CHAPTER 1 CURRENT INDUSTRY SITUATION ANALYSIS I.

The Industry Shipping has always been considered as a vital infrastructure in a countrys economy. In the Philippines, the shipping industry has played a vital role in the growth and development of the country because it generates foreign exchange earnings and contributes to the strengthening of the balance of payments position of the country. The sector also provides substantial and attractive employment opportunities for the countrys labor force and has contributed much to the generation of government revenues through taxes and fees paid by international shipping lines. It is foreseen that the sectors potential for growth is so vast that it has become imperative to act now to take maximum advantage of every opportunity that is available. A. Transportation Industry In the Philippines, transportation, communication and storage, is one of the biggest contributor to GDP growth. Based on the statistics from the National Statistics Coordination Board (NSCB) as shown in Appendix 1, the transportation industry increased to 13.5 percent in the second quarter of 2004 from 8.4 percent in the previous year as all sub-sectors performed favorably. For the purpose of this paper, it should be noted that the shipping/maritime industry is part of the transportation industry. There are three categories of transportation namely land, water and air transport. Land transport rose from 4.8 percent a year ago to 12.3 percent in the second quarter of 2004, with increased passenger patronage of road and railway transport services. Water transport, which the shipping industry is part of, also soared to a growth of 12.1 percent from only 1.1 percent in the same period due to the increased volume of passengers and cargo throughput at the waterfronts. Likewise, air transport rose to a 20.4 percent growth from a slump of 15.9 percent a year ago.

This is caused by the improvement of passenger and cargo movement as well as domestic and international flights during the period, as a result of election-related activities and increased tourist arrivals. 1 B. Cargo Shipping Industry

1. International Cargo Shipping Industry International shipping constitutes a highly significant aspect of world economic and political relationships and is responsible for the carriage of 90 percent of world trade. The rapid growth in world trade and the emergence of new national entities in the past years have further emphasized the role of international shipping. Without shipping, intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would not be possible.2 There are around 50,000 merchant ships trading internationally, transporting all kinds of cargo. The world fleet is registered in over 150 nations and manned by over a million seafarers of virtually every nationality. Shipping is the safest and most environmentally benign form of commercial transport. Perhaps uniquely among industries involving physical risk, commitment to safety has long pervaded virtually all deep sea shipping operations. Shipping was among the very first industry to adopt widely implemented international safety standards. Because of its inherently international nature, the safety of shipping is regulated by various United Nations agencies. The International Maritime Organization (IMO) in particular has developed a comprehensive framework of global maritime safety regulations, which are enforced on a worldwide basis. 3

National Statistics Coordination Board. Overview of International Shipping Industry. http://www.marisec.org/shippingfacts/keyfacts.htm 3 Overview of International Shipping Industry. http://www.marisec.org/shippingfacts/keyfacts.htm
2

Ocean shipping is divided into the carriage of liquid and dry cargos. Dry cargos are carried in liners, tramps, bulk carriers, and specialty ships. On the other hand, liquid cargos are carried in tankers and mainly transport crude oil and its products. These goods are normally homogeneous and move in large quantity lots although some goods such as vegetable oils, wines, latex, and various chemicals move in small quantities. Shipping lines can essentially be divided into two categories those that are members of a conference and those that operate independently. The former is known as conference and the latter is known as non-conference or outsider shipping lines. A conference is a group of shipping lines operating on a special route which pools its resources to provide regular and reliable services between nominated ports of loading and ports of discharge. They normally work with a common tariff for their freight rates and although in isolated instances their tariffs are flexible, there is usually no flexibility in negotiating rates with them. Usually, the great advantage with conference lines is there are hardly any delays as a result of the close-knit network and fixed departure schedules. The excellent service they provide makes freight costs far more expensive as compared to the non-conference shipping lines. On the other hand, the non-conference shipping lines operate outside the conference structure, competing both with conference lines and other non-conference operators. These shipping companies offer scheduled services but quote freight rates independently from one another. Usually, the main advantage in using a nonconference service is lower freight rates made available by them. But the main disadvantage is, there is always the danger of ships arriving or departing late and also, they cannot keep up or maintain the same standard of reliability similar to conference lines. However, the option between using conference and non-conference does not exist in all destinations and sometimes in

order to secure the price advantage of a non-conference service, it is necessary to have the shipment routed via another port, involving transshipment ports. In the liner trade, the last forty years have seen the introduction of new cargo handling methods and facilities, referred to as unitization. This development, caused by the same factors affecting the tramps, led to the introduction of containerships ranging from ships that carry containers in their hold to lighter aboard and sea barge ships in which the containers are loaded into lighters and barges, and are then stowed in their respective ships. Other special kinds of vessels like refrigerated ships and carriers of fruit, automobiles, limber, newsprint, chemicals, and other so-called neo-bulk cargos have developed as well. The containerization movement in the liner trade has had far reaching effects. It is generally accepted that one container ship can do the work of four to ten conventional vessels, depending on trade route and size. Because of this larger operational capacity, larger cargo volumes are needed in each port of call and it is expected that in the future, trade will be concentrated in a few ports on each route and with other ports being served by feeder ships. 2. Foreign Cargo Shipping Industry in the Philippines The Philippines has had a rich and colorful history as a maritime nation and continues this interest through the further development of its port infrastructure, terminals, ships, and maritime workforce. Because of its geographical configuration, local travel, trade and commercial activities are facilitated by maritime transport. Close to 98 percent of all Philippine import and export materials and products are largely handled by several ports in the country. In its bid to become a major transshipment hub in the Asia Pacific region, the country has pushed vigorously for reforms in the maritime sector which includes moves such as the deregulation of the domestic shipping industry as well as the privatization and modernization of ports.

Understanding which shipping firms are doing the majority of the business, how perishable products move through Asia to the Philippines, how shipping firms price their services, and what can be done to maintain product quality while lowering shipping costs are essential to establishing long-term and profitable marketing operations. For the past two and a half decades, cargo handled at the countrys ports was dominated by conventional or non-containerized cargo (mainly composed of bulk or loose and breakbulk or those packed in units, cartons, crates, drums, sacks, etc.) reaching 103.75 million metric tons or about 71 percent of the total cargo throughput. However, its volume continued to decelerate as it doubled last years negative growth of almost two percent to a record drop of 4.31 percent or 4.67 million metric tons lower. On the other hand, containerized cargo was pegged at 42.91 million metric tons or 29 percent of the total cargo throughput registering a 4.56 percent growth against the level a year ago, showing impressive growths for the past years and steadily increasing its share of the annual traffic. Economy, easy handling and safety of the commodities transported from port to port encouraged shippers to use containers and thus, this appreciative development. This paper will primarily focus on foreign containerized shipping. Container shipping lines move cargo in standardized, reusable containers on specialized vessels. The containers are typically 20 to 45 foot steel or aluminum boxes. Standards for container size and configuration are set by the ISO in France, and the interchangeability created through these standards allows cargo in containers to move from origin to destination via a mixture of road, rail, and marine movements ("intermodal" transportation). First introduced in the 1950s and expanded rapidly in the 1970s and 1980s, containerized shipping is now the dominant method for moving a broad spectrum of non-bulk commodities

over the oceans. By allowing shipping lines to move cargo in large sealed containers with mechanized equipment, containerization has drastically reduced handling costs and cargo damage in comparison to prior piecemeal handling methods. Containers are sealed at origin (unless opened for Customs inspection) and transported intact until finally unsealed and unloaded at destination. Once unloaded, empty containers must be repositioned at the carriers cost to points of demand. The popularity of using containers in the transport of goods by sea whether domestically or globally rests on the fact that shippers have embraced this modern concept of containerization mainly because of economy, safety of cargos, bigger capacity and convenience in handling. As specified by the International Standards Organization, standard-shipping containers should be 20 feet long by 8.5 feet square. One such standard unit for measuring container throughput is one twenty foot equivalent unit (TEU). A 40-footer container measures 40 feet long by 8.5 feet square and can be counted as equivalent to 2 TEUs. For 2003, some 3.61 million TEUs, Loaded and Empty, were carried by foreign and domestic vessels in and out of the Philippine seaports during the year. Consistently growing in number from first to fourth quarter, this total manifested a more than 4 percent increase over the level of 3.46 million TEUs a year ago but short of 4 percentage points against the 8 percent increase in 2002 over 2001. Foreign containers that grew more than 7 percent were placed at 1.93 million TEUs edging domestic ones that reached 1.68 million TEUs. The growth in containerized cargo brought corresponding increments in the number of loaded container vans accommodated in the countrys ports. From January to December 2003, 2.48 million FCL (full container load) and 0.17 million LCL (loose container load) TEUs carried the hefty 42.91million metric tons of containerized cargoes received and dispatched.

Containerized cargo traffic in the year 2003 peaked at 35.39 million metric tons and sustained its upward trend for the last five years by posting an improved rate of almost 13 percent from the 11 percent growth in 2002. General Cargo, Sugar, Fruits and Vegetables, Bottled Cargo and Animal Feeds are among the containerized commodities which showed noticeable increases this year. Specifically, foreign containerized shipments shared a volume of tonnage at 17.91 million metric tons reflecting 12 percent growth for foreign goods. Refer to Appendix 2 for the top five containerized commodity groups in terms of volume for the year 2003 for foreign trades. Entirely serviced alongside berths, only selected ports have container operations, particularly in the handling of big-sized containers such as 40-footer and 45-footer vans due to lack of specialized facilities and equipment in the majority of the countrys ports. Among the type of ports, base ports absorbed the sizable load of the containerized commodities handling about 92 percent of the total containerized traffic. Refer to Appendix 3 for the distribution of TEUs by port classification. By individual port, Manila International Container Terminal topped all other ports for foreign containerized cargo which moved 12.57 million metric tons or 70 percent of the total foreign containerized goods while the remaining 30 percent were shared by the Philippine Major Outports (PMOs) as enumerated in Appendix 4. Government Policy / Rules / Regulation4 Rules and regulations covering the shipping industry in the Philippines are as broad as they are varied. The government has taken initiatives and programs to address issues in the industry. These are laws and regulations concerning deregulation and liberalization, streamlined
4

Most of the regulations discussed here are taken from the Maritime Industry Authority (MARINA) and discussions were based on THE DOMESTIC SHIPPING INDUSTRY OF THE PHILIPPINES: A SITUATION REPORT. Copies of the Memorandum Circulars were taken from the Marina website.

and liberalized administration, incentives and financing programs, and intensive promotion of maritime safety. Deregulation and Liberalization This law helped prevent the proliferation of monopolies as it encouraged the entry of additional operators in serviced routes and provided them with flexibility in other areas of shipping activities. It also supported the deregulation of liner shipping rates by allowing ship owners/operators some degree of autonomy in determining the rates for their services with the exception of third class passage and all cargo freights, wherein the fork tariff system was instead instituted. Streamlined and Liberalized Administration The government issued policies to complement its efforts in inducing competition in the industry. These policies aim at streamlining administration and making it more efficient. Memorandum Circular 4 lays out issues concerning the registration and licensing of vessels. Furthermore, on December 3, 1991, through the issuance of E.O. No. 493, the number of required documents for departure clearance was reduced to only three copies while the Philippines Ports Authority (PPA) was the only agency tasked to clear departing vessels. Incentive and Financing Program The Investment Priority Plan (IPP) served as a channel for the government to extend exemption from import duties and taxes for vessels, machineries, spare parts and cargohandling equipment since 1987. The increasing number of availments for IPP incentives in recent years signifies and increases the extent of modernization undertaken by domestic ship owners/operators, albeit limited to big and medium-scale operators. Intensified Promotion of Maritime Safety

Government efforts are also geared toward the improvement of maritime safety in terms of vessel seaworthiness, crew competence, and navigational aids. For vessel seaworthiness, classification of certain vessels were implemented and then complemented by the introduction of the Vessel Safety Inspection System (VSIS) reflective of MARINA M.C. No. 124. Additionally, the International Management Code for the Safe Operation of Ships and for Pollution Prevention (ISM Code) gave further policies for safe maritime culture in the country. Specific maritime safety and pollution prevention was also addressed. Memorandum Circular 1-75 addresses all shipowners/operators and shipping agents and covers all ships engaged in the passenger and/or cargo trade, passenger and cargo ferries in all trade routes of the domestic trade. It discusses the submission of a copy of the cargo of manifest that would enable MARINA to maintain comprehensive and reliable statistical data on commodity flow. Also, Memorandum Circular 153 addresses all shipowners/operators engaged in domestic shipping as well as all concerned. It discusses the revised rules and regulations implementing deregulation of domestic shipping rates. 3. Market Trends of the Foreign Shipping Industry in the Philippines The provision of maritime transport services catering to the requirements of the countrys foreign trade remains open to foreign-flagged ships. As mentioned earlier, only 1.64 percent of the total value of foreign trade was carried by Philippine-registered ships; the rest were carried by foreign-registered ships.5 Foreign Trade (Exports and Imports)

