Monthly Archives: April 2018

‘Cooperation’ to ‘Collaboration’ in Container Liner business.

Under the liner shipping environment which is being challenged from various aspects internally and externally, it is imperative to have cooperation with partner lines. If considering the principle of service network which is comprised of physical ships and networks connected to the port calls, it is evident that more flexibilities are coming from available assets and options of the service which could be established and fulfilled.

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In this regards, liner shipping companies tend to make the various format of cooperations from a SOC shipment to Alliance with vessel pooling. No matter how big the carrier is, these kinds of cooperation in liner shipping to be continued as it has existed. Only the members of cooperation and dynamics will be changed continuously based on company’s strategic and market positions.

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To perform the cooperation between liners, various information is being shared. It includes vessel schedule, special cargo application, operation result in Baplie, agreed allocation/price, and settlement result, which are essential to maintaining the agreed cooperation accordance with contracts. However, there are challenges in the communication between the different systems and working practice always. Moreover, regarding accuracy, real-time communication, efficiency in handling information, it is a manually intensive process and which could be improved by the supporting of IT.

If it is possible to work with other liners as we are working in one system without worry for converting code, validation, no matter the scope and depth of cooperation in real-time, more efficient operation and decision making should be possible.

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I have confidence that current interactions between container liners can be improved more to reach in collaboration through supportive functions by an IT platform service. All the players’ roles are producer and consumer simultaneously, and the enabling made by a common platform should make players more cooperative to go into the collaborative operation.

Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec

How are Container Liners Communicating each other​?

Communication is a fundamental element when keeping cooperation between container liners as various data have to be exchanged between carriers. (Please refer to the article ‘Cooperation’ to ‘Collaboration’ in Container Liners Business for details)

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It is related not only whether each carrier has EDI capabilities but also being affected by the structure of partnerships which keeps evolving from bilateral agreement to multi players joint operation or alliance scheme.

More over, the dynamics of partnering is more complex than what we are estimating as we have seen in the shipping market. By the result, it is unavoidable the ‘Multi Carriers x Multi Communications‘ which cause unnecessary duplicated communications even same contents as much as the numbers of partner line.

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If there is a common platform service which can coordinate and harmonize said communications through ‘Muti Carriers x One Communication‘, the efficiencies required in cooperation between lines should be increased.

We are estimating the possibility of the role of the Platform service which supports the cooperation and collaboration as an enabler. ‘Multi Carriers x On OperationPlatform‘ is not just useful to the current partners but expandable to the outside or new comers to promote more opportunities.

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In our analysis, the method of communication is moving step by step into EDI era as a part of digitization although it involves investment as well as a consensus between senders and receivers. However, as an intermediate method, communication via CARA would be a good option regarding minimized investment while guaranteeing the flexibility no matter who would be partner line.

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Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec

 

Terminal Productivity from Container Liner’s View

The meaning of productivity is the ratio of output against input made with expectations. In this generic definition, there are two different approaches would be possible in the container terminal operation productivity. One from container liner’s view and another is terminal operator’s perspective.

Approach for the consumers(container liners) who are supposed to
receive the service of cargo operation, moreover good service from
producers(terminal operator) for cost reduction through
higher cargo operation productivity.

Although it would be arguable whether it is reasonable for the discussion not from the total cost of operation from container liner as well as terminal operator, but from a one-sided view, I would like to raise the importance of approach for the consumers(container liners) who are supposed to receive the service of cargo operation, moreover good service from producers(terminal operator) for cost reduction through higher cargo operation productivity.

Among a ship’s port call processes, ‘Steam-in > Arrival >
Operation > Departure’, the longest and most important step
should be ‘Operation’ which is decided by the total handling
volume, the number of gangs, and crane productivity.

From container liners’ position, several measurements of productivity are possible to calculate and regarding maintaining ship’s planned schedule, the productivity should cover end to end port operation process which is from arrival for pickup pilot until departure after completion cargo operation. Among a ship’s port call processes, ‘Steam-in > Arrival > Operation > Departure’, the longest and most important step should be ‘Operation’ which is decided by the total handling volume, the number of gangs, and crane productivity.

How the productivity in cargo operation would be
maximized in order to minimize ship’s port staying
from container liners’ viewpoint?

