Ocean Transportation Part One.

1. Ocean TransportationPart One. Marketing Logistics

2. Ocean Transportation

3. Ocean Transportation

4. Ocean Transportation Somewhat like LTL motor carriers

5. Ocean Transportation Somewhat like truckload motor carriers.

6. Ocean Transportation • Liners

7. Ocean Transportation • Liners • Set schedules.

9. Ocean Transportation • Liners • Set schedules.

10. Ocean Transportation • Liners • Set schedules. • Published tariffs.

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

13. http://www.msc.navy.mil/inventory/ships.asp?ship=americantern&type=ContainerShiphttp://www.msc.navy.mil/inventory/ships.asp?ship=americantern&type=ContainerShip

14. From: http://www.scheepvaarthoek.nl/

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

16. Russian nuclear-powered lighter-aboard-ship http://www.mdf.ru/english/exhibitions/moscow/northernsearoute70/

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

18. http://www.ship-world.de/photo-archive/roro.htm

19. http://home.t-online.de/home/shipflag.de/6.htm http://home.t-online.de/home/shipflag.de/137.htm

20. Non-Vessel-Operating Common Carrier (NVOCC)

21. Non-Vessel-Operating Common Carrier (NVOCC) • Consolidator.

22. Non-Vessel-Operating Common Carrier (NVOCC) • Consolidator. Containership B A C

23. Non-Vessel-Operating Common Carrier (NVOCC) • Consolidator. Containership B C A

24. Non-Vessel-Operating Common Carrier (NVOCC) • Consolidator. Containership C A B

25. Non-Vessel-Operating Common Carrier (NVOCC) • Consolidator. Containership A B C

26. Non-Vessel-Operating Common Carrier (NVOCC) • Consolidator. A B C Containership

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

28. Go to Part Two.

29. “Ocean Transportation” Part Two Marketing Logistics

30. Ship’s Brokers • Liason between shippers and tramp ships.

31. 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.

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

33. 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.

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

35. 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 http://www.tdctrade.com/shippers/vol26_4/vol26_4_seafreight05.htm Lloyd’s Register http://www.lr.org/market_sector/marine/ulcs.htm

36. 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. Coyle, Bardi, Novack (2000) Transportation http://www.wipro.com/insights/marinebunkering.htm BIMCO http://www.bimco.dk/Corporate%20Area/Seascapes/Sea%20View%20/The%20business%20of %20ship%20recycling.aspx

37. 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

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

39. 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

40. 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. http://www.bimco.dk/Corporate%20Area/Seascapes/Maritime%20Matters/Scale%20economies%20and%20giant%20ships.aspx

41. Ship Size and Economies of Scale http://www.maersk.com/historyTemplate.asp?nav=1&subnav=12&id=45&decade=&count=31

42. 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. http://www.bimco.dk/Corporate%20Area/Seascapes/Maritime%20Matters/Scale%20economies%20and%20giant%20ships.aspx

43. End of Program