Reducing congestion in ports
Congestion is a key problem in water transport. Vessels backed up at port have been of concern to the U.S West Coast Ports through the years, with need to decongest growing on a daily basis. Congestion and its associated problems are caused by an increase in vessel cargo prices pitched against rather constant port facility capacities. This implies that while vessels increase in size due to the upcoming strategic carrier alliances, they also increase in the amount of containers carried to shore. Major carriers as well as port management authorities therefore have the obligation to find ways of reducing congestion while still maintaining quality and efficiency in service delivery. The following recommendations can help ports and port users to reduce congestion in various ports through better handling strategies.
Joint problem solving through dialogue
The issue of congestion is not constrained to port authorities. The causes of port congestion are myriad, mainly focusing on inefficient handling techniques. Unpredictable cargo influx, unreliable suppliers, ever expanding ship sizes and cargo volumes all contribute to the increase in port congestion. The first step in decongesting is to incorporate a collaborative problem solving approach which has to involve all the players in the industry. Each of the contributors to port congestion must be made to understand how their activities cause congestion and helped to make recommendations on the best strategies for improving their service delivery while also easing the port congestion. Dialogue is the best starter to change in any process hence forms the core of this procedure.
Increasing Operation Hours
One way of surely easing congestion in ports is through the increase in port operation hours. This can help ease congestion through reducing the possibility of container and vessel hold up, as well as the volumes of vessels held up in ports. If ports can operate for 24 hours daily through an increase in the number of operational shifts, vessel handling speed would increase hence leading to reduced congestion. While this strategy is bound to be effective, the key challenges that would arise in its implementation include human resource and financial requirements for running 24 hour shifts.
Expanding marine terminals
Besides increasing operation hours, expanding marine terminals also forms a sustainable operation strategy for decongesting ports. With an increase in ship sizes and subsequent increase in container influx, the originally designed terminals have grown to be of low capacity. In order for the high number of vessels and containers to be handled effectively without congestion, sufficient storage space is mandatory. This however means that the change implemented may not sustainably prevent congestion in the long run due to the potential for continued growth of port activity. It is therefore advisable that with continued expansion of marine terminals, efficient fast rated service be implemented to enhance time saving and subsequently reduce congestion. Expansion of terminals could also extend to off shore facilities which can be used to store cleared containers after reception. This will help reduce congestion in the ports through elimination of already cleared cargo. It will also help to reduce confusions during documentation and will help to avoid the transport of contraband products through inefficient fast checks that arise when there is congestion at the ports.
Provision of reliable and reasonable cargo forecasts
Since port users also have a responsibility in reducing congestion in ports, it is necessary that carrier should be able to project their cargo volumes and travel times accurately. This makes it easier for port management authorities to plan effectively for the management of inbound transport and thus assist in cargo handling as soon as ships dock. This strategy is important for effective planning which can aid in the consumption of less time during actual inventory handling.
Developing rail and road infrastructure
Both road and rail infrastructures are essential in the management of inbound traffic. When ships bring in containers, it is necessary to ease congestion through increasing the ease of inland transport. With a good inland transport network, it is easy to predict when containers coming into the port from the mainland will be received at the port. Scheduling can thus be carried out incorporating both inbound and out bound transport. It is important since shipping can be scheduled to avoid delays and to reduce the chances of handling too much useless inventory. This can also help in reducing obsolescence caused by transportation delays which cause destruction of perishable products.
Developing in terms of schedule reliability
Ports and other port user are also encouraged to practice reliable scheduling. This can help ease congestion in various ways. Through scheduling and publication of schedules, ocean carriers can be able to receive cargo a few days to departure making it easy to plan and arrange containers for transportation. With reliable schedules, vendors also come to understand that there is no need for scramble hence can only bring cargo that they want transported. This implies that no cargo will stay at port facilities for longer than expected or intended. In case cargo has to be kept for longer, the owners have to be contacted to ensure they are aware that they will be required to pay extra charges.
Tier two Recommendations: Dealing with logistics Issues
Every ocean carrier is faced with multiple logistics issues. In order to gain market shares and improve performance, the carriers have to deal with each of the issues faced through procedures that create positive business relationships and enhance profitability. A company like Maersk Line can deal with issues such as transportation, inventory management and cold supply effectively without losing contact with their profitability. The following recommendations can be applied by Maersk Line in enhancing its transportation effectiveness in various sectors.
