Maritime Logistics

Maritime Logistics

Subject: Logistics Management 1

Presentation Flow 1. Introduction 2. Overview of the role of sea trade in economic development 3. Basic information on the merchant fleet 4. Ship types 5. Ports 6. International maritime-and-related organizations

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Definition • Maritime Logistics Management is the part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customers’ requirements in the Maritime and business environments 3

History • Egyptians used it in 3200 BC • Maritime transport was dependent on wind • Mechanized ships started in mid 19th century(steam engine) • Diesel engine introduced in 20th century • Today 90-95% of of international trade is carried onboard ships of some sort 4

Characteristics • Cheap Conveyance • High carrying capacity • Longer transport time • Affected by weather factors • Delays on port where loading and unloading is done 5

Operation • Liner Shipping • Tramp Shipping • Industry Shipping

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Sector Specific Targets • Job creation • Social development • Increasing maritime awareness • Labor standards 7

Main Concerns of Maritime Industry • Maritime business is to be conducted according to the changing pattern in international trade and global logistics and supply chain • The rule of games is changed –larger and fewer players hold the ever-stronger market power • New strategies are to continuously develop and implement to be competitive and sustainable • Successful integration into the global supply chain is the key to their business 8

Effect of Global Slowdown 2008: • Global Economic Downturn continues • Sharp decline in world merchandise trade • Growth in international seaborne trade slowed down to 3.6 % (2008) from 4.5 % (2007) 9

Growth in the volume a of merchandise trade, by geographical region, 2006–2008 (%ages)

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Source: WTO Press Release: World Trade 2008, Prospects for 2009

Indices for world economic growth (GDP), OECD Industrial Production Index and world seaborne trade (volume), 1994–2009

(1994 = 100)

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Indices for world economic growth (GDP), OECD Industrial Production Index and world seaborne trade (volume), 1994–2009 Source: UNCTAD Review of maritime transport 2009

(1994 = 100)

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Sea Borne Trade • 2008 international seaborne trade at 8.17 billion tons of goods loaded, • With dry cargo continuing to account for the largest share (66.3 per cent) • Major loading areas were located in 1. Developing regions (60.6 per cent) 2. Developed economies (33.6 per cent) 3. Countries with transition economies ( 5.9 per cent) 13

World seaborne trade in 2006–2008, by type of cargo and country group

33.6

5.9

60.6

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World seaborne trade, by country group and region, 2008 (percentage share in tonnage)

Source: UNCTAD Review of Maritime Transport, 2009

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Lloyd MIU Study

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Maritime Transportation Planning Problem • Low visibility • Less structured • Much More Uncertainty • Traditional & Fragmented

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Strategic Problems Among the strategic problems: • Market and trade selection, • Ship design, • Network and transportation system design (including the determination of transhipment points for intermodal services), • Fleet size and mix decisions (type, size, and number of vessels), and • Port/terminal location, size, and design 18

Tactical Problems The tactical problems include: • Adjustments to fleet size and mix, • Fleet deployment (assignment of specific vessels to trade routes), • Ship routing and scheduling, • Inventory ship routing, • Berth scheduling, • Crane scheduling, • Container yard management, • Container stowage planning, • Ship management, and • Distribution of empty containers 19

Operational Problems The operational problems involve: • Cruising speed selection, • Ship loading, and • Environmental routing

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Maritime supply chain applications A tactical transshipment problem, where coal is transported at sea from several supply sources to a port with inventory constraints. The coal is then transported from the port to several coal fired power plants.

• Objective is to minimize: – Procurement costs, – Transportation costs, and – Holding costs.

• Constraints: – – – – –

Company procurement policy, Power plant demand, Port unloading capacity, Blending requirements, and Safety stocks. 21

Basic information on the merchant fleet General cargo vessels Container ships Dry bulk carriers Liquid bulk carriers Gas tankers Ship types Liners Tramps Cruising ships Special vessels

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General Cargo Vessels "cargo" refers to the goods carried aboard the ship for hire A cargo ship or freighter is any sort of ship or vessel that carries cargo, goods, and materials from one port to another.

