Recent container shipping industry experience has been turbulent for all and destructive for some.

Many carriers' strategies have narrowed down to price. Since 1980, the intense pressure on rates has resulted in two wide-ranging rate wars whose most significant impact was evident in sharply lower industry profitability.The transfer of economic benefit to customers was rapid and is not likely to be recoverable by carriers. For most carriers, short-term survival has held sway over long-term strategy.

Questions have no doubt been asked as to what can be learned from this experience and how the answers can be applied to improved planning. What follows, then, is not a canned formula for strategy, but a series of critical questions whose responses can become the basis for strategy development. While they are stated for container shipping, their applicability to other service businesses is direct.

As a preface, several points should be borne in mind:

Strategic planning's underlying objective is to enable a carrier to gain competitive advantage.

Competitive advantage is defined and measured only in relatives, not in absolutes. The fastest transit times are relevant only in how they meet the customers' needs and match competitors' services.

To be of true strategic value, competitive advantage must be sustainable and defensible.

Container shipping potentially offers many opportunities to positively influence customers before, during and after the purchase decision has been made. The extension of services to include both ocean and land transportation is but one example.

A service-based strategic plan comprises basic parts that must be effectively linked for the plan to succeed. At the plan's core is the fundamental service statement whose elements are clearly expressed so that, first, the service can be seen to meet the test of the target markets' perceived needs and, second, a detailed operating strategy can be developed to fully support the service. The final part of the plan is those systems and resources that will be actually delivering the service to the target markets.

In posing the following questions, a carrier can assess how well its existing strategy has fared over the last few years and is likely to fare in the foreseeable future.

A good place to start is with those planning factors that are essentially non-controllable and include the market, competition and the general economic and regulatory environment. Obtaining the necessary information is likely to require primary market research at the customer level despite the abundance of published data. This is the most extensive task in the plan development. Its quality will dictate the overall plan's final quality.

What are customers really looking for from a carrier? What are their perceived needs? What services do they want beyond the smooth shipment of cargo? What do they say? What do they mean? Does it really just boil down to price?

What type if information do customers need to make an efficient purchase decision and how do they want it delivered? Of importance, how do customers actually make the carrier selection decision? What type of information do they feel they need after the purchase?

Also of importance, do the customers' expressed needs provide any directions to segmentation of the overall marketplace for container shipping? Does segmentation imply that different types or levels of a carrier's services are desirable?

How well are customers' needs being met? By what carriers, in what trades and in what commodity-markets? What constitutes value to the customers? Are they willing to pay for it?

What service packages are the more successful carriers offering to meet these needs? Transit time, sailing frequency, point delivery, custom features, more timely information, one-stop shopping, price?

How accurate is competitive intelligence that is beyond the information available with little or no digging? Who are your key competitors? What are their respective objectives and strategies, active or not? What are their critical success factors? In what functions are they regarded as extremely competent by the marketplace? What leverage does that appear to give them as against other carriers?

What environmental factors look to be crucial in the future? The prospect for low economic growth? Continued cyclicality of foreign trade from which the demand for container shiping is derived? Chronic cargo value and volume imbalances in major trades? Government regulation and subsidization?

How well do we know our own industry's behavior; why is competition so intense? What barriers exist to limit competitive entry? With little risk of outright service substitution, who has the bargaining clout, carriers, or customers? What roles do consortia, conferences, rationalization now play and are they likely to play in the future?

At this stage, with an external market-competitive framework in place, a carrier should be able to begin to determine whether its existing service statement still best describes why it is in business.

Does the service statement specifically address customers' needs?

Is the service statement broken down into key elements that provide benefits to customers? Do these elements also give direction in strategy development, marketing and delivery?

Does the service statement indicate the importance of functions such as operations and marketing and provide investment and general resource guidelines? Relative to competition?

Can the service be positioned to differentiate it from competitors'?

Implicitly, do customers' needs and the proposed service line up?

Is the service predicated upon the establishment of long-term customer- marke t segment relationships, or is it transactional?

Strategy often takes on one of three forms: creating cost leadership through "no frills" service; providing premium quality service with higher

margins and associated investment; and isolating and sewing up particular market niches through customized service. While a carrier's strategy may vary

from these three alternatives, it must strike a balance among customers' needs, competitors' strategies and its own competencies and resources.

Does the carrier strategy define the necessary functional strategies and assign them priorities as a road map for resource allocation?

Have the key success factors been identified? Do they provide a mix of strengths that is competitively viable and defensible?

Has the appropriate blend of assets, technology and people been established? What will be the mix of off-line and personal contact?

Have overall service standards of performance been set up? Have they been detailed into specific measures of quality, productivity and cost control?

Has full consideration been given to exploiting any gap between customer needs and value and the carrier's cost structure?

The service has to be effectively delivered to customers via well specified and coordinated systems. Increasingly, these systems comprise information and technology as well as physical assets and their respective deployment/allocation networks.

Do the systems meet the strategy's overall objectives?

Can supply-demand imbalances be adequately covered?

Have systems been fully developed for vessels, equipment, facilities, technology, information and personnel?

Do the systems adequately support performance standards of quality, productivity and control?

In answering questions such as these, the carrier will have a basis for developing customer-oriented and competitively positioned strategy. Although the analytic load may seem overwhelming, without it a carrier is forever forced to react to competitors' initiatives.

With this level of intelligence gathering, service specification, strategy formulation and execution through integrated systems, a carrier can begin to chart its own course. As a final note, even during the recent competitive chaos, some carriers initiated major strategic moves of which a few appear to have been successful.

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