IBM Business Consulting Services

IBM Institute for Business Value

Travel and
Transportation
Setting a
new course
in the
container
shipping
industry
 IBM Institute for Business Value
IBM Business Consulting Services, through the IBM Institute for Business Value,
develops fact-based strategic insights for senior business executives around critical
industry-specific and cross-industry issues. This executive brief is based on an
in-depth study by the Institutes research team. It is part of an ongoing commitment
by IBM Business Consulting Services to provide analysis and viewpoints that
help companies realize business value. You may contact the authors or send an
e-mail to iibv@us.ibm.com for more information.
Setting a new course in the container
shipping industry
Executive summary
Market and customer pressures will drive changes in
the way container shipping lines currently do business.
Customers are increasingly demanding greater reliability
of container shipments at lower total cost. Changes
in public policy are likely to require plans for increased
security throughout the industry. Meanwhile, infrastructure
constraints and threats from new, more agile entrants will
challenge the way industry players currently approach
both asset optimization and customer relationships.
In order to position themselves to benefit from these
changes, container shipping lines will need to balance
product reliability with asset utilization more evenly.
This will require a shift in mindset. Moreover, container
shipping lines will need to change deep seated ways of
working to achieve executional excellence and organiza-
tional flexibility.
Based on our perspective of how industry trends are
likely to play out over the next ten years, we expect the
market to be freer and more open, while the industry
becomes more concentrated and more focused on
customer relationships. Looking ahead ten years, we
believe that leading container shipping lines will have the
following characteristics:
Strategic clarity: a focused business model and a
precisely targeted value proposition, based on clear
alignment of strategic intent with core competencies,
customer base and asset planning.
Efficiency, quality and economy: standardized
business processes, practices driven by workflow
software, performance metrics that support continuous
improvement, integrated information systems, and
a single master database delivering higher product
quality, lower costs and excellent data integrity.
Robust network profitability management: increased
profits and free cash flow because of smarter yield
management and faster network choices. It offers the
ability to optimize asset utilization, increase revenue
quality, increase density to reduce costs, and price with
a real understanding of customer profitability.
Targeted customer relationship management: faster
growth through a strategic, enterprisewide approach
to managing customers, improved ability to initiate
strategic partnerships with top-tier customers, and
synthesized customer needs to allow fast development
of better targeted products.
Advanced business intelligence: the ability to sustain
leadership because sales, product development and
operations are all optimized across the enterprise.
Business intelligence helps create an innovative and
problem-solving culture that is focused on the customer
and thrives under ever-changing market demands.
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IBM Business Consulting Services
Steering close to the wind: Current
challenges
Todays container shipping lines face several challenges
that threaten the status quo. From infrastructure
constraints to the threat of new entrants, changing market
dynamics are forcing many shipping lines to consider
how they will adapt as the industry evolves.
Infrastructure constraints are on the rise. Exacerbated
by poor port productivity, port and inland bottlenecks
especially in North America are making it increasingly
difficult to meet customers demands for reliability at
low prices and optimize the use of assets. Meanwhile,
continuing organized labor restrictions in some key
countries are slowing improvement efforts.
Trade flows are becoming more imbalanced. For
example, the East-West imbalance in the Trans-Pacific
1
trade almost doubled between 1995 and 2004. More
and more containers are being sent back to their
origins empty, resulting in increased repositioning
costs as companies struggle to maintain effective
asset utilization of containers (which typically make up
2
25 percent of the operational balance sheet ). Lack
of efficient inland transport to port of origin and from
destination port to door contributes to these rising
costs as well.
Customer demands are continuing to tighten. Customer
price points increasingly pivot on value getting greater
reliability for lower total cost. Reliability and visibility
persist as major themes for customers as they allow
inventories to be reduced. Shipment visibility needs to
be more accurate, granular and timely, while shipping
processes need to become more tamper-proof. In
addition, a chain of trust is likely to be required to
satisfy government mandates. This is likely to combine
certification of organizations stuffing containers with
evidence that each container, once sealed, has not
had dangerous items inserted into it. These imperatives
are forcing many container shipping lines to consider
investments in better methods for tracking assets from
ship to shore to door.
2
Discipline is poor. When it comes to booking shipments,
there is a need throughout the industry for greater
discipline. Last minute changes while they may
boost short-term revenues are costing container
shipping lines efficiency and profitability, not to mention
adding security risks. Too much variability is at odds
with meeting increasing customer demands for better
reliability and lower costs. Without adherence to set
standards and rules of operation, it will be difficult
for container shipping lines to improve service or
reduce costs sufficiently to win customers in a hyper-
competitive environment.
New competitors are looming. On top of these
challenges, container shipping lines face the threat of
3
new entrants. Package delivery providers, with brand
names synonymous with the speed and reliability
customers seek, are likely to target container shipping
lines customers. And they may even target container
shipping lines as potential acquisitions to protect
their own products. These entrants have long been
focused on end-to-end value propositions, giving
them a stronger starting point for building customer
relationships. Package delivery providers (such as DHL,
TNT and UPS) have deep pockets and are quickly
acquiring capabilities to become integrated supply
chain providers. They can offer existing land-based
transport networks and end-to-end shipment visibility.
Most are deepening their logistics capabilities, with
more extensive integration with customers. Because of
extensive relationships with buyers, they have greater
mindshare than many container shipping lines do. And
their success could leave door-to-door shipping lines
adrift stuck between the integrated supply chain
providers, which deliver overall value, and the focused
port-to-port service providers that offer low cost. These
latter players are natural allies or acquisition targets for
package delivery providers.
 Setting a new course

