The port actors, terminal operators, public port authorities, carriers and other service providers in supply chain want to achieve strategic goals such as dominance, integration and insertion. These goals are interrelated and mutually strengthening. Port actors insert themselves in supply chains since this provides them with critical resources such as knowledge, technology, capital, markets and expertise. Another goal is the integration of activities in the port so as to lower transaction costs and provide services efficiently and effectively. Dominance is also another strategic goal applied by port actors. They seek to achieve scarce competency, exploit economies of scale or assets such as handling niche cargo. These strategies are all applicable if an understanding of the concepts, implications, scope of analysis and depth of analysis are reached in reference to Dubai Ports Authority.
A supply chain is the first concept that needs to be well understood when it comes to supply chain management. The global production networks (GPN) are used which provide interlinked functions and procedures through which services and goods are produced, distributed and consumed. Firms that operate in Global production networks have similar characteristics to other members that are linked to the same GPNs. The sustainability of these relationships is dependent on an actor’s personal network embeddedness and development of GPN. This embeddedness engrosses inter-firm relations and relations between firms and government agents at dissimilar spatial scales. GPNs can also show territorial embeddedness, which manifests itself, institutionally, politically and physically. Structure of provision approach is used to analyze the key actors in territorial embeddedness and the supply chain strategies that they apply.
Institutional arrangements should also be conceptualized in supply chain management. Dubai ports authority for instance determines the terminal tariffs and port dues. Port dues are levied on all vessels that dock on the port apart from those exempted. In addition, the Dubai ports authority (DPA) applies Port Receiving Charge (PRC) against loaded or empty containers and bulk cargo that enters or leaves the port from landslides or non-Dubai Ports. This prevents trucking of containers to Dubai from other ports. The tariffs levied by DPA also provide financial incentives that attract shipping lines and their containers. The port provides discounts on the terminal tariffs to shipping companies that have 18,000 container moves annually. The discounts allow the shipping companies to lower their operation costs or prices. Additionally institutional arrangements offer competitive supply chain benefits at the Jebel Ali Free Zone.
In the governance structure, the ruler of Dubai, His Highness Sheikh Mohammed bin Al Maktoum holds all the decision-making power. He is encircled by the director generals who oversee Dubai’s government departments and enterprises owned by the country. The form of governance ensures quick decisions are made concerning the port’s development projects since there is no opposition. This further elaborates the choice by Dubai to implement an antagonistic and global-oriented supply chain strategy in the nineties when it faced competition. The first was through acquiring contracts that deal with management and operating rights in the region and later, the DPA takeovers of P&O ports and CSX World Terminals.
The physical attributes of the port are also beneficial in supply chain management. A port cannot attract cargo if it does not have the required infra and superstructure. Moreover, sufficient capacity and location is also of significant importance. The Dubai ports compete successfully against their competitors because they have superior facilities.
The port of Dubai’s introduction is for the purpose of enhancing, conceptual understanding of the change in GPNs and strategies for territorially embedded firms. It shows the transformation of the port from a local port into a global terminal despite the institutional, economic and geopolitical conditions.