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Container ships Cargo ships that carry all of their load in truck-size intermodal containers, in a technique called containerization Common means of commercial intermodal freight transport

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Dry Bulk Carriers The term “Dry bulk carrier" is used to distinguish bulkers from bulk liquid carriers such as oil, chemical, or liquefied petroleum gas carriers Specially designed to transport unpackaged bulk cargo, such as grains, coal, ore, and cement in its cargo holds
Bulkers make up 40% of the world's merchant fleets
Range from single-hold minibulkers to mammoth ore ships able to carry 365,000 metric tons of deadweight (DWT) 25

Dry Bulk Carriers Typical bulk carrier crew Captain/Master Deck department

Engine department

Steward's department

1 -Chief Officer 1 -2nd Officer 1 -3rd Officer 1 -Boatswain 2 – 6-Able Seamen 0 – 2-Ord. Seamen

1 -Chief Engineer 1 -1st Asst. Engr. 1 -2nd Asst. Engr 1 – 2-3rd Asst. Engr. 0 – 2-Jr. Engr. 1 – 3- Oiler 0 – 3-Greaser/s 1 – 3-Entry-level

1-Chief Steward 1-Chief Cook 1-Stwd's Asst

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Liquid Bulk Carriers "wet" trades of • • • • •

Petroleum Liquefied natural gas (LNG) Gasoline Chemicals Liquid edibles (vegetable oil, cooking oil, fruit juices, etc.)

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Gas Tankers An LNG carrier is a tank ship designed for transporting liquefied natural gas (LNG)

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Liners Ocean liner is a ship designed to transport people from one seaport to another along regular long-distance maritime routes according to a schedule. Liners may also carry cargo or mail, and may sometimes be used for other purposes (e.g., for pleasure cruises or as troopships).

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Tramps •A ship engaged in the tramp trade is one which does not have a fixed schedule or published ports of call. •As opposed to freight liners, tramp ships trade on the spot market with no fixed schedule or itinerary/ports-of-call(s).

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Cruising Ship •A cruise ship or cruise liner is a passenger ship used for pleasure voyages •Major part of the tourism industry, accounting for U.S.$27 billion annually

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Special Vessels Cable Ship Fishery Protection Vessel Drill Ship

Heavy Lift Ship Icebreaker Ship 32

Cargo Loading Problem Containers A 50

B 250

500

Weight Capacity(Kg)

400

1000

2500

Contribution (Rs.)

500

2000

4500

Volume capacity (cubic feet)

C

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Cargo Loading Problem(contd.) Objective : To determine number of cargo units of each type so as to Max. total contribution subject to capacity restriction for carrier Constraints: Cargo capacity of ship constrained both by Max. Volume of 50,000 cubic feet & Max. Weight of 2,50,000 Kg

How to solve? Sol: Formulate as LPP (OR Application)

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Port  A facility for receiving ships and/or transferring cargo  At the edge of an ocean, sea, river or lake  Cargo-handling equipments, processing facilities, custom facilities  Port types – cruise, cargo , fishing, etc.

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Port and Economic Development Global trade structure or the transport industry Industrial relocation and boom in world production increased the tonnage supply and maximising cargo unitisation From labour intensive to capital intensive businesses Integrated and continuous transport chain – from producer to consumer Production required raw material from one country, warehousing in another and exports to a third one

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Port Infrastructure Efficiency Measures

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Major Ports  In world - Singapore, Shanghai, Rotterdam (Netherlands), Kobe(Japan), Hong Kong (Total cargo tonnage)  In India, 12 major ports and 185 notified minor and intermediate ports - as per administrative significance  Vishakhapatnam, Cochin, Kolkata , Chennai, Kandla, Ennore, Jawaharlal Nehru Port, Haldia , Marmugao, Mumbai, New Mangalore, Paradip, Tuticorin and Mundra Singapore port(40)

Jawaharlal Nehru Trust Port, Navi Mumbai (9)

Major Ports in the world Rank

Port

Country

2008

2007

2006

2005

2004

1

Singapore

Singapore

29,918 27,932 24,792 23,192 21,329

2

Shanghai

People's Republic of China

27,980 26,150 21,710 18,084 14,557

3

Hong Kong

Hong Kong

24,248 23,881 23,539 22,427 21,984

4

Shenzhen

People's Republic of China

21,414 21,099 18,469 16,197 13,615

5

Busan

South Korea

13,425 13,270 12,039 11,843 11,430

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Dubai

United Arab Emirates

11,827 10,653 8,923 7,619 6,429

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Ningbo

People's Republic of China

11,226 9,349 7,068 5,208 4,006

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Guangzhou

People's Republic of China

11,001 9,200 6,600 4,685 3,308

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Rotterdam

Netherlands

10,784 10,791 9,655 9,287 8,281

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Qingdao

People's Republic of China

10,320 9,462 7,702 6,307 5,140

(in ‘000 TEUs )

