International Journal of Management Science
and Business Administration
Volume 2, Issue 1, December 2015, Pages 50-55
DOI: 10.18775/ijmsba.1849-5664-5419.2014.21.1005
URL: http://dx.doi.org/10.18775/ijmsba.1849-5664-5419.2014.21.1005
Shipping Management and Logistics Innovation: Key Factors for
Success
Brou Mathias Allate
School of Economics and Management, Shanghai Maritime University, Shanghai, China.
Email (corresponding author): abromat@yahoo.fr
Abstract: Logistics and shipping management is a concept that is valuable for trade companies operations and success.
By exploring current studies we have identified several factors which are of great significance for effective execution
of logistic service and shipping management. These factors include present and potential competitiveness, previous
investments, industry policies, overall business performance, freight rate and price volatility, internationalization, factor
productivity growth and the increase of energy efficiency. We also suggest that Innovation of logistics and shipping is
an important way to secure further competitiveness. Innovation can be achieved through such factors as internet
disclosure and port performance measurement.
Keywords: Shipping management, Logistics, Seaport logistics, Shipping management, Logistics innovation
1. Introduction
In today’s advancing technological circumstances, market imperatives and efficiency, being innovative is of utmost
importance in various economic sectors. By the presence of advanced process technology and the participation and
support of manufacturing management in strategy formulation, the degree and level of manufacturing flexibility
changes role of logistics in organizational success (Porter, 1990). Thus, applied research and developments in logistics
and supply chain management are crucial.
Although, over time, the concept of logistics is constantly evolving, logistics and shipping is remaining as a vital
segment of supply chain management and trade and it plays a crucial role in company’s overall economic performance.
Logistics and shipping being a fraction of supply chain management include the process of integrating the movement
and maintenance of goods while logistics and shipping have an objective more prone to customer satisfaction rather
than having an emphasis on competitive advantage. Thus, supply chain management is a broader term which refers to
the connection, right from the suppliers to the ultimate consumer.
Innovation and logistics management are intertwined. Innovation is key to develop new concepts and products required
to improve overall economic performance in the logistics sector. Logistics innovation can be considered as any type of
associated service from the most basic one to a more complex and challenging one as long as it is viewed as an
innovative and important tool to a particular audience (Flint, Larsson, Gammelgaard, and Mentzer, 2005). The
audience can be internal where innovations advance and develop operational effectiveness or external where
innovations better assist and are better suited for specific customers.
Previous research has confirmed that logistics influences a manufacturer's ability to satisfy customers and impacts
overall performance (Heaver, 2002). As one of the most internationalized industries, shipping and logistics cannot only
be viewed from a narrow perspective but rather from a broad view of world development, especially in the international
50
ISSN 1849-5664 (online)http://researchleap.com/category/international-journal-of-management-science-and-business-administration
ISSN 1849-5419 (print) International Journal of Management Science And Business Administration Vol. 2, No. 1, November 2015, pp. 50-55
n
Brou Mathias Allate
Shipping Management and Logistics Innovation: Key Factors for Success
trade sector (Baxandall et al., 2002). The study of shipping and logistics management requires further comprehensive
knowledge of the world economy.
There have been drastic changes in the manner in which businesses were conducted previously and currently. Due to
the improvement of technology, a majority of the businesses have evolved including supply chain management and
logistics. Considering the rapid development of technological changes and the increased competitive requirements
which are apparent in the logistics services market, it is crucial that providers in this particular business sustain their
innovation skills in order to generate, advance and deliver services that satisfy the most demanding needs of various
customers (Porter, 1990).
Our study tries to give an overall view of the logistics management process, various innovative aspects which can be
utilized in order to speed up and enhance the comprehensive process for a better organizational performance output.
This also implies certain advantages and various barriers which can turn up during the transportation of goods and
negatively reflect on the overall degree of satisfaction of the designated customer.
