UNIVERSITY OF GHANA THE EFFECT OF OPERATIONAL EFFICIENCY ON CUSTOMER SATISFACTION: THE CASE OF PORT OF TEMA BY VISCOUNT AMEKE YAW 10497931 (MPS0000414) THIS DISSERTATION IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF MASTER OF ARTS DEGREE IN PORTS AND SHIPPING ADMINISTRATION MAY, 2016 University of Ghana http://ugspace.ug.edu.gh i DECLARATION I hereby declare that this submission is my own work towards the MA and that, to the best of my knowledge, it contains no material previously published by another person nor material which has been accepted for the award of any other degree of the University, except where due acknowledgment has been made in the text. VISCOUNT YAW AMEKE …………………… ………………………… (Student) Signature Date MR. S. O. K YEBOAH …………………… ……………………… (Supervisor) Signature Date University of Ghana http://ugspace.ug.edu.gh ii DEDICATION I dedicate this thesis to my father George Egbenya, My mother Sophia Doe Hoggar, My sisters Rita Esinam and Freda Stisofe, My in-law and his Children Oye and Ayeyi, and my best friend Enam Avorgbedor University of Ghana http://ugspace.ug.edu.gh iii ACKNOWLEDGEMENT My sincerest thanks go to the ever faithful God for his grace and mercy bestowed on me during my study period. My outmost appreciation also goes to my supervisor, Mr. S.O.K Yeboah, for his fatherly love, encouragement and support he exhibited to me in making this research a success and to all of my lectures I say thank you. My unriveted thanks are directed to all institutions, which provided information to this study. My Matchless appreciation goes to my colleagues Mr. William Frimpong-Boadu, Akwesi Gorman, Rita Zatte, Bastien Tay and Prosper Numaworse for their support. I say God richly favour you all. University of Ghana http://ugspace.ug.edu.gh iv ABSTRACT Often managers are tempted to believe that the only effect of operational efficiency is cost reduction and improvement in profit. Operational efficiency is not just about cost; other business objectives, including service quality, customer satisfaction, customer retention, sustainability and market expansion still have to be achieved in order to keep existing customers and revenue. Many This thesis provides a background on ports operational efficiency through automation, and customer satisfaction and discusses a case study used to explore the effect of operational efficiency on customer satisfaction. The case study involves the use of a customer survey based on a scale called SERQUAL which is used as a measure of service quality. The research pointed out that that quality serve induced by operational efficiency does have a positive influence on customer satisfaction. Thus, operational efficiency at port has high level influence on customer satisfaction. Therefore, the study recommended that managers should continue to improve upon operational efficiency to enhance higher level of customer satisfaction. University of Ghana http://ugspace.ug.edu.gh v TABLE OF CONTENTS Declaration i Dedication ii Acknowledgement iii Abstract iv Table of Contents v List of Tables ix List of Figures x CHAPTER ONE: INTRODUCTION 1 1.1 Overview of the study 1 1.2 Background to the study 1 1.3 Problem Statement 8 1.4 Research Questions 9 1.5 Objectives 9 1.6 Methodology of the study 9 1.7 Scope of the study 10 1.8 Significance of the study 10 1.9 Limitations of the study 11 1.10 Organizations of the study 11 CHAPTER TWO: LITERATURE REVIEW 12 2.1 Introduction 12 2.2 Historical Development of Sea Ports in Ghana 12 2.3 Legal Framework, Administrative and Management Structure for Ports Operations in Ghana 13 2.3.1 Legal Framework for Ports Operation 14 2.3.2 Administrative and Management Structure of Port Operations at GPHA 15 2.3.3 Operational Structure at Port of Tema. 16 2.4 Port Operation Procedures 19 2.4.1 The Import Clearance Processes 19 2.4.2 The export process 21 2.5 The Economic Contribution of Port Of Tema 23 University of Ghana http://ugspace.ug.edu.gh vi 2.5.1 Development of Industries 24 2.5.2 Revenue Generation 24 2.5.3 Creation of Employment 24 2.5.4 Corporate Social Responsibility 25 2.6 Ports Operations Vis–A–Vis Stakeholders Roles 25 2.6.1 Destination Inspection Companies 25 2.6.2 The Customs Exercise and Preventive Service 26 2.6.3 Stevedoring Companies 27 2.6.4 Ghana Port and Harbours Authority 27 2.6.5 Individual Port Users 27 2.6.6 Ghana Shippers Authority 27 2.7 Government Policies Affecting Ports Operations in Ghana 28 2.7.1 Impact of the Reforms 31 2.8 The Way Forward 32 2.9 Operational Efficiency 34 2.9.1 Efficiency 34 2.9.2 Operations Management and Logistics Perspective on Efficiency 36 2.10 Concepts and Theoretical Framework 40 2.10.1 Concept of Customer Satisfaction 40 2.102 Consumer Satisfaction Measurement 45 2.10.3 Determinants of Customer Satisfaction in Maritime Industry 47 2.10.4 Functional Quality (SERVQUAL) 48 2.10.5 Price 53 2.10.6 Customer Satisfaction and Behaviour Intention 54 2.10.7 Influence of Demographic Variables 56 2.10.8 Main Research Constructs and Dimensions 57 2.10.9 Satisfaction construct 57 2.10.10 Determinants of Satisfaction: constructs, indicators and measures 58 2.10.11 Satisfaction and behaviour intention relationship 59 2.11 Summary 60 University of Ghana http://ugspace.ug.edu.gh vii CHAPTER THREE: RESEARCH METHODOLOGY 61 3.1 Introduction 61 3.2 Research Design 61 3.3 Research Method 61 3.4 Population 62 3.5 Sample size 62 3.6 Sampling Techniques 62 3.7 Data for the Study 63 3.8.1 Primary data 63 3.8.2 Secondary Data 63 3.9 Data Collection 64 3.10 Pre-testing 64 3.11 Limitation of Data Collection 64 3.12 Data Analysis and Presentation 65 3.13 Ethical Issues 65 CHAPTER FOUR: DATA ANALYSIS, DISCUSSIONS AND PRESENTATION 66 4.1 Introduction 66 4.2 Response Rate 66 4.3 Respondents Demographics 67 4.4 Overall Satisfaction with Service Delivery 71 4.4.1 Quality of service received from Port of Tema relative to ideal desired service 71 4.4.2 Willingness to recommend your port to importers and exporters 72 4.4.3 The extent of Respondents expectations to standard of service 72 4.4.4 Satisfaction with quality of service at the Port of Tema 73 4.4.5 The flow of information at the Port of Tema 74 4.4.6 General appearance of employees and environment 75 4.4.7 Favourable nature of business terms and conditions at Port of Tema 76 4.4.8 Customers interest to the Port of Tema 77 4.4.9 The Ports understanding of its Customers’ needs 78 4.4.10 Ability of Port Authority to apologize for inconvenience to customers 79 4.4.11 The timeliness and truthfulness of the Port in discharging their service duty 80 University of Ghana http://ugspace.ug.edu.gh viii 4.4.12 The dependability of the Port in discharging their duty as well as solving customers’ complaints 81 4.4.13 The willingness of employees to attending to customers 82 4.4.14 The approachable nature and ease of contacting employees 83 4.4.15 Sincerity and patience in resolving customers’ complaints/problems 84 4.4.16 The ability of employees to instill confidence in customers 85 4.4.17 Employees’ use of required skills and knowledge to answer customers’ questions 86 4.4.18 Affordability of Services at the Port of Tema (Tariff Mechanism) 87 4.4.19 Technological knowledge and skills of employees in resolving customer’s problems 88 4.4.20 The innovativeness of the Port with respect to automation in order to improve service 89 4.4.21 How successful is Port of Tema 90 4.4.22 The reputation of Port of Tema 91 4.4.23 How socially responsible is Port of Tema 92 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS 93 5.1 Introduction 93 5.2 Summary of Findings 93 5.3 Conclusion 96 5.4 Recommendations 97 REFERENCES 100 APPENDIX A: FOCUS GROUP DISCUSSION GUIDE 112 APPENDIX B: QUESTIONAIRE FOR CUSTOMERS OF PORT OF TEMA 113 University of Ghana http://ugspace.ug.edu.gh ix LIST OF TABLE Table 4.1: Demographic Profile of Respondents 67 University of Ghana http://ugspace.ug.edu.gh x LIST OF FIGURES Figure 2.1: The Gap Model of Service Quality 50 Figure 2.2: The Extended Gap Model of Service Quality 51 Figure 2.3 Conceptual framework 59 Figure 4.1: Response Rate 66 Figure 4.2 Quality of service received from Port of Tema relative to ideal desired service 71 Figure 4.3 Willingness to recommend your port to importers and exporters 72 Figure 4.4 The extent of Respondents expectations to standard of service 73 Figure 4.5 Satisfaction with quality of service at the Port of Tema 74 Figure 4.6 The flow of information at the Port of Tema 75 Figure 4.7 General appearance of employees and environment 76 Figure 4.8 Favourable nature of business terms and conditions at Port of Tema 77 Figure 4.9 Customers interest to the Port of Tema 78 Figure 4.10 The Ports understanding of its Customers’ needs 79 Figure 4.11 Ability of Port Authority to apologize for inconvenience to customers 80 Figure 4.12 The timeliness and truthfulness of the Port in discharging their service duty 81 Figure 4.13 The dependability of the Port in discharging their duty as well as solving customers’ complaints 82 Figure 4.14 The willingness of employees to attending to customers 83 Figure 4.15 The approachable nature and ease of contacting employees 84 Figure 4.16 Sincerity and patience in resolving customers’ complaints/problems 85 Figure 4.17 The ability of employees to instill confidence in customers 86 Figure 4.18 Employees’ use of required skills and knowledge to answer customers’ questions 87 Figure 4.19 Affordability of Services at the Port of Tema (Tariff Mechanism) 88 University of Ghana http://ugspace.ug.edu.gh xi Figure 4.20 Technological knowledge and skills of employees in resolving customer’s problems 89 Figure 4.21 The innovativeness of the Port with respect to automation in order to improve service. 90 Figure 4.22 How successful is Port of Tema 91 Figure 4.23 The reputation of Port of Tema 92 Figure 4.24 How socially responsible is Port of Tema 93 University of Ghana http://ugspace.ug.edu.gh 1 CHAPTER ONE INTRODUCTION 1.1 Overview of the study This Chapter presents an overview of the research, the Background to the study, Problem Statement and Research Questions, Objectives of the Study and Methodology of the study, The Scope of the Study and Significance of the Study, Limitations of the Study and Organization of the Study. 