Maneuvering for leadership: A view of Increased excellence in execution: Consistent business

processes and integrated systems will drive down costs
the future
and increase data integrity and reliability. A single view
Based on how we believe the current industry pressures
of customers will enable carriers to increase service
and trends will most likely play out, the container shipping
capabilities and improve customer service.
industry will be quite different in ten years time. Despite
record oil prices, geopolitical instability and other systemic
In an industry concerned with filling vessels and
risks such as terrorism, port shutdowns and strikes, we
moving shipments as efficiently as possible, supply-
assume that trade liberalization and globalization will fuel
side priorities tend to dominate, without being balanced
industrywide growth. Meanwhile, we expect customers will
with the need for reliability and the value of long-term
continue to demand greater reliability at lower total cost
customer relationships. To date, focusing on customers
resulting in a trend toward end-to-end integration and
as a means for sustained profitability has not been
more tightly synchronized supply chains. A decade from
the top goal at most container shipping lines. But
now, land-based providers will have acquired the capabil-
as competition, industry infrastructure and customer
ities necessary to offer door-to-door services with parcel 5
demands become more challenging, service leadership
industry standards of reliability largely in collaboration
will become more important.
with some container shipping lines that are focused port-
to-port providers.
Consolidating suppliers is part of our
Based on the future scenario we envision, the container
shipping industry will likely be characterized by: direction this year. We want to move
Freer and more open markets: Ongoing market reforms, from 9 ocean carriers today to 5-6 by
deregulation policies and trade liberalization (like the the end of 2005. Major Retail Customer 6
removal of U.S. import quotas on textiles in 2004, the
phased opening of Chinas retail sector and the gradual Customers are becoming more discerning, gradually
removal of agricultural subsidies in markets such as selecting fewer companies with which to do long-term
China and India) will continue to spur globalization business and investing in back-end integration with favored
and growth. Policies such as the 1998 Ocean Shipping providers. Hence, there will be fewer and fewer oppor-
Reform Act (OSRA) in the U.S. pave the way for open tunities to get these customers business. Mastering the
and confidential negotiations between shippers and complexities of door-to-door service, including providing
carriers, as opposed to the cartel-type collective accurate and dynamically maintained product and services
bargaining approach of the past. catalogs, will be invaluable. Companies that attain service
More concentrated industry structure: As the industry leadership in these areas will lure desirable customers
becomes more consolidated (witness Maersks bid for giving them a competitive advantage as major players
P&O Nedlloyd in 2005), the top 10 players will control choose strategic partners and the industry consolidates.
about 80 percent of the market, with the next 20 players Toward that end, winning container shipping lines will
controlling about 15 percent, and all remaining players make investments in productivity to improve reliability and
sharing the last 5 percent. (In 2004, the top 10 industry service. They will also provide realtime container visibility. A
players held 53 percent of the market.)
4 move toward measuring customer profitability will allow the
industry to move away from its focus on marginal contri-
Sharply differentiated customer relationships: Shipping
bution. Instead of prioritizing shipments based on their
lines will segment the market more accurately, adjusting
value near term, carriers will instead focus on resigning
pricing and making relationship investments to optimize
unprofitable or less profitable customers.
customer profitability. Customer requirements will be
well understood, and products aligned accordingly.
Better relationships with customers will result in
improved booking forecasts and capacity planning.

