In The Sri Lankan Freight Forwarding Industry Marketing Essay

In The Sri Lankan Freight Forwarding Industry Marketing EssayAfter the three decades of the war finish the political situation in the soil is stable and the current g everywherenment enjoys 2/3 of majority of the parliament and president remains the most frequent person of the farming. But the political turmoil surrounding the center(a) East and Iran poignant the local anaesthetic exportation merchandise since most of the tea products were export to the Middle East market. Also the economic sanctions impose by United States and European junction on Iran affecting the local export market.2.2 Economical EnvironmentThe displace exchange rates argon affecting the local produces since most of them imports the raw material from china and India and produce their main products . in like manner the world economic downturn affecting the local economy. On the plus side opening of the new port and expansion of the keen of Sri Lanka port bequeath bring much vessels to the Colombo po rt. This willing definitely increase container volumes to the soil.2.3 Legal EnvironmentThe government has introduced a remains to regulate the expatriation and weight send on perseverance in the country. All shipping and freight forwarding agents must register with merchandiser Shipping department. Where they will categorise to two separate groups and issuing licences. This is renewable yearly.2.4 Technological EnvironmentThe Sri Lanka customs duty department has introduced the new EDI (electronic data interchange) system to update shipping manifest by dint of the entering in to customs department website , which will benefit the persistence where cost and time of the forwarders will be saved .previously the manifest were submitted by manu solelyy and separate person should allocate to do the job. Also this will process the accuracy and duplication of work.3 ANALYSIS OF THE INDUSTRY THOUGH PORTERS FIVE FORCESThe Threat of inletIn the Sri Lankan freight forwarding exe rtion the threats of new entry is rather superior because there argon no legal requirements early(a) than registration as a company with register of companies. Any champion or any party bunghole enter in to the industry with and requirements are recognition in the industry, headache contact and Agent network with borderline capital can enter in to the industry . When new entry enters in to the market it is a burden for the existing freight forwarders in the market. Since the industry is already overcrowded with so many players with in the industry completing for slow growing export market and everyone have e to share the existing node base with new entries to the industry.The entry barriers to the market can be arisen due to new entry to the industry unable to get economies of scale at one time since they do not have the volume advantage at the start of the business. Another barrier is the new regulation by the government which comes under the Merchant Shipping Department. T he forwarders must have the licence to carry out the business with in the local Market.The Treats Of SubstitutesThe substitutes service can be deliver the goodsd by the carriers and air lines by way of value additions or part of the supply cooking stove to the clients. Ware these carriers can provide additional serve like rothousing, transportation, inventory control etcetera The Maersk the world leading carrier has started their own arm to provide the additional value added services to the customers by in the name of DAMCO international .this will certainly make the adverse effect on the current forwarding market in the country.The Bargaining Power Of The BuyersIn the Sri Lankan freight forwarding market the dicker power of the buyers are very high. when comes to the export market in year 2011 countrys export containers were around 260047 and for a month it is around 21680 .other than forwarders the main carriers are also competing to get the business direct from the customers . The freight forwarder has to convince the buyers and must offer more than than value for the money. When relating to the concerned company the 10 major customers bring roughly 26.38% of the total income of the company so there buyer power high and the bread margins from these customers are thin.The Bargaining Power Of SuppliersThe suppliers for the freight forwarders either shipping lines, airlines, ware house provider or Logistics Companys provide services to the freight forwarders.in Sri Lanka the shipping lines and air lines are dominating the market .if other than the freight forwarder has large volumes they can bargain with the shipping lines and air lines other than that the bargain power of the suppliers are very high. When come to the concerned company same theory is applied to roughly destinations not for the all destinations.Competitive Rivalry Among Exciting FirmsAs per the merchant shipping department there are 296 freight forwarding companies in the local freight forwarding market. But there is other freight forwarders operating in the market without licences also. There is high competition