Case Studies On Transport Policy: Michael C.B. Cheng, James J. Wang
Case Studies On Transport Policy: Michael C.B. Cheng, James J. Wang
A R T I C L E I N F O A B S T R A C T
Article history:                                     The widespread globalization of production corporations in the late 20th century, as well as the
Received 4 September 2015                            subsequent trade facilitation policies of state authorities, generates an imperative need to extend the
Received in revised form 7 February 2016             scope of supply chain management. Apart from the evaluation and monitoring of networked operations
Accepted 22 March 2016
                                                     in different parts of the world, the effectiveness of trade policy measures is also included. This paper
Available online xxx
                                                     examines the potential contributions of a logistics and transport data exchange platform in measuring
                                                     the performance of supply chain stakeholders of a hub port at different stages along the chain. A case
Keywords:
                                                     study demonstrates how the integrative characteristics of a logistics and transport data exchange
Supply chain
Performance measurement
                                                     platform can be exploited to measure performances of different parties along the supply chain of a firm.
Hub port                                             More importantly, the authors explain how such a platform can be transformed into a system that
Case study                                           evaluates the integrative supply chain activities of firm, the infrastructure, and the institutional
DTTN                                                 stakeholders. A series of new supply chain performance metrics, including specific monitor end-to-end
                                                     processes, can be captured by the proposed system. The paper concludes that in view of the significant
                                                     policy implications of a platform-based supply chain performance measurement (SCPM) system, state
                                                     intervention is critical to foster a high participation rate of the logistics and transport data exchange
                                                     platform and develop its SCPM functions.
                                                      ã 2016 World Conference on Transport Research Society. Published by Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.cstp.2016.03.001
2213-624X/ ã 2016 World Conference on Transport Research Society. Published by Elsevier Ltd. All rights reserved.
   Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
   contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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CSTP 99 No. of Pages 11
2 M.C.B. Cheng, J.J. Wang / Case Studies on Transport Policy xxx (2015) xxx–xxx
environmental dimension of infrastructures and institutions                         scorecard or SCOR model) was developed by Kaplan and Norton
(Gereffi and Fernandez-Stark, 2011). Porter (2001) expected that                     (1996) not only measuring the financial performance of compa-
the Internet would enable the integration of the whole set of the                   nies, but also analyzing an organization and its supply chains
value chain, namely, suppliers, channels, and customers (i.e.                       from four perspectives, namely, learning and growth, business
stakeholders at firm level). By contrast, Gereffi and Fernandez-                      process, customer, and financial performance. In line with such
Stark (2011) explained the role of local economic and social                        approach, Gunasekaran et al. (2001) developed the multiple-level
conditions and institutions in upgrading GVC (e.g. infrastructure                   framework for SCPM metrics, which are classified into strategic,
and institution). According to Wang and Cheng (2010), a supply                      tactical, and operational, such that the results of measurement
chain is a multi-hierarchy structure of stakeholders associated                     would be addressed by the appropriate management level. Third,
with the tier of business (i.e. firm), gateway (i.e. infrastructure),                Shepherd and Gunter (2006) developed a multiple-level model
and institution. Cross-hierarchy supply chain integration refers to                 and a process-based SCPM that targets five tasks, namely, plan,
the interplay between the parties of firm, the infrastructure, and                   source, make, deliver, and satisfy customer. This method enables
the institution hierarchies, which could enhance the competitive                    the mapping and analysis of complex supply chain. Fourth, the
strength of the supply chain concerned (Wang and Cheng, 2015).                      systems thinking or end-to-end approach argues that a single
Examples of such services include advanced customs clearance or                     measurement system should be adopted to cover the entire
the integrative information platforms of state agencies, ports, and                 supply chain (Holmberg, 2000; Cuthbertson and Piotrowicz,
carriers. This cross-hierarchy perspective can also be applied in the               2011). Such approach aligns with the inter-firm collaboration and
analysis of SCPM, which this paper aims to accomplish.                              control strategy of collaborative planning, forecasting and
   This paper attempts to accomplish two purposes. First, we                        replenishment (CPFR), a supply chain system that has been
investigate how ICT, particularly e-logistics platform, can contrib-                widely adopted by the industrial and retail sector (Danese, 2007).
ute to SCPM in monitoring activities under the integrated                           The last three approaches adopt the integrative principle and
environment. Second, we explain the means in which such                             consider the close relationship of stakeholders in a globalized and
platform can be transformed into a system that evaluates                            Internet-enabled supply chain. The scope of SCPM studies has
interrelated supply chain activities of firm, infrastructure, and                    been expanded from an intra-firm to inter-firm perspective, but
institutional stakeholders through a series of integrative perfor-                  the relationship between firms and the supply chain environment
mance metrics.                                                                      (infrastructure and institution) remains passive or given.