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IBM Business Consulting Services
Angling for opportunity: Path forward
With service leadership as the competitive goal,
companies must reposition themselves to best benefit
from changing market dynamics as well as customer
requirements. Future winners in container shipping will
be characterized by great strategic clarity. Their business
models will be honed and streamlined to deliver their
chosen customer value proposition.
We have three key decision
criteria: 1) a consistently strong
footprint worldwide in capacity and
infrastructure, 2) clear breadth of
service capabilities, 3) strategic
leadership in the industry. The industry
used to be about follow the leader.
Now our decision criteria are around
leadership. Major Retail Customer 7
Figure 1. Required competencies for core segments.
Most efficient/
focused operator
Port to port
Overall focus Cost
Culture Focused on service adherence balanced
with optimizing asset utilization
Measures Service conformance, then cost control
Systems Standardized, but high integration is
local
Process High standardization relatively limited
customization options
Low business complexity
Source: IBM Business Consulting Services.
4
Going forward, we believe customer value propositions
in the container shipping line industry will likely sort into
three main types:
Less for much less (most efficient/focused operator)
More for same (full-service container shipping line)
More for more (integrated supply chain services
provider).
Each type of business is defined by a specific set of
required competencies (see Figure 1). Businesses that
ride the fence will likely be cannibalized by stronger
players. Although the primary focus of each segment
differs, each company will need to maintain cost proximity
to the lowest-cost provider in its particular segment.
Regardless of the strategic course container shipping
lines choose to embark upon, we believe winners in
tomorrows market will have optimized capabilities in the
following key areas (see Figure 2):
Efficiency, quality and economy
Network profitability management
Customer relationship management
Advanced business intelligence.
Full-service container Integrated supply chain
shipping line services provider
Door to door Product design to final delivery
Service Value
Balances broader set of customer needs Focused on delivering what the
with optimizing asset utilization customer wants
Reliability, then margin control Tied to customers success
Realtime updating of product and services Realtime, end-to-end integration; deeply
catalog, capacity availability and daily integrated into the customers business
update of single view of customer
Culture of high process standardization Culture of high process standardization
and componentized activities; customized with activities componentized by
products are turned into replicable ones customer supply chain; customization
for other customers limited to maintain scale economies
High business complexity

