The European Intermodal Transport Operations - Term Paper Example

Introduction The shipping industry is considered as one of the most important sectors of the economy because it contributes significantly to the growth and development of a country. It is an industry that handles different types of cargo that are used in different sectors of the economy. In the advent of information technology, most organizations are venturing into businesses that are proving to be profitable, which require different kinds of machines in order to operate them effectively. Shipping industry thus plays a significant role in ensuring that goods reach their predestined destination at the appropriate time. The operational and economic characteristics of shipping In this industry some of the operational and economic characteristics include the quantity, timing and the physical characteristics of the cargo being shipped from one place to another. Cargos physical and commercial characteristics determine the kind of ship type to be used within a specified period of time. For example items such as natural gas or nuclear facilities require specific type of ships due to their features suitable for the job such as speed and crew of the ship. Crude oil is carried in tankers while dry bulky goods are carried in conventional bulk carriers and container goods are carried out in containership. There are different types of shipping operations that include longterm charters, spot charters operations and liner operations. Long term charters operations require that the ship owner knows the type of cargo to handle as well as the port that should be used for that purpose. Spot charter is an operation where an owner of a ship has a general idea of where the ship should be situated but does not have any knowledge about the type of goods to be used for the port. Liner operation states that the owner of a ship should have knowledge of the port or volumes of cargo to be used but the venue of the operation may change from one period to another. The shipping companies may approach the business through taking into account several issues such as the purchasing of vessels that are highly flexible, those that serve several markets and reduce the rate of risk from occurring. In addition this may prompt an owner of a ship to use expensive open hold bulk carrier that handles containers as well as dry bulk cargo. Other ship owners may prefer to use ships that are designed for specific purposes, therefore more efficient and incur less operating cost during their operations. The European Intermodal Transport Operations. This system is used to create opportunities for its customers by availing the products to the market at the appropriate time and place. It is an information technology tool that is used for ensuring that there is efficient management and management of intermodal door to door transport operations using scientific tools such as logistic and communication systems appropriate for the organization. It was established so that it could help in the reduction of congestion as it was witnessed in the road network. The business men in the shipping industry opted to have the following factors into place so as to carry out their activities profitably .The factors include: higher reliability, lower prices, more flexibility and quality service levels for the customers. It has been observed the Intermodal transport system can offer flexible responses to the supply chain management system within the global production and distribution sectors of the economy. It can be developed by combining top down and bottom up approach that involves the identification of intermodal transport market actors in the market (Lowe, D 2005, p276). The system is said to solve problems related to financial problems in the road, railway, freight and national railway freight transport systems .For instance the Lorry drivers spend over 10% of operating time in congested road networks. The European Intermodal Transport operations can succeed in the world market through cooperating with the Asian community as well as using the latest techniques in the market that can bring about change in their organizations (Konings, Priemus &Nijkamp, 2008, p352). Voyage Planning is the procedure that is developed to indicate the distance and route a ship will follow before it reaches its destination. The plan involves: departure from harbor and dock area, through to en route of voyage destination as well as mooring area. Ship scheduling refers to the process of assigning times to the events that may occur during the ships operations such as its specific shipments. Task 1 The trends in trade as well as freight rates between the Mediterranean and East Coast North America as per Containerization 2007 The Western bound route of Mediterranean and East Coast North America trade has been experiencing challenges in the business sector and decline in its rate of growth as most of the importers and exporters have been diverting their activities to the Asian countries to sell their commodities there. The traders have resulted to market their goods to other parts of