1.2 Background to the study The Ghana Ports and Harbours Authority (GPHA) is the statutory public organization mandated to build, operate, maintain and regulate Seaports in Ghana. The Authority owns and operates two ports in Tema and Takoradi. Port of Takoradi is currently being re-positioned through an extensive expansion and modernization programme to better serve the needs of the oil and gas, mining and trading sectors (Anamoo, 2013). The GPHA was incorporated by PNDC Law 160 of 1986 which merged three organizations namely Ghana Ports Authority, Ghana Cargo Handling Company and Takoradi Lighterage Company (GPHA, 2006). The Vision of GPHA is to make the ports of Ghana the regional maritime hub and become the dominant oil and gas services center in the West Africa sub- region. In this regard GPHA will strengthen collaboration with private sector in the ensuing years to improve efficiency and productivity of the entire port service delivery and lower the cost of doing business (Anamoo, 2013). According to Anamoo (2013), GPHA will stimulate private capital investment necessary for expanding the capacity of the port to handle the ever increasing vessel and cargo traffic. University of Ghana http://ugspace.ug.edu.gh 2 The Authority is a port facility and service provider. GPHA’s two ports together handle about 17 million metric tons of cargo with vast opportunities for growth in the coming years. (Anamoo, 2013). The container traffic is projected to grow from the current one million to about two million TEUs in a decade time. GPHA (2013), in response to this anticipated or projection of growth GPHA spent US $ 100 million to rehabilitate both ports resulting in the upgrading of facilities and equipment for high operational performance and efficiency (GPHA, 2006). In Ghana, the national policy framework for development (GPRS II) has its overreaching goals as the attainment of a middle-income status (with a per capital income of at least US$ 1000) by the year 2015 with a decentralized democratic government. A critical strategy under the private sector competitiveness is to improve Ghana’s access to the global and regional market by strengthening the capacity and efficiency of institutions responsible for trade and export and also through support service as transportation (NDPC, 2006). The water transport service is one of these support service. According to Holye and Hilling (1970), a Seaport is a link in the chain of transport through which the external trade of the nation passes, as a gateway. Seaports are the pivot around which maritime transport revolves. The activities of water transport in Ghana are carried out mainly through the Seaports. In Ghana the logistic hub for water transportation is the Port of Tema. The Port of Tema is the bigger of the seaports in Ghana. It spans a land area of 3.9 million square meters and is flanked by an industrial city. The port receives an average of over 1650 vessels calls per year and these comprise an assortment of container vessels, general cargo vessels, tankers, Ro-Ro and cruise vessels amongst many others (GPHA 2013). University of Ghana http://ugspace.ug.edu.gh 3 The ports environs serve as a logistic hub for stakeholders within the port community. The shipping routes and ports of call to and from Port of Tema span all continents of the world either through direct or transshipment services. In view of this, 70% of national trade and traffic is done through the Port of Tema with additional volumes of trade and traffic to and from the landlocked countries of Burkina Faso, Mali and Niger. Notwithstanding the Mission of Port of Tema to provide efficient port facility and quality services to its clients and regulate logistics clusters in the port, Ports operations are encumbered with several challengers which have militated against the smooth functioning of various institutions, concerned with port management (Ollenu, 2002). Delays in the clearance process due to bureaucratic processes have been a major setback to operational efficiency. The bureaucratic process of the port operations resulted in officials extorting money from agents to fast track the clearing process (CEPS, 2004). Before 2002 the increasing volume of Cargo handling by the port had overwhelmed the main stakeholders including GPHA, CEPS, Freight Forwarders and Clearing Agents as well as government controlled agencies leading to gross operational – inefficiencies (Bainiah, 2008). Port inefficiencies resulted from the fact that port operations were not computerized or automated. There was no common database for sharing port operational information (Bainiah, 2008). The clearance time at both Port of Tema and Takoradi took at least three days (CEPS, 2004). Corrupt officials exploited the loop holes within the inefficient system. Due to the fact that automated data sharing was not possible, the single administrative document which was in hard copy form was easily forged by customs officials and declarants. The litany of the processes that University of Ghana http://ugspace.ug.edu.gh 4 had to be followed in order to clear cargo resulted in numerous complaints and frustrations by Importers (Bainiah, 2008). These several problems that confronted the port compelled the management of the port through it Major Stakeholder and the Government, to embark on a number of strategic reforms and policies. In 1990, the management of the ports, as part of its effort to ensure port operational efficiency, restructured customs operations to conform to international standards by implementing an Automated system for Customs Data (ASYCUDA) (CEPS, 2014). The management of the ports, between 2001 and 2002, undertook the Gateway project to make Ghana’s ports comparable to any. One critical element of the reform programme was the introduction of information and communication technology into Ports and customs management and operations. With the formation of a joint venture company, GCNet to design and operate a single window cargo clearance and documentation system for the Ports, the Electronic Data Interchange (EDI) was introduced. The GCNet is a platform enabling Ghana Customs Management System (GCMS) to share with all the parties involved in the processing of trade documents and customs clearances. On the word of Bainiah (2008), the GCNet caters for activities including: a. Electronic submission of manifests, entries, payment of duties confirmed electronically by banks; b. Sharing of files by Customs officials; c. Transferring of electronic messages between Customs and Importers; and d. Enhancing and facilitating import procedures. University of Ghana http://ugspace.ug.edu.gh 5 Consistent with Bainiah (2008), the institution of the GCNet, stemmed in the following observations:  The reduction in clearance time. For example, at Tema and Takoradi harbour, clearance time, which hitherto was at least three days, has been reduced to at most two days.  Generation of uncleared cargo list. The GCNet can generate this list at any given time, thus CEPS no longer rely on GPHA to provide this. This procedure was previously been flawed due to the possibility of inaccurate and erratic data being presented. CEPS no longer have to contend with flying entries since all cargoes are processed through Customs.  The system has also generated real time revenue and trade statistics for decision making purposes. For example, in 2007, Customs was able to provide Customs Administrators of Burkina Faso and La Cote D’Ivoire with comprehensive data on transit cargo destined for their respective countries only a few hours after request. Notwithstanding these positive observations, Bainiah (2008) still contests that, trials for dispensation shipping document were unwieldy even though clearance time had been reduced. Many studies have proven that operational efficiency can be achieved when skilled personnel are using state–of–the-art automation functions. On this basis GCNet deployed it software GICCS phase two to enhance operational efficiency subsequent to customer satisfaction. The Ghana Integrated Cargo Clearance System (GICCS) platform is Ghana’s Single window portal that houses the Manifest, Declaration and logistics module in the goods clearance chain. University of Ghana http://ugspace.ug.edu.gh 6 The main module in the GICCS include:  Manifest submission and payment related processing  Declaration submission, Validations, Notifications, and Payment related processing.  Logistics modules has Cargo Tracking, Container transfer, delivery order submission and tracking features The manifest module allows for the lodgment of Cargo manifest for customs purpose and its subsequent approval. Freight Forwarders use this module for the lodgment of consolidated cargo whiles it also caters for the amendment of cargo manifest by parties and its approval by Customs. The Declaration module allows for online submission of Customs declaration 24/7 by registered declarants to Customs. GICCS improves the visibility of cargo status to commercial users of the system and trading community as it provide cargo tracking capability (including RFID tags on containers) which will enable the users (Importer, Port Authority and Inland container Terminals) to have accurate information of movement of container and delivery order. The quest by GPHA to expand the ever increasing competitive transit market which is largely controlled by Ivory Coast within the Sub region demands that customer centric approach must be employed. Management must look for ways to understand, attract, retain and build intimate long term relationship with profitable customers (Kotler, 2006; Gronroos, 1994). One critical customer-centric approach which has widely been accepted by philosophers is customer satisfaction. According to research, a very satisfied customer is nearly six times more likely to be loyal and to re-purchase and recommend a product/service to family and friends than a customer who is just satisfied. It is again believed that satisfied customers tell five other people about their good treatment, and that five-percent increase in loyalty can increase profits by 25% - 85%. University of Ghana http://ugspace.ug.edu.gh 7 Conversely, the average customer with a problem eventually tells eight (8) to ten (10) other people (SPSS White paper, 1996; Limayem, 2007). Numerous studies have established the fact that customer satisfaction (CS) drives customer retention and loyalty (Heskett et al., 1997; Heskett et al., 1994; Reichheld and Sasser, 1990). It is believed that the average business spends six (6) times more to attract new customers than to retain old customers. Customer retention is, therefore, basically a product of customer loyalty and value which in turn is a function of the level of customer satisfaction or dissatisfaction (CS/D) (Reichheld, 1996). Organisations that have long-term perspective for growth are, therefore, increasingly developing measures to ascertain customer satisfaction/dissatisfaction. While effective customer complaints could be used to ascertain, it has its own shortcomings since the average business firm never hears from 96% of their unhappy customers and 91% will never come back; they get back; only 4% of dissatisfied customers will complain (SPSS White paper, 1996). Consequently modern business organizations adopt rigorous qualitative and quantitative mechanisms to determine customer satisfaction (CS) for effective marketing strategy and decisions. In this regard, measuring customer satisfaction provides feedback on how successful an organization is at providing products and/or services to the satisfaction of customers at the marketplace. There is also much evidence in the literature to the fact that CS is principally driven by service quality of a firm from the perspective of its customers (Thompson, 2004; Gronroos, et al., 1996; Xu et al, 2002; Dyche, 2001; Ryals & Knox, 2001; Stone, 2000). This has empirically informed practitioners of the necessity of developing, communicating, delivering and improving the quality of the service to customers. This has led to the growing interest in the development of many models of service quality for various industries, as well as development of total quality University of Ghana http://ugspace.ug.edu.gh 8 improvement strategies for service organizations that have particular significance to port operations. GPHA, like any other service organizations, has the quest to deliver quality service to satisfy its customers in the midst of fierce competition for market share with its numerous sub regional competitors. It is on this basis the researcher seeks to assess the effect of operational efficiency on customer satisfaction at the Port of Tema. 1.3 Problem Statement The Ghana Ports and Harbours Authority handles about 70% of the national trade and traffic in addition to volume of trade and traffic to and from the landlocked countries of Burkina Faso, Mali and Niger. One of it critical goals is “to make port operations more efficient and financially viable”, whiles “delivering efficient, friendly and best value services that delight it customers’’, is it customer service core value. (www.ghanaports.gov.gh/) In the midst of efforts to achieve these critical goal and customer core service value, latest figures from Ghana Ports and Harbours Authority has indicated that Ghana has lost about 50 percent of cargo trade with Burkina Faso, Mali and Niger, which has dropped from one million tons annually since 2009 to 500 thousand tons in 2014 according to Paul Asare Ansah (2015). In view of these, there is the need to evaluate the current impact of operational efficiency at the Port of Tema on its customer’s satisfaction. University of Ghana http://ugspace.ug.edu.gh 9 1.4 Research Questions With reverence to the problem statement, the study strive for answers to the following questions 1. What is the level of operational efficiency at Port of Tema? 2. What are the determinants of customer satisfaction? 