   This paper is structured as follows. In the next section, we                        “You cannot manage what you cannot measure (Sink and Tuttle,
review the development of SCPM. In the succeeding section, we                       1989).” Thus, as an essential tool in monitoring the degree of
describe the methodology in detail, followed by a case study                        success of supply chain strategies (Grosvold et al., 2014), SCPM
analysis of the contributions of a logistics and transport data                     plays an important role in capturing activities under the trans-
exchange platform in SCPM. Based on such findings, we explain                        formed environment of integrated relationship. Development in
the means in which this platform-based SCPM may be trans-                           the measurement of firm-level performance leads to positive
formed to expand its monitoring functions across firms,                              progress in reframing measurement mechanism and metrics from
infrastructure, and institution stakeholders of a supply chain.                     firm to process orientation and, to a certain extent, chain
In the last section, we discuss the results and limitations of this                 orientation (Schaltegger and Burritt, 2014), but not for cross-
project, and further research opportunities of related study.                       hierarchy SCPM.
    Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
    contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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submission. This metric reflects the efficiency of a standalone                      trade supply chain users, this system may suit the requirements.
general process of the operator. However, the actual performance                   Therefore, the Digital Trade and Transportation Network (DTTN)
of cargo collection operations related to various sectors, such as                 is selected for the case study because it has the most
perishable, express, or general cargo that may be served                           comprehensive logistics and transport data exchange platform
differently, is not indicated. Thus, users cannot track the duration               in Hong Kong (Wong et al., 2010), which has been in operation for
of individual tasks of cargo collection.                                           nearly a decade since 2006. The initial purpose of this case study
                                                                                   is to prove that a series of supply chain performance metrics can
2.3. Institution-level SCPM                                                        be compiled by connecting documents processed by a logistics
                                                                                   and transport data exchange platform with specific data
   In view of the policy implication of this research, only state-                 manipulation. Despite certain constraints described in Sec-
related institutional players with a role in SCPM are examined,                    tion 4.2.1, such platform can perform SCPM function using its
other actors such as financial institutions will not be discussed.                  existing data structure.
The approaches of institutional and infrastructure SCPM are                            To solicit support from DTTN, we met with their management
greatly similar in terms of discreteness and operator orientation                  to explain the research purpose, the data to be collected, and the
(Mann, 2012). However, unlike infrastructure operators, state                      analytical methods. We targeted a client of DTTN. This client is a
agencies or related international organizations tend to apply                      sourcing arm of a large-scale European fashion producer with
perception-based surveys to measure user opinions on concerned                     vendors and forwarders located in different locations in Asia. The
institutional services (e.g. Logistics Performance Indicators of the               geographical coverage of this firm closely matches the globalized
World Bank). Logistics performance analysis of different states                    context of SCM. Due to the current limitation of DTTN this
can also be conducted based on a similar type of survey results,                   sourcing firm only adopts the document transmission function of
such as the Global Competitiveness Report generated by the                         the system. However, in the discussion with the company’s
World Economic Forum (Wang and Cheng, 2015). Apart from the                        management, they are positive to the idea of expanding the SCPM
nature of research data that limits the accuracy of such logistics                 role of DTTN. Under constrained information availability and
performance reports, their discreteness (Global Competitiveness                    focused analysis on critical processes, four types of trade data
Report is produced annually and Logistics Performance Indicators                   were extracted from DTTN, namely, purchase order, packing list,
are surveyed every two years) also fails to provide a continuous                   shipment booking, and goods receipt.1 A full-year dataset
performance monitoring system of the concerned states. More-                       comprising hundreds of records was collected to ensure that
over, transaction-based performance measurement for supply                         the seasonal pattern of activities, if any, was captured. After
chain-related institution service in actual operations is rare. The                collecting the dataset with the required lead time approximations
Canada Border Services Agency (CBSA) has stipulated certain                        from DTTN, follow-up meetings were conducted to validate the
service standards in this aspect, such as the conduct of a marine                  data. The performance metrics were compiled accordingly. The
container examination within 24 hours (CBSA website). However,                     findings of the research were shared with the management of
CBSA has not provided information on the actual performance of                     DTTN to ensure accurate interpretation of data analysis and to
this service metric.                                                               scrutinize the logic of the proposed SCPM. To address the
   Accordingly, a knowledge gap in SCPM is identified. A                            limitation of a single-firm case study, we examined the
monitoring system that can reveal cross-hierarchy interrelated                     integrative function of a trade-related data exchange platform
supply chain activities, both by sector and general performance,                   from multiple dimensions (operation, tactical, and strategic) to
based on transaction data and continuous evaluation does not                       ensure a comprehensive coverage of relevant issues. No
exist. Such shortfall in the current SCPM has become imperative                    infrastructure and institution stakeholder is currently using
since public-private partnership trade facilitation is prioritized                 DTTN. Thus, the performance metrics derived from this case are
under regional free trade agreements (e.g. ASEAN Free Trade Area)                  confined to the parties of the firm’s supply chain, namely, the
and international trade and economic regimes (e.g. APEC, WCO).                     vendors and forwarders.