the world that have proved to be profitable in areas as: the Far East and other regions in the eastern Mediterranean and East coast trade route. The trend of the freight rates have been under intense pressure as customers have resulted in exporting their goods and services to other countries in the world hence leading to lower sales for the company. For instance the ocean carriers have recently reduced the slot capacity and sought for other profitable trade lanes where revenue can be easily generated at a cheaper rate. Freight rates have been not changed even after setting up operating strategies and pricing regimes practiced by the ocean carriers in the market; this has been as a result of low economic activities within the region. On the eastern side of the Mediterranean and east coast North America the trend of trade there has shown improved performance in the industry whereby trade levels have increased due to trading with the industrialized nations of Eastern Europe .On this region inward investment levels has been recorded as well as international trade. There has been a rise in the volume of cargo due to trading with the European countries. Goods transported from one place to another such as textiles, fruits and vegetables have been as a result of good trading investment projects invested within the region that has led to increased levels of revenue for the organization. Countries that border the eastern side Mediterranean and East Coast North America trading route that are near China supplies them with the necessary stock therefore experience higher sales volume than the Westbound route. The trend of trade between the Mediterranean and East Coast North America as per Containerization 2007 has also been slow as it has been affected by congestion at pinch point of the United States East Coast port in the country's intermodal rail network and Panama Canal where delivery of stock has been slow, with an increased cost of running the affairs of the organization. The provision of services within the port has not been easy ,these is due to the fact that the direct service calls has significantly increased over the last few years due to the modernization of Istanbul port and additional terminal that have been implemented into the stream. Niche carriers of the Turkon line have shown an interest in the trading route due to the presence of good facilities that can be exploited to increase sales volume within the organization. Task2 Container shipping services between the Mediterranean and East Coast North America (as at November 2007) The Eastern side of Mediterranean and East Coast North America region has shown improved performance over the last financial years, thus most ocean carriers have been optimistic that their activities will continue as expected due to the presence of conducive environment in which to carry out their activities. The slow economic growth rate on the Western side of the trading route has contributed to decreased sales volume for the organization. The kind of cargo been shipped in Eastern bound of the trading route has been low quality thus contributed to low sales volume for the organization. The kind of services offered within the region has not been an end to end dedicated service link, but have been as a result of way port calls whose itineraries have been extended to some regions such as the Middle East, South Asia and the Far East. The trading carriers stated that they would act on low freight rates and to come up with an amicable solution in order to solve the problem of increased costs that have led to decline in sales revenue for the organization. For instance the CMA,CGM Hapaq-Lloyd and Maersk Line have implemented a rate of USD400) / TEU and USD 600) / TEU in both the East and West bound in order to restore them to a level where cost increases would be addressed , reliably and efficient services would be offered to the customers. The service delivery within the sector has been adversely affected by difficult trading situations that have been as a result of implementation of mixed strategies whereby ocean carriers that have withdrawn their services from the sector during the summer as it has contributed to low sales volume for the organization. The low freight rate has also contributed to poor delivery of services to the customers as ship owners incur a lot of cost when carrying out their activities. For example Maersk withdrew its services from the sectors, the services involved USEC/Mediterranean service (6*2100 TEU) vessels in September and Cosco/K line Yangming alliance that halted provision of TAS3 service and withdrew four vessels for the space sharing arrangements. The action was aimed at increasing the rate of service delivery for the organization. The major factors that have contributed to the decline of delivery of services to the customers has been as a result of economic and fiscal factors contributed by retrenchment within the region, high value of Euro against the dollar that have contributed to the depression of the head hull cargo volumes and loses. The congestion at The United states and Mediterranean port