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.     

Towards improved port capacity investment decisions under uncertainty: a real options approach

ABSTRACT

Port activity plays an important role in facilitating international trade. Sufficient capacity is indispensable for a port to attract flows to a region and retain them. The capacity decision is the result of a trade-off between investment and waiting costs. Traditional methods to value expansion projects do not deal adequately with managerial flexibility in the face of uncertainty from different sources in the complex port environment. In this paper, real options (RO) models are identified as an alternative method to making project valuations and investment decisions, as they attribute the correct value to managerial flexibility under uncertainty. In order to be able to build and use such RO models for port capacity investment decisions, the sources and implications of uncertainty in the port and the different RO model specifications need to be understood. To this end, both the literature about uncertainty in the port context and the literature about real options models are reviewed in order to provide researchers who want to build their own decision-making models, with the necessary knowledge of both fields. The review makes clear that the complex interactions in and competition between the logistics chains and their actors coming together in ports have significant impacts on port capacity. Uncertainty is also caused by uncertain international trade flows and changes in legislation following new technologies and environmental impacts. An analysis of the components of some general RO models shows how the options of flexible output, investment size and timing are valued by RO models in a setting with demand uncertainty. Moreover, the review presents researchers with insights in how to deal with cooperative and competitive interactions in the chain, time to build, cyclical markets and legislation changes. It also shows how to value the expansion and the phased investment options. The new insights resulting from this review are subsequently combined in a framework that serves as a guideline to build RO models for port capacity investments. Finally, an exemplifying application of the framework is used to build an actual port capacity investment decision model.     

Picophytoplankton and nanophytoplankton abundance and distribution in the southeastern Beaufort Sea (Mackenzie Shelf and Amundsen Gulf) during Fall 2002

The distribution of picophytoplankton (0.2–2 µm) and nanophytoplankton (2–20 µm) in the Beaufort Sea–Mackenzie Shelf and Amundsen Gulf regions during autumn, 2002 is examined relative to their ambient water mass properties (salinity, temperature and nutrients: nitrate + nitrite, phosphate, and silicate) and to the ratio of variable to maximum fluorescence, Fv/Fm. Total phytoplankton and cell abundances (< 20 µm) were mainly correlated with salinity. Significant differences in picophytoplankton cell numbers were found among waters near the mouth of the Mackenzie River, ice melt waters and the underlying halocline water masses of Pacific origin. Picophytoplankton was the most abundant phytoplankton fraction during the autumnal season, probably reflecting low nitrate concentrations (surface waters average ~ 0.65 µM). The ratio Fv/Fm averaged 0.44, indicating that cells were still physiologically active, even though their concentrations were low (max Chl a = 0.9 mg m^− 3). No significant differences in Fv/Fm were evident in the different water masses, indicating that rate limiting conditions for photosynthesis and growth were uniform across the whole system, which was in a pre-winter stage, and was probably already experiencing light limitation as a result of shortening day lengths.     

In Search of the Link between Ship Size and Operations

Abstract

Since 1990s the liner shipping industry has faced a period of restructuring and consolidation, and been confronted with a continuing increase in container vessel scale. The impact of these changes is noticeable in trade patterns, cargo handling methods and shipping routes, in short ‘operations’. After listing factors influencing size, growth in container ship size is explained by economies of scale in deploying larger vessels. In order to quantify economies of scale, this paper uses the liner service cash flow model. A novelty in the model is the inclusion of +6000-20-foot Equivalent Unit (TEU) vessels and the distinction in costs between single and twin propeller units on ships. The results illustrate that scale economies have been – and will continue to be – the driving force behind the deployment of larger container vessels. The paper then assesses the link between ship size and operations, given current discussions about the increase in container vessel scale. It is found that (a) ship size and operations are linked; (b) optimal ship size depends on transport segment (deep-sea vs. short-sea shipping, SSS), terminal type (transhipment terminals vs. other terminals), trade lane (East-West vs. North-South trades) and technology; and (c) a ship optimal for one trade can be suboptimal for another.     

