Shipping firms have the unique challenge of delivering high productivity and efficiency. This industry is characterised by fluctuations in demand and supply of commodities. Firms must allocate the right number of vehicles to the available containers or vessels. They need to reduce operational costs and optimise resources. Shipping companies ought to be flexible enough to respond to last-minute changes in customer requirements. Unless they are highly agile and flexible, they cannot adequately meet customer needs. Therefore, these types of enterprises are ideal in the analysis of maritime logistics principles as their core businesses processes depend on them.
Summary of the company
The firm chosen for this study is a shipping company called Sewon Maritime Logistics Inc. It is based in Korea and specialises in the export of various types of cars from General Motors, Renault, Hyundai and Samsung. While these supplying companies are internationally based, Sewon dwells only on the products made in Korea. It then transports the cars to markets around the world. Sewon has buyers in Africa, North America, South America, Australia, the Middle East and Asia. The company also stocks approximately one thousand units at its logistics port in Gunsan, Korea. The company started in 1998, and now has twelve years experience in shipping Korean vehicles to other parts of the world. It also ships automobile spare parts to the same destinations mentioned above (Sewon Maritime Logistics Inc. 2012).
International supply chain challenges faced by Sewon
Sewon receives orders for Korean vehicles on a daily basis. As such, it requires seamless exchanges of vehicles between ports. The firm needs to eliminate possible barriers that may increase the possibility of seamlessness (Heng & Tongzon 2005). It is quite difficult to achieve such a feat if a company does not operate under strong maritime logistics principles. Sewon cannot simply stop at the theoretical aspect; it must decide which principles are the most suitable to its business processes and then apply them. The firm needs to deliver automobiles and automobile parts that are in good condition. In this regard, it ought to establish itself as a reliable and dependable company to its clients (UNCTAD 1997). Achieving such an objective can be highly challenging for the organisation because it has to employ the services of other partners. It may not always be easy to control the activities of these firms, yet the buyers will still hold Sewon accountable. Sewon Maritime Inc. should deliver its cars on time as punctuality is a vital target in any shipping organisation. This is challenging because sometimes customers may alter their specifications, but may do nothing to their previous deadlines.
The company has a logistics unit at the Korean port. At any one time, costumers may want to physically select the cars they are purchasing. As such, Sewon Maritime Inc. needs to be highly accessible to the customer. It must study consumption patterns and stock the right types of vehicles in this organisation (Panayides 2002).
This business also has the unique challenge of ensuring that the products get to the right clients. In other words, it must sell security as one of its strong points. Such an objective is highly challenging in the automobile sector owing to the possibility of intrusions and prevalence of fraudsters in certain parts of the world. The company has to be particularly cautious about those countries that have a high tolerance for corruption. However, this does not imply that Sewon should be relaxed about other countries as insecurity can arise anywhere.
This organisation must run all its operations in a manner that lowers operational costs. Nonetheless, doing so should not come at the cost of meeting the client’s needs. Striking the right balance between these objectives can make the difference between profit and loss in the company. The company tries to market itself as an affordable one. In fact, this is a major selling point for the use of intermediary shipping companies. Buyers who approach Sewon do not have the time to follow through on the direct transportation of their vehicles. Therefore, they approach the firm in order to get assistance on the exporting process. However, since automobiles are already costly purchases, customers wish to get shippers that do not charge them exorbitantly. Sewon Maritime Inc. knows this fact, and tries as much as possible to make their services affordable. The major challenge in this aspect is having enough capital to manage operations and get comfortable profit margins (Rodrigue & Notteboom 2005). Its strategic thinkers have to alter their logistical approaches in order to strike that balance at all times.
It should be noted that Sewon Maritime is not the only shipping company in the chosen port. Furthermore, there are other firms that deal with automobile sales in the country as well. This means that clients will often compare prices before selecting a shipping company to do their exporting for them (Stefansson 2002). In this regard, Sewon must keep up with market prices. The organisation needs to be transparent about its price selections so as to build or sustain consumer confidence.
Maritime Logistics processes at Sewon
The businesses processes at Sewon can be represented by a step by step process. It starts with promotion of the Sewon Maritime’s activities concerning its services. It provides this information through the internet, leaflets, conferences, handbooks, personal meetings with clients and relationship marketing from repeat clients. After promotion of the firm’s services, customers are expected to study the information provided by the company. They are supposed to ask about the conditions of transportation that the company provides. Sewon will furnish them with the answers to these inquiries. If the customers are satisfied with what the firm tells them, then customers will make an order of an automobile.