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Major Ports in the world

Major Ports in India Name Kolkata(Kolkata Dock System & Haldia Dock Complex) Paradip Visakhapatnam Chennai Tuticorin Cochin New Mangalore Port Mormugao Mumbai J.N.P.T. Ennore Kandla All Indian Ports

Cargo Handled (06-07) '000 tonnes

% Increase (over 05-06)

55,050

3.59%

38,517 56,386 53,798 18,001 45,314 32,042 34,241 52,364 44,818 10,714 52,982 463,843

16.33% 1.05% 13.05% 05.03% 20.28% -06.99% 08.06% 18.50% 18.45% 16.86% 15.41% 9.51% 41

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Containerization A

system of intermodal freight transport using standard intermodal containers  Loaded onto container ships, railroad cars, planes, and trucks  Approximately 90% of non-bulk cargo worldwide  Five common standard lengths – 20 ft, 40 ft, 45 ft, 48 ft and 53 ft Issues Increased Efficiency Additional Fuel Cost Misuse – Smuggle Empty containers

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Issues in Port Logistics Cannot be built overnight and may take a lifetime to repay Poor connectivity to international transport networks Tended to absorb excess capacity in low-skilled labour Managing ports superstructure becoming more sophisticated and demanding Governments facing resistance for developing ports. Upgrading infrastructure according to modern technology 54

Snapshot Capabilities •Huge, heavy loads hauled for distances

Market

•Used in U.S. Great Lakes, rivers; EU rivers; China and SE Asia and •Low-value, high-density elsewhere cargo such as coal or grain •Waterways maintained by taxpayers •Very low per-mile cost •Low fixed costs for ease and fuel-efficient of entry, private fleets

Tradeoffs •Limited accessibility, other transport required to/from port •Slow travel (trains faster but higher cost) •Harmful to environment

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International Maritime Organization(IMO)  Formerly known as the Inter-Governmental Maritime Consultative Organization (IMCO), was established in Geneva in 1948  Came into force ten years later, meeting for the first time in 1959  The IMCO name was changed to IMO in 1982  Presently Headquartered in London, it’s a specialized agency of the United Nation with 168 Member States and three Associate Members 56

Organizational Structure 1.Governing Bodies 2.Secretary General 3.Technical Committees 3.1 The Marine Environment Protection Committee 3.2 The Legal Committee 3.3 The Technical Cooperation Committee 3.4 The facilitation Committee 4. The Maritime Safety Committee

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Main Objectives

• To Ensure Safe secure and efficient shipping on clean Ocean • To develop and maintain a comprehensive regulatory framework for shipping • It includes safety, environmental concerns, legal matters, technical co-operation, maritime security and the efficiency of shipping.

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Legal Instruments Source of approximately 60 legal instruments like a) International Convention for The safety of Life at Sea(SOLAS). b) International Regulations for Preventing Collisions at Sea (COLREG) c) Port State Control (PSC) authority, allowing domestic maritime authorities such as coast guards to inspect foreign-flag ships calling at ports of the many port states 60

Current Issues • International Convention on Standards of Training, Certification and Watch keeping for Seafarers (STCW) • International Ship and Port Facility Security (ISPS) Code • International Code of Signals • Intercessional Meeting of IMO’s Working Group on Greenhouse Gas Emissions from Ships

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THE SHIPPING TRADE PRACTICES BILL, 2008 Objectives • Bring transparency in trade practices adopted by maritime transport logistics service providers • Arranging transportation of containerized cargo • Registration of such service providers and their obligations; • mode and manner of fixing tariff by the service providers; • EXIM (Export Import) and for matters connected therewith or incidental thereto

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Application of Act • Extends to the whole of India except the State of Jammu and Kashmir • Service providers in relation to carriage or transportation by ‘Sea’ • Service providers for warehousing • Providing services relating to stuffing and destuffing of containers 63

Registration • No person shall carry on or commence the business of maritime transportation logistics service unless he is registered under this Act. • The application shall accompany • Prescribed fee • Bank guarantee of not less than 10 lakh rupees • Insurance from an underwriter for third party liability cover. 64

• A registration shall be valid for a period of 5 Yrs • Application for registration considered only if place of business is registered in India • The registration certificate shall be non transferable. • Service provider to publish the tariff for the services • The registration is subject to production of the bank guarantee and the insurance cover every year

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References • UNCTAD Review of Maritime Transport, 2009 • Lloyd's MIU Study at the IMSF conference in New Orleans in May 2009 • http://ipa.nic.in/ - Indian Ports Association • http://www.iilschennai.com/ - Indian Institute of Logistics, chennai

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Thank You…!!

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