Professional Documents
Culture Documents
EVI PLOMARITOU
Institute of Chartered Shipbrokers – Greek Branch
E-mail: eviplom@hol.gr
ABSTRACT
Concerning the implementation of marketing in merchant shipping companies, no
extensive research has been made up to now. The articles and books published are few
and they stress only in passing the necessity of applying marketing to shipping
companies, without analyzing the subject in depth. This article presents the stages of
marketing implementation that should be ideally followed by companies, which are
activated in merchant shipping. Additionally, the article attempts a comparative
analysis of marketing implementation in bulk and liner shipping companies. From bulk
shipping, the tanker shipping companies were chosen and from liner shipping, the
container shipping companies were chosen for investigation. An empirical research was
carried out in 2005 concerning the implementation of marketing in the largest tanker
and liner shipping companies – organization models – in the world. Consequently, this
article presents the marketing strategies, as well as the marketing philosophies of the
leading shipping companies in the world.
1. INTRODUCTION
The marketing of shipping companies activating in merchant shipping, is the science of
Business to Business Marketing (B2B marketing), which deals with the satisfaction of
charterer’s – shipper’s needs for the carriage of goods by sea, with main aim the profit of
the enterprise. This satisfaction presupposes on the one hand correct diagnosis of the
shipping market to better understand and forecast client’s (charterer’s – shipper’s) transport
needs and on the other hand appropriate organization, planning and control of the shipping
enterprise’s means. The more the shipping enterprise tries to discover what its clients need,
to adapt the chartering policy to their requirements, to offer appropriate transport services,
to negotiate the freight as a function to what it offers, as well as to communicate effectively
with the market it targets, the more are the possibilities to achieve the most appropriate,
efficient and long-lasting commercial operation of its vessels1.
All shipping enterprises have limited capabilities concerning the means, the resources and
the management abilities for their ships. This means that it is impossible to exploit all the
chances of the shipping market with equal effectiveness. The matching of the shipping
enterprise capabilities with the needs and the desires of its clients is fundamental for the
provision of the desired transport services, the satisfaction and retention of charterers and
thus the commercial success of the enterprise2. The shipping company must organize its
resources in such a manner as to be able to apply the marketing process’ stages and to
achieve a long-lasting and more effective commercial operation of its ships. The application
of marketing presupposes correct diagnosis, planning, organization, implementation and
control of marketing effort. This process is continuous and it is presented at figure 1.
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2. KEY STAGES OF MARKETING IMPLEMENTATION IN SHIPPING COMPANIES
The key stages of marketing implementation in shipping companies are the diagnosis, the
planning, the organization, the implementation and the control.
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4. The marketing information subsystem, which provides daily information relevant to
developments in the external enterprise’s environment, that is necessary for marketing
planning. The external marketing environment of a shipping enterprise is distinguished into
the micro and macro environment and consists of the forces that affect the capacity of the
enterprise to develop and to maintain successful transactions and relations with its clients.
The micro-environment includes all those factors emanating from the shipping market itself
and affect the chartering policy of charterers – shippers and the demand for sea transport
services. Such factors are the regulations instituted by the international maritime
organizations, the ports’ policies, the banks’ policies, the developments in sea borne trade
etc. The macro-environment includes all those factors caused by social forces and physical
causes, which do not originate from the shipping market but affect the demand of sea
transport services, as well as the buying behaviour of the charterers. The ship owning
companies must have the capacity to adapt their policy to the above forces, in order to meet
the changing requirements of the charterers and to satisfy their needs.
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into the Voyage Charter Market, the Time Charter Market, the Bareboat Charter Market
and the Contract of Affreightment Market.
Figure 2 presents the shipping market’s segmentation and the orientation of charterers’
behaviour in every segment.
The type of ship and the type of cargo could be named as fundamental criteria because ship
and cargo are the protagonists in every commercial sea transport. Geographical criterion and
type of charter have a determinative meaning and constitute the basis for sub-apportionment
for every main segment ensued from the fundamental criteria. It must be noted that the
fundamental criteria do not operate cumulatively in forming the segments. What happens in
practice is that a group of cargoes is transported by one category of ships.
The charterers’ needs, as well as their buying behaviour are differentiated from segment
to segment8. In each segment, the buying behaviour of the charterers displays common
characteristics. A precondition of effective shipping marketing is the understanding of the
different needs the charterers – shippers have in the above market segments. For each
segment of the shipping market appropriate marketing strategies must be designed and
appropriate marketing mix must be offered.
