Liner shipping operations management

Container shipping has become the most important sector among all shipping sectors because it plays the dominant role in seaborne transport by carrying more than 50% of the total seaborne trade by monetary value. The rest of this chapter mainly focuses on container shipping and logistics. In this section, we first describe the key players in the CSSC, then focus on the focal player, and introduce a number of key concepts. Finally, we describe the main planning problems in liner shipping service management and discuss the logistics in practice.

CSSC and key players

The CSSC consists of several key players: the consignor, consignee, inter-

modal marketing company (IMC), terminal/port/depot, freight forwarder,

transport provider, logistics service provider (LSP), and equipment provider.

  • • The consignor is an organisation that directly hands off goods to the logistics or transport provider that will deliver the goods to the consignee. Both the consignor and consignee can act as a shipper that generates a request for cargo movement from the origin to destination.
  • • The consignee is an organisation that receives the goods and takes ownership of those goods. Large organisations of the consignee are often termed as beneficial cargo owners, who have enough capital and resources to perform logistics functions themselves (by taking receipt, managing, and transporting goods) instead of relying on an LSP or freight forwarder.
  • • The I IMC is a specialised type of logistics provider that focuses on handling intermodal containers. They deal with loading and unloading shipping containers, transferring containers between transport vehicles such as ships, trucks, and trains, and transporting these containers along the shipping supply chain. An IMC purchases intermodal capacity directly from the railroads and trucking firms to give shippers a door-to-door intermodal service.
  • • Terminals, ports, and depots are locations where goods are sent, received, handled, and processed to interface with transport links. For example, the seaport is a transfer point between vessels and inland transport vehicles (truck, train, and barge).
  • • Freight forwarders manage and organise the transportation of goods from one place or organisation to another. They focus on the arrangement of all necessary documentation and shipping notices and act as a middleman between shippers and transport providers. A freight forwarder is also called a non-vessel operating common carrier (NVOCC) in the USA.
  • • A transport provider physically moves goods from one location to another, e.g. the ocean carrier (shipping line), road haulier, rail operator, barge operator, and air transport. They own or lease the transport vehicles and equipment needed to physically handle and move the goods.
  • • LSPs offer a variety of functions of physical goods flow (sending, receiving, storage, and transportation) and information flow (management of goods) through the shipping supply chain. Their primary concern is to ensure the goods are moved and stored in the supply chain efficiently and effectively. Broadly, an LSP includes IMC, transport provider, and freight forwarder. Specifically, there are different LSP providing services at multiple points in shipping supply chains. For example, LSPs may be involved in storing and warehousing goods, inventory control, consolidation, moving containers and goods, packaging, cross-docking, unpacking, freight forwarding, and distribution to consignees.

• An equipment provider manufactures, owns, or leases the physical infrastructure and assets that are needed to transport goods, e.g. truck providers, trailer and chassis providers, locomotive and wagon providers, intermodal container providers, shipping container providers, and ship chartering companies.

The supply-demand relationships between these players can be summarised as follows: the consignor and consignee are the shippers that initiate trade demands for transportation. They could be the direct customers of many other players such as the IMC, freight forwarder, transport provider, and LSP. In particular, the shipping line normally has direct contracts with larger shippers. Terminals and ports provide container lifting service to ocean carriers (shipping lines), may offer fuel supply service to shipping lines, and also provide warehousing service to store containers temporarily for shipping lines and shippers. Shipping lines may offer door-to-door services to its customers in which case they are responsible for both the seaborne transport service and inland transport service, although the inland transport service may be subcontracted to the road haulier or rail operator. The freight forwarder or NVCCO can be a customer of shipping lines on behalf of multiple shippers. IMC is the customer of road haulier and rail operator because they purchase intermodal capacity from the railroads and trucking firms. Logistics service providers offer a range of services to shippers and also provide empty container repair, maintenance, and storage services to shipping lines. Transport providers are the customers of equipment providers. It can be seen that these players are interacting and may have very complicated supply-demand relationships in the different supply chain contexts.

The contractual relationships between these players in the (CSCS can be illustrated in the linkages in Figure 5.1. However, it should be pointed that there also exist operational relationships without contracts between some players, e.g. the consignor/consignee and inland transport operators; terminal operator and road haulier, terminal operator and NVOCC/freight forwarder/IMC/LSP (Fransoo and Lee 2013). Shipping lines normally have contracts with terminal operators about a port of call arrangements and the handling charges per container. Shipping lines announce their planned arrival and departure times several months in advance and provide terminal operators with updated expected arrival times frequently (e.g. daily) as the ship approaches the terminal. The formal contracts between the shipping lines and terminal operators include clauses of penalties to the shipping line if not turning up and delaying its arrival, and to the terminal operator if not sufficient handling equipment is available or taking too long to handle the ship. However, in practice, these penalties are usually not executed due to high uncertainty in shipping operations and for the purpose of maintaining the supply chain relationship between the two parties (Fransoo and Lee 2013).

Contractual relationships in CSSC

Figure 5.1 Contractual relationships in CSSC.

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