The bulk shipping business: market cycles and shipowners’ biases

Despite a strong linkage with the macro-economic course, the bulk shipping market, in the short period, follows a typical cyclic pattern, where continuous freight adjustments balance demand and supply movements.

In this context—widely unstable but quite regular in its general scheme—the shipowners may have enough competencies and information to take logical and consistent decisions about ship purchasing and chartering.

Yet, why do they periodically make mistakes?

The analysis of shipowners’ behaviour provides a reasonable answer: mistakes incur when they ignore or undervalue the market trends, following their personal intuition or even unwisely imitating their competitors.

The analysis of the Handysize segment among the bulk shipping business offers a significant example of the lack of timeliness in shipowners' behaviour: after a long period of disregard, operators began to notice the opportunities of this market niche and they are now heavily investing in minor units. Maybe it's not too late, but the market has already changed and only a few brave—or lucky—shipowners took advantage of the magic moment.     

Freight market prospects: a Baltic perspective

The indices of shipping freight market activity published daily by the Baltic Exchange, provide a graphic illustration of the vicissitudes of the international shipping industry and a useful reminder (if it were needed) of the basic economic principles of supply and demand.     

Corporate social responsibility and service quality provision in shipping firms: financial synergies or trade-offs?

This study examines whether the implementation of corporate social responsibility (CSR) and provision of service quality (SQ) to satisfy shippers result in financial synergies or trade-offs for shipping firms. To address this question, a contingency framework was introduced in this study. The literature was first reviewed for hypotheses development, followed by interviews with eight industry practitioners. Subsequently, an internet survey was administered to 156 shipping firms in Singapore, and the obtained data were analysed using path model analysis and simple slope analysis. The results indicate that CSR complements SQ and provides additional but modest financial contribution to shipping firms via customer satisfaction. In addition, synergistic interactions between SQ and CSR were found. Although there are financial synergies from the implementation of CSR and provision of SQ, the analysis reveals that CSR should only be engaged when a shipping firm is fairly competent at delivering quality shipping services. This paper contributes to both theory and practice by framing business decisions on implementing CSR under contingency theory and offering a strategic approach to managing SQ as well as CSR of shipping firms.     

Port-centric logistics,dry ports and offshore logistics hubs: strategies to overcome double peripherality?

Scotland's low accessibility is reflected in the limited share of Scottish unitised freight traffic coming through Scottish ports. This paper will discuss site development strategies to overcome Scotland's double peripherality (i.e. both physically and institutionally) by restructuring transport chains of large shippers through new corridors. Three competing logistics concepts will be discussed, beginning with the existing load centre terminal that provides direct access to the distant main ports. Second, port-centric logistics based at Scottish ports, and finally, offshore port-centric logistics utilising maritime links to a port-based distribution centre in Zeebrugge. The paper has two interlinked aims. First, to provide a firm theoretical grounding for recent maritime transport geography concepts, which has been lacking in the literature. This will be achieved by examining peripherality and responses to this by states at different scales, thus exploring how the three concepts in this paper can be viewed as attempts at spatial fixes of mobile capital. The second aim develops out of the first, and will explore how the perspective of space is treated in maritime geography as compared with other areas of geography. As a result, the paper pursues a cross-disciplinary approach by utilising theory from economic geography and political geography.     

Integrating banks’ decision on financing dry bulk shipping: a multivariable approach

ABSTRACT

Shipping is characterized by extreme changes in revenues, operating expenses and asset values, making shipping banks’ final decision for financing shipping market considerably harder. This paper develops a practical decision tool based on the estimation of the credibility factor in the decision-making process, each bank’s policy, and the most significant variables arising from both its operating environment and the dry bulk market. Revealed relationships between bank’s internal environment, its own policy, and dry-bulk shipping market conditions through GDP growth of China constitute a newly presented decision framework in shipping finance. The values of credibility factor implicate either an aggressive or passive defensive strategy taking into account the GDP China changes: Consistent with the economic growth of China, a bank’s holds an aggressive policy if the credibility coefficient is about one. On the other hand, the model predicts that a less aggressive policy in combination with the increase of China’s GDP would drive to the decrease of bank’s loan grants.     

