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WorldMaritimeUniversityTheMaritimeCommons:DigitalRepositoryoftheWorldMaritimeUniversityWorldMaritimeUniversityDissertationsDissertations2006TheanalysisoflargeChineselinercompanies'strategytodeveloplogisticsservicesBiyun.
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RecommendedCitationWang,Biyun.
,"TheanalysisoflargeChineselinercompanies'strategytodeveloplogisticsservices"(2006).
WorldMaritimeUniversityDissertations.
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http://commons.
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se/all_dissertations/167WORLDMARITIMEUNIVERSITYShanghai,ChinaTheAnalysisofLargeChineseLinerCompanies'StrategytoDevelopLogisticsServicesByWang,BiyunChinaAresearchpapersubmittedtotheWorldMaritimeUniversityinpartialfulfillmentoftherequirementsfortheawardofthedegreeofMASTEROFSCIENCEInInternationalTransportationandLogistics2006CopyrightWang,Biyun,2006iiDECLARATIONIcertifythatallthematerialinthisresearchpaperthatisnotmyownworkhasbeenidentified,andthatnomaterialisincludedforwhichadegreehaspreviouslybeenconferredonme.
Thecontentsofthisresearchpaperreflectmyownpersonalviews,andarenotnecessarilyendorsedbytheUniversity.
(Signature)(Date)Supervisedby:Prof.
ZongBeihuaShanghaiMaritimeUniversityAssessor:Prof.
PeterMarlowUniversityofCardiff,UKCo-assessor:Prof.
LiuWeiShanghaiMaritimeUniversityiiiACKNOWLEDGEMENTIamthankfultoWorldMaritimeUniversityandShanghaiMaritimeUniversityprovidingmewiththepreciousopportunitytostudyinthisprogram.
Iwanttothankthewholefaculty,especiallytoMr.
MaShuo,Mr.
ShiXin,Mr.
XuDazhen,Ms.
ZhouYingchun,andMsQuShanshan,whohavemadegreatefforttoensurethesuperiorqualityoftheprogram.
IamalsogratefultoalltheoverseasprofessorswhotraveledalongwaytoChinatosharewithustheirprofoundknowledgeandcreativeideas.
Iwanttogivemywholeheartedgratefulnesstomysupervisor,Prof.
Zong,Beihua,whohaskindlyguidedandsupportedmetocompletethedissertation,andhasgivenconstructiveadviceontheresearchtopic.
Iamthankfultoallthosewhohavekindlysupportedmyinquiryandhavegivenmetheiropinions.
Finally,sincerelythankstomyfamilyandmyfriendswhohavebeensupportingandencouragingmeoverthepasttwoyears.
ivABSTRACTTitleofDissertation:TheAnalysisofLargeChineseLinerCompanies'StrategytoDevelopLogisticsServicesDegree:MSCNowadays,intheopenChineseshippingandlogisticsmarket,thelargeChineselinercompaniesarefacedwithunprecedentedcompetitionandmarketchance.
Theyhavetotakecertainmeasuretodealwiththesituation.
Besides,itistheglobaltrendfortheinternationalshippingcompaniestocarryitsservicefromoceantransporttowardlogistics.
ThelargeChineselinercompaniesshouldbeawareofthefundamentalchangeindevelopmentandtaketheinitiativeinthecompetitionsoastosurviveandgrowinthemarket.
ThisdissertationistheanalysisoflargeChineselinercompanies'strategytodeveloplogisticsservices.
Itconsistsof5chapters.
ChapterOneintroducestheobjectivesofthetopic,themaincontent,theresearchmethodologies,andtheliteraturereview.
MainbodyofthepaperisfromChapterTwotoChapterFive.
ChapterTwointroducesthecurrentstateandproblemsinthecompanies'operation,andthendrawsthenecessityforthecompaniestodeveloplogisticsservices.
ChapterThreeanalyzestheexternalenvironmentforthecompanies'strategicdevelopment,whichincludesopportunitiesandthreats.
ChapterFouranalyzestheinternalconditionsofthedevelopment,containingtheiradvantagesanddisadvantages.
ChapterFivediscussestheissuesrelatingtothelogisticsdevelopingstrategies,includingstrategicgoals,marketpositioningandtheimplementationofthestrategies.
vThepapersuggeststheproperstrategiesforlargeChineselinercompanies'transitionintomodernlogisticsserviceprovider.
Thestrategiesshouldbebasedontheirstrengthinlinerserviceandinlocallogisticsmarket.
Thus,theywouldgaintheirowncompetitiveadvantagesinprovidinglogisticsservice.
KeyWords:LargeChineselinercompanies,Logistics,StrategyviTABLEOFCONTENTSDelarationiiAcknowledgementiiiAbstractivTableofcontentsviListoftablesixListoffiguresxListofabbreviationsxi1Introduction11.
1Theobjectivesofthetopic11.
2Maincontentsandmethodologies21.
3Literaturereview31.
3.
1.
DiscussiononlogisticsmarketdevelopmentinChina31.
3.
2.
PreviewofthedevelopingtrendofcontainertransportinChina41.
3.
3.
Discussiononthefutureofthelinerindustry41.
3.
4.
EstimationofthenewsituationSinolinercompaniesfacedwith51.
3.
5.
Issuesrelatingtothelinercompanies'developingstrategies51.
3.
6.
Summaryofthestrategicanalysisandselectionmethodologies62NecessityforlargeChineselinercompaniestodeveloplogisticsservice82.
1CurrentoperationoflargeChineselinercompanies82.
1.
1.
Scaleofthecompanies82.
1.
2.
Rankingoftheworld'stoplinercompanies92.
2Existingissuesintheoperationandtheircauses112.
2.
1.
Singletransportmodeishardtomeetthecustomers'demand112.
2.
2.
Thelinerindustrywouldundergohardtimesandtheprofitabilitywouldshrink122.
2.
3.
Homogeneousserviceproductresultsinlackofcorecompetence142.
3Thereasonsforthelinercompaniestodeveloplogisticsservice14vii2.
3.
1.
Thelinercompaniesplayanimportantroleinlogisticsservice142.
3.
2.
Itfitsthetrendoflogisticsdevelopment152.
3.
3.
Theservicesatisfiestheincreasingcustomers'demand162.
3.
4.
Thelinercompaniesneedtoenhancecompetitiveness17Summaryofthechapter183AnalysisofexternalenvironmentofChineselinercompanies'logisticsservicedevelopment193.
1Theopportunitiestodeveloplogisticsservice193.
1.
1.
Thefavorablemacro-economicenvironment193.
1.
2.
Thematuringdomesticlogisticsmarket203.
1.
3.
Greatprofitpotentialindomesticlogisticsmarket213.
1.
4.
Themassiveconstructionofdomestictransportinfrastructures223.
1.
5.
Introductionofadvancedoverseaslogisticsexperience243.
2Analysisofcompetitorsinthelogisticsmarket243.
2.
1.
OverseaslogisticscompaniestrytograbChinesemarket243.
2.
2.
Analysisoftheadvantagesofthecompetitors263.
2.
3.
Analysisofthedisadvantagesofthecompetitors273.
3Indexmodelofthelinercompany'scompetitivenesstodeveloplogisticsservice283.
4Casestudy-Maerskvs.
COSCO303.
3.
1.
Briefintroductionofthecompanies303.
3.
2.
Comparisonininformationmanagement313.
3.
3.
Competitioninlogisticsmarket313.
3.
4.
Applicationoftheindexmodel33Summaryofthechapter344AnalysisofinternalconditionsforChineselinercompanies'logisticsservicedevelopment354.
1Developingadvantages354.
1.
1.
Advantageindomestictransportnetwork354.
1.
2.
Goodreputationinlocalmarket354.
1.
3.
Stablecustomerbaseandpartnership364.
1.
4.
Strongcapitalresource364.
2Obstaclefactors364.
2.
1.
Insufficientunderstandingofmodernlogistics364.
2.
2.
Currentfacilitiesandmanagementinneedofimprovement37viii4.
2.
3.
Immaturelogisticsinformationmanagement374.
2.
4.
Personnellackinginproficiencyprovidinglogisticsservice384.
3Casestudy-COSCO'sstrengthsandweaknessesinlogisticsservicedevelopment384.
3.
1.
COSCO'sstrengthsindevelopinglogisticsservice384.
3.
2.
COSCO'sweaknessesindevelopinglogisticsservice39Summaryofthechapter415Thelinercompanies'strategiestodeveloplogisticsserviceandtheirimplementation425.
1Briefreviewofthelinercompanies'SWOTanalysis425.
2Strategicgoalandmarketpositioning435.
2.
1.
Basisofsettingthestrategies435.
2.
2.
Strategicgoalandmarketpositioning445.
3Implementationofthestrategies475.
3.
1.
Strengthenthestrategiccooperationwiththeforwardandbackwardenterprisesinlogisticsprocedure475.
3.
2.
Establishwin-wincooperationwithworld-famouslogisticscompanies475.
3.
3.
Setupcomprehensivelogisticsservicenetwork485.
3.
4.
Developadvancedlogisticsinformationmanagementsystem485.
3.
5.
Enhancetrainingofspecializedpersonnel495.
4Casestudy-thelogisticsdevelopingstrategiesofCOSCOandChinaShipping495.
4.
1.
Thecooperationstrategiesofthetwocompanies495.
4.
2.
Sustaineddevelopmentisensured515.
4.
3.
Thescaleoflogisticsoperationincreases515.
4.
4.
Sharingandintegrationoflogisticsresourceispromoted525.
4.
5.
Specializationoflogisticsserviceisbeingintensified53Summaryofthechapter54Conclusion56References59Appendix1Calculationoffactorweightingsintheindexmodel63Appendix2EvaluationofcompetitivenessofMaerskandCOSCO67ixLISTOFTABLESTable2-1Rankingoftheworld'stop10linercompanies(May,1st,2005)10Table2-2Rankingoftheworld'stop10linercompanies(Sep,29th,2005)10Table3-1TheproportionoflogisticscosttoGDPinsomedevelopedcountiesandChina21Table3-2ThestructureofinvestmentinlogisticsinfrastructuresinChina(2004,2005)23Table3-3Indexsystemoflinercompany'scompetitivenesstodeveloplogisticsservice29Table3-4Therelativeandglobalweightsoftheelementsintheindex30Table3-5ComparisonsbetweenMaerskandCOSCO33Table4-1COSCO'sstrengthsandweaknessesindevelopinglogisticsservice40Table5-1SWOTanalysisoflargeChineselinercompanies'logisticsserviceDevelopment42Table5-2ThemajorservicescopesandclientsofChinaShippingLogistics50xLISTOFFIGURESFigure2-1Predictionofcellularfleetandcapacity2006-201013Figure2-2CellularcapacityProjectionsforeachshipsize2006-201013Figure3-1Thestructureofdomesticlogisticscost(firstseasonof2006)22Figure3-2ThestructureofinvestmentinlogisticsinfrastructuresinChina(2005)23xiLISTOFABBREVIATIONSAHPAnalyticHierarchyProcessmodelCKDCompletelyKnockedDownCOSCOChinaOceanShipping(Group)CompanyCOSCONCOSCOContainerLinesCo.
,Ltd.
CSCLChinaShippingContainerLinesCompanyLimitedEDIElectronicDataInterchangeGDPGrossDomesticProductMISManagementInformationSystemNVOCCNon-VesselOperatingCommonCarrierOOCLOrientOverseasContainerLinesLtd.
SWOTStrength,Weakness,OpportunityandThreatTCLTCLCorporation(oneofthebiggestconsumerelectronicgroupinChina)TEUTwenty-footEquivalentUnit11Introduction1.
1TheobjectivesofthetopicWiththeReformandOpeningup,China'snationaleconomyboastsasteadyandrapiddevelopment.
Besides,duetotheeastwardmovementoftheworldmanufacture,ChinahasbecomethemanufacturingandprocessingcenterofAsia-Pacificregionandtheworld,whichensuressufficientcargosourceforthecontainertransportinChina.
Manyshippingmagnateshavebeenattractedbyhugeshippingdemandandhavetriggeredfiercemarketcompetition.
AfterChina'sentryintotheWTOandwiththeremovaloftheadmittancerestrictionsofSinoshippingandinlandlogisticsmarket,theforeignplayersareboundtobemoreaggressive.
Therewouldbeanewcompetitionfocus,thatis,thepenetrationandseizureofChineselogisticsmarket.
Theforeignshippingcompanieshaveabundantcapital,flexibleoperation,advancedtechnologies,andexperiencedmanagement.
However,Chineselinercompaniesareweakinsuchaspectsaslogisticsideas,systemdesign,andservicelevel.
ItwouldbehardtosurvivethecompetitionifSinolinercompaniesdidn'texpeditedevelopinglogisticsservices.
Thus,itisobviousthatdevelopinglogisticsservicesiscloselylinkedwiththecompanies'survivalandgrowth.
Facingsuchsituation,Sinolinercompaniesshouldadjustthecompetitionstrategiestoenhancelogisticsserviceandfindnewprofitsourcesoastoescapethedisorderedcompetitionondepreciatinglinerfreight.
Theyshouldcultivatelogisticsservice2capabilitytoseizeandenlargeshareinthatboomingmarketsoastogaincorecompetenceandstrengthencompetitiveadvantages.