Country Report of the Philippines. www.unescap.org/tctd/nvg/ wtogats2002files/philippines_wtogats.pdf

In further assessing the performance of international shipping in the carriage of the countrys foreign trade, it is important to take note of the configuration of Philippine foreign trade particularly the exports and imports. The countrys total foreign trade in 2003 was registered at US$73,198.96 million. Aggregate receipts for exports amounted to US$35,750.13 million in the same year. The United States, Japan and Taiwan remain to be the top three strongest trading partners of the country. However, significant trading relations with the European community and ASEAN fostered improved trade for the Philippines and its trading partners from these economic blocs. In 1999, of the total Philippine foreign trade of US$65,779.35, only US$ 1.08 billion was carried by ship. Of this, a mere 1.64 percent was carried by Philippine-registered ships, down from 2.04 percent registered the previous year. information. Exports Total Exports bounced back to 14.9 percent in the second quarter of 2004, from the modest growth of 1.2 percent in 2003 due to the robust performances of both Merchandise Exports and Non-Factor Services. Monetization of Gold exhibited a significant growth of 20.6 percent, following four quarters of negative growths. Refer to Appendix 6 for more detailed information. Two of the countrys top five merchandise exports declined during the period. Garments shrank by 8.8 percent from positive 4.3 percent; and Crude Coconut Oil dropped by 8.5 percent from a positive growth of 48.0 percent in 2003. On the other hand, Bars, Rods of Copper improved by 63.2 percent from 17.8 percent; Finished Electrical Machinery improved from negative 31.0 percent in 2003 to negative 0.4 percent this year. Refer to Appendix 5 for more detailed

Semiconductors did not register any growth during the period. Refer to Appendix 7 for more detailed information. In addition, the top export markets are Japan, USA, Netherlands, Hong Kong, and Singapore. These data can be reviewed in Appendix 8. Imports Total Imports managed to sustain the 7.0 percent growth reported in 2003, with the favorable performances of both Merchandise Imports and Non-Factor Services. Refer to Appendix 9 for more detailed information. The five major contributors to the growth of Principal Merchandise Imports were Electrical Machinery, Machinery Other than Electrical, Textile Fibers, Feeding Stuff and Textile Yarns. Refer to Appendix 10 for more detailed information. Furthermore, the top importing markets are Japan, USA, Singapore, South Korea, and Taiwan. Refer to Appendix 11 for more detailed information. The aforementioned import-export structure of the country indicates that most of these products are low-volume-high value commodities such that they are usually moved more often by air than by ship. Furthermore, in terms of volume, Philippine foreign trade is generally transported by sea with products consisting mostly of oil, ores and cereals. This paper will specifically focus on the export services of Maersk Sealand Philippines. Since the Philippines is generally an importing country, marketing strategies should be concentrated towards increasing the countrys exports (and Maersk Sealands export volumes as well) so as to achieve more balance of trade. There is a need for shipping companies to maintain balance between their import and export shipments so that there will be no surplus of equipments in the Philippines. Surpluses will cost shipping companies large

amounts of money because with the surplus of equipments, they will have to ship empty containers to those countries where there is larger demand. II. The Service Business A. A.P. Moller-Maersk Group In the new millennium, the A.P. Moller-Maersk Group employs more than 60,000 people in over 125 countries. The fleet includes more than 250 vessels with a total deadweight of approximately 12 million tons. Currently, the A.P. Moller-Maersk Group is engaged in a multitude of activities. Besides shipping, the company is also engaged in exploration for and production of oil and gas, shipbuilding, logistics, aviation, industry, supermarkets, education and training, and IT services. These are activities that take place all over the world around the clock. B. Maersk Sealand Maersk Sealand is one of the largest liner shipping companies in the world, serving customers all over the world. Maersk Sealand is a trading name of A.P. Mller-Mrsk A/S and a division of the A.P. Mller-Mrsk Group. Currently, Maersk Sealand has more than 300 container vessels and 950,000 containers, which ensure reliable and complete worldwide coverage. The name Maersk comes from the grandmother of A.P. Mller, Kiersten Pedersdatter Mrsk (1808-1875). Her family is originally from Ballum in North Schleswig. The name can be traced back to the beginning of the 16th century and supposedly, it originates from the landscape in the area called the marsh. From 2003, the name Maersk is carried on in the parent company, A.P. Moller-Maersk A/S.

In 1928, a version of the ship's funnel with the seven-pointed star was selected as a logo for the Maersk Line liner trade between the USA and the Far East. Today, aside from shipping activities, the Maersk name and star represents several companies (e.g. Maersk Air, Maersk Data, Maersk Olie og Gas, Maersk Container Industri). C. Maersk-Filipinas Inc. Maersk-Filipinas Inc. represents Maersk Sealand in the Philippines. It started as an agency in 1931 and was initially handled by Compania General de Tobacos de Filipinas, one of the largest companies in the country at that time.6 The growth of the containerized shipping industry in the late 1970s has led Maersk to becoming an independent company and as a result, handling the shipping trade separately. This new company, Maersk-Tabacalera Shipping

Agency (Filipinas) Inc., became operational in 1981 and was renamed in 1992 to MaerskFilipinas Inc. The company was a joint venture between Compania de Filipinas and the A. P. Moller Group (MAERSK). With the deregulation of the shipping industry in 1997, the A.P. Moller Group gained full ownership of Maersk-Filipinas. From purely shipping, the company expanded to other related activities such as recruitment and training of seafarers, and transport logistics. These activities have since spun-off to separate companies. On December 1,1999, four months after the A.P. Moller Groups acquisition of Sealands international liner trades, Maersk-Filipinas took over Sealands operations in the Philippines and thus, Maersk Sealand (Phils.) was established. Aside from containerized shipping activities, Maersk-Filipinas Inc. through its partnerships in the Philippines also offers Maersk Logistics Filipinas Inc., Maersk-Filipinas

General Information: Introduction. Available: http://www.maersksealand.com/HomePage/portals/maersk.portal? _nfpb=true&_windowLabel=portlet_lhp&_pageLabel=page_lhp&content=/asia/philippines/general/introduction

Crewing Inc., and Mercantile Ocean Maritime Co. (Filipinas) Inc. Maersk Logistics Filipinas Inc. offers a complete service of transport logistics like supply chain management, forwarding, warehousing and distribution, airfreight, customs clearing, trucking, etc. Maersk-Filipinas Crewing Inc. provides trained, competent, and disciplined Filipino seafarers while Mercantile Ocean Maritime Co. Inc. offers trucking services to customers in Mindanao. The Maersk Sealand division of Maersk-Filipinas Inc. will be the main focus of this paper. Vision We create opportunities in global commerce. Opportunities lie at the heart of progress. Opportunities are the lifeblood of global commerce. Everything we do creates opportunities in global commerce for our clients, for ourselves, and for people at large. At its most basic level we move goods from A to B, from continent to continent, from manufacturer through port, distribution center and to retail outlet. However, in its own right, it is a proposition critical to global commerce and international trade. Throughout history, the ability to trade between people, nations or across continents has always created prosperity and driven development. Our business plays a vital part in this ongoing process. We enable people to source goods from anywhere in the world. We enable businesses to create efficiencies in their supply chain. We create opportunities for businesses to buy or sell to each other all over the world. We enable new commodities to reach different markets. We enable new markets to emerge through the establishment of ports, infrastructures and new equipment, and through development of innovative solutions. We link exporters in global commerce.

Mission We bring our vision to life through our mission. We need a more manageable plan to make our vision become a reality. This plan is our mission. Our mission describes the best way to create opportunities in global commerce. We have identified seven key steps that will make our vision come true. We will fulfill our vision by: Truly understanding our clients and their business This means we will actively engage with our clients. We will know their business, what is critical to them now and in the future, and how we can best serve their needs. Offering second-to-none transportation solutions

We want to be constructive, dependable, reliable and trustworthy allies to all our clients. We will always strive to provide the most compelling solution tailored to our clients' needs and circumstances. In doing so, we will operate within our strategic scope of business and field of expertise. Being profitable - and delivering sustainable, profitable growth We have to ensure our business is profitable. This is the foundation for future growth opportunities, for our business, and for our colleagues. Our growth must be profitable to be sustainable for the future. We need to ensure we thereby continue to be an important catalyst to global commerce in the future as we are today. Continuously reducing costs and increasing efficiency We will make every effort to relentlessly reduce costs. By reducing costs and by continuously increasing efficiency, we will create opportunities to meet our clients' needs and secure our long-term business. Without cost leadership, we cannot succeed.

Offering our colleagues personal growth and a motivating place to work We will strive to provide a challenging and motivating environment where our colleagues can grow. We want to provide a workplace that is respected in its communities; where people enjoy working and where all colleagues are treated with respect. Being innovative We will approach all tasks with an open mind. We will constantly pursue new and more intelligent ways of doing things. Combining knowledge with an innovative mind creates opportunities. Being first with the right concepts creates the winning formula. We want to continue being the creators of innovative solutions to the benefit of our clients and ourselves.

Being good corporate citizens We will act properly and constructively in everything we do in local communities, in our engagements with authorities, with clients, suppliers, with colleagues and other business partners. We want to be seen and recognized as good corporate citizens. Philosophy When Maersk founder A.P. Mller wrote, "No loss should hit us which can be avoided with constant care, he summarized in a few words one of the central themes of Maersk Sealands business philosophy. Living with the seas and respecting nature is ingrained in their culture and conforms to A.P. Mllers quest for constant care. This concept has a wide and deep meaning for Maersk Sealand. It implies a strong dedication to promote the health and safety of their employees and others in the industry and world around them.

Organizational Chart
President Srensen, Kim

General Manager Commercial Christiansen, Brian

General Manager Finance Madsen, Soeren

General Manager Logistics Fuentes, Ramon

Human Resource Department & Administration Franco, Leticia

Operations

Import/Export Logistics

Service Delivery & Customer Service

Forwarding & Groupage

Sales

Warehousing/ Distribution

Marketing

Value-Added Services

Offices / Service Personnel Offices Cagayan de Oro City Cebu City Davao City General Santos City Manila Manila Terminal Office Subic

Service Personnel Sales representatives Customer service staffs Accounting/billing staff Operations staff who do not normally provide direct service to customers

Cargo handlers In Maersk Sealand, intense supervision of labor is administered to ensure efficient results

and performance. Their well-trained staff ensures customers the best cargo transportation solution for all shipping needs. They have over 10,000 employees under a narrow overhead control; incentives are given to those meeting management standards. Frequent detailed control reports are also administered through information systems while their M.I.S.E. (Maersk International Shipping Education) Program ensures that only the best-of-the-best individuals are employed for management positions. Equipments Dry-freight containers: 20 with payload up to 28.3 metric tons 40 both 86 and 96 high with payload up to 30.4 metric tons 45 and 96 high with a total capacity of 86 cubic metres Reefer containers dedicated to transport perishable products. Range from reefer containers with Controlled Atmosphere, Humidity Control, and Super Freezers that are capable of maintaining temperatures as low as -60C/76F. Flat racks and artificial tweendecks special equipment for heavy cargo, which needs special care and does not fit into a standard container. These equipments vary with lengths of 20 and 40, with fixed or collapsible end-walls. Open-tops and open-side/open-top containers special equipment for over-sized cargo, which does not fit into a standard container. The lengths vary with both 20 and 40, with removable roof bows and tarpaulin covers. These can be easily secured with lashing bars and bull rings. They also offer containers with removable side grating, top rails, roof bows, and door headers for easy stuffing and stripping, which also ensure effective ventilation. Ports / Vessels / Routes In the Philippines, Maersk Sealands feeders service use the Ports of: Manila (Manila International Container Terminal) Subic (Subic Terminal) General Santos (Gensan Makar Wharf/General Santos Terminal) Cagayan de Oro (Cagayan de Oro Terminal)

Davao (Sasa Wharf Port of Davao) Cebu (Cebu Terminal)

They serve trade lanes between the Philippines and North, Central and South America, Caribbean, Europe, Mediterranean, Africa, Middle East and Indian Subcontinent, Australia, and Asia depending on the available sailing schedule of each trade lane. They also accept cargos from the Port of Zamboanga, where the cargos are loaded on other carriers feeders, and then shipped to the Port of Manila to connect to one of Maersks own feeder vessel. From the ports in the Philippines, the feeder vessels connect either to Hong Kong or to Maersk Sealands-owned terminal in Kaohsiung, Taiwan, also called their transshipment port or main hub. And from there, the containers are transferred to a mother vessel and shipped to their respective destinations. Currently, there are three feeder vessels, namely MVs Munster, Asian Trader, and SL Pacer, which are serving the ports in the Philippines and Kaohsiung. Having a bi-weekly feeder coverage, these vessels can each accommodate 565-650 twenty-foot equivalent unit (TEU). Routes Kaohsiung Subic Manila Kaohsiung Kaohsiung Cagayan de Oro Cebu - Kaohsiung Hong Kong Kaohsiung Manila Cebu General Santos Davao Hong Kong Current Market Situation 1. Target Market Primary Target Market Maersk Sealands primary target is direct shippers from the Philippines with long hauls. These are shippers who mainly ship goods to a longer distance, like the United States of America and Europe. In addition, the commodities of these shippers are goods that are in

demand in other countries like fruits, marine products, furniture, handicrafts, and garments. They also have regular shipments in large quantities. Secondary Target Market A secondary target of Maersk Sealand is direct shippers from the Philippines with short hauls. These are shippers who mainly ship goods to a shorter distance, namely other countries in Asia (Intra-Asia). Similarly, the commodities of these shippers are goods that are in demand in other Asian countries such as fruits, marine products, furniture, handicrafts, and garments. These are also shippers who have regular shipments in large quantities. 2. Market Positioning Maersk Sealand is positioned as your global transportation partner. They aim to give value to their customers by offering a differentiated service, which is unique to them. Being a global carrier, their service network spans six continents through their operations of more than 300 container vessels around the globe, which includes a wide variety of vessels capable of handling virtually each type of cargo. In addition, with the increasing complexity of global supply chains, shippers can rely on Maersk Sealand with the companys worldwide network and offices. Maersk is a quality brand that offers the most efficient service on a global basis. 3. Marketing Strategies In the shipping industry, marketing strategies such as advertising and promotions are not as important as compared to personal selling, public relations, and advocacy. In Maersk Sealands case, they have minimal advertising. Their advertising usually entails placing ads in newspapers like Malaya and Port Calls. And with regards to promotions, just like other shipping companies, Maersk Sealand does not implement any specific type of promotion.