3. What is the level of customer satisfaction at GPHA? 4. How is the relationship between customer satisfaction and behavior intention influenced by customer’s background? 1.5 Objectives Generally, the study seeks to access the effect of operational efficiency on customer satisfaction. It is against this milieu that the research aims at establishing the following specific objectives: 1. To assess the level of operational efficiency at Port of Tema. 2. To examine the determinant of customer satisfaction. 3. To examine the level of customer satisfaction at GPHA. 4. To make recommendation to improve on customer satisfaction. 1.6 Methodology To be able to answer the research objectives, the study adopted the quantitative method of research. Due to the quantitative nature of the study, data gathering was done through survey with the aid of structured questionnaire. The survey method employed for the data gathering was to enable the researcher cover a larger sample size in a short time. For the purpose of time and financial constraints and uncertain knowledge about the exact population size of the study area, a convenient sampling was used for selecting respondents. University of Ghana http://ugspace.ug.edu.gh 10 1.7 Scope of the study The study focused on assessing the effect of operational efficiency on customer satisfaction at the Port of Tema. Port of Tema renders two main services thus service to Vessels and service to Goods. For the purpose of this research, the scope covered service to goods which is also referred to as shore handling service (Receipt, Storage, and Delivery). Port of Tema has been carefully chosen due to the intense operational activities, coupled with the fact that, Port of Tema serves as the major ingress and egress points for mass cargo. The manifestation of all the major stakeholders within the port community of Tema, makes this area a suitable place for the study. 1.8 Significance of the study The collapse of many state institutions in Ghana has been attributed to operational inefficiency due to bureaucratic and manual documentation process that is compounded with human errors, fraud and delays. This study consequently aims at accessing the effect of operational efficiency at the Port of Tema on customer satisfaction. Operational efficiency encompasses several strategies and techniques used to accomplish the basic goal of delivering quality service to customers in the most cost-effective and timely manner. Customers are the most important people for any organization. They are resources upon which the success of the business strives. Customer satisfaction is the heart of the selling process. One estimate is that it cost five times as much to attract new customers as it does to keep an existing one. The relationship between the organization and the customer is, therefore, an important one. The findings will sensitize port management and stakeholders within the port community, the relationship between operational efficiency and customer satisfaction which most likely may lead to wealth creation aside sustainability of investment within the maritime industry. This academic research will also add to the existing body of knowledge in the country. University of Ghana http://ugspace.ug.edu.gh 11 1.9 Limitation Financial and time constraints are seen as the limitation that may impair the progress of this study. As this is an academic study and it is supposed to be completed within a specified time, the time limit for the study may be inadequate to carry out an extensive study on the topic. As such data collection was limited to only a few samples. Also as result of the busy schedule of the unit of analysis, limitation is seen in the area of getting respondents to adequately respond to the research tools. This can therefore have a negative effect on the results of the study as the required data may not be provided by the respondents. 1.10 Organizations of the study The research is systematized into five Chapters, chapter one focuses on the background to the study accentuating on the problem statements, research questions, objectives, methodology and the scope of the study. Chapter two is centered on the review of relevant literatures that are materials and works related to the research. The methodology and the approach employed by the researcher for the research are combined in chapter three. This chapter highlights the approach and the methodology used which consist of the research design, the research method, population, sampling techniques, type of data and sources, method of data collection, pre-testing, limitation to data collection, presentations and analysis and ethical issues. The analysis of the primary data gathered from the field survey will be contained in the chapter four with findings, recommendations and conclusion in the chapter five of the study. University of Ghana http://ugspace.ug.edu.gh 12 CHAPTER TWO LITERATURE REVIEW 2.1 Introduction This chapter focuses on the history of ports development, ports operations and ports automation in Ghana. The administrative, legal, and management structure of ports operations, operation procedures and ports efficiency indicators are also contained in this chapter. Again, in this chapter are the contributions of the Port of Tema to national development, challenges of ports operations, stakeholder’s involvements and government policies regarding ports operations. 2.2 Historical Development of Sea Ports in Ghana. Between the 16th – 18th centuries, foreign trade in the then Gold Coast was undertaken from about 40 landing points strewn around the coast. By the 1900’s these had converged to six main ports of trade. From 1920 to the 1940s the transport witnessed its first revolution in the road and rail network which culminated in the construction of the Port of Takoradi. The need to build a deep seaport at Takoradi, about 4.5km west of Sekondi was discernible. The idea was conceived and born by Governor Sir Gordon Guggisberg (Oduro, 1999). The Construction of the Port began in December 1919 and was completed in 1927. Through hydrographic survey conducted by the Gold Coast governor, Takoradi was chosen and recommended as a suitable site for deep sea port. Honourable Sir J. H. Thomas, the Secretary of state for the colonies in the United Kingdom, officially opened the port on the 3rd of April, 1928 (GPHA, 2002). Since its establishment in 1928 (GPHA, 2002), the port has seen considerable expansions in the area of infrastructure. University of Ghana http://ugspace.ug.edu.gh 13 Port of Tema is the bigger of two seaport of Ghana. Further road expansion and shifts in the direction of trade in the post-independence era led to the construction of the Ghana’s second Port “Port of Tema”. Construction work began in 1954 by Sir William Halcrow and Partners with the first cargo entry in 1958. The Port was opened in January, 1962 to regular traffic with the opening of the ceremonial declaration on the 10th of February, 1962 (GPHA, 1991). The Port of Tema is 30km east of the national capital, Accra and geographically on the Greenwich Meridian and latitude 5.4 degrees north of the equator. The Port occupies a total land area of 3,904,754m2 and the quay length is 2,196m2. The Port has a coverage storage area of 53,270m and 97,200m of open storage. Plug-in refrigerated containers are found at the Reefer yard in the main Port. There are bunkering service and dry dock facilities available at the Port (Owusu-Mensah, 2007). Port of Tema handles about 80% of the imported goods in Ghana. Clinker, oil products, aluminum, vehicles, container cargo, rice, wheat and alumina are the major commodities handled by the Port (Gyebi-Donkor, 2006). The Port environs serve as a logistic point for activities of Inland Clearance Depots (ICD’S), Warehouses, Transport and haulage companies, freight forwarders and related service centres. 2.3 Legal Framework, Administrative and Management Structure for Ports Operations in Ghana. Ghana Ports and Harbours Authority (GHPA) was established under the Provisional National Defence Council Law (PNDCL 160) of 1986 (GPHA). Prior to the promulgation, three companies were managing cargo handling and shipping in the country. These were Ghana Cargo Handling Company and Takoradi Lighterage Company Limited (TLC), Atlantic Port Services (APS) and Speed Line Stevedoring Company (SSC). The seaports in Ghana are administered by University of Ghana http://ugspace.ug.edu.gh 14 GPHA. Currently, GPHA is a landlord port authority responsible for providing all needed port infrastructure. It controls the marine approach channel, navigational supports, basins and quays of the Ports (Owusu-Mensah, 2007). 2.3.1 Legal Framework for Ports Operation The statutory functions of GPHA include planning, management, maintenance, operating and controlling of all Ports in Ghana (GPHA, 2007). Specifically it shall: 1. Provide in a port such port facilities as appear to be necessary for the efficient and proper operation of the port; 2. Maintain port facilities and extend and enlarge any such facilities as it shall deem fit. 3. Maintain and deepen as necessary the approaches to, and the navigable waters within and outside the limits of any port, and also maintain light houses and beacons and other navigational services and aids as appear to be necessary; 4. Regulate the use of any port and of the port facilities; 5. Provide facilities for the transport, storage, warehousing , loading, unloading and sorting of goods passing through any port, and operate road haulage services for hire or reward; 6. Carry on all the business of stevedoring and lighterage services; and 7. Generally discharge any other functions which are necessary or incidental to the foregoing. These include the following: a. Supervise stevedoring lighterage and container services, where these are provided by person other than the Authority; b. Operate tugs, dredgers and other craft for towerage, salvage, fire prevention and protection of life; c. Enter into any agreement with any person: University of Ghana http://ugspace.ug.edu.gh 15  For supply, construction, manufacture, maintenance or repair by that person of property which the Authority may require for the efficient discharge of its functions under this law; and  For the operation or provision of any port facility which the Authority by this law is empowered to operate or provide. d. Appoint, license and regulate stevedores, master porters to operate in the container terminals; e. Establish pilotage districts, direct that pilotage shall be compulsory in any such district, determine that pilot (including Authority pilots) to operate in such districts, license pilots for work in such districts and establish pilotage boards and specify their suite include the duty of inquiring into the conduct of pilots; and f. Which such limits as may be fixed by the Secretary prescribed rates, charges and dues for services provided by the Authority or specify the persons liable to pay such rates, charges and dues prescribed under section 75 of this law. 2.3.2 Administrative and Management Structure of Port Operations at GPHA Administratively, there is an explicitly designed structure with instruments that regulate the operational activities of GPHA. A nine member board of directors including the Director General controls the authority. The government is charge with the formation of the board in consonance with a laid down procedure and consideration. The following are the principal functions performed by the board: 1. Determine policy with regard to all operations of the authority and ensuring it implementation. 