Logistics has been embedded into every type of businesses, from the largest corporations down to the smallest corner shops on your street. It can easily be assumed that no business can run without some use of logistics (Accen- ture Annual Report, 2002, p 4).
Logistics has become a significant area of interest in global business and management, and is seen as a means to enhance firms’ performance and outcomes (Grant et al, 2006). The importance of logistics has dramatically increased, as evidenced by the significant amount of attention paid to it by practitioners and academics alike, due in large part to the internal and external environmental factors affecting firms, such as globalization, chang- ing customer demands, advances in technology and industrial deregulation.
Managing logistics and supply chains is necessary in order to control the flow of material, goods, information and other resources with cyclic rela- tions between the source of production and the source of consumption in response to the requirements and needs of customers.
Since the concept of logistics was first introduced in the early 1960s, its role, as a main centre for a firm’s cost reduction activities and consequently improving its competitive market position, has become ever more important to the business world (Rushton et al, 2006). The logistics concept provided by the Council of Supply Chain Management Professionals (2010) is one of the most popular, in which logistics is defined as the part of supply chain management that plans, implements, and controls the efficient and effective forward and reverse flow and storage of goods, services and related infor- mation between the point of origin and the point of consumption in order to meet customers’ requirements. This definition implies all the relevant activi- ties of the flow of goods from the origin to ultimate destination, including transportation, warehousing, purchasing, distribution etc. The primary goal of logistics is to minimize firms’ costs and maximize customer satisfaction by coordinating the flows of materials and information in the most efficient way, and by providing a service to customers at a speedy rate and with a reasonable price (O’Leary-Kelly and Flores, 2002; Coyle et al, 1999).
Defi ning Maritime Logistics and Its Value 55
Maritime transportation, one of key components of a logistics system, is responsible for carrying and handling cargoes across the ocean and conse- quently connects widely dispersed transportation linkages between consign- ers and consignees. It also plays a bridging role in connecting all the entities in logistics (eg customers, suppliers, plants, warehouses and other channels).
If maritime transport is not well integrated into the whole logistics fl ows, additional costs, unnecessary delays and accidents may arise, thus distorting the smooth fl ows of logistics (O’Leary-Kelly and Flores, 2002). Hence, mari- time transportation should handle cargoes in a highly integrated manner by keeping pace with other logistics components (O’Leary-Kelly and Flores, 2002). Refi ning maritime operations so that they can be successfully inte- grated into the overall logistics system contributes to better outcomes for all logistics entities (Huybrechts et al , 2002; Misztal, 2002). In this respect, maritime transportation can be regarded as a strategically crucial part of the logistics integration system.
The integrated demand for maritime transport has delivered a ‘maritime logistics’ concept (Panayides, 2006). Maritime logistics is referred to as the process of planning, implementing and managing the movement of goods and information which is involved in ocean carriage. Maritime logistics can be distinguished from maritime transportation in both its focus point and the managerial function. Table 4.1 summarizes a comparison of maritime logistics and maritime transportation. With reference to the focus point, maritime transportation emphasizes individual functions relating to sea transportation and pursues its own competitiveness of transport terminal
TaBLE
4.1Maritime logistics vs maritime transportation
Maritime logistics Maritime transportation Concept The process of planning,
implementing and managing the movement of goods and information which is involved in the ocean carriage.
The process of carrying and handling cargoes across the ocean.
Focusing point Maritime logistics is concerned with not only individual functions relating to sea transportation, but also an effective logistics fl ow as a systematic entity of the logistics integration system.
Maritime transportation emphasizes individual functions relating to sea transportation.
Each function pursues its own aims or competitiveness.
(Continued )
Introduction 56
TaBLE
4.1Maritime logistics vs maritime transportation (Continued )
operators; while maritime logistics, as a systematic entity of the logistics integration system, is largely concerned with an effi cient and effective fl ow of the entirety of the logistics system. With regard to the managerial func- tions, maritime logistics involves not only the activities relating to maritime transportation, eg contracting, shipping, sea voyage, moving cargo, and loading/unloading, but also other logistics services, eg stripping/stuffi ng, storage, warehousing, inventory management, offering a distribution centre, quality control, testing, assembly, packaging, repacking, repairing, inland connection, and reuse (World Bank, 2006).