Figure 2. The journey toward success starts with strategic clarity and typically follows an overlapping sequence.
Container shipping lines will enter
this transformation pathway at
Cumulative cash generated
different points depending on their
individual starting positions.
Robust network profitability
management
Efficiency, quality and economy
Strategic clarity
Source: IBM Business Consulting Services.
The amount of work that needs to be accomplished
in each area varies by company, and is largely
determined by what type of business carriers choose
to be. For example, full-service lines must deal with
more complexity in coordinating transport from door-
to-door than focused port-to-port providers. The latter
may have fewer processes to integrate and fewer
business variables to contend with, but may face tighter
margins (and require more efficient operations). Since
focused port-to-port providers offer products with less
opportunity for differentiation, they instead must focus on
providing the lowest cost.
Efficiency, quality and economy
Increasing quality while reducing costs
Many carriers are burdened by a lack of standard-
ization in their operations sometimes compounded
by acquisitions where processes and systems are not
yet standardized with those of the original business. To
maintain reasonable proximity to the lowest-cost providers
in the industry (even those from other segments),
container shipping lines must examine and drive out
cost and process inefficiencies across their businesses.
Standardizing processes and integrating systems across
Setting a new course
Advanced business intelligence
Sustaining
leadership
Targeted customer relationship
Growth
management
Margin increases
Cost reduction
Time
the business will fuel efficiency and service improvements.
Instead of being viewed as one-time improvements, these
efforts need to be continuous so that carriers can remain
competitive under any market scenario.
Process standardization and systems integration
The low quality of data used for documentation is a key
concern for customers. For example, bills of lading often
contain errors. Customers need a clean and correct bill
of lading before the banks will honor the letter of credit.
By automating realtime data capture, sharing data
without reentry and using more accurate data across
the enterprise, companies can make better business
decisions and increase the quality of service.
Currently, most carriers systems are not fully integrated.
Unclear or overlapping ownership of processes (such
as capturing and updating information) results in
conflicting data and costly resolution (such as manual
workarounds). The amount and importance of documen-
tation associated with the movement of containers across
borders makes data integrity critical for this industry. Lines
need to assign clear ownership of master data. Whether
companies focus on a few major packages, or integrate
best of breed with custom applications, IT systems need
a robust data layer to feed all the various databases
driving the applications.
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IBM Business Consulting Services
Standardization of processes and integration of
systems provides excellent opportunities to cut costs
while improving overall productivity. By routing the right
information or documents to the right people at the right
time, workflow software enables systems to be aligned
with business processes for greater efficiency.
In addition, the majority of communication between a
line and its customers should be electronic, helping both
parties to increase accuracy and reduce long-term costs.
In general, freight forwarders have been more proactive
than container shipping lines in regards to electronic
messaging and deeper integration with customers.
A dynamic product catalog
The use of a dynamic product and services catalog is
central to our vision of efficiency, particularly for door-to-
door players. The ability to update information in realtime,
given a catalogs potential size, can be a challenge. As
the number of inland points, equipment categories, line-
haul and feeder vessel strings, and commodity types
increases, the size of the catalog expands exponentially.
For instance, a door-to-door line might serve 30,000 or
more destinations and pickup points. If containers are
shipped from each destination to every other one, there
are 900 million products traveling through a single lines
network. If there are, on average, five service options
per route, then that creates 4.5 billion different combina-
tions. Add to those combinations more than one hundred
additional factors such as peak season charges, global
volume incentive discounts, demurrage and substitution
charges and the complexity becomes practically unman-
ageable without automated support.
Besides managing the inherent complexity, the catalog
must create a transport plan for each consignment. This
requires the catalog to be connected electronically to
the scheduling and booking systems of every vendor
that provides land transportation and other services.
Route and pricing information must also be updated
continually. A dynamic catalog can reduce customer
costs by eliminating confusion, time-consuming questions
and errors. A dynamic catalog translates to a customer
perception of better service and costs the line less.
6
Visibility
Focusing on process integration using workflow software
has the potential to dramatically improve the speed and
accuracy of documentation and visibility reports. When
a container is rolled from the planned vessel loading, a
proactive exception or event is created along with the
revised plan. Without this kind of process integration,
systems that provide visibility would have to depend upon
multiple data feeds plus manual inserts and discovery.
Today, for example, in the first 36 hours after each
movement leg, systems can disagree with each other by a
factor of approximately 20 percent.
8
Robust network profitability management
Increasing free cash flow
Efficient cost structure and processes increase a lines
basic ability to compete. To improve overall profitability,
container shipping lines need to adopt a global view of
the business focusing on the cross-network impact
of business decisions (instead of just the local implica-
tions). Raising margins will generate more profit and cash
which can fund growth or be returned to investors. The
process begins with segmenting customers, forecasting
demand accurately and then mapping it to the catalog.
Network profitability is driven by a combination of
strategic network choices and yield management tactics.
Network choices
Deciding which trades to participate in, exit, trim or
expand are longer-term, strategic choices. Accurate
analysis reduces the risk of commercial judgments.
A business with high data integrity, and activities and
processes that are mapped to the underlying information
architecture, will find the decisions easier and quicker to
make. We believe such lines will be more commercially
agile able to seize opportunities faster and extract
themselves from losing positions more quickly.
Increasingly sophisticated mathematical algorithms that
take into account potential revenues, costs of movement
and operational constraints (both logistical and strategic)
can help lines determine the trade-offs between different
activities and their impact on overall profitability. For