has made the company to incur a lot of operating cost thus a decline in sales revenue for the organization. The recent change by the competitors has affected businesses operations within the potential marketable and profitable areas such as: Far East, South Asia, Middle East and Intra Asian Marker that has served over 18 months. The competitors have opted to trade in other trade routes through re-assigning the ships tonnage and also cutting the slot capacity in the above profitable areas. There has been extreme competition from the Pendulum service operators where the voyage economists have had difficulties handling. For instance the 1700 TEU class ships cannot complement with the 5000/6000 TEU types thus leading to incurring of heavy costs to run the operations of the organization. a) The speed required by ships in Maersk Line Gulf-Med service Operator Service Port rotation N.o of vessels Total capacity Average vessel capacity (TEU) Max capacity (TEU) Slot characters Maersk line 1 Nyw-Chs-Hou-Cag-Git-Goa-Val-Alc_Nyw 6 22,998 3833 199,316 APL Hapaq Maersk line 2 Nyw-Nfk-Chs-Cag-Psd en route to middle East 7 29,859 4266 221,810 Safmarine Maersk line 3 Sav-Nfk-Nyw-Alc-Git en-route to middle East ,psd,Al c,Sav 8 39,774 4972 258531 Safmarine Formula of calculating speed =Distance divided by time Distance=250 kilometers Time= Time is calculated on the basis of two, each 25 lifts per hour, works 24 hours a day in a weeks' time 6 hours added due to berthing and unberthing of cargo -Total lifts = 4800 full + 800 empty = 5600 lifts -Handling time = 5600 =140 hours 20lph*2 cranes Port time=handling time +berthing=170h=7.1d Speed = Distance Time = 250+5600 kilometers =33.24kn 170+6 hours # 3 ships first= 21d r/v, less 7.1 d in port =24.7kn 6ships =24.7*2=49.4 Too fast for ship size, but 4 ships looks on. Task3 i) The number, size and minimum size of ship(TEU) required to meet forecast container flow in Table1 Forecast Container flow New York Norfolk Charleston TOTAL Direction WB EB WB EB WB EB WB EB Container size 20 40 20 40 20 40 20 40 20 40 20 40 Leghorn 425 200 475 150 200 250 350 150 300 100 140 120 1475 1385 Gioia Tauro 200 240 150 100 160 100 50 60 180 100 80 90 980 530 Algeciras 300 110 200 150 150 60 190 90 115 75 200 100 810 930 TOTAL 1475 1225 920 890 870 730 3265 2845 United States of America port (New York, Norfolk, Charleston) Port Discharge TEU Load TEU Full EB Empty WB Full EB Empty/WB New York 1225 250 1475 Norfolk 890 30 920 Charleston 730 140 870 Mediterranean Port (Leghorn, Gioia Tauro, Algerciras) Port Discharge TEU Load TEU Full/WB Empty/WB Full/EB Empty/WB Leghorn 1475 1385 90 Gioia Tauro 980 530 450 Algerciras 810 120 930 The minimum ship size =1200TEU New York Norfolk Charleston Leghorn 1250-1200=50 950-1200=250 660-1200=540 Gioia Tauro 690-1200=510 370-1200=830 450-1200=750 Algeciras 760-1200=440 490-1200=710 490-1200=710 Accommodates 35 feet containers Assumption -One day in each port ii) Itinerary that redistributes the empty containers Port Full TEU Empty TEU full EMPTY Discharge Load Discharge Load ROB ROB New York 1225 1475 250 1200 0 Norfolk 890 920 30 1200 0 Charleston 730 870 140 1200 0 Leghorn 1385 1475 90 1200 0 Gioia Tauro 530 980 450 1200 0 Algerciras 930 810 120 1080 120 20% of containers at the sea are usually empty iii) Maersk aim of providing more frequent 5-day interval: it involves minimum ship size, number and speed of service interval Minimum ship size equals 1200 Minimum ship size Maersk line1 = 3833-1200=2633 // 2 =4266-1200=3066 //3 =4972-1200=3772 Speed required: # 3 ships first= 21d r/v, less 7.1 d in port =24.7kn 6 ships = 24.7kn*2 = 49.4kn Number of ships Voyage time Port Time Sea time Distance Speed 3 21 days 7.1 day 13.9 day 8250 24.7kn 4 28 days 7.1 day 20.9 days 8250 16.5 kn 5 35 days 7.1 day 27.9 days 8250 12.3 kn 6 42 days 7.1 days 34.9 days 8250 8.3 kn 7 49 days 7.1 days 41.9 days 8250 4.3 kn 8 56 days 7.1 days 48.9 days 8250 0.3 kn Task 4 The problems of operating container shipping services and short and long term solutions. Empty containers The shipping companies as well as the customers face difficult situations while they return empty containers to the ports of United States and Europe and other exporting countries. The cost of having to transport empty containers from one place to another is that a ship owner should be in a position to cover the expenses incurred during a specified period of time. Lack of control of the empty containers is a problem in the shipping industries as it leads to loses during the financial year of a company. Most containers are meant to be loaded with new goods once the previous cargo has been off loaded but quite often this is not the case. This may lead many empty containers lying idle in the port. One way of trying to solve this problem is trying to find more goods to load in the empty containers and if this is not possible then the containers could be recycled and also put into useful purposes of the organization. Another solution to the problem of having empty containers is by moving them to the places where goods had been unpacked so that they can be loaded with