CASA Basic Ship Agency Functions - Marketing 2024 PDF

Basic Ship Agency Functions Module : Marketing & Sales in Shipping 11/05/2024 Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK)  Agenda Overvi...

Basic Ship Agency Functions Module : Marketing & Sales in Shipping 11/05/2024 Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK)  Agenda Overview of Service types Overview of Strategy Pricing management Factors affecting calculations Conversions ICD concept Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Service Types Air Line Shipping Line NVOCC Feeder Operator Freight Forwarder Freight Broker Service Options / Air Sea, River Sea Sea Sea, Air, ICDs Sea, Air, ICD, offerings ICDs ICDs Rail, Road Rail, Road Multimodal Mostly port to Mostly port to Mostly port to Port to Port Multimodal Multimodal Solutions port. Rarely on port. Rarely on port. Rarely on solutions solutions limited tradelines limited tradelines limited tradelines / geographical / geographical / geographical locations offer locations offer rail locations offer rail trucking solutions / truckingupto an / trucking upto an ICD ICD Asset base High High Medium / High Medium / High Non / Low Non Documents used Air waybill Bill of Lading Bill of Lading Service Bill of Bill of Lading Carriers Lading Air waybills document Ability to issue Yes Yes Yes No Yes No own transport document(AWB/BL) CHA No No No No Yes Yes Local transport No No No No Yes Yes solutionsDelivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) W/H Solutions No No No Yes Yes  Strategic Pyramid Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Generic Strategy Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Pricing Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Pricing Objectives Pricing objectives are the goals or targets that a company aims to achieve through its pricing strategy. In the marine shipping industry, there are several potential pricing objectives that a company may have. Some common pricing objectives include; Maximize Market share 1. Maximizing profits: One potential pricing objective for a company in the marine shipping industry is to maximize its profits by setting prices that are as high as possible while still being competitive and attracting Maximize customers. To achieve this objective, the company may use a cost-plus pricing strategy, value-based pricing, or Revenue competition-based pricing, depending on its business model and target market. 2. Maximizing market share: Another potential pricing objective for a company in the marine shipping industry is Objectives to maximize its market share by offering competitive prices that attract customers. To achieve this objective, the company may use a competition-based pricing strategy or offer volume discounts to encourage bulk purchases. 3. Maximizing revenue: A third potential pricing objective for a company in the marine shipping industry is to Minimize maximize its revenue by setting prices that are as high as possible while still attracting customers. To achieve this the cost objective, the company may use a value-based pricing strategy or a dynamic pricing strategy that adjusts prices in real time based on demand and other factors. Maximizing 4. Minimizing costs: A fourth potential pricing objective for a company in the marine shipping industry is to Profits minimize its costs by setting prices that are as low as possible while still covering its costs and generating a profit. To achieve this objective, the company may use a cost-plus pricing strategy or a competition-based pricing strategy. Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Pricing models Freight Rate model used in the container shipping industry In the container shipping industry, freight rates refer to the prices that shipping companies charge for transporting containers between ports. These rates are typically quoted on a per-container basis and may vary depending on factors such as the distance of the voyage, the size and type of the container, the cargo type and commodity, and the shipping route. There are several different models that are used to set freight rates in the container shipping industry. Some common models include: Liner shipping model: Spot market model: Contracts and agreements model: All-in rates model: This model is used by shipping This model is used by shipping This model is used by shipping This model is used by shipping companies that operate regular, companies that offer ad-hoc or companies that enter into companies that offer an all- scheduled services between one-off services on a spot basis. contracts or agreements with inclusive price for their services, ports. In this model, shipping companies customers to provide regular, including the cost of transporting In this model, shipping companies quote rates on a voyage-by- long-term shipping services. the container, customs clearance, publish tariff schedules that voyage basis, based on the In this model, shipping companies and other fees and charges. outline the rates for different current market demand and may offer fixed or discounted This model is designed to provide routes and container types supply. rates in exchange for a transparency and simplicity for These rates may be subject to Spot rates may be significantly commitment from the customer customers but may not offer the seasonal or market fluctuations. higher or lower than liner rates to use their services over a flexibility or customization of depending on market conditions. certain period of time. other models. The choice of freight rate model will depend on the needs and preferences of the shipping company and its customers, as well as market conditions and other factors. Companies in the container shipping industry may use a combination of different models to meet the needs of different customers and markets. Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Factors affecting Freight Rates Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK)  Factors affecting Freight Rates cont… Fuel Costs Supply and Distance to Service Charges Type and Amount Geopolitical Risks Other Factors Demand Destination of Cargo Freight rates are closely Freight rates also Distance or intended Port service charges and If your freight is difficult Rough governments and Government related to fuel costs. depend on demand, i.e. destination is also a terminal fees affect to ship, such as the dangers of pirate regulations, your When fuel prices the volume of cargo factor that affects shipping rates. dangerous or oversized attacks tend to push reputation as a increase, vessel owners that is ordered and shipping rates. As a rule, Depending on your cargo, freight rates will prices up along some merchant and partner, either take some losses shipped. If demand is the longer the journey destination, you may be higher. When routes. These routes are and adverse events like or hike prices as ships high and capacity to the post of arrival, have to pay: shipping dangerous considered riskier due epidemics and conflicts become more expensive limited, vessel owners the higher the freight Freight dues goods which require to the presence of that cause supply to operate. Losses will may choose to offer rates. In addition, if you Pilotage, berth, canal, special storage, terrorist sects and chain disruptions. then be passed to space at a premium. ship cargo to an isolated anchorage, shipping, and handling, maritime pirates which merchants and Also, for some types of or remote location that lighthouse, and you will be charged is why vessel owners consumers, either in the cargo seasonality is an is difficult to reach, sanitation dues higher rates due to the have to pay higher form of a fuel important factor. Fruits, rates are likely to be Customs duties need for special insurance premiums. component or vegetables, and grain high. If your destination Tugboat and dock fees containers, skilled indirectly. that are shipped during is close to a major port Tonnage dues manpower, etc. You may a certain period of the or carrier’s hub, also have to pay year will have higher shipping costs will be demurrage and freight rates. lower. detention (D&D) and port storage charges. Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Factors affecting Freight Rates cont… Ocean freight (OCE): Bunker adjustment factor (BAF): Currency adjustment factor (CAF): Interim fuel participation (IFP): Origin fuel surcharge (OFUE): This is the base cost of shipping one BAF is a surcharge that It is a surcharge if you pay for the Shipping companies apply this Source countries apply this charge container from one point to compensates for fuel price cargo in foreign currency and it is charge if there is an increase in fuel for oil prices and it is usually a another. fluctuation. usually a percentage of basic ocean prices. percentage of basic freight. freight. Origin terminal handling charges Congestion surcharge (CON): Emergency risk surcharge (ERS): Heavy lift (HEA): Out of gauge surcharge (OOG): (OTHC): There may be delays of incoming A shipping company applies this for This is an additional surcharge if the If a container is 20 feet or more and It is a charge at the port of origin or and outgoing vessels in some ports. handling cargo in routes with the cargo weighs more than the exceeds the weight of 14,000 kg terminal for handling containers This cost compensates for the risk of violence or piracy. ERS standard weight limits. tare, shipping companies apply this before loading them into a vessel. congestion and the shipping includes bunker cost, insurance and charge. It compensates for the lost companies apply this freight charge. costs for enforcing additional slots as these containers could take security measures. up additional space, causing a loss of revenue. Peak season surcharge (PSS): Special equipment surcharge (SPE): Hazardous surcharge (HAZ): Suez canal surcharge (SUE): Low sulphur charge (LSC): A fee applied to all shipments A seller or a consignor pays this It is a surcharge for transporting SUE is a surcharge for cargo that This is a surcharge for ships that during high-volume trade periods. charge if they require special hazardous goods like chemicals or transits through Suez Canal operate in the European Union temperature-controlled containers flammable material. areas. to transport their consignment. Panama canal surcharge (PCC): Aden gulf surcharge (ADE): Other This is a surcharge for ships It is a surcharge that shipping transporting cargo through the companies apply if they cross the Panama Canal. Gulf of Yemen as there is a high risk of piracy and the charge compensates for potential costs. Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Container round trip cost calculation Class room activity Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Volume calculation Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK) Container Depot vs Inland Container Depot Container Depot Inland Container Depot Main purpose A container depot is an area where An inland container depot (ICD) is a facility shipping containers are stored for for storing containers located in the transshipment. mainland – far from the main ports. Before and after delivering shipping containers to the seaport, shipping companies can store and move their boxes to the ICDs. Services offered Storage of empty containers till Receiving and delivering of containers repo/export release, freight with customs formalities far from the consolidation, repair, and cleaning of seaports. boxes, reefer plugging, survey, etc Stuffing / De-stuffing operations. Transport arrangement Mainly road transport. Mainly rail transport. Other services Container Sales - Delivered by : Dinesh Chandrawansa (CMILT-UK, MBA-CMU/UK, CIM-UK)