For example, in 2007, under the SAFE framework of the World                            After achieving the initial purpose of the case study, we then
Customs Organization (WCO) (World Customs Organization, 2007)                      attempt to examine the integrative ability of DTTN in processing
the Authorized Economic Operator (AEO) program was introduced                      logistics and transportation data of other hierarchical parties in
and later also launched in EU countries in 2008. AEO aims to                       the supply chain. A set of trade and logistics documents (see
identify reliable traders and provide concerned entities with trade                Section 5.1) processed by the container terminal (infrastructure
facilitation measures. In view of the cross-hierarchy (firm and                     hierarchy) and government departments of Hong Kong (institu-
institution) collaborative nature of such schemes, concerned                       tion hierarchy) were reviewed for compatibility by the operation
nations or states must monitor their effectiveness through an                      staff of DTTN. As expected, DTTN confirmed that such papers can
integrative SCPM system and make improvements if necessary                         be handled technically by the platform. After validating the
(Moise, 2003; OECD, 2005).                                                         integrative function of DTTN, we proceed to the final purpose of
                                                                                   this case study, which is to develop the data structure of a
                                                                                   platform-based SCPM system and the new performance metrics
3. Methodology
                                                                                   that can capture the interrelated activities of the hierarchical
                                                                                   parties of different supply chain. To ensure the feasibility of the
   A qualitative research method, particularly a case study, is
                                                                                   proposed SCPM mechanism, we also verify the technical validity
adopted because of the exploratory nature of this paper in
                                                                                   of the data structure with DTTN experts. In a follow-up interview
investigating the shortfall of current SCPM in monitoring cross-
                                                                                   with 3 corporate members of the Hong Kong Sea Transport and
hierarchy supply chain activities and in potentially filling the
                                                                                   Logistics Association (members are mainly small and medium
loophole by an ICT mechanism (Yin, 2003). However, becoming
                                                                                   sized LSP), initial response of the executives towards a platform-
the right candidate for such requires an ICT mechanism that is
                                                                                   based SCPM is favourable.
open, compatible, and capable of supporting the activities of
supply chain parties of different hierarchies (firm, infrastructure,
and institution). Given the flexible structure of a logistics and
transport data exchange platform that is designed for multiple-                      1
                                                                                         Receipt issued by the forwarder to confirm receipt of consignment.
   Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
   contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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Table 1
Example of major supply chain stakeholders and key documents supported by DTTN.
4. Integrated structure of logistics and transport data exchange                         participate in DTTN. The platform’s development with the
platforms and potential contribution to SCPM                                             institutions is also unpromising under the impartial policy of
                                                                                         the Hong Kong SAR Government. The administration offers no
4.1. Background of logistics and transport data exchange platforms                       incentive to encourage trade-related state authorities, such as the
                                                                                         Customs and Excise Department and the Trade and Industry
   As one of the trade facilitation measures promoted by major                           Department, to join DTTN. Thus, the development of DTTN has
international organizations such as WTO and APEC (ESCWA, 2011),                          been difficult from its inception, except for the limited success in
the single window2 has gained increasing popularity in the trade                         incorporating few medium-sized producers and forwarders to the
regime. To catch up with other trade competitors, several countries                      platform. However, the firm’s efforts to attract major infrastructure
established their own information platforms. These platforms                             and institution parties are in vain. In line with the government’s
support single-window operation, such as NACCS of Japan and                              declining policy focus on logistics development, DTTN was later on
TradeXchange of Singapore. A strong collaborative effort is                              hived off from the government in 2009.
necessary to drive operators of different segments of the trade
regime to link and conduct their businesses through a single                             4.2.2. Structure and characteristics of DTTN
window (Wong et al., 2010). To overcome this problem, most                                  As a community-focused information platform, DTTN empha-
information platforms are established by either the government                           sizes neutrality, non-exclusivity, and non-competition with other
(Japan) or an agency with a strong support from the state                                existing private sectors over the provision of value-added services.
(Singapore).                                                                             Under this constraint, the platform does not provide any data
                                                                                         analytical service for participants, which on the contrary is an
4.2. Case study of DTTN                                                                  essential service element of e-logistics providers to compete in the
                                                                                         market (Wong et al., 2010).
4.2.1. Background of DTTN                                                                   DTTN provides B2B e-commerce services to parties of the
    DTTN was established on a commercial basis in 2006 and                               supply chain who are based in Hong Kong; the design structure of
funded by the government. Unlike other states, the Hong Kong SAR                         these services is linked with almost all types of entities of the trade
Government has adopted an impartial policy and has been                                  and logistics community, and the company handles over 80
reluctant in fostering the acceptance of DTTN as a common                                commonly used documents (DTTN, 2015). We use a hypothetical
logistics and transport data exchange platform. Similar to other                         case to illustrate the integrative nature of DTTN and the key
port cities, Hong Kong infrastructure operators, particularly                            documents that can be traced along the chain. We assume that a
container terminals, are powerful players of the supply chain. A                         company under a single master purchase order (PO) is sourcing
system known as Oneport has been developed by the collective                             child fashions from the Mainland of China. Subsequently, these
efforts of terminal operators. This system plays an important role                       products are imported to Hong Kong for quality inspection before
in processing container collection/delivery activities at terminals.                     they are redistributed to buyers in various countries in EU. Table 1
Oneport strengthens the influence of terminal companies (all are                          summarizes the major stakeholders and key documents involved
commercial enterprises) on associated supply chain parties, such                         under the three hierarchies of the supply chain supported by DTTN.
as carriers, forwarders, truckers, and barge operators. Unless a                         Although majority of the documents are related to firm trans-
significant commercial gain or policy intervention is evident, the                        actions, the efficiency of infrastructure (e.g. terminal) and
terminals are not willing to share such influential power with other                      institution (e.g. customs authority) can affect the overall perfor-
ICT firms. Hence, supply chain infrastructure stakeholders refuse to                      mance of the chain. For instance, a delay by the Hong Kong
                                                                                         authority in customs formalities can affect the order fulfillment of
                                                                                         a company with overseas buyers.