Maersk Sealand is more focused on personal selling, public relations, and advocacy. Personal selling is the primary selling method and the most important marketing strategy for Maersk Sealand since their main goal is to target certain and specific customers. In particular, the selling techniques of Maersk Sealand include face-to-face meetings, direct mail, letters, and sales calls. Their sales force is currently composed of 7 people, which is divided according to areas (i.e., Quezon City, Caloocan, Bulacan, Malabon, Makati, San Juan, etc.). In addition, Maersk Sealand has good customer service personnel who provide information, take reservations, receive payments, and solve the shipping needs and problems of customers. New customers often rely on customer service personnel for assistance in learning how to use their shipping services more effectively and how to resolve problems regarding the shipment of their goods. Next to personal selling, Maersk Sealand uses public relations to stimulate positive interest in the organization and their products and services. The widely used public relation techniques employed by the company include press releases which feature stories about the company and their employees, specific services, and community involvement and support. The company also obtains favorable publicity for the organization through sponsorships and special events. Basically, whenever they need to announce or publish anything, they either schedule an interview or write a press/news release themselves and send it to the media. Usually, the press releases are printed in newspapers such as Malaya and Port Calls. With regards to advocacy, Maersk Sealand sponsors the shipments of medical supplies for medical missions (i.e. World Diabetics Foundation) and donates to various organizations. Recently, Maersk Sealand donated containers, which they painted themselves to a dental association to serve as their clinics. This also serves not only as a community service but also as teambuilding for the personnel. 4. Technology

The shipping industry currently faces a number of changes that radically influence the industrys dynamics. Aside from the pressures affecting the entire industrial world today, shipping lines must contend with the internet, e-commerce, and globalization. With the necessity to meet these new challenges, Maersk Sealand has employed the use of internet and e-commerce in order to better serve their customers. The Maersk Sealand website contains information about its businesses such as a list of their offices and contacts, export and import services, and rate of exchange. The website allows their customers to make bookings, track cargos, submit shipping instructions, get access to transport documents, view account statements, and view or download reports with detailed data of cargo movements. In addition, Maersk Sealands website has a help and assistance section, which allows customers to either interact via online chat or type or browse via a knowledge base section for inquiries. The website also offers e-mail services, which gives the customer arrival notices via e-mail as well as access to advanced tracking features one-click overview of all their shipments, customization of the layout of their search results, tracking of a wide range of criteria, and the usage of their references to categorize their bills of lading and containers according to their needs. These online value-added services offers the customer accessible and updated information; less rekeying; saved fax, phone, and courier costs; possibility to reuse information and create templates; search, save, and overview capabilities; secure solutions; expedited documentation process; and seamless flow of booking a cargo, submitting shipping instructions, and printing the transport documents.7 The introduction of this technology has brought

Do Business. Available: http://www.maersksealand.com/HomePage/portals/maersk.portal? _nfpb=true&_pageLabel=do_business

considerable efficiency, allowing reduction in the length of time for processing transactions between the different parties on the shipping chain. Maersk Sealand also employs an automation processing system called Electronic Data Interchange (EDI), which is defined as the electronic transfer of business information from one independent computer system to another using agreed standard to structure the data.8 The use of EDI has enabled them to increase productivity by reducing paperwork and increasing data quality. This benefits both Maersk Sealand and their customers since they can do business directly from their own system, avoid retyping of data, improve data quality (by reducing manual errors), save time, and the ability to manage by exception. Another unique value-added service of Maersk Sealand in the Philippines is their launch of Maersk SMS. This allows clients to retrieve Maersk Sealands complete address and trunkline number, check the current USD-PhP exchange rate, get import vessel registry numbers, and perform B/I or container tracking, merely by sending an SMS to 0920-8387059. Just send HELP to receive a reply listing of the available keywords. Since this is controlled by an auto-reply system, this service cannot send replies to areas outside the Philippines. 5. Price and Other User Costs Freight Costs is one of the financial costs incurred by the customer when transporting cargos from one place to another. It depends mostly on the nature of goods shipped; the weight of the goods (expressed in tons) or volume (expressed in cubic meters), whichever is higher; what type of container; and where the destination is. Therefore, the merchandise is both measured and weighed before freight cost can be quoted. Freight costs consist of two main components, basic rate per cubic meter or metric ton, and surcharges. Surcharges include currency adjustment factor, bunker adjustment factor, container service charge, port congestion
8

Bond, R T. J., The future of electronic commerce in international trade, ITLQ, p. 16.

surcharge, war risks, arbitrary charge, etc. Customers also need to rent chassis and truck for the transport of cargos to the port area. Furthermore, they need to pay fees such as wharfage fees, gate pass fees, cargo handling fees, etc. On the other hand, the non-financial outlays of the customers include psychological burdens such as anxiety in shipping the goods securely and on time as well as the time and physical effort (fatigues and discomfort) in searching, booking and processing papers needed for the shipment of goods. Also, from the point of view of the shipper, there is a waiting time involved while from the point of view of the consignee, transit time is incurred before goods reach its final destination. The waiting or transit time encountered by both parties is an opportunity cost for them, since the goods that were shipped may have already generated sales at that time. Other costs include the storage cost, freight tax, cost of exchange rates, and cost of damage. Storage cost is usually lower if the shipper chooses a shipping line with a higher sailing frequency because his cargo will not be able to reach a big volume before it ships out. For the freight tax, since tax is usually assessed on the landed cost which includes the freight charges then the higher the freight rate is, the higher the tax that will have to be paid. For the cost of exchange rate, in a country where the local currency is rapidly appreciating, the total waiting time has an added cost. In cases where the goods have to be sold immediately due to the risk of either perishability or obsolescence of the commodity, then the total waiting plus transit time becomes important. Lastly, although cargos are usually insured, it is only its commercial value or purchase cost that is covered. Any plant shutdowns or cost of finding a substitute for the delayed cargo is not covered. For Maersk Sealand, the prices they charge depend on their revenue-oriented objectives. The company is a profit-seeking firm, which aims to maximize the surplus of income over their

expenditures. They normally target a specific percentage return of investment or service income. The pricing strategy the company employs is a combination of cost-based pricing and competition-based pricing. The former sets prices relative to financial costs. The price is sufficient to recover all costs variable, semi-variable and fixed of producing and marketing a service and with the addition of an adequate margin to yield the desired level of profit at the predicted sales volume. Shipping business normally incur high fixed costs in generating the service. On the other hand, they also consider the prices of their competitors in setting the price because if the customers see little difference between the services offered in the marketplace, then they may just choose the cheapest. In this case, the company with the lowest cost per unit of service will enjoy an enviable marketing advantage. Therefore, they normally charge the price at the going market rate, which also covers the costs incurred. It is of the essence that Maersk Sealand remains competitive and maintains their market share and position. There is a need to constantly monitor competitors services and prices and be able to match it competitively. Price is a very important factor for the customers of Maersk Sealand since most of their clients export their goods in the international market. The costs in shipping the goods may affect their competitiveness in terms of price, which means that their goods/cargos may have a higher value as compared to their competitors because of the costs incurred. The ranges of Maersk Sealand prices for each trade lane are as follows: Transpacific $2,300 to $3,700 Europe $1,625 to $2,075 Intra-Asia $350 to $900 Middle East $1,150 to $1,775 Australia $1,100 to $1,300

6. Service Blueprint

The service Maersk Sealand offers is part of the possession processing which includes tangible actions to goods and other physical possessions belonging to their clients. In this type of process, the object requiring processing must be present but the customer need not be. The clients are less physically involved with this type of service. The customers participation is usually limited to booking the shipping services and dropping off or getting from the clients the cargos needed to be exported. General Flow of Export Cargoes
Pre-transport 1.Exporter receives orders 2.Exporter undertakes export preparation activities Secures permits clearances Prepares packing list, invoice, price quotation Booking of shipping services Origin 3.Sorting of cargos 4.Packaging of cargos 5.Hiring of container from shipping company 6.Loading of cargos into hired container 7.Loading of container into truck Trucking Port of Origin 8.Securing of gate pass ( To 9.Securing of bill of lading 10. Payment of port arrastre fees 11. Placing of container at holding area 12. Customs processing 13. Loading of container in ship Shipping

Port of Exit 14. Unloading of container from ship 15. Placing of container in holding area 16. Customs processing 17. Loading of cargos in ship

Shipping

Destination (Outside the country)

Detailed Flow of Export Cargoes Main Activities 1-2 Exporter receives orders Exporter receives orders Exporter secures permit clearances, prepares packing list, invoice, price quotation and booking of shipping services 3-7 Sorting of cargos, Packaging of cargos, Hiring of container from shipping company, Loading of cargos into hired container, Loading of container into truck Shipper Sub-Activities Shipping Company Cargo Handling Operator Port Operator

Receives bookings (check available sailing schedules and equipments, negotiation of price rates)

Sorting & packaging of cargos, hiring of container from shipping company, loading of cargos into hired container, loading of containers into truck

Secures containers

Sends containers to shippers warehouse

Main Activities 8 Securing of gate pass

Shipper

Sub-Activities Shipping Company Customs

Cargo Handling Operator

Port Operator

Secures gate pass and pays fee 9 Securing of bill of lading Secures bill of lading and pays hauling fee by ship 10 Payment of port and arrastre fees Pays port user fee Pays arrastre fees 11 Placing of container at holding area Unloads container from truck and places container in holding area Receives payment & issues bill of lading & receipt

Receives fee and issues gate pass

Receives port user fees Receives arrestre fees

Main Activities 12 Customs Processing

Shipper

Sub-Activities Shipping Company Customs

Cargo Handling Operator

Port Operator

Fills up export declaration permit form (EDP 13 Loading of container in ship

Evaluates EDP form Inspects cargoes

Receives fee and issues gate pass

Loads container in ship

Hauls container in ship

7. Flower of Service Maersk Sealands market positioning strategy helps to determine which supplementary services should be included. Most supplementary service should represent responses to customer needs. Any badly handled element may negatively affect customers perception of service quality. A strategy of adding benefits to increase customers perceptions of quality will probably require more supplementary services and also a higher level of performance on all such elements than a strategy of competing on low prices. The nature of the service of Maersk Sealand helps to determine which supplementary services must be offered and which might usefully be added to enhance value and make Maersk Sealand easy to do business with. Information Maersk Sealand provides information that enables their customers to use their services more efficiently and effectively. Specific information with regards to the shipment of customers goods is made accessible through the companys customer service personnel, website, SMS, advertisements in newspapers like Malaya and Port Calls, and sales calls. Information details made available to customers include directions to the site where the service is sold or details about how to order/book, schedule and service hours, prices, offices, trade lanes, origin ports, transit times, notification and confirmation of changes in schedules, demurrage and detention, fees and charges, documentation, availability of equipment, and standard operating procedures and shipping instructions. Maersk Sealand also provides their customers with documentation of what has already taken place, such as confirmation of reservations and bookings, receipts and tickets, and monthly summaries of account activity. Further information, usually required by law includes conditions of sale/service and use, warnings, reminders, and notification of changes.