among the forwarders since the export market is only expand around 6% in year 2011and import market did expand by 17% when compared to 2010 as mentioned by the Sri Lanka Freight Forwarders Association (SLFFA).in the industry there are lot of equal size competitors in the market and this will result intense competition with in the market .and there are few major size competitors competing in different sectors of the market .most of these competitors complete in the appeal and tea sector since those are the most exported commodities in the country.When analysing the tailfin force frame work in the freight forwarding industry in Sri Lanka there is little information about the individual performance of the cope with governance. And there is no ranking system to identify who the go around company is providing the forwarding services in the industry. Even though there is association in the industry it has only 84 members and where government has issued over 296 licences to practice as freight forwarders. And there is lack of understanding among competitors with in the industry about the increase and there is no growth forecast with in the industry.When analysing the above finding there are lot of competition in the market for sea freight export since the sea freight export growth rate is about 6% but the sea freight import growth rate is high about 17% .most of the freight forwarders concern about the full container cargo (FCL Containers) in market and less about the loose cargo load (LCL) and multi country consolidation (MCC).4. VALUE CHAIN ANALYSISTo achieve the competitive advantage system of rules must deliver the value to the customers below are the value chain analysis for the CWT Globelink Colombo4.1 Primary Activities4.1.1 Inbound LogisticsWhen comes to the export of goods organisation provide transport from shippers place of production to the organisations ware house. Fumigation, concording relevant certificates for the export purposes is other parts of the job. In the import sea freight communication with relevant shippers in the various destinations, picking up the relevant good, storing in the ware houses in the relevant destinations till it ships to the Colombo or various other ports.4.1.2 OperationsIn sea fright exports the operation is stuffing the relevant cargo intimate the container according to the stuffing plan.in this case the shipment must be stuffed to the container without any damages and relevant cargo must be dismiss to the relevant containers accordingly. And should send to the relevant ships accordingly.in import sea cargo must be DE stuffed accordingly.4.1.3 Outbound LogisticsWhen is come to the import shipments after receiving the goods to the Colombo port the organisation must issue the relevant documents to the relevant consignees to clear the goods from the relevant ware h ouses operated by the Sri Lanka ports authority. Also must help the consignees to track down the cargo from the ware houses.4.1.4 Marketing and gross revenuePromoting sea freight business with relevant rate to the direct and cooperate customers, overseas agents and shippers with value added services are the part of the sales and marketing4.1.5 functionTracking the customers cargo till its deliver to relevant parties, issuing Delivery orders, Bill of ladings, surveying for the damage cargo and issuing relevant letters to obtain the insurance claims and sending arrival notices some of the additional services provided by the company.4.2 support activities4.2.1 Technology DevelopmentThe trustworthy provide tracking system to all their customers to track their cargo through new innovative system .using this system customers can see where their cargo are currently lying on or which vessel the shipments are on and time this shipments will be delivered to the destinations.4.2.2 Firm Infra structure and Human resourcefulnesss ManagementThe business home has a good reputation among the customers. The organisation poses a good customer centric culture. The MIS support the innovation and responsiveness to the customer involve.5. THE SOURCE OF COMPETITIVE ADVANTAGE THROUGH ONION MODELTHE ripe(p) ONION MODEL5.1.2 The Agent NetworkThe organisation poses a worldwide agent network .the organisations has 40 associate offices in 13 countries and cargo ships to over 120 countries reaching more than 1200 destinations worldwide which unmatched by the local competitors .5.1.2 Superior Rate StructureThe organisation offers the most competitive rate in the LCL cargo sector in the market and most of the other freight forwarders in the market co-load their shipments with company since they do not have the capabilities match the rate offered by the firm.5.1.3 Leading Multi Country ConsolidatorThe organisation is the innovator of the large scale of operations of the multi country co nsolidation among the competitors. Firm is the leading MCC to Indian sub-continent.5.1.4 Innovative Cargo Tracking SystemThe customers can track their cargo through the system only the have to do is enter the bill of leading numbers to the system and will able to get the full details