IT Management help on: Performance of shipping companies
Identify the indicators that you would use to evaluate the performance of shipping companies. Explain how these indicators may be related and how they may be used. Provide practical examples to illustrate your explanation.
There are many indicators which would we use to evaluate the performance of shipping companies. Communication and Information technology are considered as significant factors for all companies of shipping (Gear & Roche, 2000). The function of communication technology and maritime information has emerged from the simple function of the support of the difficult task to the valuable partner integrating technology with needs of the business. Ultimately, some companies of shipping upgraded the function of the information technology by requesting officer of chief information as the strategic partner in top committee. The task list or job description approach does not take into consideration successful principles of management: MBO is considered as the process in which the employee and the manager agree upon a group of particular objectives, goals or performance and jointly form the plan for attaining them. The goals should be achievable and clear and plans should comprise an evaluation criteria and time frame. The significant factor in the system of MBO is its stress on results accomplished by employees as compared to the actions executed in its jobs. It is examined that target of TMSA is to offer the operators the path to measure and improve their systems of own management. The guide of TMSA comprises numerous performance indicators to control the improvement and implementation of the shipping process. KPI’s are considered as non-financial and financial metrics utilized to quantify the objectives to show the strategic execution of the organization. It can be said that, there is a high advantage for the Maritime IT to accept a group of basic indicators of performance for evaluating the progress and function of IT department throughout the Company. It can be said that customer satisfaction can be considered as a measure to know how much the customers are satisfied with the services of the Shipping Company. In case of Shipping Company, customer satisfaction may form an indicator for on –time delivery, pickup performance, invoicing accuracy and claim- free service. On the other side, Balanced Scorecard is considered as a tool utilized by many kinds of business throughout the world and serve as the indicator to make a group of the performance metrics which integrate focus to mandatory targets of the shipping business.
Balance Scorecard of Shipping
How would the performance evaluation system for the shipping IT will look like? This following sample might be utilized as the template in formation of own objectives and link these objectives to basic indicators of performance.
Financial perspective: to diversify the efficiency and scope of IT services of the shipping. To make sure that communication and information technology is released on time throughout the budgets and have obvious value and benefits for business.
- Customer Perspective: External and Internal satisfaction of the customer and number of new channels and ways to deliver the services to the users.
- Business Process perspective: Enhance the reliability and availability of the information technology.
- Growth and Learning Perspective: Have accurate people and technologies accessible for the company’s future. Morale and staff productivity, trained staff in new services and enhanced availability of the knowledge systems.
The most current technological transformation impacting water transport has concentrated on altering water canals and enhancing the automation, size and specialization of the vessels. These kinds of transformation define the formation of the maritime traffic which has been adapting to enhancing demand of the energy, movement of the raw materials and location of main grain markets. This procedure is not identical and several levels of the connectivity to international networks of shipping are being viewed. The configuration and importance of the maritime route has altered with technical improvements and economic development. For example: containerization altered the pattern of the freight route with modern services. With lower and faster, costs of the transshipment required to be greatly adaptable in term of which port is serviced, and emerged as the favorite type of the containerized circulation of the maritime.
Discuss the following. “Because old ships are subject to high operational costs, they are less competitive than new ships. Therefore shipping companies should only have new ships in their fleets”
The capability to access the new ships at the reasonable cost greatly impacts the ability of the ship operators to offer the services of shipping. The purchasing cost of the ship is the basic element of the capital structure of the Shipping Company (Hawai Free Press, 2012). It is mandatory for the operators to substitute their fleets at the realistic intervals with technical modern ships at globally competitive prices (Fey and Beamish, 2000). New ships permit operators to maintain abreast of innovative technology and designs and avoid greater maintenance and operating costs incurred by the older ships and accomplish the mandatory efficiencies to price reasonable rates of freight and offer sufficient service levels. The building cost in the U.S is three times greater in comparison to the globally competitive shipyard in South Korea and Japan.
The higher cost and inadequate competitiveness of the main U.S shipbuilding recently burdens the residents and business of non contiguous jurisdiction with various adverse effects:
- Imposes great barriers to the entry and restricting competition in non contiguous trades
- Restricts the formation of the new ships by existing local operators of ship who don’t have financial resources
- Leads unavoidably to the greater costs of freight comprising excessive fuel charges as older ships are inherently more expensive because of the increased consumption of the fuel, greater crews, inefficient cargo handling and more maintenance.
