Shipping and Logistics Management (eBook)

Y.H. Venus Lun, Kee-hung Cheng and T.C. Edwin Cheng all work for the Department of Logistics and Maritime Studies at The Hong Kong Polytechnic University.

Preface 5
Contents 8
Chapter 1 International Trade and Shipping 15
1.1 The Importance of Shipping 15
1.1.1 Why Is There a Demand for Shipping? 16
1.1.2 What Is a Shipping System? 16
1.1.3 Who Are the Actors in the Shipping Business? 17
1.2 Freight Market 18
1.2.1 Tramp Market 18
1.2.2 Liner Market 19
1.3 World Economic Development and Shipping 19
1.4 Sea Transport System 20
1.4.1 Shipping Intensity 21
1.4.2 Concept of Parcel Size Distribution 22
1.5 International Trade Pattern 23
1.5.1 World Output and World Trade 23
1.5.2 Overall Seaborne Trade 24
1.6 International Maritime Passages 26
1.6.1 The Panama Canal 26
1.6.2 The Suez Canal 27
1.6.3 The Strait of Malacca 27
1.6.4 The Strait of Hormuz 27
1.6.5 The Strait of Magellan 28
1.6.6 The Cape of Good Hope 28
1.7 Conclusions 28
References 29
Chapter 2 Freight Rate Mechanism 30
2.1 Demand for Sea Transport 30
2.1.1 Political Factors 31
2.1.2 World Economy 32
2.1.3 Seaborne Trade 32
2.1.4 Average Haul 32
2.1.5 Transport Cost 33
2.1.6 Shipping Demand Curve 33
2.1.7 Elasticity of Demand 34
2.2 Supply of Sea Transport 35
2.2.1 Shipping Supply Curve 37
2.2.2 Short-run and Long-run Shipping Supply 38
2.2.3 Rigidity of Supply 40
2.3 The Freight Rate Mechanism 40
2.4 Shipping Cycle 41
2.4.1 Characteristics of Shipping Cycles 42
2.4.2 What Causes the Shipping Cycle? 42
2.4.3 Recent Developments in the Shipping Market 42
2.4.4 Managing the Shipping Cycle 43
References 29
Chapter 3 Bulk Shipping Market 46
3.1 Introduction 46
3.2 The Shipping Market 48
3.2.1 New Buildings 49
3.2.2 Second-hand Vessels 50
3.2.3 Demolition Vessels 51
3.2.4 Freight Rate 52
3.2.5 Seaborne Trade 52
3.3 The Empirical Model 53
3.4 Determinant of Fleet Size of Bulk Shipping 55
3.5 Discussion and Conclusions 57
Appendix 58
References 29
Chapter 4 Container Shipping Market 61
4.1 Introduction 61
4.2 Industrial Organization in Container Shipping 62
4.3 Capacity Adjustment in the Container Shipping Market 63
4.3.1 Seaborne Trade 63
4.3.2 Freight Rate 64
4.3.3 Capacity Adjustment 64
4.3.4 An Empirical Model of the Container Shipping Market 65
4.4 The Determinant of Fleet Size in Container Shipping 66
4.5 Discussion and Conclusions 68
Appendix 58
References 29
Chapter 5 Business Strategy in Shipping 72
5.1 Introduction 72
5.2 Strategy for Shipping 74
5.2.1 Corporate Strategy 75
5.2.2 Business Strategy 76
5.2.3 Functional Strategy 76
5.3 Market Orientation in Shipping 76
5.3.1 Customer Focus 77
5.3.2 Competitor Intelligence 77
5.3.3 Cross-functional Coordination 78
5.3.4 Performance Implications 78
5.4 Operational Effectiveness Versus Competitive Strategy 78
5.4.1 Variety-based Positioning 79
5.4.2 Needs-based Positioning 79
5.4.3 Access-based Positioning 79
5.5 Development Process of Shipping Strategies 80
5.5.1 Strategic Analysis 80
5.5.2 Formulation of Strategies 81
5.5.3 Implementation and Control 81
5.6 Structural Options for Shipping Companies 81
5.6.1 Organic Growth 82
5.6.2 Acquisitions 82
5.6.3 Joint Ventures 83
5.6.4 Alliances 83
5.6.5 Networks 84
References 29
Chapter 6 Growth of Firms 87
6.1 Introduction 87
6.2 Exchange Function 88
6.3 Vertical Expansion 91
6.4 Horizontal Expansion 93
6.5 Growth and Firm Performance 94
6.6 Discussion and Conclusions 96
References 29
Chapter 7 Fleet Mix Decision 98
7.1 Introduction 98
7.2 Liner Shipping 99
7.2.1 Hub-and-spoke Services 99
7.2.2 Fleet Mix 100
7.3 Fleet Mix Decision 102
7.3.1 Capacity 102
7.3.2 Ship Size 102
7.3.3 Number of Ships 104
7.4 The Fleet Mix Model 105
7.5 SCOPE Framework 106
7.5.1 Service Frequency 107
7.5.2 Customer Value 107
7.5.3 Optimal Vessel Size 107
7.5.4 Ports of Call 107
7.5.5 Extensive Market Coverage 108
7.6 Concluding Remarks 108
References 29
Chapter 8 Liner Shipping Network 110
8.1 Introduction 110
8.2 Network-based Organizations 112
8.3 SMART Driving Forces 113
8.3.1 Strategic Initiative for Performance Gain 113
8.3.2 Market Coverage 114
8.3.3 Additional Business 114
8.3.4 Reduction in Waste 115
8.3.5 Technology Development 115
8.4 SHIPMENT Framework 117
8.4.1 Space Management 118
8.4.2 Hinterland 118
8.4.3 Intermodal Transport 118
8.4.4 Port 119
8.4.5 Management Information Systems 120
8.4.6 Equipment Supply 120
8.4.7 New Agents 121
8.4.8 Terminal Operators 121
8.5 The Case of Maersk Line 122
8.5.1 Space Management 122
8.5.2 Hinterland 123
8.5.3 Intermodal Transport 123