2. Submit annual reports on the activities of the authority to the government and University of Ghana http://ugspace.ug.edu.gh 16 3. Approval of annual budget of revenue and expenditure. The Board is composed in the following manner: 1. Chairman 2. Director General of the Authority 3. The Directors of the two Ports (Takoradi and Tema), 4. Four representatives of Port users; 5. Representative from the Ministry of Roads and Transport; and 6. Two other members; one of whom must be an employee of the authority. The Board of GHPA is accountable to the Government of Ghana. The Board is charged with the organizational structure, management team, organizational competency and general management procedures. The Board is also charged with setting target, monitoring the activities of the organization, deliberations, and results on financial, technological and strategic decisions (GPHA, 2007). The level of autonomy of the authority pertaining to administrative, financial, operational and legal issues is clearly defined by the Ministry of Roads and Transport (GPHA, 2007). The management power of the GPHA is subject to regular and hierarchical interruptions usually from the government. 2.3.3 Operational Structure at Port of Tema. The efficiency and effectiveness of ports to play their roles and execute their duties well depend on the relationship among the various strategic units within the port concerned with operational service delivery. The Port of Tema has copious department which are all engaged in the chain of operations. These departments include the Port personnel and administration, material, engineering, marketing and customer service, stevedoring, port security, marine, plant, and University of Ghana http://ugspace.ug.edu.gh 17 Finance (Revenue and audit department). The tasks of these departments are coordinated unswervingly under the director of port (GPHA, 2006). i. Material Department The department is responsible for the acquisition and purchasing of port machinery and other logistics. The head of this department is the material manager. ii. Engineering Department The Role of this department within the operational chain is to ensure the repairs and maintenance of all works of the port machinery or plants. The head of this department is the chief engineer. iii. Marketing and Customer Services Department The department is the communication channel linking the ports community and ports management. The department is headed by the marketing and customer service manager. The department is in charge of the promotion of ports business transactions in both the local and international market. It also sets and ensures that customer service standards are maintained. The complaints of customers are addressed through a single system; the customer service Centre. iv. Administration and Port Personnel Department The department is responsible for all administrative roles that are necessary to ensure efficient operation and management of the port. The department mandates include personnel recruitment, transfer and employee welfare and others. The personnel manager is the head of this department. University of Ghana http://ugspace.ug.edu.gh 18 v. Stevedoring Department The department is in charge of Dockers involved in loading and unloading of cargo from and onto vessels. Stevedoring services are provided by the Port Authority and ten (10) private Stevedoring Companies. GPHA controls 25% whiles the 75% performed by the private companies. The department supervises the functions and operations of stevedoring companies both public and private within the ports. vi. Port Security Department The department is concerned with responsibility of ensuring the security of goods and vessels. It simply provides security for the ports. The Port of Tema has been ISPS compliant since July, 2004 and is operating at MARSEC level 1. All Port installations are manned by 24hour CCTV surveillance plus professionally – trained security personnel who monitor all port zones including entrance and exit gates on 24 hour basis. To enhance their operations they are assisted by the Ghana Police Service, Ghana Immigration Service and CEPS at the exits gates and Ghana Navy at the water front. vii. The Finance Department The department is responsible for every aspect of accounting and financial administration. Also the department is charged with the supervision and implementation of the ports financial policies, directives and procedures. It is responsible for the initiation and execution of financial plans within the guidelines of the port’s policy framework. There are five sub-sections under the department. These are the revenue section, printing section, central accounts, management University of Ghana http://ugspace.ug.edu.gh 19 accounting system section and the expenditure. The financial manager is the head of the department. viii. Port Audit Department The port internal auditor supervises the department. The role of the department is to perform internal examination of official accounts and business transactions of the ports. It ensures that all financial related transactions are performed within the well establish framework and financial statements prepared according to the International Financial Reporting Standards. Also it ensures value for money is attained in all ports dealing including procurement of logistics. ix. The Marine Operation Department All vessel handling services are provided by the port authority’s marine department. The harbour master has oversight of marine operation within the port. This comprises operational tasks related to the safety and efficiency of vessel management within the boundaries of the port. The harbour master’s office allocates berths and coordinates all services necessary to berth and un-berth a vessel. These services include pilotage, towage, mooring and unmooring, and vessel traffic services (VTS). 2.4 Port Operation Procedures 2.4.1 The Import Clearance Processes  Various service providers work within a set of procedures and accompanying documentation in order for cargo to be cleared through the port:  The shipping lines bring in cargo releases accompanying documents to agents notably invoice, parking list and freight receipt. University of Ghana http://ugspace.ug.edu.gh 20  The destination inspection companies authenticate the documents and thereafter issue a final classification and valuation report (FCVR) stating the value of the consignment and the duty payable.  Custom Division of Ghana Revenue Authority (GRA) undertakes valuation of certain category of items and ensures that the correct duty is collected.  GPHA facilitates the physical clearance process and ensures collection of rent and handling charges.  After securing the above documents, the Customs Agent (Clearing Agent) will do the following: 1. Sends the above documents to a destination inspection company (DIC) depending on the country of origin for Final Classification Valuation Report (FCVR) to be issued. 2. Sends a declaration electronically through the GCNet to the Ghana Customs Management Systems (GCMS). 3. The Customs Division validates the declaration by stating the duties and taxes to be paid. 4. Agents print out the declaration and effect payment at Ecobank or Ghana Commercial Bank. a. After payment, agent attaches the receipt, the bill of lading, attested invoice, IDF and FVCR to a designated customs officer for verification. b. The Original Bill of Lading, Bank Receipt, Customs Declaration (Hard Copy), and or Delivery Order (with relevant information typed on it by Clearing Agents) are sent to the Shipping Lines for cargo to be released. c. After paying all administrative charges and demurrage, (where applicable) the Delivery Order or the declaration is duly endorsed by the shipping lines and given back to the agent. University of Ghana http://ugspace.ug.edu.gh 21 d. Submits the released D.O. as well as the customs declaration (hard copy) to the Receipt and Shore Handling Service provider and pay handling charges, rent, un- stuffing charges (where applicable). Information on the declaration (hard copy) would be compared with the one on the GCNet. If they agree then Cash Delivery Invoice (CDI) would be issued by the service provider. e. Proceeds to the delivery bay for cargo to be located and positioned for customs physical inspection or go for scanning. f. If the information on the declaration and what has been physically examined agree, the customs officer would release the cargo on the declaration (hard copy) and electronically send via the GCNet to the GCMS that the cargo is released. g. After this a Delivery Tally Sheet or waybill would be issued by the service provider to enable the cargo to be loaded onto a truck and exit the port. h. Presents all clearing documents to Customs Division of the Ghana Revenue Authority (GRA) at the exit gate to confirm (using the GCNet) whether they have indeed released cargo. Copies of waybill (DTS) would then be given to GPHA Security and Police detailed at the gate to inspect and allow exit as appropriate. 2.4.2 The export process The consignee provides details of shipment to the forwarder: - Cargo type, volume of cargo, cargo destination, shipping line, port of loading, vessel etc.  Consignee then submits invoices showing unit price and total cost of the consignment to the forwarder for onward submission to Customs Division of the Ghana Revenue Authority. University of Ghana http://ugspace.ug.edu.gh 22  Freight Forwarder submits an application to the Assistant Commissioner of Customs (AC) for approval to load or stuff the container.  The forwarder inputs all previously submitted information through the GCNet  The shipper has the discretion to choose a shipping line and base on this preference relevant details on freight cost, transit times, etc., are provided by the shipping line after which a shipping note is issued.  Forwarder re-enters any additional information through GCNet and prints out the declaration.  Forwarder then heads to the long-room verification desk where a compliance officer verifies the declaration and appoints an examination officer for the transaction.  Examination officer conducts an inspection at the loading bay in the presence of Narcotics Board and National Security officials after which the container is sealed.  A waybill from the loading point and a counter waybill are used for port entry and (GPHA/Customs) at the export shed are notified.  An invoice is raised for payment of handling charges and rent where applicable. This is paid at the GPHA revenue after which a shipping release is issued.  The waybills together with a photocopy of the declaration are submitted to shipping line representatives to check whether the seal and container numbers are the same as those on the shipping instructions / note. A shipping release is then issued.  GPHA releases the CDI (Cash Delivery Invoice). This submitted to Customs by the agent.  Customs subsequently writes out the shipping release and refers it to the shipping line.  An invoice is then raised for payment of handling charges and certification to the shipping line. University of Ghana http://ugspace.ug.edu.gh 23  The shipping line raises a provisional bill of lading after certification by the forwarder or shipper.  Seventy two hours after the vessels departure the original bill of lading is raised by the shipping line.  The forwarder or shipper returns to Customs for post shipment clearance.  