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possible consequences of those forces to the long-term profitability of the segment. Such
forces are the possible new shipping enterprises entering the market, the substitutes of sea
transport services such as air transport etc.
4. Company Objectives and Resources: Even if a segment has the appropriate size and
development and from structural point of view is good, the shipping enterprise must take
into account the objectives and resources it possesses in relation to this segment.
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2.2 The Stage of Planning
The planning of marketing includes the strategy planning and the programme planning of
marketing. Worsam M. (1998) defines marketing planning as the planned application of
marketing resources aiming to achieve marketing objectives10. The planning process
includes the following phases:
1. During the first phase, the missions of the enterprise as well as the business objectives
are determined. Most activity sectors of the enterprise aim at a mix of objectives that
includes increase of fleet’s effectiveness, improvement of market share, interception of
shipping risk, fixture of profitable charters etc.
2. During the second phase, the tracking down of the strengths and weaknesses of the
enterprise in relation to opportunities and threats from the external environment is
conducted. Therefore, in this phase, the company may understand its relation to the
shipping environment in which it is activated.
3. During the third phase the marketing strategies and programmes are determined.
4. The last phase includes the evaluation of expected results and the tracking down of
alternative marketing plans.
The planning of marketing ends up at a document called “marketing plan”. McDonald M.
adds that success of a marketing plan depends on the quality of information gathered during
the previous marketing process stages11.
Marketing strategies are the means by which a company achieves marketing objectives
and is related to the tools of marketing mix. Marketing mix is the sum of marketing tools
used by the enterprise in order to achieve its objectives in the target - market. The tools of
marketing mix for a shipping enterprise which is activated in tramp or liner shipping market
are: the Product (Tramp or Liner Service), the Price (Freight or Hire), the Process
(Negotiations’ Procedure & Execution of the Charter), the People (Office Personnel &
Ship’s Crew), the Place (Ports & Geographical Area of Ship’s Employment), the Promotion
(advertising programs), and the Physical Evidence (Ship’s Characteristics & Seaworthiness
of the Vessel). Additionally, a new tool of the shipping marketing mix is the “PAPERLESS
TRADE” and constitutes the eighth tool of the shipping marketing mix. Shipping companies
in order to respond fully to the demands of the competitive shipping market, is necessary to
use modern electronic communication means by which time, cost and effort are saved and
quality improvement in the services offered is achieved12. Figure 3 presents the shipping
marketing mix (the 8 Ps)
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The action plans must be applied correctly, so that the proper transport service be
provided to the appropriate charterer, at the right time and port with the appropriate vessel
and at freight levels that satisfy not only the shipping enterprise but also its client.
The planning of marketing programmes consists of the basic decisions concerning the
distribution of marketing resources, marketing expenses and marketing budget among the
various tools of marketing mix. Shipping enterprises have unique capabilities with regard
to the means, resources and abilities of managing their ships, which means it is
impossible to exploit all the opportunities of the shipping market as efficiently as other
companies do. The combination of the shipping enterprise’s capabilities together with the
needs of the clients is a basic factor for the provision of desired transport services, the
satisfaction and retention of the charterers and therefore for the commercial success of the
enterprise. The shipping company must organize its resources in such a manner, as to be
able to apply the marketing plan.
The management of a marketing department should also decide which level of marketing
expenses is necessary in order to achieve the marketing objectives. The enterprise already
knows from the previous stage the means and resources it possesses for materializing its
objectives. Companies entering a market try to learn what is the ratio of marketing budget
to the sales of their competitors. A company should analyze the marketing work required
in order to achieve a given volume of sales and then to cost this work. The distribution of
marketing budget among the tools of marketing mix constitutes a basic stage in the
planning procedure of marketing programmes.
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2.4 The Stage of Implementation
A correct drawing up of the shipping enterprise strategy is achieved via rationally
planned business actions and via the provision of appropriate transport services. Marine
transport services are priced, promoted and offered to charterers for a payment of
freight. The action plans must be applied correctly, so that the proper transport service is
provided to the appropriate charterer, at the right time and port, with the appropriate ship
and at freight levels satisfying not only the shipping enterprise, but also its clients.
Marketing of shipping companies is the provision of appropriate sea transport services by
the right people (personnel and crew), to right people (charterers - shippers), at the proper
place (ports) and time, at a fair price (freight or hire), with a suitable promotion14.
