plan and make improvements to the shortages faced.

There that has six components that need to give emphasis to improve management in order to reduce

weaknesses and increase operational efficiency by Westport. The component that include in this factor is,

relationship with customer, limited connection, time management, high cost in the operation, purchasing

equipment with not relevant and outdated technology. Useful opportunities can come from such things

as government policies, development policy, technology, social pattern and so on. Opportunities that



exist in Westport is through stakeholder factors, namely the components with development of

government incentives and policies, port enlargement and loyal customer at Westport such as shipping

company, CMA-CGM and China Shipping.

A threat will always exist in an organization, from the study, in Westport there are two factors that occur

in Westport, which is in service development and will affect the revenue. The component including this

factors are research and development activity, emphasize of safety of customer or clients, multi product

and profit in future. Nowadays, in the port industry, each port is always good to compete with each

other, especially in the development of facilities and facilities used. Each time, Activities of research and

development is constantly evolving to further develop this industry, indirectly, Westport has always

threatened by this development, and however it also provides an opportunity for Westport to continue to

grow due to this activity.

CONCLUSION

This study was conducted is to maintain a ranking of Westport now and identifying the factors involved

to continue to improve the ranking of Westport to be the world's top 10 ports, in the near future. Making

Westport for a Hub Port in Malaysia and to attract new entrant to use the services provided by Westport

and maintain existing users to keep using the service in Westport.

Based on this study, it shows the strength of the most important key in Westport, namely through

efficient service and management efficiency. Westport can provide efficient services to its customers and

successfully meet their needs in dealing with Westport. Westport is also able to attract more new

customers to use services provided by the efficiency and skills provided by the workers Westport. From

the preparation of the document until the preparation of a container provided with good and proper. Use

of facilities and infrastructure to achieve efficiency and smoothness of the services provided, attracting

new customers to sign in using the services and facilities provided by Westport. In addition, the

opportunity will be given the expansion port, giving an advantage to Westport to enhance existing

services and to achieve 10 world-class ports and makes Westport as a Hub Port in Malaysia.

Despite the strengths and opportunities offered by the Westport, there are also weaknesses and threats

that need to be in a serious view of Westport that can prevent the development and progress in Westport.

However, Westport able to overcome weaknesses and threats with strengths and opportunities by

Westport, this can be seen with increased throughput obtained from year to year. The strengths and

opportunities identified in Westport able to manipulate you to overcome or reduce the weaknesses and

threats.

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Utusan Malaysia, 14 August 2007, “Westport perlu kumpulan pelapis”; Retrieve on September, 13, 2011, from http://www.westportsmalaysia.com/index.php?option=com_content&view=article&id=303:utusan-malaysia-14-aug-2007-westports-perlu-kumpulan-pelapis&catid=57:pressrelease2007&Itemid=234

New Straits Times, 19 November 2007, “Westport Expansion Drives need for skilled Workers”: Retrieve on September 15, 2011 from, http://www.westportsmalaysia.com/index.php?option=com_content&view=article&id=331:new-straits-times-19-nov-2007-westports-expansion-drives-need-for-skilled-workers-&catid=57:pressrelease2007&Itemid=234

The Star, 15 August 2011, “Westport receives another 55 Prime Movers”: Retrieve on October, 20, 2011 from, http://www.westportsmalaysia.com/index.php?option=com_content&view=article&id=403:the-star-15-aug-2011-westports-receives-another-55-prime-movers&catid=61:pressrelease2011&Itemid=143

The Star, 15 July 2010, Tan Sri G Wins Asia HRD Congress Award 2010, Retrieve on October 18, 2011, from,

http://www.westportsmalaysia.com/index.php?option=com_content&view=article&id=375:15-jul-2010-tan-sri-g-wins-asia-hrd-congress-award-2010&catid=60:pressrelease2010&Itemid=268

Table 1: Ranking of Malaysia Port (in thousands TEU):

Ranking Port 2009 2008 2007 2006 2005

1 Port Klang 7,309 7,970 7,120 6,326 5,544

2 Tanjung Pelepas 6,000 5,600 5,500 4,770 4,177

References: (Port of Hamburg, 2009)

