1. INTRODUCTION

Globalization creates a huge demand to transport raw materials and inventory from one country to another. About 70% of the goods transported through Mongolia’s border ports go to China (General Department of Customs, 2023). Port logistics is a term used to describe logistics and distribution services based on the port where goods arrive. Port logistics consists of various activities such as cargo transportation, loading/unloading, storage and customs documentation. Therefore, effective port logistics operations are essential for successful international trade and transactions. Port logistics in the Industry 4.0 era consists of global trade, environment, sustainability, automation and optimization, supply chain, smart technology, port and terminal transport lines. According to the McKinsey company, it is possible to increase the efficiency of ports by 15-20% by implementing Industry 4.0 (Technonlogy, 2019). Many European countries have started initiatives to introduce Industry 4.0 technologies in their ports. Therefore, in the era of Industry 4.0, it is imperative to remove the barriers of port logistics. Loh, Zhou, Thai, Wong and Yuen (2017) identified a comprehensive list of supply chain disruption hazards associated with port operations using a fuzzy complex assessment approach. Pallis (2017) identified potential risks associated with port container terminals, and Alyami, Yang, Riahi, Bonsall and Wang (2019) identified various risks in container terminal operating systems and developed a framework for evaluating safety performance using evidence-based (ER) methods. Venkatesh, Zhang, Luthra, Dubey, Subramanian and Mangla (2017) identified ten barriers to port logistics and ranked them according to their importance through a Delphi study and DEMATEL. In addition, some barriers relevant to port logistics were identified and grouped based on their relevance and driving force using MICMAC (Matrix d’impacts croisés multiplication applied to a classification) analysis of the impact matrix. This study found that damaged and outdated cargo handling equipment reduces the efficiency and productivity of port logistics and causes damage to cargo (Igbokwe, 2001). According to Marsh and McLennan, equipment failure, operational malfunctions, accidents during cargo transportation, theft, and terrorism can cause huge losses and losses in cargo transportation.

1. THEORETICAL REVIEW

Accidents and cargo mishandling at ports reduce overall efficiency and create other costs such as accident and transportation costs. Congestion within a port/terminal is a manifestation of inadequate facilities and resources and is a consequence of poor forecasting and planning (Loh et al., 2017). In the era of Industry 4.0, it is necessary to have a proper port management system to operate port logistics effectively.

Harris, Wang, and Wang (2015) identified emerging barriers to ICT adoption in multimodal transportation. Tseng and Liao (2015) studied the integration of information technology and supply chain and its performance in the maritime industry. In recent years, the use of ICT in ports has increased rapidly, meeting operational requirements and significantly increasing throughput (Perego, Perotti & Mangiaracina, 2011). Tracking the location of containers and handling equipment at the port is performed by information and communication technologies such as Radio Frequency Identification (RFID), Optical Character Recognition (OCR) systems, and GPS. All these technologies rely on the ICT ecosystem for operations and information exchange. However, these technologies are responsible for creating system and information security and resilience (Lezzi, Lazoi, & Corallo, 2018).

Today, in our country, in the era of Industry 4.0, it is necessary to identify and analyze the obstacles affecting the effective operation of port logistics. Port logistics consists of a wide range of operations, such as placing containers in yards, loading, unloading, storage, transportation, and customs clearance from vehicles to and from the yard (Kim and Lee, 2015). Adequate resources, infrastructure and manpower are required to successfully carry out the various processes at the port.

Merk, Busquet & Aronieti, 2015; Suwannakij & Javier (2011) investigate how cost savings in transportation and the complications that occur at the terminals where vessels are located increase supply chain risks. The infrastructure of each port varies, for example, some ports have sufficient container berths but lack cargo handling equipment such as silos and cranes. However, some ports have good infrastructure but low cargo handling capacity. Both of these situations lead to low productivity and inefficient operation of port logistics (Hussain, 2018).

Port logistics is a labor-intensive task, so human intervention plays an important role in the efficient operation of ports. The importance of communication between the workforce, employee motivation, professional knowledge and education are the skills needed by an individual in a port. In early 2015, a strike by dock workers on the US West Coast, affecting nearly 50 percent of all US freight traffic, prompted a renewed focus on the importance of ports in supply chain processes. Also, a strike by Australian dock workers has directly affected the food, retail and processing industries, causing production shutdowns. (Burgess, 2011).

In the era of Industry 4.0, factors such as human resource training, age, work experience, and adaptability to new technologies and skills affect the effective operation of port logistics. (Fabiano, Curro, Reverbery & Pastorino 2010). Many research studies have identified the success factors of port logistics and their impact on the economy. However, there are few research works that have developed a comprehensive system to study the difficulties in developing economies like our country.