Using system dynamics in maritime economics: an endogenous decision model for shipowners in the dry bulk sector

In this paper, we consider the benefits of applying system dynamics in maritime economics. We build an endogenous shipowners' model for the dry bulk sector, incorporating both the decision process of individual shipowners and traditional shipping market conditions. The aim is to arrive at a simulation tool that can be used for a variety of applications, both for teaching/learning and for research purposes. Within the endogenous shipping model, we can distinguish between the strategic and the tactical choices shipowners face. As an application, we focus explicitly on a strategic decision-making process that is relevant to any shipowner, i.e. the sale of a vessel. System dynamics seems to be a tool well-suited for the detailed modelling of strategic and operational behaviour in the maritime business.     

It's all about economics!

Due to the capital-intensive nature of the modern shipping industry, loan finance plays a major role in vessel-acquisition cost. In this paper, J. B. Yolland discusses government-guaranteed finance, ancillary and commercial new building finance and finance for second-hand tonnage. He also examines a new source of funding found in the Euro-market.     

Technical changes and impacts on economic performance of dry bulk vessels

Spurred by the expanding bulk shipping and technological innovations, dry bulk vessels have gained considerable development in ship types, ship design, and operation since the invention of the first specialized dry bulk carrier in the early 1950s. However, questions like: what changes in technical specifications have occurred for dry bulk vessels during the past four decades; what triggered these changes and what impacts have these specific changes had on shipping costs or earnings potential, have never been examined systematically in previous work. Subsequently, this article attempts to investigate changes in main technical specifications and relationships between the main technical variables and their economic performance measured by costs and revenues of dry bulk carriers. Technical changes in speed, deadweight, lightweight, and engines are checked for the main types of dry bulk vessels, and trends revealed in these developments are demonstrated to be the consequences of both technical improvement and economical considerations. Additionally, it has been found that the earnings potential differs much from dry bulk vessels with different technical specifications. This can be manifested in the sensitivity analysis. The analysis of this article may contain useful information to practitioners of dry bulk shipping in guiding their market decisions about ship building and operations.     

How to turn an innovative concept into a success? An application to seaport-related innovation

The main objective of this paper is ‘to assess the conditions, including policy support, under which innovative concepts have a high chance of getting adopted and being successful’. The work will start from the state-of-the-art with the following goals targeted. Firstly, to identify the paths that new innovative concepts usually follow, what key determinants are, which actors are involved, and what policy has been doing and can do. As part of this, a typology of variables is established, which will be the basis for the identification of successful adoption paths. Illustrations are provided of the performance of different innovative concepts in the seaport sector. A further goal is to propose policy recommendations, identify best practices, barriers to implementation and transferability of innovative concepts and processes. Finally, the research establishes developments needed in assessment methods and a methodological framework if innovative concepts are introduced.     

Impact of scale increase of container ships on the generalised chain cost

In recent years, an increase in the size of the container ships could be observed. The question is how these larger ships will influence the total generalised costs from a port of loading to a destination in the European hinterland. The second question is whether a scale increase of the container ships on other loops, such as a loop from the United States to Europe, has the same impact on the generalised chain costs as on the loop from Asia to Europe. A derived question is which element of the total chain has the highest importance, and whether this balance varies as the ship size changes. In this article, a model is developed that allows answering the above research questions. The model is designed to simulate the cost of a complete loop of a container ship and of a chain that uses that same loop. For the chain cost simulation, the maritime part is determined by the loop. From the ports of loading and unloading, the port container handling and the hinterland transportation costs are also integrated. The model also allows calculating the total chain cost from a point of origin (either a hinterland region or a port) to a destination point (also a port or a hinterland region). An actual container loop of a container shipping company can be introduced in the model. An application is made to two existing container loops, namely from Asia respectively the United States to Europe. It turns out that changing ship does indeed lead to economies of scale, but also that the impact is larger on the Asia–Europe connection than on the US–Europe connection. Furthermore, the maritime component has the biggest share in the total chain cost, but as ship size increases, the shares start getting closer to each other. This research contributes to the existing literature in two ways. First of all, it quantifies the impact of the scale increase of container ships throughout the total chain. Second, this is done from a bottom-up engineering modelling approach.