Liner shipping service optimisation with reefer containers capacity: an application to northern Europe–South America trade

Increasing the number of vessels in a container liner service while reducing speeds, known as slow steaming strategy, has been a short-term response since 2008 to the challenges of over-capacity and the rise in bunker prices faced by shipping lines. This strategy, which reduces the fuel cost per voyage but increases the operating costs as more vessels are added to the service, is difficult to sustain when the transit time significantly affects the transportation demand. This article proposes a model applied to this situation, referred to as a case of optimal speed under semi-elastic demand, for which containerised perishable product transport is sensitive to time, while frozen and dry products are not. It investigates if slow steaming is still optimal when working to maximise the total profit on the cycle. In order to demonstrate the proposed model, a numerical application is carried out for a direct Northern Europe to East Coast of South America container service, a route selected due to the high volume of fresh products. For this application, the speed that maximises the total profit with inelastic and semi-elastic demand is then estimated for several bunker fuel prices.     

Refrigerated container versus bulk: evidence from the banana cold chain

During the last 20 years, the reefer shipping sector has been characterised by a gradual changing process, leading from specialised vessels to reefer containers. In fact, the reefer bulk fleet has experienced an irreversible decline, while the reefer container fleet has shown a continuous growth. This article investigates the current major factors shaping the reefer shipping industry, in order to understand the economic drivers inducing competition between bulk and containers. Therefore, a twofold analysis has been performed. First, an overview of the reefer market, including the cold chain, the demand for refrigerated products and the supply of reefer capacity given both by containership fleet and by conventional reefer fleet. Second, a specific case of the banana trade has been carried out for evaluating the revenues of each player involved in the banana cold chain followed by a cost analysis. The results reveal the market tendencies, focusing on the main sources of competition for bulk versus container.     

Dynamics of liner shipping service scheduling and their impact on container port competition

Container ports provide the primary interface where physical exchange between buyers and sellers of containerised shipping capacity can be consolidated and realised. Consequently, ports that are able to complement and add value to the objectives of shipping lines and shippers will become focal points for containerised cargo flows. To evaluate container port competition, the authors propose a practical and direct approach based on revealed preferences of shipping lines with respect to container shipping service dynamics. The container shipping networks are generated as carriers formulate their service schedules to capitalise on opportunities that are presented by evolving container trade patterns along trade routes and relative changes in the competitive profile of the ports of call. Empirical results showed that this approach offers a deeper understanding on the workings and evolution of competitive dynamics between ports, which may not be obvious from observations of port performance at the aggregated level. Benefits of the approach also include raising awareness that policy makers should be aware of the need to understand the nature, extensity and intensity of competitive relationships between ports as they craft and implement policies to correct for the actual or perceived market failures in the industry.     

Cost analysis of bulk cargo containerization

ABSTRACT

Bulk cargo containerization (BCC) involves changes in the transportation mode of container shipping for cargo that uses bulk carriers without packing. This topic has recently attracted considerable attention as an alternative transportation method for container cargo. BCC is advantageous because it can address imbalances in the amount of cargo conveyed between the main and back hauls, thereby improving efficiency. A previous survey among companies involved in cargo shipping revealed that in addition to ocean freight, vanning and devanning, and customs clearance costs, consignees’ decisions were the key factor in selecting transport modes. The present study aims to clarify the cost competitiveness of container shipping and identify cost reductions that may increase the use of BCC. To quantitatively check the results of the survey employed in this study, we constructed a model based on consignees’ and container shipping companies’ costs to determine the choice of transport mode for back-haul trade, then examined the incentives for consignees and shipping companies. We found that BCC can be realized by cost reduction on the part of the consignee and profit improvement on the part of the container shipping company for some routes and goods. Although reducing the freight rate would effectively promote BCC, reducing other costs would not have the same effect.     

Optimal container ship size: a global cost minimization approach

ABSTRACT

Currently, the best container ship size in a service is determined mainly by the liner operator, considering only the economies of scale of ships. Its external diseconomies to the ports and shippers are usually not considered in the decision-making process, which may reduce the overall efficiency and lead to global nonoptimality. This study incorporates the cost to the shipping companies at the main lines, ports, and feeder services, as well as the external costs to shippers and ports in a hub-and-spoke network, and determines the best ship size and the number of weekly services to minimize the overall costs. The external cost to the shippers in the feeder ports is assumed to be proportional to the feeder cost, and a sensitivity analysis is provided. The maximum container ship size is estimated according to different levels of freight demand. A numerical analysis shows that the optimal size should be smaller than the current biggest container ships in service.     

