Análisis de los instrumentos cualitativos

2.2.6.1: The round the world, end to end, pendulum, double dipping service:

One of the main problems of liners is how to increase the utilization of ships and improve the slot earning capability. Beside many other strategies, to choose the best suitable routing option can be the most effective way. There are four main routing options: end -to-end, pendulum, double dipping and round the world service. End-to-end is the traditional service in liner shipping, the pendulum operating as the end-to-end service but through the intermediate market. In 1985, Evergreen and USL debuted the round the world service (RTW) which covered the major trades with big capacity vessels. Through the RTW service, they hoped that the vessel could get high utilization as she carries cargo over from one leg of the service routes to another. Because of the imbalanced trade, the technical and operational problems, now there are few liners operating this type RTW service.

Choosing the right routing options should be based on the economic study of each liner in accordance with their capabilities.

2.2.6.2: Direct calling or hub-spoke service

The size of the ship has been increasing rapidly in order for the liner to achieve ‘economic of scale’. There are many reasons that bigger ships could not call at some ports such as: insufficient cargo, draft restriction, minimizing the turn around time in the port and reducing the number of ports served. Therefore, liners have to make their clear decisions by choosing between two alternatives:

Ø The Direct calling Ø The Hub-spoke service

When choosing one of them, various factors must be taken into consideration like: Ø Cost comparison

Ø Cargo volume

Ø Political, technological reasons Ø The ambition of liners

Ø The availability of feeder networks in the region Ø Customer policy (transit or direct call)

Ma (2001a, p.89) remarks: ‘‘in many case, transshipment or direct call is an economics decision’’ and liners have to make a comparison for the ‘‘total cost which includes ship related costs and cargo related costs.’’

2.2.7: Yield management:

The liner business is a more sophisticated industry than that of others. People not only need to utilize the allocation of ships, they need to consider the total cost of the business (sales, customer service, vessel, terminal, inland transportation, equipment, overhead, etc.). Nowadays, all liners want to devote a “ global service” to customers by deploying

more ships and equipment. However, trade imbalance caused liners in the dilemma of surplus or shortage of equipment. The equipment repositioning cost is a huge amount so they try to cut the cost of repositioning by:

Ø Using cheaper cost ships and terminals to move empty equipment, Ø Using affordable containers

Ø Pooling information, direct interchange (DIR) among the alliance members

Ø Leasing or off hiring from the container leaser

However, in fact, these are negative ways of solving a problem when it has already occurred. “Prevention is better than cure”, liners should have strategies and contingency plans to reduce and avoid the imbalance of equipment rather than to pursue the above- mentioned methods. The way out for this headache, a costly matter, is the yield management strategy. Hapag Lloyd, MSL and others have implemented this yield management effectively and successfully. By doing so they are now considered as one of the most profitable liners in the world. The following are the key elements of yie ld management:

ü All staff from the board of directors to simple staff are aware of the importance of equipment control, inland operation in determining company financial success ü To establish the yield management system for controlling the productive time of

equipment

ü To consider the “total cost “ of the business rather than isolated business

ü To classify customers to different categories and use different strategies for each of them

ü To categorize customers for selecting the most profitable cargo based on a ‘'win- win” situation

ü To negotiate with the customer for the best utilization of equipment for their cargo; to have confidential negotiations of contract with customers.

ü To control the cost of inland haulage

ü To locate inland points (ICD, depot) for flexibility of shipment ü To introduce an effective IT system to support the yield management

ü To have a database of the total cost structure of every point (inland and sea port)

Yield management is the best way that liners should implement for their operations. There are many other strategies and management ways that liners have applied in practice. Besides those above-mentioned strategies, liners also consider some strategies such as: decentralization or centralization, M&A, diversification or specialization.

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This chapter has gone through the development of containerization and some basic strategies that liners have to take for their operations. All those strategies could lead to the failure or success of a liner. ‘‘A poker game - you just have to keep putting more money on the table which you are about to lose’’ (Drewry 1991,p.9). Yes, that is container shipping where liners have to continue investing money into their operation and hope to get it back. But things do not always go as they expected, shipping markets are changing in circles. Some good years will be followed by bad years. Liners have to take prompt and proper strategic decisions to get enough profit to cover the bad years. All these things caused the ups and downs of the top 20 liners from 1980-2001 and the next chapter will investigate those changes.

CHAPTER 3

THE TOP 20 LINERS DURING PERIOD 1980-2001