Chapter 4: Findings and Discussions
In the first section of this chapter, the interview result is being analysed. Following that, the research done in phase 1 and the interview results gathering in phase 2 is combined to formulate the Opportunities, threats and uncertainties in Intra-Asia container trade. Finally in the last section of this chapter, we will forecast the future outlook of Intra-Asia for the next five years.
4.1 Analysis of Intra-Asia Market
We had tailored our interview questions to gather professional opinions on the future outlook of Intra-Asia and Intra-Asia container shipping and how they could impact and affect the ship-owners and operators (Appendix D).
Based on the interviews results (Appendix E) we had gathered, 80% of the respondents believe that the current shipping market is now in its recovery from the longest downturn in three decades in the shipping industry. It is largely due to the cause of overcapacity of ships in the market that have depressed freight rates since the end of a shipping boom in 2008 (Shipping Industry sees an end to five-year downturn, 2014). The current recovery seem to be fragile in Europe, though it is gaining traction in the US and UK, while emerging market is showing signs of slow growth (Howard, 2014). All the main shipping segments remain heavy on the supply side, causing great volatility in freight rates (Figure 10). Fortunately, the industry has now improved its ability to apply counter-balancing measures that had
(NSY) had been providing parts and services to the Mega-Yacht Industry since receiving their initial seed capital in 2000. The Mega-Yacht industry provided an attractive opportunity for NSY. Although the industry was small by comparison, serving only 10,000 vessels, it generated in excess of $1 billion in economic activity annually, divvied amongst the new build, and maintenance, refit and repair business sectors (Mark & Mitchell, 2003, p. 48). The industry’s supporting cast included captains and crews, owners, management companies, procurement agents, yacht builders and repair entities, brokers, and local husbanding agents. Although unknown to the firm at its inception, consultants in 2002 forecasted the mega-yacht industry would see annual growth of 6%, with the potential for even better numbers in the short-term (Mark & Mitchell, 2003, p. 48).
- Explain the structures of the road and rail cargo industries and the current issues facing the industries.
There were also the existences of exporting conflicts. In 1994, an exporting consultant Hodges had identified major export problems. One of these problems is the relatively high cost, low efficiency and reliability of Australian shipping that will greatly affect the price and quality of the product. There are also problems with the availability and usage of appropriate containers for the product that again has a massive effect on the quality and on-time delivery of the products. Different countries have their own prevailing laws and standards, which an exporter should comply with. There are also trends that an exporter should successfully fulfil, like the new trend for environmental concerns. The exporter should also establish a better relationship with their traders in order to continue a regular link and easy entry to the market.
Ocean Carriers Inc. was approached in January of 2001 with a contract proposal for the leasing of one of their ships for a term of 3 years beginning in 2003. Ocean Carriers currently has no ship to accommodate the customer. To commission the construction of a new vessel would take 2 years from start to completion. The average rate in the spot market is $22,000 per day. Ocean Carriers deployed a younger fleet than average carriers and generally earned a 15% premium over the average daily rate placing them in position to capitalize in strong economies. However, the industry is volatile and suseptable to extremes both low and high. Many ship owners sought to sign contracts with time charters in order to shield themselves from the swings
2. Consider the idea of upgrading the Los Angeles warehouse to include a distribution center capable of processing all the volume coming into the United States. Assume that containers coming into Seattle would be inspected by federal officials (this needs to be done at all port locations) and then immediately shipped by rail in their
This drawn manufacturing enterprise moved from Hong Kong to backyard China at a relatively lower cost. Therefore, Hong Kong port turns to focus on transporting container cargo; shifting from a relay hub to a load center and enjoying its superb period till mid-1990s.
