Cost calculation for a door to door service and analysis on the possibel contribution from backhaul

Abstract: This study has been made with the purpose of trying to attain the competitiveness between container carriers and specialised reefers in offering door-door services for perishable cargo. In order to achieve a full scale picture of the investigated cost chains a number of different analyses and calculations have been performed regarding the door-door cost chain. Two key trades where the NLC group is currently operating have been chosen as basis for this comparison. Still, the intention in this study has been to find the general benefits/disadvantages regard the chosen mode of transportation, which can be applicable to any trade using a certain mode. A model has therefore been constructed based on earlier studies conducted within the NLC group, relevant shipping theory and new information gathered during interviews and questionnaires. This model computes a comparison between the shipper and carrier looking at the total door-door cost. An indication on the competition in the trade is hereby attained. However most importantly is that the comparison generates an overview of the economical conditions in the trade, i.e. are the trades theoretically making money. The results from this study show that there is a margin in most trades between the cost to produce the service, i.e. carrier cost and the shipper cost. This is only natural however the troubles come from comparing the margins between the container and specialised reefer vessel. These result shows that the container margin in certain trades is almost three times the size of the specialised reefers looking at competing trades. This does not only indicate bigger revenue but also makes for a buffer towards market fluctuations. Results from the study also show the importance in taking full control of the entire cost chain and not to be governed by strong importers controlling the end of the chain. This is especially true looking at pallets transported under deck where the haulage activity plays a critical scale of balance role, with the possibility of breaking the entire cost chain. A backhaul cost model has also been constructed in order to find the possible effects which backhaul can play on the total round voyage cost. These results show that all investigated backhaul cargo covers the additional cost for the backhaul operation, hence giving contribution to container and ship repositioning. However only live cargo shipped in operating 40`RHC can pay the full cost for the round voyage. Looking at the general competitiveness between the different transport modes this study does not produce any final conclusions. A tendency can however be noticed towards container lines under the right circumstances tend to produce the door-door service at a lower cost compared to the specialised reefer.