Order Taking To facilitate in the acceptance of applications, orders, and reservations, Maersk Sealand employs electronic booking systems, based on telephone or website reservations. This provides enormous cost savings for Maersk Sealand because there is no agent commission customers book directly and the administrative effort is drastically reduced. Bookings through sales

agents may be handled many times, whereas an electronic booking requires just one step. But since some customers are disenchanted by the electronic process and may feel insecure without direct contact and tangible proof that they have a container on a particular shipment, Maersk Sealand employs sales representatives and customer service personnel to ensure customers business needs are satisfied accordingly. Furthermore, Maersk Sealand offers to fax receipts and itineraries on request at the time a shipment is booked. Billing Customers need clear, timely bills that explain how charges are computed. In a global setting and most especially for a multinational corporation like Maersk Sealand, currencies and conversion rates are always clarified on billing statements. Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that point, have been quite satisfied with their service. Furthermore, Maersk Sealand guarantees that billing is timely to stimulate faster

payment. Maersk procedures range from verbal statements to computerized billing and from handwritten invoices to elaborate monthly statements of account activity and fees. Perhaps the simplest approach is self-billing, when the customer tallies up the amount of an order and either encloses a check or signs a credit account authorization. In such instances, billing and payment are combined into a single act although Maersk Sealand may still need to check for accuracy.

Payment In most cases, a bill requires the customer to take action on payment and such action may be very slow in coming. Increasingly, customers expect ease and convenience of payment, including credit lines when they make purchases in their own countries or abroad. Maersk Sealands finance department requires prospective customers to go through an application process designed to gather relevant information and to screen out those who do not meet basic enrollment criteria (such as those with a bad credit record). Normally though, they give 15 to 30 days credit period. Much payment still takes place through hand-to-hand transfers of cash, managers checks, or bank transfers but debit accounts are growing in importance as more and more businesses accept them. Consultation Consultation involves a dialog to probe customer requirements and providing for tailored-fit solutions for their business needs. At its simplest, consultation consists of immediate advice from a knowledgeable service person in response to the request of suggestions. Thus, Maersk Sealand employs well-trained sales representatives and customer service personnel who will readily attend to every customers business needs. Salespeople usually do regular sales calls to update and attend to the customers business needs while customer service personnel are readily available to answer to customer inquiries about their shipping needs. Hospitality Ideally, hospitality-related services should reflect pleasure at meeting new customers and greeting old ones when they return. Maersk Sealand ensures that their employees treat

customers as guests. Customers are always invited to Maersk events or activities. Sales calls are done periodically to assure customers that they are well taken cared of. Customer service is

always updated with regards to any changes in shipping schedules, reservations, and procedures. Courtesy and consideration for customers needs are applied to both face-to-face encounters and telephone interactions. Maersk Sealand recruits sales employees and customer service personnel who are naturally warm, welcoming, and considerate for customer-contact jobs that help create a hospitable atmosphere and better business relationships. The quality of the hospitality services offered by Maersk Sealand can increase or decrease satisfaction with their services. Maersk Sealand enhances their appeals by providing a high level of shipping service and options, including shorter transit times as generally expected. Safekeeping Customers often want assistance with their shipment of goods. In fact, unless certain safekeeping services are provided, some customers may not use the service at all. Maersk Sealand safekeeping services include the provision of quality containers, cargo transport, handling, and storage. Additional safekeeping services may include packaging, pickup and delivery, assembly, installation, cleaning, and inspection of cargos and containers. Maersk Sealand also worries about the safety of their customers goods. With weather disturbances and other fortuitous events, and most especially during these times where terrorism is a threat, Maersk Sealand pays close attention to safety and security issues for customers who are using their services. Exceptions Exceptions involve supplementary services that fall outside the routine of normal service delivery. Maersk Sealand anticipates exceptions and develops contingency plans and guidelines in advance. That way, their employees will not appear helpless and surprised when customers

ask for special assistance. Well-defined procedures are adapted to make it easier for their employees to respond promptly and effectively. Special requests. There are many circumstances when a customer may request service that requires a departure from normal operating procedures. For instance, some customers may want to ship goods on a preferred specific time for their business needs, or under different terms and conditions. Advance requests often relate to personal needs and concerns, shipping Maersk

requirements, standard operating procedures observance, and personal disabilities.

Sealand considers and gives importance to special requests and if such requests are within the means and resources of the company then by all means, Maersk Sealand will guarantee the customers request. Problem solving. Situations arise when normal service delivery fails to run smoothly as a result of accidents, delays, equipment failures, or customer experiencing difficulty in obtaining the goods on time. Therefore, Maersk Sealand has employed well-trained customer service personnel and sales executives to assist customers with their business needs and other concerns. Handling of complaints, suggestions, and compliments. Sometimes customers express dissatisfaction, offer suggestions for improvement, or pass on compliments, and Maersk Sealand is always able to make an appropriate response quickly whether positively or negatively. Maersk Sealand has employed well-trained staff and personnel to accommodate all of their customers business needs. Restitution. Many customers expect to be compensated for serious performance failures. Compensation may take the form of warranties, legal settlements, refunds, an offer of free service, or other forms of payment-in-kind. As in the case of Maersk Sealand, they will only be held liable for delays caused by the company. However, Maersk Sealand will not be held liable

for damage of goods caused by fortuitous events. The party liable for the damage of goods will depend upon the prior terms and conditions of the contract (i.e., FOB, CIF, etc.). But it must be noted that Maersk Sealand has an untarnished track record with regards to the security and delivery of their shipments under the terms agreed with customers. III. Competitive Situation A. Porters Five Forces Model

Risk of Entry by Potential Competitors The threat of entry by potential players is low in the shipping industry. This is due to the fact that the barriers to entry are high because of the following factors: (1) There is high product differentiation in terms of the customer service (on-time transport, servicing globally, safe and secured cargo transport, availability of ports in the Philippines, availability of equipments, etc.) (2) There is high brand identity in the industry; (3) A large amount of capital is needed in order to start a containerized/shipping business; (4) There is government protection for shipping firms. There is a P7.0 million required minimum paid-up capitalization for every shipping company applying for accreditation. Bargaining Power of Buyers Clients or buyers of the shipping industry, which may include freight forwarders and direct shippers, may possess either high or low bargaining power. The following are some of the factors which make bargaining power low: (1) There are many important buyers in the industry like companies that are part of the top exporters, which they can give their priority to.

(2) There is high product differentiation in terms of service, so the buyers will still likely choose one shipping company that best fits their needs and preferences. On the other hand, the following makes the bargaining power of buyers high: (1) The availability of a number of shipping lines that caters to the service a buyer needs. (2) The availability of substitutes such as air transport to the industrys products; especially for smaller shipments and the need for a faster transit time. (3) Buyers profitability is low especially when there is an economic crisis, which may affect their potential export or import shipments. Bargaining Power of Suppliers Suppliers of the shipping industry also possess high bargaining power. Suppliers may provide the industry with the inputs such as gas, equipments, spare parts and manpower. The following are the factors, which make their bargaining power high: (1) Suppliers contribute greatly to the quality and service of the industrys products; (2) There are high switching costs involved and differentiation in terms of price and quality when shifting from one supplier to another. (3) The shipping industry does not pose much of a threat of backward integration, except in terms of sourcing and training their own staff. They do not have the means to supply or manufacture their vessels and equipments. (4) There are quite a number of important suppliers and substitutes available for the industrys needs. However, not all substitutes are reliable. That is, not too many can deliver the best quality at a reasonable price. Threat of Substitute Products

The shipping industry does not face a lot of pressure from substitute products. Since most companies are doing containerized business, big bulk of cargos can only be carried by large vessels. Air transport can only carry smaller shipments but with a faster transit time. As compared to other countries, the rail transport of containers in the Philippines is not widely used because it does not reach and cater to as many places and is only used for domestic areas. Land transport is not also used for overseas shipping given that the Philippines is made up of islands. Thus, feeder vessels for shipping containers are used even for domestic shipping. Shipping also works best for long-distance transportation of the substitutes especially for land carriers which are best for short-distance deliveries. Rivalry Among Established Firms The rivalry among competitors in the shipping industry is fairly intense although competition among firms is healthy. The industry possesses a significant number of equally balanced and diverse competitors who are capable of serving a specific trade lane globally, offering number of tons per service, having more available ports in the Philippines, etc. For each trade lane and origin port in the Philippines, there are different key players. No shipping line is dominant for all trade lanes and origin ports. There are differences or specialization among every shipping lines services. Services offered by all shipping lines are not too similar in the sense that they are not perceived as generic or near commodities. Due to these factors, there is fair competition among industry players. However, there is still more room for improvements and innovations for all shipping lines, which can largely differentiate one shipping line from another. B. Major Players in the Industry

There is intense competition among the shipping companies that sell and target the same service. Each shipping line is doing their best to have a position in the market. Since there are many companies that offer the same services, not all companies will succeed in their respective target markets. Attaining and maintaining market leadership will prove to be very difficult because the market is highly saturated and economic-sensitive. Therefore, shipping lines compete by lowering prices and offering more efficient services such as faster release of bill of lading and increase availability of equipments. Some of the international shipping companies have their branch office here in the Philippines, while others are marketed in the country through an agency. Appendix 12 to 17 lists the major competitors of Maersk Sealand, their agency or branch office and position per trade lane. At present, shipping lines American President Lines, Maersk Sealand, Evergreen Marine Corp., Orient Overseas Container Line, China Ocean Shipping Co., MOL Philippines Inc., Regional Container Lines Pte. Ltd., Wan Hai Lines Ltd., and Hapag-Lloyd Line GMBH have branch offices in the Philippines while the other shipping lines are only handled by an agency. Having a branch office in the Philippines is very advantageous for the company since they can have more coordination between the branch office and the head office, and can enjoy bigger marketing budgets and supports. C. Market Share per Trade Lane From Appendix 12 to 17 (Rankings per Trade Lane Table), it can be assessed that there are different market leaders per trade lane. Though some shipping lines enjoy high brand awareness, it does not necessarily mean that they are the market leaders in that given trade lane.

Figure 1.1 to Figure 1.6 shows the market shares of the major players in the industry based on the total TEUs per trade lane.
APL 20.20% 3.84% 4.04% 4.23% 6.74% 15.82% 7.73% 7.98% 11.55% 17.87% MSL OOCL NYK EMC HJSC ZIM MOL HMM Others

Figure 1.1 Transpacific Market Share

In the total Transpacific trade lane market of 83,433 TEUs from January to July 2004, American President Lines has the largest share with almost 18 percent of the total TEUs or 14,908 TEUs exported in the Transpacific. Maersk Sealand ranks second with almost 16 percent of the total Transpacific market share. With 9,634 TEUs exported in the Tranpacific, Orient Overseas Container Lines is also one of the shipping lines that enjoys almost 12 percent share of the total Transpacific market. These shipping lines are well-known for cargo shipments to the Transpacific trade lane. They specialize and target this market since not all shipping lines have services going to the Transpacific and they are known to be competent in delivering service particularly in this trade lane. Since the Transpacific countries are long hauls, it is more profitable for the shipping company to target exporters who mostly ship cargos in this trade lane.
APL 24.82% 15.87% 11.48% 5.12% 5.29% 5.62% 6.44% 7.67% 8.71% 8.98% MSL MOL NYK HJSC PONL K-LINE EMC HAPL Others

Figure 1.2 Europe Market Share

In the total Europe trade lane market of 54,115 TEUs for the year 2003, American President Lines still has the largest share with almost 16 percent of the total TEUs or 8,588 TEUs exported in Europe. Again, Maersk Sealand ranks second with almost 12 percent of the total Europe market share. With 4,860 TEUs exported in Europe, MOL Philippines, Inc. is also one of the shipping lines that enjoys almost 9 percent share of the total Europe market. Similarly, these shipping lines specialize and target this service as it is also not available in all shipping lines and is considered as long haul.
TSK 30.07% 14.35% 10.81% K-LINE OOCL APL EMC 3.43% 4.43% 10.36% 4.56% 5.62% 6.55% 9.82% MSL YML RCL PEL Others

Figure 1.3 Intra-Asia Market Share

In the total Intra-Asia trade lane market of 214,054 TEUs from January to September 2004, Tokyo Senpaku Kaisha has the largest share with almost 15 percent of the total TEUs or 30,707 TEUs exported in the Intra-Asia trade lane. Kawasaki Kisen Kaisha ranks second with almost 11 percent of the total Intra-Asia market share or 23,131 TEUs. With 22,176 TEUs exported in Intra-Asia countries, Orient Overseas Container Lines is also one of the shipping lines that enjoys around 10 percent share of the total Intra-Asia market. Maersk Sealand, on the other hand, ranks sixth with a share of almost 6 percent of the total Intra-Asia market. The IntraAsia market is not Maersk Sealands primary target market because this trade lane is considered as short haul thus, it is not as profitable as servicing long haul destinations such as the Transpacific and Europe market. The top 2 shipping lines enjoying a considerable market share

in this trade lane are Japanese-owned companies. As Japan is the top trading country in the IntraAsia trade lane and is known to be very nationalistic; they usually support and use the services of their affiliated shipping lines. Also, most of the shipping lines in the Philippines have services in this trade lane as it is evident that there are many cargos exported in this area.
MSL 3.78% 46.15% APL UASC TSK/NYK EMC PONL 25.71% NCL PIL OOCL Others

