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The strategic design of port services based on a total landed cost approach

Rosa G. González-Ramírez (Faculty of Engineering and Applied Sciences, Universidad de Los Andes Chile, Santiago, Chile)
J. Rene Villalobos (School of Computing, Informatics, and Decision Systems Engineering, Arizona State University, Tempe, Arizona, USA)
Cesar Meneses (TIS Consulting, Sonora, Mexico)

The International Journal of Logistics Management

ISSN: 0957-4093

Article publication date: 27 October 2020

Issue publication date: 30 January 2021




This paper explores the effect of port's service time, particularly the mean and variability, on shippers' total landed costs to determine the competitive position of the port and derive recommendations for the strategic design of port services.


The competitive position of a port is estimated considering the service level offered to the end-users of the port such as port service time, its variability and its effect on the total landed costs observed by the port users. The proposed methodology is meant to help ports to determine the required service time levels to maintain or gain a competitive advantage against other ports, in terms of attracting common hinterland's customers.


Results show the advantages of considering service levels factors to determine the competitive position of a port, and what are the minimum characteristics required to capture more traffic volumes, that can help port managers to take strategic design decisions to better position the port in the current fierce market.

Research limitations/implications

The proposed methodology is illustrated by considering a case study, which is the Port of Guaymas in Mexico. Data was not directly collected by the port, but based on interviews with shippers and public information, a representative case is presented. Due to a confidentiality agreement with the Port, specific references for most of the data used to estimate the model's parameters are not provided. The analysis is intended to show the potential value of this mechanism and can be used for evaluating the competitive position, from a high-level perspective, of any port to determine potential hinterland by improving the service level of the port.


The existing literature on port choice and port competition has not previously considered the effect of port service levels under the perspective of total landed costs of the users, being this paper a contribution to fulfill this gap.



This material is based upon work supported by the National Science Foundation under Grant No. IIP-0839969. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.Conflict of interest: The authors declare that they have no conflict of interest.


González-Ramírez, R.G., Villalobos, J.R. and Meneses, C. (2021), "The strategic design of port services based on a total landed cost approach", The International Journal of Logistics Management, Vol. 32 No. 1, pp. 96-120.



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