Chapter 13

Question 1

What are the three components of the container system?

Answer 1

1. standard units
2. integrated transport system
3. high-speed cargo-handling facilities

Question 2

Discuss the process of developing container service infrastructure

Answer 2

threefold process:
1. Develop fleet of container ships
2. Construct container terminal
3. Setting up international agreement on sizes of standard containers

Question 3

Define liner shipping

Answer 3

A liner service is a fleet of ships, with common management, providing a fixed service, at regular intervals, between named ports.

Question 4

How do liner firms differentiate their product?

Answer 4

1. Vessel on-time arrival - some customers put high value on reliability
2. Transit time door-to-door - speed may be important
3. Carrier cost per move - cost for transport of container from origin to dest
4. Cargo tracking - GPS, safety
5. Frequency of sailings - reducing stock levels
6. Reliability of administration - admin capabilities, contactability
7. Space availability - some need more space flexibility

Question 5

Discuss the building blocks of liner service economics:

Answer 5

1. Ship characteristics
   *Ship size, speed and cargo-handling efficiency set economic framework for the service
   *larger ships, faster, consume more fuel, spend more time at port
2. The service schedule
   *Have to decide frequency of sailings and number of port calls
   *larger, faster ships speed offset by longer port time. May require more ships in string
3. Capacity utilisation
   *need to make sure ship is full but also must not run out of space
4. Ship costs and economies of scale
   *three main cost elements
   * (a) capital costs diminishing returns
   *(b) OPEX - significant economies of scale
   *(c) bunker costs - diminishing returns
   *overall - big economies of scale savings per tue, diminishes with marginal size increase
5. Port charges
   *Less control, based on ships tonnage
6. Deployment of containers
   *Two issues:
   *Mix of container types
   *Efficiency of turn-around
7. Container costs
   *Capital costs, maintenance and repair, terminal costs, storage, on-shipment costs, repositioning
8. Administration costs

Question 6

Compare the four different price strategies

Answer 6

tbook (was asked in test 1)

Question 7

Discuss three main issues in regulation

Answer 7

1. Freedom to negotiate - shippers should always have option to freely negotiate rates, surcharges and other terms of carriage
2. Freedom to protect contracts - shippers and carriers should always be able to protect key terms of negotiated service contracts
3. Freedom to coordinate operations - carriers should be able to pursue operational agreements with other carriers as long as these do not confer undue market power to the parties involved

Question 8

Note difference between conferences and global alliances

Answer 8

tbook