1.55% 4.50% 4.59% 5.42% 5.97%

0.86% 1.47%

Figure 1.4 FEME Market Share

From the total Far Eastern Middle East (FEME) TEUs of 8,209, Maersk Sealand is the market leader for FEME with 46 percent of the market share for the year 2003. American President Lines ranks second with almost 26 percent of the total FEME market share or 2,110 TEUs. United Arab Shipping Company, on the other hand, enjoys almost 6 percent share of the Total FEME market or 490 TEUs. The top 2 shipping lines alone comprises around 70 percent of the total FEME market because only a few shipping lines offer services in this area.
FESCO 2.38% 4.00% 6.40% 7.82% 10.80% 12.61% 20.99% 2.01% 8.29% 24.70% NYK HSUD PIL MISC OOCL PONL K-LINE MSL Others

Figure 1.5 Australia Market Share

In the Australia market segment of 8,566 TEUs from January to September 2004, Far Eastern Shipping Company enjoys the market leadership position with a market share of almost

25 percent or 2,116 TEUs. Trailing behind is Nippon Yusen Kaisha with 21 percent market share of the total Australia trade lane market or 1,798 TEUs. Hamburg Sud ranks third with a market share of almost 13 percent or 1,080 TEUs. Maersk Sealand, on the other hand, ranks ninth with a market share of only 2 percent. Again, for this trade lane, only a small number of shipping lines have services in this area. The top 3 shipping companies alone in this trade lane comprises about 58 percent of the total Australia trade lane market.
NYK FESCO 33.51% PONL MISC HSUD PIL 17.28% 21.32% MSL MOL HMM OOCL

2.19% 0.98% 0.66% 3.39% 7.54% 12.91%

0.22%

Figure 1.6 New Zealand Market Share

For the New Zealand trade lane which comprises a total market of 915 TEUs from January to September 2004, Nippon Yusen Kaisha has the largest market share of almost 34 percent or 307 TEUs while Far Eastern Shipping Company ranks second with around 21 percent market share or 195 TEUs. P&O Nedlloyd Lines also enjoys a market share of 17 percent or 158 TEUs. On the other hand, Maersk Sealand only has a market share of 2 percent for the New Zealand trade lane. As compared to the Australia trade lane, this trade lane has lesser key players, which is why the top 3 shipping lines alone already comprise 72 percent of the total New Zealand market share. D. Direct Competitors Maersk Sealands direct competitors are determined by their competitors service line competitors who offer the same service like catering to a particular trade lane such as the Transpacific, Europe, Intra-Asia, Far Eastern Middle East, Australia and New Zealand. It is for

this reason that not all shipping lines cater to all of these areas. Moreover, Maersk Sealands primary competitors are those shipping companies that have the same target market as theirs those direct shippers exporting cargos to long haul like the Transpacific and Europe trade lane. Based from Figures 3.1 to Figures 3.6 and the primary target market of Maersk Sealand, their direct competitors include American President Lines, Orient Overseas Container Line, Nippon Yusen Kaisha/Tokyo Senpaku Kaisha, Evergreen Marine Corporation, Hanjin Shipping Company Ltd., MOL Philippines Inc., and Kawasaki Kisen Kaihsha. Refer to Table 1.1. Direct Competitor APL EMC HJSC K-LINE MOL MSL NYK/TSK OOCL TOTAL Direct Competitor APL EMC HJSC K-LINE MOL MSL NYK/TSK OOCL TOTAL Table 1.1 Market Share in Percentage and in TEUs Market Share in Percentage Transpacifi Europe Intra-Asia FEME Australia c 17.87% 15.87% 9.82% 25.71% 0.44% 15.82% 5.29% 6.55% 4.59% 6.74% 7.67% 3.39% 1.23% 2.99% 5.62% 10.81% 2.38% 4.04% 8.98% 1.43% 0.21% 0.14% 15.82% 11.48% 5.62% 46.15% 2.01% 7.98% 8.71% 14.35% 5.42% 20.99% 11.55% 3.22% 10.36% 0.86% 6.40% 100% 100% 100% 100% 100% Market Share in TEUs Transpacifi Europe Intra-Asia FEME Australia c 14,908 8,588 21,014 2,110 38 6,453 2,860 14,017 377 5,621 4,150 7,262 105 2,492 3,043 23,131 204 3,375 4,860 3057 17 12 13,195 6,212 12,021 3,788 172 6,656 4,713 30,707 445 1798 9,634 1,740 22,176 71 548 83,433 54,115 214,054 8,209 8,566

New Zealand 0.98% 2.19% 33.51% 0.22% 100% New Zealand 9 20 307 2 915

E.

Summary Overview of the Competitive Situation

PORT OF ORIGIN Manila, Batangas, Subic, Cavite, Mariveles, Cebu, Bugo, Cagayan de Oro, General Santos, Davao Manila; For outports, they use domestic carriers Manila; For outports, they use domestic carriers Manila, Cebu, Davao, General Santos, Zamboanga, Cagayan de Oro TRADE LANES USA, Canada, Europe, Intra-Asia, Australia, New Zealand, Middle East, Africa, South America Australia, New Zealand, Pacific Islands Intra-Asia TRANSHIPMENT PORTS Kaohsiung for all trade lanes Singapore for Europe Singapore, but there is a direct service to Australia Kaohsiung for all trade lanes Hong Kong for Transpacific and China Singapore for Europe, Mediterranean, Middle East, Red Sea, South Africa/America, Durban Hong Kong for Asia, USA, Mediterranean, Europe Busan for USA, Canada and Carribean Hong Kong for all trade lanes Busan for USA, Canada and Carribean Singapore for Europe AVERAGE TEUs/MONTH Exports 5,400 TEUs Imports 6,000 TEUs Exports 20 TEUs Imports 100 TEUs Exports 800 TEUs Imports 1,600 TEUs Exports 292 TEUs Imports 150 TEUs SHIPMENTS MOSTLY TO USA

COMPANIES APL Company Pte., Ltd. (APL)

Australian National Line (ANL) Cheng Lie Navigation Co., Ltd. (CLN) China Ocean Shipping Co. (COSCO)

Australia Asia

Intra-Asia, USA, Europe, Mediterranean, Middle East, Red Sea, South Africa/America, Durban

USA

China Shipping Container Lines Company, Ltd. (CSCL) CMA-CGM The French Line (CMA-CGM) Dongnama Shipping Co., Ltd.

Manila, Cebu, Davao, General Santos, Cagayan de Oro

Intra-Asia, USA, Europe, Mediterranean, Australia, Africa, Persian Gulf

Exports 450 TEUs Imports 1,000 TEUs Exports 150 TEUs Imports 600 TEUs Exports 700 TEUs Imports 2,000 TEUs

Asia

Manila; For outports, they use domestic carriers Manila; For outports, they use domestic carriers

Europe, Middle East, USA, Intra-Asia Intra-Asia, India, USA, Canada, Carribean

Europe

Korea

COMPANIES Evergreen Marine Corp. (EMC) 1974

PORT OF ORIGIN Manila, Cebu, Davao, General Santos (satellite office), Zamboanga (satellite office), Cagayan de Oro

TRADE LANES USA, Canada, Europe, Mediterranean, South America, Middle East, Intra-Asia, Australia

Far Eastern Shipping Company (FESCO) Gold Star Line, Ltd. (GSL) Hamburg Sud (HSUD)

Manila, Cebu, Davao

Australia, New Zealand, Intra-Asia Intra-Asia, Africa, Australia Intra-Asia, USA, Australia, New Zealand, South America, Africa

TRANSHIPMENT PORTS Kaohsiung for all trade lanes Alternative: Malaysia for Europe and Mediterranean Busan for Japan Singapore for Durban Direct shipments to Australia and New Zealand Hong Kong for all trade lanes

AVERAGE TEUs/MONTH Exports 3,000 to 4,000 TEUs Imports 10,000 TEUs

SHIPMENTS MOSTLY TO Intra-Asia

Manila; For outports, they use domestic carriers Manila; For outports, they use domestic carriers

Hanjin Shipping Company Ltd. (HJSC) Hapag-Lloyd Line GMBH (HAPL) Heung-A Shipping Company

Manila; For outports, they use domestic carriers Manila, Cebu

Kaohsiung for Australia Hong Kong for Australia and New Zealand Singapore for Africa and South America USA, Canada, Central Busan/Kaoshiung for America, Europe, Middle USA East, Australia, Intra-Asia Singapore for Asia, Middle East, Europe USA, Europe, Australia, Kaohsiung for all trade Middle East, Intra-Asia, lanes New Zealand Singapore for Europe Intra-Asia Hong Kong for Asia

Exports 350 TEUs Imports 600 TEUs Exports 1,275 TEUs Imports 2,060 TEUs Exports 400 TEUs Imports 1,200 to 1,600 TEUs

Australia

China

Thailand Indonesia

Manila; For outports, they use domestic carriers

Exports 2,100 TEUs Imports 3,100 TEUs Exports 600 TEUs Imports 1,200 TEUs Exports 700 TEUs Imports 1,200

USA Intra-Asia

Europe

Asia

COMPANIES Hyundai Merchant Marine Co., Ltd. (HMM) Islamic Republic of Iran Shipping Line (IRISL) Kawasaki Kisen Kaihsha (KLINE)

PORT OF ORIGIN Manila, Cebu, General Santos (they use domestic carriers) Manila; For outports, they use domestic carriers Manila, Cebu, Davao, General Santos

TRADE LANES USA, Europe, Canada, Australia, Intra-Asia, Middle East Middle East Intra-Asia, Europe, USA, Middle East, South America, Australia, New Zealand USA, Canada, Europe, Intra-Asia, Australia, New Zealand, Middle East, Africa, South America, Indochina Europe, Australia, New Zealand, Soth Africa USA, Europe, Middle East, Intra-Asia, Australia, New Zealand USA, Europe, Middle East, Intra-Asia, Australia, New Zealand US, Intra-Asia, Europe, Middle East

TRANSHIPMENT PORTS Kaohsiung for all trade lanes except Intra-Asia Singapore for Middle East Tokyo/Kobe for USA Hong Kong for USA (East Coast) Singapore for Middle East Malaysia for Asia Singapore for Middle East Hong Kong for all trade lanes Kaohsiung for USA Singapore for all trade lanes Kaohsiung for all trade lanes Singapore for Europe Malaysia for Asia Kaohsiung for other trade lanes Hong Kong for all trade lanes

TEUs AVERAGE TEUs/MONTH Exports 1,000 TEUs Imports 1,200 TEUs Exports 80 TEUs Imports 300 TEUs Exports 2,400 TEUs

SHIPMENTS MOSTLY TO USA

Middle East Japan

Maersk Sealand (MSL)

Manila, Davao, Subic, Cebu, General Santos, Cagayan de Oro

Exports 4,000 TEUs Imports 4,400 TEUs

USA

Malaysia Internaional Shipping Corp. Berhad (MISC) MOL Philippines, Inc. (MOL) Nippon Yusen Kaisha (NYK)

Manila, Cebu, Davao, General Santos Manila, Cebu

Manila, Cebu, Davao, General Santos

Norasia Container Lines

Manila For outports, they use

Exports 350 to 400 TEUs Imports 400 to 600 TEUs Exports 1,300 TEUs Imports 2,000 TEUs Exports 2,000 TEUs Imports 3,000 TEUs Exports 250 TEUs

Europe

USA

USA

Europe

(NORASIA) COMPANIES Orient Overseas Container Line (OOCL) P&O Nedlloyd Lines (PONL)

domestic carriers PORT OF ORIGIN Manila, Cebu, Davao, General Santos

TRADE LANES Europe, Mediterranean, USA, Intra-Asia, Middle East, Australia, New Zealand Asia, Africa, Middle East, Australia, New Zealand, Europe, Mediterranean, USA Intra-Asia (Singapore, Malaysia, Brunei, Thailand, Indonesia, Vietnam) Australia, New Zealand, Gulf, Indian Subcon, Africa, Red Sea, South Pacific Island, India, Intra-Asia USA, Micronesia, Samoas

Manila, Cebu, Davao

Pacific Eagle Lines Pte., Ltd. (PEL) Pacific International Lines Pte., Ltd. (PIL) Phils., Micronesia & Orient Navigation Co. (PM&O) Regional Container Lines Pte., Ltd. (RCL)

Manila, Cebu, Davao, General Santos Manila, Cebu, Davao, General Santos

TRANSHIPMENT PORTS Singapore for Australia, New Zealand Kaohsiung for USA, Intra-Asia, Europe Singapore for all trade lanes Kaohsiung for USA Hong Kong for Carribean Singapore for all trade lanes Singapore for all trade lanes