about their cargo5.1.5 Customer Centric CultureThe organisation is fully focused on customers needs and requirements. Organisation have separate department focusing the customer care and even has customer complaint line which is first for the Sri Lankan freight forwarding industry.5.1.6 represent Leadership in LCL marketThe organisation provide special services for the like packing transport fumigation entry passing as a tout ensemble package which includes the freight charges. The organisation eternally provides the more service for the money charge for the customer.THE BAD ONION MODEL5.2.1 Parochial Top Management brainpower SetEven though the organisation very centric towards the customers and cu stomer need they are not much focused on the developing business to the next level or stepping up for the next level. They poses very narrow found of business vision for the company and does not want step extracurricular the comfort zone their currently in and change the current business dynamics.5.2.2 Employee EngagementThe organisation lacks the motivation to achieve its goals .where employer wants employees to do their best work and tote the organisation towards its goals.to do that employer must engage with the employees and find the ways to get more from the employees other than the primary work set they have been assigned to do .7. THE SWOT ANALYSIS7.1 Strengths of the Organisation7.1.1 Agent NetworkAs mentioned earlier organisation has good agency network around the world. Using this network firm can import and export any cargo according to the customer requirements.7.1.2 Rate StructureSince the firm operates most parts of the world with various agents organisation can off er the cheapest LCL rate in the market. Most of the agents the firm work are the market leaders in those destinations and the have the lowest tariff with in that particular destination .with the collaboration with them organisation can offer the best rate in the market.7.1.3 Transhipment Cargo VolumeThe Colombo port is a strategic transhipment point in the world.so most of the cargo to Europe from Indian sub-continent tranships through the Colombo port and most of the European Cargo to Indian sub-continent tranship through Colombo port. most of the agents send their transhipment cargo to consolidate in Colombo send to the various destinations previously mentioned.7.2 weaknesses Of the Organisation7.2.1 Working Capital InadequacyThe firm always works with the thin cyberspace margins with credit to the customers sometimes with low volumes will create a loss situation where it will affect the working capital requirements of the company. The other scenarios is there more imports to fir m than exports and the firm has to pay to the agents and should provide credit to the customers this will also create working capital inadequacy.7.2.2 Human Resource ManagementThe firm not very keen in developing good human resources management process .this will lead to the less employee battle and will hinder the achievement of organisations goals through performance.7.3 External Opportunities7.3.1 Development of Colombo and Hambantota PortThe development of Colombo port efficiency and increase of the handling of the containers will affect the industry also opening of the new port in Hambantota will increase the vessel calling specially the car carriers are promoted in the new port. Expansion of the Colombo port to will win more vessel to the port and will benefit the local industry by more volumes and less cost7.3.2 Stable political EnvironmentThe ending three decades of the war and stable political environment will attract more investors to the country. The more investment com es and starts new business will create more imports and exports from the country.7.4 External Threats7.4.1 Weak Economic Development of United States and European UnionThe European Union and United States economic crisis were affected to the local preen and tea and other sectors badly and this crisis has been effected to the freight forwarding industry also the export market were grown only by 6% in last year.7.4.2 Turmoil in Middle East and Sanctions to IranOne of the best export market for the country is middle East and Iran .the current turmoil in Syria, Egypt ,Libya has halted the export to those countries also the sanction by the US and EU to Iran also effected the industry . dealTo Be A World-Class CorporationWith Global Logistics CapabilitiesMISSIONTo Excel As A Leading Logistics SolutionsProvider Delivering Best Value To Customers(http//cwt.listedcompany.com/misc/ar2011/ar2011.pdf)8. THE VISSION, MISSIONS, CORE value OF THE COMPMANYThe Colombo office uses the same vision st atement as head office in Singapore. This is for a border group with different SBUs and freight forwarding is a one SBU among other business units. Colombo office should have a different vision for its objectives. Modified vision statement for the firm would be TO BE A ONE OF LEADING FREIGHT FORWERDING COMPANY IN SRI LANKA WITH GLOBAL FREIGHT FORWERDING CAPABILITIES.The mission statement by the head office will be the mission to the