What'sworthmentioningiswhetheralinercompany,whichiscapital-intensive,issuitabletodeveloplogisticsservice.
Inmyopinion,duetotheuniquesituationinChina,themarketisprovedtohavesuchdemand.
Thepaperwouldgivetheanalysis.
Besides,thecompanies'maritime-basednatureshouldbetakenintoconsiderationintheprocessofmarketpositioning.
1.
2MaincontentsandmethodologiesThedissertationanalyzesthelargeChineselinercompanies'strategiestodeveloplogisticsservice.
Thenecessityofdevelopmentisconcludedfromtheanalysisofthecompanies'currentoperation.
Thecompanies'strategicgoals,marketpositioningandtheirimplementationsuggestionsarebasedontheanalysisofthecompanies'externalenvironmentandinternalconditions.
ThefirstpartofthemainbodyanalyzesthecurrentoperationoflargeSinolinercompanies,andgetsthereasonstodeveloplogisticsservice.
Thesecondpartfocusesontheexternalenvironmentofthecompanies,includingtheiropportunitiesandcompetitors,inwhichtheAnalyticHierarchyProcess(AHP)modelisappliedtosetupamodelevaluatingthelinercompanies'competitivenesstodeveloplogisticsservice.
Thethirdpartdiscussesthestrengthandweaknessofthecompanies'internalconditions.
Thefourthpartisabouttheissuesrelevanttothecompanies'strategiesandtheirimplementations,suchasstrategicgoalsandmarketpositioning.
TheSWOTanalysisisappliedinthesecondandthirdparts.
31.
3Literaturereview1.
3.
1.
DiscussiononlogisticsmarketdevelopmentinChinaAfterChina'sentryintotheWTO,mostofthelogisticsmarkethasbeencompletelyopen.
DingJunfa,aChineselogisticsexpert,forecastedfivetrendsintheChineselogisticsindustry.
First,theindustrywouldundergorapiddevelopment.
Second,governmentandenterpriseswouldfunctionwellinaharmoniousway.
Third,stated-ownedcompanies,privatecompanies,Sino-foreignjointventure,andforeigncompanieswouldoccupythemarket.
Fourth,theindustry'scontributiontoGDPwouldincreasesteadily.
Fifth,theindustrydevelopmentwouldrelyonsupplychaintheories,investmentinmoderntechnologiesandhumanresource1.
ThereisalargegapbetweenChinaanddevelopedcountriesinlogisticsindustry.
First,theSinocompaniesaregenerallyweakandlooseinoperation.
Second,thecompaniesaretoosmalltosatisfytheincreasingdemand.
Third,thethird-partylogisticsdevelopsslowlyandisnotspecialized2.
Multinationalenterprises'entryhasbroughtaboutbothopportunitiesandchallenges.
Theydrivethedevelopmentbycreatingadditionallogisticsdemand,upgradinglogisticsservicewiththeircapitalandtechnologies.
Theywouldbetherolemodelsforlocallogisticscompanies.
Yet,theirentrycausesintensivecompetitionaswell.
CompetinginthecompletelyopenChinesemarket,themultinationalswouldfullyutilizesignificantfinancial,technological,andhumanresource,whichwouldputChinesecompaniesundergreaterpressure3.
1TheSpecialists'opinionofChina'slogisticsdevelopment.
WaterTransportationDigest,2005(2/3)2ThefivefeaturesofthedevelopmentofChineselogisticsenterprises.
WaterTransportationDigest,2005(11)3WhathasinternationallogisticsbroughttoChinasinceChina'sentryintoWTO.
WaterTransportationDigest,41.
3.
2.
PreviewofthedevelopingtrendofcontainertransportinChinaDuetotheboomingnationaleconomyandforeigntrade,thecontainertransportinChinagrowshealthily.
Thehealthyandsteadygrowthwouldcontinueduetoeconomic,foreigntrade,andportdevelopment.
Itwouldalsobedrivenbygovernmentsupport,logisticsdevelopmentandinternationalcompetition4.
WhenChinahasbecomethe"worldmanufacturingcenter",domestictradeisboosted.
ThedevelopingtrendsofthecontainertransportmarketinChinaareasfollows:containerizationandintermodalisationwouldbeenhanced;themarketwouldberegulated;efficientcontainertransportsystembetweenmajorterminalsandinlandrouteswouldbesetup;thetransportequipmentswouldbeappliedwithmoderntechnologies;advancedmanagementwouldreducecostandimproveservicelevel;sustainabledevelopmentstrategywouldleadtofewerenergyconsumptionandlowercost.
Inaword,thecontainertransportdevelopmentinChinaisoptimisticandfullofpotential5.
1.
3.
3.
DiscussiononthefutureofthelinerindustryAccordingtotheeconomists'forecast,theland-basedexpresscompanieswhoareexploringtherangeofservicearelikelytosurpassthetraditionaloceancarriersandreplacetheoceancarrierstocontactwiththemajorclients.
2005(2/3)4Fan,Y.
FactoranalysisofcontainertransportationdevelopmentinthefutureofChina.
WorldShipping,2005(4)5Sun,J.
Consideringaboutsomepoliciesonthedevelopmentofcontainertransportation.
WorldShipping,2005(3)5John.
F,aBritishcontainermarketanalyzer,indicatesinareporton"internationalcontainer"(2005,10)thatthetimesofacquisitionwithinthelinerindustryhasbegun.
Thedrivingforcesincludereducingcostthrougheconomyofscale,expandingthescopeofroutes,andseizingashareinthelogisticsmarket.
Therefore,theurgenttaskfortheoceancarriersistoreducecostbyformalizingtheiroperationthroughstandardizedandintegratedmanagement,andtoadjusttheirservicetomeetcustomers'demand.
Theyshouldbeawareoftheriskandallocatetheresourcesinalong-termeconomicallybeneficialway6.
1.
3.
4.
EstimationofthenewsituationSinolinercompaniesfacedwithAfiercecompetitioninlinerindustryisgoingoninChina.
TherapidandsustainablegrowthineconomyandforeigntradeleadtotheboomingcontainertransportinChina,whichhascaughttheattentionofoverseaslinercompanies.
Thus,Chineseshippingindustryshouldattachimportancetoenhancingcompetitivenessandsettinglong-termmarketingstrategies7.
Manyshippingcompanieshaverealizedthatlogisticsisanewprofitsource.
Logisticsandshippingareindispensable.
Therangeoflogisticscoversoceantransport.
Inthecurrentfiercecompetition,theshippingcompaniesneedtoexplorelogisticsservicetostrengthenitscompetitiveness8.
1.
3.
5.
Issuesrelatingtothelinercompanies'developingstrategiesIncurrentsituation,theChineselinercompaniesshouldgrasptheopportunitiesto6Shan,M.
Thechangingperiodofgloballinerindustry.
TransportBusinessChina,2005(12)7Chen,D.
ThereviewandtheforecastofInternationalcontainershippingmarket.
WorldShipping,2005(1)8HowcanSinoshippingcompaniesprovidinglogisticsservices.
WaterTransportationDigest,2006(1)6startlogisticsserviceatahigherlevel.
Thecompaniesshouldresearchthemarketandmakeeffectivedecisions,exploreservicebasedontransportation,setupandexpandthelogisticsservicenetwork,developlogisticsinformationsystemandcultivateprofessionalpersonnel9.
Whendevelopinglogisticsservice,Sinolinercompaniesshouldadoptessentialstrategiesaccordingtopracticalconditions.
Theyshouldsetupthecustomers'demand-orientedidea,developmultipleserviceproductstomeetvariousdemands,enhanceinformationmanagementcapability,seizethelogisticsmarketquicklythroughacquisition,consolidationandalliance,andcultivatepersonneltostrengthenthecapabilityofprovidingvalue-addedservice10.
1.
3.
6.
SummaryofthestrategicanalysisandselectionmethodologiesNowadays,"SWOT"analysisiswidelyusedintheprocessofstrategicplanning.
"SWOT"analysiswouldanalyzethestrengths,weaknesses,opportunitiesandthreatsofthecompany.
Itisamethodologytosummarizetheinternalandexternalfactorsinfluencingacompany'sbusiness.
Theanalysisofstrengthandweaknessfocusesontheconditionsofthecompanycomparedtoitsrival,whiletheanalysisofopportunitiesandthreatsconcentratesonthechangingexternalenvironmentwhichmighthaveaneffectonthecompany'soperation.
"SWOT"analysisenablesthecompanytoknowitsownresourcesandcapabilitiessoastotakepropermeasurestokeepitscompetitiveadvantages11.
9HowcanSinoshippingcompaniesprovidinglogisticsservices.
WaterTransportationDigest,2006(1)10ThelogisticsmarketdevelopingstrategiesforSinoshippingcompaniesunderthenewsituation.
WaterTransportationDigest,2005(12)11Plunkett,WAttner,R.
Management.
South-WesternCollegePublishing(1997)7"Corecompetitiveness"isalsoacommonlyusedtheory.
Itisthebasisofacompany'scompetitiveness.
Itisafundamentalcapabilityofabusiness,aproductoutofbusinessdevelopmenttoacertainstage,whichcompetitorscannottotallyimitate,nottomentionfullytrade;itisaresultofcollectivelearningwhiledoing.
Thecultivatingofcorecompetitivenessneedstheeffectiveallocationanduseoftheresources.
12TheAnalyticHierarchyProcess(AHP)model,arelativefuzzyevaluatingmathematicalmethod,canalsobeappliedinthecomparisonofcompetitivenessandintheselectionofstrategies.
Theweightingofthefactorsinvariouslayersaresetdownthroughplus-weightinganalyticcomprehensiveassessmentmethodandLevelanalyticapproach.
Withrelevantinformation,thespecialistsareinquiredtoscorethefactorsaccordingtojudgmentmatrix.
Then,thetargetindexvaluecanbeobtained.
Themethodcouldmakethequalitativeandquantitativeanalysissyntheticallysothatacomprehensiveevaluationofcompetitivenesscanbemade13Besides,thesixprinciplesofbusinessexplorationputbyAndrewCampbell,thedirectorofAshridgeStrategicManagementCentreareworthreferringto.
Theyare:keepinginvestincorebusiness;findingopportunityandnotbeingtemptedbythemarket;onlyinvestinginfewnewbusinesswhichthecompanyhascompetitiveadvantage;notbeingoverconfidentofcurrenttechniques;findingpotentialpersonnel;andbeingpracticalwiththegoal.
Theseprincipleshelptomaketherightkindofdecisions14.
12prahaladGary,H.
"CorecompetenceoftheCorporation"(1990)13Hu,D.
Thecompetitivenessofenterprise.
EconomicManagementPublishing14Fang,J.
Howtoseektheopportunityofgrowthwisely.
ModernWeekly,2006(1.
21)82NecessityforlargeChineselinercompaniestodeveloplogisticsservice2.
1CurrentoperationoflargeChineselinercompanies2.
1.
1.
ScaleofthecompaniesThetwolargestChineselinercompaniesareCOSCOContainerLinesCo.
,Ltd.
("COSCON")andChinaShippingContainerLinesCompanyLimited("CSCL").
Theyarebothworld-famousChineselinercompanies.
COSCONhad127moderncontainervesselstotalingover320,000TEUsasattheendof2005.
Inthenexttwoyears,thefleetcapacitywillbeupto450,000TEUs,whichwillinvolveEuropeanandAmericantrunkservicesdeployedwith5400to8200TEUvesselsandsubsidiaryserviceswith4800to5200TEUvessels.
In2010,COSCONisexpectedtoreachtotalcapacityofabout800,000TEUs.
COSCONoperatesover70internationalshippingroutesanddozensofdomesticservicesconnectingover100principalportsinover30countriesandregionsacrosstheworld.
Thescheduleaccuracyhasconsistentlybeen95%orhighersince1998.
Inparticular,theUStradeandAustraliatradehavemaintained100%scheduleaccuracy,becomingkeyfeaturesoftheirtradingservices.
Asthebestcontainerlinerathome,COSCONhassetupover300freightorganizationsinShanghai,Shenzhen,HongKong,Xiamen,Qingdao,Guangzhou,Dalian,Tianjin,Wuhan,Beijingandother9coastal&inlandcities.
Besides,ithasmorethan400agenciesbeyondChina15.
AsatMay2006,CSCLhadayoungandmodernfleetthatcomprises145vesselswithatotaloperatingcapacityof361,171TEU,amongwhichover54ofthemhadcapacitiesofover4,000TEU.
Theaverageageofvesselswithcapacityofmorethan4,000TEUis2.
25yearswhichoccupied75.
8%ofthewholeoperatingcapacity.
CSCLisnowoperatingdozensofdomesticcoastalroutesandinternationalcontainerlinerservicesfromChinatoJapan,Korea,SoutheastAsia,Australia,Europe,Mediterranean,America,WestAfricaandPersianGulf.
With16vesselsinoperation,ChinaShipping'sFarEast-NorthAmericalinescover8baseportsandover40inlandpointsofNorthAmerica.
ThecompanyhasformedanetworkcoveringthemainportsofChina,Japan,Korea,andSoutheastAsia.
ItsFarEast-Europe/Mediterraneanlineisnowservingalmostallchinabaseports.
Withbigcapacityascomparedwithothercarriers,itisalsoadominantplayerinChinawithashareofover50%inasignificantnumberofdomesticports.