Imports 500 AVERAGE TEUs/MONTH Exports 4,000 TEUs Imports 5,000 TEUs Exports 600 TEUs Imports 1,600 TEUs Exports 400 TEUs Imports 500 TEUs Exports 250 TEUs Imports 300 TEUs Exports 350 TEUs Imports 600 TEUs Exports 1,000 TEUs Imports 2,400 to 3,200 TEUs

SHIPMENTS MOSTLY TO Asia

USA

Singapore

Australia

Manila, Cebu, Davao

Kaohsiung for all trade lanes

USA

Manila, Cebu, Davao, General Santos

Intra-Asia, Middle East

Singapore main hub Hong Kong for China * Direct services to IntraAsia (Taiwan, HK, Singapore)

Malaysia

Senator Lines (SEN)

Manila, Cebu

Intra-Asia, Europe, Middle East, USA, Mediterranean

COMPANIES Tokyo Senpaku Kaisha (TSK)

PORT OF ORIGIN Manila, Cebu, Davao, General Santos

TRADE LANES Intra-Asia, Middle East

United Arab Shipping Co. (UASC) Wan Hai Lines, Ltd. (WHLL)

Manila, Cebu, General Santos, Zamboanga (they use domestic carriers) Manila, Cebu

Middle East, North Europe, Mediterranean, USA Intra-Asia, Middle East, Europe, West Coast

Busan for USA Kaohsiung for USA Singapore for IntraAsia, Middle East, Australia, Europe TRANSHIPMENT PORTS Kaohsiung for IntraAsia Singapore for Middle East Singapore for all trade lanes Hong Kong for China Kaohsiung for East Asia & West Coast Singapore for Europe, India, Middle East Malaysia for Europe, India, Middle East Kaohsiung for USA, Intra-Asia Singapore for Europe Hong Kong for all trade lanes

Exports 150 TEUs Imports 300 TEUs AVERAGE TEUs/MONTH Exports 3,400 TEUs Imports 4,200 TEUs Exports 250 TEUs Imports 500 TEUs Exports 1,250 TEUs Imports 7,000 to 8,000 TEUs

Europe

SHIPMENTS MOSTLY TO Asia

Europe

Taiwan

Yang Ming Marine Transport Corp. (YML) Zim Israel Navigaton Co., Ltd. (ZIM)

Manila, Cebu, Davao, General Santos, Cagayan de Oro Manila; For outports, they use domestic carriers

Intra-Asia, Europe, Dubai, USA USA, Europe

Exports 1,500 TEUs Imports 3,000 TEUs Exports 718 TEUs Imports 82 TEUs

Intra-Asia

USA

Advertisements and Promotions of Competitors The players in the shipping industry utilizes the same medium and channels to reach their target market. Shipping companies usually employ similar channels to disseminate their message to their clients. The companies do not have extensive advertising efforts,

only print advertisements in newspapers such as Malaya and Port Calls, and Internet websites. Shipping companies also sponsor some events like golf or bowling tournaments. Shipping companies mostly depend on personal selling and public relations to make sales.

CHAPTER 2 SWOT ANALYSIS Strengths Being part of the A.P. Moller Group, Maersk Sealand is the worlds largest provider of containerized transport solutions serving customers all over the globe. With over 100 years of experience in liner shipping, Maersk Sealand now has a well-established reputation and background. Maersk Sealand is well respected in the industry with a reputation of providing customer-focused solutions, a quality through excellence approach and continual innovation. The company holds significant shares in all major trades, with their customers giving high value to the companys history of investing in vessels, containers, terminals, and IT. Maersk Sealand provides a strong organization structure with an optimized global network of services to facilitate better interaction with customers. Their service network spans six continents with dedicated Maersk Sealand professionals ready to serve in more than 100 countries around the world thus, ensuring reliable and comprehensive worldwide coverage. Most of the customers of Maersk Sealand have been loyally supporting their services for many years, some even spanning for more than a decade now. Having well-trained employees who are involved in establishing effective sales communication and long-term relationships with existing customers is important. Being able to truly understand clients and their business builds long-term relationships and customer loyalty, which Maersk Sealand has achieved through many years of service in the shipping business. With their fixed schedule that arrives and departs on time, Maersk Sealand provides their customers with consistent schedule reliability. With their two sailings per week, Maersk Sealand offers greater flexibility in transport options. Their vessels connect to Maersk Sealands global network of more than 300 vessels via Kaohsiung, Taiwan or Hong Kong.

With more than 300 container vessels, 950,000 containers and company owned terminals, trucks, and trains, availability of equipments has never been a problem for Maersk Sealand. Needless to say, at their disposal is a huge and modern fleet of containers and vessels. From straightforward dry boxes to state-of-the-art controlled atmosphere reefers, they have every size and type of container to suit the needs of all of their customers. Maersk vessels are among the most modern, secure, and environmentally friendly to sail the oceans hence, assuring the cargos a smooth and safe voyage. Maersk Sealand operates more than 950,000 containers, more than 75,000 of which are reefer containers. Being dubbed as the worlds leading reefer carrier, they are continuously investing in new technology so as to be able to offer their customers a variety of specialized state-of-the-art reefer equipment. With an active commitment to efficiency and technology in all aspects of their operations, as represented by innovations such as the Super C. Environmental Best Practice Freezer9 unit, which can chill its contents up to -60 and with the use of reefer units utilizing non-CFC refrigerants, customers are ensured optimal conditions for both fresh and frozen products. They have also established a dedicated reefer organization focusing on the transportation of perishable products. The companys technical sales staff provides all the necessary assistance including recommended temperatures, the ideal stowage pattern, and the optimum treatment of the products prior to shipment. Reefer technicians at the terminals and on board the vessels ensure that the containers are supervised 24 hours a day. Maersk Sealand makes extensive use of online communication and IT applications more specifically, the use of an automation processing system called Electronic Data Interchange (EDI). The use of EDI enables them to work smarter and to increase productivity by automating

Chilling Training at South Tyneside College. Available: http://maritime.press-world.com/v/25968.html

the interchange of information between its back office systems. This reduces paperwork and the need to manually rekey data, thereby preventing delays and increasing data quality. Substantial enhancements have also been implemented within their technical infrastructure and support organization in order to meet the requirements of customers. With Maersk Sealands working website, customers are presented with a system that enable them to make bookings, track cargos, and carry out documentation at the click of a button. In addition, customers can review sailing schedules, check freight rates, submit shipping instructions, view and verify bills of lading, and monitor the state of their accounts. In other words, all the jobs that customers used to do personally or on the phone, they can now do online 24 hours a day making it more efficient and effective for both Maersk Sealand and their customers. Having dedicated and competent staff including an extensive M.I.S.E. program ensures a strong commitment to the customers and business partners of Maersk Sealand. In an increasing global and challenging business environment, and with growing markets, Maersk Sealand strives to offer their customers reliable yet innovative solutions that help in creating new business opportunities while at the same time optimizing the transportation processes of customers. Being an information company in every sense, the foremost task for them is to provide the vessels, the harbor, the customers, and all relevant parties with the right information at the right time. Maersk Sealands unique education program and career, M.I.S.E. (Maersk International Shipping Education) Program combines theoretical and practical education with working experience; thus, ensuring that only the best-of-the-best individuals are employed for management positions. A key factor in Maersk operations is having good working relationships with suppliers because suppliers form an integral part of their value chain. All companies and business units of

the A.P. Moller-Maersk Group are active participants in Maersk Procurement,10 which organizes and pools the vast range of procurement activities conducted by A.P. Moller companies and business units with thousands of suppliers from around the world. Maersk Procurement reduces purchasing expenditures and improves the quality of products delivered by building close and lasting relations with world class suppliers. Weaknesses Maersk Sealand lacks knowledge or information about the business and services of their competitors. Only with the right information about their competitors will Maersk Sealand be able to build appropriate strategies, which are unique to them and more importantly, will directly target the business needs of their customers. Maersk Sealand has low market share in the Intra-Asia, Australia and New Zealand trade lanes. Specializing in long hauls, Maersk Sealand is more concentrated on trade lanes such as the Transpacific and Europe. Thus, opportunities are lost in other trade lanes. More importantly, as a global carrier, they should be able to serve as many trade lanes as possible, which should include Intra-Asia, Australia, and New Zealand. Maersk Sealand directly serves the ports of Manila, Subic, General Santos, Cagayan de Oro, Davao, and Cebu. They should also consider directly serving other ports in the Philippines such as Zamboanga and Batangas to provide better service for all of their customers. With a limited number of ports directly served, coverage will be limited to major ports only and not to any other routes. Maersk Sealand charges higher freight rates as compared to other shipping companies because as an international and world-class carrier, there is a constant need to update
10

Procurement for the Joint Benefit of Suppliers and Purchasers. Available: http://www.maersk.com/procurement_about.asp?nav=6&subnav=61

the technology and services used in the business. Although higher freight rates are justified with their unique and modern service, there are certain customers who are not willing to pay for a higher price. Having feeder vessels only in the Philippines, the goods still need to be transported to transshipment ports where the mother vessels are located. Goods which are not directly shipped to its final destination may result to longer transit times in some trade lanes. Specifically, this will be a drawback for Maersk Sealand in destinations where other shipping companies provide direct services hence, shorter transit times for them. As a branch of Maersk Sealand International, Maersk Sealand Philippines is required to comply with certain rules and regulations imposed by the headquarters in Copenhagen, Denmark. The mother company is very thorough and systematic with certain requirements to avoid inefficiency and problems from lack of papers or documents. Thus, Maersk Sealand is perceived by some customers to be very rigid and strict with documentation. In the shipping industry, advertisements and promotions are not used as much as personal selling. Maersk Sealand has very minimal advertisements and promotions. The minimal advertisements implemented by Maersk Sealand are not as effective because the medium used (i.e., newspapers with a limited market reach) is not as highly visible to the market. Furthermore, the allocation budget for advertising is not given much priority by the company. Opportunities Shipping can be developed through service and market development. Through service and market development, Maersk Sealand can expand their market share. Service development can be achieved through incorporating new and innovative equipments and technology while market development can be done by attracting and tapping into new markets

(i.e., such as exporters from other industries, most especially in the industries which they normally do not serve), or venturing into new trade lanes. As a labor-intensive country, the Philippines is a hub for manufacturers of potential products for the world market. More manufacturers investing in the countrys labor force may translate to higher exports and thus, higher volume of shipments for Maersk Sealand. Compared to other means of transporting goods, shipping is more economical in transporting big bulk of goods. Exporters prefer shipping as a means of transporting goods because it is more efficient; they can transport big bulk of goods in one shipment. Furthermore, shipping is cheaper than other modes of transportation such as air or land. With trade liberalization such as the reduction in tariff rates, there will likely be an increase in the demand for shipping companies. Therefore, there will now be a bigger market for Maersk Sealand to tap. At present, there is growth in the exports of industrial products in the Philippines. Growth in the exports of industrial products can also be an opportunity for potentially higher volume of shipments. In addition, there is an opportunity for Maersk Sealand to specifically target exporters of industrial products. The proliferation of bilateral and regional trading arrangements will hasten the effects of trade liberalization such that prices of traded commodities will decrease. As a result, there will be an increase in trade and ultimately in the demand for shipping companies. Again, this is an opportunity for Maersk Sealand since there will now be a bigger market to take advantage of. Maersk Sealand can use technological advances as an opportunity to enhance its service

and be more efficient. Innovation is central to effective marketing but major service innovations are relatively rare. More common is the use of new technologies to deliver existing services in new ways. Specifically, the development of the Internet and the near-universal connectivity that it provides has changed some of the activities of Maersk Sealand. The opportunity lies in the online interaction with customers through web application and data integration. Technological advances have greatly reduced the effort required to communicate with trading partners and also allowed them to make prearrangements for customers and delivery at any given destination. These advances can also help in the innovation of more enhancing factors whose presence will certainly create greater customer satisfaction. Technological developments may take many forms such as basic research, process equipment design, and servicing procedures. There are foreseen developments on services because of improved government policies and incentives. As a result, Maersk Sealand can adapt faster, more streamlined administrative procedures and also, exporters will be more encouraged because services and incentives are now given. Threats In the Philippines, Maersk Sealand has numerous competitors who are also major key players in the shipping industry. There is also increased competition in the trade lanes that Maersk Sealand currently serves because competitors are trying to expand to other trade lanes. With numerous competitors, customers will have more available options to choose from. More specifically, customers will have a wider choice of schedules and equipments. Having numerous competitors will lead to price competition, making it even more difficult to optimize freight rates. Increasing competition may result to lost market share because existing and

potential customers may switch or tap the services of other shipping companies, choosing whichever liner will suit their business needs best. Some competitors specialize on a specific area and thus, becoming more efficient in that particular trade lane. Customers, most especially those whose main business is concentrated on just one trade lane, will tend to choose the shipping company that specializes on the trade lane that concerns or relates to their business the most. Maersk Sealand concentrates more on longer hauls such as the Transpacific and Europe, and less on other trade lanes such as Intra-Asia, Australia and New Zealand. As a result, Maersk Sealand may lose clients in the trade lanes competitors will choose to specialize. Weather disturbances and unpredictable weather conditions can cause delays in shipping, just like in any other modes of transportation. Delays can cause serious inconvenience to customers most especially if goods are perishable in nature. Goods can be stocked for days and even weeks. Although these are external forces that are beyond the control of Maersk Sealand, delays can have negative effects on the customers business and thus, harmful implications for Maersk Sealand. The cheap labor in China has made many manufacturers whether locals or foreigners, move the production of their products from the Philippines to China because it is wiser economically. Although it is beneficial for the firms venturing to China, it creates a bad effect on the Philippine economy in the form of decreasing exports and gross domestic product, and increasing unemployment rates given that most Filipinos are engaged in manufacturing. For Maersk Sealand, worsening economy conditions and lower exports will translate to lower volume of shipments.

