Function of shipping

 The function of shipping is the conveyance of goods from where their utility

is low to a place where it is higher. Goods may consist of raw materials

conveyed in bulk cargo shipments or purpose-built containers, equipment

components or parts for assembly at an industrial plant or on-site capital

project, like a power station, or the whole range of consumer products, many

of which are durable and may be shipped in containers, on swap bodies or by

an international trucking operation. A growth area in recent years is out -

sourcing. This involves manufacturers relocating their industrial plant from a

high labour cost economy, such as Germany or the UK, to a low labour cost

environment as found in many Far East countries. Components are sourced

locally or from neighbouring countries to the industrial assembly plant.

Subsequently the products are marketed locally to the major trading centres,

such as Europe and North America. Outsourcing is logistically driven and

relies primarily on containerized shipment. It exemplifies how shipping is

con tributing to the growing volume of international trade, the relocation of

industry from the developed to the developing economies, as well as to the

changing pattern of international trade.

The factors influencing the shipper’s choice of transport mode has changed

dramatically since the 1980s. Today it is based on the total product concept

embracing all the constituents of distribution logistically driven. These include

reliability, frequency, cost, transit time, capital tied up in transport, quality of

service, packaging, import duty, insurance, and so on. It favours more strongly

multi-modalism, with sea transport undertaking the major leg of the overall

transit. Logistics, just-in-time delivery, supply chain management and distribu -

tion centres or ‘distriparks’ play a major role in decision-making. All these

aspects will be re-examined later as the basis of how the shipowner can best

meet the needs of the shipper in the foreseeable future. The paramount con -

sideration is for the shipowner to empathize with the shipper and strive to

become flexible and responsive to the shipper’s needs on an innovative valueadded

basis in a competitive logistic global environment. The freight rate is

not the only paramount factor, it is the value-added benefit the shipper gains

from the service, which is usually a combined transport operation of road,

sea and rail.

Thank you