instance, shipping lines must weigh the ever-changing
variables of vessel, container and port capacity, as well as
contractual commitments and relationships with particular
customers, when considering new business and
optimizing assets. Advanced algorithms can also provide
a quantitative platform for evaluating various what-if
scenarios, such as what would happen if a vessel string
were to bypass a port call.
Yield management
Yield management is a means of exploiting customer
dispersion within capacity constraints to increase asset
utilization, increase revenue per asset, reduce costs per
container and increase margins per container.
Increasing asset utilization. Increasing the utilization
(and availability) of assets vessels, containers, chassis
and gen-sets clearly reduces the level of capital
employed. Effective demand forecasts down to
individual pairs of ports and inland container storage
sites by week are a key starting point for all types
of asset utilization. The value of historical data can be
enhanced by advanced stochastic algorithms (i.e., the
modelling of uncertainty). Optimizing vessel utilization
requires formulating the best business rules for space
allocation trade-offs (granted to the sales organization
and agents), considering the demand for particular
load port and discharge port routes, container size,
type and weight, and the importance and profitability of
particular customers. Decision-making capabilities can
be enhanced with increasingly sophisticated optimization
algorithms.
Improving container utilization relies on increasing
the load factor by using the same container for more
bookings, and, if the container ends up at a surplus
location, speeding its repositioning to a deficit location.
Increasing the container load factor by even a small
percentage e.g., from 5.0 to 5.5 loads per container per
year can reduce capital expense significantly. Starting
from an effective demand forecast, the best fit scenario
can be optimized mathematically. The key challenge is
to change the organization roles, performance measures
and practices to support effective execution of the best fit
scenario. For more decentralized lines, this represents a
major change.
Setting a new course
Increasing revenue per asset. The essential dilemma in
driving revenue per asset, and hence margins, is deciding
which cargo takes priority which to pursue and which
to avoid over time. While automated analysis can allow
a set of business rules to be applied consistently, this is
difficult to achieve without a segmentation of customers
and traffic.
The key switch is from a short-term, voyage-by-voyage
view to a longer-term, trade route view. Land costs are
typically scale-driven and material usually comprising
20 percent of total revenues, compared to 45 percent
9
for vessel and terminal operations. As density of pick-
up and drop-off points increases on land, the distances
between stops typically decrease, reducing vehicle costs
significantly. Where density drives half of land costs, a
doubling of volume could reduce total land costs by 25
percent equivalent to 5 percent of total revenues falling
through to the bottom line. Hence, the importance of
marketing programs which focus on increasing density.
Reducing costs and increasing margins per
container. As in other freight logistics companies
(where we have discovered that as much as 30
percent of shipments failed to cover direct costs), few
container shipping lines are currently able to calculate
and work with profit margins per container, and so
per customer. Most stop at a measure of vessel and
trade route contribution. But moving to activity-based
costing (ABC) allows companies to understand the
long-term profitability incurred from a single container,
customer, product or trade lane, which offers a radical
step-change in managing network profitability. Whether
used when quoting a price or accepting a booking, it
provides a profit-driven way of discriminating between
customers and traffic, and can help increase the margin
per container. Change resistors argue that ABC is not
applicable where there is a significant element of joint
costs. However, the methodologies are quite capable of
allocating resources consumed. In a culturally conser-