  2
    A single window aims to provide a platform and a process for a paperless                Logistics and transport data exchange are the main purposes of
(electronic) exchange of trade information between participants in the trade             DTTN. Hence, the platform does not track and trace these
process, which is largely accomplished by a single electronic lodgement (ESCWA,          documents neither does it conduct performance monitoring of
2011).
     Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
     contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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Table 3
Structure of the data captured and compiled lead time (PO vs. PL and SO vs. GR).
  PO      Supplier    Forwarder   Origin country   Loading port       SO/SI date   Goods receipt date    Lead time/days       PO date      PL date      Lead time/days
  123     SUPP03      FW1         CN               CN-SHA             31/07/2013   05/08/2013            5                    31/01/2013   14/08/2013   195
  456     SUPP04      FW1         CN               HK-HKG             29/01/2013   30/01/2013            1                    24/01/2013   01/02/2013   8
  654     SUPP05      FW1         CN               CN-SHA             07/06/2013   07/06/2013            0                    30/01/2013   24/06/2013   145
  234     SUPP06      FW1         CN               HK-HKG             20/08/2013   21/08/2013            1                    07/05/2013   21/08/2013   106
  112     SUPP07      FW1         CN               HK-HKG             25/10/2013   26/10/2013            1                    27/06/2013   25/10/2013   120
  678     SUPP08      FW2         CN               CN-SHA             11/09/2013   17/09/2013            6                    05/06/2013   27/09/2013   114
  344     SUPP09      FW1         CN               CN-SHA             17/06/2013   26/06/2013            9                    19/04/2013   28/06/2013   70
  665     SUPP010     FW1         CN               CN-TAO             25/09/2013   26/09/2013            1                    07/08/2013   27/09/2013   51
  934     SUPP011     FW3         TH               TH-BKK             30/10/2013   07/11/2013            8                    07/09/2013   06/11/2013   60
  980     SUPP012     FW4         VN               VN-SGN             25/10/2013   26/10/2013            1                    20/08/2013   28/10/2013   69
Note: see Appendix A for the full name of the loading ports.Source: DTTN.
   Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
   contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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6 M.C.B. Cheng, J.J. Wang / Case Studies on Transport Policy xxx (2015) xxx–xxx
Table 4
Exceptional performance (+/       1SD*) analysis on lead time from confirmed PO to PL (Shanghai).
    Origin country         Loading port     Supplier     PO (Q1-4)          Avg. lead time PO vs PL       Avg. lead time per supplier          Monthly Avg. lead time
                                                                                                          PO vs PL                             PO vs PL (beyond +/ 1SD)
Table 5
Ocean shipment exceptional performance (+/        1SD*) analysis on lead time from SO to GR (Hong Kong).
    Origin country        Loading port    Forwarder    SO/SI date (YYYYMM)      Lead time/days Booking vs Goods receipt           Monthly Avg. lead time
                                                                                                                                   Booking vs Goods receipt (beyond  1SD)
aggregated information provides the management with                                        improve the arrangement of export gateways for inland suppliers,
knowledge of the service gaps of providers from different                                  thereby avoiding peak season clash at certain ports. An example is
geographical locations. These indexes can accurately reflect the                            the relatively long lead time for the fourth quarter of 2013 in Hong
performance of suppliers or forwarders clustered around a loading                          Kong. The management should compare lead times to determine
port if additional related processes are captured. For example, if the                     whether other gateways, such as Chi Wan (i.e. the gateway port at
logistics-data exchange platform also handles a value-added                                Western Shenzhen, China), should be arranged as an alternate for
activity (e.g. re-labeling) request to forwarders and the job                              Hong Kong during an identified peak period.
completion advice of this activity, then an extra efficiency index
can be compiled to monitor this process. Hence, a broad                                    4.2.7. Current constraints and key finding of DTTN to perform SCPM
performance measurement of the forwarder group can be applied.                             function
                                                                                              Through the case of DTTN, we illustrate how an integrative
4.2.6.3. Seasonal pattern analysis by location. Fig. 1 illustrates the                     logistics and transport data exchange platform may serve as a
monthly patterns of variation in SO lead time for Hong Kong,                               SCPM system. However, under the current constraint of firm-level
Shanghai, and Xiamen. We assume that the number of captured                                participants of DTTN (i.e. vendors, producers, and forwarders), the
forwarder records is sufficiently large. The aggregated lead time                           process and metrics examined remain confined to the firm-level
values for the three loading ports should reasonably represent the                         supply chain. Moreover, the discrete nature of the data, that is,
monthly pattern of shipping activities at these locations. This                            collected PO versus PL and SO versus GR, limits the scope of
analysis can be a strategic planning tool for the management to
     Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
     contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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Table 6
Analysis of lead time from confirmed PO to PL rank by loading port (2012-Q4 to 2013-Q4).
