Shipping: Cars Transportation Industry Outlook - Research Paper Example

May 2009 Shipping – Cars carrier Shipping – Cars Carrier The evolution of the shipping industry in transporting cars across the world is what this paper is going to address. Why this trade has become important in the international shipping industry? Shipping cars is a form of transporting the vehicle from a seller to a buyer. The sales transaction can occur across continents. This form of transportation includes transferring the car from one destination to the other. In some transactions the transportation can occur from one state to the other. This form of shipping and logistics is primarily a commercial activity which involves the manufacturer, dealer and brokers. The business has grown to a great proportion in the last ten to fifteen years. Moreover with the use of the internet the niche service has reached the general consumer. This form of buying cars is no longer the periphery of the ultra rich. The upper middle class families are also able to purchase cars from different countries or states and get it shipped to their desired location. Hence, this mode of transportation has seen growth and expansion. i ACKNOWLEDGEMENTS This paper has been prepared with the help of information available online and some notes that has been gathered over a period of time. (Please include any necessary acknowledgments that you seem applicable) ii TABLE OF CONTENTS 1. Introduction 1.1.1 Introduction to shipping 1.1.2 Transportation of cars – the beginning 2. What has been the reason for the industry to boost? 1.1.1 The growth of the business 1.1.2 Cars – the market scenario 3. The demand and supply aspect of car carrier 1.1.3 The need 1.1.4 Conclusion References 1 1. Introduction 1.1.1 Introduction to shipping It was a Saturday when at “Uljanik” there was a launch. Hull No. 464 which was named as “Höegh Bangkok”. This ship was a car-carrier of about 16,700 dwt and was intended to transport 7,000 trucks and cars for P.D. Gram & Co. AS a Norwegian buyer from Oslo. The date was 17th March, 2007. Alongside “Höegh Delhi”, this was the second ship that was contracted for P.D. Gram, was considered one of the largest car carriers in the world. The ship was equipped with 13 decks and out of these 2 was hoistable, with a total parking area of 58,819 m2. In actual figures the ship can transport a little more than 7,000 passenger cars. 1.1.2 Transportation of cars – the beginning There are a few basic fundamental steps which a customer should undertake before they intend to move the car. When the car is about to be shipped it should be loaded onto a carrier. This carrier will ultimately transport the vehicle to its destined location. The carrier is what will transport the car to a new place. Before the shipping actually takes place, each of the cars must be recorded and inspected properly. The records must be kept of any particular damage or markings that are already there on the car. This is done so that the carrier company is not held responsible for the same. They are only liable for those damages which occur during the transit. The car shipping companies have two very important things to display. The first is the customer service and the second is the reputation. Most of the reputed companies provide information about their vintage and the number of customers they have served till date. This information will provide the 2 customers faith on the company. Also one can find companies which deals with various modes of transportation and provide consulting kind of service to the customer who wants to ship the vehicle. These companies deal with multiple transport carriers and they are knowledgeable of the reputation and service of the associated companies. 2. What has been the reason for the industry to boost? 2.1.1 The growth of the business Before the internet came into the market, people had the one and only option to buy the car from the local dealers. They did not much choice and had to rely mostly on the available options that the dealer provides. Also one cannot be sure of the quality and performance of the vehicles. People were devoid of much knowledge on cars. Also since the cars cannot be transported from one state to the other. Though the business of freight did exist yet the transportation was very expensive and not so cost effective. The shipping is still done on the basis of weight and can actually cost more than the specialized car moving companies which were charged based on either distance or other basis. Due to such cost the shipment of cars was restricted amongst those who had money to purchase and also transport. But one can say that the shipping industry in terms of car freight has grown to a great proportion only after the internet was introduced. People can now buy the car of their choice from any parts of the world and get them delivered at their doorstep. In fact one can see that the dealers are also keen to market their products online. Even the small and medium range cars are also being sold online. Thus one can estimate the volume of 3 car business that takes place online. Ebay is one such site which provides the consumers a wide variety of cars to choose from. Those, who have the eye for collectible cars can also check them out online. Hence a good proportion of car carriers ship the vintage cars around the globe. 