company since to become the leading freight forwarding company in Sri Lanka the firm must move to the other sectors of the logistics to provide best value to the customer.8.1 Core Values8.1.1 Service ReliabilityProvide the best service to customers and to improve the service levels and consistently upgrade the service levels8.1.2 CompetitivenessTo provide competitive freight rates in the market and pass any reductions possible to valued customers so they can keep their cost down to the nominal levels.8.1.3 Customer FocusTo understand the customers requi rements and utilise the knowledge of the organisation to deliver quality, committed service to the customer8.1.4 TeamworkAs an reputed organisation it is value the strength of an individuals and unite together to deliver the objective of the firm8.1.5 QualityThe firm to ensure customers receive a standard of service which provides quality and assurance that can be deliver time and time again.9. GROWTH TARGETSAs per the attached Annexure Below the firms average import overturn increase about 28% and export turnover were increase by 41% .but the firms import volume was only increased by 9% and export volume was down by 34% .the export volume decrease is mainly due to the low volume exported during year 2010 recession period .even though year 2011 and 2012 shows an increase of 42% and 22% respectively.These are the growth targets set for the next 3 years201320142015Export tus330036303993Import tus4,6965,1655,682201320142015Export turnover477,276,792.67525,004,471.93577,504,919.13Impor t turnover41,796,722.8846,394,362.4051,497,742.26Export profit37,495,029.3341,244,532.2743,306,758.88Import profit30,887,954.4030,887,954.4030,887,954.40After analysing the market trends for the year 2008/2009/2010/2011/2012the growth target was set. The average turnover and profit were nearly about 11% for the export and imports thence the target was set as 10% increase for income and profit for two sectors.For the volume the fluctuations are very high and it was very difficult to set an accurate target therefore the 10% was taken to the volume target alsoSTRATEGY OPTION TO ACHIVE THE GROWTH1. The Ansoff Approach1.1 Market PenetrationIncreasing the sales volume through new marketing recruitments, encouraging the customers to purchase more services, attracting the customers with price and differentiation and gaining the market through expense of the competitors will help the organisation to flick more in to the market1.2 Market DevelopmentFirm can enter in to the new market segmen ts like supply chain management to the garment industry and telecommunication industry. Also can enter in to the market such as Maldives and Afgenistan where there are less competition and high profit margins.1.3 Product DevelopmentFirm can combine their import and export business together and provide services such as imports goods from one country and export the same goods to an another country .bundling the products together and offering as a one product (freight, transport, packing ,entry passing together as one product )1.4 DiversificationFirm can move in to a commodity markets where they can buy and sell commodities2. The Porters Approach2.1 Cost Leadership before long the firm provides the lowest cost in the market. Where firm cut the costs to the minimum and pass the savings to the customer with lower price .this help to attract more volumes to the organisation.2.2 DifferentiationThe firm can differentiate their product and services more attractive than the competitor .this c an be create through customer service, image of the organisation, faster services to the one destination to another.STRATEGY FOR THE GROWTHThe firm to use hybrid strategy for the growth .the organisation need to penetrate in to the market using differentiation and cost leaders and must move in to the new products to grow in the market .Currently firm offers the best rate in the market. Offering the best rate will help organisation to gain the cost leadership in the market. Gaining the cost leadership will help secure more volumes from the customers and attract the customers from the competitors. With the cost firm can encourage the customers purchase more products and services and these will help the firm to penetrate in to the market with same products catalogue.Currently firm only offers few services such as freight, transport, packing and entry passing. This will delimit the growth opportunities. Firm can enter into a new market segment using supply chain management. This will h elp the firm to smash in to the appeal industry which is one of the largest import and export market in the country.The growth target was set for the next ten years is 10% for the profit and volume. Through new product development firm can attract more customers and volumes to achieve the set target. Combining few product and services as new product and offering to the customers services like imports from one destination to other destination without importing the goods to Colombo will be a new product development to the firmREFERANCE LISTwww.slffa.comhttp//www.dgshipping.gov.lk