vative industry, moving from making decisions based
upon contribution to fixed costs, to one based on how
much of a fixed cost is consumed, is a major step
forward. Becoming a service leader in this area is central
to carriers success. Leaders will be faster to identify
which customers they wish to resign or deter.
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 IBM Business Consulting Services
Targeted customer relationship management
The capacity to optimize growth
A focus on network profitability drives container shipping
lines to better understand customer profitability, which, in
turn, informs customer and product investment decisions.
With this foundation, the investment in customer
relationship management or sales coverage can bring
nomy bigger paybacks.
Segmentation can be refined and used to determine
the degree of coverage and service offered to particular
customer segments. Industry leaders will create a
virtual reinforcing circle where they listen, interact with
and demonstrate an informed understanding of their
key customers needs. They will proactively sense and
respond to customers needs, allowing them to innovate
more readily. And as satisfaction rises, customer stickiness
increases and brand perception is enhanced.
Major customers, global or regional, increasingly expect
lines to provide them with a consolidated view of their
shipping spend. Having this single, integrated customer
view enables shipping lines themselves to review
customer compliance with annual purchase contracts.
Growing faster than the market requires an organiza-
tional design that balances leanness with the capacity
to be agile. At this stage of the transformation journey,
leaders will have mastered how to deliver consistent
service globally. The challenge then becomes how to
retain a culture of standardization with its clear scale
economies yet innovate quickly and specifically enough
for numerous, smaller segments. In our view, the key to
such agility is a business structure based on configurable
components distinct groups of activities with clearly
defined services, outputs and measures.
Rather than betting their success on whether they have
the right forecast of what will happen in the macroeco-
nomic environment, how customer demands will evolve,
or what seasonal changes, regulatory shifts, competitive
moves and other dramatic changes might impact the
industry, future container shipping winners will design their
businesses to be flexible and nimble enough to respond
quickly to virtually any change or market threat.
8
Advanced business intelligence
Sustaining leadership
An advanced business intelligence (ABI) capability is
the ultimate result of the progression toward improved
business flexibility and responsiveness. To receive full
benefits from ABI, a line must perform all activities at a
competent level, and excel at those few which offer a
competitive advantage. At this stage of their transfor-
mation journeys, industry leaders will act more broadly,
optimizing across all processes and activities. They will
become better at sensing and responding to events
and better at product and service innovation.
By using advanced data analytics across the enterprise,
carriers can become more proactive. The few that are
using advanced business intelligence approaches
successfully do not have to rely solely on entrepre-
neurial flair. Mitigating market risks, addressing changing
business demands, spotting industry-defining trends
and identifying valuable relationships with partners and
customers becomes much less of a gamble with the
right analysis. Rigorous analysis can also help shipping
container lines grab opportunities before the competition.
Capturing up-to-the-minute customer, operational and
competitive data through optimized business processes
enables realtime data analytics and better predictive
intelligence. The result is better execution across many
activities, including:
Exception event management
Pricing
Account profitability analysis
Dynamic rerouting across modes
Predictive modeling of capacity allocation
Efficient employee management.
Becoming a more dynamic enterprise across these
business areas allows companies to sustain their
competitive advantage.
 Setting a new course