2.1.2 Cars – the market scenario As explained above the car shipping companies and the online marketplace have given the people the opportunity to shop the way they want to do. The boundary is no longer restricted to the regional boundaries. As long as the consumers are able to pay the shipping freight charges this business will be quite flourishing. But at the same time one can see that since the business is growing quite impressively the cost of shipping has also reduced significantly. The companies are competing against each other to get the maximum of the customers. There are different companies and a person who wants to get the car transported must ensure that the car arrives at the destination in intact condition. Jim Fitzpatrick MP, the Parliamentary under Secretary of State, Department of Transport, opened the Associated British Ports’ (ABP) new car handling facility. The cost is estimated to be £7m. This was opened at the Port of Southampton on 2nd February. 4 The opening of this facility is ensuring that Southampton will remain the number one port in UK for vehicle import and export. This new terminal can house up to 2,500 new cars for export. The destination of the cars can be anywhere in Asia, Africa, Europe, and the Americas. The terminal was built on 5 levels. The terminal is just under 1 hectare and it also proves that ABP is committed towards sustainable development by using the existing dock area. Apart from storage the terminal also provides wash-down facilities, office space and car handling areas. In the year 2002, Southampton was the first British port to build a multi-deck car storage terminal. This allowed the density of cars to be stored per acre been increased by five-fold. The new terminal is the third of its kind which is built in the last 6 years. With this approach of multi-deck storage facility, ABP has built more than 26 acres of “space in the sky”. This will allow Southampton to be the leading hub in UK for vehicle import and export. As per Doug Morrison, the Port Director of ABP Southampton: “The decision to invest £7million in a project of this nature demonstrates our confidence in the future of the car trades at Southampton and our commitment to investing for the long term. While we have seen car volumes affected by the current economic climate, it is imperative that we consider the long-term outlook and invest now to meet future demand. We aim to keep Southampton as the number one port for car imports and exports in the UK. It is investments like these that will put the port in a good position to further grow its market share.” 5 Southampton is being currently used by the key car manufacturers for the export of British-manufactured Fords, Hondas, Range Rovers, Jaguars, BMW Minis, Rolls-Royces, Toyotas, Nissans, and GM models. In 2007 Southampton alone handled 653,000 units of vehicles. The global market for car manufacturing and the potential growth and the sales figure for seaborne trade of new vehicles have changed as China has now developed into a major exporter of new cars. The significance of logistics and supply chain management in the automobile industry is seen as a major breakthrough. The need of the time is fast a reliable logistics services. This should include reliable and prompt services along with ability to handling large volume of cargo. Of the 64 million vehicles that are manufactured on an annual basis, 20-25 per cent of them are transported via sip. Hence the car carrier has a significant role to play in this business. 3. The demand and supply aspect of car carrier 3.1.1 The need The need of car carrier has been justified in the previous paragraphs, but what is most important is the way it is shipped. The usual process is container shipment, but one can also avail shipment through flat racks and RORO options. Depending on the type vehicles one can choose from 20ft., 40ft. or 45ft. containers. In the recent past there has been a slump on the vehicle production and shipment but it is expected to rise after 2010. In most countries the production has dipped anywhere 6 between 10-20 per cent. Asia is expected to grow rapidly post 2010 in terms of vehicle manufacture and shipment. In Asia, China is expected to become the key exporter of cars to Europe, USA and rest of the world. 3.1.2 Conclusion In the conclusion it can well be judged that the industry of car carrier is quite dynamic and flourishing. It will definitely follow the normal demand and supply trend of the global car business, yet it has potential to grow manifolds due to increased urbanization and international business. The government and local port authorities are making significant breakthrough in the logistics aspect of car transport. This itself proves the demand and supply of the car carriers. 7 Reference: 1. Car shipping. Wikipedia. Last modified on 12 May 2009. 2. Car Carriers: The Fast Lane of International Shipping. Feb 14 2008. 3. Launch of HOEGH BANGKOK at Uljanik shipyard. Shipping & Shipbuilding News - 29 March 2007. 4. New car handling facility opened at Southampton. Shipping & Shipbuilding News - 05 February 2009. < http://www.shippingtimes.co.uk/item_10254.html> 8 Read More