2. Factors that contribute to shipping management and logistics
For the past few decades, international trade has developed in both volume and speed, which has, in turn, brought an
ever-increasing competition among major maritime nations and requires a corresponding shipping policy. According to
Lee and Dong (2008), it is crucial to identify and weigh the factors influencing country’s shipping competitiveness and
shipping policy. A country’s shipping competitiveness depends not only on its present competitiveness but also on its
potential competitiveness (Lee and Dong, 2008). Specifically, a country’s present shipping competitiveness is the final
result of all previous investments, industry policies and business performance in the shipping industry while its
potential shipping competitiveness is a set consisted of all influencing factors of competition which has impacts on the
future competitiveness. Such factors that may be valuable to shipping and logistics may include:
Freight rate and price volatility
According to Wu and Lin (2008), another important aspect of the successful logistic trade is global dry bulk shipping
market, which is a crucial element in global economy and trade. Considering new structures and secondhand vessels
are frequently traded as assets and the freight rate is the key factor of vessel price, it is important for shipping market
participants to recognize the market dynamics and price transmission mechanism over time to obtain proper strategic
decisions. Significant volatility transmission effects exist in each market sector and the market volatility transmission
mechanism varies among different vessel types. Furthermore, some bilateral effects are found in the dry bulk shipping
market, indicating that lagged variances could affect the current variance in a counterpart market, notwithstanding the
volatility transmission.
Internationalization
Gadhia et al. (2011) analyzed the internationalization level of the world’s largest container shipping companies by
examining how their port network is analyzed. According to their results, only three of the nineteen companies could,
in fact, be considered as being truly "international" and service the major and minor ports distributed across the globe.
The other companies are positioned on different stages of such a development scheme. The most distinguishing aspects
of the differing levels of internationalization are the attachment to the region from which a shipping company
originated and the usages of ports in smaller regions that were located close to the main routes, as a means of
expansion.
Factor productivity growth
Wu and Lin (2008) developed a theoretical model to evaluate and decompose the total factor productivity (TFP) growth
of the container shipping industry, reconfirming the cost advantage of large vessels and indicated that the deployment
of large vessels has pointed to a problem of serious over-capacity. A further study may be conducted, since the
operation and management of international container shipping are globally standardized and integrated, the model
developed in this study can be applied to examine the productivity growth of other container shipping lines.
51
ISSN 1849-5664 (online)http://researchleap.com/category/international-journal-of-management-science-and-business-administration
ISSN 1849-5419 (print) International Journal of Management Science And Business Administration Vol. 2, No. 1, November 2015, pp. 50-55
Brou Mathias Allate
Shipping Management and Logistics Innovation: Key Factors for Success
Increase of energy efficiency
According to Johnson and Styhre (2015), another kind of cost-effective approach is the potential to increase energy
efficiency in shipping through reduced speed at sea permitted by shorter time in port indicating that energy required
can be reduced whilst preserving the same transport service. The conclusion of this study was that aspects features such
as a lack of effective ship-shore-port communication, little time for ship operators, an absence of means for correctly
predicting energy use of voyages as a function of speed, observed risk of arriving too late, and connections with thirdparty technical management all have a somewhat significant impact in energy efficiency.
Impediments of logistics management
Along with the enhancing factors of logistics management there are also some obstructions and barriers which can
arise. Rojon and Dieperink (2014) indicate that there are numerous structural barriers have been found that can obstruct
the further development of wind propulsion technologies in the shipping sector, including, inter alia, a lack of policies
and incentive schemes developing wind propulsion, lack of financial resources, insufficient collaboration among
different actor groups and conservative and risk-averse attitudes prevalent in the maritime industry.
3. An application of logistics to seaport-related innovation
The concept of logistics innovation which focuses on the inter-organizational connections between port actors within
the service supply chain is explored in this section. Current analysis structure, together with the determining limits and
detailed analysis of the logistic innovation is performed. Today, innovation is the most important driver of firm
competitiveness in advanced world economies. In today's computing environment, firms need to complement
technological innovation with non-technological innovation concerning services, people, and organization (Vaccaro,
Jansen, Van Den Bosch, & Volberda, 2012; Volberda & Van Den Bosch, 2005) in order to persevere and prosper.
Nuttall et al. (2014), showed that international shipping transports which constitute 90% of global commerce and are of
major importance for the global economy. It was discovered that sea transport generally is considered a private
investment issue with public or donor investment restricted exclusively to shore infrastructure (primarily ports), policy
and regulation. The privatization of ports has resulted to a mixture of governance structures in various countries
(Brooks and Pallis, 2008). The change from public to private financing in ports is not strictly ideological on
assumptions of effectiveness and overall performance of private firms correlated to public ones (Heaver, 2006). In the
growth and development of terminal operating firms, there has been an enhancement in ports, expertise level, capital,
and an increase in distinguished recognition of essential provision of value added services. The results emphasis on
port customers' demands so that performance attributes' gaps can be recognized for further and comprehensive
improvement.
