maritime logistics song en 17668

Maritime Logistics A complete guide to effective shipping and port management

Dong-Wook Song and Photis M. PanayidesKogan Page 2012344 pages

Focus Take-AwaysLeadership & Management

Strategy

Sales & Marketing

Finance

Human Resources

IT, Production & Logistics

Career & Self-Development

Small Business

Economics & Politics

Industries

Global Business

Concepts & Trends

The world economy depends on maritime transport, which relies on maritime logistics.

The process of planning, implementing and managing the movement of goods andinformation involved in ocean carriage is maritime logistics.

The growth in global commerce has changed seaborne shipping, which handles 85% ofinternational trade.

Vertically integrated shippers offer complementary services, such as inlandtransportation, documentation preparation and customs clearance assistance.

Maritime transport operations must fully integrate into clients global logistics systems.

Cargo ships continue to increase in size so shippers can leverage economies of scale.

Containers revolutionized global freight transport by sea, making it cost-effective.

Greater demand has driven a rise in dry bulk shipments of commodities.

Inland dry ports work with seaports to relieve traffic congestion and to offer a seamlessintermodal transport system.

To move goods efficiently, shippers use the hub-and-spoke distribution model that theaviation industry perfected.

Rating (10 is best)Overall Importance Innovation Style

8 8 9 6

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What You Will LearnIn this summary, you will learn:r1) Why maritime logistics are vital to seaborneshipping; 2) How containers, ship size and safety issues affect the industry; and 3) Howgrowth in international trade has changed marine transportation.

ReviewWithout maritime transport, the global economy would be dead in the water. And withoutmaritime logistics, maritime transport would be grossly inefficient. The cost of all goodsshipped by seaborne transportation which is just about everything would skyrocket.Distinguished maritime logistics scholars Dong-Wook Song and Photis M. Panayideshave compiled essays by expert academics covering transport and shipping economics,maritime business administration, transport research, international logistics, supply chainsand related fields. While this is a specialized book for scholars and those who understandthe mathematical mechanisms behind maritime logistics like discriminant validity,structural equation modeling multivariate non-normality and squared interconstructcorrelations readers who cant decipher these dry, relatively rarefied concepts can skipthem and still come away with a workable, in-depth understanding of maritime logistics.The text, while academic and sometimes a bit repetitive, is a true insiders manual.getAbstract recommends these astute essays to logistics managers and anyone who needsto learn about maritime transport.

Summary

Logistics has beenembedded into everytype of businessfrom the largestcorporations downto the smallestcorner shops on yourstreet.

Adventure anda will to engagein foreign tradehave stimulatedand advanceddevelopment,building andutility of ships andports since timeimmemorial.

The Logistics of Maritime TransportA quiet revolution is taking place in oceangoing cargo services, thanks to the developmentof worldwide maritime logistics and the expansion of the international shipping industry.Growth in global trade has resulted in notable restructuring of seaborne transportation,leading to increased deregulation, competition and supply-chain integration.

In the face of these changes, value-added logistics services are in great demand. Manyprominent global transport operators now include logistics as an essential componentof their strategies, so they can reduce costs and improve services. Because the freighttransportation industry depends on tight linkages among disparate firms, it needs asophisticated level of logistics.

The 1990s saw the rise of integrators: companies that offer logistics and contractingservices, including total logistics solutions and seamless origin-destination capabilities.According to one survey, eight out of ten shipping lines say they plan to ally themselvesmore strategically with logistics firms and to enhance their internal logistics capabilitiesand services. However, whether internal logistics operations earn profits or not isuncertain, given current evidence.

The Importance of Maritime LogisticsMaritime logistics is the process of planning, implementing and managing the movementof goods and information involved in ocean carriage. These operations encompassmaritime transport (ports plus shipping) and management (cost-cutting, performance




Seaports areuniquely structuredsocial and technicalorganizations.

Global production,transport,distribution andlogistics require thesetting of freightmanagementstrategies.

The demand forcontainer shipmentsmoves parallel to theglobal GDP.

For the shipper, thegreatest advantageof intermodaltransport is thepossibility ofseamless door-to-door transport.

enhancement, tracked results and customer satisfaction). In the field of maritime logistics,as well as in ocean liner shipping, development moves at a rapid pace.

