Maritime Logistics Industry - Essay Example

?Running head: MARITIME LOGISTICS: INDUSTRY OVERVIEW Maritime Logistics: Industry Overview Insert Insert Grade Insert 15 January 2011 Maritime Logistics: Industry Overview Introduction Any form of investment requires preliminary understanding of the basic of the factors that affect the business. Maritime logistics is among the most viable investment that a company can make. The returns involved in the business sector are usually high if a business is able to conveniently position itself in the industry to wade off the stiff competition in the industry. For efficient working of several global systems, there must be a system, which facilitates the movement of the goods and the related products. Maritime logistics is the system that is used to facilitate the movement of goods and related products from place to the other. Maritime logistics is mainly concerned with the movement of goods and services from one location to the other mainly via the sea. Maritime logistics can be simply defined as a detailed coordination of maritime activities with relation to people, facilities, and supplies (Mangan, Lalwani and Butcher, 2008, p. 8) Maritime logistics is used to facilitate the movement of raw materials and finished products between the producer, manufacturer, supplier, and consumer. There are various types of cargo transported using the maritime logistics. Types of cargo transported by the maritime logistics companies include: Containerized cargo: This refers to the cargo that is transported in containers that are standardized. This type of cargo is very easy to handle as various types of equipment have been specifically designed to handle the containerized cargo. Project cargo: This refers to machinery and equipment that is exported or imported by a certain party for performance of a specific purpose. This type of cargo is difficult to handle as cargo size, shape and weight usually vary, hence making it difficult for the equipment to handle them without causing damage. Automobiles: This refers to the vehicles and similar equipment. Break bulk cargo: This refers to goods that are transported in bulk without being containerized. The main types of goods transported in this method are mineral and ores. Among the most important aspects of maritime logistics are the cost of provision of services, speed in which the products will ultimately reach the intended person, and the quality of services that the company provides. A company that is able to effectively utilize the above aspects usually has a competitive edge over the other companies. Navex maritime Navex maritime is a maritime logistics company based in Antwerp, Belgium. The company was formed in 1993 after the merger of the commercial activities of Navex N.V and Van Meerbeek & Company. Both companies had been in existence for a long time, with Navex N.V having been formed in 1919 and Van Meerbeek & Co. having been formed in 1946 (Navex maritime logistics company website 2011). In 2005, the company ventured into the global forwarding business. Navex logistics is mainly involved in the maritime trade as a sales agent to the ship owners, provision of third party logistic and in the forwarding of freight. The company mainly specializes in oil and gas industry and mainly handles break bulk cargo (Navex maritime logistics, company website 2011). The company’s strategic location in Antwerp, the second largest port in Europe - after Rotterdam – enables it to benefit from the volume of trade and cargo, which passes through the port to other parts of Europe. Antwerp is also among the 10 largest ports in the world. Main competitors Navex maritime faces stiff competition from the other large maritime logistics companies that have their operations in all the regions of the world including Belgium. These companies include Mediterranean shipping company, the largest maritime logistics company, A.P-Mollar Maersk group, Evergreen, P&O and MOL. Due to the fact that maritime trade is global, these large companies control a sizeable proportion of the maritime trade. As of 2002, the twenty largest maritime logistics companies controlled 72 percent of the container carriage in the industry. Moreover, during the same year, the five largest companies controlled 32 percent of the container carriage (Sutton, 2008, p. 231). There are many other maritime logistics companies in Belgium, which offer stiff competition to the Navex N.V. These companies include Steinweg, Atlas International networks, Rotra Air & Ocean, Dissaco GSS N.V., Safar Belgium (Anon, 2011). Industry and competition The presence of a few large companies makes maritime logistics a very competitive industry. The occasional mergers and acquisitions help different maritime logistics companies to consolidate their position in the market. The companies that are involved in maritime logistics are in either one or multiple segments of the sector. These segments include: Pure maritime activities; Handling of the goods at the ports; Inland transportation of the goods (OECD, 2010, p. 72) Most of the maritime logistics companies are involved in all the above segments; the form of involvement may be either direct or indirect. The maritime logistics companies put great emphasis in the first two segments and in most cases, are directly involved in the provision of the activities, as they are the most