The original bill of lading is finally released to the shipper  The procedure may have slight variations with different commodities. The aforementioned procedures for import and export entails going through so many uncoordinated steps, which lead to duplication of roles by variables institutions involved in the operational chain. But it will be seen that with the introduction of the automated (GCNet) system coordination among the various institution involved with the execution of these procedures had improved and the many steps that pertained have been compressed into just eight steps. This greatly reduced the time, cost and paper work involved in port operation. 2.5 The Economic Contribution of Port Of Tema With ever increasing globalization around the world, world trade is bound to increase. Many countries around the world have benefitted by opening up their economies and integrating with world economies by removing trade barriers. As world trade started growing, it was imperative for all the countries to be competitive and become more cost and quality conscious. Ports are backbone of world trade and play a key role in inward and outward movement of goods, and countries which built good ports with excellent infrastructure became competitive manufacturing centres/hubs. The significant importance of the Port of Tema to the national economy can be identified in the following areas of its contribution as discuss below: University of Ghana http://ugspace.ug.edu.gh 24 2.5.1 Development of Industries Port of Tema plays an important role in development of industries in its hinterland. Export and Import based industries like steel plants, refinery and power plants based on imported LNG benefit from development of deep draft mechanized ports such as Port of Tema. Land Transportation cost through rail and road are much higher than sea transportation cost. It has been observed that development of Port of Tema has influence the development of its industries around the Tema environs that have become industrial communities. 2.5.2 Revenue Generation Most governments in the world generate revenue from the operations of sea ports. The government of Ghana generates enough revenue through import and export duties paid at the port by Importers and Exporters. The Rotterdam Port which is one of the most efficient and biggest ports in the world contributes about 10% to its country’s GDP (Hoyle and Pinder, 2002). Also taxes and dividend paid by GPHA, private entities and individual workers goes a long way to augment the revenue generation of the country and the Tema Municipal Assembly for national development. 2.5.3 Creation of Employment The sea port of Tema provides employment to several citizens and even foreigners. The successful operations of a port in the world require labour to foster efficient and effective operations of the ports. The intrusion of private sector in maritime or ports operations in Ghana coupled with the expansion works on Port of Tema and Takoradi are indications that lot of people will be employed. In Ghana, the GPHA employs about 20,000 people annually in addition to the indirect services due to existence of the ports (GPHA, 2002) University of Ghana http://ugspace.ug.edu.gh 25 2.5.4 Corporate Social Responsibility The port of Tema has been undertaking a lot of corporate social responsibility in and around the Tema Community. Giving scholarship to students, operating medical facilities and sponsoring other national accepted course like that of the Black Stars and Ghana AIDS Commission. Again the Port of Tema financed the major dual carriage road linking the Port to the Tema Motorway which is 6km. (Tema Metropolitan Assembly, 2006). Port of Tema is crucial for the growth of the Ghanaian Economy and it has been driving force for trade and growth of the economy since ancient times. Most of the ancient cities were port based cities and port will remain the focal point of urbanization in modern age as well. Need of the hour is to promote the port of Tema development, automation and facilitate full utilization of its assets, including the human capital. 2.6 Ports Operations Vis–A–Vis Stakeholders Roles As a transitional area in international trade facilitation, the ports serves as a place where cargo (whether imports or exports) is held until necessary documentation and payments are completed for either clearance or shipment (Anamoo, 2014). The participation of major and minor entities in the operations of seaports is very essential in ensuring efficient and prudent functioning of the port. The realization of the ports objectives greatly depends on the level of coordination and involvement of the various stakeholders within the ports community (CEPS, 2006). Among the principal stakeholders in Ghana are: 2.6.1 Destination Inspection Companies These are companies appointed or mandated by government to conduct inspection thus classification and valuation of import goods at the ports of clearance. Destination inspection was introduced in Ghana in April 2000 to replace Pre-shipment inspection. Pre–shipment inspection involved inspection of imports before shipment from the country of supply. University of Ghana http://ugspace.ug.edu.gh 26 Inspection of goods used to be the exclusive preserve and responsibility of the Customs Exercise and Preventive Service until events of modern bulk packaging and transportation known as containerization by which large quantities of goods are packed into huge containers became the order of the day, and CEPS lacked the proper means by way of equipment for identifying and classifying goods packed and delivered in large containers into our ports. Also of importance is the fact that Pre–shipment inspection gave way to destination inspection as a result of new World Trade Organization WTO rules. Gateway Services Limited was the first company that was engaged to undertake destination inspection in the country. By 2003, other companies such as Bivac, Ghana Link and ICS had all been licensed to participate in the destination inspection business in Ghana. However, as at now there are only two companies appointed by the government to carry out the destination inspection and they are Gateway Services Limited (GSL) and GSBV Company Limited. The GSL is responsible for inspection of imports through the seaports whiles GSBV inspect imports through Kotoka International Airport, Land Frontiers and Free Zone Companies. GSBV is also responsible for physical inspection of goods classified by the Ministry of Trade and Industry as “High Risk”. 2.6.2 The Customs Exercise and Preventive Service The Customs Exercise and Preventive Service (CEPS) under the Ghana Revenue Authority plays indispensable role in the operations of ports. The service is mandated to collect import and export duty tax, petroleum tax and import excise. It promotes the protection of revenue through the prevention of smuggling of goods across Ghana’s borders. University of Ghana http://ugspace.ug.edu.gh 27 2.6.3 Stevedoring Companies Stevedoring companies are responsible for loading and offloading of goods on vessels. In port operations in Ghana, private stevedoring companies forms 75% whiles GPHA stevedoring forms 25%. Private stevedoring companies in Ghana include Atlantic Port Services Ltd, Advance Stevedoring Company Ltd, Ordert Stevedoring Company Ltd, Golden Gate Stevedoring Company Services Ltd and Safe Bond Company Ltd with GPHA serving as the only government stevedoring entity. 2.6.4 Ghana Port and Harbours Authority GPHA is practicing the hybrid module of Port operations. Mr. Asare Ansah (2014), Marketing and Public Relations manager of the Port of Tema said the landlord port approach which is being practiced in most of the countries along the sub region is a World Bank agenda, stressing that because that was not good for Ghana, GPHA opted for the hybrid way of operation which is yielding positive dividends. The hybrid module makes it possible for GPHA as a regulator to participate in cargo handling and marine operations as well as licensing private operators also to participate so as to attain sustainability emanating from the competition. 2.6.5 Individual Port Users These include private individuals, agencies and groups who are involved in the maritime industry either by way of imports or exports. 2.6.6 Ghana Shippers Authority The Ghana Shippers Authority was established by NRCD 254 of 1974 to, among others, effectively manage the demand side of Ghana’s shipping industry with a view to protecting the interests of Ghanaian shippers in relation to port, ship, inland transportation and other ancillary problems with a view to ensuring a quick, safe, reliable and cost effect delivery of cargo for the University of Ghana http://ugspace.ug.edu.gh 28 shipper in Ghana. Since its establishment four decades ago, the Authority has worked closely with other sectors of the industry in protecting and promoting the interests of Ghanaian shippers and ensured the provision of relevant logistics for the growth of shipping and trade in the country. The Authority upholds the need to educate and sensitise shippers, the business community and other relevant stakeholders in order to assist them improve upon their knowledge and skills and also adopt best business practices. 2.7 Government Policies Affecting Ports Operations in Ghana The management and sustainability of the seaports in Ghana have consistently been the concern of government. A government effort with regards to ports operations is the trade and investment Gateway projects. This project fall under the framework of the national institutional renewal program which is to embark upon public sector efficiency by reforming public institutions. The relevance of the reforms is to hold public agencies and enterprises accountable for the delivery of services (Alabi, 2009). The Gateway Project is of two components which are essential in increasing inflows of foreign direct investment. The development of a geographically sited Export Processing Zone (EPZ) is the first component of the project. The purpose of this component is to attract private developers who will provide on-site services or infrastructure for investors to operate in such areas. This first component of the Gateway Project is geared towards the removal of all identified constraints in the operations of the ports (World Bank, 1998). The second component of the project is the improvement of institutional capacities to encourage investments. This components deals with the reforms of the Customs Exercise and Preventive Services and Ghana Ports and Harbours Authority regarding their administrative processes and University of Ghana http://ugspace.ug.edu.gh 29 operations. The second component is also essential in ensuring Ghana’s vision of becoming a trade and investment center. Under the Gateway Project, GPHA was charged with certain responsibilities including; reducing the turn -around time for vessels, enhancing ports management efficiency, ship handling capacity and clearance cargo time. In light of this, government encouraged private sector participation in port operation in Ghana. To achieve the responsibilities set under the Gateway project for GPHA by 2001 there were critical element outlined in the port management reforms and these include;  As part of activities undertaken a new container terminal was concessional to a joint venture company meridian port service ltd. Under a public private partnership agreement that saw the injection of about $150 million into the development of the terminal.  Nine(9) private stevedoring companies were licensed to operate in both Ports of Tema and Takoradi and 75% of stevedoring services were transferred to these private companies, in addition, license was issued to bulk cargo importers and exporters to stevedore their own cargoes but are not authorized to provide services to the third parties  Hundred per cent of shore handling of general cargo was transferred to the private sector in both Ports whiles 75% of container handling was also passed on to the private sector in Port of Tema.  