An assessment of the integration of seaports into supply chains using a structural equation model

Purpose – The changing role of seaports in supply chains has been the subject of extensive research in the recent literature. The strategic development of seaport terminals, responding to the need for closer integration into supply chains, invites a more detailed examination of the influence of the supply chain structures on seaport performance. Therefore, this paper aims to investigate the effects of supply chain structures, especially the degree of integration of seaports into supply chains, on seaport performance. Design/methodology/approach – The parameters for a structural equation model were identified in the first instance from the supply chain and seaport operations and management literature. The structural equation model itself was then devised, and subsequently refined, using data from Korean seaport terminal operators, shipping companies and freight forwarding companies. The structural equation model was used to assess the level of supply chain integration of seaports and the relationship to port performance. Findings – The results indicate that the integration of seaports into supply chains has a positive impact on both the effectiveness and the efficiency of seaport performance. In addition, antecedents to seaport supply chain integration are identified; these suggest that a strong orientation to supply chain integration within a port operating company enables the company to adopt and implement a strategy that integrates functions within the port and with other upstream and downstream organisations. Research limitations/implications – As the field data were geographically limited to one country, extending the findings of this study to other geographical areas may not be possible, although the approach taken, using the structural equation modelling technique, should be transferrable elsewhere. Cross‐validation of the model would widen its applicability to other areas. The paper provides a framework that allows other researchers to examine the level of integration of ports into supply chains. Practical implications – The potential benefits of closer integration of seaports into supply chains are shown with supply chain integration having a positive effect on port performance. Seaports which do not integrate with their supply chains have a lower level of performance. Thus, enhanced port performance accruing from closer integration would have positive implications both for port and terminal managers and for other supply chain participants. Originality/value – This study, for the first time, empirically examines the impact of the integration into supply chains of seaports on their performance. This is achieved by the development of a structural equation model which is then tested in the field, thus extending the existing literature which is largely conceptual or descriptive.