8.5.4 Port 123
8.5.5 Management Information Systems 123
8.5.6 Equipment Supply 123
8.5.7 New Agents 124
8.5.8 Terminal Operators 124
8.6 Conclusions 124
References 29
Chapter 9 Container Transport Chain 128
9.1 Container Transport 128
9.2 International Transport 130
9.3 Primary Customers 131
9.4 Transport Facilitators 132
9.5 Transport Operators 136
9.5.1 Road Operators 136
9.5.2 Rail Operators 137
9.5.3 Inland Waterway Operators 138
9.5.4 Ocean Container Carriers 138
9.5.4.1 Relationship of Shipping Lines with Terminals 139
9.5.4.2 Relationship of Shipping Lines with Intermodal Services 139
9.5.4.3 Relationship of Shipping Lines with Logistics Service Providers 139
9.6 Freight Transport Modes 140
9.6.1 Mode Choice 141
9.6.2 Modal Combinations 142
References 29
Chapter 10 Intermodal Transport System 144
10.1 Introduction to Intermodal Transport 144
10.2 The INTERMODAL Model 146
10.2.1 Infrastructure 147
10.2.2 New Technology 148
10.2.3 Transport Operators 149
10.2.4 External Business Environment 150
10.2.5 Regional Location 151
10.2.6 Management of Containers 152
10.2.7 Operations of Container Terminals 153
10.2.8 Deregulation 153
10.2.9 Availability of Logistics Services 154
10.2.10 Logistics Security 155
10.3 Concluding Remarks 156
References 29
Chapter 11 Managing Empty Containers 159
11.1 Introduction 159
11.2 The Container 160
11.2.1 Stakeholder Participation in Container Interchange 161
11.2.2 Key Terms in Empty Container Management 161
11.2.3 Costs of Maintaining Container Equipment Service and Capacity 162
11.2.4 Types of Containers 163
11.3 A Conceptual Model of Empty Container Management 164
11.3.1 Strategic Planning 165
11.3.1.1 Value-based Pricing 165
11.3.1.2 Length of Planning Horizon 166
11.3.1.3 ABC Analysis 166
11.3.2 Procurement of Empty Containers 167
11.3.3 Movement of Empty Containers 169
11.3.4 Technical Efficiency 170
References 29
Chapter 12 Container Transport Security 173
12.1 Container Transport Chain and Container Transport Security 173
12.2 Container Transport Security Enhancement 175
12.2.1 Radio-frequency Identification Technology 177
12.2.2 Smart Box Initiative 177
12.2.3 Non-intrusive Inspection 177
12.3 Diffusion of Technology to Enhance Container Transport Security 178
12.4 Types of Institutional Isomorphism 178
12.4.1 Coercion 180
12.4.2 Mimesis 181
12.4.3 Norms 182
12.4.4 Comparison of Normative and Coercive Institutional Isomorphic Processes 183
12.5 Conclusions 184
References 29
Chapter 13 Port Operations 186
13.1 Introduction 186
13.2 Multiuser and Dedicated Container Terminals 188
13.3 Terminal Facilities 190
13.3.1 Quay 190
13.3.2 Container Yard 191
13.3.3 Container Freight Station 191
13.3.4 Interchange Area 191
13.3.5 Gate Facility 192
13.3.6 Railhead 192
13.3.7 Others 192
13.4 Processes at Container Terminals 192
13.5 Physical Flows in the Container Transport Chain 194
13.5.1 Consignment Assembly 195
13.5.2 Consignment Consolidation 195
13.5.3 Carriage 196
13.5.4 Port Handling 197
References 29
Chapter 14 Managing Container Terminals 199
14.1 Introduction 199
14.2 Development of Global Container Terminal Operators 200
14.2.1 Terminal Networks 202
14.2.2 Regional Coverage 202
14.2.3 Internationalization 203
14.3 Performance of Container Terminals 205
14.4 The PROFIT Framework 208
14.5 Concluding Remarks 209
References 29
Chapter 15 Agile Port 211
15.1 Introduction 211
15.2 Agility in Ports 213
15.3 Characteristics of Agile Ports 216
15.3.1 Infrastructure of Their Own 216
15.3.2 Commitment from Top Management 216
15.3.3 Working with Upstream and Downstream Partners 217
15.3.4 Streamlined Operating Processes 217
15.4 Implementing the Concept of an Agile Port 218
15.4.1 Step 1: Management Commitment 219
15.4.2 Step 2: Process-improvement Team 219
15.4.3 Step 3: Setting the Standards 220
15.4.4 Step 4: Awareness of Staff Members 221
15.4.5 Step 5: Manager and Supervisor Training 221
15.4.6 Step 6: Goal Setting 221
15.4.7 Step 7: Removal of Error 222
15.4.8 Step 8: Corrective Actions 222
15.4.9 Step 9: Recognition and Reward 222
15.4.10 Step 10: Continuous Improvement 223
15.5 Concluding Remarks 223
References 29
Chapter 16 Port Development 225
16.1 Introduction 225
16.2 The Operating Environment 226
16.2.1 Containerization 226
16.2.2 Concentration 227
16.2.3 Collaboration 228
16.2.4 Competition 228
16.3 Port Hinterland and Foreland 229
16.4 Evolution of a Port 231
16.4.1 Anyport Model 232
16.4.2 Development of Shipping Hubs 233
16.5 Transport Complex Economy 233
16.6 Concluding Remarks 235
References 29
Index 238