Once an order has been received, the organisation is expected to prepare information about sailing schedules in the deep seas shipping lines, feeder lines as well as the port terminals. The firm also creates information about intermodal services and road or rail terminals. This information is highly dependent on the availability of the vehicle at its logistics centre. However, if it does not have that vehicle model, then it must contact the concerned supplier –GM, Renault and others. After acquiring the vehicle, the company then prepares a contract of sale for the vehicle. Once the contract is made and money exchanged, then the company starts coordinating its shipping lines.
The vehicle is then shipped from the logistics unit to the vessel and then to its destination. Sewon employs a series of strategies to make sure that this process is thoroughly co-ordinated. Once the vehicle reaches its destination, then the company must facilitate the transition to road or rail transport. It then handles this latter component until the automobile reaches the concerned customer. Most of the time, road and rail transport are outsourced to a transporting or cargo-delivery firm. However, the firm must work hand in hand with its partners to ensure that this process happens seamlessly.
How Sewon maritime Logistics Inc. enhances competitiveness using Maritime logistics principles
This organisation employs supply chain integration as one of its strategies as seen through a series of practices. First, it has a strong relationship between its customers and suppliers. One can deduce this from continuous sourcing from the same large companies such as GM and Renault (Stank et al. 1995). It also treats customer feedback as a vital part of its operations. Sewon does this by sourcing for information from them before, during and after completion of a transaction. This high level of coordination between the company partners and itself leads to thorough supply chain integration and superior performance. While the prime role of this organisation is to facilitate the transport of an automobile, it still thinks of itself as an important part of the vehicle supply chain. It makes sure that the ship operations, storage processes, loading and unloading processes are in order. It also looks at cooperation with and coordination with its suppliers’ supply chains.
The company under analysis uses technology to promote data sharing with its international supply chain. Sewon is able to receive and transmit orders through electronic data sharing. It also invoices and notifies clients on shipping through technology. This approach means that products with short lead times like the automobile parts will get delivered speedily (Bluemel et al. 2005). The organisation prides itself in information sharing; a vital part of an effective international supply chain relationship. Usually, this company achieves such an objective by making the information up to date and always on point. Customers rarely complain about distortions concerning the automobiles received. Others tend to complement the firm through its frequent updates as well as its fast and timely responses.
Forging relationships within one’s shipping lines is indicative of whether a firm has a stable international supply chain or not. Here, companies that use a transactional approach have difficulties in improving their profit levels because they cannot retain their clients (Brooks 1993). This company has a well synchronised intermodal operation. Therefore, one may say that it does have the right relationships with its shipping lines; it is driven by relationships rather than transactions.
Value addition is another important part of the international supply chain for this company. It does not simply focus on uploading and downloading vehicles, it also adds value to the vehicles that are placed under its car. For instance, the assembly of certain accessories on its automobiles occurs in its logistics centres. Furthermore, procuring the vehicles for the customers is another activity that adds value to the company’s services. Since the organisation is meant to be a transporter, then any other services outside it core activities are classified as value-adding processes. Other ways in which the company adds value to is services is its ability to change schedules in order to meet customers’ needs. Furthermore, the company can take its products through highly diversified modes in very short times. These are qualities that customers appreciate about the organisation tremendously.
This company has integrated its transportation modes so as to ascertain that goods get to consumers at the right time and in the right condition. Integrating different modes of transport is a vital part of maritime logistics because ships do not work in isolation. All ports are usually bi-directional in nature, and the commodities they deliver are meant to enter road or rail systems (Bluemel 1997). Such is the case for Sewon Maritime Logistics Inc. its automobiles are transported by land to the port and then by road and rail to their buyers. This company employs a high level of connectivity and coordination in order to achieve this. Employers ensure that their cargo goes through the most economically feasible routes. In other words, the company’s staff members always select the routes that promise low costs. This also means providing customers with easy access to the hinterland. If the company merely delivered the automobiles to the customer’s port without thinking about how the automobile gets to their clients, then this would have prevented the firm from accessing a large portion of its revenues. It also minimises customer-direct-involvement in the shipment process, thus leading to better outcomes.
In order to integrate one’s shipping services with different transport modes; one must have a good relationship with one’s inland transporters (Brooks 1990). This is true for Sewon Maritime Inc.; it often partners with port authorities in its target markets. Alternatively, it works with the major cargo firms in the receiving country. The company dedicates a lot of time in the selection of these partners. It also makes sure that it explains its expectations to the concerned company. Furthermore, Sewon usually review the container flows in order to synchronise them with the inland freight distributors. There are two levels of partnerships that the company has with these groups. The first is formal partnerships with international cargo firms. The second level is the establishment of informal partnerships through networks with concerned rail or road transporters. After their automobiles get to these partners, Sewon Inc. often makes sure that it communicates and coordinates activities with the companies. This means that the concerned partners will be highly transparent and accountable to Sewon. They will also know about the quality expectations from the organisation.