Scenario analysis for supply chain integration in container shipping

Competition in the business world nowadays is largely between supply chains, rather than individual players only. The same situation exists in container shipping. The study looks into container shipping from an integrated perspective and investigates the nature and level of supply chain integration in container shipping. Based on empirical examinations of the world's top 30 container shipping lines, a scenario analysis is conducted. The paper aims to present the scenario analysis for examining supply chain integration in container shipping. It also aims to formulate strategic recommendations for liners to create and sustain competitive advantage. The scenario analysis is designed to allow more complete consideration of alternative possible outcomes and their implications on the research topic. It involves an evaluation of past and present events and provides a plausible discussion of what might occur in the future. It depicts four scenarios of supply chain integration in container shipping, namely, low integration, partner-focused integration, activity-focused integration and high integration. On the whole, research findings suggest that market situations favour those scenarios representing higher level of supply chain integration. Importantly, with reference to the scenario analysis, shipping lines should position themselves in an appropriate scenario and formulate strategic plans accordingly.     

[What is the cost of increasing taxation?] (Oslo: Statistics Norway: Oekonomiske analyser no 8). [In Nowegian].

Zero taxation is today the rule in the international shipping industry. The absent income tax on profits is translated into an equivalent reduction in freight rates. Countries and companies which are net purchasers of shipping services gain, while the treasuries of countries providing the equity lose. Equity investors in shipping obtain no more than the internationally required after-tax profit level. The private income distribution effect, therefore, should not give rise to political concern. By eroding the tax base, zero taxation gives rise to an economic cost by shifting taxation to other sources. The effect on resource allocation through too high volumes shipped is shown to be insignificant. In countries where profit taxation is still levied, shipowning cannot remain competitive. Forcing inherently competitive operators to close down or move to a zero tax location is likely to cause a significant economic loss. Short of ordinary taxation of shipping internationally, the second best solution may be a more consistent lifting of tax obligations.     

Strategic fleet size planning for maritime refrigerated containers

In the present economic climate, it is often the case that profits can only be improved, or for that matter maintained, by improving efficiency and cutting costs. This is particularly notorious in the shipping business, where it has been seen that the competition is getting tougher among carriers, thus alliances and partnerships are resulting for cost effective services in recent years. In this scenario, effective planning methods are important not only for strategic but also operating tasks, covering their entire transportation systems. Container fleet size planning is an important part of the strategy of any shipping line. This paper addresses the problem of fleet size planning for refrigerated containers, to achieve cost-effective services in a competitive maritime shipping market. An analytical model is first discussed to determine the optimal size of an own dry container fleet. Then, this is extended for an own refrigerated container fleet, which is the case when an extremely unbalanced trade represents one of the major investment decisions to be taken by liner operators. Next, a simulation model is developed for fleet sizing in a more practical situation and, by using this, various scenarios are analysed to determine the most convenient composition of refrigerated fleet between own and leased containers for the transpacific cargo trade.     

Strategic alliances in container liner shipping

The economic crisis in the years between 2008 and 2010 has demonstrated the necessity for substantial adjustments on behalf of container lines. Capacities were shifted quickly to emerging and less affected markets allowing a faster recovery of globally organized companies. This paper illustrates the dynamics in the container shipping market. Alongside the main characteristics of the Top 20 ocean shipping companies, liner services are described. These services are classified by geographic coverage and vessel deployment. In addition, this paper provides a better understanding of the collaboration among service providers. Starting from a general framework of co-operative liner services, in-depth analyses of the global alliances in liner shipping are obtained. These formations - Grand Alliance, New World Alliance and CKYH Alliance - are compared with alternative forms of collaboration in the liner shipping industry. The analysis of alliance announcements which are related to operational and strategic changes indicates that the “global alliances” cannot be regarded as closed corporate-like entities. In effect, service agreements are not only negotiated with the focal members of the specific alliance. Instead, every service is arranged individually and under specific conditions. By understanding the dynamics within alliances, we are able to develop an assessment relating to the stability of collaborations. Ultimately, these insights direct us to several paths for future research.     

