Ocean Freight

Ocean Freight refers to transporting goods or produce for commercial

gain by water
usually on a ship.
While slower than air transport,
modern sea transport is a highly
effective method of moving large
quantities of non-perishable goods.
Transport by water is significantly less
costly than transport by air for trans-
continental shipping.
Ship transport is often
international by nature and can be
accomplished by barge, boat, ship or
sailboat over a sea, ocean, lake, canal or
river.
Ship transport is used for a variety of unpackaged raw materials ranging
from
chemicals, petroleum products, and bulk cargo such as coal, iron ore,
cereals, bauxite,
and so forth.
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Ocean Freight – Different Types of Cargo

Containerized Cargo: Containerized cargo includes everything from
machinery
components and auto parts to toys, shoes and frozen meat and seafood.
Automobiles : This includes automobiles such as car, truck etc.
Project cargo and heavy lift cargo: Project cargo & heavy lift cargo
includes items
such as power equipment e.g. generators and wind turbines, factory
components,
manufacturing equipment, military equipment or almost any other
oversize or
overweight cargo too big or heavy to fit into a container.
Break Bulk Cargo: Break bulk cargo typically is materials stacked on
wooden pallets.
This is lifted into and out of the hold of a vessel by cranes aboard the
ship itself or on
the dock.
Bulk Cargo: Bulk Cargoes, such as oil, salt, tallow and Scrap metal,
usually defined
as commodities that are neither in container nor on pallets. These are
not handled as
individual pieces in the way heavy-lift and project cargoes are handled.
Gypsum,
alumina, logs grain and wood chips, for instance, are bulk cargoes.
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Ocean Freight – Different Types of Ships

Ships are usually used for Ocean Freight. Various types of ships can be
distinguished
by propulsion, size or cargo type.
Container Ships: Container ships are cargo ships that carry
their entire load in truck-size containers, in a technique called
containerization. They form a common means of commercial
intermodal freight transport.
Bulk carriers: Bulk carriers are cargo ships used to
transport bulk cargo items such as ore or food staples (rice,
grain, etc.) and similar cargo. It can be recognized by the
large box-like hatches on its deck, designed to slide outboard
for loading. A bulk carrier could be either dry or wet.

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The next few slides, explain the every day business activities of a Liner
Business
Organization.
Shipper:
Mr. David, a textile manufacturer in
China, needs to 10 containers of clothing
material to Long Beach, California .
Mr. X is the seller of the goods, or the
Shipper
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A day-in-the-life of a Liner Business

Organization
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Ms. Jennifer, an apparel store owner in San
Pedro, is the buyer of Mr. David‟s clothing
material.
She is the consignee, the person/company to
whom goods are shipped.
Consignee
Mr. Jonathan acts as a middleman for Mr. David, rather like
a travel agent. He helps make arrangements for packaging,
transportation and documentation. He is called a freight
forwarder. A shipper may prepare his or her own
documentation, but often chooses to use the services of a
freight forwarder.
Freight Forwarder
A day-in-the-life of a Liner Business
Organization
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XYZ (Ocean Liner) agrees to transport the
computer equipment from Hong Kong to
San Pedro by an estimated time for a
specified rate. XYZ is the carrier of the
goods.
Carrier
 A XYZ Sales Representative calls on Mr.
David to determine his needs and match
them with XYZ‟s products and services
 Sales will secure the business and try and
obtain a Service Contract
Sales
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Organization
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Mr. David decides to use XYZ to ship his
Textile material to Long Beach.
He calls an XYZ customer service
representative (CSR) to make a booking.
 Basic information like container
requirements, origin, destination,
shipper, consignee, dates are collected
and a booking is created in the system
for a particular vessel voyage
Customer Service
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A day-in-the-life of a Liner Business

Organization
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The XYZ equipment department receives
information from the booking to supply
the necessary equipment needed to Mr.
David. The shipper/supplier makes
arrangements to move the equipment
and cargo.
Equipment
The shipper/supplier would instruct a
particular trucker, who must have an
interchange agreement with XYZ, to take
the empty container to Mr. David‟s plant and
have the cargo (commodity) loaded into the
container. The trucker will then take the
loaded container back to the rail yard, port,
or container yard (CY yard)
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A day-in-the-life of a Liner Business