According to the World Trade Organizations 1995 Agreement on Textiles and Clothing, quotas for garments exports will have to be removed by January 2005 to complement its liberalization policy. The Philippines benefited from the quota system because it enjoyed assured allocation for its garment exports to major export destinations like the United States and European countries. With the lifting of the quota system, the Philippines and other garment exporters are expected to face stiff competition from China. This will lessen the garment exports not only for Maersk Sealand but for the whole shipping industry as well. However, with the expected adverse effects of the lifting of the quota system, the Confederation of Garments Exporters of the Philippines together with 36 other garment exporting countries signed a petition seeking a three-year deferment of the removal of the export quota system for garment and textile. A big percentage of the Philippines export comes from the electronics sector. According to the Institute of Finance Inc., there will be a decline in global demand for electronics sector next year. This means that Maersk Sealand electronics exports may also decline.

SWOT MATRIX
STENGTHS (S): 1. Well-established reputation and background. 2. Worldwide coverage. 3. Customer loyalty. 4. Consistent schedule reliability. 5. Availability of equipments. 6. Worlds leading reefer carrier. 7. Online communication and extensive use of IT applications. 8. Dedicated and competent staff including extensive M.I.S.E. program. 9. Good working relationships with suppliers. OPPORTUNITIES (O): 1. Shipping can be developed through its services and the market. 2. Philippines is a laborintensive country. 3. Shipping is more economical in transporting big bulks of goods. 4. Trade liberalization. 5. Growth in the exports of industrial products. 6. Proliferation of bilateral and regional trading arrangements. 7. Technological advances. 8. Improved government policies and incentives. S-O STRATEGY 1. Give incentive to those loyal customers and to those who refer Maersk Sealand to other clients. This will increase market share and help the company build more customer loyalty. (S3, O1) 2. Extensive use of IT applications, competent staff and good working relationships with the suppliers will make the company more efficient in their services and thus, resulting to more economical prices of shipping services. (S7, S8, S9, O3) 3. Competent staff can tap potential markets such as the industrial industry. (S8, O5) WEAKNESSES (W): 1. Lack of knowledge and information about their competitors. 2. Low market share in the Intra-Asia, Australia and New Zealand trade lanes. 3. Limited number of ports that they directly serve. 4. Higher freight rate as compared to other shipping companies. 5. Longer transit times in some trade lanes as compared to their competitors. 6. Perceived by some customers to be very rigid and strict with documentation. 7. Lack of advertisements and promotions W-O STRATEGY 1. Know more about the competitors services and prices so as to be able to meet minimum service standards. (W1, W4, W5, O1) 2. Advertisements and promotions can help increase the market share in the Intra-Asia, Australia and New Zealand trade lanes, and the potential market of industrial products. (W2, W7, O1, O5) 3. The company can lower their rates in the IntraAsia, Australia and New Zealand trade lanes to attract new customers, increase their market share, and take advantage of the trade agreements. (W2, O1, O4, O6) 4. Through the governments help in the countrys port infrastructures, they can increase the ports that can be directly served. (W3, O8) 5. Technological advances can help them be more efficient as compared to their competitors. (W2, W4, W5, O7)

THREATS (T): 1. Numerous competitors. 2. Some competitors specialize in an area and thus, becoming more efficient in that particular trade lane. 3. Competitors are trying to expand to other trade lanes. 4. Weather disturbances and unpredictable weather conditions can cause delays. 5. Cheap labor of China. 6. Removal of quotas for garments exports by January 2005. 7. Decline in global demand for electronics sector.

S-T STRATEGY W-T STRATEGY 1. Justify the high prices by offering quality 1. Know more about the competitors and their prices, services like consistent schedule reliability, to help them gain competitive edge in terms of their availability of equipments, worldwide coverage, products and services and be able to create longand excellent customer service so that customers term plans to counter stiff competition in the will not shift to other shipping companies. (S2, industry. (W1, W4, W5, T1, T2, T3) S3, S4, S5, S6, S7, T1, T3) 2. Having effective advertisements and promotions 2. Having worldwide coverage, they can help create awareness, interests and the desire can compare their services to competitors who are to avail the services of Maersk Sealand as against trying to specialize on a specific trade lane, and the service of competitors. (W7, T1, T2, T3) then identify their competitors key services. After evaluation, the company can match competition and also focus on being more efficient on the services that they need more improvement on. (S2, T2) 3. Keep the customers loyal by giving them incentives or having fixed contracts especially in the garments and electronics sectors. (S1, S3, T6, T7) 4. Since the company has been in the business for a long time, they should be able to have back-up plans for changing weather conditions. (S1, T4)

CHAPTER 3 GOALS AND OBJECTIVES Goal Objectives To increase the market share in the Intra-Asia, Australia and New Zealand trade lanes by at least 5 percent annually. To decrease operating costs by at least 4 percent. To establish Maersk Sealand as a trusted, efficient and high-quality service shipping line in all of its service lines. Medium-term Objective To be able to reach P49,150,000 in net income for the year 2005. To be the preferred shipping line among the target market.

Long-term Objectives To increase brand loyalty among the target markets. To have a stronger brand recall in the Intra-Asia, Australia and New Zealand trade lanes. To achieve market leadership position among the target market.

CHAPTER 4 SURVEY I. Survey Objectives and Methodology The objective of this survey is to identify the characteristics direct shippers and freight forwarders consider when choosing a shipping line and how they decide on it. From the survey results, the group will develop the right marketing mix and action plans that will help Maersk Sealand increase their market share. Our group made use of primary sources particularly telephone survey with existing and prospective clients. Freight forwarders and direct shippers listed in the Top 1000 Exporters from the Business World Magazine and The Shippers Directory were interviewed for the purpose of this survey. The 100 respondents were randomly chosen from the lists mentioned. The telephone survey was conducted for a week. It is with the help of these respondents that substantial information was gathered about the liner selection process and more importantly, on how to increase the market share of Maersk Sealand. The survey questionnaire can be seen in Appendix 18. For the data presentation, tables, graphs and matrices were used to better understand the survey results. Refer to Appendix 19. Furthermore, the SPSS program was used to analyze the data gathered. II. Survey Results A. Respondents Background Information Most of the respondents are freight forwarders, while the direct shipper respondents are

mostly engaged in perishable food, non-perishable food and industrial products. All of the respondents are part of the liner selection process. Out of the 100 respondents

interviewed, more than 1/3 makes the final decision on which liners to use.

The decisions in liners selection are usually performed locally. Such decisions involve

negotiating rates, selecting from a list of approved liners, and providing feedback on performance and service quality of liners used. The decision regarding the choice of liner is made based on all trades combined.

B. Shipping Needs/Activities Almost half of the respondents ship cargos once per week on their main trade. More than half of the respondents need to ship cargos on specific days of the week. The approximate average total shipment per year is 705 TEUs.

Most of the respondents total shipment in terms of volume is in Intra-Asia, followed by

Transpacific and Europe respectively. Intra-Asia has the highest approximate average total shipment in terms of volume,

followed by Transpacific and Europe respectively. C. Purchase Criteria The top 5 most important attributes in liner selection are as follows: the ability to offer

the lowest price, fastest shipment, most consistent schedule reliability, ability to honor committed availability of space and equipment, and offers the best documentation and shipment information. Most of the respondents are not willing to pay any premium to a liner who can meet their

top 5 purchase criteria. This means that these purchase criteria are supplementary services characterized as hygiene factors. These are service elements that customers take for granted. That is, if these factors are absent or present but performed below a certain threshold level of acceptability, customers will be dissatisfied. However, if these factors are present and performed well, it does not automatically create satisfaction. Such factors are already

expected by customers to be present and performed satisfactorily; therefore, shipping companies must always be able to provide for these services. D. Advertisements/Promotions Most of the respondents know or hear about the shipping lines through word of mouth

through friends, associates, and families, other companies and print ads such as brochures, journals, magazines, and newspapers. The top three most effective medium of communication for the respondents are personal

selling, directory, and magazines/journals.

CHAPTER 5 TACTICS, STRATEGIES AND PROGRAMS I. Service Development Program From the survey of Maersk Sealands clients, which was conducted by the Asia-Pacific Centre for Research for Maersk Sealand last November 2004, Maersk Sealand is perceived to offer the best documentation and shipment information, has the most consistent schedule reliability, and the fastest shipment compared to other main liners. However, Maersk is also perceived to be at par with other main liners in terms of their prices and in terms of being able to honor committed availability of space and equipment. A. Flower of Service 1. Information To obtain full value from any good or service, customers need relevant information. New customers and prospects are especially information hungry. Therefore, Maersk Sealand should make sure the information (e.g., schedule and service hours, prices, offices, trade lanes, origin ports, transit times, notification and confirmation of changes in schedules, demurrage and detention, fees and charges, documentation, availability of equipment, and standard operating procedures and shipping instructions) they provide is both timely and accurate because incorrect information can annoy or inconvenience customers. Maersk Sealand should always provide more convenient ways for customers to contact them while at the same time, providing the quickest response or solutions to the business needs of customers. Other ways of providing information to customers include using frontline employees who must always be well informed and updated, printed and online notices, brochures, and shipping instruction manuals as well as other information media such as videotapes or software-driven tutorials, touch-screen video displays, and menu-driven recorded telephone messages. In addition, the Maersk website should be

continuously updated with useful information that will give support and assistance to the business needs of customers. 2. Order Taking Maersk Sealand should ensure that the process of order taking should be polite, fast, and accurate so that customers do not waste time and endure unnecessary mental or physical effort. Reservations or bookings represent a special type of order taking that entitles customers to a specified unit of service as in the case of Maersk Sealand, containers to ship goods. Accuracy in scheduling is vital reserving shipments and bookings for the wrong day is likely to be unpopular with customers. Maersk Sealand can make use of more innovative technology (i.e., electronic processes and systems, self-service machines, online communication) to facilitate order taking that is, to make it easier and faster for both customers and suppliers. To

encourage customers to use the technology available (i.e., online booking, tracking of cargos, SMS, etc.), the company can provide incentives (i.e., discounts, rebates, etc.) for customers. This will be beneficial for both parties because the use of technology minimizes the time and effort required of both parties while also ensuring completeness and accuracy. 3. Billing Customers usually expect bills to be clear, informative, and itemized in ways that make it clear how the total was computed. Unexplained and unfamiliar symbols, that are decipherable only by experts, do not create a favorable impression; neither does unclear printing or illegible handwriting. Therefore, it will help Maersk Sealand by asking customers in advance what information they want and how they would like it to be organized. Busy customers hate to be kept waiting for a bill to be prepared. Maersk Sealand may create express billing options, taking details of customers accounts in advance and documenting

charges later by mail or messenger. Also, Maersk Sealand should provide their customers with a way to check their billing accounts through the companys website. But accuracy is essential. Because customers use the express billings and websites to save time and to manage their accounts properly, they certainly do not want to waste time later seeking corrections and refunds. Maersk Sealand should continuously build their shipping business by offering customers particularly exporters and other suppliers involved in the shipment of goods, detailed documentation and summary of the accumulation of total shipment of cargos for the year. Intelligent thinking about customer business needs will lead Maersk Sealand to realize that wellorganized information has value to a customer, beyond just the basic requirement of knowing how much to pay at the end of each month. 4. Payment To ensure that people actually pay what is due, Maersk Sealand should institute control systems such as receipt and bill checks before entering the port or the shipment of goods. However, inspectors and security officers must be trained to combine politeness with firmness in performing their jobs so that honest customers will not feel harassed. In addition, Maersk Sealand can also have customer debit accounts (i.e., prepaid accounts) to lessen the costs and inconvenience of having to pay for every transaction. In this way, customer payments are

assured. Furthermore, prepaid payments can also be used by the company for investments in developing and improving their services. More importantly, firms benefit from prompt payment because it reduces the amount of accounts receivable. To reinforce good behavior, Maersk Sealand should periodically send thank-you notes to customers who have consistently paid on time. 5. Consultation