In a spontaneous private sector response to congestion at the landside of the Port of Tema, six private inland container depots were established in addition to the jubilee terminal operated by the GPHA to undertake container transfer and receipt, storage and delivery operations. University of Ghana http://ugspace.ug.edu.gh 30  Information and communication technology was introduced into port and customs management and operation system with the information of a joint venture company, GCNet to design and operate a single window cargo clearance and documentation system for the port and shipping industry. A global positioning system was subsequently introduced to track and trace vehicles and cargo along the transit corridors to improve transit cargo transportation and security.  Following the licensing of five private destination inspection companies by the custom administration, container scanning equipment were installed to facilitate quick container examination and deliveries.  Scanning equipment was introduced to facilitate containerized cargo inspection. Close circuit television cameras were mounted at vantage points within the port to boost general port security. This has greatly enhanced the security and safety of personnel and cargo. Indeed ports in Ghana boasts of being the safe haven ports in the West African sub-region.  Engagement of dock labour was outsourced to the joint venture entity, Ghana Dock Labour Company Limited, leading to a reduction of port staff by 53%. Non-core activities transferred to the private sector included bunkering and waste collection.  The dry dock and slipway facilities in Takoradi Port were refurbished at the cost of $15million. A management contract was then signed with a specialized facility management company which provides management services, brings operational skills and know-how and trains the existing port staff to take over within a two years period. University of Ghana http://ugspace.ug.edu.gh 31 2.7.1 Impact of the Reforms  The introduction of modern gantry cranes and the adoption of the NAVIS IT application at the MPs container terminal have significantly enhanced the efficiency and productivity in ship and cargo handling.  Active berth occupants of the container terminal improved from 55% in 2003 to 78% in 2011 whereas berths occupied by not working reduced from 15% to 5% within the same period.  Container handling improved from about 10 moves per ship hour in 2005 to 22 moves in 2011; the time container vessels spend at birth decreased from 45hrs in 2005 to 33hrs in 2011 and container traffic in Port of Tema into 233,000 TEU’s in 2002 to 757,000 TEU’s in 2011.  With the introduction of a single window electronic data interchange system, customs procedures have been simplified. The thirteen manual documentation processes that used to take about two to three days to undertake have been eliminated. The cargo clearance period has been reduced from average of two weeks to two days.  At the land borders, consignments are processed within a matter of hours and as against whole day (or longer) in the past .The electronic vehicular and cargo tracking systems also guarantees maximum security on the corridors and a quicker transit time for their destinations.  The electronic data interchange system also increased the annual revenue collected by customs at the ports by 35%  The competitiveness of the Ghanaian exports increased due to the expeditious electronic processing of consignment. University of Ghana http://ugspace.ug.edu.gh 32  The refurbishment of the rail and road transport sectors has also facilitated movement of goods and persons to and from the ports. 2.8 The Way Forward Despite these achievements, recent developments in Ghana have imposed greater challenges to further improve the performance of port and maritime logistics service delivery in the country. The fast track production of oil in 2010 and the new wave of industrialization oil the country fueling the high economic growth rate of 13% have brought enormous opportunity for business growth and investment in the maritime logistics supply chain. The discovery of petroleum has resulted in the influx of supply vessels into Takoradi Port and thereby reduces the berthing capacity for traditional operation. Today 66% of the total 1,800 vessels calling at the port are supply vessels. These have created the need for the expansion of the Port of Takoradi to meet the short-to medium term needs of the oil and gas industry. New facilities to be constructed include:  Bulk cargo terminal for handling mineral ore, clinker, cocoa beans cereals and other non-containerized cargo;  Dedicated container terminals  Port facilities for rail transport of containers and general cargo.  Port facilities for oil services vessels including repair and fabrication yards Plans are equally far advanced to literally double the capacity of Port of Tema to meet traffic growth, trans-shipment and transit trade demands. New facilities to be provided include:  New container terminals  New passenger terminal  New food & fruit terminals University of Ghana http://ugspace.ug.edu.gh 33  New Ro-Ro terminals  New trans-shipment terminals  New transit terminals  New break, dry and liquid bulk terminals (www.ghanaports.gov.gh/uploads/document/Main_ACTIVITIES.pdf.(accessed,2015,july 15) The implementation of the expansion plans of both ports are estimated to cost about $2.3 billion. A third port for deep sea vessels would be constructed to meet demands of an aluminum, bauxite and gas driven national economy development. As part of the west Africa transport and transit facilitation project more trunk roads are to be rehabilitated, rest stops are about to be constructed by the Port Authority along the major transit corridors and satellite transit truck villages are to be developed near Port of Tema at the cost of $80.million. Joint border post are also being established between Ghana and her neighboring countries. In this regard, the ports authority has teamed up with government to develop the appropriate public private partnership policy that will attract potential private partners to contribute meaningfully to the development of the ports and maritime logistics infrastructure and service In response to these emerging opportunities over 50 foreign and local companies have been registered over the last five years to participate in the provision of various services in support of the new industry and yet this is just the beginning of the era in maritime logistics service delivery. University of Ghana http://ugspace.ug.edu.gh http://www.ghanaports.gov.gh/uploads/document/Main_ACTIVITIES.pdf 34 Indeed the unprecedented economic growth of Ghana fueled by the discovery of oil in 2007 and the new wave of industrialization have opened up life time opportunities for both local and foreign companies to energize their business and lift their profitability to the next level. 2.9 Operational Efficiency Operationalization is the process of defining concepts into measurable factors or variables to describe what is to be a part of a concept and what not part of a concept is. For many fields of science, operationalization is important. A typical example is to operationalize hunger in terms of ‘time since last feeding’ as Tolman did according to Feest (2005). Operationalization is closely related to operational definition, which Demining (2000) defines as ‘a procedure agreed upon for translation of concepts into a measurement of some kind’. According to Hokey Seong (2006), the operational efficiency of a third party logistics providers – defined as equipment utilization or labour productivity – dictates the competitiveness and even survival of the company. Seong and Phillips (2001) defined operational efficiency as ‘equipment utilization’. They also argue that operational efficiency measured by input and output ratios may reflect the true overall productivity better than traditional financial measures. 2.9.1 Efficiency The field of logistics and management associate efficiency with how well a relevant action is performed. A firm thus becomes efficient if it achieves result with minimal resources. Eliasson and Samuelson (1991) who studied performance measurement in the public sector define efficiency as a relation between output and input that is normally expressed in terms of financial value, although it also can be expressed in non-financial terms. Efficiency is how well the University of Ghana http://ugspace.ug.edu.gh 35 organization is running its operations and the extent to which the greatest benefit can be obtained from a given amount of resources or doing things right. According to Ax et al. (2009), a high degree of internal efficiency is often associated with a high degree of productivity and cost effectiveness. Effectiveness is defined as the level of goal completion. Measures of efficiency and effectiveness are often designed as specific ratios, but can be expressed as absolute values. Another definition of efficiency is a company’s economizing with limited resources (Ax et al., 2009). They define efficiency as “degree of fulfilling a goal” and the degree is a relationship between what has been accomplished in terms of value to what has been put into process, also in terms of value. They highlight a series of problematic aspect of efficiency. Efficiency is not an objection terms of how well a company performs its business. The degree of efficiency is decided in relation to a goal; if the level of the goal is decreased, efficiency is increased. It might be difficult to determine if a Company is efficient on its own merits only. An increase in efficiency might be due to an increase in demand or technological change. The company might have several goals that contradict each other. Profitability and high wages is one example of such a trade-off. Therefore it is important to identify if several goals are present and if these goals are in line with each other. The time horizon is important. Short term, the company might be able to “squeeze” the maximum amount of efficiency by using all resources. This might jeopardize long term profitability, where development and renewability are important factors. Available resources in the short term are important, even though this means lower efficiency levels. These difficulties have made some come to the conclusion that it is important to establish a company’s efficiency level. The company’s ability to survive has been proposed as the ultimate University of Ghana http://ugspace.ug.edu.gh 36 level of efficiency (Ax et al., 2009). In terms of productivity, Ax et al., (2009) acknowledged the same relationship as efficiency, but what has been achieved (output) and the resources used (input) are discussed in terms of quantities and not in terms of value. Another way to look at efficiency is through organizational efficiency and effectiveness (Pfeffer and Salancik, 2003). They define the effectiveness of an organization as its ability to create acceptable outcomes and actions. How well an organization meets the demands from actors that are concerned with it activities is an external standard. Organizational efficiency is an internal standard of performance. The question of what is being done is not posed, merely how well it is performing. Efficiency is relatively value free and is measured as the ratio between utilized resources and production output. Borgstrom (2005) refers to Pfeffer and Salancik when she concludes that efficiency has changed from an internal measure used to find waste to a measure of goal fulfilment. She concludes that efficiency is the internalization of effectiveness which is related to Liljegren’s notion (1998) that efficiency is an operationalization of effectiveness, which in turn is co-creation of goals. 