Empirical research was based on advertising material of the above enterprises, as well as
on data requested directly from the companies18. More specifically, information was
gathered for their competitive advantages, their business relationships to charterers, their
ships’ performance, their safety system, etc. The data was appropriate and sufficient for
drawing significant conclusions from them regarding the marketing philosophies they
adopt and the marketing strategies they apply. The accuracy of collected information is
not questioned, to the degree that this was drawn out of its initial source of gathering. In
addition, the reliability of each source is a basic evaluation criterion of researcher’s skills.
The companies, from which the data was gathered, maintain separate market research
depts, which are manned with appropriate trained analysts. The work of these analysts is
the systematic collection of the necessary information and its distribution to the decision
makers of the enterprise. After the critical appreciation of sufficiency, accuracy and
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reliability of collected data, and after the careful study of the records, considerable
conclusions ensued regarding the manner by which they perceive their clients’
requirements, the segmentation, differentiation and promotion strategies they apply and
the marketing philosophies they adopt.
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Which Marketing Strategy do they Apply?
The largest tanker companies apply a high degree differentiated marketing strategy,
according to which they address to selected market segments by adapting their policy to
each one of them. Thus, the segmentation of the tanker market is based on:
• The type of cargo: they distinguish the market into two basic categories. The oil market
and the oil product market. The latter includes as many categories as the products are.
• The geographical field of tankers employment: various market segments ensue.
• The type and duration of charters: every charter market has a segment that includes short-
term charters (spot market) and a corresponding one, which includes long-term charters.
The needs of charterers are differentiated from market segment to market segment. The
appropriate marketing mix is offered in every market segment. The tanker companies use
differentiation strategies of transport service, in order to gain the preference of the charterers.
The tanker companies use geographical, quality, personnel and image differentiation. Their
competitive advantages that differentiate them from their competitors are the following:
Frontline possesses a large and modern fleet of tankers, which can meet the strict
legislation of the extremely sensitized environmentally regions. Frontline achieves
geographical and quality differentiation through its capacity to possess a high
technology fleet employed in any sea, without trading and geographical restrictions.
Mitsui O.S.K. Lines has created a strict management system called the “MOL
Environmental Management System”. According to this system, the crews are
trained at the simulation centers of the company. In addition, the ships are
constructed in such a manner (PBCF system) so that risk of the marine
environmental pollution is reduced, fuels are saved and speed is increased by 2%.
Mitsui obtained in 2003 the “Certificate of Environment Management International
Standards - ISO 14001”. Mitsui achieves personnel differentiation through the
application of continuous training programs, as well as quality differentiation
through the application of a strict environmental protection policy.
Teekay Shipping has created a marine management system, called the “Marine
Operations Management System”, which imparts the philosophy of safety
management to the entire organization. The system includes efficiency indicators for
constant monitoring and improvement of all enterprise’s operations. Teekay obtained
in 2003 the “Certificate of Environment Management International Standards - ISO
14001”. Teekay achieves quality differentiation through the application of a strict
safety management policy.
Worldwide spends large amounts of money for research and development of marine
environment protection programs. Its fleet includes high technology ecological tankers.
Worldwide won in 2003 the “Green Award”. Worldwide achieves quality differentiation
through the application of an environmental protection policy, as well as image
differentiation through the public acknowledgement of its active role in the environmental
protection efforts.
Overseas Shipholding Group applies a technologically advanced system for the unification
of management, of chartering department and of fleet, called the “OSG’s Networking
System”. The system coordinates the orders and actions at company and onboard the vessel.
The company obtained in 2003 the “Certificate of Environment Management International
Standards - ISO 14001”. Overseas achieves quality differentiation through the application
of technologically advanced intracommunication systems.
Bergesen gives high priority in maintaining a safe work environment for seamen. This
is achieved through maintaining a safety committee for each ship (Protection and
Environment Committee). The committees’ annual reports help the company in
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planning strategies for improving the work conditions and for increasing the ship
efficiency. Thus, Bergesen achieves quality and personnel differentiation.
Tanker Pacific Management has made a good image in the tanker market and has built
the reputation of the most reliable and responsible company. This has as a result, the
maintenance of long-term relations with charterers. The company achieves image
differentiation through the application of good business relations’ policy.
The A.P.Moller – Maersk Group achieves quality differentiation through the
implementation of auxiliary marine activities’ policy (such as, oil processing industries)
and through the application of an environmental protection policy. The company
achieves also personnel differentiation through constant training programs.
Nippon Yusen Kaisha achieves quality differentiation through maintaining new,
modern and specialized fleet, which can provide safe, rapid, and reliable itineraries.