Itsdomesticmarketshareincertainportsisashighas80%-90%16.
Asisrevealedbytheinformationabove,COSCONandCSCLarecloseinscale.
Theyboaststrongcapitalpower,havedensedomesticservicenetwork,andcoverglobalservicerange.
Ofcourse,foracapital-intensivecompanyprovidinglinerservice,havinglargescaleisnecessary,becauseitisaprerequisitetosurviveinthismarket.
2.
1.
2.
Rankingoftheworld'stoplinercompanies15COSCOContainerLineshttp://www.
coscon.
com16ChinaShippingContainerLinesCo.
,Ltdhttp://www.
cscl.
com.
cn10Table2-1andTable2-2showtherankingoftheworld'stop10linercompaniesinMay2005andinSeptember2005respectively.
Table2-1Rankingoftheworld'stop10linercompanies(May,1st,2005)CompanyRankingMarketShare(%)TEUcontainervesselsMaerskSealand112.
31036582387MSC28.
1681334257P&ONedlloyd35.
5460203162Evergreen45.
2439538153CMA54.
9412007185APL63.
731587999Hanjin73.
529817380CSCL83.
4290089111COSCON93.
4289883118Kline103.
3281722105Source:JCtrans.
comCorporationhttp://www.
jctrans.
comTable2-2Rankingoftheworld'stop10linercompanies(Sep,29th,2005)CompanyRankingTEUContainervesselsMaerskSealand11614225575MSC2727169266CMA3485844243Evergreen4460487152CSCL5330087119APL6326926103COSCON7311644125Hanjin830765381Kline9301573188OOCL1023678767Source:TransportBusinessChina,2005.
11ThetablesreflecttheimportantpositionsthetwolargeSinolinercompaniesholdintheglobalmarket.
Itcanbeconcludedfromthestatisticsthatthemarketshareand11thefleetcapacityarecloselyrelated.
Thus,fleetcapacityisthemostconvincingproofofalinercompany'spower.
Recently,COSCONandCSCLhavefocusedonenhancingoceantransportcompetencebyenlargingcontainerfleetssoastomaintainthemarketshare.
Table2-2showsthatthenumberofCSCL'scontainervesselsreached119andthetotalTEUwasover330,000,whichpositionedthecompanywithinthefirstfivegloballiners.
Thestatisticsshouldraiseourattentionaswell.
AftertheNo.
1shippingmagnateAPMoller-MaerskGroup'sacquisitionofP&ONedlloyd,itscapacityisunreachable,whichenablesthecompanytoallocatethevesselsonalargerscaleandextent,coverwiderrouterange,shortenthedeliveryperiod,andbetterutilizetheshipspace.
Scaleisadecisivefactorofalinercompany'scompetitiveness,which,however,cannotbecaughtupeasily.
Itremainsadoubtwhetherenlargingfleetcapacityistheonlywaytogrow.
Findingnewcompetitiveadvantagesandprofitsourcemightbethekeytoalinercompany'ssurvivalandgrowth.
2.
2Existingissuesintheoperationandtheircauses2.
2.
1.
Singletransportmodeishardtomeetthecustomers'demandThetransportmodeSinolinercompaniesoperateisexclusive,whichcannotmeettheincreasingdemand.
Thelinercompaniesprovidesimplesea-porttransportservice.
Withdiversificationoftradedeliverymodes,thetransportmodetendstodiversifyaswell.
Forasignificantclient,themodeisnolongerrestrictedtoseatransportandportdeliveryisfarfromsatisfactory.
Modessuchasairandroadtransportarealsorequired.
Duetothediversityofcustomers'demand,seatransporthastotransitintointermodaltransportsoastoprovidedoor-to-doorservice.
Besides,12timeofdeliveryandqualityofserviceshouldbesupervisedeffectively.
Thecoreofservicebusinessistosatisfycustomers'demand.
Thus,itisakeyissuehowtoadjustandexpandtherangeofserviceaccordingtothemarketdemand.
2.
2.
2.
ThelinerindustrywouldundergohardtimesandtheprofitabilitywouldshrinkAstheindustrycompetitionintensifies,theprofitabilitywoulddecrease.
Since1990,boomingworldtradehasarousedrapiddevelopmentininternationaltransportation.
Yet,theincreaseinfleetcapacityhadwellsurpassedthegrowthintradevolume.
Thehardsituationofsupplyexceedingdemandinlinermarketresultedinviciouspricecompetition.
Facingtheincreaseincapacity,thedecreaseinfreightrateandthenegativeinfluenceoffinancialcrisisanddepressedglobaleconomy,thelinercompaniesmanagedtoreducecostbymeanssuchasalliance,acquisitionandsharingvesselspace.
However,thiscouldn'tturnbackthedropofprofitability.
Theshippingcompaniesarethreatenedwithslimprofit,andevendeficit.
Recentyears,thelinerindustryhasrecovered.
However,theeffectofitsperiodicalchangeonthecompanies'operationisinevitable.
Figure2-1illustratesthetrendinworldcellularfleetandcapacityfrom2006to2010.
Wecanseethatthecapacitywillceasetoescalatefrom2006to2008.
SeeingFigure2-2,wecanseeanobviousincreaseincapacityforvesselssizedover5000TEU.
However,theincreaseincargovolumedoesn'tseemtobeoptimisticduringthatperiod.
AccordingtoInternationalMonetaryFund'sprediction,theworldeconomywouldhavea4.
3%increasein2006.
However,theChinaEffect,theforcepushingcontainershippingtopeak,mightchange.
Since2002,China'sforeigntradehassustaineda4-yearrapidgrowth.
Theincreaseratesfor2003and2004bothexceeded35%,whichwerethelargest.
ThoughChina'sforeigntradeishopefultokeep13booming,thegrowthobviouslysloweddownin2005.
MinistryofCommerceofChinapredictedthatthe2006foreigntradeisexpectedtoexceed1,600billionUSD,whichwouldbea15%increaseandobviouslylowerthanthatoftheyearsbefore.
Theindustrypeopleindicatedthattherewouldbeasurplusinvesselcapacityin3years,whichmightdecreasefreightrate.
Insuchcase,itwouldbetoughforthelinercompaniestosurvivethefiercecompetitionbyrelyingonoceantransportservice.
Theyhavetofindanewwaytowininthemarket.
shipsTEUs01,0002,0003,0004,0005,0006,0002006-1-12007-1-12008-1-12009-1-12010-1-1Ships02,000,0004,000,0006,000,0008,000,00010,000,00012,000,00014,000,000TotalTEUsFigure2-1Predictionofcellularfleetandcapacity2006-2010Source:ObtainedaccordingtothestatisticsreportedbyBRS-Alphaliner0500,0001,000,0001,500,0002,000,0002,500,0003,000,0002006-1-12007-1-12008-1-12009-1-12010-1-1TEUsCellularshipsize>75005000/74994000/49993000/39992000/29991500/19991000/1499500/999100/499Figure2-2CellularcapacityProjectionsforeachshipsize2006-2010Source:ObtainedaccordingtothestatisticsreportedbyBRS-Alphaliner142.
2.
3.
HomogeneousserviceproductresultsinlackofcorecompetenceForalinercompany,theproofofitscorecompetenceistheabilitytograspcustomers'need.
DuetothealiketraditionaloceantransportserviceprovidedbySinolinercompanies,theycouldn'trevealtheircorecompetenceandfailedtoobtaintheircompetitiveadvantages.
Owingtothelowcustomers'perceptionofthedifferencebetweenserviceproducts,thepricecompetitionwasboundtobetriggered.
Toescapesuchsituation,thecompanieshavetoadjusttheirbusinessstrategiessoastocultivatetheirowncorecompetence.
Thedebutanddevelopmentofintegratedlogisticshascaughttheeyeoflinercompanies.
Theyhaverealizedthroughpracticethatcompetitiveadvantagescanbeobtainedbysatisfyinghighercustomers'demandandbyenhancingtheservicelevelofshipper-orienteddoor-to-doortransport.
Basedonsuchunderstanding,someworld-famousshippingcompaniesstartedtheirlogisticsservice,whichhasbroughtnewbusinessopportunityandrichprofit.
Moreover,thecompetitiveadvantagesoftheiroceantransportservicehavebeenwellstrengthened.
Thus,itisaglobaltrendfortheinternationalshippingcompaniestodeveloplogisticsservice.
2.
3Thereasonsforthelinercompaniestodeveloplogisticsservice2.
3.
1.
ThelinercompaniesplayanimportantroleinlogisticsserviceSeatransportplaysakeyroleinmodernlogisticssystem.
Transportationisthefundamentalfunctionofmodernlogisticssystem.
Itsproperfunctioningistheguaranteeandprerequisiteforotherfunctionstotakeeffect.
InChina,90%ofthe15cargoisbyseatransport.
Besides,theoceanfreightisamainportionoftotallogisticscost,sothegoodcontroloveritisdecisivetoreducetheoverallcost.
ThelogisticsindustryinChinaisinitsearlystage.
Mostdomesticplayersareweak,small,andlackinginspecialization.
However,thelargelinercompanieshavegreattransportcapacities,themanagementexperiencetooperatelogisticsservice,theservicenetwork,andsettledtransportfacilities,allofwhicharefavorabletostartlogisticsservice.
ComparedtootherChinesecompanies,thelargelinercompaniesaremorequalifiedtoprovidehigh-standardlogisticsservice.
2.
3.
2.
ItfitsthetrendoflogisticsdevelopmentSeeingthelogisticsdevelopmentinsomedevelopedcountries,thelogisticsservicedevelopmentofmanytransportationcompanieshasbecomeagreatdrivingforceoftheindustrydevelopment.
Inmanycountries,thelinercompaniesgraduallyformafewlargegroupsthroughmergingandacquisitionsoastoprovideintegratedlogisticsserviceofhighqualityandtospreadtheriskofoperation.
Theglobalizationofworldeconomyandtheapplicationofhi-techinformationtechnologieshaveboostedworldeconomyandincreasedimportsandexports,sothetransportindustryisfacedwithhigherrequirements.
Thedifferentiatedandadvanceddemandandtheintensifiedmarketcompetitionhaveledtothetransformoftransportmode.
Thesimpleportdeliverydemandhasevolvedintodemandforintegratedandcustomizedsupplychainservice.
Overseaslargetransportationcompaniestransitedintologisticsserviceprovidersbymeanssuchasreforming,mergingandacquisition.
Actually,manylogisticscompaniesgrewthroughacquisition,forinstance,thewell-knownDeutschePostandSchenkerLogistics.
16Chineselinercompanieshavestartedlogisticsserviceaswell.
TheCOSCOgroupsetupthespecializedlogisticscompany,COSCOLogistics.
Itgetsintegratedbyalteringthecontentsandmeansofservice.
TheChinaShippinggroupfoundedChinaShippingLogistics.
Thesecompaniestakeadvantageoftheircapital,facilities,management,networkandtechnologiestoleadinthemarket.
Theyaimtoprovidecustomizedsupplychainserviceofsuperiorqualityaccordingtoindividualdemand.
Thisshowsthatthelogisticsdevelopmentisapttospeedupbothathomeandabroad.
Thecompaniesmustseizetheopportunitytotransitintologisticsserviceprovider.
Otherwise,theymaylosecompetitivenessandbekickedoutofthemarket.
2.
3.
3.
Theservicesatisfiestheincreasingcustomers'demandAsaserviceprovider,thecompanymustmeetthecustomers'demand.
Inglobalmarketcompetition,themanufacturersandvendorshavetogaincompetitivenessfromlowlogisticscostandquickreactiontothemarket,whichrequiresanefficientandswiftlogisticsservice.
Thelinercompaniesshouldrespondtothechangingdemandandtakemeasurestodeveloplogisticsservice.
Duringrecentyears,thetradegrowthinChinaismainlyfromintra-industrytradeofmultinationalcompanies.
Thosemultinationalsandoutstandingdomesticcompanieshavegoodoperationandcreatehighlogisticsdemand.
Forthelinercompanies,providingserviceforthesefamouscompanieswouldenrichtheirmanagementexperienceinlogisticsoperation,enablethemtogaingoodreputations,andcreatechancesforfuturebusiness.
Thelinercompaniesshouldsetupthemarket-orientedoperationandcustomerservicesystemthroughclosecooperationwithfamouslogisticsandprocessingcompanies.
Theyshouldalsoestablishstableand17comprehensivecooperationwithleadingdomesticmanufactures.
Furthermore,theycanfoundstrategicalliancewithdistinguishedlogisticscompaniesandlearntheadvancedmanagingexperiencesothattheywouldmeetthecustomerdemandandmeanwhilegrowintoacompetitivegloballogisticsserviceprovider.
2.
3.
4.
ThelinercompaniesneedtoenhancecompetitivenessNowadays,thecompetitionintheshippingindustrybecomesincreasinglyfierceandtheprofitabilityintraditionaltransportserviceshrinks.
Thus,thelinercompaniesmustopenupnewrangeofservicebasedonthestrengthenedadvantagesintraditionalservice.
Asanextensionofthelinerservice,logisticshasbecomethefirstchoicetoenlargeservicerange.
Theintegratedlogisticsservicewouldreducetotalcostbyaddingvaluetotraditionaltransportservicewiththeapplicationofvariousfacilitiesandtechnologies.
