Transportation economics relates to the study of the manner in which resources of transportation are allocated for meeting the societal demands. Within a macroeconomic sense, activities of transportation constitute a section of the economic product of any nation in addition to playing a fundamental role in the development or strengthening of regional or national economy and as an effect on the development of other resources such as land (Wood, 2017). On the contrary, transportation economic on a microeconomics sense entails the associations among companies and their clients. This essay uses the case study of Maersk™ Line to describe the connection between transportation economics and customer value.
Maersk™ Line is the biggest container-shipping corporation of the world that is renowned for reliability, flexibility, and eco-efficiency in its operations (Larsen and Mortensen, 2011). The company is a registered trademark of the Maersk Group that has its headquarters in Copenhagen, Denmark. Information of the firm also indicates that it operates 610 water vessels that ferry containers, which ensures that it provides ocean transportation to all parts of the globe (Maersk Line, 2017a). The business prides in powering some of the largest ships in the world in addition to propelling the ambitions of growth for businesses as well as personals from across the world.
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The concepts of transport economics, both at the macro and micro levels, play a critical role in the transportation decisions of the corporation. For instance, the company devotes to delivery cargo for its clients each day. Specifically, it uses its team of 25000 employees working on land in the 374 officers worldwide and another 7000 seafarers who share in their expertise with clients globally in the optimization of their supply chains, maximization of their networks of distribution, and the realization of business potential (Maersk Line, 2017a). From this perspective, therefore, it can be deduced that Maersk is devoted the creation of reliable and simple solutions for its clients through continuously raising the standards of the industry in which it operates while enabling growth in a manner that is as sustainable as possible. In addition, the company chooses to interconnect its clients to global and local partners in a manner that facilitates the growth of their businesses since it realizes the contribution of transportation economics. The fact that ocean container lines carry the maximum load possible means that the firm is able to deliver large volumes of freight to its clients, which helps them to lower the costs of transportation (Maersk Line, 2017a).
The firm’s supply chain is dedicated to contributing to client value through its extensiveness. The fact that the firm does not produce products, but rather distributes them means that it has to maintain a consistent flow of cargo between destinations according to the needs of its clients. For this reason, the corporation has an extensive global service network that penetrates the major ports of the world as well as the local markets through dedicated feeder networks (Maersk Line, 2017b). A team of dedicated staff members supports this system. Such staff work in more than 125 nations, which means that there is an in depth coverage of the clients, required resources, and proper response from the clients for an optimal execution of the supply chain over the ocean (Maersk Line, 2017b). Customers who rely on this company for the supply of its business material, therefore, can benefit from timely deliveries at low costs, which ensure steady and profitable businesses.
At Maersk Line, inventory management is considered a critical component of its success. For instance, thru the utilization of advanced computer systems and logistics, it is reported that a single carrier of the firm is able to plan as well as control the manner in which an entire shipment moves (Jephson and Morgen, 2014). The company is also able to provide its clients with up-to-the minute information concerning financial tracking in relation to the shipments in addition to being able to manage the distribution logistics of their clients’ merchandise via the post and pre-production stages (Jephson and Morgen, 2014). The company’s move in the recent past to further digitalize its inventory management was considered a plausible towards enabling the firm improve its inventory management and create value for its customers. Specifically, the corporation entered into a business contract with Microsoft™ to provide big data services for the management of inventory and distribution logistics (Patrick-Burnson, 2017).
As described in the succeeding paragraphs, the concept of transportation economic is critical in the effective positioning of Maersk Line to maximize shareholder value. For instance, the company strives to be the best in terms of customer experience, delivering products within the required timeframe and serving as many clients per time as possible. In business terms, the company ensures that it attains competitive advantage through bridging the gap in the supply chains of their clients by ensuring a steady supply of merchandise. The clients will always prefer the company because of its guarantee for proper handling, low cost distribution, an extensive existence, and friendly business terms. Such factors place the corporation ahead of most of its competitors. Therefore, that the company has been able to realize sustained profitability for the years it has been operational (Schultz, Nielsen, and Boege, 2012). The shareholders of the business then pride in the efforts and successes that their organization has been realizing since it culminates in higher returns on investment for them.
As much as the global container shipment industry is not very competitive, there is a need to note that most of the companies operating in it are large scale because of the need for transportation of voluminous cargo. Therefore, the most successful companies are those that are able to meet the expectations of their clients in terms of timely deliveries, low distribution costs, effective handling of distribution logistics, and other issues. Companies will want to benchmark the success of Maersk Line in relation to its conceptualization of transportation economics. For instance, managers of other corporations in the industry should benchmark inventory management and the use of technologies from the business. Furthermore, it is recommended that the same organizations borrow the approach of Maersk to supply chain management by investing in customer-oriented operations such as having effective feeder networks and committed staff.
In conclusion, this essay has described the conceptualization of the transportation economics by Maersk Line. It has been noted that the company ventures to use such conceptualization to attain customer and shareholder satisfaction. For example, the company is committed to ship as much volume of cargo within strict timeframes as possible. According to this model, the corporation is able serve as many customers as it can, enabling them to continue their trading activities and support the economy. Additionally, serving as many clients as possible is also be effective in ensuring that the company provides value for its shareholders through improved profitability. Therefore, other companies are invited to benchmark the organization’s approach to supply chain management, inventory management and the use of technology in the same process, and other issues related to transportation economics.
References
Jephson, C., & Morgen, H. (2014). Creating Global Opportunities: Maersk Line in Containerisation 1973-2013 . Cambridge University Press.
Larsen, T., & Mortensen, F. (2011). Mærsk Mc-Kinney Møller: The Danish shipping magnate . Gyldendal Business.
Maersk Line. (2017a). Keep up with Maersk Line. Retrieved September from https://www.linkedin.com/company/maersk-line
Maersk Line (2017b). Supply Chain Brain. Retrieved September 27, 2017 from http://www.supplychainbrain.com/content/sponsored-channels/maersk-line-global-container-shipping/landing-page/
Patrick-Burnson, S. (2017). Maersk Partners With Microsoft to Bring More Digitization to Its Global Supply Chain - Supply Chain 24/7. Supplychain247.com . Retrieved 27 September 2017, from http://www.supplychain247.com/article/maersk_partners_with_microsoft/maersk_line
Schultz, M., Nielsen, K. U., & Boege, S. (2012). Denmark: nominations for the most visible companies for the Danish RQ. Corporate Reputation Review , 4 (4), 327-336.
Wood, F.D. (2017). Transportation economics . Retrieved 27 September 2017, from https://www.britannica.com/topic/transportation-economics