In this regards, how the productivity in cargo operation would be maximized in order to minimize ship’s port staying from container liners’ viewpoint? In general, it requires well-planned stowage plan based on terminal’s gang allocation in consideration of handling volume. However, there are other aspects which are out of liners’ hands like OEE(Overall Equipment Effectiveness), G/C & Y/T balance, Crane intensity.

 

OEE (Overall Equipment Effectiveness)

Although there are several measurements of cargo operation productivity, gross gang productivity should be targeted in monitor through breakdown by the categorized event during the cargo operation. When applying the theory of OEE (Overall Equipment Effectiveness) which is well known in manufacturing domain, the opportunity of enhancement could be identified specifically. (To obtain the opportunity for improvement, rigorous and detailed monitoring should be premised on)

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  • These waterfall charts represent the detail of non-productive ratio and reasons. More breakdown, more opportunity for improvement. An OEE score of 85% is considered world class for discrete manufacturers. For many companies, it is a suitable long-term goal (reference-1)

The balance of G/C and Y/T

Depend on the shuttling distance from the inbound/outbound containers in the terminal yard to the beneath of gantry crane, allocation of yard tractors per crane would be a key point to be monitored and managed. In this aspect, terminal operator’s support through assigning yard locations in a short distance from the gantry crane operation is essential, and this is not only for better the crane productivity but also for optimizing asset with minimizing allocation yard tractors per gantry crane.

If there is targeted crane productivity range 29~33 moves/hour, required Y/T turn time, as well as allocated the number of Y/T per crane could be calculated. Action plans to avoid idling either by gantry crane or yard tractor need to be reviewed and executed.

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  • This table is illustrating the combination of Y/T turn time and Y/T number which are determining cargo operation productivity.
  1. Improvement Y/T utilization: Allocate more Y/T to the G/C which is handling containers from/to near-by location in C/Y, Continuous monitoring and control Y/T allocation during operation
  2. Improvement other unproductive events: Meal break, Operator break, Shift change, Gear exchange for awkward cargo

Crane Intensity

No matter how many cranes are allocated, commencing and completing cargo operation at the same times would be the best result. However, the reality is quite different depending on stowage planning and available cranes at the specific berth. The efforts of understanding the plan & result of gang allocation for the cargo operation will make more attention by vessel planners in container liner and terminal operator.

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  • This bar charts explaining each gang’s operation intensity and imbalance would be the target need to reduce through improved inbound/outbound as well as gang allocation split.

There are lots of opportunities beyond than apparent
situation in improving cargo operation productivity through
cooperation with terminal operators.

The belief of ‘doing the best’ and ‘there is nothing to improve’
is a preconception based on limited experiences.

However, it needs to be careful with the tradeoff between
cost reduction vs. safety in cargo operation always.

Reference-1: OEE in lean production (https://www.leanproduction.com/oee.html)

Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec

 

Port Time vs. Sea Time? Omni-Operation!

What does it mean port time vs. sea time in container liner operation?

Depend on the scale of container liner, it could be separated the responsible teams who were focusing port time and sea time, in specifically, vessel operation and terminal operation.

One of the side effects in approaching two different operations is the
possibility of misleading is the importance of two different operation sectors.

If considering the duration of the voyage at sea, the port time could be deemed as a small period. However, in accordance with liners’ required efforts for cost reductions, the dispatch from a port to provide more time at sea is one of an important targeted performance.

Before, approaching the targets in vessel operation and
terminal operation would like to propose to have the holistic
understanding in order to have better decision making.

This is not only for an operational KPI but also to secure optimum network design which is the product generated and provided by container liner.

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Usually, a proforma product is designed based on ‘constraint, requirement’ which came from the result of two different operations, i.e. vessel voyage operation and port operation. Consequently, the performance of each operation is monitored based on the separated target.

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If it is possible to provide a method of ‘Omni-Operation
Management’ which covers vessel operation and terminal operation
with single window of management, more optimized operation
in terms of holistic evaluation, and consequent optimum product
design will be available.

Moreover, through the ‘Omni-Operation Management’, integrated measuring performance, total cost management, cost-based product simulation, real-time optimization, and activity-based costing will be enhanced.

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As a tool for the ‘Omni-Operation Management’, introduced the approaches in my articles, and overall concept would be ‘understanding total cost as well as service visually’. Please refer to the articles ‘Just Mouse Drag for Adjusting Ship’s Schedule‘, and ‘How Can We Make It Easy? (Visualizing Container Ship’s Schedule)‘.