Theadvancedshippingtechnologieshaveeliminatedthedifferentiationofoceantransport.
Yet,byprovidingvalue-addedservice,thelinercompaniescouldavoidsuchsituationandestablishcorecompetenceoftheirservice.
Nowtheforeignanddomesticlogisticsmarketistakingshape.
Theincreasingdomesticcompanies'logisticsdemandwouldbeaprofitsourceforChineselinercompaniesandanopportunityforthemtoenhancetheirowncompetitiveadvantagesbyprovidingindividualizedanddifferentiatedserviceproductfortheircustomers.
Thesearethemainreasonsforthelinercompaniestodeveloplogisticsservice.
Thelinercompaniesshouldnotonlyoperateoceantransport,butalsoopenupthelogisticsmarket.
It'sfortheirsurvivalandfortheirgrowthaswell.
Itisaninevitabletrendforthelinercompaniestodeveloplogisticsservice.
18SummaryofthechapterThischapterfocusesonthenecessityforthelargeChineselinercompaniestodeveloplogisticsservice.
First,thecurrentoperationoflargeChineselinercompaniesisintroduced,andtheconceptthatthecompetitivenessoflinercompaniesisdecidedbythecarryingcapacityismentioned.
Then,theissuesresultedfromsingletransportmodeandserviceproduct,gloomyindustrysituation,whichwouldbethethreattosurvivalandtheneck-bottleofgrowth,areexplained.
Thus,thecompanieshavetoadjusttheirstrategies.
Inthefollowingpart,thereasonsfordevelopinglogisticsserviceareconcluded:itwouldstrengthenthecompanies'positioninthelogisticssystem,fitthetrendoflogisticsdevelopment,enablethecompaniestomeetcustomers'demandandcultivatetheirowncompetitiveness.
193AnalysisofexternalenvironmentofChineselinercompanies'logisticsservicedevelopment3.
1Theopportunitiestodeveloplogisticsservice3.
1.
1.
Thefavorablemacro-economicenvironmentAccordingtothenationaleleventhFive-Yearplan(2006-2010),30modernlogisticsdistributioncenterswillbesetup.
About10largespecializedlogisticscompanieswithnationwidenetworkwillbecultivatedonthisbasis17.
Withthegovernment'spolicytodeveloplogisticsindustry,variousregionshaveworkedouttheirowndevelopingplansandhavelistedthemonschedule.
ThelogisticsparkconstructionprojectsinBeijing,Shanghai,andothercitieslikeTianjin,Shenzhen,Qindao,WuhanandChengdu,indicatethatlogisticsdevelopmentisregardedasanimportantstimulationtothecitydevelopment.
Accordingtothepredictionofrelevantgovernmentdepartment,100logisticsparksand7majortradingcentersaretobebuiltinChinainthenext10years18.
Thus,theprospectoflogisticsdevelopmentinChinaisexpansive.
Meanwhile,thegovernmenthasconstitutedrelevantlawsandregulationstopromotelogisticsdevelopment.
InMarch2003,aftersixministriesandcommitteesjointly17HowcanSinoshippingcompaniesprovidinglogisticsservices.
WaterTransportationDigest,2006(1)18Eastdaynews.
http://news.
eastday.
com20issued"SeveralSuggestionsonSpeedingUpChina'sLogisticsDevelopment",therelevantministriesandcommitteesissuedseveralpoliciesandregulationsrespectively,suchas"SeveralSuggestionsonPromotingTransportEnterprisestoDevelopLogisticsService","RegulationsonForeignInvestmentinRoadTransport","RegulationsonForeignInvestmentinInternationalFreightForwardingAgentCompanies","RegulationsofThePeople'sRepublicofChinaonInternationalOceanShipping",and"RegulationsonInternationalCivilAviationTransport"19.
In2005,ninegovernmentministriesandcommitteesjointlypublished"StrategiestoPromoteModernLogisticsDevelopment",whichprovidefavorableconditionsforthecompanies.
Withvariouspoliciesandgovernmentsupport,thelogisticsdevelopmentinChinaisinorder.
Inshort,themacro-environmentisbecomingfavorable.
3.
1.
2.
ThematuringdomesticlogisticsmarketTheprosperousChineseeconomycreatesthegoodconditionsforlogisticsdevelopment.
Thedemandcreatedbyoverseasmultinationals,domesticstate-ownedandprivateenterprisesshouldarousetheattentionofChineselinercompanies.
Accordingtothestatistics,80%oftheworld'stop500enterpriseshaveentereddomesticmarket20.
Theirentryhasbroughtaboutmodernlogisticsconceptsandadvancedoperations.
Besides,theyexpecttheiroperationtobeguaranteedbythelogisticssysteminChina.
Thefashionofthemultinationalsistooutsourceandintegratelogisticsoperation,whichhasfetchedgreatdemandaswellaschallengingtask.
Tomeetsuchdemand,transport,forwardingagent,andstoragecompaniesstartprovidinglogisticsservice.
Theshapingofdomesticlogisticsmarketprovides19CommercialTimes.
2006,No.
12http://www.
ectime.
com.
cn20MinistryofCommerceofthePeople'sRepublicofChina.
.
www.
mofcom.
gov.
cn/21developingopportunitiesforthelinercompanies.
3.
1.
3.
GreatprofitpotentialindomesticlogisticsmarketWiththeintensifyingcompetition,thecontrolovercosthasturnedtologistics,"thethirdprofitsource".
AccordingtotheWorldBank,thelogisticscostaccountsfor16.
9%ofGDPinChina,whileonlyabout10%insomeEuropeanandAmericancountries.
WecanseeinTable3-1.
Table3-1TheproportionoflogisticscosttoGDPinsomedevelopedcountiesandChinaCountryProportionoflogisticscosttoGDP(2005)Germany11%FranceAbout11%Britain10.
63%USA9.
50%Japan11.
40%China16.
90%source:ShanghaiLogisticsNet(www.
sh56.
cn)WecanseethatthelogisticscostismuchhigherinChinathanthatinthedevelopedcountries.
Basedonthe2005GDP(18,232.
1billionRMB)basis,ifthelogisticscostwasreducedby1%,anetprofitof182.
3billionwouldbegained,whichindicatesagreatpotentialforcostreducingandprofitability.
22transportationcost57%storagecost31%managementcost12%Figure3-1Thestructureofdomesticlogisticscost(firstseasonof2006)Source:NationalDevelopmentandReformCommitteehttp://yxj.
ndrc.
gov.
cnFigure3-1illustratethestructureofdomesticlogisticscostforinthefirstseasonof2006.
Wecanseethatthetransportationcosttakeupamajorityinthetotalcost.
Thisalsoindicatesthere'salargepotentialtoincreaseprofitmarginbyimprovingthetransportprocess.
ThelogisticsservicedevelopmentwouldbeachancefortheChineselinercompaniestoincreaseprofitmargin.
3.
1.
4.
ThemassiveconstructionofdomestictransportinfrastructuresNowadays,domestictransportinfrastructureshavebeengreatlyimprovedbyconstructiononamassivescale.
Table3-2showsthestructureofinvestmentinlogisticsinfrastructuresinChinafortheyear2004and2005.
Wecanseeanincreaseininvestmentin2005overtheyearbefore.
Furthermore,lookingateFigure3-2,wecanseethattheinvestmentintransportationinfrastructuretakeanoverwhelmingpartofthetotalinvestment.
23Table3-2ThestructureofinvestmentinlogisticsinfrastructuresinChina(2004,2005)Year20042005Transportationinfrastructure229.
56285.
80Warehousinginfrastructure11.
8315.
90Tradeinfrastructure29.
0440.
60Distribution&processinginfrastructure1.
481.
80Investmentin(billionRMB)Postalinfrastructure0.
800.
65Totalinvestment272.
71344.
75Source:BusinessTransportChina(2005.
10)transportation82%trade12%Warehousing5%postal0%distributionprocessing1%Figure3-2ThestructureofinvestmentinlogisticsinfrastructuresinChina(2005)Source:ObtainedaccordingtothestatisticsinTable3-2AccordingtotheMinistryofCommunications,asattheendof2005,totalroadmileagereached1.
9millionkilometers,whilethehighwayisabout40,000kilometers.
InthetenthFive-Yearperiod,24,000-kilometerhighwaywasbuilt,andthehighwaymileageinChinarankedsecondintheworld.
Thenation-wideroad24trafficnetworkhastakenshape.
Therewere141civilairportsoverthecounty,achieving5.
16-tonkilometercargoturnoverperannumandhaving1176aerialliners,including1015domesticlinesreaching130citiesand161internationallinesto66citiesin33countries.
Theairbornetransporthasbeenstrengthened.
Therewere33,450coastalandinlandwaterberths,including882deep-waterberths.
Thecontainerthroughputwasover27millionTEUS,andthecargothroughput2.
68billiontons.
Therewere7portswhosethroughputisover100milliontons21.
Thestatisticsindicatesthegreatimprovementintrafficinfrastructures.
Forlinercompanies,thedeep-waterberthsandupdatedloadingandunloadingfacilitiesensuresmoothtransportation.
Thefreightfacilitiesinports,airportsandinlandhubswouldenhanceservicecapabilities.
Thesedepotsareingoodcontactwithregionalenterprises,whichprovideagoodopportunitytodeveloplogisticsservice.
3.
1.
5.
IntroductionofadvancedoverseaslogisticsexperienceAfter1970s,overseasshippingcompaniesinitiallystartedlogisticsservice.
Ithasbeenprovedthatlogisticsserviceiswellfittooceantransportoperation.
Meanwhiletheforeignlogisticsmagnatesenteredthemarket,theiradvantagesinservicestructureandoperationmodeareworthanalyzingandreferring.
Itwouldbehelpfulforthecompaniestocombinethosewiththeirownpractice.
3.
2Analysisofcompetitorsinthelogisticsmarket3.
2.
1.
OverseaslogisticscompaniestrytograbChinesemarket21MinistryofCommunicationsofPeople'sRepublicofChina.
www.
moc.
gov.
cn25Theworld-famousshippingcompaniessuchasMaerskandNYKLinewerewareoftheindustry'strendandopenedupthelogisticsservicesuccessfully.
Aftersteadygrowthforovertwodecades,theyoperatelogisticsserviceonasignificantscaleandhavedistinctadvantagesinnetwork,IT,management,andpersonnel.
What'sworthmentioningisthattheseforth-goershaveaimedboominglogisticsmarketinChinaandaretakingstepstopenetratethemarketrapidly.
Theyhavealsoformallianceswithoverseasandjointventuremanufacturers.
ManyforeignlogisticscompaniessuchasMareskLogisticsandAPLLogisticsaretheforeignNVOCCauthorizedwithClassALicensetooperateshippingserviceinChina.
Theyhavesimilardevelopingsteps:settingupbranchesincitieslikeGuangzhou,Shenzhen,Xiamen,Nanjing,QindaoandBeijing,providingocean-relatedserviceincludingforwarding,customsclearance,roadtransport,railtransport,bargetransport,inlanddistribution,labeling,etc.
TheforeignmagnatesareplanningfurtherdevelopmentinChina.
MaersksetupproprietarydistributioncenterinShanghaitoprovidespecializedsupplychainservice.
Itmeanstobuildanother10inthefuture.
APLprovidesfreightforwardingserviceaccordingtotheregulationofChinesegovernment,includingbooking,loading,storage,issuingreceipt,cargoreceiving,etc,whichpromotethebusinessofAPLLinerinChina.
APLLogisticsisincooperationwithtwolargetransportcompaniesinShanghaiandShenyangtotakeashareinChineselogisticsmarket.
Thecompanyestimatedtheannualmarketincreaserateover27%,muchhigherthan10%inUSandCanada,and9%inWesternEurope.
Ithassetup7branchesinthesoutheastcoastalcitieslikeShanghai,Dalian,Qindao,Xiamen,ShenzhenandNanjing,andplanstoexpanditsrange.
OOCLhassetupitsChina'sheadquarterinShanghaiandover20officesoverthenation.
Theservicerangecoverseach26provinceandmajortradecenter,providingserviceslikemultimodaltransport,storage,bargetransport.
ItslinerserviceconnectsthemajorportsinChinawithAmerica,Europe,Australiaandotherplacesallovertheworld.
ItprovidesquicktransshipmentservicebetweenthemainlandandTaiwan.
Besides,itsinlandtransportserviceinChinaisoutstanding.
Withbarge,truckandrailway,OOCLhasformanintegratedtrafficsysteminChina.
Thegovernment'spolicyonlogisticsisattractivetoforeigncompanies.
Thus,it'sobviousthatthemajorcompetitorsofthelargeChineselinercompaniesaretheoverseaslogisticsmagnatesmentionedabove.
3.
2.
2.
AnalysisoftheadvantagesofthecompetitorsTheforeignshippingandlogisticscompanieshavethefollowingadvantagesindevelopinglogisticsserviceinChina:(1)Theyhaveagoodreputationintheindustryandwinbytheirbrandnames.
Manyinternationallogisticscompaniesaremultinationalsthathaveaglobalfame.
Somehaveevencooperatedwithdomestictransportcompaniesandarewell-knowntolocalclients.
OncetheyenteredtheChinesemarket,theirbrandnameswouldbeanadvantageinthecompetition.