Angelicoussis Shiphld also achieves quality differentiation through maintaining new,
modern and specialized fleet, which can provide safe, rapid, and reliable itineraries.
In addition, the largest tanker companies use advertising as a basic competition tool.
The companies provide high quality transport services, and have as a motive to reveal this
quality through advertisements. In this way, they place their competitors in an inferior
position, if the last provides lower quality services. The tanker companies have developed
various advertising programs. These programs include design of web page on the internet,
creation of brochures, donations in researches, advertisements in shipping press etc.
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Which Marketing Philosophy do they Adopt?
The largest liner companies know that the clients’ requirements are orientated towards
quality. Therefore, the companies have adopted the marketing philosophy with the
market as a focal point, which according to Kotler P. (1994) presupposes that the duty
of the enterprise is to determine the needs of its clients and offer the desired satisfaction
more effectively and efficiently than its competitors22. Based on the above philosophy
the liner companies have set the following objectives:
Primary aim of the companies is the provision of high quality shipping services.
The liner companies give special emphasis to the provision of logistic services.
The next objective of the companies is their compliance with the international standards
of ship’s safety management.
The companies seek to maintain a good reputation and image among banks, insurers,
suppliers, agents and shippers.
The liner companies maintain advanced systems of transport monitoring and of
constant updating of shippers.
The shippers’ needs are differentiated from market segment to market segment. In every
individual segment the buying behavior of the freighters displays common characteristics.
The liner companies understand the different needs the shippers have in the above market
segments and plan the appropriate marketing programs, so that they provide the desired
transport services. The appropriate marketing mix is provided in each segment.
The liner companies use differentiation strategies for the transport service, in order to win
the shippers’ preference. The liner companies use geographical, quality, personnel and
image differentiation. The competitive advantages of the largest liner companies that
differentiate them from their competitors are the following:
The A.P.Moller – Maersk Group possesses a large and modern fleet of containerships,
and manages a large network of routes servicing the needs of trade throughout the
world. In this way, the company achieves geographical differentiation. In addition, the
company achieves quality differentiation through the application of Safety and Risk
Management System. The company has won the awards “ISP”, “Customs-Trade
Partnerships Against Terrorist Validation Award”, “Maritime Excellence Lifetime
Achievements Awards”, and the “Transportation Safety Administration Award”.
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Evergreen achieves quality differentiation for the service provided through the
application of a technologically advanced EDI System between the company and the
shippers. The system provides fast and valid information, while time and effort are
saved. The company won the “E-Commerce Excellence Award 2004”.
Cosco has built the best image in the market of containerships and has the reputation
of the most reliable company. As a result, the company maintains long-term business
relationships and achieves image differentiation. Cosco won the “Sailing Schedule
Reliability Reward on Australia – East Asia Trade” as well as the “International
Quality Management Platina Medal”.
P&O Nedloyd, (like Evergreen), achieves quality differentiation through the
application of a technologically advanced EDI system between company and shippers.
NOL / APL achieves quality differentiation through maintaining a new and modern
fleet of specialized containerships, such as reefer containerships, with ventilation, of
pressurized gas, with movable sides, of liquid bulk cargoes etc.
MSC gives high priority to the development of its fleet. During the last six years, the
company showed a remarkable doubling of its fleet (from 120 ships in 1997, to 240
ships in 2003). In this manner, MSC achieves quality differentiation.
NYK in comparison with the other liner companies possesses the most advanced and
organized logistics services system, i.e. a complete cargo transport from the storage
area to the point of destination. In this way, NYK achieves quality differentiation.
• K Line has created a strict management system, called the “K Line Environmental
Management Program”, which transpires the safety management philosophy
throughout the organization. In this way, the company achieves quality differentiation.
Yang Ming has built a very good image in the liner market and has the reputation of a
company, which is based on teamwork, innovation, honesty and pragmatism. In this
manner the company achieves image differentiation.
Hapag Lloyd Group achieves quality differentiation through the policy of
constructing, hiring and selling containers to other liner companies. The Hapag Lloyd
Group is the largest manufacturer and leasing company of containerships.
In addition, the largest liner companies use advertising as a basic competition tool.
The companies provide high quality transport services, and have as a motive to reveal this
quality through advertisement. The liner companies have developed similar advertising
programs to those developed by tanker companies. Figure 4 presents the basic results of
empirical research.
CONCLUSIONS
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administration is carried out by a separate department, which undertakes the analysis,
planning, application and control of the marketing process.
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19
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