Seaports are of great economic importance for regions and countries in terms of value added, employment and
investments (Ferrari, Percoco, & Tedeschi, 2010). Besides that, however, seaports also provide a unique and important
strategic contribution to the international competitiveness of firms in these regions and countries (Porter, 1990; Van
Den Bosch, Hollen, Volberda, & Baaij, 2011). In this respect, international competitive dynamics, economies of scale
and globalization have emphasized the key role of technological innovation, supply chain integration and knowledge in
order for Port Authorities and port operators to achieve and maintain a competitive advantage (Haugstetter & Cahoon,
2010; Priemus, 2001; Yang, Marlow, & Lu, 2009).
According to Flint, Larson & Gammelgaard (2008), logistics innovation can be communicated by collection of
customer’s values, interpreted and shared via the different companies. As a result of vast logistics services, interorganizational learning processes can be extended at the chain supply level. Chapman et.al (2003), adds that, with
comparison to learning methods and developed technologies, innovation relies on consistent and supportive interorganizational structures which can be viewed as an extent of logistics innovation. Logistics innovation is expected to
develop and arise from processes directed at collecting extensive insights about various logistic values of customers
using communication with customers, with the interpretation of those insights through information sharing method and
distribution, and across the company (Flint, Larsson, & Gammelgaard, 2008). Due to the variety of logistics services,
inter-organizational learning processes have to happen at the extended supply chain level. The potential for innovation
compared to developed technologies and learning methods relies on sufficient and supportive inter-organizational
structures, which can be perceived as expediting elements in logistics innovation (Chapman et al., 2003).
52
ISSN 1849-5664 (online)http://researchleap.com/category/international-journal-of-management-science-and-business-administration
ISSN 1849-5419 (print) International Journal of Management Science And Business Administration Vol. 2, No. 1, November 2015, pp. 50-55
Brou Mathias Allate
Shipping Management and Logistics Innovation: Key Factors for Success
However, there are various conditions of implementation on innovation which are environmental, institutional,
interaction condition and various capabilities. Environmental conditions include roads, ports, and ships, institutional
conditions encompass various law regulations, social and economic values and interaction conditions including weak
and strong network problems.
Internet disclosure
The connection between internet disclosure, profitability and financial structure in the shipping sector are also crucial.
According to Andrikopoulos et al. (2013), shipping firms are keen on making more and more financial information
accessible via the web and have significant policy implications for executives, as it implies that greater internet
disclosure is not a just an effect of reliable and sound financial performance, but also, a requirement for it. According to
the conceptual framework model of the study conducted by the aforementioned author, it was suggested that
knowledge management enablers such as organizational structure and knowledge management culture have
significantly positive effects on the organizational performance features of innovativeness, financial performance, and
customer service, whereas, on the other hand, information technology support is a positive effect on the organizational
performance aspect of innovativeness.
Port performance measurement
Although there is extensive recognition of the potential of ports as logistics centers, widely affirmed performance
measurements for such centers are yet to be developed. The essence of logistics and supply chain management is an
integrative approach to the interaction of different processes and functions within a firm extended to a network of
organizations for the purpose of cost reduction and customer satisfaction. The logistics approach often assumes a cost
trade-off analysis between functions, processes, and even supply chains. This approach could be beneficial to port
efficiency and performance by directing port strategy towards relevant value-added logistics activities. The significant
structural changes in global logistics include intermodalism, vertical integration, outsourcing, logistics patterns of
maritime support, operational productivity and operational management are all exhibited in the proposed key
performance indicator model. This paper seeks to show that through conceptualizing ports from a logistics and supply
chain management performance, it is reasonable to suggest a relevant framework of port performance.
4. Implications for future research
It is believed that the research findings can aid in explaining customer assessment of service provision in a wider
variety of industries than just container shipping. In addition, future studies of perceptions of liner shipping services
should consider the patterns of service operated by carriers and how they may differ from one carrier to another.