(2)Theyhaverichexperienceandaglobalcustomerbase.
Thesecompaniesprovidedlogisticsserviceofdifferentfeaturestomeetvariouscustomers'demandduringtheirexpansion.
SuchexperiencewillgreatlyhelpthemtoopenupChineselogisticmarket.
Besides,theyhavealreadyestablishedclosecooperationwiththeforeignmultinationals,whichcontributealottothedevelopmentofChinese27economy,andtogetherenteredthemarket.
TheirlogisticsservicesinChinaaremostlywithintherangeoftheirgloballogisticsservicecontactswiththemultinationals.
(3)Theyhaveintegratedinformationmanagementsystems.
Thequalityoflogisticsserviceisguaranteedbytimelyandexacttransferofbusinessinformation.
Thelargeforeignlogisticscompanieshaveestablishedasetofmanagementsystemsanddevelopmentaseriesofsoftwaretoenhancetheirservice.
ThisisoneoftheirmostdistinctadvantagescomparedtotheChinesecounterparts.
(4)Theyhavestrongcapitalandpersonnel.
Theforeignlogisticscompaniesarerichincapital,whichisafavorablefactorfortheirdevelopmentinChina.
Moreover,theyhaveteamsofexperiencedmanagementpersonnel,whoarecapableofsatisfyingcustomers'demand.
ThiswouldalsoacceleratetheirbusinessdevelopmentinChina.
3.
2.
3.
AnalysisofthedisadvantagesofthecompetitorsThoughtheforeignlogisticscompaniesboastmanyadvantages,theyhavetheirweaknessintheChinesemarketduetothepracticalsituation.
Theirdisadvantagesinclude:(1)TheChineselogisticsmarkethasdistinctdifferencewithinternationalmarket.
Thus,theirexperiencemightnotbeapplicableandtheyhavetostartallover.
Besides,thelocallogisticsmarketisnotfullymature,andthecustomers'understandingoflogisticsislimited.
Itwouldtakealongtimetocatchupwiththedevelopedcountriesinthisaspect.
28(2)Theyhaven'tformthelogisticsnetworkofscalewithinthecountry.
Becauseithasn'tbeenlongsincetheirentry,thelogisticsnetworkcoveringwidescopecan'tbesetupinsuchashortperiodoftime.
(3)Duetocomplicatedreasons,domesticlogisticsmarketisnotinperfectorder.
Thus,theforeigncompaniesmightnotadapttothenewbusinessenvironment.
AftertheirentryintotheChinesemarket,theforeigncompaniesmighttakeadvantageoftheircapital,technologiesandpersonneltoexpandservicenetworkandincreasemarketshare.
Yet,duetothepreviousfactors,itwouldtaketimeforthemtodeveloplogisticsserviceonalargescale,whichprovidestheChineselinercompanieswiththeprecioustimetocatchup.
3.
3Indexmodelofthelinercompany'scompetitivenesstodeveloplogisticsserviceFacingtheimpactofeconomicglobalizationandthechallengesofoverseaslogisticscompanies,evaluationandcultivationofcompetitivenessareofstrategicimportancefortheChineselinercompanies.
Theset-upofindexsystemiscrucialtotheevaluation,whichwouldaffectfeasibilityandrationality.
Afterreferringtoanumberofacademicresearchesandaccordingtothepracticalconditions,theAnalyticHierarchyProcess(AHP)modelisappliedtosetuptheindexsystemofthelinercompany'scompetitivenesstodeveloplogisticsservice,whichmightbeusefultocompetitivenessevaluation.
Theset-upoftheevaluationindexhierarchyisbasedonthecompany'sbusiness.
Theevaluationisfromoperationalandmanagerialaspects.
First,thecompetitive29advantagesmainlyfocusonmarketcompetition,logisticstechnologies,serviceflexibility,etc.
Thus,operationalaspectincludingsuchcriteriaiscrucialinevaluation.
Secondly,managementisdecisivetothefunctioningofacompanyandhasadirecteffectonthecompetitiveness.
Theindexsystemoflinercompany'scompetitivenesstodeveloplogisticsserviceisshowninTable3-3.
Table3-3Indexsystemoflinercompany'scompetitivenesstodeveloplogisticsserviceTargetlayerCriterialayerSub-criterialayerFactorlayerMarketshare(a11)Marketdevelopingcapability(a12)Controlovermarketandcustomers(a1)Customers'loyalty(a13)Fleetcapacity(a21)Trafficnetwork(a22)Logisticsfacilities(a2)Informationtechnologies(a23)Transportandstorage(a31)Specialservice(a32)Operationassessment(a)Depthoflogisticsservice(a3)E-business(a33)Educationlevel(b11)Communicationcapability(b12)Humanresource(b1)Managerialteam(b13))Adaptability(b21)Adaptability(b22)Linercompany'scompetitivenesstodeveloplogisticsservice(T)Managementassessment(b)Companyculture(b2)Learningorganization(b23)Byinquiringseveralspecialists,theweightingofthefactorsinvariouslayersaresetdownthroughplus-weightinganalyticcomprehensiveassessmentmethod.
(SeeAppendix1)TheresultofthecalculationisshowninTable3-4.
30Table3-4Therelativeandglobalweightsoftheelementsintheindex.
Targetrelativeweightscriteriarelativeweightssub-criteriarelativeweightsFactorglobalweights0.
455(a11)0.
14400.
199(a12)0.
06290.
528(a1)0.
347(a13)0.
10990.
429(a21)0.
08550.
286(a22)0.
05700.
333(a2)0.
286(a23)0.
05700.
464(a31)0.
03890.
255(a32)0.
02140.
6(a)0.
140(a3)0.
281(a33)0.
02350.
217(b11)0.
05800.
285(b12)0.
07600.
667(b1)0.
498(b13)0.
13270.
151(b21)0.
02020.
218(b22)0.
0291T0.
4(b)0.
333(b2)0.
630(b23)0.
0840Thisindexsystemcouldprovidearesearchmethodtoevaluatethelinercompany'scompetitivenesstodeveloplogisticsservice,andhassometheoreticalandpracticalmeanings.
3.
4Casestudy-Maerskvs.
COSCO3.
3.
1.
BriefintroductionofthecompaniesMaerskhasseveralhundredbranchesinover100countries.
Ithasover60,000employeesprovidingservicesallovertheworld.
Itistheworld'sbiggestcontainercarrier.
Itssolidandwidecustomerbaseandrichexperienceinfreighttransportenablesitsforthgoingintologistics.
Itsetuptheintegratedlogisticsservicebasedonoceantransport.
MaerskenteredtheChinesemarketin1998andhas11branches31andwideservicecoverage.
Ithasestablishedlogisticscooperationwithports,rails,roads,warehouses,andagentcompanies.
COSCOisawell-knownChineseshippingcompany.
Ithasdistinctadvantagesinlocalmarketandtheoverseasservicecovers8regionincludingJapan,Korea,Singapore,NorthAmerica,Europe,Australia,andSouthernandWesternAfrica.
Theroutesconnectover1300portsinmorethan160countriesandregions.
3.
3.
2.
ComparisonininformationmanagementFlowofinformationiscrucialformodernlogistics.
Informationmanagementisthebasisofintegratedmanagementandservice.
Maerskistherolemodelinthisaspect.
Ithasaworldwideandintegratedlogisticscommunicationnetworksystem,whichincreasesefficiencyandreducescost.
Itsnewsupplychainsolutionmode"Spective"hasintegratedtheinformationofallitspartnershipandenabledthetwo-wayinformationexchangewithitsclients.
Maerskcantrackandtracethefreightalldaylong,andhaveacomprehensiveviewofitsbusinesssoastomakeeffectiveforecast.
Ithasalsoimprovedtheresourceutilityandcommunicationbetweendepartmentsandpromotedtheintegrationanddiversificationofservice.
Yet,informationmanagementistheweaknessofCOSCO,whichwouldbeanobstacleforitstransitionintologisticsserviceprovider.
Thecompanyismakingeffort.
TheIRIS2systemisgloballyapplied,consistingoflogisticssubsystemsuchasMISandEDI,andatpresent,isbasicallymeettherequirementfordevelopment.
However,thereisstillalongwaytogo.
3.
3.
3.
Competitioninlogisticsmarket32COSCOhasstrengtheneditsfinancialpowerbyissuingstockandallocatedthecapitalintheconstructionofdistributioncenters,inlanddepot,andinformationsystems.
Ithastakenmeasurestointegratethecontainertransportandlogisticsservicesoastoestablishcomprehensivelogisticsnetworkconsistedofsea,rail,roadandairtransport.
Maersk'sexperiencedlogisticsoperationisattractivetoChineseclients.
Itsstrategiesshowitsambition.
Besidesitsoriginalcustomerbase,MaerskenhancesitscooperationwithSinoenterprisesandhascooperatedwithShanghaiWicresofttodevelopaninformationsystemtailoredforChinesemarket.
Ithasa3-yearcooperationagreementwithChinaInternationalMarineContainersCompany,enablesittoexpandtheportrangeandreducetransportationcost.
MaerskandCOSCOaretherepresentativesofforeignanddomesticlargeliners.
TheirfeaturesaresummarizedinTable3-5.
Wecanseethatitbasicallyaccordswiththepreviousanalysisoftheadvantagesanddisadvantagesoftheforeigncompetitors.
TheChinesecompaniesshouldbeawareofthesituationinordertomakestrategicplan.
33Table3-5ComparisonsbetweenMaerskandCOSCOCompanyMarketshareinshippingmarket(2006.
1)22AdvantagesDisadvantagesMaersk18.
2%Experiencedoperation;Maturemanagement;Globalservicerange;LargecustomerbaseLackingexperienceinChinesemarketCOSCO3.
5%ExcellentinChineseandAsianshippingmarketInexperiencedinlogistics;Narrowcustomerbase;Weakinglobalservice3.
3.
4.
ApplicationoftheindexmodelAfterinquiringseveralspecialists,thefactorsarescoredaccordingtothejudgmentmatrix,P=[excellent,good,normal,bad,toobad].
Itsplus-weightingcoefficientmatrixisF=(9,7,5,3,1)T.
AccordingtothepreviousweightingofthefactorsandLevelanalyticapproach,thetargetindexcanbeobtained.
(AsforthecalculationseeinAppendix-2)Xcosco=6.
542Xmaersk=7.
665Wecanconcludefromtheresultthatthere'sabiggapbetweenMaerskandCOSCO.
Thus,itwouldbemoreimportantfortheChineselinercompaniestopositioninthesuitablemarketsoastomakeupforitslackofoverallcompetitiveness.
22JCtrans.
comCorporation.
http://www.
jctrans.
com34SummaryofthechapterThechapteranalyzestheexternalenvironmentofChineselinercompanies'logisticsservicedevelopment.
Thefavorablemacro-economicenvironment,maturingdomesticmarket,greatpotentialprofit,transportinfrastructureconstruction,andexperienceofoverseascounterpartsaretheopportunitiesfortheChineselinercompanies.
Thefollowingpart,whichisnecessarytobeawareof,istheanalysisoftheircompetitors.
Then,theindexmodelofthelinercompany'scompetitivenesstodeveloplogisticsserviceissetup,whichprovideamethodtoevaluatethecompetitiveness.
Afterthat,thecomparisonbetweenMaerskandCOSCOillustratethecurrentsituation.
354AnalysisofinternalconditionsforChineselinercompanies'logisticsservicedevelopment4.
1Developingadvantages4.
1.
1.
AdvantageindomestictransportnetworkDuringanumberofyear'sdevelopmentathome,theChineselinercompanieshavegainadvantagesindomestictrafficnetwork.
Theyhavematureagentnetworkincoastal,andinlandcities,andlandinfrastructuressuchasports,warehouseandcontainerdepots,whichprovidedthemwiththehardwareconditionstodeveloplogisticsservice.
TakingCOSCOforexample,thecompanyhasalogisticsnetworkincludingover300spotscovering29provinces.
Ithas1222trucks,inwhich850arecontainertrucks,and6fixedexclusivecontainerrailwaylines.
4.
1.
2.
GoodreputationinlocalmarketMeanwhilemakingcontributiontothenationaleconomy,thelargeChineselinercompaniesestablishitsfameinthedomesticandevenforeignmarket.
Thegoodreputationwillhelptofindlong-ternlogisticspartners.
36What'sworthmentioningisthatthebusinessofmanyforeignlogisticmagnatesaregeographically-intensive,especiallyintheirhomecountries.
ThisgivesanindicationtotheChineselinercompanies.
Thecompaniesshouldmakegooduseofthisstrength.
4.
1.
3.
StablecustomerbaseandpartnershipThecompanieshavecomparativelystablecustomerbaseandmarketshareinthemarket,especiallyindomesticmarket.
Theyhavealong-termandstablepartnershipwithsomesignificantclientssoastogaintheirtrusttoprovideintegratedlogisticsservice.
Thecooperationwithlandtransportandwarehousingcompaniesalsosupportstheirdevelopment.
4.
1.
4.
StrongcapitalresourceComparedtootherdomesticlogisticsserviceprovider,theChineselinercompanieshavesolidcapitalpower.
Itisanimportantconditiontoenlargetheservicescopeandupdatetechnologicalfacilities.
Logisticsrelyoneconomyofscale.
Thus,strongcapitalisfavorabletoseizethemarketshare.