An investigation of forecast horizon and observation fit’s influence on an econometric rate forecast model in the liner shipping industry

This paper evaluates the influence of forecast horizon and observation fit on the robustness and performance of a specific freight rate forecast model used in the liner shipping industry. In the first stage of the research, a forecast model used to predict container freight rate development is presented by exploring the relationship between individual company’s rates and aggregated market rates, and thus assists in dealing with uncertainty and market volatility for a given business situation. In the second stage, a design of experiment approach is applied to highlight the influence of the forecast horizon and observation fit and their interactions on the forecast model’s performance. The results underline the complicated nature of creating a suitable forecast model by balancing business needs, a desire to fit a good model and achieve high accuracy. There is strong empirical evidence from this study; that a robust model is preferable, that overfitting is a true danger, and that a balance must be achieved between forecast horizon and the number of observations used to fit the model. In addition, methodological guidance has also been provided on how to test, design, and choose the superior model for business needs.     

‘Only work and sleep’: seafarers’ perceptions of job demands of short sea cargo shipping lines and their effects on work and life on board

Previous research on job demands in seafaring has focused on the effects of workload and circadian disturbance on seafarers’ health and fatigue. Taking a more comprehensive approach, this study identifies job demands of short sea cargo shipping lines and explores their effects on work and life on board. Data came from 54 interviews with officers and crew on five cargo ships. Findings revealed job demands related to characteristics of the schedule, ports, and sea voyages; these were not only associated with workload and circadian disturbance, but also with the difficulty of the work, the ability to plan ahead, and intrusions from third parties. Job demands affected outcomes through two interconnected processes. First, job demands had direct and indirect effects on fatigue and the working climate on board. Second, potential positive effects of job demands (i.e. interesting work and pay) were related to motivation and, together with a good working climate, could reduce turnover. Connecting the two processes, a good working climate was pivotal in counteracting negative emotions and supporting motivation and collaboration. In this way, it functioned as a key resource. External constraints could either buffer or reinforce these effects.     

Daily Maersk’s impacts on shipper’s supply chain inventories and implications for the liner shipping industry

The liner shipping industry has long been characterized by a weekly sailing frequency and schedule unreliability. This research is motivated by the launch of the revolutionary “Daily Maersk” service in late 2011, which introduced daily departures and “absolute reliability” in the Asia–North Europe trade lane. This article analyzes Daily Maersk’s impacts on a shipper’s supply chain inventories and profound implications for the liner shipping industry as a game changer. The quantitative analyses show that the impact of more frequent sailings is most significant on a shipper’s cycle stock, while improving schedule reliability substantially reduces safety stock and pipeline stock. Daily Maersk is most valuable for products that have high value density, high inventory holding cost ratio, low demand variability, and high service level (SL) requirement. These findings imply that the trend of liner alliance/merger/acquisition is likely to continue or even accelerate as shipping lines consolidate fleet capacity to offer more frequent sailings. Rival carriers may step up their involvement in terminal operations to improve schedule reliability. They also need to rethink about their SL targets and clearly define their preferred customer segments.     

Effects of the ‘Belt and Road’ initiative on the wine import logistics of China

China’s Belt and Road (BR) initiative is expected to facilitate international trade between the countries involved. In this study, we review the special requirements of wine logistics and the market growth potential of wine consumption in China. A model minimizing generalized logistical costs is developed and applied to wine imports in China, so that the best candidate cities in which to locate transport gateways and distribution centers can be identified. Our analysis suggests that the most preferred gateways are Shanghai, Tianjin, Guangzhou, and Hong Kong, which all have similar delivery costs. In comparison, Beijing and Chongqing have much higher delivery costs, mainly because they do not have good access to marine transport and/or efficient domestic distribution networks. For long-distance intercontinental transport of large volumes of wine, marine shipping remains the only viable delivery mode. However, wine distribution within China extensively uses air, road, and water transport. Therefore, cities with excellent multi-modal transport services are better positioned to become wine logistics gateways. Our study also highlights the importance of value-added services and good government support, which are important factors that influence distribution costs and quality.     