An econometric analysis for container shipping market

This article presents an econometric analysis for the fluctuation of the container freight rate due to the interactions between the demand for container transportation services and the container fleet capacity. The demand is derived from international trade and is assumed to be exogenous, while the fleet capacity increases with new orders made two years before, proportional to the industrial profit. Assuming the market clears each year, the shipping freight rate will change with the relative magnitude of shifts in the demand and fleet capacity.

This model is estimated using the world container shipping market statistics from 1980 to 2008, applying the three-stage least square method. The estimated parameters of the model have high statistical significance, and the overall explanatory power of the model is above 90%. The short-term in-sample prediction of the model can largely replicate the container shipping market fluctuation in terms of the fleet size dynamics and the freight rate fluctuation in the past 20 years. The prediction of the future market trend reveals that the container freight rate should continue to decrease in the coming three years if the demand for container transportation services grows at less than 8%.     

The impacts of maritime piracy on global economic development: the case of Somalia

This paper investigates the impacts of maritime piracy on global economic development. Calibrated with data between 2003 and 2008, we model shipping demands and competition in the Far East-Europe container liner shipping service and investigate the economic welfare loss effects due to reduced volumes of trade and shipping, as well as efficiency loss due to geographical re-routing of shipping networks which would be otherwise uneconomical. The substantial economic loss simulated from our model indicates that, even from purely the perspective of economic interests, more efforts from the international community should be dedicated to tackle maritime piracy.     

Optimizing shipping company operations using business process modelling

In order to identify the elements constituting quality in services, a business process modelling methodology has been applied in the case of a Greek liner shipping company. The company operations have been identified and analysed in order to assess the complete performance of service elements and thereafter identify how to match the service performance against the user requirements. A liner container service within Europe has to compete with the road transport which, in many cases, is an alternative to the sea transportation and not complementary to it. Thus, not only the ship has to be envisaged when aiming to improve quality in services but also the whole chain, namely port authorities, land transportation enterprises, subcontractors, agents, charterers and others. A set of potential improvements within this framework are thus suggested and time and cost (examined in a specific voyage scenario) are measured before and after the implementation of these measures. Very large time and cost savings are observed after the application of the technology improvements, allowing, in fact, the shipping company to even increase the number of round trips per year in the examined route. This indicates that very large benefits can be drawn by analysing and critically adjusting business processes in modern shipping companies.     

Optimizing shipping company operations using business process modelling

In order to identify the elements constituting quality in services, a business process modelling methodology has been applied in the case of a Greek liner shipping company. The company operations have been identified and analysed in order to assess the complete performance of service elements and thereafter identify how to match the service performance against the user requirements. A liner container service within Europe has to compete with the road transport which, in many cases, is an alternative to the sea transportation and not complementary to it. Thus, not only the ship has to be envisaged when aiming to improve quality in services but also the whole chain, namely port authorities, land transportation enterprises, subcontractors, agents, charterers and others. A set of potential improvements within this framework are thus suggested and time and cost (examined in a specific voyage scenario) are measured before and after the implementation of these measures. Very large time and cost savings are observed after the application of the technology improvements, allowing, in fact, the shipping company to even increase the number of round trips per year in the examined route. This indicates that very large benefits can be drawn by analysing and critically adjusting business processes in modern shipping companies.     

作业成本法在远洋集装箱运输企业的应用探讨

论文根据作业成本法的特点,对其在远洋集装箱运输企业应用的适用性作出探讨,并列出了远洋集装箱运输企业作业成本的计算过程。     

集装箱航运服务组合拍卖模型研究

根据运输的“范围经济性”原理,阐述了集装箱航运服务组合拍卖的适用性,围绕价值因素和价值评价因素,分析了集装箱航运服务组合拍卖的比较优势,结合集装箱航运服务的特点,以拍卖者效用最大化和投标者总估值最大化平衡为目标,设计出了组合拍卖的机制和运作程序;针对组合拍卖中的竟胜标问题,建立了集装箱航运服务组合拍卖的一般优化模型,并通过引入集装箱航运服务质量属性参数和运量限制等约束条件,对其进行了改进。从而为实现集装箱航运服务在线拍卖提供理论支持和计算平台。     

