Shipping Logistics 156
Furthermore, higher expectations in the production chains force transporta- tion companies to offer services just-in-time. By offering integrated transpor- tation services, the shipping lines have closer relationships with the customer and can reduce their dependence on third-party logistics. In many cases, in order to offer such door-to-door services, subsidiaries are mandated to integrate the transportation chain under the supervision of the shipping line.
It must also be noted that inland logistics represent one of the most attrac- tive parts of the transportation chain for reducing costs. More specifically, inland costs account for 40 to 80 per cent of the total costs. In contrast to fixed-cost-driven ocean logistics, inland transportation turns out to be much more variable, respectively cost-driven. Notteboom (2002, p 92) states that inland transportation costs are 5 to 30 times higher than long-distance liner shipping rates.
Notteboom (2009, p 21) provides a positive picture by summarizing:
‘What will take place inland, will shape the future of containerization in terms of its potential to further accommodate the growth of international trade.’ Nevertheless, since the shipping company moves away from its core business, new problems might be encountered. Competition between the different inland transportation modes is not a given anymore which might result in inefficiencies (Frémont, 2009a, p 11).
Supply chain integration of shipping companies
T aBLE
9.1Liner companies and their subsidiaries
CompanyShipping lines (container)Terminal activities Tankers and other shipping activities Logistics/ MultimodalShipyard/ Container production Others 1AP Möller Group Mearsk Line Safmarine og MCC Damco
APM Terminals Maersk Tankers Maersk Drilling Maersk LNG Maersk FPS Svitzer (towing) Mearsk Logistics The Odense Steel Shipyard group Container Industry
Maersk Oil Supermarked Group Danske Bank Star Air Danbor Service 2Mediterranean Shipping Company (MSC)
MSC CargoMSC Cruises 3CMA CGM Group Delmas ANL Mac Andrews OT Africa Line CNC Line Comanav U.S. Lines River Shuttle Cont. LTI France Progeco CMA Rail CMA CGM Logistics TCX Multimodal Logistics
Compagnie du Ponant Partir en Cargo Tapis Rouge Int. The Traveller's Club (all tourism related) 4Evergreen Line EG Marine Corp. Italia Marittima SpA EG Marine (UK) Ltd. EG Marine (Hong Kong) Ltd. EG Marine (Singapore) Pte Ltd.
4 transhipments hubs 3 terminals operated
(Continued)
CompanyShipping lines (container)Terminal activities Tankers and other shipping activities Logistics/ Multimodal
Shipyard/ Container production Others 5Hapag Lloyd AGHapag-LloydHolding with minor shares in container terminals in Hamburg and Montreal
6CSAV Group CSAV Norasia Container Lines Ltd. Companhia Libra de Navegacao/Navegacion CSAV Panama
COSAN SAAM Transportation of vehicles, reefer cargo, solid and liquid bulks SAAM (tugboats)
SAAM (logistics activities) 7NOL GroupAmerican President Line (APL)APL Terminal Activities APL Logistics APL Log Transp. Management Serv. APL Log Wh Management Serv. Vascor, Ltd.
8COSCO GroupCOSCO Shipping LinesCOSCO Pacifi c Co. Xiamen (bulk) Cosco Bulk Carrier Dalian (tanker) Guangzhou Ocean Shipp (specialized)
COSCO Logistics China Ocean Shipping Agency
COSCO Shipyard Group Nantong COSCO KHI Ship Eng. Co Dalian COSCO Shipbuilding CIMC (container manufacturing) passenger shipping: Tianjin Jinshen Ferry Sino-Japan Int. Ferry Yingkou COSCO COSCO Finance Co COSCO Int. ship trading China Marine Bunker
T aBLE
9.1Liner companies and their subsidiaries ( Continued )
9Hanjin ShippingHanjin Shipping Hanjin Pacifi c Corporation (13 terminals) Hanjin New Port Company Hanjin Kerry Logistics Total Terminal Int.
Hanjin Overseas Bulk Hanjin Overseas Tanker Pte.
Hanjin Shipmanagement Hanjin Logistics HJLK (Transport. Agency) Shandong Hanjin Log. (ODCY)
ZESCO (ship repair yard)Samol Co. (renewable energy) 10CSCL China Shipping Container Lines ShanHai Puhai Shipping Xiang Zhu
China Shipping Terminal Development Dalian Int. Container Terminal various other terminals China Shipping Refrigeration Universal Shipping Co. Shanghai HaiXin YuanCang Int. Log. Various cargo agencies Shanghai Yanshan Storage and Transportation Co. Dalian Vanguard Int. Logistics Universal Logistics
CSCL (Dalian) Data Processing International Computer Co. (IT) 11Mitsui O.S.K. Line Mitsui O.S.K. Liner Utoc Corp. International Container Terminal MOL Bulk Shipping - Tankers MOL LNG Transport Co. MOL Car Carriers
MOL Ship Management MOL Ferry Blue Sea Network (ferry and domestic transport) Tug-Boat and Towing
Minaminippon Shipbuilding Co. MOL Information Systems MO Tourist Co. MO Marine Consulting MOL Finance 12NYK LineNYK Liner TradeYusen Terminals Inc.Bulk Shipping NYK Logistics Nippon Cargo Airline Co.
Yusen Real Estate Crystal Cruises Inc. NYK Cruise Co. Monohakobi Technology Inst. (Research) (Continued)
CompanyShipping lines (container)Terminal activities Tankers and other shipping activities Logistics/ Multimodal
Shipyard/ Container production Others 13Hamburg Süd Group Hamburg Süd Alianca Alianca Bulk Hamburg Süd Tramp Shipping
Columbus Logistics Service GmbH (CLS) Columbus Shipmanagement GmbH
Hamburg Süd Travel Agency Columbus Tours Event Business GmbH Alianca Consulting 14OOIL GroupOOCL Logistics Ltd. associated companies: Ningbo Yuan Dong Terminal Tianjin Port Alliance Int. Container Terminal Co.