Seafarers’ perceptions of competency in risk assessment and management: an empirical study

Past analysis of accident investigations suggest an absence of or inadequate practices of risk assessment and management on board vessels. Although the International Management Code for the Safe Operation of Ships and for Pollution Prevention (ISM Code) requires that the risk management process must not only be correctly formulated and implemented but also be periodically evaluated in order to verify that these objectives are attained, the correct and effective implementation and application of the process cannot be achieved without active involvement of competent seafarers on board. Due to the limited investigation of seafarers’ competencies in risk management, the reasons for the inadequacies in the process that are leading to accidents were not evident. Hence, using a survey, this paper conducted a pilot study investigating seafarers’ perceptions of competency in the various components of the risk management process conducted on board vessels. The findings of this paper suggest an overall satisfaction with the risk assessment process. However, there is certainly room for improvement as far as seafarers’ performance is concerned. The findings of this paper provided valuable insights into the current training regimes in the area of risk assessment and management paving the way towards enhanced safety procedures on board vessels.     

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.     

Pursuing maritime education: an empirical study of students’ profiles,motivations and expectations

This study reveals the profiles, motivations, and expectations of students pursuing undergraduate maritime programmes. Although a number of tertiary institutions offer maritime programmes, the characteristics and structures of the demands for such programmes remain under-researched. This paper illustrates and discusses the results of a survey completed by students pursuing undergraduate programmes in maritime business and management at three universities in Asia and Europe, and compares them with the findings of a database examining similar issues towards postgraduate students within the same institutions. Research highlights include the tendency of undergraduate students to combine studies and work, considering real-world experiences as a vital contributor to career prospects. Shipping (notably tankers, dry bulks and containers) stands out as the ideal professional paths within the maritime industries. Another key finding is that the current marketing strategies of the institutions are rather irrelevant. This paper provides a solid foundation for understanding the profile students pursuing maritime programmes and contributes to the effective planning and management of maritime programmes, thus to the overall professional quality of the maritime industries.     

Overseas trade vis-a-vis overseas shipping: Growth and performance in India (1999–2009)

Maritime trade has been and even continues to account for about a lion's share of India's total cargo volumes. Despite the growth of multimodal transport (by land, water and air), shipping still continues to be the major mode of transport in the bulk carriage of country's overseas trade. In view of this vital role of shipping, in the first four decades of independence, under the initiative of planned development and active government support, India's shipping and port sector saw dramatic growth in their performance to build adequate national fleet, in keeping up with the transport of overseas cargo. However, the onset of economic liberalization in 1991 has given rise to many new dimensions in the development of the shipping and port sector of the country with a significant redefinition of shipping and port services, in response to the new global trend patterns. For instance, it has also established the new era of containerization in the mode of cargo delivery from the dominance of the era of bulk and break-bulk trade during the decade of sixties and seventies. Moreover, as global competition increases, in response to this emerging trade patterns within this country, India's volume of traffic growth also increases manifold. So, India's shipping and port sectors need, significantly, to build up and furnish their capacity by increasing the frequency of this mode of transport i.e. the growth of the national overseas fleet to meet this surging demand. This paper, therefore, have focused on this role of shipping in such rising overseas trade, with a view to examine the shipping performance (the growth of overseas fleet) in response to the growing overseas trade at all ports of India during the period (1999–2000 to 2008–2009), in terms of both a mathematical model and a graphical representation. Finally, it concludes that the absolute overseas trade, being highly import dependent, have led to a more or less stagnant performance in overseas shipping, owing to the lack of the adequate growth of absolute overseas exports during this period.     

