Value Creation in the Maritime Chain of Transportation: The Role of Carriers, Ports and Third Parties in Liner and Bulk Shipping

Thomas Roslyng Olesen

    Research output: Book/ReportReport

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    Abstract

    This report has examined the concept of value creation in the maritime chain of transportation. A maritime transport chain can best be conceptualized as a network through which carriers (e.g. shipping companies and haulage providers) and third parties (e.g. terminal operators, freight forwarders, brokers and agents) provide services for the movement of cargo provided by shippers. The main actors in the maritime chain of transportation are the carriers who add value to the shipper by moving goods from areas with excess supply to areas with excess demand. In this process a number of (independent) third parties may provide a number of services. The shipper and/or carrier will employ these agents if the rise in costs is more than compensated by the value of the service. The third parties can thus only exist if they provide value added services to the carrier and/or to other third party service providers. From a financial perspective value is created when a business earns revenue that exceeds the expenses. In many sectors, however, value is increasingly being created by more intangible drivers such as research, innovation, branding, ideas and networks which usually provide indirect rather than direct benefits (Kaplan & Norton, 2004a; 2004b). This is also the case within maritime logistics. According to Johansson et al. (1993) third parties may add value through (1) improve the level of service, (2) quality, (3) cost and (4) time reduction. The chartering agent’s network and market knowledge allows him to speed up the search time and match process for shippers and carriers (time reduction). The port agent’s local network allows him to speed up port operations (time reduction) and make the necessary arrangement on behalf of the carrier (service). Freight forwarders may take over part of the production chain and provide services which manufacturers don’t consider their core business (service). This includes assembly, quality control, customizing and packing of goods, pest control and after sales services. Third party ship management companies may reduce costs through economies of scale (cost reduction) and increase quality of crew and equipment maintenance through specialization (quality). Just to mention a few. While the report has investigated the concept of value creation, the question of value capturing has not been addressed in this study. Value capturing depends on the individual transactions between the actors in the chain. A port agent may add value to a carrier by securing smooth port operations and thus reduce waiting time. The added value may, however, be captured by a freight forwarder who forces the carrier to lower the price or more likely be distributed among several actors. The business model literature may provide a fruitful lens for exploring this in greater depth. The maritime chain of transportation is becoming increasingly complex and involves an increasing number of actors. The services of some actors are furthermore overlapping. Inland haulage can thus be provided by shippers, freight forwarders, independent liner agents, in-house liner sales offices, or by an independent haulage provider. Freight forwarders are increasingly overtaking functions in the value chain from manufacturer etc. In order to successfully navigate this network is it important to have an overview of the chain of transportation at a more general level
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherCBS Maritime
    Edition2
    Number of pages38
    ISBN (Print)9788793262072
    Publication statusPublished - 2015

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