Ocean Transportation Part One. Marketing Logistics

Ocean Transportation

Type of Ocean Ships LinersTramps

Ocean Transportation Type of Ocean Ships LinersTramps Somewhat like LTL motor carriers

Ocean Transportation Type of Ocean Ships LinersTramps Somewhat like truckload motor carriers.

Ocean Transportation Liners

Ocean Transportation Liners –Set schedules.

Port Southbound from FloridaNorthbound to Florida DepartureArrivalDaysDepartureArrivalDays ANGUILLA FridayWednesday5 Monday5 ANTIGUA WednesdayMonday5 7 BARBADOS ThursdayTuesday5 7 CAYMAN ISLANDS Tuesday**Thursday2 Monday4

Ocean Transportation Liners –Set schedules.

Ocean Transportation Liners –Set schedules. –Published tariffs.

Ocean Transportation Liners –Set schedules. –Published tariffs. –Container or break-bulk.

From:

Ocean Transportation Liners –Set schedules. –Published tariffs. –Container or break-bulk. Lighter-aboard-ship.

Russian nuclear-powered lighter-aboard-ship

Ocean Transportation Liners –Set schedules. –Published tariffs. –Container or break-bulk. Lighter-aboard-ship. Roll-on/Roll-off ship (RORO)

Non-Vessel-Operating Common Carrier (NVOCC)

Consolidator.

Non-Vessel-Operating Common Carrier (NVOCC) Consolidator. Containership CA B

Non-Vessel-Operating Common Carrier (NVOCC) Consolidator. Containership CA B

Non-Vessel-Operating Common Carrier (NVOCC) Consolidator. Containership CA B

Non-Vessel-Operating Common Carrier (NVOCC) Consolidator. Containership CA B

Non-Vessel-Operating Common Carrier (NVOCC) Consolidator. Containership CA B

Non-Vessel-Operating Common Carrier (NVOCC) Consolidator. Handles all details of exporter’s shipping needs. Assumes all obligations of common carrier. Containership C A B Often serve freight forwarders (who are shipper’s agents, not carriers).

Go to Part Two.

“Ocean Transportation” Part Two Marketing Logistics

Ship’s Brokers Liason between shippers and tramp ships.

Ship Agents Liason between shippers and tramp ships. Act for ship operator to execute –Ship arrival. –Clearance. –Loading, unloading. –Fee payments in port. –Used when amount of business in port does not justify ship owner having their own people there.

Shipping Conferences Voluntary cartel of ship operators who agree on rates. Exempt from antitrust concerns. Previously carried quality image.

International Air Space and weight capacities on aircraft are at a premium. Products less than 10.4 pounds per cubic foot are assumed, for purposes of weight calculation, to be 10.4 pounds. Products more than 10.4 pounds per cubic foot are rated at actual weight.

International Air General cargo rate. Class rate – for cargo grouped into classes. Commodity rate. Container rate.

Container Traffic 26% of world container movements in 2003 were intra-Asia. China is the fastest-growing market. 25% of the container ship fleet is post-panamax. TDC Trade.com Lloyd’s Register

Liner Rates Liner costs are 80-90% fixed. –Fixed costs of owning/operating large vessels. –High management overhead for required sales efforts. Ship operating costs: 60-70% of costs are for fuel. Ship scrapping. –95% of ship can be recycled – especially steel. BIMCO %20ship%20recycling.aspx Coyle, Bardi, Novack (2000) Transportation

Liner Rates Ships tend to be built for specific routes. –Size. Panamax. Post-panamax. –Dimensions. –Ports. –Cargoes. Rates tend to be based upon costs per cubic foot of space. –Floor price must cover fixed costs. –Prices are then based upon commodity values. The higher the landed cost, the higher the transportation charge that can be charged. –Elasticities are factored in. Coyle, Bardi, Novack (2000) Transportation

Tramp Ship Cost Factors Tramp ships must be flexible to carry varied cargoes. –Tradeoff: more flexibility, less economy. Coyle, Bardi, Novack (2000) Transportation

Tramp Ship Rate-Making High fixed costs. Key is to minimize nonrevenue time and mileage. Three types of tramp ship charters. –Voyage charter: specific trip(s). –Time charter: ship, crew used for a specific time. –Bareboat: vessel is rented for a long period of time and charterer provides crew. Coyle, Bardi, Novack (2000) Transportation

Ship Size and Economies of Scale Ship size previously had been limited by –Abilities of ship builders. –Materials from which to build ships. –Ability of world’s ports to handle. By 1970s ports were basically the only limitation.

Ship Size and Economies of Scale

Ship Size and Economies of Scale Ship size previously had been limited by –Abilities of ship builders. –Materials from which to build ships. –Ability of world’s ports to handle. By 1970s ports were basically the only limitation. Economies of scale. –Quadruple ship size, only double its building and operating costs.

End of Program