other goods. Empty containers should be repositioned at strategic places where the customers can access and thus ease the shipping operations. Purchasing of ships to cargo, use of feeder services, container pools, interchange of containers can ease the problem of having many empty containers within the port, that lead to having declined sales for an organization. Maintaining schedule The ships are expected to leave their destinations and arrive at the set time line that must always be observed. The preparation of schedules by the ship owners leads to an increase in the operating costs that arises due to the fact that the ship can be sailed when full or empty thus leads to loss of revenue due to lack of carrying cargo for their customers. Slow loading of goods in the ship lead to further delays in the time set and this could make the operational costs to rise. The other problem observed due to maintaining schedules is that of a transporter been forced to maintain a single product in the warehouses waiting scheduled time which leads to loss of value of the goods and therefore declined profits as goods cannot reach the customers at the appropriate time. Thus proper planning should be done so as to ensure the goods consigned reach their predestined destinations .A feedback program should be put in place so that if there is any variance from the set timelines then proper action should be taken (Kong, 2008). Ship under utilization The problem of ship under utilization usually occurs when the distance to be covered by ship becomes too short and small thus even under the very optimal conditions the ships spend much of their working hours in the ports idle. Another way that ship can become underutilized is when the bulk of the goods being imported are so small thus decreasing the optimal unloading rate hence the ship spends much of its time being underutilized. One way of reducing this problem by engaging the ships for long distances so that the time spent at the ports is minimal. Again shippers should try to load goods to their optimal capacity so that the loading rate may have to go up significantly. Ship owners should carry out research on investments that generate greater returns for an organization venture so as to enhance growth and development within their organizations. Trade imbalances The trade imbalance occurs as a result of imbalance between the exports and imports of any trading partners. As a result countries that have more imports than exports have many accumulated empty containers while a region that has more exports than the imports will experience a shortage of containers. Thus if the problem persists then it requires repositioning of the containers thus making the transportation costs to go up For instance trade imbalances are experienced in Maersk Line and Maersk Logistics portfolio where there is import and export of goods and services within these trading areas of South East Asia. Where there is ,trade imbalances between the maritime countries and longer transport routes it leads to tying up of the rate of capacity of goods and services to been shipped from one place to another. Another example involves the case where the demand for containers are transported eastwards exceed the container capacity in the different direction, that later on implies that large number of containers cannot be sent to other work stations to undertake the activity effectively (McCusker, 1997, p 426 ). Conclusion Ship Industry plays an important role in the economy therefore extensive research should be carried out to ensure it serves its purpose in an appropriate manner. It has been observed that it carries very large volumes of cargo thus convenient for traders that would like to venture into the business. Problems that may be observed during its operations should be noted and corrective measures taken in order to curb them from happening in the future. The industry should implement the latest information technologies so as to avoid wastage of time when handling cargo and transporting it from one place to another, so as to increase sales revenue for the organization. APPENDIX General Index Container shipping services: Empty Containers: 17 Maintaining of schedule; 18 Trade imbalances; 19 Gulf -Med Weekly Service; 8 Itinerary; 15 Maersk Line Gulf-Med Service; 16 Mediterranean East coast North America; 5, 6 Mediterranean Ports (Leghorn, Gioia Tauro, Algerciras); 13 Operational and economic characteristics of shipping; 2 Service changes by competitor; 5 Speed; 9 Trend in Freight rates; 4, Trade; 5 United States of America ports (New York, Norfolk, and Charleston); 12 References: Barnhart, C & Laporte, G 2007, Transportation: Transportation, Edition, Elsevier, United States. Flapper, S, D, Nunen, P, J, A, E, Wassenhove N, Luk 2005, Managing Closed-loop Supply Chains, Edition, Springer, United States. Greve, M, Wendelboe M, Henrik, H, 2007, Schaumburg-Mller container shipping and economic development: A Case Study of A.P. Moller - Maersk in South East Asia Edition: Copenhagen Business School Press DK, United States. 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