The Shipping Industry Canada - Term Paper Example

?  Analysis how political processes impact a Canadian industry By Presented to Location Due Structure CMA CGM Canada Inc. is a shipping agency in Canada which is part of the worldwide network of branches affiliated top the main company located in France. The shipping industry Canada is characterized with increased competition attributed by the number of firms, there are number of businesses similar to CMA CGM (Canada) Inc. The industry has a number of shipping agencies and companies hence qualifying it to being a competitive market structure. Another major contribution of the increased competitive market structure in Canadian shipping industry is the implementation of the 1985 task force recommendations on deep-sea shipping. This government amendment made the Canada shipping industry most competitive compared with other countries as the ship owners were not compelled to pay for taxes also increasing employment opportunities (Johnson 2001). This industry has few customers mainly shippers who are mainly involved with the transportation of bulky goods, the major shippers involved in this industry are importers and exporters who engage on the movement of large quantities of cargo for over long distances. The customers are provided with a highly efficient international network of shipping as the agencies are mostly global carries (Johnson 2001). The products and services of the Canadian shipping industry are mainly the movement of goods and services across Canada and other global countries. The main activity is being shipping service providers where they engage in the provision of shipping and shipping related services, this include shipping services and multimodal services. Shipping services include shipping clearance, extensive vessel containers and container fleets, provision of cargo solutions, crew change services, loading and offloading cargo, provision of warehouse facilities, chartering and brokerage. The agencies in this industry extend their services in providing railway, road and river freight as well as providing services such as container fleet management, special transport services, air freight and supply chain management and turnkey supply-chain solutions. Agencies and firms in this industry engage in tough competition through specialization on the specific products and services that they provide where specific firms and agencies engage on specialized shipping activities which results into having competitive advantage over other players in the industry most of the firms are engaging in specialized transport services such as reefer fleet which is the latest trend in the industry involving refrigerated containers which are transported to all the countries worldwide. The industry is considered to be dynamic as the firms compete to offer their various customers innovative and quality services that suit the needs and requirements to achieve full customer satisfaction (Johnson 2001). The growth of shipping industry in Canada is as a result of the consistent prospects for growing knowledge-based industries in Canada. Shipping industry in Canada offers a variety of goods and shipping services which are wholly a spectrum. The most significant aspect of this industry is the existing markets and the global potential markets which are constantly emerging as well as the future markets; this knowledge base has enhanced the potential growth of the opportunities as well as the expected challenges in the shipping industry. With the available types of knowledge bases including machine-readable knowledge bases which has been largely adopted operations that machines are largely involved and the expert information is passed across the industry and the firms focus on putting into practice the acquired knowledge. Secondly widely adopted knowledge base in the Canadian industry is the knowledge base analysis design where this approach allows the firms, agencies and individuals in this industry to carry out analysis and design in which a knowledge base is established and the obtained results from the analysis are used to make informative decisions on the regarding the operations that are involved in the industry. These decisions are crucial for the shipping agencies and firma across the industry in the consideration to develop a new product or even engaging on a particular service provision. Knowledge base has become essential in the consolidation of the current and the future markets in the Canadian shipping industry. The promotion of the import export trade has greatly contributed to the success of this industry where the agencies and shipping service providers are having increased number of the exporters and importers clients promoting their business operations. The industry has adequate capital plant which is located all over the globe, these physical assets are mainly the facilities that that facilitate the provision of shipping services. Most of the shipping agencies and firms have widely invested on the physical assets such as ships and containers which operate in most of the shipping routes around the world, shipping agencies have also invested on the tourism sector in which they have physical assets that facilitate luxury cruises such as styled cruises on board such as yachts, liners and sailboats; those engaging on reefer transport have specialized refrigeration containers to adequately meet the rising and increasing refrigerated transport activities across Canada and other globe countries finally there are other physical assets that are used purposely on the movement of the extra large cargos such as heavy equipments including heavy machines, factory components, and heavy engines. The inputs of the shipping agency industry involve a chain of agents and suppliers that facilitate the whole processes in the agencies. It is notable that this in the major area of concern that is highly influenced by the government regulations and the legal procedures that are involved as well as the fact that these inputs being scarce putting into consideration the fact that there are many shipping agencies and the increased level of competition for the scarce inputs. Tax regulations on the revenues collected by the shipping agencies and the import duty are the major areas of concern, the remission of the 