DB REPLIES - BUSI 464
Discussion Board 2
Cody Mitchell
Liberty University
In any business, there are always going to be various risks that have to be dealt with. One substantial risk for many businesses are shipping risks. Shipping risks are the risks that your product can be lost, stolen, damaged, or possibly detained while they are being shipped, before they reach the proper destination. Having goods that get lost at sea, damaging in the loading process, or damaged due to poor packaging are realities that must be addressed. With overseas shipping, various different customs documents and requirements may complicate the process and make it more difficult to ship your product internationally. When discussing exporting or importing goods, shipping risks are something that definitely need to be considered.
The shipping industry overall is a big part of business worldwide, generating $500 million in freight rates, representing 5% of the total global economy (Albertijn, Bessler, and Drobetz, 2011)”. While they affect a substantial amount of business, the impact of shipping risks on importing and exporting companies are even more significant. Importers and exporters both depend for the sake of their business on being able to sell and buy internationally. Even though technology has significantly increased, “the rate of shipping accidents has not been reduced to the desired levels (Celik, Lavasani, and Wang, 2010)”. Even though shipping isn’t the only form of transporting goods, there is also air transportation, and land transportation (depending on where the shipments are coming and going from), this is a startling fact. While this does add risk, to combat this, exporters that use water transportation just invest in marine insurance. Marine insurance protects the exporter just in case the goods get lost, or damaged at sea. Adding marine insurance may not solve the problem completely, but due to the need to ship products for importing and exporting companies, this will just be another liability to consider.
While learning about the liability associated with shipping risks, I also learned about the shipping industry’s long established cartels. Despite the fact that the accident rates among ships hasn’t gone down, this hasn’t stopped shipping companies from collaborating on prices and due to their international nature, “these cartels have been exempted from domestic legislation on competition (Davies, 1986)”. Further expanding on my knowledge of shipping risks and how import/export companies interact with them, I have also learned how freight forwarders are used to use this particular burden on the company. Overall, mostly I was shocked that the increase in technology hasn’t drastically reduced the accident rate in the shipping industry, but I know understand further how companies hedge their risks.
References
Albertijn, S., Bessler, W., & Drobetz, W. (2011, December 19). Financing Shipping Companies and Shipping Operations: A Risk‐Management Perspective. Retrieved April 08, 2017, from http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6622.2011.00353.x/full
Celik, M., Lavasani, S. M., & Wang, J. (2010, January). A risk-based modelling approach to enhance shipping accident investigation. Retrieved April 08, 2017, from http://www.sciencedirect.com/science/article/pii/S0925753509000952
Davies, J. E. (1986, September). COMPETITION, CONTESTABILITY, AND THE LINER SHIPPING INDUSTRY: A COMMENT. Retrieved April 08, 2017, from http://www.jstor.org/tc/accept?origin=/stable/pdf/20052790.pdf
DB Forum #2 Thread
Shipping and Logistics
BUSI 465
Viviana Hochradel
Logistics is described as the means by which goods are moved from the manufacturer in one country to the customer in another (Nelson, Pg. 120). It includes activities such as material handling, warehousing, packaging, transportation, shipping security, inventory management, supply chain management, procurement, and customs service. Logistics and shipping is a part of the supply chain and value chain in most industries and is an essential component of the supply chain and value chain for any successful business, this part of supply chain governs the business of shipping freight with its vital needs. It also ensures the suitable implementation and control of the business of shipping freight that will provide the most efficient and effective results
(Page, 2017).
As world markets evolve, their logistics and shipping needs are forced to change right along and come up to speed of the level of demand that consumers present nowadays; globalization and outsourcing are driven by the rapid growth in international trade. The international shipping industry has an undisputed, major contribution to global transportation & logistics.
The shipping industry has historically been highly cyclical, experiencing significant volatility in vessel values, freight rates and shareholder returns. It is highly affected by changes in the international economic and political environment. Increasing regulation, volatility in financial markets, risk of piracy, technological breakthroughs and environmental concerns have added to a very challenging business environment that puts even experienced shipping executives to the test (PwC, 2017).
In regards to how my understanding of the term has changed with this assignment, I already had a fair understanding of the logistic and shipping process but gained a much deeper level of knowledge during my research; also, this specific term relates to this class/ course because it directly involves doing business across borders. For companies to import or export their products successfully, a good management plan of their shipping and logistic process is crucial.
References:
Nelson, C., & Nelson Carl.,. (2000). Import Export. Blacklick, USA: McGraw-Hill Professional Publishing.
Page, P. (2017). Today’s Top Supply Chain and Logistics News From WSJ. WSJ. Retrieved 4 April 2017, fromhttps://www.wsj.com/articles/todays-top-supply-chain-and-logistics-news-from-wsj-1491302244
Shipping & ports. (2017). PwC. Retrieved 4 April 2017, from http://www.pwc.com/gx/en/industries/transportation-logistics/shipping-ports.html