  1               2                                           3                                             4                                    5
  Origin          Loading                                     Avg. lead time per loading port/origin        Gap between best performer &         PO Processing efficiency index- (item 4/Leadtime of best
  country         port                                        country PO vs PL                              other ports                          performer) + 1
  TH              TH-BKK                                      42.92                                          0.00                                1.00
  CN              CN-SHE                                      48.00                                          5.08                                1.12
  SH              CN-SHA                                      50.00                                          7.08                                1.17
  ID              ID-CGK                                      53.32                                         10.40                                1.24
  ID              ID-JKT                                      53.32                                         10.40                                1.24
  ID              ID-TPP                                      53.32                                         10.40                                1.24
  VN              VN-SGN                                      53.48                                         10.56                                1.25
  CN              CN-FOC                                      55.33                                         12.42                                1.29
  CN              CN-SZX                                      58.97                                         16.05                                1.37
  CN              CN-CAN                                      64.14                                         21.22                                1.49
  CN              CN-XMN                                      68.49                                         25.57                                1.60
  CN              CN-DLC                                      69.40                                         26.48                                1.62
  CN              CN-TAO                                      70.63                                         27.71                                1.65
  CN              CN-HUA                                      70.95                                         28.03                                1.65
  CN              CN-YTN                                      71.53                                         28.62                                1.67
  CN              HK-HKG                                      75.46                                         32.54                                1.76
  HK              HK-HKG                                      77.25                                         34.33                                1.80
Table 7
Analysis on ocean shipment lead time (day) from shipping order/shipping instruction to goods receipt rank by loading port (2012-Q4 to 2013-Q4).
  1               2                                            3                                       4                                       5
  Origin          Loading                                      Monthly Avg. lead time Booking vs Goods Gap between best performer &            SO Processing efficiency index- (item 4/Leadtime of best
  country         port                                         receipt                                 other ports                             performer) + 1
  MO              HK-HKG                                       1.00                                      0.00                                  1.00
  CN              CN-DLC                                       1.10                                      0.10                                  1.10
  VN              VN-SGN                                       1.93                                      0.93                                  1.93
  CN              CN-TSN                                       2.11                                      1.11                                  2.11
  CN              HK-HKG                                       2.20                                      1.20                                  2.20
  CN              CN-XMN                                       2.51                                      1.51                                  2.51
  CN              CN-YTN                                       2.97                                      1.97                                  2.97
  HK              HK-HKG                                       3.10                                      2.10                                  3.10
  ID              ID-TPP                                       4.00                                      3.00                                  4.00
  CN              CN-SZX                                       4.20                                      3.20                                  4.20
  CN              CN-FOC                                       6.37                                      5.37                                  6.37
  CN              CN-SHA                                       7.80                                      6.80                                  7.80
14
                                                       12
                    Monthly average lead-time (days)
10
                                                        8                                                                                                                    Hong Kong
                                                                                                                                                                             Shanghai
                                                        6                                                                                                                    Xiamen
                                                        0
                                                            2012.12 2013.01 2013.02 2013.03 2013.04 2013.05 2013.06 2013.07 2013.08 2013.09 2013.10 2013.11 2013.12
                                                                                         Shipping order/instruction date (YYYY .MM)
Fig. 1. Analysis of seasonal patterns of lead time from SO to GR by loading port (Hong Kong, Shanghai, and Xiamen).
Source: Authors’ elaboration based on data from DTTN.
   Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
   contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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CSTP 99 No. of Pages 11
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activities that can be assessed by the SCPM function of this case                           customs and trade authorities of the government, their compati-
study.                                                                                      bility with the DTTN platform is also guaranteed because
    The initial purpose of this case study is to prove that by                              Tradelink (i.e. the parent company of DTTN) is a major player
connecting documents processed by a logistics and transport data                            in this field.
exchange platform, in this case the PO number, a series of supply                               Despite the inference that DTTN could process documents of
chain performance metrics can be compiled despite their limited                             the Hong Kong container terminals and trade-related institu-
scope. After achieving this objective, we demonstrate that the                              tions, we still conducted a review of several key documents
integrative method applied in the case study can be extended to                             with a DTTN expert to confirm their interchangeability. These
connect documents of other supply chain hierarchies (infrastruc-                            documents are essential for the compilation of new perfor-
ture and institution) and derive new performance metrics as                                 mance metrics under the proposed platform-based SCPM
required. If infrastructure and institution operators participate in                        system, which can capture cross-hierarchy interrelated supply
this case study, actual data can be obtained for analysis. This                             chain activities. These activities include appointment booking
situation is unlikely to occur because of the conflicting interest of                        and container receipts processed by terminals, cargo manifest,
terminals and the impartial policy of the government (see                                   and customs notice of detention or release handled by the
Section 4.2.1). However, by resorting to technical analysis, logical                        Customs and Excise Department. As expected, the DTTN expert
inference, and expert advice, we ascertain that the proposed                                confirms the compatibility of such documents with the
platform-based SCPM can actually integrate data of other supply                             platform. In the document review process we also understand
chain hierarchical stakeholders and generate new performance                                that a modified data structure should be in place to connect the
metrics.                                                                                    concerned documents and derive the approximate lead time
                                                                                            accordingly.
