Liner Shipping Strategy

Introduction

Many of the logistics problems faced by regional, national, cross-border, and international transport are also typical for marine transport. This industry has developed over a long period, and today, a significant volume of cargo is transported by water. This type of cargo transportation is characterised by its economy, versatility, and a wide range of possibilities. Nevertheless, the implementation of maritime transport is complicated to organise, plan, and manage. Depending on the type of transport or organisational details of the carriage, additional difficulties can be faced by individual shipping companies for different operations. Therefore, it is essential to identify the key general problems faced by modern companies and discuss strategies that can help overcome potential difficulties to improve the process of transportation.

Modern Challenges of Liner Shipping Companies

While the problems that cargo carriers can face on the water can be very different, companies that deliver on land face many similar issues characteristic of transportation in general: cargo delays, difficulties with customs clearance, problems with partners, etc. In order to effectively organise the entire supply chain, it is necessary to think through the whole algorithm of actions to lower the potential difficulties that could arise and, thus increase the chances of the goods being transported on time (Pantuso, Fagerholt & Hvattum 2014). Undoubtedly, during the development of the shipping industry, the system improved as new outlets opened, and ships became more adapted for even faster transportation. However, some complications arise even today, and many companies are forced to suffer losses because of such problems. The list of difficulties encountered by carriers includes: periodic delays of cargo, long registrations of customs documents, incorrect route settings, as well as obstacles in organising transportation due to outdated ports.

Delays of Cargo

Causes of periodic delays can vary a great deal. According to Rehmatulla and Smith (2015), carriers quite often encounter inconsistency of loading and unloading schedules, insufficient quality of interaction among suppliers and customers, and violations of the rules for the movement of vessels. All these difficulties cause not only the delay of goods but also the deterioration of business relations between partners. Evidently, when one side expects to receive certain goods within a specific time frame, and these goods are not delivered on time, it cannot reflect positively or inspire a high degree of confidence in the supplier. Moreover, various carrier companies are forced to tolerate additional costs caused by lengthy delivery periods and the need to pay for certain procedures, for example, withholding goods in particular zones (Sun & Zheng 2016). It is a logistics issue, and if such problems arise, they require an immediate solution.

One of the reasons why some cargo stays in ports for a long time is corruption. According to Lund-Thomsen, Poulsen, and Ackrill (2016), since 2011, in such countries as Indonesia, Nigeria, Argentina, there has been a special law passed, aimed at combating corruption. The fact is that some carriers in these countries suffer serious losses as they are at the intersection of large trade marine lanes, which are also known to be used by many criminal elements. Despite the introduction of specific forms of control over corruption in trade, such cases are still arising. Therefore, this problem is still urgent and requires taking some concrete measures.

Long Registrations of Customs Documents

When drawing up particular documentation, the process is often not optimal and takes too much time in overall. The number of papers, positions for filling, etc., in the required package of documents also seems more than is really necessary. Nevertheless, when customs clearance is completed, it is essential to have all the required papers but in practice it is often found that some of the important forms are missing, and some are incorrectly filled. Of course, the customs service cannot let cargo that has the wrong documentation enter a territory, and this can cause goods to be delayed at checkpoints, creating problems for both the sender and the recipient. Moreover, the term of delivery of the goods can be extended for an indefinite period since the customs services, as a rule, do not give specific information regarding the exact dates of dispatch.

There are quite a few examples of these issues in practice. For instance, Reinhardt et al. (2016) claim that in most ports of North America, Asia, and Europe shipping companies have to waste significant money on surplus fuel, which is caused by extensive time taken over paperwork. In addition, according to the authors, corruption is also possible at checkpoints, and even though governments of all the countries are actively fighting this problem, incidents still regularly occur (Reinhardt et al. 2016). One possible solution for commercial carriers might be to devote more time to processing documents in order to avoid such challenges and not to have problems with the law. Also, the customs services themselves could work faster if the corresponding set of papers are prepared, and all the necessary materials are the same as those required by transportation instructions.

Incorrect Route Setting

Even despite significant advances in the field of navigation, the modern trade marine system still faces problems caused by incorrect settings of cargo delivery routes. As a rule, such complications arise in connection with the disruption of the navigation systems of ships. Like any equipment, these systems can unexpectedly fail, and the route can be slightly changed, which is usually not critical for cargo but can cause customer dissatisfaction because of extended delivery times. On the other hand, even a slight deviation from a selected course is an indication that the equipment used in the delivery process is not perfect.

An incorrect route setting does not just cause discontent of customers. As Ghiara and Caminati (2017) remark, the modern maritime industry has at least four hundred liner services. This means that the competition between suppliers is quite high and sometimes, in order to get ahead of another service and gain credibility among buyers, it is necessary to deliver goods as quickly as possible. An incorrect route setting, along with a long customs clearance, is often the main causes of delays, and can severely damage a supplier’s reputation. One of the examples that can be cited is the Malacca Straits, where depths are very shallow, as Ghiara and Caminati (2016) note, and some tankers and other large vessels cannot pass through it. On the other hand, lighter ships can easily pass through, thereby saving time on the delivery of goods. This example illustrates that sometimes even a slight advantage over a competitor can provide a significant benefit in gaining time for deliveries.