Organization
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A XYZ employee looks up the booking number
in the system, verifies that the cargo matches
the information given in the booking, notes
additional shipment information, and enters a
CY receipt into the system.
Once the shipment has been received, the
booking now becomes a shipment.
EIR/CY Receipt
When the container is delivered by the trucker, the
gate personnel gives the trucker a receipt for the
container, called and Equipment Interchange
report (EIR).
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The shipper‟s freight forwarder (Mr. Jonathan)
types up a Master BL and faxes it to the
Documentation Center. The master BL contains
shipping instructions and the exact wording that
the customer would like to appear on the Bill of
Lading.
Freight Forwarder
Documentation
The documentation staff adds rate information,
input the BL into the computer system and
resolve any problems with what is on the
Master BL and what is in the system.
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Documentation (Cont...)
Even though the shipper provides the
information that he wants to appear on BL,
XYZ must verify that all the information is
accurate, legal, and states real facts.
Once the Documentation dept. is satisfied
that all information is correct, they “push” the
BL to be printed and release it to the shipper
or the freight forwarder. .
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Information Flow – Recap...

Booking
• Customer makes
booking
• Booking
party can be
Shipper, Consignee
or a third-party
Freight Forwarder
• Booking confirmation
sent to customer
• Once booking
uploaded to system
other Departments like
Network, Operations,
Equipment,
Documentation etc.
• Cargo physically
received at the carrier
facility (Note: receipt of
at least one container
against a booking
creates the shipment).
• Shipping Instruction
received by the carrier
• Carrier issues BL to
Shipper when charges
are paid
• Shipper gives BL to his
bank. It is transferred to
Consignee‟s bank
• Bank releases BL to
Consignee when
payment received
• Consignee must have
BL to pickup cargo at
destination
Manifest
BL and shipment
Information
manifested to
appropriate
customs, ports
and/or any other
regulatory
agencies.
Shipment Bill of lading
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Module 4: Container Shipping

Value
Chain
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Business Value Chain

PRIMARY
ACTIVITIES
Regional Sales
Global
Accounts
Pricing
Marketing
Market Research
Advertisements
Billing
Taxes Disbursements
Payments
Revenue & Receivables
Audit & Corporate
Accounting
Costing & Profitability
Payroll
Manifest Activities
Regulatory & Customs
Clearance
Terminal Operations
Vessel Planning
Empty
Equipment
Repositioning
Equipment Mgmt
Fleet Mgmt
Shipment
Tracking
Customer
Support
Functions
Customs
Clearance
Warehousing
Logistics
Sales & Marketing Finance & AccountsLiner Operations Services
Network
Mgmt..
Route
Planning
Vessel
Allocation
Vessel
Scheduling
Demand
Planning
Net Ops.
Manage Booking
Manage Shipments
Documentation
Customer
Operations
SUPPORTACTIVITIES
Office Space, Yards, Terminals (Ports), Terminal MachineryInfrastructure
Human Resources
Technology
Procurement
Recruitment & Training, Compensation & Benefits, Internal Communication
IT infrastructure, Data Security, Software Products, Product solutions like RFID..
Vessels, Container, Trucks, Terminal Hardware, Ports, Asset acquisition through alliances, acquisitions
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Business Value Chain - Sales &

Marketing
Regional Sales:
Sales and promotion activates focusing on the retail customers on
geographical basis.
Global Accounts:
 Relationship management with Global customers
 Contract management from existing accounts and new accounts
Pricing:
 Retail Pricing for all customers based on market research
and profit margin
 Pricing Management for existing customers, based on
contract terms and business.
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Business Value Chain - Sales &

Marketing
Marketing & Advertisement:
Geographical advertising, promotion and customer
communication activities
Market Research:
Research and analyze the market trends.
Get to know the competitors business
strategies.
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Business Value Chain – Customer

Operations
Manage Booking: (Business Process – Booking Process)
 Receiving and creating bookings
 Create and maintain customer profiles
 Rate determination based on the contract with the customer
 Route determination based on the customer needs and vessel slot
availability
 Track the status of the booking
Manage Shipments: (Business Process – Shipment Process)
 Receiving, inspecting and handling the containers at CY or CFS Yard
 Stuffing or de-stuffing the containers in case of Less than the
Container Load
 Handle the containers on the vessel and yard based on the shipping
instructions
 Track the status and activities related to the container
Documentation: (Business Process – Shipment Process)
 Create Bill of Lading and handle any changes to it.
 Release Bill of Lading to the customer after appropriate verification
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Business Value Chain – Liner Operations