The most current technological transformations impacting water transport have concentrated on altering water canals (Fey and Beamish, 2000). These kinds of transformations partially define the formation of the maritime traffic which is adapting to the increasing demand of energy, raw material movements and location of the main grain markets (Hawai Free Press, 2012) It is examined that, main arguments against the U.S. Flag ship in the local trades is perceived advantage of labor cost enjoyed by the foreign shipyard which is said to be inequitable. It is viewed that there are 3 leading countries of shipbuilding in today’s time such as South Korea, Japan and China. Generally, the more technical challenging kind of ships are made in South Korea and Japan where rates of labor compensation are at world standards in region of Japan and receiving those level in South Korea (Hawai Free Press, 2012). In China, main shipyards are on seaboard where rates of labor are skilled and highest shipyard workers are ones who have greatest paid in these regions. According to the rule, the owner of international ship wants to order the new ship then he will view out the shipbuilder who maintains the desired kind and ship class (Hawai Free Press, 2012). The design is generally the yard proprietary design which shipbuilders have made over the time with the help of series production. The owner of the ship might ask yard to create some changes to the standard design of the yard, but that modifications would not substantially alter the specifications of delivery.
This graph shows that various customers in region of Europe cut orders and extended the time of delivery.
At last it can be said that, new ships allow operators to maintain abreast of innovative designs and technology and avert greater operating costs and maintained done by the older ships and obtain the mandatory efficiencies to offer reasonable rates of the freight and provide sufficient levels of the service. It can be said that new ships in the fleets would help in minimizing the excessive cost and reduces the burden of the shipbuilders. New ships permit operators to maintain abreast of innovative technology and designs and this would help the shipbuilders to have more number of customers.
Explain how the declines in the world economy and trade as a result of the on-going European debt crisis would affect the sea freight market in the short term and in the long term, and given your answer, explain the further effects on ship-breaking market.
It is viewed that debt crisis of Europe has impacted a lot in comparison to the few nations throughout the Europe. It has become as the worldwide phenomenon and impacting countries throughout the European continent. The consequence of crisis was experienced globally and major thing it is attributed to various factors. It was the boiling point condition which did not happen because of one event (Ferner and Varul, 2004). It is divided up to several possible facts which added up to its outcome. Impacted by the debt crisis of Europe and other factors, two foreign trades are subjected to great losses to changing extends. At the similar time, as global economy slow and demand of trade drops, many companies of international shipping have already started to pull out its route of shipping, narrow their scope of business and minimize their capacity of the transportation (Tzeng, 2000). Statistics of customer reveal that in month of October, volume of the exports was about 157.49 billion dollars, but previous month stats were about $ 169.7 billion (China Import Magazine, 2005). As per the data of the Alphaliner Research, a shipping consultancy of French in month of October, the rate of container freight remained to decline, impacting the new bottom of year. In summation to container routes of China in region of South Asia enhanced slightly and other routes seem to reduce to changing degrees, out of which routes of Europe and South Korea have revealed the greatest decline (China Import Magazine, 2005). The least price of shipping line of European routes has fallen down to 500 TEU. It is viewed that, since the initiation of year, the price of shipping among Northern Europe and Asia has fallen down to 54% among Asia to US, lines of freight reduced by 24%. In, fact slump of two greatest routes freight of global trade has started to extend to routes of emerging markets.
As per the Alphaliner Research, advisory agency of the French shipping has started and planning to leave from the number of major U.S and Europe routes. From April & Sep, 7 routes had cancelled on east and west coast of America. This shall inevitably impact the export market of the China; the Transport Ministry revealed the current data, first three quarter of the foreign trade container of the country throughout the entire transport maintained quick growth and the growth came down significantly. In the month of October, the Transportation Ministry announced the regular conference in 1st quarter this year, freight transport of waterways, air routes and highways maintained the quick growth. The development of foreign trade transportation reduced significantly and overall downturn in market of shipping are conspicuous (Ferner and Varul, 2004). In, fact Transport Ministry has announced that, it shall examine and resolve the downturn of shipping market, supply of the excess capacity and issues. Transport Ministry promised that government could continue to adopt some decisive measures to match up the capacity restructuring. It is viewed that, rational regulation of market capacity shall assist companies of shipping to overcome the difficulties.
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