Inbound and Outbound Transport Handling
Inbound and outbound transport contrib.ute immensely to carrier effectiveness. If handles efficiently, a lot of financial savings can be achieved by the carrier. In handling inbound and outbound transport, documentation poses a serious challenge to carriers in general. It is necessary to improve documentation particularly with reference to inbound transport. According to Harrington (4), greater cost efficiency can be achieved through gaining control of all expenses related to transport of both inbound and outbound transport. Transportation handling, if centralized can help in moving the right freight when there is choice to be made. Moving the right freight enhances reliability and thus helps in increasing market shares. Freight management can be handled more effectively through simultaneous bidding (Harrington 3). This helps to develop better carrier base. During transportation, it is also necessary to enhance effectiveness and reliability through freight tracking. Tracking inbound transport can help to identify the exact positions of carriers hence projecting their docking times. In this way, Maersk Line can help vendors to choose the right carriers for their products and to align the carrier strategic objectives to the available business.
Cold chains pose a significant challenge to the shipping industry as a whole. Major steamship lines such as Maersk can handle the challenges that come with cold chains in various ways. Handling food and pharmaceutical products offer a challenge in stringent standards, temperature restrictions, and sensitivity and product qualities (Terry 2). These challenges, when coupled with other general sea shipping challenges such as global outlooks and cost optimization make cold chain an even more sensitive area in the shipping industry. Maersk Line can therefore deal with cold chains in ways that drive the company towards reliability and dependence. With increasing demand for cold chain needs, it is essential for the company to specialize in terms of product transport. Specialization can help the line to access a greater market share and create a more reliable niche in the market.
Apart from this, product specialization can also help the company to overcome infrastructure and capacity constraints associated with carrier transport. Moreover, the company can also deal with cold chains through investing in the costly equipment required in maintaining quality and credibility in cold chains. While this may pose a challenge through the high initial costs, it can help the company to maintain product qualities and thus avoid fluctuations in taste and texture which arise due to poor storage conditions during transportation (Terry 3). A combination of sufficient effective instrumentation with the transportation of original and traceable products can help the company to build a name in the industry.
Logistic Service Strategy
Most steamship lines apply the game theory to enhance logistic service strategies. In operations, the game theory supports the identification of the most optimal operation route through prediction of potential outcomes (Burnson 1). This route of operation is then chosen from several available options to ensure the desired outcome is achieved. Maersk Line can use this strategy in handling its logistic services, particularly in the choice of suppliers, managing freight, selection of freight and formation of alliances. By ensuring that the most profitable options are always selected, the company is bound to sustain profitability regardless of the prevailing market conditions. Moreover, competitive advantage in increased through improved performance in all the sectors associated with logistic service delivery.
Inventory Management and Obsolescence Issues
Obsolescence issues cannot be addressed independently of inventory management by ocean carriers. The key to effective inventory management is to enhance performance through identification and elimination of unreliable suppliers who cause inventory shortages (Napolitano 2). In this way out of stock situations can be eliminated by Maersk Line. A key procedure in managing inventories is through tracking inbound transport. With reliable cargo reports, it is possible to track and plan for incoming inventory prior to arrival. It is also essential to follow up on inventory through the use of tools such as inventory management software which can aid in tracking and controlling inventories as they come and leave. In using inventory management tools, the application of real time analytics is essential as they give the exact reports as on the ground (Napolitano 3). It is moreover possible to capitalize on opportunities that arise for freight movement. Inventory management can help address the issues of obsolescence through on-time deliveries and requisitions which help to reduce chances of goods and services becoming obsolete. Moving with industry trends can also help the company to maintain its position in the market without becoming obsolete.
The key concerns regarding waste disposal by steamship lines deal with disposal of toxic wastes such as oil on the seal. To deal with this issue, the line should find strategies for preventing oil leakages during transportation through thorough maintenance procedures. It is also essential for the line to create in-ship waste storage and treatment facilities which can help handle wastes effectively for off shore disposal.