Manifest Activities: (Business Process – Terminal Process)
 Declaration of import, export, transshipment and on-board
cargo for a vessel to terminals, customs and any other
regulation body.
 Handle any discrepancies, issues related to the manifest.
 In case of any changes, send manifest amendments.
 Receive and process responses received for the manifest.
Regulatory and Customs Clearance:
(Business Process – Terminal Process)
Declaration of cargo to the customs at
appropriate
timing.
Handle any issues and get clearance from customs for
loading and discharge of cargo.
Handle vessel and container inspection by the customs
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Business Value Chain – Liner Operations

Terminal Operations: (Business Process – Terminal Process)
 Manages the receipt, storage, loading onto vessel, discharge from
vessel and
delivery of containers/ cargo within the terminal.
 Handle the berth request and allocation for the vessel by submitting
appropriate
documentation to the port.
 Handle vessel delays, vessel roll-overs and vessel re-handling.
Vessel Planning: (Business Process – Terminal Process)
 Plan the vessel voyages to optimize utilization of vessels
based on the bookings.
 Increase on-time performance

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Industry Trends & Challenges

Shipper Trends:
 Focus on Core Business
 JIT becomes more and more widely adopted
 Shippers deciding transportation not a core function
 Outsource transportation – 3PL‟s
 Requires transportation companies to broaden service lines
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Industry Trends & Challenges

Shipper Evolution:
 Wants the transport company to do more
 Needs and expects instant information
 Demands a wide range of service offerings
 Cost conscious
 On-time delivery a top priority
 Looking at long term strategic partnerships
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Industry Trends & Challenges
Environmental Safety and Standards in International Shipping:
 Owing to poor monitoring and compliance with international safety
standards by
Flag of Convenience (FOC) countries, issue of environmental safety and
standards is likely to be a major issue of concern to all national ship
registries and
is likely to make new stringent demands.
 Tanker shipping with a prominent share of global fleet and sea-borne
cargo is
going to be affected much
 Many organizations like International Transport Workers Federation
(ITWF),
Green Peace International and World Wildlife Fund have come forward
with their
campaign against "substandard" shipping and have requested UN for
intervention.
 The European Union has black-listed some of the ships and barred
their entry into
the European ports.
 Further to this, the incremental costs of stringent international safety
regime is
bound to impact the operations of global shipping companies through
added costs
of redundancy and renewal of fleet.
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Industry Trends & Challenges

Economic Recession and Shifting Global Trade Patterns:
 Economic recession in the developed countries & shifts in global trade
that have
come about since the formation of WTO have brought up a number of
surprises
for international shipping.
 Although global merchandise trade volumes have increased, the
shipping freight
rates have come down, primarily due to many structural changes in the
world
trade.
 While developed industrial economies of North America and Europe
still continue
to drive the global merchandise trade, there has been remarkable growth
of
merchandise trade, primarily in the Asian region with countries like China
& India
at the front.
 Restructuring of the world trade flow is leading to remarkable effects
on the
global shipping patterns.
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Module 7 – Key Industry Players

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Key Industry Players
 Today, there are 6,044 ships active on liner trades, for 12,587,082
TEU and
171,827,550 TDW including 4,534 fully cellular ships for 11,832,391
TEU.
 The global market share of the 3 leading lines of the world , Maersk
Line, MSC
and CMA CGM, has grown from 32.1% to 34.1% in terms of TEU
capacity during
the year 2007, as per the latest figures published by AXS-Alphaliner.
Market Share progression on 24 months – Jan 2006-Jan 2008
_________________________________________________
Jan 06 Jan 07 Jan 08
_________________________________________________
Maersk Line 18,2% 16,8% 16,1%
MSC 8,6% 9,8% 10,4%
CMA CGM Group 5,6% 6,5% 7,6%
__________________________________________________
All three 32,4% 33,2% 34,1%
Source : Alphaliner
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Key Industry Players