4.
2Obstaclefactors4.
2.
1.
InsufficientunderstandingofmodernlogisticsTheChineselinercompanies'perceptionofmodernlogisticsneedstobeenhanced.
Ittakestimeforsuchlargecompaniestochangetheconceptandidea.
Theyareaccustomedtothetraditionaloperationpattern,whichwoulddecrease37competitivenessandbafflethedevelopmentoflogisticsservice.
4.
2.
2.
CurrentfacilitiesandmanagementinneedofimprovementTheunadvanceddepotandtransportfacilitiesandmanagementmightbetheadversefactorstofurtherlogisticsservicedevelopment.
Recently,thequantityofstorageandtransportfacilitieshasincreased.
Yet,thesefacilitieslackmultiplefunctionsandarenotefficientlymanaged,whichisduetotheindustry'shistoricalreasons.
Thus,furtherinvestmentarerequiredinthenetworkconstructionsoastoprovidesuperiorlogisticsservice.
Duringtheseyears,thecompanieshaveinvestedhardinreconstructionandthesituationhasbeenimproved.
Yet,effortstillneedtobemadeintheyearstocome.
4.
2.
3.
ImmaturelogisticsinformationmanagementTheproblemisrelatively-speaking.
Mostdomesticlogisticscompanies,whoarestillintheresearchstageofestablishingmodernlogisticsinformationsystem,areweakininformationmanagement.
Comparedwiththem,thelargeChineselinercompaniessuchasCOSCOandChinaShippinghavegoodinformationmanagementsystems.
Yet,whencomparedwiththeirmajorcompetitors,theforeignlogisticsmagnates,theinformationmanagementcapabilityturnsouttobetheirweakness.
Forinstance,someanalysispointsoutthatweakinformationmanagementhasfrustratedthedevelopmentofCOSCON.
Theproblemsincludeseparatefunctioningofthesystems,poordata-sharingandlowdegreeofonlineservice.
Theopening-upofthelogisticsmarketputthelargeChineselinercompaniesinfrontofgreatchallenges,andlaggingininformationmanagementwillgloomtheprospectofthecompanies'development.
Theinformationmanagementcapabilityisanindicatorofalogistics38company'sserviceandmanagementstandard.
ThelargeChineselinercompaniesstillhavealongwaytogo.
4.
2.
4.
PersonnellackinginproficiencyprovidinglogisticsserviceThelargeSinolinercompanieshaveanumberofskilledpersonnelprovidingtransportservice.
Theyhavealsocultivatedcrewsofmanagersandtechniciansinthefiercemarketcompetition.
Theymastermanagementandmarketingskillsandenterprising,sotheyareregardedasthehardcoreofthecompanies'development.
However,thedomesticlogisticsisstillinitsearlystageandthelogisticsservicethelinercompaniesprovidearelimitedduetoinsufficienttechnologicalfacilities,impropermanagement,andmoreover,lackofpersonnelspecializedinlogistics.
Thiswillbeanobstacleforthelogisticsservicedevelopment.
Thus,itisanecessarytoenhancetheoverallpersonnelandfosterthemintoateamcapableofprovidinglogisticsservice.
4.
3Casestudy-COSCO'sstrengthsandweaknessesinlogisticsservicedevelopment4.
3.
1.
COSCO'sstrengthsindevelopinglogisticsservice(1)Ithasabasisforglobalservice.
COSCOhasa40-yearhistoryofoverseasoperationandpossessexperienceincommunicatingwithforeignpartners.
Itsbrandnameiswell-knowntosomeextentandthecompanyisprovidedwithaglobalbasis.
(2)Ithasagooddomesticservicenetwork.
COSCOhaveover400logisticsbranchesandstorageandtransportresourcealloverthecountry,whichguarantees39thecompany'sengaginginlogisticsserviceandqualificationtomeetcustomers'demand.
(3)Ithassomemodernlogisticstechniques.
COSCOhasaccumulatedsomeexperienceandtechniquesduringtheoperationintheseyears.
Thesetechniquesaremainlyrelatedtostockmanagementandinformationmanagement.
Moreover,itprovidesspecializedserviceforthelargedomesticmanufacturers,includingcontractedandoutsourcinglogisticsservice.
Ithasformedabasisforthecompany'scooperationwithforeignlogisticscompanies.
(4)Itenhancesitspersonnelstandardbyhumanresourcecultivation.
COSCOhasdomesticandoverseaspersonnelexchangeeveryfouryears.
Italsointroducesforeignpersonnelintothecompany.
Besides,ithasitsownprogramsinuniversitiesandcollegestoprovidespecializedtraining,whichwouldprepareitselfforfurtherdevelopment.
(5)Ithasagoodcustomerbase.
COSCOhasagroupofinternationalclients,includingdomesticclients.
Exceptforoceantransport,logisticsserviceisalsothedemandoftheseclients.
Thisoffersanopportunityforthecompany'sdevelopment.
Meanwhile,thedomesticenterprises,representedbyTCL,havebeguntheiroverseasacquisitionactivities.
Thislaysagoodfoundationofthecompany'sentryintotheglobalmarketandenablesthecompanytogrowtogetherwiththeseenterprisesintheglobalmarket.
4.
3.
2.
COSCO'sweaknessesindevelopinglogisticsservice(1)Itisnothighlyglobalized.
Comparedwiththeforeignlogisticscompanies,40COSCOisweakinobtaininglargeoverseasclients.
TheseclientshadalreadybeeninclosecooperationwiththeforeignlogisticsmagnatebeforetheyenteredtheChinesemarket.
Thus,COSCOishinderedfromtakingseizureofthatshareinthemarket.
(2)Itsinformationtechnologyneedstobeimproved.
COSCO'scurrentinformationsystemhasbasicallymettherequirementofitsservicetransitfromtraditionalseatransportintologisticsservice.
Yet,itwouldbelongbeforeitcatchesupwiththeinternationalstandard.
Thecompanyhastomakeunremittingefforttoimproveinformationmanagement.
(3)Thelogisticsconceptsandideasneedtobewellperceived.
Asaleadingcompanyindomesticlogisticsdevelopment,thechangeofconceptandideaisofgreatsignificance.
Tofullytransitintoagloballogisticsserviceprovider,theconceptandideaofprovidingcustomer-orientedintegratedlogisticsservicebasedonitsadvantageinoceantransportneedtobeborneinmindthroughoutdailyoperation.
Tosumup,COSCO'sstrengthandweaknessindevelopinglogisticsserviceareconcludedinTable4-1.
Table4-1COSCO'sstrengthsandweaknessesindevelopinglogisticsservicebasisforglobalservicegooddomesticservicenetworkpossessionofsomemodernlogisticstechniquesenhancedpersonnelstandardstrengthgoodcustomerbasenothighlyglobalizeduncompetitiveinformationtechnologyweaknesssuperficialperceptionoflogisticsconceptsandideas41Recognizingthecompany'sstrengthandweaknessisessentialtothestrategicplanning.
Itwouldbethebasisofestablishingeffectivedevelopingstrategies.
SummaryofthechapterThischapteranalyzestheinternalconditionsforthelargeChinesecompaniestodeveloplogisticsservice.
Theirstrengthsindevelopmentinclude:(1)providedwithgooddomestictransportnetwork;(2)gainingagoodreputation;(3)boastingasoundcustomerbaseandpartnership;(4)havingrichcapitalresource.
However,theirweaknessesconsistof:(1)insufficientunderstandingofmodernlogistics;(2)unadvancedfacilitiesandmanagement;(3)immatureinformationmanagement;(4)personnellackinginproficiencyprovidinglogisticsservice.
Onlywhenacompanyhasknownitselfwellcanitworkoutsuitabledevelopingstrategies.
Inthenextchapter,theanalysisofthecompanies'strategieswillbemadebasedonthepreviousanalysis.
425Thelinercompanies'strategiestodeveloplogisticsserviceandtheirimplementation5.
1Briefreviewofthelinercompanies'SWOTanalysisTheconclusionoftheanalysisoftheexternalenvironmentofandtheinternalconditionsforthelargeChineselinercompanies'logisticsservicedevelopmentinthepreviousChaptersissummarizedinTable5-1.
Table5-1SWOTanalysisoflargeChineselinercompanies'logisticsservicedevelopmentStrengthsAdvantagesindomestictransportnetworkHavingareputationtosomeextentStablecustomerbaseandpartnershipStrongcapitalresourceInternalconditionsWeaknessesInsufficientunderstandingofmodernlogisticsUnadvancedlogisticsfacilitiesandmanagementImmaturelogisticsinformationmanagementPersonnellackinginproficiencyprovidinglogisticsserviceOpportunitiesFavorablemacro-economicenvironmentMaturingdomesticlogisticsmarketGreatpotentialprofitinlocalmarketUpdatingdomestictransportinfrastructuresExperienceofoverseaslogisticscompaniesExternalenvironmentThreatsOverseaslogisticscompanies'entryRemarkableglobalreputationsofthecompetitorsRichexperienceandsoundglobalcustomerbaseofthecompetitorsThecompetitors'advantagesincapitalandpersonnel43Theconclusionaboveprovidesthefoundationofstrategicplanningandimplementation.
5.
2Strategicgoalandmarketpositioning5.
2.
1.
BasisofsettingthestrategiesItcanbeconcludedfromthepreviousanalysisthatthelargeChineselinercompanieshavecompetitiveadvantagesinthelocalmarketwhichisfullofpotential.
Thus,thecompaniesshouldseizetheopportunitytoexpanditslogisticsservice.
Thedomesticcontainertransportisboostedbyeconomicglobalization,transferofmanufacturecenterandboomingglobalprocurement.
In2004,thecontainerterminalthroughputofinChinareached61.
8millionTEU,accountingfor20%oftheworld'stotalcontainerterminalthroughputwhichwas0.
309million.
Moreover,ithadkeptanincreasingrateover30%forseveralconsecutiveyears.
Therelativelyslowdevelopmentofdomesticroadcontainertransportationprovidesthemarketchanceforthecompaniestodevelopcontainertransportsupplychain.
Comparedtothesustaineddevelopmentinoceancontainertransport,thedevelopmentofroadcontainertransportislaggedbehind.
Nowadays,theroadcontainercarryingcapacityisonlyabout10%ofthetotalcontainerterminalthroughputinChina.
Mostcontainersaredispatchedincoastalportsandthecargosaretransportedinbulk.
Theproportionofdoor-to-doorserviceislow.
Theadvantageofcontainertransporthasn'tfullyemerged,andthefullcontainertransportsupplychainhasnottakenshape.
44Moreover,theChinesemarketlackslargedomesticroadtransportcompanieswhoareprovidedwithsufficientcontainerandcargosource,whichcreatesagreatopportunityforthelargeSinolinercompanies,whopossesscapitalandinfrastructureresources,toinitiallygrabthemarket.
Itwouldbeofgreatimportanceforthecompanies'furtherdevelopmentiftheycoulddevelopindomesticroadcontainertransportbasedontheirresources.
Nowadays,thecompetitioninthelinerindustryhasgraduallyswitchedfromwatertransporttolandtransport,andwillfinallyturnintothecompetitiononthewholesupplychain.
5.
2.
2.
StrategicgoalandmarketpositioningAccordingtopreviousconclusions,thestrategicgoalofthelargeChineselinercompanies'logisticsservicedevelopmentisasfollow:orientedbythemarket,basedonoceantransport,dependentonservicenetwork,advancedbymoderncommunication,andfocusingonlogisticsparks,thecompaniesshouldacquireatleasta5%marketshareindomesticlogisticsmarketin5years,andtransitintoaspecializedgloballogisticsserviceproviderin10to15years.
Itisahugeandchallengingtaskforthelinercompaniestotransitintogloballogisticsserviceprovider.
Thus,thegradualdevelopmentstrategiesoughttobedividedintoseveralstages.
(1)Thecompanyshoulddevelopdomestictradelogisticsservicetocomplementforeigntradelogisticsserviceandlayafoundationforthesupplychainlogisticsservice.
Withthedeepenedopening-up,thedemandfordomestictradelogistics45servicesurgesrapidly.
Itisabroadmarketforthelinercompanies.
Moreover,domestictradeislessinfluencedbyinternationalconditions,whichwouldprovideabufferforthenegativeeffectcausedbygloominforeigntrade.
Thelargelinercompanieshavetheadvantagesindevelopingdomestictradelogisticsservice.
Iftheycouldmakegooduseoftheirresources,theywouldgainalotbytakinginitiativeinthedomestictradelogisticsmarket.
(2)Theyshouldsetupregionallogisticcentersbyenhancinglogisticsserviceatregionaldistributioncenters.
Whenthedomestictradelogisticshasdevelopedintoscale,theregionallogisticscenterscanbesetupatdistributioncentersorinlandtransportnodestoreducecostbyeconomyofscaleandtoenhanceservicebyprovidingvalue-addedservice.
(3)Theyshouldestablishcooperationwithlargeandmediumenterprisesathomeandabroad.
Thehealthydevelopmentofalogisticscompanyisensuredbystablecargosource.
Thus,whenthelogisticsservicehasdevelopedintosuitablestage,thecompanieshavetoestablishlogisticsalliancewithlargeandmediumenterprisesforfurtherdevelopment.
(4)Theyshouldsetupacompleteanddensenationwidelogisticsservicenetwork.