According to Yang et al. (2009), logistics service capability had a positive effect on the performance of container
shipping service firms. On the other hand, resource and innovation capability were not found to have significantly
positive effects on firms’ performance.
One of the factors and features for further analysis can be the adverse impacts on the environment caused by cargo
movement in international trade, examining the environmental awareness and the environmental measures taken in the
shipping industry. According to Lai et al. (2011), institutional forces have a positive impact on the tendency of shipping
firms to adopt GSPs, which in turn improves their environmental performance. In other words, shipping firms
confronting regulatory requirements, industrial norms, and customer pressures are predisposed to adopting GSPs more
intensive.
One of the topics for future research can be analyzing the challenges of managers in the shipping industry to implement
energy efficient measures in ship operations and their roles of managing both people and technology under the
fulfilment of their corporate social responsibilities. According to Kitada and Olcer (2015), human element in energy
management should be treated as equally important as technology when monitoring the implementation process of
energy efficiency and the lack of examining the human element in energy management, including education and
training for workers to be competent for new technology, would, therefore, cause a gap in the implementation
mechanism for the sustainable.
53
ISSN 1849-5664 (online)http://researchleap.com/category/international-journal-of-management-science-and-business-administration
ISSN 1849-5419 (print) International Journal of Management Science And Business Administration Vol. 2, No. 1, November 2015, pp. 50-55
Brou Mathias Allate
Shipping Management and Logistics Innovation: Key Factors for Success
5. Conclusion
The importance and significance of shipping are widely discussed. Numerous previous studies indicate that inefficient
supply chains acutely hamper the capabilities of firms in developing countries to compete in global markets and
become integrated into global value chains. Multinational shipping and logistic companies play an increasing role for
emerging and developing countries, not only by providing advanced infrastructure and implementing services by
organizing and conducting global supply chains. In conclusion, the shipping business is crucial for the development of
economic activities, such as international trade, because it is required for the transport of cargo from production to
consumption. Thus, to obtain successful shipping and logistics management, it is crucial to determine the demand for
shipping and the overall shipping system.
References
• Andrikopoulos, A., Merika, A. A., Triantafyllou, A., & Merikas, A. G. (2013). Internet disclosure and corporate
performance: A case study of the international shipping industry. Transportation Research Part A: Policy and
Practice, 47, 141-152.
• Arduino, G., Aronietis, R., Crozet, Y., Frouws, K., Ferrari, C., Guihéry, L., ... & Lloyd, M. (2013). How to turn an
innovative concept into a success? An application to seaport-related innovation. Research in Transportation
Economics, 42(1), 97-107.
• Baxandall, R., Ewen, E., Bernstein, D. S., Blunt, A., Wills, J., Carriere, J. P., & Farthing, S. (2000). The Institute of
Logistics and Transport. Join. Urban Studies, 37(11), 2131-2132.
• Bichou, K., & Gray, R. (2004). A logistics and supply chain management approach to port performance
measurement. Maritime Policy & Management, 31(1), 47-67.
• Brooks, M. R., & Pallis, A. A. (2008). Assessing port governance models: process and performance components.
Maritime Policy & Management, 35(4), 411-432.
• Baltacioglu, T., Ada, E., Kaplan, M. D., Yurt, O., & Kaplan, Y. C. (2007). A new framework for service supply
chains. Service Industries Journal, 27(2), 105–124
• Chapman, R. L., Soosay, C., & Kandampully, J. (2003). Innovation in logistic services and the new business model
— A conceptual framework. International Journal of Physical Distribution and Logistics Management, 33(7), 630–
650.
• De Martino, M., Errichiello, L., Marasco, A., & Morvillo, A. (2013). Logistics innovation in seaports: An interorganizational perspective. Research in Transportation Business & Management, 8, 123-133.
• Flint, D. J., Larsson, E., Gammelgaard, B., & Mentzer, J. T. (2005). Logistics innovation: A customer valueoriented social process. Journal of Business Logistics, 26(1), 113–147.
• Flint, D. J., Larsson, E., & Gammelgaard, B. (2008). Exploring processes for customer value insights, supply chain
learning and innovation: An international study. Journal of Business Logistics, 29, 257–281
• Ferrari, C., Percoco, M., & Tedeschi, A. (2010). Ports and local development: Evidence from Italy. International
Journal of Transport Economics, 37(1), 9–30.