Maritime logistics promotes several strategic objectives of the marine shipping industry,including efficient operations through improved customer service, trimmed costs andshorter lead times. Logistics helps the industry in the areas of contracting, shipping,sea voyage, moving cargo and loading/unloading, as well as storage, warehousing,inventory management, offering a distribution center, quality control, testing, assembly,packaging, repacking, repairing, inland connection and re-use. The three primary areasthat maritime logistics focuses on are moving cargo, managing ports and terminals, andfreight forwarding.

Customers NeedsMaritime logistics provides value by satisfying customer needs. To meet that goal,maritime transport operations must fully integrate their work into a global logisticssystem. A lack of integration means higher costs, greater delays, more accidents and lostcustomer satisfaction.

Maritime transportation through ocean transport, seaways and inland waterwayshandles 85% of international trade shipments. Its essential task is integrating cargohandling with all the other components of a logistics system. Maritime transport is acrucially important link in global supply-chain management for firms around the world.

Maritime transport activity increases or decreases depending on the global economy. Itslowed considerably during the 2008-2009 financial downturn, dropping by 4.5% in 2009,when the worlds gross domestic product fell by 1.9%. But global GDP rebounded by3.5% in 2010, and total container trade for world seaborne trade picked up by 11.5%.

Containers Have Changed EverythingContainers have revolutionized the global freight transport system. In 1956, MalcolmMcLean, the president of Sea-Land Inc., made container shipping a reality with the launchof his Ideal X container ship. It transported 58 containers on its maiden voyage, movingthem efficiently from Newark to Houston. In 1966, the first real transatlantic containerservice kicked off, linking the East Coast of the United States with Northern Europe.

Container ships are specifically designed for cost-effective loading and unloading. TheInternational Organization for Standardization (ISO) sets strict criteria that apply to allcontainers: They must be 10-, 20-, 30- or 40-feet long; 8 feet wide; and 8- or 8.5-feet high.Some 20 firms dominate container shipping; the largest fleets belong to the MediterraneanShipping Company (MSC) and to Maersk Line. They each have more than 400 ships.

Today, container shipping is a key factor in the health of global trade and maritimetransport. Container-shipping networks are the jewels of the global supply-chain system.Overall, globalization requires container-shipping networks to provide more reliableschedules, better freight rates and worldwide coverage. Additional ports and shippingsystems have developed in recent years to meet increased demand.

Intermodal TransportIntermodal transport (integrating various forms of conveyance specifically, by waterand land) is a direct function of containerization, which makes seamless door-to-door




As technologicalsystems increasein complexity, thegap between thehuman operator andthe system tends toincrease as well.

Cargo handling inports is consideredone of the mostdangeroustasks...and work-related mortality forseafarers remainsamong the highestof all occupations.

The world drybulk trade growsfaster than the worldeconomy.

Hinterland logisticsand hinterlandtransport systemshave become animportant andintegrated partof global supplychains.

transport fully viable and notably efficient. For example, North Americas Double StackTrain (DST) networks enable the economical and timely movement of cargo from WestCoast ports to the interior and the East Coast.

Intermodal transport facilitates the integration of shipping companies logistics. Manyof these organizations now combine with other transportation companies, including raillines, to convey goods smoothly. Shippers will be able to achieve even better resultswhen additional intermodal transport routes become available. International logisticsorganizations employ the same hub-and-spoke distribution model that the airlineindustry established and uses. In this system, the freight companies consolidate theirshipments at major ports (known as hubs) and then use radial links (known as spokes) toredistribute goods to widespread destinations.

Many of the worlds leading shipping companies also offer inland transport, documentpreparation and customs clearance services to their clients. Several of the major carriersprovide warehousing and supply-chain planning, as well as logistics services at suppliersor customers business locations.

Most fleet operators provide comprehensive transportation services for cargo, liquid andsolid bulks, and reefer cargo. For such firms, vertical integration is the prevailing trendthat makes supply-chain optimization possible. This strategy can include land, sea andair transportation, in-transport inventories and optimized warehousing. Shippers realizeseveral advantages with vertical integration, including increased resiliency during sloweconomic periods.

The Human ElementShipping efficiency and superior customer service depend on workers capabilities andprofessional knowledge. Todays high-tech maritime industry incorporates numeroussophisticated man-machine systems. In 1997, in recognition of these man-machinemethods, the International Maritime Organization (IMO) formally recognized that thehuman element is a vital issue that affects the well-being of shipping operators as wellas the marine environment.