5. Transformation of logistics and transport data exchange
platform to perform integrative SCPM function                                               5.2. Data structure of an integrative platform-based SCPM system
    To discharge the primary function of a logistics and transport                              The use of PO number as a common field is not adequate to
data exchange platform (e.g. DTTN), which is to facilitate exchange                         integrate the extra documents that will be added by the terminals
of trade and logistics documents between different parties of a                             and institutions. A revised data structure is presented in Table 8,
global supply chain, a certain degree of integrative capability must                        which indicates the fields that can be applied to connect a PO with
be incorporated into the system. This characteristic of DTTN is                             different types of documents related to the terminals and customs
critical for the transformation of a platform into an integrative                           authority. Setting up an accurate and updated database is essential.
SCPM mechanism.                                                                             Such database maps the relationships among the documents
                                                                                            connected to an individual PO. Specific integrative performance
5.1. Types of documents to be processed by an integrative platform-                         metrics can only be compiled based on such data relationship.
based SCPM system                                                                               A critical basic rule must be observed by the proposed platform-
                                                                                            based SCPM system. Only transactions that comply with the data
    According to the document format specifications of DTTN, the                             structure in Table 8 should be captured to calculate the
platform adopts standards for XML canonical document structures                             performance metrics. In this manner, the SCPM can maintain
as the format for the transformation between the sender and                                 the integrative nature of its output figures. Thus, discrete
recipient. The platform also supports the use of international                              transaction data, such as cargo manifests not traceable to any
document standards (e.g. UN/EDIFACT, ANSI X.12, IATA CargoIMP)                              original PO, are not to be counted by the platform-based SCPM
and end-user specific formats (e.g. XML, MS Excel, CSV) by both the                          mechanism.
senders and recipients (DTTN website). Thus, the technical design                               Two additional enhancements of the data structure are
of the system ensures the highest degree of compatibility of                                necessary to expand the scope of the performance metrics that
different types of document to be exchanged by users of various                             will be captured by the integrative platform-based SCPM system.
supply chain sectors.                                                                       First, Harmonized System code (H.S. code) should be added to the
    Apart from the technical aspect, the integrative capability of                          PO so that an analysis by sector performance can be conducted.
DTTN is investigated from the governance perspective of the firm.                            Second, a clear set of system codes to be applied by the platform,
The management of DTTN indicates that to ensure exchangeabil-                               such as the AEO status of a producer or forwarder, must be
ity of files, staffs of container terminals have been consulted                              established. These codes should be adopted to delineate the special
before the platform confirm to adopt XML canonical document                                  status of certain users (e.g. AEO or participants of pre-arrival
structure. With regard to the trade documents required by
Table 8
Data structure that indicates the connecting field (connector) between PO and documents of terminals and customs authority.
                          Terminal appointment        Terminal container receipt       Cargo manifest             Customs notice of release   Customs notice of detention
    Buyer      PO         Connector- booking no.      Connector- booking no.           Connector- BOL* no.        Connector- BOL* no.         Connector- BOL* no.
    OVH        123        69859                       69859                            11258600                   11258600                    11258600
    BPH        456        39981                       39981                            36548120                   36548120                    36548120
    BPH        654        12421                       12421                            96598589                   96598589                    96598589
    BPH        234        36586                       36586                            33879856                   33879856                    33879856
    HVK        112        12022                       12022                            21056985                   21056985                    21056985
    WIW        678        98568                       98568                            68794588                   68794588                    68794588
    OVH        344        47741                       47741                            38879610                   38879610                    38879610
     Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
     contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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CSTP 99 No. of Pages 11
M.C.B. Cheng, J.J. Wang / Case Studies on Transport Policy xxx (2015) xxx–xxx 9
Fig. 2. Four processes of outbound containerized ocean transport captured by Trade Logistics Performance Indicator (General).
Source: Authors’ elaboration.
customs declaration scheme) and facilitate inter-group compari-                        customs clearance between users and non-users of the target
son of performance metrics.                                                            scheme will reflect the effectiveness of such program. Thus, the
                                                                                       performance metrics of an integrative platform-based SCPM
5.3. Performance metrics of an integrative platform-based SCPM                         system can moderately broaden the scope of measurement for
system                                                                                 firms and operators of individual supply chain hierarchies.
   With the revised data structure, a platform-based SCPM system                       5.3.2. Integrative (cross-hierarchy) performance metrics
can capture data of trade and logistics firms, infrastructure                               The proposed integrative platform-based SCPM for a hub port
companies (e.g. terminals), and institutions (e.g. Customs and                         initially consists of four core segments of a supply chain, namely,
Excise Department), which will generate a set of new supply chain                      PO fulfillment (i.e. vendor performance), SO processing (i.e.
performance metrics. In this section, we focus our analysis on the                     forwarder performance), laden container collection/delivery (i.e.
performance metrics of the proposed system that cannot be                              terminals performance), and customs clearance (i.e. institution
obtained under the current SCPM mechanisms of supply chain                             performance). Although a broad-based average lead time can be
players. These metrics are categorized into single-tier and                            compiled for the overall supply chain evaluation, we only propose
integrative (cross-hierarchy) SCPM.                                                    to capture the last three segments which are related to logistics.
