Vision - May/June 2008 - (Page 20)

Ships Turn Green Shipping companies are being called on to accommodate their CE customers and others with expanded routes to emerging markets at a challenging time. Rates fluctuate in the cyclical shipping industry, but the outlook is for higher rates as shipping companies look for ways to cope with rising fuel costs, increased competition from a rising number of ships and the prospect of slowing U.S. imports. At the same time, shipping companies are contending with stiffer environmental regulations as well as security challenges relating to concerns over the contents of containers making their way to western ports. To counter a negative image surrounding these issues, shipping companies in January launched a joint campaign, called the Container Shipping Information Service, to promote an improving environmental record and to ease security concerns. Countering criticism of the shipping industry’s large carbon footprint, the Container Shipping Information Service asserts that its constituents have a relatively low environmental impact compared with other modes of transportation. For every kilometer that it carries a ton of cargo, the group says, an average container ship emits roughly 40 times less CO2 than a large freight aircraft and more than three times less than a heavy truck, for example. Maersk, for one, is trying to be more fuel efficient and meet environmental responsibilities by slowing its ships, says Gordon Dorsey, a Maersk Line vice president. Slowing a vessel down by one knot, he says, saves three percent of fuel costs. Adding ships to routes helps reduce shipping times despite the slowing of the pace that vessels travel. New ship designs further the efficiency. “If you take a ship from today and compare it to a ship from 1970, we emit about a quarter of the CO2 as we did back then,” Dorsey says. “We’ve designed in more efficiency.” Still, the rising cost of fuel and of meeting increasingly stringent environmental codes is likely to mean that CE manufacturers and other customers looking to ship their goods will have to reach deeper in their pockets for the services. “Oil costs are through the roof, and I think that’s going to be a major driving force and probably a very good indicator in the industry that can drive the rate up and “The product is depreciating rapidly, so they need to get it onto the shelf as quickly as possible. But also as the manufacturing base becomes more diverse, the whole manufacturing process is much more complex.” — Charlie Covert, vice president of customer solutions Moving Out Change from the previous year in the three-month moving average of loaded-container traffic through Los Angeles and Long Beach, Calif., ports 30% 25 20 15 10 5 0 -5 -10 -15 2005 ’06 ’07 Inbound ’08 Outbound for the high-tech sector, UPS Maersk’s online fuel-surcharge calculator is just one prong in e-commerce efforts that the company has been beefing up to help give customers 24/7 access to itineraries, improve efficiency and reduce errors. The idea is to give customers the same kind of simple online access that travel consumers might find on the websites of major airlines or car rental companies. To that end, Maersk recently unveiled YouShip.com, an e-commerce shipping platform for small businesses, which can view sailings, rates and space availability, as well as secure space, book a sailing and pay in one transaction. Documentation can be downloaded upon booking. Customers also can change a booking and update other new details. Youship.com is serving customers in a number of trade lanes from the ports of Hong Kong, Rotterdam and Antwerp to destinations in Netherlands, United Kingdom, Morocco, Turkey, China, Japan and Australia. Youship.com will become available in North America, Dorsey said, although a timetable has not been set. Barbara Pratt, Maersk Line’s director of North American refrigerated services, said it is particularly important for Maersk to put a new shine on its e-commerce capabilities to accommodate expanded connectivity in both mature and emerging markets. Maersk is giving its customers extra visibility into their cargo through satellite tracking devices that accompany, say, sensitive electronic components that need to be transported in a temperaturecontrolled container, Pratt says. Maersk added the satellite tracking last summer. It alerts Maersk and its customers of any deviations in the container temperatures as well as providing locations. Sources: Ports of Long Beach and Los Angeles down,” says APL’s Wang. “Another big thing is the environmental-related surcharges.” Tallying Up the Costs To give customers more insight into how fuel surcharges are tallied, Maersk Line in January introduced a new formula and online calculator (http://baf.maerskline. com/). Ferrying cargo in a 20-foot temperature-controlled container from points around China, for example, to the Pacific region of the United States would cost an additional $125 per unit. Before introducing the calculator and formula, known as a Bunker Adjustment Factor (BAF), Maersk customers wanted to know how the shipping company determined its surcharges. “This allows total transparency,” Dorsey says. The calculation is based on third-party formulas that are listed on the company website, he adds. Currently the cost of shipping a 40-foot container from Hong Kong to the U.S. can range from $1,750 to the West Coast to $3,300 to the East Coast via the Panama Canal. Costs can increase to $4,100 to the East Coast if an overland rail connection from a West coast port is used. Rates from Asia to the U.S. are typically adjusted every three months. Source: The Wall Street Journal, May 2007 www.ce.org 20 May/June 2008 http://Youship.com http://Youship.com http://baf.maerskline.com/ http://baf.maerskline.com/ http://www.ce.org

Table of Contents Feed for the Digital Edition of Vision - May/June 2008

Vision - May/June 2008 Contents Shapiro's Spectrum In This Issue The Economist C4 Trends Visionary Making the Smartphone Truly Intelligent Shipping Strategies for CE Companies IP in BRIC Countries CEA Newsline Tech Speak Eye on Business Tech Policy Market Insider Just the Stats

Vision - May/June 2008

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