Empty container reposition planning for intra-Asia liner shipping

This paper addresses empty container reposition planning by plainly considering safety stock management and geographical regions. This plan could avoid drawback in practice which collects mass empty containers at a port then repositions most empty containers at a time. Empty containers occupy slots on vessel and the liner shipping company loses chance to yield freight revenue. The problem is drawn up as a two-stage problem. The upper problem is identified to estimate the empty container stock at each port and the lower problem models the empty container reposition planning with shipping service network as the Transportation Problem by Liner Problem. We looked at case studies of the Taiwan Liner Shipping Company to show the application of the proposed model. The results show the model provides optimization techniques to minimize cost of empty container reposition and to provide an evidence to adjust strategy of restructuring the shipping service network.     

Factors influencing container carriers’ use of coastal shipping

Coastal shipping is one of the most sustainable and economically competitive modes of transportation. This study employs the analytic hierarchy process (AHP) method to determine the importance of various factors influencing container carriers’ use of coastal shipping. A three-level hierarchical structure with the 17 attributes is proposed and tested. A previous AHP survey in Taiwan has indicated that port policy and infrastructure is the most critical factor influencing the coastal shipping by container carriers followed by operational cost, operational strategy and operational efficiency. Overall, the results indicate that the five most important attributes influencing the use of coastal shipping are simplified customs procedures; leasing a dedicated terminal; transhipment time; a favourable port charge system and efficient terminal operations.     

Examining the influence of firm performance on business risk-taking and the mediation effect of scale of operations in the container terminal industry

Container shipping and its related service sectors help accelerate globalization of the world economy. This industry has been experiencing rapid growth, prompting container terminal operators to increase their handling capacity in response. Providing container terminal services requires substantial capital investment in physical assets such as cargo handling facilities and information systems. On the other hand, operating container terminals is a long-term investment that typically spans several business cycles. Hence prudent asset management using appropriate tools is critical for container terminal operators to sustain their businesses. Generally, due to risk-adverseness, investors are unwilling to take more risk in their investment unless they can reap a higher return. Contrary to this argument, this study finds no direct influence of better firm performance as a proxy of higher return on business risk-taking by container terminal operators. Instead, scale of operations is positively associated with business risk-taking, suggesting that container terminal operators with a larger scale of operations are willing to take more business risk.     

Benefit segmentation of the container shipping market in Turkey

ABSTRACT

Marketing policies have gained more importance in container shipping as the industry experiences challenges arising from commoditization. Market segmentation is fundamental to marketing policies, yet it needs a detailed analysis in container shipping. Accordingly, this paper aims to explore homogenous customer groups in container shipping by conducting a segmentation analysis, which can help container lines apply more efficient marketing policies. A survey study is conducted on 356 shippers in Turkey. The study develops five reliable and valid selection criteria factors and applies cluster analysis based on the selection criteria factors. The cluster analysis produces a total of six benefit segments which are differentiable. The segments are significantly identified by the demographic characteristics of shippers. The paper suggests several implications for the marketing policies of container lines.     

Maritime policy in Scotland

This paper begins by defining the meaning of the term ‘maritime policy’. Since devolution in the UK, the opening of the new Scottish parliament in 1998 and the creation of the Scottish Executive, little effort has been made to establish a distinct maritime policy for Scotland. As was evident prior to devolution, the primary emphasis from any maritime policy perspective has continued to be a focus on lifeline island ferry services. This ignores significant developments in several other key maritime transport sectors, and this paper provides examples of areas that require some form of policy response, including intra-European short sea shipping, UK coastal shipping, urban/river transport and global container shipping. Long-standing institutional bias against maritime transport coupled with subsidy devoted almost entirely to land transport systems has resulted in a quite distorted marketplace. This suggests that a maritime policy is now imperative if maritime transport is to play a more significant role in the overall transport system. Further discussion centres on the need to consider, from a Scottish policy perspective, the role of various state-sponsored maritime service providers and how these bodies might fit better within evolving policy. The conclusion is that formulation of a maritime policy by the Scottish Executive is overdue and that a degree of restructuring of transport responsibilities within the Executive, combined with adequate resource allocation towards the maritime industry, will be necessary in order that market distortions can be overcome, so enabling Scotland to fully exploit the competitive and environmental advantages that maritime transport can provide.