                                                                                       This approach is also in line with the import and export lead time
5.3.1. Single-tier performance metrics                                                 figures captured by the Logistics Performance Index Report (World
    For single-tier performance metrics, which capture activities of                   Bank, 2014). Hence, a trade logistics performance indicator
stakeholders belonging to a same supply chain hierarchy, the most                      (general), that is, TLPI (General),3 by sea and air mode for Hong
significant benefit of an integrative platform-based SCPM is the                         Kong can be constructed and updated by the proposed platform-
comparison between an individual firm’s performance and the                             based SCPM. This platform-based SCPM is not a reflection of all the
industry’s best practice or average standard. By adopting the H.S.                     trade-related logistics activities performed in Hong Kong because
code the best practice and average standard in processing PO, and                      not every added-value activities are supported by documents,
SO can be obtained for different sectors (e.g. garment or office                        regardless whether or not they are performed through data
equipment). The PO and SO processing efficiency indexes, as                             exchanges through DTTN. However, the new performance metrics
described in Section 4.2.6.2, can then be modified to compare a                         can serve as a basic tool for comparing the supply chain efficiency
firm’s performance with the industry’s best practice or average                         of hub ports on a transactional and continuous basis.
standard (instead of own company’s best performer). These by-                              The focus of such measurement shifts from a single tier (e.g. the
sector comparative analyses can be conducted on a continuous                           terminal) to interrelated logistics and administrative activities
basis (e.g. monthly or quarterly). Similarly, the formula of                           associated with shipments (Fig. 2). The TLPI (General) should be
processing efficiency index should be applied to the handling of                        reported with a breakdown of segments. For example, the
container collection/delivery and terminal receipts. The average                       outbound TLPI (General) by containerized ocean transport for July
performance (in lead time) of an individual terminal can be                            20XX is 15 days (overall 100%): 3 days (SO processing 20%) + 3
compared with the achievement of the best performing terminal of                       days (containerized shipment preparation 20%) + 5 days (termi-
the container port. In this manner, the efficiency gap between                          nal handling 33%) + 4 days (customs clearance 27%). Such
different operators will be revealed, which may lead to improve-                       breakdown can reveal the development trend of the four
ment. Applying the same principle, the by-sector processing                            concerned components of a supply chain. Analysis of long-term
variance in customs clearance can also be evaluated, particularly                      trend of this indicator would provide benchmarks to measure the
the lead time from submission of cargo manifest to issuance of                         performance of terminal operators and customs authority. The TLPI
customs release notice. However, such analysis may not reflect the                      (General) with adequate data support and proper implementation
efficiency of customs operation. Rather, it merely indicates the risk                   may supplement as a port city measurement of the Logistics
factors of different types of shipment.
    Moreover, institutional operators can conduct performance
analysis on the effectiveness of express formalities by applying the                     3
                                                                                           In the context of the proposed platform-based SCPM, TLPI (General) can be
coding system of special user status (e.g. pre-arrival customs                         defined as the consolidated number derived from a summation of the average lead
                                                                                       time for SO processing by forwarders, container collection/delivery handling by
declaration). A significant variance in the processing lead time of
                                                                                       terminals, and customs clearance by state authority.
   Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
   contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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Performance Index Report of the World Bank, and resolves the                         performance metrics that can be derived from the proposed
problem of aggregation of such index.                                                integrative SCPM system, which covers both single-tier and cross-
   Apart from the general supply chain monitoring role, the TLPI                     hierarchy activities, effectively fill the identified gap (Section 2.3)
(General) can be modified to measure chain reliability. By                            of the current SCPM system. The platform-based SCPM system can
calculating the coefficient of variation of the lead time derived                     benefit almost all supply chain stakeholders and significantly affect
for the TLPI (i.e. overall figure) and its three components, the                      trade and logistics policy makers, including international eco-
variation of service performance can be examined. To ensure                          nomic organizations (e.g. World Bank). We understand from the
consistency, the TLPI (Reliability) should also be reported with the                 initial response of small and medium sized LSP that they are in
breakdowns. For example, the overall inbound TLPI (Reliability) by                   favour of our proposed SCPM system, although the current system
containerized ocean transport for May 20XX is 0.19, with 0.21 for                    set up cost (approximately HK$50,000 or US$6,494-1 US$ to 7.7HK
SO processing, 0.19 for containerized shipment preparation,                          $) is still a concern. Thus the resistance is expected from the large
0.18 for terminal handling, and 0.15 for customs clearance. In this                  scale LSP or terminal operators (Section 4.2.1).
