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Maritime Logistics

MT1002-Introduction to Maritime Industry (AY2015-16)


Mr. Chiu Sai Hoi, Benson

Objectives of Lecture
Understanding of
Concept of maritime logistics
Introduction of maritime transport

MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Maritime logistics is often referred to maritime transport


system that is deeply involved in the entire logistics flows
Main values

Operational efficiency, e.g. reducing lead time, business costs, and


Service effectiveness, e.g. flexibility, responsiveness and reliability

Maximizing the maritime logistics values and successful


integration of the values into global logistics become a
critical strategic objective of the maritime industry

MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Maritime transport is strategically a crucial part of the


logistics integration system

The whole transport system provides not only transport-related


services but also other related and wider logistical services in a
more efficient and effective manner
Advantages

Reduce additional costs


Reduce unnecessary delay or accident

Integrated demand for maritime transport brings on a


Maritime Logistics concept

Refer to the process of planning, implementing and managing the


movement of goods and information involved in ocean carriage

MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Differences between maritime logistics and maritime


transport
Maritime Logistics

Concept

Process of planning, implementing and


managing the movement of cargoes and
information involved in ocean carriage
Individual functions relating to sea
transportation, and

Focusing Point
Effective logistics flow as a systematic
entity
Sea transportation activities:
Contracting, shipping, sea voyage,
moving cargo, loading/ unloading, and
Function

Additional logistics services:


Storage, warehousing, offering
distribution center, assembly, packaging,
repacking, inland connection, etc.

MT1002-Introduction to Maritime Industry_Maritime Logistics

Maritime Transport
Process of carrying and handling
cargoes across the ocean

Individual functions with own aims


and competitiveness relating to sea
transportation

Sea transportation activities:


Contracting, shipping, sea voyage,
moving cargo, loading/ unloading

Concept of Maritime Logistics

3 Key Players in Maritime Logistics


1.
2.
3.

Shipping
Port operations
Freight forwarding

Source: Maritime Logistics by Dong Wook Song & Photis M Panayides


MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Role of Shipping in Maritime Logistics

Transport mode

Moving cargoes between ports, i.e. from shippers to consignees

MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Role of Shipping in Maritime Logistics

Supporting logistics activities

Prepare documentation relating


sea trade, e.g. Bill of Lading (B/L)
Provide container tracking and
information
Logistics services, e.g. logistics arm

B/L
MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Role of Port Operations in Maritime Logistics

Distribution center

Depot

Transit cargoes from shore to land or vice versa


By different intermodal systems, e.g. rail, road, inland waterway, etc.
Store cargoes which will be transferred within a certain period of time

Warehouse

Port may equip with Container Freight Station (CFS) for shippers and
consignees to consolidate cargoes
Provide value-added services, e.g. repacking, labeling, etc.

MT1002-Introduction to Maritime Industry_Maritime Logistics

Concept of Maritime Logistics

Role of Freight Forwarding in Maritime Logistics

Agent on behalf of shipper

Book vessel
Prepare requisite documents for ocean carriage and trade

Inventory management

Provide warehousing services to shippers and consignees to


consolidate cargoes, packaging, labeling, etc.

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Introduction of Maritime Transport

Different Transportation Modes

Air
Land

Rail
Road

Water (Maritime)

Inland waterway
Short sea
Ocean-going/ deep sea

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Introduction of Maritime Transport

Air Transportation Mode

Cargoes are mostly carried by Unit Load Device (ULD)


Main characteristics of cargoes

High value
Perishable

ULD

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Introduction of Maritime Transport

Land Transportation Mode

Cargoes are normally carried by containers on rail or road


Highly integrated with water transport, i.e. intermodalism
Advantages of intermodal system

Reduce re-handling of cargoes


Lower operating cost

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Introduction of Maritime Transport

Water (Maritime) Transportation Mode

Transportation of cargoes by vessel


Advantages

High capacity
Cost effective
Energy efficient
Reduce congestion on road

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Introduction of Maritime Transport

Water (Maritime) Transportation Mode

More than 80% of international trade of goods are carried by sea,


i.e. seaborne trade
2 major types of seaborne trades

Liner shipping
Tramp shipping
Seaborne Trade
Liner Shipping

MT1002-Introduction to Maritime Industry_Maritime Logistics

Tramp Shipping

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Introduction of Maritime Transport

Derived Demand

A factor which is not in demand for its own sake but derived from
the demand for the goods

Transport Demand
= 200,000

Singapore

Demand = 200,000

Transport
Demand = 0
Mfg Base in China

Congo
MT1002-Introduction to Maritime Industry_Maritime Logistics

Demand = 0
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Introduction of Maritime Transport

World economic activity is one of the major factors to


induce derived demand
Benefited by globalization

International integration arising from increasing human activity


Interchange of products, ideas, culture, etc.
Advances in transportation and telecommunications infrastructure
drive globalization

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Introduction of Maritime Transport

Gross Domestic Product (GDP) is a direct indicator for


world economic activity

A measure of the total flows of goods and services produced by the


economy calculated by market value on an annual basis

Source: Wikipedia
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Introduction of Maritime Transport

Strong correlation between World GDP growth and


World seaborne trade
Also, industrial production index is highly correlated to
World GDP growth and World seaborne trade