Itistheultimategoalofdomestictradelogisticstosetupacomprehensiveservicenetworkalloverthecountryandtoprovidesafe,swift,economicandcompletelogisticsservicefortheircustomers.
(5)Theyshoulddevelopforeigntradelogisticsservicetoincreasecargosourcesoastoenhancetheirmainbusinessinoceantransport.
Facingthechallengesofforeignlinercompanies,theChineselinercompanieshavetosolidifytheirexistingcargo46sourceandopenupmarketonthatbasissoastoensuretheiroperationanddevelopment.
(6)Theyshouldworkontheestablishmentofgloballogisticsservicenetworksoastoprovidegloballogisticsservicefortheircustomers.
Afterthecompletionofdomesticservicenetwork,thecompaniescancombinedomesticandoverseasservicenetworktogether,andturnthemintoagloballogisticservicenetwork.
Theycanalsocooperatewithoverseaslogisticscompaniestoopenupinternationallogisticsmarket.
Itshouldbeemphasizedthatdevelopinglogisticsserviceisnotonlyahardwareconstructionprocess,butalsoaprocessofinformationnetworkperfectionandaprocessoflogisticsmanagementenhancement.
Thus,duringeachstepsabove,importanceshouldbeattachedtothedevelopmentofinformationmanagementsoftware,accumulationofmanagementexperienceandcultivationofpersonnel,especiallytheinformationsystemwhichwouldbekeytothedevelopmentoflogisticsservice.
Itistheleadintechnologiesthatwillenablethecompaniestofullytransitintothelogisticsserviceproviderandwininthemarket.
Whenpursuingthestrategicgoal,thelargeChineselinercompaniesshouldkeepfocusingonthedevelopmentofoceantransportoperation.
Thelinerindustryhasitsperiodicalfeaturesandhasdepressedtimes.
Yet,thecompaniesmustinsistonthedevelopmentoftheirmainbusinessandavoidthesituationofdiversifyingbusinessblindly.
Developingtheliner-relatedservicetoenhancetheirmainbusinessiskeytosuccess.
Atpresent,thelargeChineselinercompaniesareinfluentialinthehomemarket.
47Theirinformationsystems,whichenabletrackandtraceofcargosandcontainers,basicallymeettherequirementofmodernlogistics.
Thepreviousstrategiesaretailoredaccordingtothestrengthsandweaknessesasabove.
Thelinercompaniesaredifferentfromotherspecializedlogisticscompanies.
Thus,theyaimtogaintheircompetitiveadvantagesinthemarketsegmentbasedoncontainertransportationbyprovidingseriesofvalue-addedservicethroughouttheirland-watercontainertransportchain.
5.
3Implementationofthestrategies5.
3.
1.
StrengthenthestrategiccooperationwiththeforwardandbackwardenterprisesinlogisticsprocedureThecompaniesshouldtakeadvantageoftheirdomesticservicenetworkandcurrentcustomerresourcetosetuplogisticsservicesystembyjointcooperationwithdomesticmanufacturecompanies.
Bythis,theycanmaintainastablesourceofbusinessmeanwhileaccumulatingexperienceinprovidingcustomizedservice.
Theclosecooperationwillalsopromotetheintegrationoflogisticsresourceswiththepartners.
What'sworthmentioningisthatthecompaniesshouldbeseriousinopeningupthemarket,sincethecurrentimportantcustomers'satisfactionshouldnotbesacrificedduetothecompanies'customerbasedevelopment.
5.
3.
2.
Establishwin-wincooperationwithworld-famouslogisticscompaniesThecooperationshouldnotonlybeestablishedinverticaldimension,butsometimeswiththecompetitorsaswell,onceitprovesouttobebeneficialforthecompanies'development.
Lookingintothedevelopmentofworldshippingandlogisticsindustry,48thereexistvariousformsofcooperationsuchasalliance,association,andmerging.
Bythis,theoperationalcostwouldbereduced,theutilityofspacewouldincrease,andthedeliveryoffreightwouldquickenup,whichleadstomoretimelyserviceandcreatevalueforthecustomers.
Moreover,theadvancedexperienceandtechnologiesmightbeintroducedthroughstrategicalliancewithremarkablelogisticscompanies,whichwouldpromotethelogisticsservicedevelopmentofthecompanies.
5.
3.
3.
SetupcomprehensivelogisticsservicenetworkWhenopeningupthelogisticsmarket,itisnecessarytoperfectfacilities,expandservicerange,andimproveservicelevel.
Thecompaniesshouldinitiallyrebuildthecurrentcontaineryardsandwarehouseswithinmajorportandinlandhubregionsintologisticscentersandsetuplogisticsserviceknotsthroughcooperationtoenlargeservicescaleandenhancetheregionalservicelevel.
Then,theyshouldfurtherimprovethewarehousingfacilitiesaccordingtopracticalsituationsoastomeetvariousstoragedemands.
Suchreconstructionsareneededtomeettherequirementforlogisticsservicedevelopment.
Moreover,asanimportantpartoflogistics,thedistributionrequirestrucksofvarioustypesandtonnages.
Withthedevelopmentoftheirlogisticsservice,theallocationwouldneedadjustmentsinanationwiderangetomeetthecustomers'demand.
Thiswillenhancetheirpositionindomesticlandcontainertransportmarket.
5.
3.
4.
DevelopadvancedlogisticsinformationmanagementsystemWiththeboomingofe-business,thelevelofinformationmanagementsystemhasbecomeanindicatorofthecompany'scompetitiveness.
Moreover,theflowofinformationiscrucialtologisticsservice.
Thus,itisrequisitetodevelopseriesof49informationmanagementsystemsappliedwithmodernlogisticsconceptsfortheChineselinercompanies'logisticsservicedevelopment.
5.
3.
5.
EnhancetrainingofspecializedpersonnelNowadays,thecompaniesattachimportancetopersonneltraining.
Theyhavecultivatedgroupsofspecializedlogisticshumanresourcebyvariousmeansandbeyondnormalspeed,butthecompaniesstillrequiremore.
Theystillhavetocontinuetheirtrainingprogramstogainenterprisingworkingteamsequippedwithoperationalandtechnicalskills.
Itisanimportantandurgenttasktobeaccomplishedfordevelopingmodernlogisticsservice.
5.
4Casestudy-thelogisticsdevelopingstrategiesofCOSCOandChinaShipping5.
4.
1.
ThecooperationstrategiesofthetwocompaniesThemajorcustomersofCOSCOLogisticsarelargedomesticmanufacturers.
ThestrategicallianceswiththesecompaniesenableCOSCOtoprofit,growandopenupoverseasmarkettogetherwiththepartners.
TheyhelpCOSCOtoachievesustaineddevelopmentandexpandoflogisticsservicescale.
Theeffectiveresourceintegrationwiththesepartnershasreducedlogisticsoperationalcostandenhancedthespecializationoftheservice.
ChinaShippingLogisticsisforgingitsadvantagesthroughclosecooperationwiththecustomersaswell.
Itfocusonexploringtheprojectlogisticsmarketandhassuccessfullogisticspracticeinthefieldsuchasfamilyelectricappliance,fast50movingconsumergoods,andautomobile.
Table5-2summarizessomerepresentativeclientsofthecompany's.
Table5-2ThemajorservicescopesandclientsofChinaShippingLogisticsServicescopesRepresentativeclientsServicecooperationRobustNationwidetransportandstorageserviceBrightDairyChilleddistributionwithinShanghaiandfromShanghaitoEastern-ChinaFastmovingconsumergoodsB&QStorageanddistributionservicewithinFuzhouandNanjingregions;TrunktransportfrompointedmanufacturerstodomesticcoastalregionsShaanxiAutomobileStockmanagement;Seriesofspecializedvalue-addedserviceAutomobileFaw-VolkswagenCKDEntirecontainertransportfromEuropetothemanufacturingfactoryinChangchunHisense,TCL,andPandaStorageanddistributionwithinShandong,EasternandNortheastChinaregion;TrunktransportfrommanufacturingfactoriestodistributioncentersFamilyelectricapplianceYongleandTkecchainmarketRegionalstorageanddistributionserviceChilledproductMengniuGroup,BrightDairyandYiliGroupTransportationanddistributionoffrozenfoodChevronChemicalSeatransportfromZhangjiagangtoSouthernChina;StorageservicewithinSouthernandEasternChinaregionofpolystyreneproductRhodiaStorageanddistributionbasedinGuangzhouandShanghaiChemicalproductSeccoChemicalContainertransportfromShanghaitoNorthernandSouthernChinaSource:TransportBusinessChina2005.
11SeriesofsuccessfuloperationsinlargeprojectspromotesthematurityofChinaShipping'sdomesticlogisticsservice.
Bearinginmindthecustomer-oriented51concept,thecompanyhasbeguntoopenupoverseasmarketandfindnewpartners.
5.
4.
2.
SustaineddevelopmentisensuredWhendevelopinglogisticsservice,thecompaniesgainstablebusinesssourcebylong-termcooperationwithlargedomesticsmanufacturers,whichensurethecompanies'long-termsteadygrowth.
Duringthestrategiccooperation,thecompaniesprovidesuperiorandefficientservicesoastostrengthentherelationshipbetweentheirkeycustomers.
COSCOLogisticsevenprovidesitscustomerswithlogisticssolutions,developingstrategiesandserviceresourceattheirdisposal,andthemanufacturersarenowdependentonthecompany'slogisticsservicetoachievethestrategicgoal.
Asawaytoopenupnewmarket,thecompanieschoosetojointlydevelopwiththeirpartners.
Theygraduallyopenuptheoverseasmarketwiththeexpansionofcustomers'business.
Forinstance,COSCOLogisticshasenteredthefamilyelectriclogisticsmarketinAmerica,EuropeandAustraliaduetoTCL'smarketexpansion,andhasenteredthemarketinMiddleandSoutheastAsiawithChinaNationalNuclearCorporationandDongfangElectricCorporation.
Bythis,thecompanymanagestoincreaseitsservicerangeandmarketshare.
5.
4.
3.
ThescaleoflogisticsoperationincreasesThealliancesallowthecompaniestobegintheconstructionofnationwideinfrastructureandsetupmodernlogisticsnetworksystembasedonthepartner'sstablefreightquantity.
Itqualifiedthecompanieswithhardwaresupporttoprocure52rapidexpansionintheirservice.
COSCOLogisticshavetwologisticscentersforfamilyelectricapplianceinnorthernandsouthernChina,providingaplatformfortransport,warehousing,anddistributionservice.
IthasalsobuiltalogisticscenterforliquidchemicalproductinShanghai.
Thecompanyismakingefforttoestablishafunctionallogisticsservicenetworksystem.
TheproperallocationofinfrastructureresourceovervariousregionswouldenableCOSCOtominimizeitsoperationalcostonabroadernetworkcoverage,andprovidemoreefficientlogisticsservice.
Thecompany'ssuperiorservicetoitspartnershaswonmanybusinessopportunities,enablingthemtoincreaseoperationscaleandgainfromeconomyofscale.
5.
4.
4.
SharingandintegrationoflogisticsresourceispromotedTheestablishmentofallianceshasaccomplishedthesharingoflogisticsresourcesandinformation.
COSCOLogisticsareutilizingpartners'exclusivewarehouses,informationsystemsandspecialtransportfacilitiestocarryoutservice.
Bythis,thelogisticsnetworkhasbeenexpanded,whilearemarkableamountofcapitalcouldbesaved.
Suchintegrationwouldtightentherelationshipwiththepartners.
Thecompanywouldprovidemorefineandefficientserviceandreactmorequicklytothepartners'logisticsdemand.
Thus,itprovesthattheeffectiveintegrationofresourcewouldoptimizethelogisticsprocedureandenhancecustomersatisfaction.
Thetotallogisticscostisreducedbyhigherutilityofwarehousing,savinginlaborcost,etc.
Suchwin-winsituationis53basedonstrategiccooperation.
5.
4.
5.
SpecializationoflogisticsserviceisbeingintensifiedManufacturersdifferfromeachotherinprocurement,manufacturing,anddistribution,whichrequiresthecompaniestoofferspecializedlogisticsservice.
COSCOandChinaShippingarenowpayingmoreattentiontoprovidingcustomizedlogisticsservice.
Theyaimtogainadvantagesinspecializedlogisticsserviceandtrytoenhancetheproductivityofitsclientsonthatbasis,soastoachieveintegratedbenefit.
Theygettoknowthelogisticsdemandandtechniquerequirementindifferenttradesandaredevelopingcustomizedserviceproduct,whichhasincreasedthespecializationoftheirlogisticsserviceandenhancedtheircompetence.
Accordingtothecustomers'demand,COSCOLogisticsisnowprovidingspecializedvalue-addedserviceincludingpackaging/repackaging,labeling,stockcontrolmanagement,cargotracing,logisticsnetworkdesign,procurementmanagement,consultingservice,etc.
Theseservicespromotetheproductivityandoperationalefficiencyoftheclients,andthus,strengthenthestrategicrelationship.
Meanwhile,COSCOandChinaShippingaremakingefforttodevelopnewlogisticstechnologiesandadvancedlogisticsinformationsystemtopromoteservicespecialization.
