Introduction
Purpose of the Essay
Every organization requires an objective point of view every now and then in order to critically assess its performance. This is exactly what this paper aims to do. It aims to look into the performance of an organization located in Singapore. As the organization’s transportation manager, the specific aspect of its performance that I will be analyzing is its transportation management. More particularly, I will be looking at the organization’s mode selection criteria, incoterms selection consideration, and security management. These three are important aspects of every company or corporation’s transportation management, and they all have an influence on a company’s success. Because of this, it is paramount that I be able to determine the strengths and weaknesses of the organization’s transportation management aspects.
About the Organization
The organization that will be the center of this paper’s critical analysis is the “K” Line Shipping Management Pte Ltd or KLSM Singapore. KLSM Singapore is actually under the “K” Line Ship Management Co., Ltd in Tokyo, Japan; more specifically, it is an in-house ship management located in Singapore (KLSM, 2014b). While there are also KLSM branches in Tokyo and India, KLSM Singapore is one of the principal shipping hubs in Southeast Asia (KLSM, 2014b).What the organization does specifically is it provides a “comprehensive range of integrated ship management services to its parent company “K” Line” (KLSM, 2014b). Ever since its official inauguration on July 1, 2005, KLSM Singapore has already immensely progressed in the market of global maritime transportation (KLSM, 2014b). During its early years, KLSM Singapore was responsible for managing merely seven container vessels and four aframax tankers for its mother company. However, in the past nine years, the organization has highly developed and is now in charge of managing 19 container vessels and two oil tankers (KLSM, 2014b).
According to its mission statement, the organization aims to “offer the highest level of ship management service to its customers in the field of global maritime transportation, in a safe and environmentally sound way with a commitment to continuous improvement” (KLASM, 2014d). It is apparent that KLSM Singapore is indeed on its way to beating competitors like Pegasus Cargo Service Co., Ltd., Eagle Holdings, Inc., and Inui Steamship Co., Ltd. (Bloomberg Businessweek, 2014). In order to make sure that they do reach their goal, KLSM Singapore has been implementing their own management strategy that involves focusing on five building blocks: safety & environment, customers, finances, personnel, and operation (KLSM, 2014a).
Mode Selection Criteria
All organizations that have a process of transportation in their operations are bound to have their own mode selection criteria. These are the standards by which an organization or a company is able to determine the mode of transportation that they are going to use for their operations (Taylor, Tseng & Yue, 2005). There is no singular best mode of transportation because each mode caters to a particular kind of company or even a specific industry (Taylor, Tseng & Yue, 2005). Therefore, a good and effective transportation management should be able to identify which mode of technology is best suited to their organization.
KLSM Singapore’s mode selection criteria actually include 15 standards. Some of these are the following: delivering the cargo without damage, delivering the cargo at the promised time, transit time, minimum changes to schedule, providing special equipment, responding to urgent deliveries quickly, and more (Punakivi & Hinkka, 2007). Each standard is then evaluated in relation to its importance. And then they are given a numerical value; 1 being of lowest importance and 5 being of highest importance.
Through these mode selection criteria, KLSM Singapore is able to arrive at what the organization considers their most important factors when it comes to transportation. The five most important factors include: being able to deliver the cargo without damage, being able to issue accurate shipping documentations, being able to deliver the cargo on time, being able to handle any sort of problem, and being able to accurately inform changes to schedules (KLSM, 2014b).
It can be assessed that KLSM Singapore’s mode selection criteria are highly effective, especially considering that the organization eventually ended up using maritime transportation. Maritime is the most suitable transportation for KLSM Singapore’s operations because it is cheap, has a high carrying capacity, and, most importantly, is often used to transport goods like oil—one of KLSM Singapore’s main transport goods (Kapoor& Kansal, 2003; KLSM, 2014b;Taylor, Tseng & Yue, 2005). Their mode selection criteria were able to help them set liner shipping as their type of maritime transportation. Liner shipping satisfies the aforementioned five most important standards because it is based on similar ships, routes, price, and regular voyages (Taylor, Tseng & Yue, 2005). This makes it highly dependable and easy to monitor.