Top 20 Players and their Market Share:
Source: AXS-Alphaliner
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Market Players
Vendor Offering Availability What it does
i2 Technologies
Dallas, Texas
Transportation
&
Distribution
Management
Hosted
&
Licensed
Provides transportation modeling, analysis, planning,
and management; bid collaboration; supply chain
visibility; replenishment planning; private market place
Lean Logistics
Holland, Mich.
Lean Logistics
On Demand
TMS
Hosted
Provides procurement, planning, execution, private
transportation marketplace, appoitment scheduling,
continuous move, visibility, and business intelligence
features
Manugistics
Rockville, Md.
Manugistics
Transportation
Management
Licensed
Two distinct versions - one for retailers and one for
consumer goods manufacturers - offer procurement,
carrier capacity management, fleet management,
inbound order collaboration, and freight auditing and
payment features
Manhattan
Associates
Atlanta, GA
Transportation
Management
Hosted
&
Licensed
Provides transportation management, audit and
payment claims, transportation planning execution,
transportation procurement, and fleet management
and capabilities
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Market Players...
Vendor Offering Availability What it does
Oracle
Redwood
shores, CA
Oracle
Transportation
Management
Licensed
Integrates and streamlines transportation planning,
execution, business process automation, and freight
payment on a single application across transportation
modes - from full truckload to complex multi-leg air,
ocean, and rail shipments, introduced earlier this year,
the software is designed to help companies reduce cycle
times and improve asset and cost management
RedPrairie
Waukesha, Wisc.
DLx
Transportation
&
Global Trade
Management
Hosted
&
Licensed
Optimizes order fulfillment with the least-cost
transportation mode, carrier, and routing. The software
considers changing capacities and constraints, carrier
contracts, trade regulations and cost, and customer
requirements and service windows.
SAP
Walldorf,
Germany
mySAP
Supply Chain
Management
Licensed
Offers transportation planning and shipment completion,
cost calculation and settlement, customer freight billing,
service agent selection, transport and utilities
management, and shipment follow-up and supervision.
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Product/Technology Selection
Large number of products available in the market makes it difficult to
choose
which product and technology will be the best-fit for a given
Liner/Logistics company.
There Decision multiple frameworks available in the market which
provide
product/technology evaluation approach with defined steps and
directions. It is up to
organization to choose the right frame work depending upon the
organization‟s need.
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Glossary
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Glossary
Alliances: Alliances are group of carriers that pool their assets and
essentially form a
single operating entity.
Arrival Notice: A notification by carrier of ship‟s arrival to consignee, the
“notify party”
and, when applicable “also notify party”.
Box Car: A roofed freight rail car usually with sliding doors in the sides.
Cargo : Freight loaded into a ship.
Chassis: A trailer constructed to accommodate containers moved over
the road; a
frame with wheels.
Consolidation: Grouping several packages in to one whole consignment
that is
freighted to a destination where every single parcel is delivered to its
individual
consignee.
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Glossary...
D&H: Abbreviation for "Dangerous and Hazardous" cargo.
Deadhead: One leg of a move without a paying cargo load. Usually
refers to
repositioning an empty piece of equipment.
Deadweight Cargo: A long ton of cargo that can be stowed in less than
40 cubic feet.
Devan: To remove freight from container.
EIR: Equipment Interchange Receipt. A form used by third parties to
confirm the
delivery and receipt of containers and container equipment.
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Glossary...
Feeder Service: A service that coordinates cargo/container transport by
small feeder
vessels to large vessel for ocean transit
Feeder Vessel: A small(er) vessel that transports cargo/container to
larger ocean-
transiting vessel. It is more economical to operate and can often dock
more safely and
easily at small ports.
GOH: Garment on Hanger. Specialized container that allows cloths to be
transported
on hangers, ready for immediate display and/or purchase at their final
destination.
Line-Haul Vessel: A vessel that is able to transit long distances or that
calls at the
major port of services.
NVOCCs: Non Vessel Operating Common Carrier. Carriers that do not
operate
vessels. They solicit small shipments for ocean transport and arrange for
consolidation
at port.
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Glossary...
Pallet: Wooden or metal platform on which individual pieces of cargo are
stepped
together for loading or unloading.
Slot: Stowage location for a container on vessel.
Spreader: A piece of equipment designated to lift containers by their
corner castings.
Store Door Delivery: Delivering cargo directly to a consignee‟s place of
business.
Trade Lane: A route of major ocean commerce.
Vessel: A ship that carries cargo in the form of container or bulk. Cargo
capacity of
the vessel is measured in terms of TEU or FEU. TEU stands for twenty
foot equivalent
and FEU stands for forty foot equivalent. A ship capacity of 40000 TEU
means that it
can carry 40000 containers of size 40 ft length ( = 20000 FEU)