Khalid Altukhays

The Case of Fremantle Ports

1). Why did Fremantle Ports need to change?

In today's changing environment, success requires that managers recognize the changes effective
in terms of organizational survival. If change is desired or feared, expected or unexpected, it is
usually done by a certain degree of discomfort that often leads to a measure of conflict. The way
you managed the process of change often makes the difference between success and failure
(Brawn cited in Bartol et al 2008, p 26)

Fremantle Ports is a Western Australian Government trading enterprise responsible for strategic
management of the Port of Fremantle. The Port of Fremantle operates from two locations: the
Inner Harbour at Fremantle and the outer harbour, south of Kwinana (Whitaker 2010). Of
Australia’s five major capital city ports, Fremantle is the closest to Singapore, which is just four
and a half day’s journey from Singapore (Whitaker 2010). It is also well positioned for trade
with the Middle East, Africa and Europe (Whitaker 2010). Fremantle Port is often a first and last
port of call for shipping operating between Australia and overseas destinations, making
Fremantle a strategic port for trans-shipment of cargos as well as direct services (Whitaker
2010).

Given such important strategic facts about Fremantle Ports, there were problems with bureaucrat
icy, unresponsiveness, lack of chain of command with highly unionised workforce and other
problems prevailed which turn the port into a loss making institution (Whitaker 2010). Besides
maritime industry’s century old tradition of” worker versus boss” is a tough place to improve
efficiency, effectiveness and customer focus at large (Whitaker 2010).

In the 1990, Kerry Sanderson was appointed CEO of Fremantle Ports. Her challenge was to
transform the port into an efficient and effective customer focussed organisation for the reasons
mentioned above (Whitaker 2010).

2). Identify the main stakeholders in the case and outline their interests.

Stakeholders are person, group, or organization that has direct or indirect stake in an organization
because it can affect or be affected by the organization's actions, objectives, and policies. Key
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stakeholders in a business organization include creditors, customers, directors, employees,

government (and its agencies), owners (shareholders), suppliers, unions, community, and the
environment from which the business draws its resources (Business Dictionary 2010).

The main stakeholders discussed in this case are: managers, workers, customers (shipowners and
shippers), government, local community and environment (Fremantle port 2010).

Managers want more command and control over matters regarding workers. For this, the
relationship between managers and workers were detecting (James et al cited in Bartol 2004,
p.25).

The workers, on the other hand, are highly unionised. They want more freedom and shared
responsibility with management, which eventually creates the conflict of interest between
managers and workers. When Kerry Sanderson took over the charge of CEO of Fremantle Ports
in 1990 this adversary was so high that she had to deal with “them against us “situation between
workers and managers (Whitaker 2010).

Customers of the port include shipowners and shippers. A ship owner is a

person(s)/company/entity which owns a particular ship and thereby accepts all the legal
responsibilities/obligations in accord with the country's maritime law to which the ship is
registered (Jamports 2010).Their interest from a key and strategic port like Fremantle Ports
include smooth and hassle free prompt service at competitive price from the port. A shipper is an
organization responsible for the packaging and shipping of a commodity (Sjport2010). Since
Fremantle Ports is often the first and last port of call for shipping operation between Australia
and overseas destinations; the shippers’ interest is that shipment is to reach their destination on
time and thus maximize value. If the shipment failed to reach its destination on due time because
of problems in the port they may lose their contract and have to look for alternatives. When
Kerry Sanderson took charge at Fremantle Ports in 1990, the view of the customers about the
port was bureaucratic and unresponsive (Whitaker 2010).

The government is another key stakeholder as Fremantle Ports is a Western Australian

Government trading enterprise responsible for strategic management of the Port of Fremantle.
Due to various bureaucratic short comings, inertia-clogged government culture; the port stood
loss of an $11.5 million when Kerry Sanderson took over as CEO (Whitaker 2010). So the
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interest of government was to make it a profitable institution as incurring such huge lose is a
serious headache for the State Government of Western Australia.

The community is also an important the stakeholder as where the port operates have an impact
on that community (Fremantle port 2010). Community’s interest is a sustainable port that is
contributing to that community and protecting its interest. Before Kerry Sanderson took over the
community did not get that much priority; however she introduced inclusive management style
understanding and taking into account the claims of all stakeholders including staffs, port
customers and the community to build a competitive advantage.

Environment is also a key stakeholder for a large port like Fremantle (Fremantle port 2010).
Environmental interests include safe and sound environment, free from all sorts of pollution and
hazards, ensuring safety marine environment and local wild life community.

3). Discuss the main barriers to change faced by Sanderson on her arrival as
CEO of Fremantle Ports. What did she do to overcome resistance to change?

Kerry Sanderson took over the charge of CEO of Fremantle Ports in 1990. She faced many
complex barriers.