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By the result of adaping ‘Omni-Operation Management’,
dynamic approaches to the optimum products from
cost as well as service perspective.

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Lastly, I would like to highlight the meaning of the optimum product which should cover the sea and port operation in container liner business. It is not a static product target, but the dynamic result adjusted by continuous approaches depends on real operational circumstance with consideration cost as well as service.

Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec

Where are the Top 100 Container Liners moving?

If we are tracking each container liner’s operating vessels’ number as well as the average capacity of a ship, it represents certain trends in number and capacity wise.

Trend 1: The number of ships is moving upper direction, which means increasing numbers of the ship in general.

Trend 2: The average capacity of a ship is moving right direction, which means upsizing capacity in general.

Trend 3: Forming container liners group from three(3) groups to two(2) group.

Trend 4: There is a group which is not changing the number of ships nor capacity of each ship.

I think it is related to the concentration of container shipping market and well explaining the trend of reshaping liners under financial difficulties.

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Although it was not possible to secure each line’s revenue to calculate HHI (Herfindahl-Hirschman Index), it seems workable in calculating HHI based on the size of capacity which should be allied with revenue directly.

By the result of the calculation, though it is not correct squaring share of sales of each company, it could reach 1,400 by the result of recent announcements made by global carriers.

For reference, according to DOJ, ‘The agencies generally consider markets in which the HHI is between 1,500 and 2,500 points to be moderately concentrated and consider markets in which the HHI is in excess of 2,500 points to be highly concentrated’.


Edited by Kwang-Yong Jung on August 14, 2017

Values in ALLEGRO, all about the Liner Shipping (3)

It is continued post from posting ‘Values in ALLEGRO, all about the Liner Shipping (2)’


The 7th core value in ALLEGRO is about network

 control which is getting more important even in
 accordance with the extended cooperation with
partner lines, and diversified hub ports for efficient
 operations.

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ALLEGRO’s service network management provides maximum combination of service and controllability not only with the inland node & link but also with the ocean node & link, and ALLEGRO supports users in selection optimum network through provided information in terms of cost, # of transshipment, transit time, And space control, commodity & port regulation, eq type, to be added under the name of constraint.

The service networks which are being generated automatically in the combination of inland transportation, feeder contract, and trunk service, could be used in real-time when creating booking depends on the schedule and space availability.

It could be used for negotiation contract with customers even.

As it is highlighted in the simulation with an intelligent algorithm, ocean link, and route to be designed, planned, and actualized under simulation precisely.

ALLEGRO will have users are understanding the trade-off relationship between service vs cost which is based on regression analysis from historical data like fuel consumption.

     
  Last but not least, Optimized system architecture
with stable performances has been validated & guaranteed
for any scale of liner shipping business.

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And ALLEGRO has the mechanism that enables a flexible response to the biz environment through user-friend UX concept.

Also, through the open architecture based H-platform which ensures quick development under standardized environment, easy maintenance, ALLEGRO has been renovated from ITO perspective.

ALLEGRO has segregated system architecture online batch and system batch for the stability of the system. Plus, one server & one database logically & physically makes possible real-time sync without replication batch process.

In order to support, integrated & globalized business process, ALLEGRO supports unified core data under master data for the customer, commodity, location, partner, account, asset code.

ALLEGRO provides various features for improved users including Any browser and device without active-X, Cognitive program access through the structured menu and frequent menu function, UI under UX consulting for intuitive, proactive, configurable approach.

Through included 80 configurable items, quick business response to minimizing program change is achieved.

Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec

Values in ALLEGRO, all about the Liner Shipping (2)

It is continued post from posting ‘Values in ALLEGRO, all about the Liner Shipping (1)’


The 4th core value that ALLEGRO can provide
is exception management which will be a key
differentiate element in commoditized liner
shipping industry.

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As ALLEGRO works under integrated and inter-linked business process, efficient handling exceptions are critical not only for the process flow itself but also for guarantee accuracy of information. Therefore, ALLEGRO has been designed to recognize various exceptions occurred in shipping processes, to notify automatically, to support recovery, and to monitor the final result.

Again, sophisticated container activity plan makes possible mentioned exception management from the point of receiving booking until delivering cargo at the destination including customs hold, management contract, control special cargo, communication by EDI, changing vessels, revising schedule/network, changing of destination.

Furthermore, automatic alert and email functionality in customs hold, long staying container, a port omission are very supportive features for communication internally/externally 24/7, minimizing cost like demurrage, maximizing equipment turn-time, providing the high level of customer service even.