Marketing and Material Support Issues
Marketing and material support issues arise among a plethora of other minor issues in the shipping industry. The most effective marketing tool for Maersk Line is through the provision of reliable and specialized services to the potential customers. This can help to access greater market shares and enhance brand equity. It is therefore important for the steamship line to enhance their service delivery in terms of material support through effective inventory management.
Tier Three Recommendations: Effects of Consolidation
As the shipping industry grows in capacity as well as in congestion, various steamship lines are also finding ways to handle this growth and increase in competition through formation of strategic alliances. Consolidation of operations and facilities has also arisen due to the presence of those strategic alliances formed for increase in profitability. As some researchers argue that consolidation practices have more potential positive effects, some are of the opinion that consolidation can result in negative effects too. This present study has recognized the potential effects of consolidation as follows.
It is possible for consolidation to result in greater operation efficiency in port terminals as well as among steamship lines (Leach 2). The rationale behind this argument is that as lines consolidate the combination of terminals result in greater terminal capacities which can help in handling the increasing ship capacities at port. Moreover, consolidation means that greater man power will be required and obtained due to the demand for more services. With higher man power values, it is possible to increase efficiency even further. Efficiency increase also comes in terms of using ship capacity. With combination of business, ships are bound to transport higher values of cargo at a time, a factor which ensures that the ship capacities are optimally utilized. In addition to this, maximizing on the ship capacity also helps in port operations since a greater number of cranes can be deployed to offload a higher value of cargo at every ship docking. How this can help in reducing port congestion is however a subject of further study.
Greater control over freight pricing
As shipping companies consolidate over forces, it implies that greater market shares will lie in the hand of few consolidated companies. This only means that the competition among these companies will in turn reduce. When the competition reduces, price control is not longer in the hand of international markets but rather with the few consolidated companies. The respect developed between business partners can also make it possible for signaling to occur, whereby one company, recognizing the potential in a given port or location signals its allies in business to come in through the same port. As a result, prices fall subject to the recommendations of the few companies since they are at liberty to use whatever means they deem most profitable for cargo landing.
Increased intricacy of schedules
While schedules planned prior to consolidation were more simplistic and easily understandable, consolidation is bound to result in higher intricacy due to the connectedness of various lines (Leach 5). The difference in line origins and consolidation of operation can result in complex transport route patterns which are more difficult to plan for and which take more time in structuring. With greater time consumption and higher documentation rates and costs, consolidation practice will increase costs of steamship line operations while also increasing the optimal use of ship capacities. In addition to this, intricate schedules and complexity of routes will make it more difficult for vendors to know their exact carriers during transportation. For instance, when Maersk Line merges with Mediterranean Shipping Co., it will be difficult for a vendor booking with Maersk to understand which of the Mediterranean carriers will be transporting their cargo.
With increased consolidation, collusion of vessels is bound to occur. This does not mean literally but rather in terms of shared docking time and off loading times. This will be either legitimate or illegitimate where ships dock without prior notice. Collusion can occur when shipping lines pass by ports to pick up cargo or drop cargo assigned to their partners in business. To address this issue, steam ship lines are advised to maintain a keen look into their procedures and ensure communication of their operations occurs at all times. Tracking of inbound and outbound transport will also help steam ship lines to address this issue effectively through timely communication and preparation of the required resources for loading and unloading since collusion will mean a higher demand for both human resources and machinery.
Besides the aforementioned effects of consolidation, is also important to note that consolidation has great power of scale economics. Through consolidation, steamship lines will be able to control their expenditures through economies of scale (Leach 3). Carrying large volumes of cargo at once will also help to reduce the shipping rates due to reduced cargo volumes in storage. Moreover, the reduced shipping rates will enable ports to plan for the use of the available resources effectively. The use of the large ships together with maximizing on ship capacity will help to reduce documentation levels through incorporation of inventory tracking and transport management features.
Burnson, Patrick. Transportation best practices: Carriers use “Game Theory” to gain Strategic advantage. 2015
Harrington, Lisa. Inbound traffic control. Web. 2015
Leach, Peter. Shipppers, regulators will be watching closely as alliances launch services. Web. 2015.
Napolitano, Maida. Top 8 guidelines to improve inventory management. Web. 2013.
Terry, Lisa. The big Chill: 10 Trends in cold chain logistics. Web. 2016