25% import duty on the shipping activities on under temporary import which is assessed on a monthly basis which is a provision on the vessel duties regulation as a way of removing regulations. The enactment of the Ferry-Boats, Tankers and Cargo Vessel Remission Order, 2010 which has the provision that allows 25% remission import duty which only applies on the ships and fleets that are permanently imported has a major impact on the ship agency industry in Canada (Holmes 2000). The limitation of the duty remission only to the permanently imported ships is considered to being discriminatory and unfair practice. The unfavorable impact has affected agencies that engage on the use of temporary imported ships to meet the increasing transportation needs in Canada. This has limited competitiveness and the overall growth of the shipping industry in Canada as it contribute less to the lowest total cost on the shipping agency product and service provision to users thus the Canada’s Transportation Policy is considered to limit the performance of the shipping transportation agencies in Canada (Holmes 2000). Another major government regulation on the key inputs of the Canadian shipping industry is the introduced new customs regime that governs and regulates empty containers in the international trade. This regulation has greatly impacted on the operations of agencies such as CMA CGM Canada Inc and other multinational agencies who are the major shareholders in the Canadian shipping industry leading to the change on the major lines of operations. This government regulation provides that more containers which are the key inputs can only be used on the transportation of cargo in within Canada by trucks and railways. This regulation prompted the industry to engage on the unnecessary repositioning of the empty containers. The industry has also been affected by the Coasting Trade Act in which it prohibits the repositioning of the foreign flag ships empty containers in between two Canadian ports. This regulation affects the performance and service delivery of the multinational agencies which operates has their operations and subsidiaries in other countries. The regulation is further complicated by the complex procedures that are involved in the application of the coast trade license, this process involves the expensive administrative management and its high related cost which comprises payment of taxes and duties which is under the provision of Custom tariff and Excise Tax Act also provided by the Coasting Trade Act (Johnson 2001). The enforcement of this regulation is done through a government set federation which requires agencies in the shipping industry to register with. The agencies that need to reposition the empty containers between two Canadian ports can only do so through other means of transport such as rail and road which costs the performance and the general convenience of the involved agencies. In general the government regulations such as Coasting Trade Act, Custom Act, Canada Shipping Act, 2001, Custom Tariff and the Immigration Act are rigid and hinder the optimal performance of the shipping industry in Canada. The major concern on these government regulations is that they do not provide a mechanism to enable it adapt and fit the dynamic shipping industry to meet the needs of its agencies and major firms who are the key stakeholders of this industry. The Canadian government move to grant exemptions from the Coasting Trade Act to the major multinational shipping agencies has facilitated reduction of cost and the prevalence of delays that are associated with the coasting trade applications. This move has also minimized the collateral effects as a result these regulations which acts as disincentives for the multinational shipping agencies such as CMA CGM Canada Inc in offering shipping services to meet the existing increasing demand in Canada. This amendments and exemptions that are provided to mitigate the impacts of these government regulations has increased the efficiency and the convenience of both local and multinational shipping agencies which has enhanced the overall performance in the product and service delivery in the Canadian shipping industry (Johnson 2001). Market Behaviour Shipping industry in Canada is characterized with increased level of competition because of its attractiveness. The industry has seen many investors and many firms venturing and entering into this industry resulting into stiff competition among the stakeholders in the industry. Shipping agencies and liners have established their operations in Canada most of them multinational companies, to be able to sustain competition and the increased rivalry these multinational shipping companies and agencies have developed marketing various strategies as a way to counter their competitors and have appropriate order winners. The aim of these strategies is to consolidate the customer base and to expand their market share and control of the shipping industry. To be able to adapt the dynamic shipping industries companies and firms in the shipping industry have carried out major research and study on the shipping industry market trends and behavior. The implication of these studies and research is that the findings are used to address the Canadian demand in regard to the transportation and the need of shipping services by the major customers including importers and exporters. The analysis of the market behavior and the examination of the marketing trends in the Canadian shipping industry can be done through an assessment of the marketing mix that is applied by the shipping agencies and the major liner companies in Canada. The marketing mix comprises of the various strategies that is applied by the stakeholders in the industry taking into account the extent in which competition influences the approach in which the companies adopt in the implementation of these strategies. The marketing mix comprises of product and services, place, price and promotion and the analysis of the Canadian shipping industry market behavior is as follows. Product and Services Canadian shipping industry is characterized with specialized goods and services provision. Companies and agencies in this industry have developed products and services to meet the requirements and the needs of their customers in