lucrative in the business, making maritime logistics companies to be the main players in the segments. However, maritime logistics companies have not been able to dominate the inland transportation of the goods (OECD, 2010, p. 52). This is mainly because the activities of the companies are maritime; hence, involvement in the inland transportation is a deviation from their industry’s main area of specialization. However, the maritime logistics companies have subsidiaries or other companies they have contracted to provide inland transportation of goods. These companies increase the efficiency and quality of the services provided by the maritime logistics companies by offering door-to door services. The maritime logistics industry like any other industry is affected by the legislation in the areas of operation. The legislation regarding maritime logistics in Belgium is considered to be among the most favorable in Europe. There are various tax incentives, which have been put in place by the government to facilitate the efficient operation of the maritime logistics sector and help in the development of the industry. Belgium usually charges very low tax for the tonnage of the ships in their ports; that is, the higher the tonnage of the ship, the lower the tax that the ship will be charged. In fact, Belgium was the first European Union member country to introduce the low rate tax of 0.05 Euros per 100 net tones for ships, which carry in excess of 40,000 tones (Janssens, 2008, p. 2). The incentive offered by the government to increase the tonnage of the ships in the ports and thereby increase the activities of the ports, have led to an increase in the incomes of the companies that are involved in maritime logistics. Navex N.V has in particular greatly benefited from the legislation by the government due to the increase in it business activities. This makes the maritime logistics a very conducive industry to venture into. To facilitate fast offloading of the goods from the ships to the land, the availability of storage space is a general necessity. This is because the goods must first be stored in a specific location while they are undergoing inspection and customs clearance (Rodrigue & Browne, p. 5). Ships are not usually offloaded if there is no storage space; the availability of storage space therefore determines how much time the ships will spend at specific ports. This has necessitated different maritime logistic companies to search for ways of creating space in the ports. The maritime logistics companies therefore own or have leased go-downs and parks where the goods can be stored while undergoing inspection and customs clearance in the ports. The terminal operations such as loading and offloading in the ports also affect the speed in which the goods take to reach their destination (Lun, Lai & Chen, 2010. P. 112). Maritime logistic companies therefore have to invest in equipment, which provide fast offloading services. If the companies cannot be involved directly in the loading and offloading of the goods, the company should ensure that the contracted firm to undertake the services has the necessary equipment that will offer the services in a fast and convenient way. Navex N.V has greatly invested in the cargo handling equipment and it is able to effectively handle different types of cargo in a convenient and fast method; the company is able to handle project cargo, break bulk cargo and even containerized cargo (Navex maritime logistics, company website, 2011). Information technology can be used to improve the services offered and internal management by different organizations. Navex N.V uses the information technology for control of line operations, handling of the equipment it uses, and accounting business intelligence and management. The company recently acquired a tailor-made software application from a software developer known as softship to facilitate the above (anon. 2011 new customer in Portugal). In addition, Navex NV uses various internet-based services to help in improving the quality of its services, which include booking, booking status, bill of lading, and the location of the products of the customers. Maritime logistic companies are generally involved in the global transportation of goods and other related cargo. Therefore, the availability of offices and agencies in areas that are near to the customers affects the quality and speed of the services offered by the maritime logistic companies (Lung, Lai and Cheng 2010 p 112). Navex N.V has many offices and agencies located in most European ports; these offices help in the facilitation of services between different parties involved in the transportation of cargo and in the provision of customer support services. The time spent by ships in the sea usually forms the largest proportion of the time spent for the cargo to move from the party sending it to the recipient. Companies therefore have to ensure that the ships, which are used to transport the goods, are moving at relatively high speeds to reduce the time taken. Though the high-speed ships consume more fuel than the low speed ships, the ships are able to make more deliveries over a given period of time, thereby ensuring that the company saves on capital (Stopford, 2009, p. 355). Moreover, Navex NV logistics ensures that the cargo being transported is shipped by ships, which have the highest speeds so as