"Chapter 12 Container Transport Security (p. 165-166)

Abstract In the container shipping industry, the importance of adopting technology for enhancing transport security has been well acknowledged. Institutional pressures can be a key driver of change for firms in a container transport chain and these firms include shippers, consignees, freight forwarders, transport operators, maritime carriers, container terminal operators, customs authorities, and government agencies. Technological devices such as radio-frequency identification, the smart box initiative, and non-intrusive inspection are adopted to enhance container transport security.

This chapter discusses the implications of the different types of institutional isomorphism from the perspectives of container transport operators that have taken the initiative to adopt technology for container transport security enhancement and those that have followed other firms to adopt technology. The possible impacts of the different types of institutional isomorphism, namely, coercion, mimesis, and norms, elaborated in this study can help shipping and logistics managers better understand the institutional pressures that are put on them, and the institutional pressures that drive them to adopt technologies in the container transport chain.

12.1 Container Transport Chain and Container Transport Security

A transport network consists of nodes and links (Song et al. 2005). In a container transport chain, the nodes are physical locations, such as container terminals and depots, where containers are handled and transferred from one transport mode to another. In addition, the links between nodes are served by various modes of transport, such as trucks, trains, and ships.

From the perspective of transport security, the risk of a breach of security at any one of the nodes or links can compromise the security of the entire container transport chain (Lee and Whang 2005). For outbound shipment, the stuffing area of a container transport chain is crucial to container transport security because it represents the last point in the container transport chain where the contents of a container can be visually identified and reconciled with related documents such as container load plans.

Once the container has been sealed by the shipper, the contents of the containers cannot be verified until the container is reopened. From this perspective, shippers play a critical role in container transport security by providing accurate and complete sets of data about the cargo in the containers. On the other hand, containers moving through different transport modes need to tackle many security challenges. Door-to-door container transport involves multiple stops (such as cargo stuffing areas and container terminals), where containers are stored and handled, and open transport infrastructure (such as highways and rail stations), which can be accessed by different parties (Vis 2006)."