Conclusion In the past, a focus on asset optimization has been

In the container shipping industry one thing is certain:
the race to acquire the capabilities customers demand
namely better reliability, visibility and data integrity for
reduced costs will intensify. Though change may come
slowly, and affect some contenders more than others,
container shipping lines must start preparing now. To lead
the industry, companies will need deeper relationships with
customers and the capabilities to thwart the competitive
threat of new package delivery provider entrants.
integral to success. In the future, carriers that give that
same attention to managing product reliability more
effectively will reap the rewards. There is more than one
way to make money in the container shipping industry.
Regardless of strategic course, carriers need to work
toward executional excellence and business flexibility
so that they can provide expected service levels to their
target customers and generate attractive profits no
matter what surprises the market holds.

Ready for the future: Putting it all together

Joan, the Shipping Line Account Manager for a major retail customer, is meeting with its Chief Purchasing Officer and Logistics Director
to negotiate the annual contract. She reflects on how different the build up to this meeting has been compared to last years. Joan is
confident in the fact that this year it will be harder for the customer to switch. Walking away to another line would be a bigger step: they
had gotten used to having better visibility, and theyd started to reduce their inventory safety stock. Moreover, Joans customer had
provided a much more effective set of rolling forecasts that each became progressively more accurate as the sailing date approached
which offered some uncharacteristic breathing room and confidence during the peak season. Capacity was assured.
However, Joan also knew that her boss expected her to come away with a contract minimum much closer to the predicted volume
although the line now offered a tapered penalty. But had the customer fully understood the quid pro quo for all the improvements? If
they did not deliver close to 85 percent of the volume promised, there would be a price increase.
Things had changed. Better service had led to more demand, but the line was no longer chasing volume so readily. The mantra was
service and margin, so they had not taken on as many additional vessels as they would have done before. But Joan reassured herself.
For the first time, she could show the full global picture and demonstrate what was jointly documented last year: under-delivery by the
customers Dubai factory of 40 percent, and a stunning 70 percent shortfall from the Yokohama factory. And though Poland had exceeded
forecast by 25 percent, the final net remained materially adverse. It would be very difficult for the Purchasing Chief to dig himself out
of that data story. And even if he had an argument, Joan now had the data to show the difference in delivery times between what her
colleagues had promised and the outcome on a global basis the gap had narrowed enormously since the dynamic product and services
catalog was rolled out mid-way through the year. As she shuffled through her data points, Joans confidence grew.
After the meeting, Joan phoned her boss to inform him of the outcome. The normally aggressive Purchasing Chief had gone out of
his way to convince her of the volumes he was forecasting a first. The line had taken over two more key routes, which would add 15
percent to last years volume with no rate concession. And most of it fit the trade balancing program (which she could have used as an
incentive to close the deal). Joans boss congratulated her for being on track not only to make the firm-wide bonus for meeting profit
targets, but her sales bonus as well.

9
 Copyright IBM Corporation 2005
About the authors IBM Global Services
Naresh Hingorani is an Associate Partner with IBM Business Consulting Services. He Route 100
Somers, NY 10589
can be contacted at naresh.hingorani@us.ibm.com. U.S.A.

Derek Moore is an Associate Partner with IBM Business Consulting Services. He can Produced in the United States of America
06-05
be contacted at derek.moore@uk.ibm.com. All Rights Reserved

Keld Tornqvist is a Chief Consultant in IBM Transport and Logistics. He can be IBM, and the IBM logo are trademarks or
registered trademarks of International Business
contacted at kt@dk.ibm.com. Machines Corporation in the United States, other
countries, or both.
We would also like to thank the following consultants who have contributed to this
Other company, product and service names
paper: Eric Conrad, Chris David, Brian Goehring, Anand Janardhan, Peter Klaus, may be trademarks or service marks of others.
Joe Murphy, Palle B. Pedersen, John Simon, Mike Simon, Bo Sorensen, all from IBM,
References in this publication to IBM products
and Theodore Prince of Optimization Alternatives Limited, Inc. and services do not imply that IBM intends to
make them available in all countries in which
IBM operates.
About IBM Business Consulting Services
With consultants and professional staff in more than 160 countries globally, IBM
Business Consulting Services provides clients with business process and industry
expertise, a deep understanding of technology solutions that address specific
industry issues, and the ability to design, build, and run those solutions in a way that
delivers bottom-line business growth.

References
1
Page, Mark. Trans-Pacific Container Trade Market Outlook 2005/2006. Drewry
Shipping Consultants Ltd. Presentation at 5th Trans-Pacific Maritime Conference.
February 28, 2005.
2
IBM Business Consulting Services estimate.
3
We have used the term package delivery provider to describe carriers that have a
culture, processes and systems designed to provide time-definite delivery services
with an on-time delivery standard usually well above 95 percent. These companies
are also known as express parcel carriers, couriers, integrators and expedited
package services.
4
BRS-Alphaliner TOP 100 of Liner operators at 01 January 2005. http://
www.alphaliner.com/brs-alpha/search.htm
5
Service leadership is defined by players that can set the offering and service
benchmark for customers through breakthrough innovations in service scope and
in processes and technology. This will be reflected in increased and sustained
customer loyalty and market share in its segment.
6
IBM Business Consulting Services interviews with major shipping customers.
7
Ibid.
8
IBM Business Consulting Services estimate.
9
Ibid.

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