The initial challenge she faced was to deal with century old tradition of “worker versus boss”
which prevailed between managers and highly unionised workforce. Such situation makes it
tough to improve effectiveness, efficiency and customer focus for the port. Dissatisfied
customers and consequently significant losses was the result of this bureaucratic, unresponsive
complex situation.

The toughest task she had to deal with was the human toll, as a lot of people had lost their jobs as
result of the reforms she undertook (Whitaker 2010).

To overcome the challenges Sanderson realised that a new approach of managing the port
required a complex series of interaction between the leaders, their followers and the situation. It
was the change in each of these that gave leading and managing the port its special
characteristics. She introduced an “inclusive” style of management which understanding and
taking into account the claims of all stakeholders to build competitive advantage (James et al
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cited in Bartol p, 269). As a result of her inclusive management style all the stakeholders-
managers, staffs, workers, customers, community felt included. Additionally inclusive provided
a base to become more accountable. Other strategies taken by her include continuous
improvement, integrated management systems and long term corporate planning. She adopted
the continuous improvement management concept from Japanese “Kaizen” strategy which calls
for never-ending efforts for improvement involving everyone in the organization – managers and
workers alike. It has two major components: 1) maintenance and 2) improvement. She also
believed that without long term planning her “feel good” management style would be inefficient
(1000 ventures 2010).

Part of her reform programs includes sweepings changes at Fremantle such as dramatic
restructuring and downsizing of the workforce (Allison James et al cited in Bartol p, 269).

Employment numbers were dramatically reduced, with the survivors working under a leaner,
flatter management structure (Allison James et al cited in Bartol p, 269).

Port services were privatized, sold or streamlined to get rid of bureaucratic, red tape problems as
well as loss making situations. Other operations such as security and mooring were restructured.
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4) Using data from the case study and the port’s website
(www.fremantle.com.au), prepare a SWOT analysis table for Fremantle
Ports.

Strengths Weaknesses

 Fremantle Ports Strategic position.  The important strategic location of the port
 Inner harbor provides modern deep water makes it too much reliant for trade between
facilities for handling container trade. Australia and other key trading routes which
 The Kwinana Outer Harbour is one of creates extra pressure on the port’s day to day
Australia’s major cargo ports. operation.
 Closest port for trade among Australia and other  Level of bureaucracy and red tape issues
major trading routes like Singapore, Middle hinders the ports success.
East, Africa, and Europe.  Highly unionised workforce.
 Fremantle Ports provides and maintains  Significant loss of money till 1990.
shipping channels, navigation aids, common  Shortcoming with identifying all key
user cargo wharves, cargo wharves at least stakeholders.
terminals, the passenger terminal, road and rail
transport infrastructure within the port area,
moles and seawalls, and other port
infrastructure, such as buildings, water, power
and public amenities.
 Other services provided by Fremantle Ports
include overall port planning and coordination,
ship scheduling and berthing allocation, port
communications, mooring, security services,
emergency response, hazardous cargo services
and quarantine and waste disposal services.
 Fremantle Ports is certified to international
Environmental, Quality and Safety standards.
Opportunities Threats

 Due to its key strategic location, Fremantle
Ports could be the primary naval port of
Australia.
 Could be highly profitable if all managerial and
technical issues resolved.
 Local community could get more benefit from
the port.
 New business and services could develop
around the port to make it more attractive
destination.
 Could be a key tourism destination.
 If the “worker versus boss” attitude continues
that could seriously jeopardize the ports day to
day operation and success at large.
 Without identifying all the stakeholders and
their interest properly might be a key barrier for
the ports success.
 Highly unionized workers might demand too
much.
 Long established command-control and high
level of bureaucracy could be another barrier
for success.
 Excess number of workers could be a problem.
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References

Bartol, K, Tein, M, Matthews, G & Sharma, B, 2008, Management: a Pacific Rim focus,
5th edn, NSW, McGraw Hill Australia.

Fremantle Ports n.d, Fremantle Ports homepage, viewed 18 September 2010 ,

<http://fremantleports.com.au/>.

Flinders Business School, Flinders University 2010, The case study of Fremantle
Ports, BUSN 1005, semester 2, Flinders University, Adelaide, p. 1 - 3.

Business Directory n.d, Business Directory definition page, viewed 18 September

2010, <http://www.businessdictionary.com/definition/stakeholder.html>.

Vadim Kotelnikov n.d, business_guide page, viewed 19 September 2010,

<http://www.1000ventures.com/business_guide/mgmt_kaizen_main.html>.

Jamports n.d, Jamports page, viewed 22 September 2010

<www.jamports.com/shipping.dti>.

Sjports n.d, Sjports page, viewed 22 September 2010

<www.sjport.com/english/about/glossary_terms.html>