• PART OF THE RESEARCH

Today, most industries operating globally require an efficient logistics network to deliver inventory and finished products to desired destinations on a frequent and precise schedule. Therefore, it is very important to improve the freight transport network. One-stop services are important for clustering transportation activities along domestic and cross-border corridors of any country, providing customs clearance services, warehousing services, cargo handling, distribution and other activities quickly. Today, the combination of road and rail transport is important for the establishment of a continental mixed transport facility capable of increasing the efficiency of transport and meeting the requirements of the supply chain.

Mongolia has a total of 39 registered ports, but 24 are in regular operation. It includes:

• Airway port 6,
• 16 in the area bordering Russia,
• 17 in the area bordering China.

There are 14 roads, 2 railways and 16 ports on the border of Mongolia and Russia, 10 of them are working, and 6 ports are not working due to lack of infrastructure development and construction.

Table 1

Mongolia-Russia border ports

Source: http://bpo.gov.mn/

The infrastructure is not fully developed and non-working ports are highlighted in blue. 13 road ports, 4 railway ports, 13 ports out of a total of 17 ports are operational and 4 new ports have been opened on the border between Mongolia and China..

          Table 2

Mongolia — China border ports

Source: http://bpo.gov.mn/

Newly created ports are highlighted in blue. According to the 2004 agreement between the governments of Mongolia and China, 4 new ports were established in 2020.

As for our country, the Dry Port Agreement was signed on November 7, 2013, and it was stated that Altanbulag, Ulaanbaatar, Sainshand, Zamyn-Uud can become dry ports, and Choibalsang can become a dry port. The Dry Port Agreement was ratified by the General Assembly of Mongolia on February 5, 2016 and entered into force on April 23, 2016.

Source: Intergovernmental Agreement on Dry Ports

Figure 1. Mongolia’s dry port, which is included in the Intergovernmental Agreement on Dry Ports

It can be seen from the experience of other countries that building and developing a dry port in a landlocked country like our country can increase cargo throughput and improve transportation productivity. Therefore, within the scope of this article, we have compared the top 12 dry ports in the world in terms of their active capacity.

Table 3

Comparison of dry ports

Note*

• C- Ability to process collection cargo,
• T–Transportation possibility,
• Bs – Whether or not there is a customs-guaranteed warehouse

Source: Prepared by researcher

From the above research, it can be explained that dry port is an inland terminal directly connected to sea port by road or rail.

For Mongolia, about 87% of the total cargo turnover is transported through Altanbulag, Zamyn-Uud and Gashuunsuhait ports. Therefore, a comparison of Altanbulag and Zamyn-Uud and Gashuunsuhait ports based on the main criteria of the port shows the following results.

  Table 4

Main ports of Mongolia

Source: Prepared by researcher

According to the research, except for Zamyn-Uud, Gashuunsukhait, and Hangi mandals, there is no railway input and output, so cargo transportation is carried out only by road transport. As for Zamin-Uud port, although there are problems of development compared to dry ports in other countries, it is believed that it is possible to take measures to achieve the status of a dry port. It can be seen from this that a dry port can be defined as an inland terminal capable of loading, unloading, storage, inspection and related customs control and clearance for all categories of cargo transported in international trade.

The following common criteria are set for ports in landlocked countries like our country. It includes:

1. It is connected to the sea port by railway and other transport. /United Nations Convention on Combined Transport of 1979/
2. The cargo receiving center /logistics/ and border control are available.
3. Document preparation procedures are the same as seaports.
4. Many types of international fixed transport contracts, concessions, service contracts etc. have been signed between the sea port and the land port.

The port logistics service industry (Yang, Liang, and Ding, 2013) is a customer-based consumer market. Therefore, the ability to precisely define the needs of customers and quickly meet those needs directly affects the increase in the profits of companies. Based on the experience of other countries and the research results of researchers, it is necessary to take the following measures in order to improve the logistics technology problems of a landlocked country like ours. For example:

• Provide regulation. Improving port logistics technology is a collaborative process between transport, container, information and system operators, regulators, manufacturers, and users. A supply chain consists of multiple actors that are interconnected and require proper coordination. Therefore, managing the traffic flow within a port is a joint task of operators and port regulators, and good coordination increases the performance of ports.
• Reduce congestion within the terminal. Congestion increases costs and shipping times. Congestion within a port/terminal indicates poor internal organization and is the result of poor forecasting and planning. Therefore, terminal congestion represents inefficient operation of port logistics.
• Make informed decisions. In recent years, due to technological advancements, the transportation industry has created large databases. Processing and managing this data can have a significant impact on port logistics.
• Employee incentive system. The era of Industry 4.0 has brought great changes in the role of individuals in organizations (Leavitt, 1965). As incentives play an important role in the productivity of human resources, a good incentive system should be established.
• Training and domain expertise. The implementation of Industry 4.0 can increase the efficiency of ports by 15-20% (Technonlogy, 2019). Adoption of advanced technology requires workers to acquire additional skills. It is difficult for employees because it takes time. Therefore, proper training and domain expertise is essential.
• Proper planning of demand and capacity. Most ports do not have enough containers or vehicles to load and transport them. In some ports, many empty containers are piled up in the railway transshipment area, which makes loading and unloading difficult. Handling empty containers requires the same advanced technology and adequate shipping and storage space as full cargo containers, creating a zero-income container yard.
• Conduct research and development. Most companies are spending billions of dollars on R&D to implement Industry 4.0. According to the Port Technology Report, many European countries have started initiatives to introduce Industry 4.0 technologies in their ports (Technonlogy, 2019). China has also increased its research and development funding. To maintain the proper balance of the environment, eco-technology needs to be developed and this can be done through proper research and development. (Chen, Wei & Peng, 2018). Therefore, our country also needs to conduct basic research on improving port operations.
• Ecosystem support. According to the current legal acts in Mongolia, Chinese vehicles are allowed to transport bulk cargo in Mongolia. In this regard, more than 20,000 vehicles form a long queue after crossing the border at Gashuunsuhait port. This has an impact on the environmental ecosystem, such as the destruction of roads around the port and the creation of garbage. /Report of the National Road Transport Center/ This causes difficulties in the operations around the border port and directly affects the profit and income of the port.
• Improve infrastructure development. Infrastructural development varies from port to port, for example, some ports have less container space but have good port facilities, while others have good infrastructure but less cargo handling capacity. Both situations lead to low productivity and inefficient operation of port logistics.
• Coordinate activities of stakeholders. This represents a conflict of interest between stakeholders. Therefore, appropriate rules and regulations are developed by the government and implemented by the stakeholders in order to regulate it properly. Stakeholders have conflicting interests, making it difficult to set common goals for port planning and operations. Therefore, the rights, duties and responsibilities of the stakeholders should be clearly defined.
• Increase return on investment. Investing and making a profit is a long process and takes time. The port needs to increase throughput and cargo handling capacity to maximize return on investment.
• Minimize inconsistencies between local and international operating processes and standards. Local ports are not well equipped with modern technology, infrastructure and cargo handling capacity are insufficient. Therefore, the load of ports with international status increases and difficulties arise in their operation. Therefore, the technology of ports should be improved.
• Improve customer satisfaction. Cargo damage and theft are critical issues in shipping security. This negatively affects the financial and customer satisfaction (eg carriers, terminals, logistics providers, etc.) of ports and shipping companies. Therefore, it is necessary to ensure cargo safety.

1. CONCLUSION
2. Analyzing the development of free economic zones and dry ports in developing countries, dry ports have the following functions. It includes:

• Container cargo processing and storage
• Container loading and unloading
• Bulk cargo handling and storage
• Customs and other border inspection and clearance
• Light container fixes
• Freight forwarding and consolidation services
• Banking / insurance / financial services
• Transportation booking / mediation
• Value-added services (eg, packaging, labeling, long-term storage)

2. Road-Uud port of Mongolia has many advantages such as advantageous geographical location, infrastructural hub (connected with other regions by rail and road), sufficient spatial resources, coordination of international and regional development. Therefore, it is desirable to develop the dry road port into a dry port.
3. By improving the logistics technology of Zamyn-Uud, Gashuunsukhait and Altanbulag ports, where 87% of Mongolia’s cargo flow is transported, the following advantages can be created. For example:

• The total cost of transport operations will decrease and cargo flow will increase,
• Reduction of environmental pollution (reduction of greenhouse gas emissions, toxic fumes, noise pollution, etc.),
• Improvement of public safety (reduction of accident costs),
• Reduction of transport infrastructure maintenance costs,
• Shipping companies will be able to address their containers directly,
• Due to the reduction in the time of cargo processing and document preparation, there will be an opportunity to avoid additional costs such as rental costs and late fines,
• Eliminate tariff and non-tariff barriers in relations between countries, simplify trade and customs rules and regulations, create efficient, reliable and stable transport routes and services, ensure trade balance,
• Shortening of transportation time,
• Favorable conditions for the transportation of cargo from third countries will be created and it will be easier to transport cargo from any port in the world by ocean shipping container.
• Increase the transportation of perishable food products and make a significant contribution to the increase in the volume of export and import of products,
• Reduction of transportation and logistics costs, creation of new jobs,
• The regional logistics transport network will develop.