manner, the dispersion of the performance of an individual                               For Hong Kong and other countries that operate logistics and
segment can also be evaluated.                                                       transport data exchange platforms on pure commercial basis, a
   By-sector comparative analysis is also an essential performance                   possible approach for state intervention is to establish a trade and
metric that should be conducted to reveal cross-hierarchy supply                     logistics development committee that will review the efficiency of
chain activities. The processing efficiency index explained in                        the industry from the supply chain perspective. Performance
Section 4.2.6.2 can be extended to integrate the lead time of PO                     measurement (i.e. the role of DTTN for Hong Kong) should then be
fulfillment, SO processing, laden container collection/delivery, and                  incorporated within the framework of the review, which may
customs clearance. Hence, by categorizing transaction data with H.                   hopefully enhance or revitalize the function of SCPM. Alternatively
S. code, the efficiency index will compare the overall chain                          the state authority may enforce sourcing terms that favour vendors
performance (from vendors to customs authority) of an individual                     or LSP using the integrative SCPM system.
firm with the best practice and average standard of the related                           The state administration may also transform logistics and
industry. Through an integrative platform-based SCPM, firms can                       transport data exchange platform into a SCPM system by adopting
monitor activities of the terminals and institutions related to their                a series of statistics collection exercises. By setting TLPI (General)
PO or SO, which is a benefit not achievable by conventional SCPM                      and TLPI (Reliability) as two key statistics for the efficiency
systems.                                                                             evaluation of trade-related supply chains, the state administration
                                                                                     should contract a consultant to design alternative methods to
6. Results and discussion                                                            collect data and update such figures. Through this approach, a
                                                                                     proposal to utilize the logistics and transport data exchange
    Management factors rather than technical condition critically                    platforms for related data collection may be suggested for
affect the transformation of a logistics and transport data exchange                 consideration.
platform into an integrative SCPM system. As illustrated by the                          Based on the findings of the case study and expert advice, a
case of DTTN, only moderate technical inputs are required to                         logistics and transport data exchange platform can be transformed
extract and compile the supply chain performance metrics based                       technologically and become an integrative SCPM system. Adopting
on lead time. In a competitive market economy, key supply chain                      Internet-based ICT and state policy measures to enhance efficiency
infrastructure operators, such as container terminal companies,                      of cross-border trade administration is not new in supply chain
require cost savings, quality improvement, or market opportunity                     studies, for example cloud single window (Pugliatti, 2011) and E-
to conduct their services through a common information platform.                     government service-orientated architecture (Bukhsh and Wei-
A transparent and integrated cross-hierarchy SCPM system may                         gand, 2012). This research tackles the same problems from the
exert additional pressure on supply chain infrastructure operators                   control perspective by similar tools, expanding the scope from
because their managers may need to handle extra external forces                      state to cross-sector orientation. Similarities of trade and transport
(mainly from users) on their service performance. This condition                     data exchange platforms of advanced economies (Section 4.2.3),
partially explains the persistent difficulty of DTTN as a commercial                  and other endeavors to integrate trade administrative processes
entity in attracting major supply chain infrastructure operators to                  indicated that broad-based information sharing, which this
be on board.                                                                         research advocate, is one of the key options to enhance supply
    Nevertheless, a cross-hierarchy SCPM from a policy perspective,                  chain efficiency. Nevertheless, a properly organized research
whether transformed from a logistics and transport data exchange                     involving infrastructure and institution operators (with actual
platform or purposely built, can facilitate decision makers to                       data) remains useful in understanding key issues, particularly
monitor the efficiency of different supply chain stakeholders and                     administration problems, that may affect the operations of a
the entire supply chain at large. For example, the efficiency of Hong                 platform-based SCPM system.
Kong container port as a whole or related individual process, such
as the customs clearance process, can be revealed by the proposed                    7. Conclusions
SCPM. Two additional benefits should be considered. First, if the
integrated SCPM is designed and operated properly, it can become                         The 21st century, which is also known as the digital era, is
an automated system providing continuous monitoring service                          marked by firms and nations being surrounded by all types of
with minimum human intervention. Second, the investment                              information. The ability to convert information into useful
involved in enhancing a trade-data exchange platform is moderate.                    intelligence may affect the success or failure in competition
Therefore, the state policy action to foster the establishment of                    (Guthrie and Austin, 1996; Hassan, 2008). SCM is facing a similar
SCPM is justified, and the decision of the Hong Kong SAR                              situation.
Government to withdraw support for DTTN is shortsighted.                                 In this paper, we examined the shortfalls of the current SCPM
    It is important to reiterate the flexibility of the enhanced SCPM                 system in monitoring the performance of stakeholders in a
which only reveals the industrial trend of service performance, e.g.                 globalized environment. SCPM lags behind in measuring the supply
by sector PO & SO processing efficiency indexes, leaving the                          chain performance of stakeholders from the cross-hierarchy
discretion to individual enterprises to decide whether or not to                     perspective. The capability of a logistics and transport data exchange
disclose their own company performance. The supply chain                             platform to function as a SCPM mechanism is illustrated through a
     Please cite this article in press as: M.C.B. Cheng, J.J. Wang, An integrative approach in measuring hub-port supply chain performance: Potential
     contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001
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   contributions of a logistics and transport data exchange platform, Case Stud. Transp. Policy (2016), http://dx.doi.org/10.1016/j.cstp.2016.03.001