As maritime logistics is a concept developed from the study of maritime transportation within the context of logistics, the following three key play- ers of maritime transportation make up the maritime logistics system: ship- ping, port/terminal operating, and freight forwarding. Table 4.2 presents the main and supportive logistics functions that maritime operators should provide.
The major function of the shipping system is moving the goods of ship- pers from one port to another. Shipping also provides other logistics ser- vices in order to successfully support the shipping and logistics fl ow, eg pick-up service, delivery notifi cation, a special handling service for cus- tomers who require particular services, inbound/outbound bill of lading (B/L), container tracking and information, and intermodal services (Lu, 2000; Heaver et al , 2000; Notteboom and Winkelmans, 2001; Robinson, 2002).
Maritime logistics Maritime transportation Managerial
function
Sea transportation activities: eg contracting, shipping, sea voyage, moving cargo, and loading/unloading.
Additional logistics services:
eg stripping/stuffi ng, storage, warehousing, offering a distribution centre, quality control, testing, assembly, packaging, repacking, repairing, inland connection, and reuse.
Sea transportation activities: eg
contracting, shipping, sea voyage, moving cargo, and loading/
unloading.
SOuRCES Lu (2000), Notteboom and Winkelmans (2001), Robinson (2002), Bichou and Gray (2004), Carbone and De Martino (2003), Panayides (2006), World Bank (2006)
Defi ning Maritime Logistics and Its Value 57
The key function of port/terminal operation is loading/discharging cargoes into/from a vessel, and making preparations for the cargoes to be ready to be delivered to the fi nal destination of the consumer via inland transporta- tion. In order to ensure that the cargoes be passed smoothly and quickly to the next stage of the logistics system, port/terminal operations in modern logistics systems involve not only loading/off-loading cargoes to/from a ves- sel, but also various value-adding services including warehousing, storage and packing and arranging inland transportation modes (Carbone and De Martino, 2003; Bichou and Gray, 2004; Roh et al, 2007).
Sometimes, a third intermediate party is engaged in the process of sea transportation for arranging the complex processes of international trade.
For example, freight forwarders reserve a vessel on behalf of shippers, or prepare for requisite documents for ocean carriage (eg B/L) and other docu- ments required for customs clearance and/or insurance requirements. They also arrange other logistics services, eg inventory management, packing and warehousing (Murphy and Daley, 1992; 2001).
Figure 4.1 shows the interaction of maritime logistics with other activi- ties in a whole logistics chain. As indicated in Table 4.2, maritime logistics is involved in sea transportation service as well as additional logistics services.
TaBLE
4.2Main function and supportive activities of maritime logistics
Shipping Port/Terminal
operating Freight
forwarding Main function Moving cargoes
between ports.
Shipping reception;
Loading/unloading cargoes;
Stevedoring;
Connecting to inland transportation.
Booking vessels;
Preparing for requisite documents for ocean carriage and trade, on behalf of shippers.
Supportive logistics activities
Documentation relating to sea trade;
Container tracking and information;
Intermodal service.
Warehousing;
Offering a
distribution centre;
Testing; Assembly;
Repairing; Inland connection.
Inventory management;
Packaging;
Warehousing.
SOuRCE Lu (2000); Heaver et al (2000); Robinson (2002); Notteboom and Winkelmans (2001);
Carbone and De Martino (2003); Bichou and Gray (2004); Roh et al (2007); Murphy and Daley (1992);
Bernal et al (2002)
Introduction 58
Those additional logistics services are a major part of physical distribution activities, eg warehousing, material handling, packaging, goods inventory, distribution planning, order processing, transportation, and customer ser- vice. Therefore, the performance of maritime logistics activities does inevi- tably affect the overall performance of physical distribution management.
As physical distribution is one of the two pillars of the whole logistics chain, successful management of maritime logistics has a direct impact on the over- all management and operations of both physical distribution and logistics management.