Category Archives: Strategy

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ITF Study on shipping alliances makes EC exemption decision ‘puzzling’

Why did the EU decide to extend shipping alliances’ rights?  This article in the Loadstar points to a short piece on Linked in calling attention to a study by Olaf Merk (and others) critiquing alliances and what they have done to the ocean shipping and port industries.

The study points out alliances were useful in the distant past, but today they are serving to consolidate ocean shipping, reduce offers and most every service, and they also put great pressure on ports to engage in competition on facilities, a costly endeavor that results in over-allocation of capital for the use of few lines.

I’ve attached the Merk etal. article below. He’s an eminent port and maritime economist, and what he writes should be taken seriously.

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By Alex Lennane 22/11/2019

 

via Study on shipping alliances makes EC exemption decision ‘puzzling’ – The Loadstar

The Impact of Alliances on Container Shipping

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Posted on November 23, 2019 by in Logistics, Managerial Econ, Shipping, Strategy, Supply Chains

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Assessing tariff impact SKU-by-SKU

The hard but accurate way to figure out the effect of tariffs on your product line draws a page from ABC accounting. Examine each and every SKU.  Apparently Home Depot has done this.  The results should be a finer-grained snapshot of tariffs’ effect.

It should also supply information for decisions as the tariff situation changes in the short term, as it most certainly will.  The article states that at a similar company, Lowe’s, tariffs cost it 40 basis points of gross margin. That’s a lot in a business where markups are not that large.

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via Home Depot assesses tariff impact SKU-by-SKU | Supply Chain Dive

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Posted on November 23, 2019 by in Logistics, Managerial Econ, Production Operations, Strategy, Supply Chains

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Fuel transition charges flood in

Here are a few of the initial announcements on fuel surcharges to compensate carriers for the IMO2020 rule requiring 0.5% sulfur fuel or equivalent scrubbing equipment.  The current gap is $171.00 between MGO and VLSFO as seen on this graph from shipandbunker.com where you can add several grades to the graph. It’s a 20-port average reported here.  A useful site.

You can see from the article that the firms are soft-pedaling the surcharges to keep from losing too many shippers.  Probably a good strategy at the start. I believe long term as refineries gear up for LSFO that the spread will narrow.

And of course you don’t have to buy MGO, you can use the dirty fuel which is cheaper.

screenshot-splash247.com 2017-11-16 08-27-01-343

via Fuel transition charges flood in – Splash 247

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Posted on November 7, 2019 by in Logistics, Ports, Shipping, Strategy, Supply Chains, Uncategorized

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