2.9.2 Operations Management and Logistics Perspective on Efficiency From the field of operations management, Stevenson (2001) views efficiency as a tool to improve productivity, but efficiency should not be confused with productivity. Efficiency is a more narrow concept that “pertains to getting the most out of a fixed set of resources; productivity is a broader concept that pertains to effective use of overall resources”. Heizer and Render (1999) define productivity as the ratio of outputs (goods and service) to inputs (resources, such as labour and capital). The Job of the operations manager is to improve this ratio, “improving productivity means improving efficiency” (Ibid, P. 16). Chase et al. (2006) University of Ghana http://ugspace.ug.edu.gh 37 defines efficiency as doing something at the lowest possible cost”. Later they define it as a ratio of actual output of a process relative to some standard or to measure the cost or gain in a process. Lumsden (2006) defines efficiency as the degree of fulfilment to a certain goal, not far from chase et al. Mentzer and Konrad (1991) define efficiency in a logistics performance context as “ a measure of how well the resources expended are utilized” (P 34) and “the ratio of resources utilize against the results derived”(ibid). According to Caplice and Sheffi (1994), there is no need to create new metrics because the critical elements of logistics management remain the same – time, distance and money. Samuelsson and Tilanus (1997) formulate the efficiency dimensions as time, distance, speed and capacity. Caplice and Sheffi (1994) propose a series of ratios as indicators for performance measurement in logistics. These logistics metrics were later reworked by Mckinnon (2004) and proposed as a base for transport efficiency measures. 2.9.2.1 Sea-Port Operational Efficiency Sea-port operation is defined as cargo handling activity performed by a designed company consisting of labour and machines. It is also defined as the operation of a wharf and other port facilities, operation of port passenger transport service, operation of cargo loading/unloading, haulage and warehousing services within a port area (P.A. Osaretin, 2006) Presently, there is difficulty in defining port operational efficiency due to non-universal definition of what indicates an efficient port or what port operational efficiency entails (G. De Monie, 2009). An efficient sea-port should be one that is competent in operations leading to customer satisfaction (G. De Monie, 2009). Based on this definition, efficiency of a sea-port operation is determined by duration (time) of ships stay in a port, quality of cargo handling and quality of services to inland transport vehicle during passage through port (B.A. Blonigen and W.W. Wilson, 2006). Quality of cargo handling is in the form of berth throughput and quality of University of Ghana http://ugspace.ug.edu.gh 38 service to inland vehicle is dependent on port infrastructure and labour. Productivity has been identified as a measure of sea-port operational efficiency (J. Tongzon and W. Heng, 2005). Many researchers have used various approaches to evaluate sea-port operational efficiency. Annual firm level surveys have been employed as indicators of sea-port operational efficiency, but there was almost no information on how port operational efficiencies evolve over time and its effect on customer satisfaction. According to B.A Blonigen and W.W. Wilson, (2006). A number of studies have used data on inputs, outputs and production function theory, by means of Data Envelopment Analysis (DEA), to estimate the most operational efficient production frontier across a set of sea-ports (J. Tongzon, 2001). Some research has been done on the contribution of port ownership to efficiency. Transformation from public to private ownership is believed to have improved sea-port operational efficiency even without change in level of competition (S. Estrin and V. Perontin, 1991). Some other researcher contended that principal-agent problems may also arise in the private sector as a result of capital market imperfection (J. Tongzon and W. Heng, 2005). Again, it has been established that size of sea-port has positive effects on its operational efficiency (T. Notleboom, C. Coeck and J. Van Den Broeck, 2000). Also, it has been shown that ports with larger throughput seem to have certain performance advantage over those with smaller throughput (K. Cullinane, D.W. Song and R. Gray, 2002). 2.9.2.2 Operational Efficiency Vis-À-Vis Customer Satisfaction The modern port is no longer a single entity but a component of the overall supply chain and its operations have implications for all those associated with the transport of cargo and movement of goods (UNCTAD, 2014). Thus, port operations are now an integral part of supply chain management, hence its operational efficiency are criteria to ensuring customer satisfaction University of Ghana http://ugspace.ug.edu.gh 39 (UNCTAD, 2014). One objective of Port of Tema as a commercial port is to improve on its operational efficiency to ensure that the cost of transiting goods through it is as low as possible (GPHA, 2013). Until 1970, GPHA performed all the cargo handling in the port of Ghana (GPHA, 2014). Subsequently, the World Bank encouraged the government to privatize part of the stevedoring and other aspect of its operations (UNCTAD, 2014). The objective was to increase competition and enhance operational efficiency that will lead to quality services for customer satisfaction at the port. Currently, 10 licensed stevedores operate in competition with GPHA’s stevedoring section at the Port of Tema (GPHA, 2014). The last two decades have seen a prolific increase in the range and capabilities of mechanical handling equipment aside data processing computer software. It is the believe of Richard Anamoo (2014) that if cargo has to be handled efficiently, critical factors such as the proper allocation, deployment and operation of technological equipment available must be taken into account. Again, in an attempt to ensure operational efficiency at the port, management introduced an Automated System for Custom Data and subsequently GCNet (CEPS, 2013). The effect of all the improvement in operational efficiency at the port of Tema on customers’ satisfaction is as follows; 1. According to Bainiah (2008), the transferring of electronic message between customs and importers through the GCNet helps to save time, loss of document and resources with respect to the movement of customers from one office to the other. 2. Again, according to Bainiah (2008), the improvement in operational efficiency due to the introduction of the automated system (GCNet) has resulted in the following as benefit to customers University of Ghana http://ugspace.ug.edu.gh 40 a. Reduction in clearance time. Clearance time which used to be at least three days has reduced to at most two days. This helps importers to avoid demurrage and also prevent the lock up of their capitals in cargoes. b. Bureaucratic processes due to the use of manual system leading to the extortion of money from customers has stopped to the satisfaction of clients. 2.10 Concepts and Theoretical Framework 2.10.1 Concept of Customer Satisfaction Customer satisfaction is a word that has received significant consideration and curiosity among scholars and practitioners perhaps because of its importance as a key element of business strategy, and goal for all business activities especially in today’s competitive market (Anderson, Fomell, and Lehmann, 1994; Gronroos, 1984; Lovelock &Wirtz, 2007). The concept has been variously well-defined by many authors. “Satisfaction is a person’s feeling of pleasure or disappointment resulting from comparing a product’s performance (outcome) in relation to his or her expectation” (Kotler & Keller, 2006 p. 144). Satisfaction is a “psychological concept that involves the feeling of well-being and pleasure that results from obtaining what one hopes for and expects from an appealing product and/or service” (WTO, 1985). Customer satisfaction is “as an attitude-like judgment following a purchase act or a series of consumer product interactions” Youjae Yi (1990 cited in Lovelock & Wirtz 2007). Customer satisfaction is “a consumer’s post-purchase evaluation and affective response to the overall product or service experience” (Oliver, 1992). “Satisfaction is merely the result of things not going wrong; satisfying the needs and desires of consumers.’’(Besterfield, 1994); Customer satisfaction is “an experience- based assessment made by the customer of how far his own expectations about the individual characteristics or the overall functionality of the services obtained from the provider University of Ghana http://ugspace.ug.edu.gh 41 have been fulfilled” (Bruhn, 2003). According to Gyasi and Azumah (2009) satisfaction is “The process of customer overall subjective evaluation of the product/service quality against his/her expectation or desires over a time period.” Undoubtedly, satisfaction is more multifarious to define to accurately apt every perspective and measure. In the words of Oliver (1997), “everyone knows what satisfaction is until asked to give a definition. Then it seems, nobody knows”. From marketing perspectives, customer satisfaction has multi-dimensionality. The object of customer satisfaction may be varied and can be related to different dimensions of multiple experiences with product/service provider (Surenshchandar et al. 2002 cited in Satari, 2007) while most definitions relate customer satisfaction to quality of a product or service offering (Kotler & Keller, 2006; www.theacsu.org). Satisfaction can as well be related to other non-quality dimensions (Singh 1991; Garland and Westbrook. 1989). It may be related to an on-going business relationship or with price-performance, satisfaction with the time or service delivery or the service experience, service context and satisfaction with entire reputation and outlook of an organization. Even with the product or service quality there can be several dimensions (Gronroos, 2000, 2001; Bo Edvardsson 2005), such as what product offers, product or service reliability, timeliness, friendliness of the service providers, and the like. Consequently depending on the purpose one wants to achieve, one can relate satisfaction to any object of interest. In this study customer satisfaction is defined in relation to only dimensions connected to the service quality of GPHA’s shore handling services. Satisfaction can be related to attribute-specific and overall performance. It is attributed to specifics where it relates to a specific product or service (Cronin & Taylor, 1992). For example, with Port of Tema, satisfaction can be related to a specific attribute such as: Time taken to have University of Ghana http://ugspace.ug.edu.gh http://www.theacsu.org/ 42 your documentation complete, the Shore handling charges and the safety of cargo and human inside the port area. On the other hand, customer satisfaction can be related to the overall performance of a product/service or the overall performance of an organization’s products/services (Cronin & Taylor, 1992). The present study relates customer satisfaction induced by internal organizational operational efficiency at Port of Tema in order to generalize the findings for managerial implications. As to whether customer satisfaction is an outcome or a process, many early definitions conceptualized satisfaction as a process which is currently the dominant view held by most scholars (Oliver, 1980; Parasuraman et al., 1988). The process perspective presupposes that customer satisfaction is a feeling of satisfaction that results from the process of comparing perceived performance and one or more predictive standards, such as expectations or desires (Khalifa & Liu, 2002). This perspective is grounded in the expectancy disconfirmation theory proposed by Richard Oliver (Oliver, 1980). The customer is satisfied if the performance of product/service is equal to his/her expectations (positive disconfirmation) and he/she is dissatisfied