To avoid accidents, workers must fully understand and operate complex mechanisms.Such safety concerns are a serious problem in an industry that already suffers from atoo-high percentage of occupational accidents. To illustrate what can go wrong, consideran incident in 2005, when the container ship Savannah Express crashed into a linkspan(cargo-loading drawbridge) at Southampton Docks. The accident occurred because theship engines complicated electronic controls flummoxed its operators. While no one washurt in the mishap, it seriously interrupted port operations.

To prevent such problems, shipping authorities conduct routine inspections to ensure thathandlers and operators know what to do and how to do it, and that all functions are inorder and have the correct certifications. These authorities may cite vessels that fail topass inspection or that do not meet IMO conventions. Penalties include the detention of[a] ship...or a ban on entering certain ports.

TankersIn 2009, almost a quarter of all maritime cargo shipped worldwide consisted of crude oiland petroleum products...requiring 35% of the world fleet. Shippers once transported oilin wooden barrels, but that changed in 1878, with the advent of a ship called the Zoroaster




Ports have becomethe most importantlogistic link inthe production,distribution andconsumption chainsof economiesworldwide.

Seaports should beregarded as logisticcenters, industrialzones and centers oftrade.

Todays maritimeoperators...shouldbe in search of anew strategic optionthat enables themto develop theircapability to realizea more efficientoperation and moreeffective service.

The higher thelevel of integrationamong the actorsof a supply andlogistics chain,the higher theeffectiveness for theentire chain...andfor the port.

that stored oil in a specially designed hull. In 1886, the designers of the Gluckauf theprototype for the modern tanker added new features, such as pressure relief valves,cofferdams and cargo valves that workers could operate from the deck. Modern tankersstill employ such features.

Economies of scale allow larger tankers to move oil and petroleum more inexpensivelythan smaller ships can. Thus, many major shippers now commission supertankers. Thebiggest to date was the Seawise Giant with a capacity of more than 560,000 deadweighttons (dwt). Smaller tankers are better suited to certain trade routes and specific cargoes.Quality and timing issues can lead to potential losses, so shippers must be fully awareof all their risks.

Dry BulkThe shipment of dry bulk commodities for example, iron ore, coal, grains, bauxite/aluminum and rock phosphate has soared in conjunction with the increase in worldwidedemand for these items; dry bulk transport now accounts for 25% of global maritimetrade. Ships in the bulk carrier fleet range from 28,500 dwt to 365,000 dwt in size. Theeconomies of scale that affect so many other areas of marine transport also logically factorinto dry bulk shipping. Thus, fewer companies are ordering smaller carriers (up to 40,000dwt), and orders are increasing for Supramax bulk carriers (40,000 dwt to 60,000 dwt).The dry bulk trade is vital to the global economy, and its volume is a prime determinant ofworld trade activity. Disruptions to dry bulk shipping can have expensive consequencesfor national economies.

Seaports and Dry PortsAs cargo ships increase in size, seaports must adapt and expand to accommodate biggervessels and greater amounts of freight. Growth in international trade means seaports areincreasingly congested, as are their access routes. However, expanding seaport terminalsand facilities is costly and takes time.

To enable efficient cargo transport, seaports must offer good connections withhinterland destinations, that is, the geo-economic space that a seaport serves. Theprimary goal of a hinterland transportation system is to maximize cost efficiency andsupport smooth logistics. Hinterland logistics, another key component of the global supplychain, requires dry ports the inland terminals that use rail to link directly to seaports. Dryports cut down on seaport congestion while promoting environmental benefits. Customerscan deliver or pick up their goods at dry ports, just like at seaports. Dry ports make theirconnected seaports far more competitive. Overall, port capabilities are more important tologistics chains today than ever before.

A supply chain integration strategy is essential to optimal seaport performance and, thus,to effective maritime logistics, and dry ports are a pivotal part of that integration. Theyenable seaports to offer a seamless intermodal transport system.

About the Authors

Dong-Wook Song is a lecturer in maritime logistics at the Logistics Research Center atHeriot-Watt University in Scotland. Photis M. Panayides is an associate professor inshipping economics at the Cyprus University of Technology in Cyprus.



maritime logistics song en 17668

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