Finally, an aging driver workforce is expected to result in driver shortages as drivers will be leaving the market at a faster rate than can be replaced by interested qualified new drivers. For these reasons, the overall transportation industry and global supply chain will be challenged as trucking is the common thread needed to complete rail, ocean and air moves. In addition to lower service levels for shippers, higher driver pay due to driver a shortage and rising transportation costs, a potential impact on the industry is a shift in focus toward driver productivity maximizing initiatives like reducing terminal/shipper dwell, improving chassis quality, or increasing number of drop pools (at the expense of container utilization). While a driver shortage should bode well for the fundamentals of intermodal (ie. fewer total truck miles) versus full OTR truck offerings, a significant driver shortage would nonetheless be a major challenge for the intermodal
Reefer box, as known as refrigerated container, is listed in the Hanjin’ potential products list. Since reefer boxes are limited and demand for it is escalated from EU to Asia, reefer boxes are promoted inbound in Asia to export boxes to Europe. As a result, Hanjin can maximize EQ-equipment turnover. Some ports in Europe, such as Felixtowe in Great Britain, have a surplus of reefer boxes, thus the company can adjust the rate higher in order to limit the trade into such area while surplus areas, such as Barcelona in Spain, are offered a reasonable low rate to give Asia-Europe service promotions. Afterwards, the company gets higher contribution margin derives from Europe-Asia trade. Another way Hanjin reinforces its core business globally is promoting “shipper owned container”, “SOC” for short, in the area where boxes are deficit to save on empty repositioning cost. In surplus areas, Hanjin tries to be flexible with its rates to clear out the boxes and send them to other areas with high demand. The rates can be adjusted from lower to higher accordingly. Hanjin Shipping, additionally, has a service diversification to Africa as NAF-North Africa-Asia, WAF-West Africa, EAF-East Africa, SAF-South Africa lines are added. Before cargos are
Other section of buyers which may affect container line business are freight forwarders or clearing agents, with rapid expansion of shipping industry and import/
According to Waters (2010) water transport has not been used to it’s full potential therefore there has been a decline in sea transport, this is due to the lack of proper terminals. But according to Harrison & Fichtinger (2013) containerised ocean transport has become the lifeline of nearly all global supply chain, because of the increased amount of global processes, outsourcing and offshoring. Mason & Nair (2013) states that today, there are more than 80% of world trade by sea, such as raw materials and manufacturing outputs are carried inter-regionally around the globe.
You are required to undertake a detailed examination of the changing nature of the long-haul transatlantic airline market. The market you are required to investigate comprises only the international passenger market (i.e. excluding the movement of goods by
This essay attempts to describe current air freight market conditions, challenges in air freight demand and generate potential solutions to increase air cargo demand. It is divided into four parts: air freight, current demand for air freight, challenges, and potential
On this report, we provide information about Shipping Process that we get from APL (American President Lines). As for, the data we got such as the requirement, documents that needed in shipping process, and also the overall shipping process that already told by our resources in the interview. We conduct an interview with Captain Nugroho Subroto as the Chief of Operation Advisor of APL (American
In particular, this chapter includes an analysis of the technical characteristics of LNG and its transportation process on the one hand, and an analysis of the legal background focusing on chartering. More specifically, it provides a brief analysis of the definitions and the main characteristics of the Time Charter Parties (T/C hereinafter), and Voyage Charter Parties (VCP hereinafter). The remainder of the chapter is devoted to the presentation and discussion of the main chartering routines followed when trading a vessel under different charter-parties (C/P hereinafter) and special C/P forms.
The consequences of over-investment appear and the economy starts manifesting over-heating symptoms. New tonnage begins to come into the shipping market when the wider economy has reached its peak. Ship owners are not concerned about this because as far as they have been observing, the prosperity phase is getting better and better so they expect that it will continue on this upward trend. Then the recession hits and shippers become less willing to commit to long term charter parties and take advantage of declining freight rates on the sport market. There is competition as new tonnage enters the declining market between ship owners who try to grab hold of declining fixtures accepting lower freight rates than they had originally anticipated when the decision was made to order new vessels. A downturn in the economy resulted in a decrease in the demand for shipping and tonnage when supply is now inflated. There is a downward trajectory now and as freight rates and asset values decrease shippers hold back in anticipation of a depression and non-shipping banks begin to pull out as they lack the experience of such a volatile market.