Just letting ALLEGRO send the right message to the right person at the right time.


The 5th core value in ALLEGRO is yield management
for right cargo at the right price. All of the trade
management processes pricing, planning,
targeting sales quota, space controlling,
booking monitoring are included in ALLEGRO.

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Instead of relying on sales rep’s capability, the system should provide features for a strategic approach in trade management level from planning sales target, allocating quota, and analyzing performance in the end.

As ALLEGRO provides unified profitability standard ground based on detailed container activity plan and proved algorithm for cost estimation, it leverages proper decision making the top to bottom in terms of quantitative profit and loss result.

When negotiating with shipper based on profitable cargo deciding pricing policy for profit planning sales target for maximum op by office controlling space dynamically from profit perspective booking under optimum service network route

ALLEGRO will stand out the real value.


The 6th core value in ALLEGRO is coming
from accumulated data inside of ALLEGRO
itself.vUnder the required supporting decision
making in various processes, ALLEGRO is able to
utilize the full potential of value in data constantly.

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Data generated from front operation level makes simulation possible for proforma schedule port tariff estimation agent commission impact service profitability/freight by route and contribution margin in real-time.

More importantly, depending on the required responses to dynamic market situations and management consequent, multi-dimensions basis performance analytic would be the key fact for BI tool.

ALLEGRO will support it.

ALLEGRO provides 4 weeks of equipment forecasting based on historical performance and estimated booking and simulate empty repositioning in terms of equipment inventory for empty planning as well as a guideline.

To be continued …

Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec

Values in ALLEGRO, all about the Liner Shipping (1)

It is not a day one solution but based on 20 + Years of business experience in H-co, and stepping up through the projects 2013 Heung-A / 2014 Kambara + Camellia + NYK / 2015 PIL / 2016 JAPAN 3 J/V ONE, we made functionalities upgrade even more and those are proved under various real liner shipping situations.

PLUS, up-to-date IT technologies and new design have been applied in order to retain more flexibility, higher performance,

By the result, CyberLogitec can provide a solution with LOW RISK & COST, SHORT PROJECT PERIOD and FEWER HUMAN RESOURCE.

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ALLEGRO is providing 7 core values through a foundation of optimum IT solution for liner shipping business which are under various challenges internally and externally.

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1. ALLEGRO is integrated solution which is born
from the multi-decades of business experience as
well as proved mega projects with global carriers.

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The standardized and the best practice embedded in ALLEGRO satisfies requirements in global business and local practices. Through the full set of global logistics service network information generated automatically by the system, /// users will work on an integrated working environments under standard process with a single instance while covering local practice simultaneously.

Integrated business process working on one database and one architecture design possible solution simplified, accurate, and reliable. The users who are using ALLEGRO to be connected with internal/external systems always with maximum flexibility also.

2. ALLEGRO is internalized the intelligent algorithm
which has been empowered by field & project experiences.

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The intelligent algorithm makes possible to generate automated container activity plan, precise cost estimation for evaluation profitability and automated processes itself. By the result, efficient working and prompt response to be guaranteed.

Sophisticated cost estimation, management exception through clear visibility, and comparing actual shipping activity against planned one are possible only based on the container activity plan generated per single container automatically which covers 67 activities grounded on shipping process algorithm.

In order to provide yield management fundamental which makes possible the real-time contribution margin calculation, ALLEGRO has cost estimation algorithm through utilizing contract tariff and average unit cost, based on the automated container activity plan.

In addition, ALLEGRO has numerous functionalities which have intelligent algorithm embedded like special cargo control through dedicated validation engine, joint operation settlement which has automatic settlement calculation for partner lines who are under various contract terms and conditions.

3. Transparency which is providing world class
profit management maximized cost governance,
and end to end supply chain visibility.

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Through the clear profit visibility, agile response to dynamic business environment together with all organizations is possible.

Profit visibility is available from the bottom when creating booking by real-time contribution margin calculation to top estimating weekly operation profit for management. ALLEGRO’s cost governance in invoice validation provides crystal clear cost management based on JO, and contract tariff.

No job order No payment to be made.

In addition, supply chain visibility in terms of customers’ perspective is available through the plan based execution, tracking, and communication through e-Commerce portal.

To be continued …

Edited by Kwang-Yong Jung, Business Consultant, CyberLogitec