the various market segments. The notable trend is the quality differentiation of the products and services provided by the various shipping agencies (Lorange 2009). This has been achieved through the application of technologically advanced systems between the shipping agencies and the liners and the shippers. This system has facilitated the flow of information across the company operations thus information regarding the clients and the customer needs and requirements. The product and image differentiation in the industry has enhanced the established long term business relationships with their major clients. Another notable market behavior is that companies strive to achieve quality product differentiation through the maintenance and the development of new products by the application of new modern technologies notably is the establishment of modern fleet with specialized containers like reefer containerships with enhanced ventilation, movable sides and those with greater efficiency (Odeke 2000) . Place This market behavior component in a marketing mix of an industry comprises of the operations and the supply chain of the shipping agencies. This aspect of an industry is important for the effective and efficient delivery of goods and services to the target customers. Operations and chain supply strategies ensures that there is effective communication between the shippers and the shipping agencies. Customer satisfaction has to be achieved in the various market segments through an effective chain of supply which has mechanisms in which various issues and problems of the clients can be addressed easily and faster. Shipping industry in Canada has a complex supply comprising the suppliers to the customers who are mainly client importers and exporters; the effectiveness of this supply chain process is negatively impacted by the government regulation that prohibits the repositioning of the foreign flag ships empty containers in between two Canadian ports thus making difficult in reaching out some targeted market segments (Holmes 2000). Price Price is one of the key determinants in the consideration to use a particular product or a service. Competing firms and shipping agencies in the Canadian industry have developed very competitive marketing strategies that suit the financial requirements of its key target existing as well as potential customers. Price is widely used as a competing factor in this industry and that firms are keen in carrying out market research before setting up prices for their goods and services (Anttiroiko 2011). Different prices are charged by various shipping agencies and firms according to the quality of the service and other underlying factors that influence the pricing strategies of the firm. The pricing systems of the firms and agencies in the shipping industry in Canada are greatly affected by the tax regulations that exist the country. Increased taxes and other related costs lead to higher prices on the shipping services and products (Lorange 2009) Promotion Promotion is a key feature in the Canadian shipping industry where advertising is a key tool in carrying out promotion on goods and services provided by these firms and shipping agencies. There are notably aggressive marketing campaigns carried out to influence the key clients and customers to use their products and services (Anttiroiko 2011). These product and service promotions are carried out in the bid to expand into the new markets and to create awareness on the availability of the new products. Through research and design new products are developed and promotional tools such as advertising, direct selling via email marketing to the various importers and exporters in different market segments and to reach out clients (Odeke 2000). There are also management practices that are crucial in the achievement of the set goals and objectives of the shipping industry. The Human resource management and the operations and supply chain management are the two notable areas of management that influence the performance and service delivery of goods and services. With the increased globalization of the shipping industry and liners, most of the shipping agencies and firms in Canada are multinational companies whose headquarters are located in other countries. Canada is in a strategic position in which shipping activities are common in its ports as it is one of the major destinations of ships and cargo containers (Lorange 2009). Canada is the destination of most exports in North America before they are transported to other parts of the world making it one of the busiest countries involved with shipping activities attributed by the favorable government regulations that result into the attractiveness of shipping activities in Canada. In this industry human resource is an important resource in the smooth running and the achievement of optimum customer satisfaction and to ensure that customer motivation is achieved (Anttiroiko 2011). Incentives and welfare services are provided to the employees of the various liners and shipping agencies, it is also important to note that employees in these shipping firms and agencies are well remunerated thus labour problems in which there government regulations that monitor the remuneration procedures and basis of the firms and shipping agencies in Canada. The non market forces that attributed to the Canadian industry are mainly associated with the operational mechanisms that ensure that barriers towards achieving effective supply chain and operational activities are achieved by the shipping agencies and liners (Lorange 2009). These non market barriers include; the first is the risks that are associated with the shipping operations, government regulations and the enforcement of Laws and Acts such as need to register with the federation result into emergence of additional costs, opportunity costs and more additional costs. Notably is the uncertainty on the government taxes which keep on increasing as a result of the passing of bills and laws that has greater impacts on the shipping industry in Canada. Lack of information on costs and the potential savings leading to problem in the split of incentives where cost and benefits are not always accrued by the investing party attributed by the legal procedures provided by the Coasting Trade Act which