WhilethemanufacturersappreciatethecooperationwithCOSCOandChinaShipping,COSCOandChinaShippingshouldalsobeawarethatitistheclosecooperationwiththosepartnersthatensurethecompanies'long-termsteady54development.
Thus,itisawin-winsituationthatenablesjointdevelopmentwiththepartnersinthiscase.
Itshouldbeemphasizedthatthesuccessofthesecompaniesisowingtotheproperlogisticsdevelopmentstrategieswhicharesetonthebasisofthecompanies'characteristics.
Withtheideaofsupplychaincompetition,thecompaniesshouldwellrecognizetheiradvantageouspositionsinthewholechain,sinceallcompanieshavetheirownstrengthsandcorebusiness.
Foralinercompany,oceancontainertransportisthecorebusiness,andthedevelopmentoflogisticsserviceaimstoincreasemarketshareandstrengthenthecompetitivenessofitscorebusiness.
SummaryofthechapterThischapterdiscussesaboutthelargeChineselinercompanies'logisticsdevelopingstrategiesandtheirimplementation.
Basedontheanalysisinthepreviouschapters,thestrategicgoalsandmarketpositioningaregotaccordingtothecompanies'strengthandweakness.
Thecompaniesshouldbeorientedbythemarket,basedonoceantransportanddependentontheirservicenetworkandadvancedmoderncommunicationtograduallyaccomplishtheirtransitintospecializedlogisticsserviceproviders.
Strengtheningthestrategiccooperationwiththeforwardandbackwardenterprisesinlogisticsprocedure,establishingwin-wincooperationwithworld-famouslogisticscompanies,settingupcomprehensivelogisticsservicenetwork,developingadvancedlogisticsinformationmanagementsystem,andenhancingtrainingofspecializedpersonnelaretheessentialtasksforthecompaniestoachievethestrategicgoals.
ThecasestudyillustratesthecurrentlargeChineselinercompanies'logistics55developmentbycitingCOSCOandChinaShipping,whosecooperationstrategiesconductthemodernlogisticsconcepts.
56ConclusionThelargeChineselinercompaniesneedtodeveloplogisticsservice.
It'snotonlybecauseoftherequirementfromtheirexternalbusinessenvironment,buttherequirementfortheirownsurvivalandgrowthaswell.
Itisaglobaltrendforthelargelinerstotransitfromtraditionaloceancarriersintologisticsserviceprovider.
Homogeneousserviceproductinthelinerindustryledtocompetitiononoceanfreight,andthishasgreatlythreatenedthelinercompanies'survivalandgrowth.
Developinglogisticsservicewouldbringnewbusinessopportunitiesandprofitsourceforthetraditionallinercompanies,andthusstrengthentheircorecompetenceinoceantransport.
Thefavorablemacro-economicenvironment,maturingdomesticmarket,greatpotentialprofit,massiveconstructionoftransportinfrastructure,andexperienceofoverseascounterpartsarethegoodopportunitiesforthelargeChineselinercompaniestodeveloplogisticsservice.
Yet,theentryofoverseaslogisticsmagnatesisagreatthreattothelargeChineselinercompanies.
Thosecompaniesboastremarkablereputations,richexperience,globalcustomerbases,integratedinformationmanagementsystems,andstrongcapitalandpersonnelresource.
Facingsuchcompetitors,thelargeChineselinercompaniesshouldbeawareofsituationandmakesuitabledevelopingstrategies.
57WegetthroughanalysisthatthelargeChineselinercompanieshavetheirstrengthsinlogisticsdevelopment,includinghavingagooddomestictransportnetwork,havinggoodreputationsathome,boastingasoundcustomerbaseandpartnership,andhavingrichcapitalresource.
However,thereareweaknessesaswell,suchasinsufficientunderstandingofmodernlogistics,unadvancedfacilitiesandmanagement,immatureinformationmanagement,andpersonnellackinginproficiencyprovidinglogisticsservice.
ThelargeChineselinercompaniesshouldmakelogisticsservicedevelopmentstrategiesaccordingtotheexternalenvironmentandinternalconditions.
Basedontheanalysis,theultimatestrategicgoalfortheChineselinercompaniesistograduallyaccomplishtheirtransitintospecializedlogisticsserviceproviders.
Itisahugeandchallengingtaskforthelinercompanies.
Thus,thedevelopmentoughttobedividedintoseveralstages,includingdevelopingdomestictradelogisticsservicetocomplementforeigntradelogisticsserviceandlayafoundationforthesupplychainlogisticsservice,settingupregionallogisticcentersbyenhancinglogisticsserviceatregionaldistributioncenters,establishingcooperationwithlargeandmediumenterprisesathomeandabroad,settingupacompleteanddensenationwidelogisticsservicenetwork,developingforeigntradelogisticsservicetoincreasecargosourcesoastoenhancetheirmainbusinessinoceantransport,andworkingontheestablishmentofgloballogisticsservicenetworksoastoprovidegloballogisticsservicefortheircustomers.
Strengtheningthestrategiccooperationwiththeforwardandbackwardenterprisesinlogisticsprocedure,establishingwin-wincooperationwithworld-famouslogisticscompanies,settingupcomprehensivelogisticsservicenetwork,developingadvancedlogisticsinformationmanagementsystem,andenhancingtrainingof58specializedpersonnelaretheessentialtasksforthecompaniestoachievestrategicgoals.
ItisanopportunityaswellasachallengeforthelargeChineselinercompaniestodeveloplogisticsserviceandtransitfromtraditionaloceancarriersintologisticsserviceproviders.
It'sagrandtaskforthemandthereisalongwaytogo.
Greateffortneedstobemade.
Yet,oncethetaskisaccomplished,thecompetitivenessoftheChineselinercompanieswillbegreatlyenhanced,andtheywillbemorecompetentintheglobalmarket.
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62ThefollowingwebsitesgiveinformationandstatisticsoncoursesBRS-Alphalinerwebsite.
(www.
alphaliner.
com)ChinaShippingContainerLinesCo.
,Ltd.
(http://www.
cscl.
com.
cn)CommercialTimes.
(http://www.
ectime.
com.
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coscon.
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(http://news.
eastday.
com)JCtrans.
comCorporation.
(http://www.
jctrans.
com)MinistryofCommerceofthePeople'sRepublicofChina.
(www.
mofcom.
gov.
cn)MinistryofCommunicationsofthePeople'sRepublicofChina.
(www.
moc.
gov.
cn)NationalDevelopmentandReformCommittee(http://yxj.
ndrc.
gov.
cn)63Appendix1CalculationofweightingsintheindexmodelAsthehierarchyhasbeenstructured(insection3.
3),thenextstepistodeterminetheprioritiesofelementsateachlevel.
Asetofcomparisonmatricesofallelementsinalevelofthehierarchywithrespecttoanelementoftheimmediatelyhigherlevelareconstructedsoastoprioritizeandconvertindividualcomparativejudgmentsintoratioscalemeasurements.
Thepreferencesarequantifiedbyusinganine-pointscale.
ThemeaningofeachscalemeasurementisexplainedinTableA-1.
Thepair-wisecomparisonsaregivenintermsofhowmuchelementAismoreimportantthanelementB.
AstheAHPapproachisafuzzymethodology,inthiscase,thepriorityweightsofelementsisobtainedfrominquiringagroupofspecialists.
TableA-1ScaleofpreferencebetweentwoelementsPreferenceweightsDefinition1Equallypreferred3Moderatelypreferred5Stronglypreferred7Verystronglypreferred9Extremelypreferred2,4,6,8intermediatesvaluesReciprocalsReciprocalsforinversecomparisonThepair-wisecomparisonsgenerateamatrixofrelativerankingsforeachlevelofthehierarchy.
TheλmaxvalueisanimportantvalidatingparameterinAHP.
ItisusedasareferenceindextoscreeninformationbycalculatingtheconsistencyratioCRoftheestimatedvectorinordertovalidatewhetherthepair-wisecomparisonmatrixprovidesacompletelyconsistentevaluation.
Theconsistencyratioiscalculatedasperthefollowingsteps:Calculatetherelativeweightsandλmaxforeachmatrixofordern64Computetheconsistencyindexforeachmatrixofordernbytheformulae:CI=(λmax-n)/(n-1)(A-1)Theconsistencyratioisthencalculatedusingtheformulae:CR=CI/RI(A-2)FollowingistheCalculationforthecomparisonmatrixes.
TableA-2a1n-a1levelsub-criteriaa1a11a12a13Wa111.
002.
001.
500.
455a120.
501.
000.
500.
199a130.
672.
001.
000.
347CI=0.
009,CR=0.
016<0.
1TableA-3a2n-a2levelsub-criteriaa2a21a22a23Wa211.
001.
501.
500.
429a220.
671.
001.
000.
286a230.
671.
001.
000.
286CI=0.
CR=0<0.
1TableA-4a3n-a3levelsub-criteriaa3a31a32a33Wa311.
001.
502.
000.
464a320.
671.
000.
750.
255a330.
501.
331.
000.
281CI=0.
018,CR=0.
032<0.
1TableA-5b1n-b1levelsub-criteriab1b11b12b13Wb111.
000.
670.
500.
217b121.
501.
000.
500.
285b132.
002.
001.
000.
498CI=0.
009,CR=0.
016<0.
165TableA-6b2n-b2levelsub-criteriab2b21b22b23Wb211.
000.
670.
250.
151b221.
501.
000.
330.
218b234.
003.
001.
000.
630CI=0.
001,C=0.
13<0.
1TableA-7an-alevelcriteriaaa1a2a3Wa11.
002.
003.
000.
528a20.
501.
003.
000.
333a30.
330.
331.
000.
140CI=0.
028,CR=0.
046<0.
1TableA-8bn-blevelcriteriabb1b2Wb11.
002.
000.
667b20.
501.
000.
333TableA-9TlevelTargetTabWa1.
001.
500.
6b0.
671.
000.
400Providedwiththerelativeweights,wecancalculatetheglobalweightsforeachfactor.
SeeTableA-10.
66TableA-10TherelativeweightsandglobalweightsfortheelementsTargetrelativeweightscriteriarelativeweightssub-criteriarelativeweightsFactorglobalweights0.
455(a11)0.
14400.
199(a12)0.
06290.
528(a1)0.
347(a13)0.
10990.
429(a21)0.
08550.
286(a22)0.
05700.
333(a2)0.
286(a23)0.
05700.
464(a31)0.
03890.
255(a32)0.
02140.
6(a)0.
140(a3)0.
281(a33)0.
02350.
217(b11)0.
05800.
285(b12)0.
07600.
667(b1)0.
498(b13)0.
13270.
151(b21)0.
02020.
218(b22)0.
0291T0.
4(b)0.
333(b2)0.
630(b23)0.
084067Appendix2EvaluationofcompetitivenessofMaerskandCOSCOSixexpertsandpeoplerelatedtothefieldareinquiredtoscorethefactorsaccordingtothejudgmentmatrix,P=[excellent,good,normal,bad,toobad],whoseplus-weightingcoefficientmatrixisF=(9,7,5,3,1)T.
Thetargetindexcanbeobtainedbyapplyingplus-weightinganalyticcomprehensiveassessmentmethod.
TableA-11istheevaluationofMaersk,andTableA-12istheevaluationofCOSCO.
TableA-11TheevaluationofMaersk'scompetitivenessTargetrelativeweightscriteriarelativeweightssub-criteriarelativeweightsFactorglobalweights97531averagescoreforeachfactor0.
455(a11)0.
1440518.
670.
199(a12)0.
0629417.
170.
528(a1)0.
347(a13)0.
10994118.
000.
429(a21)0.
0855518.
670.
286(a22)0.
0570428.
330.
333(a2)0.
286(a23)0.
0570338.
000.
464(a31)0.
0389247.
670.
255(a32)0.
02141417.
000.
6(a)0.
140(a3)0.
281(a33)0.
0235428.
330.
217(b11)0.
0580157.
330.
285(b12)0.
07601417.
000.
667(b1)0.
498(b13)0.
13271417.
000.
151(b21)0.
02021417.
000.
218(b22)0.
0291426.
33T0.
4(b)0.
333(b2)0.
630(b23)0.
0840516.
67Thefinalresultcanbedrawnbymultiplyingtheglobalweightsmatrixwiththematrixofaveragescoreforeachfactor.
Thus,wegetthattheevaluationresultofMaersk'competitivenessis7.
665.
68TableA-12TheevaluationofCOSCO'scompetitivenessTargetrelativeweightscriteriarelativeweightssub-criteriarelativeweightsFactorglobalweights97531averagescoreforeachfactor0.
455(a11)0.
144067.
000.
199(a12)0.
0629426.
330.
528(a1)0.
347(a13)0.
1099426.
330.
429(a21)0.
0855157.
330.
286(a22)0.
0570426.
330.
333(a2)0.
286(a23)0.
0570426.
330.
464(a31)0.
0389336.
000.
255(a32)0.
0214155.
330.
6(a)0.
140(a3)0.
281(a33)0.
0235256.
500.
217(b11)0.
0580157.
330.
285(b12)0.
0760426.
330.
667(b1)0.
498(b13)0.
1327426.
330.
151(b21)0.
0202426.
330.
218(b22)0.
0291426.
33T0.
4(b)0.
333(b2)0.
630(b23)0.
0840426.
33Bythesamemethod,wecangetthattheresultforCOSCOis6.
542.