Shipping was traditionally viewed as a direct service from port to port, with the misconception that direct shipping represents the most efficient mode of moving goods (Hanley 2003). But increasingly, this is not the case due to a number of converging factors. First, this has to do with the fact that in order to support traffic on a certain route, ports need to be of certain size. Moreover, with direct shipping, routes and scheduling have become very complex, and that complexity has led to inefficiencies. Ports that are able to create mechanisms to improve efficiency in this environment will gain a greater share of the market.
An examination of the shipping volumes at major ports conducted by Hanley (2003) shows that a very significant proportion of the trade is handled by a small group of port operators. Lambert's (1999) study illustrates that the top ten ports (1.4 percent of ports) in the world out of a total of 700 ports surveyed handled 38 percent of the global container cargo in 1997. Should this be extended to the top 25 ports (3.6 percent), the volume handled would increase to 56 percent or over half.
Formulation of shipping strategies in the complex environment is the focus of Coyle, Bardi, and Novack's (2006) study. The study provides a very useful approach to in a fast-paced and hastily changing industry. The very appropriate scenarios that these authors are focusing on are the metropolitan areas which have been the essential hubs of economic integration, fostering and benefiting from innovations in commercial, manufacturing, communications, and transportation technologies. In the twenty-first century, nevertheless, only those metropolitan areas that adapt to global economic trends and provide the infrastructure and services that support knowledge-based and technology-driven industries will stay geographic nodes of worldwide business transactions. Persistent technological innovation, particularly in globally interconnected digital communications, transportation, and logistics systems, has spawned the fast growth of service and manufacturing industries connected through virtual networks and supply chains, and is increasing the demand for rapid delivery of high quality goods, services, and information in North America, Europe, Asia, and Latin America. Globalization, the mobility of factors of production, and advances in information and transportation technology are essentially and persistently changing the economic bases of metropolitan areas and the requirements for attracting and maintaining competitive economic activities.
Shipping Strategies: A Review
Complexity of Direct Shipping
From a global system point of view, the complexity of direct shipping is one facet that is often overlooked but is essentially critical. For instance, sustaining direct point-to-point shipping among ten ports necessitates 100 services from one region to another. Should this be doubled to 20 ports from a region to be connected to another 20 ports in another region, then it will require 400 services. The complexity in ensuring these connections is evident. What is less evident is the need for more ships and consequently, more crowded sea-lanes just to provide the necessary connections. Probably, the most significant point is the need for enough traffic to justify such services. Current trade volume in the