if the product/service performance is perceived to be below his/her expectation (negative disconfirmation). If expectation exceeds perceived performance, the customer is highly dissatisfied. By taking satisfaction as a process these definitions do not focus on satisfaction itself but things that cause satisfaction, the antecedents to satisfaction, which occur primarily during the service delivery process (Vavra, 1997). More recent studies view satisfaction as an outcome or end result during the process of the consumption of a service; it is viewed as a post-purchase experience (Vavra, 1997). This view has its roots in motivation theories that postulate that people are driven by the desire to satisfy their needs (Maslow, 1954) or that their behaviour is directed at the achievement of relevant University of Ghana http://ugspace.ug.edu.gh 43 goals (Vroom, 1964). In this way satisfaction is perceived as a goal to be achieved and can be described as consumer fulfillment response (Rust & Oliver, 1994). In the context of port operation, we believe that customers, through the constant awareness created by GPHA, Tema to render efficient and quality service, have developed certain expectations and set of desired services. These are important in determining their satisfaction of the services received/given. Therefore our conceptual framework treats satisfaction as a process not just an outcome that customers strive to achieve. Alternative controversial issue in customer satisfaction literature is whether satisfaction is cognitive or affective. Although most scholars, notably proponents of disconfirmation theories, view satisfaction as a process, but the nature of satisfaction process remains unclear. While some authors maintain that satisfaction is a cognitive assessment involving a comparison of product/service offerings from a provider against expectations, other scholars opine that the feeling of satisfaction represent an emotional or affective state of mind that is formed through the process of service delivery where customers encounter service experiences that affect their emotions. More recent research has found that satisfaction is both cognitive and affective (Edvardsson et al., 2005; Gronroos, 2001; Martin, et al., 2008; Oliver, 1993a; Wong, 2004). This view holds that customers do not only consume an offering for which they cognitively evaluate, but their involvement in the service production and delivery process allows them to emotionally evaluate the service quality. They argued that satisfaction is naturally tied to cognitive judgments and to affective reaction elicited in consumption (Mano & Oliver, 1993, p. 451). In this study, customer satisfaction is conceptualized as cognitive and affective. University of Ghana http://ugspace.ug.edu.gh 44 An equally debatable element in clarifying customer satisfaction concept is whether it is subjective or objective in nature. Pizam A. & Ellis (1999) noted that “a minority of researchers perceive the satisfaction process to be subjective in expectations but objective in the perceptions of the product attributes, or outcome.” In this light, Klaus (1985, p. 21) defines satisfaction as “the customer's subjective evaluation of a consumption experience, based on some relationship between the customer's perceptions and objective attributes of the product". Expectation and perceived performance are constructs that are in themselves subject to external influences to some extent (Maister, 1985). Others point out that both what is seeming (outcome) and what is expected are subjective and psychological phenomena not reality. The importance of the subjective nature of the process cannot be overlooked. The reason is that both expectations and perceptions are psychological phenomena and are susceptible to external influences and manipulation. To say that customers’ evaluation of a product or service is objective implies that the evaluation is not biased in any way. This is not realistic because it is a common knowledge that customers are different and the way they perceive a service like going through the clearing and export processes coupled with the charges may vary considerably depending on the nature of cargo, the nature of customs examination, type of release ( House to House or Unstuffing). However, according to Gyasi & Azumah (2009), each customer can be objective in their own subjective, cognitive and affective states. Therefore in this study, customer satisfaction in itself is defined as a subjective evaluation, but its measurement is approached objectively; thus, customers are supposed to be objective - expressing whatever subjective response they have about a product objectively without bias. Satisfaction may be viewed as Transactional or Cumulative: On one hand from a transactional- specific perspective, Customer Satisfaction is based on a one time, specific post-purchase evaluative judgment of a service encounter (Hunt, 1977; Oliver, 1977, 1980, 1993 cited in University of Ghana http://ugspace.ug.edu.gh 45 Yonggui Wang &Hing-Po Lo 2002). On the other hand, the cumulative Customer Satisfaction perspective is conceptualised as an overall customer evaluation of a product or service based on purchase and consumption experiences over a time period (Fomell, 1992; Johnson and Fomell 1991; Anderson et al., 1994a, b; cited in Yonggui Wang & Hing-Po Lo 2002). In terms of the diagnostic and predictive value of customer satisfaction measurement, cumulative satisfaction is more useful and reliable than transaction-specific in that it is based on series of purchase and consumption occasions rather than just one occasion of transaction. Customer satisfaction, in this study, is measured from the last twenty four months. Therefore, the conceptual framework of this study treats Customer Satisfaction as cumulative. Consequently, the operational definition of Customer Satisfaction in this study is the one by Gyasi and Azumah (2009, p.g.36), “The process of customer overall subjective evaluation of the product/service quality against his/her expectation or desires over a time period’’. 2.10.2 Consumer Satisfaction Measurement Consumer satisfaction has been conceptualized in the marketing literature as the difference between perceived performance of a product/service and some cognitive standards such as expectation and desire of consumers (Oliver, 1980; Cronin and Taylor, 1992). In this regard satisfaction is the result of perceived product performance and some expectation or desire of consumers. This results in a confirmation or disconfirmation of customer expectation and desire. Disconfirmation theory of consumer satisfaction suggests that customer satisfaction/ dissatisfaction is the disparity that exists between the performance of a product/service and some cognitive or emotional standards of the consumer, such as desire and expectation of customers. If perceived performance exceeds or falls short of expectation or desire, there is positive disconfirmation or negative discontinuation and the customer is satisfied or dissatisfied University of Ghana http://ugspace.ug.edu.gh 46 respectively. Desire Disconfirmations (DD) and Expectation Disconfirmation (ED) are both empirically validated to significantly explain customer satisfaction (Khalifa and Liu, 2002). Previous studies by Danaher and Haddrell (1996), have identified three broad categories of measurement scales used in customer satisfaction measurement. They are performance scales, disconfirmation scales and satisfaction scales. Performance scales are those that use scales such as poor, fair, good and excellent; disconfirmation scales are those that use scales such as worse than expected to better than expected; and satisfaction scales are those that use scales such as very dissatisfied to very satisfied. Disconfirmation scales are based on the disconfirmation theory. Oliver (1980) was the first to propose and developed the expectancy disconfirmation theory. It has been verified and recommended that the use of disconfirmation scale is useful for three reasons. “First in one disconfirmation-based single question, it captures succinctly Parasuraman et al.’s (1988) two- stage SERVQUAL measurement, i.e. much worse than expected to much better than expected. Second, it is shown mathematically that comparison with expectations will correlate higher with customer retention than either a quality question or a satisfaction question (Rust et al., 1994, p. 61). Lastly, using disconfirmation scale is better because a customer rating service quality highly, for example as good or excellent, may not perceive it as ‘better than expected’ (Danaher and Haddrell, 1996; Devlin et al., 1993; Rust et al. 1994). For the above reasons, in this study, our theoretical framework for measuring overall customer satisfaction with service quality uses satisfaction scales and a five-point disconfirmation scale: from much better expected or desired to much worse than expected or desire. University of Ghana http://ugspace.ug.edu.gh 47 2.10.3 Determinants of Customer Satisfaction in Maritime Industry Many factors drive customer satisfaction that need to be examined in order to reliably measure it. Customer satisfaction could be influenced by service quality and the customer service experiences (Oliver, 1993a; Parasuraman, et al., 1988, Lovelock, 2000; Lovelock &Wirtz, 2007; Gronroos, 1994, 2000, 2001; Yonggui Wang & Hing-Po Lo 2002; Kotler & Keller, 2006). “A service experience is defined as the service encounter and/or service process that creates the customer’s cognitive, emotional and behavioural responses which result in a mental mark, a memory” (Gronroos, 2005 in Edvardsson, 2005). It is generally accepted by most scholars that service quality basically relates to what the customer perceives of the product/service performance. Recent empirical studies have shown that customer satisfaction is not only driven by cognitive dimensions of customer perceptions of service quality but also by affective dimensions which have positive impact on post-purchase behaviour like repeated purchase, customers loyalty, switching intention, and likelihood to recommend (Erevelles, 1998; Oliver, 1980; Oliver, 1993a). This is consistent with the work of two perceived service quality guru’s, Gronroos and Edvardsson (Gronroos, 2001; Edvardsson, 2005; Edvardsson, et al., 2005), who postulate that perceived service quality is an important determinant of customer satisfaction that have both cognitive and affective dimensions beyond just cognitive assessment of customers, of the offering of service providers. These SERVQUAL gurus further maintain that perceived quality is formed by customers during their ongoing interactions with product/service providers. Service quality has been variously defined by different authors from different context. It has been referred to as customer perceived quality (CPQ), which is defined as the confirmation (or disconfirmation) of a consumer’s expectations of service compared with the customer’s perception of the service actually received (Gronroos, 1982). Asubonteng, McCleary, Swan University of Ghana http://ugspace.ug.edu.gh 48 (1996) defined service quality as the extent to which a service meets customers’ needs or expectations. This view of service quality has been supported by Parasuraman, Zeithaml and Berry by defining the concept of service quality as "a form of attitude, related, but not equivalent to satisfaction, that results from a comparison of expectations with perceptions of performance. Expectations are viewed as desires or wants of customers, i.e. what they feel a service provider should offer rather than would offer." (Parasuraman, et al., 1988). 2.10.4 Functional Quality (SERVQUAL) Many different models have been developed to explain and measure service quality in different settings of business operations (Nitin et al., 2005). Different service qu