Incoterms Selection Consideration
Incoterms, also known as International Commercial Terms, are set rules established by the International Chamber of Commerce for global commercial transactions and transportations (Malfliet, 2011). In addition to providing a basis of mandated conduct and procedures for global commerce, Incoterms have also provided an internationally accepted interpretation for eleven common trade terms. These eleven terms play a significant role because they entail a whole series of obligations and responsibilities included in the process of delivering (Malfliet, 2011).
Every contract of sale includes at least one trade term; the same goes for global transportation. Trade terms are used for their convenience and clarity. Seeing a specific acronym, which is the usual format of a trade term, will immediately inform both buyers and sellers multiple information regarding the trade that they are doing. These information include, most importantly, what type of transportation they are doing, who is in charge of the transportation, who bears the risks and costs of the transport, insurance, documents, and formalities (FHWA, 2005).
Being an organization that utilizes maritime freight, KLSM Singapore uses maritime Incoterms instead of multimodal terms (KLSM, 2014b). The maritime Incoterms that KLSM Singapore uses are FAS (Free Alongside Ship), FOB (Free on Board), CFR (Cost and Freight), and CIF (Cost, Insurance and Freight) (Malfliet, 2011). Unfortunately, the maritime Incoterms that KLSM Singapore uses have a lot of disadvantages. Of course it is understandable that the organization use maritime Incoterms; it is, after all, a maritime company. However, maritime Incoterms do not have a sufficient delivery document.
The maritime Incoterms obligate sellers to present a delivery document as a proof that the purchased goods—in KLSM’s case the oil—have already been loaded onto the liner ship (Malfliet, 2011). In addition to that, a bill of lading should also be presented to the seller which states that the transported goods have already been received for shipment (Malfliet, 2011). When analyzed further, these maritime Incoterms are still insufficient because there is a high possibility that the buyer would be left unable to do anything if ever the transported goods are damaged sometime or somewhere in the duration of the transportation (Malfliet, 2011).
Transport Security Management
KLSM Singapore prioritizes its partnership with the mother company of KLSM Co. Ltd. in Tokyo by ensuring top level transport security management. This includes having an advanced fixed surveillance system. This system makes sure that both the main offices and the port are a hundred percent safe at all times. It specifically includes live video monitoring, mobile and portable cameras, and security guards. The organization also makes sure that their transport goods are safe, especially considering that they are dealing with highly flammable goods. To ensure this, they have 24-hour surveillance dispatchers and marine vessel escorts. These guarantee the safety and protection of the transport goods both on land and on water.
In addition to those, KLSM Singapore also implements the Initial Security Awareness & Safety Familiarization program, which is led by the chief officer and aims to orient all employees regarding the security measures of the organization (KLSM, 2014c). Having said all that, KLSM Singapore’s transport security management is indeed extremely impressive. They are using all the appropriate technologies to make sure that their transport goods are safe at all times and in all places. These include those times when they are still in storage and even when they are already being transported. Furthermore, their highly trained staff when it comes to transport security is also extremely valuable assets to the organization.
Conclusion
KLSM Singapore seems to be running an effective transportation management. However, its incoterms selection consideration is vastly outdated. Being an organization that uses maritime freight does not instantly translate to using maritime Incoterms, which are the oldest of all trade terms. These trade terms, while still beneficial, are highly inadequate when it comes to buyers’ welfare. Because of this huge flaw, KLSM Singapore should instead make use of the International Chamber of Commerce’s recommended Incoterms, which are the multimodal terms. Other than this, KLSM Singapore’s other aspects of transportation management are commendable. The only other recommendation is for it to maintain its high standards for mode selection and regularly evaluate its own security management.
References
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