Seaborne Trade
GDP

Source: UNCTADs Review of Maritime Transport 2014


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Introduction of Maritime Transport

Major International Seaborne Trades

Asia Europe
Asia North America
Europe North America
Intra Asia
Latin America
Middle East
Australia

MT1002-Introduction to Maritime Industry_Maritime Logistics

Source: Drewry Maritime Research, 2011 Data

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Introduction of Maritime Transport

Major International Seaborne Trades

Asia Europe (AE Trade)

Source: https://www.apl.com/routes/
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Introduction of Maritime Transport

Major International Seaborne Trades

Asia North America (Transpacific Trade)

Source: https://www.apl.com/routes/
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Introduction of Maritime Transport

Major International Seaborne Trades

Europe North America (Transatlantic Trade)

Source: https://www.apl.com/routes/
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Introduction of Maritime Transport

Major Maritime Locations

Strait of Malacca

Important for container vessels, dry bulk carriers and tankers


~800km in length, ~50-320km in width, min. channel depth ~23m

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Introduction of Maritime Transport

Major Maritime Locations

Strait of Hormuz

Important for oil tankers: ~20% of oil export, ~35% of oil tankers
Linkage between the oil fields of the Persian Gulf and Gulf of Oman
~6km wide in navigation channel

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Introduction of Maritime Transport

Major Maritime Locations

Panama Canal

Reduce voyage distance of Transpacific Trade


~86km and limited by lock chambers
Allow passage of smaller container vessels, dry bulk carriers and
tankers

Lock Chamber
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Introduction of Maritime Transport

Major Maritime Locations

Suez Canal

Reduce voyage distance of AE Trade


~163km in length, ~135m wide without lock chamber
Allow passage for all container vessels and almost all dry bulk carriers
and tankers

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Introduction of Maritime Transport

Major Maritime Locations

Nicaragua Canal

Reduce voyage distance of Transpacific Trade


~240km in length, ~3.5 times the length of Panama Canal
Construction is planned to begin in December 2014 and might take up
to 11 years to construct

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Introduction of Maritime Transport

Major Maritime Locations

Great Lakes St. Lawrence Seaway

~3,700km in length with lock chambers


Linking Atlantic Ocean to the Great Lakes, as far as Lake Superior
Mostly for the transportation of bulk cargoes to Canada and US

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Introduction of Maritime Transport

Major Maritime Locations

Some important rivers

Mississippi River
Yangtze River
Pearl River
Nile River
Amazon River
Danube River

Yangtze

Pearl
Mississippi

Danube
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Introduction of Maritime Transport

Major Maritime Locations

Some important short seas

Baltic Sea
Black Sea
Mediterranean Sea
North Sea

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Q&A

~~Thank You~~
Email: bensonchiu@ntu.edu.sg
Office Address: Block N1-01b, Room 44
Office Phone: 6790 5273
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Shipper & Consignee

Consignee A person or company to whom commodities


are shipped
Shipper A person or company who is usually the
supplier or owner of commodities shipped. Also called
Consignor

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Logistics Arm

Shipping Companies with Logistics Arm

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Logistics Arm

Financial Performance of APL Logistics, NOL (FY2014)

Source: NOLs 2014 Performance Review


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Intermodalism

Intermodalism in general is defined as the transportation


of a person or a freight from its origin to destination by a
sequence of at least 2 transportation modes in the same
loading unit
Containerization is a catalyst of intermodal system

VS

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GDP

GDP (nominal)

GDP (Purchasing Power Parity, PPP)

Calculated at market exchange rates


Adjust for differences in the cost of
living in different countries

GDP (PPP) per capita

Per population of the nation

Top 20 Countries by GDP (nominal) in 2014;


Source: Wikipedia (Data from International Monetary Fund)
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GDP (nominal) Per Capita

Top 30 Countries by GDP (nominal) Per Capita in 2014;


Source: Wikipedia (Data from International Monetary Fund)

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GDP (PPP) Per Capita

Top 30 Countries by GDP (PPP) Per Capita in 2014;


Source: Wikipedia (Data from International Monetary Fund)

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Big Mac Index

A guide to measure whether currencies are


at their correct level

Invented by The Economist in 1986


Based on PPP between 2 currencies

Ave. price at US ~4.37USD; Singapore ~3.64USD


(4.5SGD)
Big Mac Index says SGD was undervalued by ~17%
RMB and HKD undervalued by ~41% & ~50%
Norwegian Krone overvalued by ~80%
Norway
China

Hong Kong

Singapore

Source: The Economist


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Big Mac Index

Number of Big Macs that can


be bought after working for
one hour on minimum wage

In HK, the ave. price is ~19HKD


with a min. wage of 30HKD, so a
worker who works for one hour
can buy ~1.54 Big Macs

Source: OECD and The Economist


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World GDP Growth

World economy growth in


GDP slowed down in
2012/13 vs 2011
Estimated a slight
improvement in 2014 with
~2.7% growth vs 2013
Higher GDP growth in
developing economies vs
developed economies

MT1002-Introduction to Maritime Industry_Maritime Logistics

Source: UNCTADs Review of Maritime Transport 2014

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