to benefit from the above features. Maritime logistics management Maritime logistics is generally considered a low cost, high volume business enterprise. The profits margins are usually small. This necessitates the companies to device methods of making small incremental savings so as to achieve a competitive advantage in the industry (Stopford, 2009, p. 356). The maritime logistics companies must therefore device means of increasing their income. This can be effectively done through diversification of services, which are offered by the maritime logistics companies apart from the simple carriage of goods (Brewer, Button & Hensher, 2001, p. 421). The company can diversify its services through the formation of subsidiaries that offer other related products. These products include: Inland transportation Terminal operations Charter services Tourism services The method of operation of the subsidiary companies usually determines the income generated by the companies. The subsidiary may be a liability to the business if the company fails to use effective strategies in the management format of the subsidiary. The most efficient method of maximizing income of the subsidiary companies is mainly through the isolation of the subsidiary from the parent company. This is mainly necessitated by the fact that many customers are usually not willing to pay the company premiums for the services provided by the other subsidiary companies (Brewer, Button & Hensher, 2001, p. 421). However, the company must first concentrate on a specific field to help build its brand and explicitly understand the details of the other maritime related activities before diversification of the services it offers. Transportation security is also among the major factors that affect the maritime logistics industry. This became a priority between the US and its trading partners after the 2001 terrorist attacks (Gourdin, 2006, p. 102). The management must therefore ensure that it devices systems, which will ensure that the security is enhanced. The company needs to device innovative solutions using information technology to help in the improvement of security. Innovative maritime logistics solutions Innovative solutions to maritime logistics are mainly centered on information technology. This is mainly due to the fact the activities of the maritime logistics companies take place in different ports with integrated information technology into various operations that they undertake. Information technology may be used to create products, which enhance security, provide information to their customers, handling of the equipment of the company and internal administration of the company. The information technology is also used to help in the coordination of the activities of various ports. Hence, the company can use information technology that effectively blends with the information technology of the ports to help improve its services. The easiest methods through which maritime logistic companies can venture into the maritime trade are through the servicing of the available supply chains. However, the maritime logistics companies can also venture into the business through the initiation of new supply chains. This can be done through the initiation of regional project networks on logistics, which will help in attracting global supply chains (Kersten, Kersten & Blecker, 2008, p. 26). Reference List Anon. 2011. Freight forwarders in Belgium. (Online). Available from: http://www.jctrans.net/Company/List_0__BELGIUM__0_3_8.html (Accessed January 15, 2011). Anon. 2011. New customer in Portugal. (Online). Available from: http://www.softship.com/Shippingsoftware/shipping_software/home/news.php (accessed January 15, 2011). Brewer, A., Button, K. J. & Hensher, D. A., 2001. Handbook of logistics and supply-chain management. Oxford, Elsevier. Gourdin, K. N., 2006. Global logistics management: a competitive advantage for the 21st century. Oxford, Wiley-Blackwell. Janssens, P., 2008. Transport and logistics industry network, global network, local expertise, individual services. PricewaterhouseCoopers. (Online). Available from: http://www.pwc.com/en_BE/be/transport-logistics/pdf/Opportunities-challenges-for-the-shipping-industry.pdf (accessed January 15, 2010). Kersten, W., Kersten, W. & Blecker T., 2008. Global Logistics management: Sustainability, Quality, Risks. Erich Schmidt Verlag. Lun, Y. H. V., Lai, K., Cheng T. C. E. 2010. Shipping and Logistics Management. London, Springer. Mangan J., Lalwani C. and Butcher, T., 2008. Global logistics and supply chain management. West Sussex, John Wiley and Sons.   Navex maritime logistics company website. 2011. (Online). Available from: http://www.navexmaritime.com/index.aspx (accessed January 15, 2011). OECD, 2010. IT Round Tables Integration and Competition between Transport and Logistics Businesses. OECD Publishing. Rodrigue, J and Browne, M. International maritime freight transport and logistics. Blackwell publishing. (Online). Available from: http://people.hofstra.edu/jean-paul_rodrigue/downloads/International%20Maritime%20Logistics.pdf (accessed january15, 2010). Stopford, M., 2009. Maritime economics. NY, Taylor & Francis. . Sutton, M. 2008. Maritime logistics and the world trading system. (Online). Available from: http://www.ritsumei.ac.jp/acd/cg/ir/college/bulletin/Vol.20-3/20_3_14%20Sutton.pdf (accessed January 15, 2011). Read More