OOCL Logistics Ltd. (cargo) Reefer Service
Maritime Delivery Services Inc. (trucking) OOL Logistics Warehousing and Transportation Intermodal Service
E-services Orient Overseas Building (real est.) investment: Kenwake Ltd. Soberry Investments Ltd. Wall Street Plaza Wayton Wealth Cap. Corp. 15K Line K Line America, Inc. K Line International Transportation Service
RoRo services Bulk shipping Tanker services LNG transport intermodal services, land transportation Century Distribution Systems
K Line Travel Ltd. K Line Accounting and Finance Co. 16Zim Zim Integrated Shipping Services Reefer Containers
OOG & Project Cargo Tanker
T aBLE
9.1Liner companies and their subsidiaries ( Continued )
17Yang Ming Group Corp.Yang Ming Marine Transport Corp. Kao Ming Container Terminal Corp. Honming Terminal & Stevedoring Co.
Kuang Ming Shipping Corp. (bulk) Jing Ming Transport Co. Yes Logistics Corp.
Ching Ming Investment Corp. 18Hyundai M.M.HMM Container LinesInvestment on 5 terminals Cargo Service Wet Bulk Dry Bulk Tanker Heavy-Lift Service
19Pacifi c International LinePIL container linerPort and terminal business in Singapore and Thailand
PIL Logistics (SCM solutions)Singama Container Holdings Ltd. (container manufac.)
IT services 20UASCUASC liner service Shipping Agencies Tankers Freight Forwarding Land Transportation Air Cargo Storage
Container Repairs Ship Repair
SOuRCE Authors, companies’ web pages, annual statements
Shipping Logistics 162
The integration of logistics-related subsidiaries has influenced the revenue structure of shipping companies. Figure 9.3 illustrates the revenue ratios of NYK subsidiaries. While the shipping business of dry and liquid bulks counts for almost 40 per cent of NYK’s business, the liner trade business is the second strongest business division within the group. Although NYK Line operates the 12th largest container fleet in the world, the revenue of the liner division is almost as big as the revenue of related logistics services.
Moreover, the significance of port activities has increased for shipping com- panies as they have realized the chances of increasing influence on the supply chain. In 2008 over 40 per cent of the container terminal capacity among the top 12 operators was managed by shipping companies. The remaining 60 per cent of terminal capacity was operated by terminal managers without shipping services (NYK Annual Report, 2010).
With over 800 vessels, 42 terminals worldwide, 308 distribution cen- tres in 33 countries in 2010 as well as an air cargo fleet, NYK reflects the
fIgurE 9.3 Revenue ratios NYK Group for the fiscal year 2009–2010
Liner Trade Business (378,1 Billion Yen) Bulk Shipping Business (733,5 Billion Yen) Logistics Business (341,8 Billion Yen)
Terminal & Harbor Transport Business (110,3 Billion Yen) Cruise Business (35,2 Billion Yen)
Air Cargo Business (62,6 Billion Yen) Real Estate Business (12,2 Billion Yen) Other Business (156 Billion Yen)
Revenue Ratios for NYK Group (fiscal year ended March 31, 2010)
2%
6%
19%
40%
1%
3%
9%
21%
SOuRCE NYK Annual Statement (2010)
Supply Chain Integration of Shipping Companies 163
changes in the liner industry. Integrated companies promise more stability and more customer-oriented logistics services. Only in this way logistics ser- vice providers can fulfil the high expectations of globalized manufacturing companies.
A major goal of liner companies is an overall optimization of the supply chain. This ranges from land, sea and air transportation, in-transport inven- tories and optimized warehousing along the value chain of a company to the delivery to customers. In this manner, service providers must extend the geographical coverage, the range of services and the solution capabilities for every served industry (NYK Annual Report, 2009, p 15). The set of possible solutions is illustrated in Figure 9.4.
Frémont (2009b) conducted a survey among container lines in order to understand their definition of logistics and the relations with forward- ing agents. Annual reports do not give a complete understanding of the subsidiaries’ role. The turnovers of divisions are generally aggregated.
Therefore, it is difficult to distinguish between the importance of inland transportation, consolidation activities etc. Although a broad portfolio of services is offered, shipping lines improve financial performance by providing maritime transportation. Inland transport is often outsourced to partners. Furthermore, shipping lines do not want to compete with forwarding agents that have been close partners and customers for the liner company. This customer might be lost if the shipping lines enter the forwarding market.
Although Figure 9.4 provides a picture of advanced service integration, the maritime groups that develop logistics capabilities remain limited. NYK, the AP Möller Group and the NOL Group with APL are exceptions. Frémont (2009b) indicates that many other shipping lines use logistics activities as labels for publicity reasons.
fIgurE 9.4 Portfolio of integrated service for a shipping company
Land Transport
Service Range
Warehouses
OCEAN TRANSPORT
Bulk, Tanker, Cargo
AIR TRANSPORT
Expedited delivery
Cross-Docking Pre-Delivery Inspection (PDI) Transport Tracking – Inventory Management System
Coverage of the transportation chain
Add. Logistics servicesMain transport servicesAdd. Transport services
Milk-Run; Cross-Docking Freight Forwarding
Terminal Operations Terminal Operations
Distribution Centres
Land Transport
Delivery
TRANSPORTATION CHAIN
Shipping Logistics 164