Table 2: Reliability Test (Cronbach’s Alpha) for actual test

Variable/Factors No. of items Cronbach’s Alpha

N=100



I-Strength 7 0.841

II-Weaknesses 6 0.834

III-Opportunities 5 0.765

IV-Threats 6 0.706

V-Recommendation

Total

10

40

0.842

0.666

Table 3: KMO and Barlett’s Test for SWOT

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .784

Bartlett's Test of Sphericity Approx. Chi-Square 1102.673

df 276

Sig. .000

Table 4: Total Variance Explained of SWOT

Comp Initial Eigenvalues Extraction Sums of

Squared Loadings

Rotation Sums of Squared

Loadings

Total % of

Varian

ce

Cumula

tive %

Total % of

Varian

ce

Cumul

ative %

Total % of

Varian

ce

Cumulati

ve %

1 7.208 30.034 30.034 7.208 30.034 30.034 3.416 14.232 14.232

2 2.393 9.971 40.005 2.393 9.971 40.005 2.810 11.709 25.941

3 1.981 8.255 48.260 1.981 8.255 48.260 2.701 11.253 37.194

4 1.506 6.274 54.534 1.506 6.274 54.534 2.574 10.725 47.919

5 1.382 5.756 60.291 1.382 5.756 60.291 2.015 8.397 56.316

6 1.114 4.643 64.934 1.114 4.643 64.934 1.678 6.992 63.309

7 1.043 4.347 69.281 1.043 4.347 69.281 1.433 5.972 69.281

Table 5: Rotated Component Matrix of SWOT at Westport

Rotated Component Matrixa

Component

1 2 3 4 5 6 7

Good HR

Management

-.173 .108 .082 .236 .747 -.065 .346

Skilfull and Well-

Trained Workers

-.198 .219 .243 .339 .541 .150 .360

Safety of workers -.174 .071 .308 .051 .177 .170 .722



Usage of latest

technology

-.223 .022 .736 .189 .027 .136 .393

Smooth operation

flow

-.166 .081 .875 .110 .130 .055 .049

Good reputation -.187 .175 .776 .304 .170 -.003 .017

Stability of company -.279 .262 .240 .159 .607 .117 -.084

Bad Relationship

with customers

.619 -.054 -.033 -.229 -.112 -.246 -.200

Limited website

information

.647 -.197 .069 .155 -.375 -.067 .000

Time management .701 .075 -.344 -.127 -.078 .094 -.183

High cost .711 -.191 -.165 -.114 -.236 .061 -.042

Not relevent

purchasing of new

equipment

.785 -.228 -.045 -.210 .016 -.154 .030

Outdated

Technology

.710 -.064 -.340 -.162 -.014 .146 -.026

Government

Incentives

-.106 .858 -.010 .024 .014 .002 .058

Development

Policies

-.143 .679 -.026 .157 .021 -.163 .473

Port Enlargement -.105 .700 .318 -.037 .136 .217 -.020

Loyal customers -.169 .785 .056 -.102 .264 .113 -.068

Strategical location -.094 .338 .265 .299 -.201 .308 -.304

R&D Activity -.021 -.067 .275 .715 .211 -.065 .074

Emphasize of safety -.223 .010 .166 .748 -.047 .089 .204

Multi of Product -.212 -.012 .067 .780 .133 .149 -.091

Best promotion and

commercial

-.137 .161 .090 .455 .350 .389 -.007

Profit in future -.057 .004 .098 .049 .154 .879 .034

Educational

background

.100 .226 -.056 .212 -.404 .570 .199

Table 6: Seven main factor of SWOT at Westport

Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7

Relationship

with

customers

(0.619)

Government

Incentives

(0.858)

Usage of

latest

technology

(0.736)

R&D Activity

(0.715)

Good HR

Management

(0.747)

Profit in

future

(0.879)

Safety of

workers

(0.722)

Limited

Connection

Development

Policies

Smooth

operation

Emphasize of

safety (0.748)

Stability of

company



(0.647) (0.679) flow

(0.875)

(0.607)

Time

management

(0.701)

Port

Enlargement

(0.700)

Good

reputation

(0.776)

Multi of

Product

(0.780)

High cost

(0.711)

Loyal

customers

(0.785)

Not relevant

purchasing

of new

equipment

(0.785)

Outdated

Technology

(0.710)

Services

Quality

Stakeholders Services

Efficiency

Service

Development

Efficient

Management

Revenue Health &

Safety

management

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