Issue of Outdated Ports

Not all modern day trade ports are equipped with sufficient facilities in order to quickly accept goods and complete cargo deliveries. In some countries, for example, the infrastructure is not developed enough to equip modern and convenient ports to ensure that ships have enough space to manoeuvre, or that all the goods can be stored in good conditions (Challenges troubling the shipping industry 2016). In order to achieve significant changes, it is essential to not only equip trade ports with appropriate facilities but also to determine the most efficient allocation of space so that as much useful area as possible can be used. Otherwise, shipments will be scattered all over the ports, causing additional problems in finding lost goods and returning them to suppliers. Therefore, some measures should undoubtedly be taken to re-equip ports and make them more modern and functional.

Strategies to Utilise to Overcome the Challenges

The solution to problems that arise in the process of general goods transportation by sea can be achieved through the introduction of various effective supply management strategies. The leadership of the shipping companies can employ more efficient measures by which certain difficulties can be partially or entirely resolved, thus ensuring partnership with customers will remain as successful, if not more so, as before. A list of such strategies may include several different intervention methods that differ in the degree of impact on specific companies and the potential outcome. However, to solve any of the previously mentioned issues, serious decisions are required, and for their successful implementation, as a rule, efforts are needed to be made by not only the leaders of companies but also ordinary employees who are interested in achieving success and forging partnerships with potential clients.

Attracting Highly Skilled Employees

It is well known that the effectiveness of work primarily depends on how well employees cope with their duties; that is, the quality of staff. Certainly, the correct management of employees plays an essential role in the process of organising such critical procedures as marine goods transportation. Nevertheless, without skilled and qualified personnel, work cannot be performed quickly and competently, and all the processes will certainly require additional intervention from authorities, which, in its turn, will further slow down the supply process.

One of the successful strategies that will help to avoid long delays of cargo and speed up the process of customs clearance is to attract talented employees who are able to quickly assess the current situation and react to any changes. According to Morrissey (2015), a personnel policy can bring a certain company both advantages and disadvantages. Those employees who have experience in organising marine trade will be able to quickly navigate exactly how the routes should be set. In addition, a person who is at executive level and responsible for the project is unlikely to experiment with the documentation. The more qualified and conscientious the employee is, the higher the chance the papers accompanying cargo will meet all customs regulations. Moreover, professional specialists usually allocate time more efficiently and plan each detail; for example, if the reason for the delay lies in insufficiently thoughtful communication with a receiving party, everything possible will be done for the goods to arrive on time. As a rule, the conventions with the customs are also settled. Therefore, the involvement of experienced personnel should become one of the priorities of modern liner shipping companies.

Innovative Equipment Improving

Based on the difficulties faced by many of today’s suppliers of goods by sea, it can be noted that frequent challenges arise with the equipment that is used during work. It is not just about different navigational and technical systems but also more standard devices used in warehouses and ports. For example, as Wang, Yeo, and Ng (2014) claim, more advanced storage systems of goods will protect both suppliers and recipients from the premature damage of cargo and will help to distribute delivered items more efficiently. Transport operated in the ports of some cities and countries can also be replaced with newer and more advanced options. As a rule, all shortcomings intersect with one another, and, for instance, if transporting the cargo from one place to another takes too long, which is often caused by outdated equipment, this will inevitably lead to further delay and possible problems with the customs services. Accordingly, the acceleration of the delivery process could be a rather effective step in improving the company’s operations. To achieve it, it is possible to partially or completely replace outdated and inefficient transport and other port equipment with newer models.

Another challenge that different shipping companies are periodically forced to experience is the failure of navigation equipment. Such systems have been used in modern navigation for a many years; nevertheless, even the appearance of new developments cannot affect the quality of work that such devices perform. The construction of routes largely depends on how efficient and stable a programmed system is. According to Bray, Caggiani, and Ottomanelli (2015), an innovative approach to the design and implementation of the most modern navigation equipment can help get rid of the problems of incorrect routeing and delays. Therefore, this strategy also has rather obvious advantages and deserves attention.

Conclusion

The key challenges faced by modern companies can be solved by the implementation of appropriate strategies. Various difficulties in the process of marine transportation can be minimised with thoughtful and carefully planned strategies, for example, upgrading the equipment base or through a policy of attracting talented and experienced employees. Effective and timely taken measures will help to not only protect a company from losses but also bring profit, in case of their successful implementation. Both managers and ordinary workers can influence the improvement of work quality and the correction of current problems. Described strategies can be implemented by both large and small liner shipping companies.

References

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Challenges troubling the shipping industry 2016. Web.

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Morrissey, K 2015 ‘An inter and intra‐regional exploration of the marine sector employment and deprivation in England’, The Geographical Journal, vol. 181, no. 3, pp. 295-303.

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Wang, Y, Yeo, GT & Ng, AK 2014, ‘Choosing optimal bunkering ports for liner shipping companies: a hybrid Fuzzy-Delphi–TOPSIS approach’, Transport Policy, vol. 35, no. 1, pp. 358-365.