prohibit the transportation of the empty containers cargo from one Canadian port to another thus savings cannot be fully realized. Government regulation on the structure of the ownership is also an important non-market characteristic in the Canadian shipping industry in which the government provides the types of charters that the shipping agencies and firms can only subscribe and this determines the type of technology that can be adopted in particular sectors in the shipping industry (Lorange 2009). Performance Shipping industry in Canada is one of the best performing sectors of economy in Canada and this performance has greatly contributed to the overall economy of the country. The overall performance of the shipping agencies and the firms in the concerned industry has greatly increased since the amendment of the shipping laws and regulation on the containers cargo and the Canadian tax regulations. This enactment has impacted positively on the shipping industry as more revenues and profitability is realized, Canadian shipping agency and shipping service providers industry has made significant growth over the last few years. It is estimated that the industry output per year is over $ 10 billion therefore ranked among the best performing sectors of the economy. The industry further offers employment to over 5000 people across the industry and this generated estimated $1.5 billion in total labour compensation with the inclusion of the supplementary labour income becoming one of the profitable sectors of the Canada economy attributing to its market attractiveness hence increased number of firms and agencies in this industry. In addition to the above industrial performance the industry contributes to an estimated over $3 billion on direct gross domestic product of the Canada economy. In summary the better performance of this industry has been contributed by the favourable tax regulations and the shipping laws in Canada and this is further enhanced by the advance innovation of products and services provided through continuous research and design, quality differentiation between the concerned firms and agencies and finally an integrated marketing mix (Odeke 2000) . Firms and shipping agencies have greatly engaged on corporate and sustainability strategies. The following are the strategies that are adopted by the shipping industry in Canada. Corporate Social Responsibility Shipping agencies and firms have increased their efforts in promoting Corporate Social Responsibility principles and practices in their business practices (McKinley 2008). This process involves integrating the environmental, social and economic consideration into their decision making process (McKinley 2008). Strategic environmental assessment Firms and shipping agencies engage on the assessment and examination of environmental impacts on the designed strategies, programs and policies that have been proposed by the companies where alternatives that are environmentally friendly are chosen for the implementation (Gummesson 2012). Sustainable Development Firms and shipping agencies engage on the developments that address the current progress needs as well as it’s the future success and that of the community and the country economy, efforts have been made in by the government by providing legislation on the responsibility for sustainable development such as the Department of Industry Act, Federal Sustainable Development Act which compel all the firms and agencies in all the sectors of the economy to prepare a sustainable development strategy (Odeke 2000) . Eco-Efficiency Firms and shipping agencies have made efforts to enhance productivity by the adoption of eco-efficiency approaches in their business operations mainly engaging on eco-efficient technologies and business practices that are environmentally friendly to the business as well as the community (M'Gonigle 2001). The major stakeholders engage on collective interactions and coordination in the implementation of the various strategies the shipping industry that has facilitated the improved performance of the shipping industry in Canada. The major players and the stakeholders in this productive interaction process are the government, shipping agencies, shippers, importers and exporters. The government ensures that regulations that promote the growth of the industry are passed and the shipping agencies and firms have the responsibility to implement these regulations thus enhancing an efficient supply chain in the industry. The outcomes of these interactions and the implementation of the government regulation and the underlying strategies include: the shipping agency industry in Canada has become competitive characterized with increased operational efficiency gains; it has led to improved employee relations in the industry there are no industrial unrests; community relationships has been enhanced hence shipping agencies and firms can easily acquire licence of operation; the strategies has enhanced management of risks in the industry and finally is that shipping agencies and firms have been able to enhance their public image, reputation and branding through the adoption of the various corporate social responsibility strategies and the sustainability development strategies (M'Gonigle 2001). The result of the interactions of the major stakeholders in the shipping industry influences the industry approach on major operations and decision making. There is integration of social, economic, and the environmental imperatives across the industry business practices (Richardson 2008). Interactions enhance industrial pursuit of the sustainable development integrating them into its corporate structure and its business practices (M'Gonigle 2001). The performance outcomes of the shipping industry in Canada is that there is a notable significant impact on the efforts made by the major stakeholders in the industry in coming up with innovative and feasible solutions for the challenges faced by the community as well as the environmental challenges. The coordinative and interactive collaborations by both the external and internal shareholders of this industry have greatly contributed to the better performance of the shipping agency industry in Canada. Reference Ademuni-Odeke, D. (2000). 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