• Gadhia, H. K., Kotzab, H., & Prockl, G. (2011). Levels of internationalization in the container shipping industry: an
assessment of the port networks of the large container shipping companies. Journal of Transport Geography, 19(6),
1431-1442.
• Haugstetter, H., & Cahoon, S. (2010). Strategic intent: Guiding port authorities to theirnew world? Research in
Transportation Economics, 27, 30–36.
• Heaver, T. D. (2002). The evolving roles of shipping lines in international logistics. International Journal of
Maritime Economics, 4(3), 210-230.
• Heaver, T. D. (2006). The evolution and challenges of port economics. Research inTransportation Economics,
16(1), 11–41.
• Jonsson, P. (2008). Logistics and supply chain management. New York.
• Johnson, H., & Styhre, L. (2015). Increased energy efficiency in short sea shipping through decreased time in port.
Transportation Research Part A: Policy and Practice, 71, 167-178.
• Kitada, M., & Ölçer, A. (2015). Managing people and technology: The challenges in CSR and energy efficient
shipping. Research in Transportation Business & Management, 17, 36-40.
• Lee, D. H., & Dong, M. (2008). A heuristic approach to logistics network design for end-of-lease computer
products recovery. Transportation Research Part E: Logistics and Transportation Review, 44(3), 455-474.
54
ISSN 1849-5664 (online)http://researchleap.com/category/international-journal-of-management-science-and-business-administration
ISSN 1849-5419 (print) International Journal of Management Science And Business Administration Vol. 2, No. 1, November 2015, pp. 50-55
Brou Mathias Allate
Shipping Management and Logistics Innovation: Key Factors for Success
• Nuttall, P., Newell, A., Prasad, B., Veitayaki, J., & Holland, E. (2014). A review of sustainable sea-transport for
Oceania: Providing context for renewable energy shipping for the Pacific. Marine Policy, 43, 283-287.
• Pagell, M. (2004). Understanding the factors that enable and inhibit the integration of operations, purchasing and
logistics. Journal of operations management, 22(5), 459-487.
• Panigrahi, J. K., & Pradhan, A. (2012). Competitive maritime policies and strategic dimensions for commercial
seaports in India. Ocean & Coastal Management, 62, 54-67.
• Porter, M. E. (1990). The competitive advantage of nations. New York: The Free Press.
• Priemus, H. (2001). Mainports as integrators of passenger, freight and information networks.
• Rojon, I., & Dieperink, C. (2014). Blowin'in the wind? Drivers and barriers for the uptake of wind propulsion in
international shipping. Energy Policy, 67, 394-402.
• Van Den Bosch, F. A. J., Hollen, R., Volberda, H.W., & Baaij, M. G. (2011). The strategic value of the Port of
Rotterdam for the international competitiveness of the Netherlands: a first exploration. Rotterdam: INSCOPE/RSM
Erasmus University978-90-817220-2-5.
• Vaccaro, I. G., Jansen, J. J. P., Van Den Bosch, F. A. J., & Volberda, H. W. (2012). Management innovation and
leadership: The moderating role of organizational size. Journal of Management Studies, 49(1), 28–51.
• Volberda, H. W., & Van Den Bosch, F. A. J. (2005). Why management matters most. European Business Forum,
22, 36–41.
• Wagner, S. M., & Sutter, R. (2012). A qualitative investigation of innovation between third-‐party logistics
providers and customers. International Journal of Production Economics, 140(2), 944-958.
• Jim Wu, Y. C., & Lin, C. W. (2008). National port competitiveness: implications for India. Management Decision,
46(10), 1482-1507.
• Yang, C. -C., Marlow, P. B., & Lu, C. -S. (2009). Knowledge management enablers in liner shipping.
Transportation Research Part E, 45, 893–903.
• Yang, C. C., Marlow, P. B., & Lu, C. S. (2009). Assessing resources, logistics service capabilities, innovation
capabilities and the performance of container shipping services in Taiwan. International Journal of Production
Economics, 122(1), 4-20.
55
ISSN 1849-5664 (online)http://researchleap.com/category/international-journal-of-management-science-and-business-administration
ISSN 1849-5419 (print) International Journal of Management Science And Business Administration Vol. 2, No. 1, November 2015, pp. 50-55