Key Factors About Shipping - Encompass Shipping

Key Factors About Shipping

Posted by Joshua Gluck

Factors that contribute to shipping management and shipping logistics for the past few decades, international trade has developed in both volume and speed, which has, in turn, brought an ever-increasing competition among major maritime nations and requires a corresponding shipping policy. According to Lee and Dong (2008), it is crucial to identify and weigh the factors influencing country’s shipping competitiveness and shipping policy. A country’s shipping competitiveness depends not only on its present competitiveness but also on its potential competitiveness (Lee and Dong, 2008). Specifically, a country’s present shipping competitiveness is the final result of all previous investments, industry policies and business performance in the shipping industry while its potential shipping competitiveness is a set consisted of all influencing factors of competition which has impacts on the future competitiveness.

Such factors that may be valuable to shipping and shipping logistics may include:-

  1. Freight rate and price volatility

Freight rate and price volatility-shipping logistics-key factor about shipping

According to Wu and Lin (2008), another important aspect of the successful logistic trade is global dry bulk shipping market, which is a crucial element in global economy and trade. Considering new structures and second hand vessels are frequently traded as assets and the shipping rate is the key factor of vessel price, it is important for shipping market participants to recognize the market dynamics and price transmission mechanism over time to obtain proper strategic decisions. Significant volatility transmission effects exist in each market sector and the market volatility transmission mechanism varies among different vessel types. Furthermore, some bilateral effects are found in the dry bulk shipping market, indicating that lagged variances could affect the current variance in a counterpart market, notwithstanding the volatility transmission.

      2. Internationalization

internationalize-Freight rate and price volatility-shipping logistics-key factor about shipping

Gadhia et al. (2011) analyzed the internationalization level of the world’s largest container freight shipping companies by examining how their port network is analyzed. According to their results, only three of the nineteen companies could, in fact, be considered as being truly “international” and service the major and minor ports distributed across the globe. The other companies are positioned on different stages of such a development scheme. The most distinguishing aspects of the differing levels of internationalization are the attachment to the region from which a shipping company originated and the usages of ports in smaller regions that were located close to the main routes, as a means of expansion.

     3. Factor productivity growth

Freight rate and price volatility-shipping logistics-key factor about shipping-factor productivity

Wu and Lin (2008) developed a theoretical model to evaluate and decompose the total factor productivity (TFP) growth of the container shipping industry, reconfirming the cost advantage of large vessels and indicated that the deployment of large vessels has pointed to a problem of serious over-capacity. A further study may be conducted, since the operation and management of international container shipping are globally standardized and integrated, the model developed in this study can be applied to examine the productivity growth of other container shipping lines.

     4. Increase of energy efficiency

energy-efficiency-Freight rate and price volatility-shipping logistics-key factor about shipping

According to Johnson and Styhre (2015), another kind of cost-effective approach is the potential to increase energy efficiency in shipping through reduced speed at sea permitted by shorter time in port indicating that energy required can be reduced whilst preserving the same transport service. The conclusion of this study was that aspects features such as a lack of effective ship-shore-port communication, little time for ship operators, an absence of means for correctly predicting energy use of voyages as a function of speed, observed risk of arriving too late, and connections with third party technical management all have a somewhat significant impact in energy efficiency.

     5. Impediments of logistics management

Freight rate and price volatility-shipping logistics managament-key factor about shipping

Along with the enhancing factors of shipping logistics management there are also some obstructions and barriers which can arise. Rojon and Dieperink (2014) indicate that there are numerous structural barriers have been found that can obstruct the further development of wind propulsion technologies in the shipping sector, including, inter alia, a lack of policies and incentive schemes developing wind propulsion, lack of financial resources, insufficient collaboration among different actor groups and conservative and risk-averse attitudes prevalent in the maritime industry.

The importance and significance of standard shipping are widely discussed. Numerous previous studies indicate that inefficient supply chains acutely hamper the capabilities of firms in developing countries to compete in global markets and become integrated into global value chains. Worldwide shipping and logistic companies play an increasing role for emerging and developing countries, not only by providing advanced infrastructure and implementing shipping services by organizing and conducting global supply chains. In conclusion, the shipping business is crucial for the development of economic activities, such as international trade, because it is required for the transport of cargo from production to consumption. Thus, to obtain successful shipping and shipping logistics management, it is crucial to determine the demand for shipping and the overall shipping system.



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