It should be noted that in the future, this firm may take greater charge of inland transport as part of its overall strategy. Currently, most of the work is done by its partners. This may involve the involvement of the company in some of the shuttle train services within principal markets (Beresford et al. 2003). It may also entail working with key companies in those markets. This should also be accompanied with other rail operators or road operators. Right now, the company has also done a good job of working with its inland transport partners in order to identify the most effective ways of enhancing its automobile deliveries. If the company has heightened its involvement in this segment, then chances are that it will produce greater customer satisfaction.
In order to ascertain whether the latter company actually possesses a relationship with various members of its shipping supply chain, one must establish whether partners or suppliers perform their end of the bargain on the basis of their contract or on mutual trust. For Sewon, the latter aspect is more prevalent than the latter because sometimes its suppliers can draw contracts after completion of consignments. This comes about after working closely with these partners for years and showing that the organisation does keep its promises.
How Maritime logistics affect results at Sewon Inc.
In order to understand how effective the above-mentioned principles have been in the company, it is essential to look at various elements of the services offerings at Sewon. First, the company offers competitive prices, which is only possible when one’s international supply chains are effectively run. One can test this by comparing the company’s service charges alongside its competitor’s prices. It can boast of offering lower charges than other shipping firms in Korea. Handling cargo is not just done effectively in this company, but it occurs at affordable rates.
The company also believes that the quality of its services is what brings customers to its premises. This emanates from high port service performance especially in regard to customer feedback. Many clients also claim that they approach the organisation for its quality offerings. One thing that customers value in terms of quality is the customisation of its shipping services. The company has a flexible logistics system such that it can meet its customers’ needs. If a customer requires a specific performance issue, the company is always so fast to respond.
The firm also considers itself as a reliable company. It has minimal delays for deliveries. Sewon is able to deliver this through the strong coordination efforts with its partners, use of technology and synchronisation of activities.
The level of responsiveness in this firm is also something worth noting. Creation of new services at this companies occurs at a very fast pace. Additionally, those services get to customers speedily. Sewon has established a reputation in the industry for introducing new services and that has given it a competitive edge over other corporations. All these aspects are alleged by the firm, but they can also be seen through repeat buys (Ginters 2003).
Sewon Maritime logistics Inc. has demonstrated that it is possible for organisations to offer affordability alongside value. Therefore, low prices do not necessarily mean that a shipping company offers low quality. Relationship-building between the shipping company and its partners alongside adoption of technology and continual monitoring of the supply chain all lead to superior performance.
Beresford, A, DSouza, G & Petit, S 2003, ‘Linear shipping companies and terminal operators: internationalisation or globalisation?’ Maritime Economics and Logistics vol. 5, pp. 393-412
Bluemel, E 1997. Managing and controlling growing harbour terminals, Budapest, European publishing house.
Bluemel, E, Vinichenko, S & Novickis, L 2005, ‘Model based essential logistics principles for creating a web-portal of transport services consumers’, Simulation Journal vol. 8 no. 2, 1-5
Brooks, M 1990, ‘Ocean carrier selection criteria in a new environment’, Logistics and Transportation Review vol. 26 no. 4, pp. 339-356.
Brooks, M 1993. ‘International competitiveness: exploring and assessing competitive advantage by ocean container carriers.’ Logistics and Transportation Review vol. 29 no. 3, pp. 275-293.
Ginters, E 2003, Applications of simulation and IT solutions in the Baltic port areas of the associated candidate countries, Riga, JUMA.
Heng, W & Tongzon, J 2005, ‘Port privatisation, efficiency and competitiveness: some empirical evidence from container ports’, Transportation research vol. 39, pp. 405-424
Panayides, P 2002, ‘Economic organisation of intermodal transport’, Transport reviews vol. 22 no. 5, pp. 401-414.
Rodrigue J & Notteboom, T 2005, ‘Port regionalisation; towards a new phase in port development.’ Maritime policy and management vol. 32 no. 3, pp. 297-313.
Sewon Maritime Logistics Inc. 2012, Company website, viewed 20 February 2012 ‹http://www.sewonmaritime.com›
Stank, T, Daughterty, P & Gustin, C 1995, ‘The effects of information availability on logistics integration’, Business Logistics Journal vol. 16 no.10, pp. 1-21.
Stefansson, G, 2002, ‘Business to business data sharing: a source for integration of supply chains’, Production Economics International Journal, vol. 75, pp. 135-146.
UNCTAD 1997, Multimodal transport handbook, Geneva, UNCTAD.