Liner shipping between East and West Europe: competitive developments in the Poland–United Kingdom trade

This paper provides an analysis of the development of the liner route between the UK and Poland and the activities of the two main operators—EuroAfrica of Poland and United Baltic Corporation of London. The most significant factors driving the development of this trade are analysed using a combination of an industrial survey and government statistics for the route, before going on to examine the threat to the trade presented by the growth of the trucking mode.     

Transformations and continuities of issues related to Chinese participation in the global seafarers’ labour market

Since the 1990s, Chinese seafarers have become a force to be reckoned with in the global seafarer labour market, particularly against the backdrop of the manning crisis. Compared with other groups of seafarers dominating the market such as the Filipinos and the Indians, they are commonly associated with perceptions of low cost, poor English skills, different safety/work culture, problems with the International Transport Workers’ Federation, etc. This article identifies transformations and continuities of problems related to Chinese seafarers in the global market in the last two decades or so by reviewing relevant Lloyd’s List reports as well as official documents and previous research. The review shows that Chinese authorities have been taking various initiatives to take advantage of the manning crisis and to expand and promote seafarer education, supply and export, which in general serve to make seafarers better educated and improve their communication skills. Although such initiatives have helped increase seafaring labour export, the success is nevertheless limited by tight government control on recruitment, which makes some foreign managers reluctant to employ Chinese seafarers.     

The UN’s 2030 Agenda for sustainable development and the maritime transport domain: the role and challenges of IMO and its stakeholders through a grounded theory perspective

In September 2015, the United Nations (UN) officially adopted the 2030 Agenda for Sustainable Development together with 17 sustainable development goals (SDGs) (UN, 2016). The attainment of the SDGs requires a strong commitment by all UN Member States, not least by the Member States at the International Maritime Organization (IMO). This empirical research aims to identify the role and challenges of stakeholders at IMO, when implementing the UN’s 2030 Agenda in the international maritime transport domain using a grounded theory approach. This paper describes the methodology and the analytical process undertaken and presents the main findings based on empirical data. The results are presented as a set of six propositions. The first proposition presents the phenomena engulfing Member States at IMO stemming out from lack of knowledge and policy incoherency on the 2030 Agenda at national level. The other five propositions suggest how these challenges could potentially be best alleviated through an IMO-led strategy on sustainable development within the context of the 2030 Agenda, supported by an appropriate governance structure that sees the introduction of strategic actors for coordinating the implementation of the SDGs at national level. With the support of a Task Force, and by also making use of the IMO Member State Audit Scheme (IMSAS), to create more awareness and ownership, the strategic actors could work towards balancing the three dimensions of sustainable development—the economic, the environmental, and the social dimensions—which were found to be imbalanced in the international maritime transport domain.     

Marine engineers’ training: Educational assessment for an engine room simulator

Qualitative upgrading of the educational process at university level marine education depends largely on the instructive value of the trainers’ educational software. Marine education software has developed out of a certain initial implementation in an equivalent manner to which the programs of practice and training have been applied in cases of simulations and programming environments. In most cases, educational software categories have developed without taking into consideration any special pedagogical theory.     

Maritime security and seafarers’ welfare: Towards harmonization

This article examines the negative situation surrounding seafarers’ welfare in the post 9–11 shipping world. Its main focus is the denial of shore leave which has become a prime source of disharmony since the implementation of post 9–11 security measures. It discusses the implementation of these measures which has been at the expense of seafarers’ customary right to shore leave.     

The relationship between ‘position-port’, ‘hard-port’ and ‘soft-port’ characteristics and port performance: conceptual models

This research study attempts to conceptualize models based on the relationship between characterization factors and port performance. By selecting a universe of the 230 largest European ports in terms of cargo throughput, 43 valid answers were obtained. Factor analysis and K–W (Kruskal–Wallis) tests were carried out taking as a reference the port performance theory. Findings reveal the existence of a relationship between port performance and its characterization factors, delving into the development of conceptualized models that contribute to deepen the knowledge of port competition structure and dynamics within Europe.