Customers need for advice may vary widely around the world, reflecting such factors as level of economic development, nature of the local infrastructure, topography and climate, technical standards, and educational levels. Effective consultation requires an understanding of each customers current situation before suggesting a suitable course of action. Good customer records can be a great help in this respect, particularly if relevant data can be retrieved easily. There are more formalized efforts to provide management and technical consulting for corporate customers. Advice can also be offered through the website, tutorials, group training programs, and public demonstrations. 6. Hospitality As a multinational corporation, differences in cultural definitions of appropriate hospitality should be considered. Cultural definitions of appropriate hospitality may differ widely from one country to another, such as the tolerable length of waiting time and the degree of personal service expected. In addition, Maersk Sealand can employ sports and entertainment activities which will give more opportunity for a more intimate or personal level of interaction with their customers. 7. Safekeeping Maersk Sealand should mail a brochure with their billing statements containing information about shipping safety and instructions. It seeks to educate their customers about standard operating procedures and how to protect both their goods and themselves from theft locations or other concerns to reduce any risks to their customers or their goods. 8. Exceptions Maersk Sealand should take note of requests made by customers. Too many requests may indicate that standard procedures need revamping. If Maersk Sealand constantly receives

requests for special transit routes or time because there are none available, this may indicate it is time to consider the demand and whether or not adding another route will be feasible. A flexible approach to exceptions is generally a good idea because it reflects responsiveness to customer needs. On the other hand, too many exceptions may compromise safety, negatively impact other customers and overburden employees. B. Technology and Equipments Maersk Sealand is one of the top shipping companies who constantly invest in the repair and maintenance of their equipments. They operate a maintenance program fully compliant with the CSC (Convention for Safe Containers) and IMO Standards, which stipulate the internationally adopted standards and requirements for safe operations. Their container fleet is also subject to continuous modernization, the average age of a Maersk Sealand container is less than five years. Maersk Sealand should continuously invest in upgrading and improving their equipments. Owning some of the biggest vessels in the shipping industry, Maersk Sealand should be able to continuously meet quality requirements and more importantly, the markets needs while at the same time, deterring competition. The Maersk Sealand website should be more comprehensive and should enable customers to do various transactions 24 hours a day, seven days a week. With the help of ecommerce solutions that stems from the exchange of data in a preset format that is transmitted into the Maersk Sealand backend systems without any data loss, they should be able to interact with customers more effectively. This also eliminates the ambiguity of transacting through manual means like faxes and telephone calls. Maersk Sealand should update and develop its website regularly. Changing information, pictures, services, and other relevant information on

their website allows customers to view new information, see different pictures, and stay informed and interested about the company.
Service Development Program Activity Cost Update and development of website P60,000/yr TOTAL: P60,000

II. Target Market A. Trade Lanes Maersk Sealand should still continue catering to businesses that export to long haul destinations because it comprises a considerably large portion of their sales. However, from the survey results and statistics, it will also be beneficial for Maersk Sealand to consider short haul destinations such as the Intra-Asia trade lane. Even though the Intra-Asia trade lane is a short haul destination, it can still contribute enormous profits since it has a large export volume of 214,054 TEUs from the months of January to September for the year 2004. Also, according to the survey conducted, most of the respondents cargos are shipped to Intra-Asia, with a mean of 47.62 percent of each respondents total exports. Therefore, being able to capture a high market share in this trade lane will be beneficial for Maersk Sealand, with its goal of growth in profits. Furthermore, the untapped markets of Australia and New Zealand trade lanes also prove to be potential profitable markets for Maersk Sealand since the combined export volume from the months of January to September for the year 2004 was 9,481 TEUs. B. Ports Although most of the shipments come from the Port of Manila, the company should also focus on other outports such as Subic, Cebu, and Cagayan de Oro because goods originating from these areas have potential in the export market. C. Industries

The exports of garments and electronics are expected to decline next year therefore, Maersk Sealand should focus their efforts on other potential industries to compensate for the decrease in exports of garments and electronics. According to statistics, merchandise exports which include bars, rods of copper, iron agglomerates, semi-conductors, and electronic microcircuits had a positive growth from the year 2003 to 2004. Although other commodities such as fruits, vegetables, machinery and electrical equipments did not project positive growth, Maersk Sealand should still consider these goods as potential markets because these goods have a large percentage share of exports. I. Building a Sustainable Competitive Advantage With over 50 years of doing business in the shipping industry, Maersk Sealand is wellequipped with the valuable experience needed to provide for every customers business needs and solutions. With competency in the trade lanes and origin ports, with excellent equipments and consistent schedule reliability, and with the best documentation and reliable shipment information, Maersk Sealand is able to continuously provide total quality and efficient services. With intense competition in the shipping industry, Maersk Sealand should be more focused in strengthening their market share and position. As previously mentioned, one of their weaknesses is having little knowledge or information about the business and services of their competitors. This should be one of the most important key working areas for Maersk Sealand. Studying competition will definitely be valuable in the implementation of alternative strategies. As an opportunity for them to be even better in the industry, Maersk Sealand should highlight their strengths and improve on their weaknesses. Information about their competitors will enable Maersk Sealand to evaluate their strengths and weakness and more importantly, ascertain whether or not substantial changes should be incorporated in their system.

So as to have sustainable advantage over their competitors, Maersk Sealand should focus on three things low-cost operations, quality service and reliability, and customer loyalty. For Maersk Sealand to fully maximize their operations, it is important for the company to continuously reduce their costs but still maintaining or increasing the quality standard of their services. This can be achieved through proper management of service processes activities are divided among different departments. Furthermore, technological advances can help the company to be more efficient by reducing the service process, which will provide greater convenience for customers and reduce administrative costs. Such advances can include electronic payments, online bookings and tracking of cargos, etc. It will also be advantageous for the company to forecast their imports and exports based on the trends from the past years to help them manage the demand and supply of their equipments. Such forecasts will help the company to optimize service income and minimize costs, particularly with the surplus of containers resulting from a negative balance of trade. Maersk Sealand can also strongly gain sustainable competitive advantage through hiring and training better people than their competitors do. The company should select customercontact people carefully and train them well (Kotler 1999). With Maersk Sealand having

established a reputation of providing high quality shipping options and services and being the ever dependable, reliable and trustworthy partners of their clients, training sales and service personnel in answering customer inquiries, complaint calls and customer visits is largely important; most especially in a market where corporate reputation is a key determinant of market success. Sales and service personnel must be able to provide information, take reservations, price quotations and solve problems tailored to fit each customers business needs and concerns. Perhaps through creating videos and scripts of mock scenarios on proper ways of dealing with

the customer, sales and service personnel will be able to adapt to real life situations. Current and future personnel should be required to watch the video, read the scripts, and be tested. Also, monitoring service personnel carefully in their courtesy in dealing with customer complaint calls and visits is a must. Aside from low-cost operations and providing consistently outstanding shipping service, a key to success is creating customer loyalty through nurturing relationships. It is important for Maersk Sealand to truly understand clients and their business needs. The sales force should be competent and well-trained and just as important, they should establish regular connections with clients through face-to-face meetings, phone calls and also, the use of the Internet. Nurturing customer relationships really depends on a comprehensive and up-to-date customer database and the ability to make use of it in a personalized way. Although postal mailings have been the traditional channel of communication, many businesses are now turning to telecommunications to keep in touch with customers as well as encouraging customers to visit their corporate websites. Businesses typically choose products and services that give them the greatest value. Thus, the key to winning and keeping business customers is to understand their needs and buying processes better than competitors do and to deliver more value. To the extent that Maersk Sealand can position itself as providing superior value to selected target markets by providing more benefits to justify higher prices, it gains competitive advantage. But solid positions cannot be built on empty promises. If the company positions their services as offering total quality and reliability, they must then deliver the promised quality and reliability. Thus, positioning begins with actually differentiating Maersk Sealands marketing offer so that it will give customers and their businesses more value than competitors offers do. To find points of differentiation, Maersk Sealand must think through the customers entire experience with the companys services.

Lastly, the comments and recommendations that customers make about their service encounters can also have a powerful influence on the decisions of other customers. Therefore, the company should offer consistent and outstanding service at all times. Positive word-of-mouth can act as a powerful and highly credible selling agent. This will help the company strengthen their sales and maintain good reputation. At the same time, old customers can also be useful in helping inexperienced new customers on how to ship cargos and process required documents. Hence, Maersk Sealand should continuously survey their clients to know their comments and suggestions with regard to their services as compared to other liners. The survey should be conducted at least once a year, preferably in November or December to be able to evaluate the progress of the company for the whole year and be updated to the ever-changing export market.
Activity Survey Frequency Once a year (Nov. or Dec.) Cost P50,000 per survey TOTAL: P50,000

III. Sales Force Currently, Maersk Sealands sales force is composed of 7 people and is divided according to areas (i.e., Quezon City, Caloocan, Bulacan, Malabon, Makati, San Juan, etc.). Maersk Sealands well-trained sales force is an integral part of the companys operations and success. Because of their continuous and close contact with customers, Maersk salespeople have a direct impact on revenues, especially when considering the lifetime value of happy, satisfied customers. Studies have shown that the best salespeople are those who are highly motivated and good closers but more than this, they are customer-problem solvers and relationship builders. Good salespeople working with key customers do more than call when they think a customer might be ready to place an order. They also study the account and understand its problems. They call or visit frequently, work with the customer to help solve the customers problems and improve their business, and take an interest in customers as people. To be successful, Maersk

Sealands sales force should be well-selected, trained, and organized in a way that reflects the business needs and expectations of their customers. A. Sales Target by Trade Lanes The sales force currently does not have an existing sales target. Maersk Sealand should have a sales target that is specifically divided by trade lane. The sales target should be divided by trade lanes because the company bases their market share and positioning on each trade lane. If the sales target were to be divided by trade lane, they will then be able to project the desired or targeted number of TEUs for each trade lane. The following are the recommended sales target estimates by trade lane: Transpacific 280 TEUs Europe 80 TEUs Intra-Asia 205 TEUs FEME (Far Eastern Middle East) 45 TEUs Australia 4 TEUs New Zealand 1 TEU

*Figures were reached based on existing market share of Maersk Sealand and the objectives. **Sales target of each salesperson per month

B. Incentive Programs Salespeople play a very significant role in selling and promoting the goods and services of Maersk Sealand. They bring in clients, sales and profits to the company. It is for these

reasons that salespeople can be regarded as assets to the company. Thus, it is essential for Maersk Sealand to take good care of their salespeople so as to prevent them from becoming liabilities. Salespeople become liabilities when they are not able to deliver their tasks effectively and efficiently. They may cause the company to acquire losses because they lack the skills,

knowledge, training, or motivation needed.

The following motivating factors are recommended to facilitate excellent results from salespeople: sales commission scheme, training and development, and awards and recognition (i.e., favorable incentive scheme). The commission scheme aims to encourage salespeople to work harder. A mere increase in salary will not ensure the improvement in work discipline because the incentive is granted even in instances when no work is being done whereas in commission basis, people will have to work for the pay. Thus, more or less, there will be an assurance of better employee performance. In addition, salespeople can deliver best what is expected from them if they are equipped with proper training. Training programs provide salespeople with adequate competencies such as knowledge, skills and behaviors for them to deliver a successful job performance. Lastly, recognizing employees accomplishments is an important way to satisfy their self-esteem needs. If salespeople are being recognized and rewarded for their excellent performances, they will be motivated to work harder and perform better for their subsequent tasks. 1. Objectives To motivate sales performance in support of national volume and overall business objectives. To relate payments to volume at the national level and individual local performance objectives, directed towards improvement of business performance. To differentiate incentive payout opportunities consistent with position capabilities to impact volume and business results. 2. Strategies Incentive systems will motivate salespeople to meet their individual targets on a per month basis. Sales Commission Scheme Salespeople will be given commissions for every new customer account.

Sales Commission Program Average Price No. of New Customers* Volume TEUs* Commission (1%) $3000 2 8 $480 $1850 2 8 $296 $625 2 8 $100 $1462.50 2 8 $234 $1200 2 8 $192 TOTAL AMOUNT: $1,302 per salesperson/yr x 7 = $9,114 x 56 = P510,384/yr *These figures are assumptions. **The average price is based on the current prices of Maersk Sealand. Trade Lane Transpacific Europe Intra-Asia Middle East ANZ

Rewards Scheme Prizes such as gift certificates and trips to Boracay will be given semi-annually to the top seller, to serve as both a motivation and reinforcement. The first prize will be given at the end of the first half of the year (from the months of January to June), while the second prize will be given at the end of the year (from the months of January to December). The top seller will be assessed according to the number of TEUs, new customer accounts, and trade lanes accounts.
Rewards Program Period of Accumulation January June January December Prizes Gift certificate worth P5,000 from Rustans Department Store Free trip to Boracay for two - 3 days, 2 nights - accommodation in Pink Patio - inclusive of airfare, land and water transportation, and breakfast

3. Sales Force Costing

Programs Sales Target Incentive Programs: 1. Commissions Computation N/A Cost of commission No. of sales force Exchange rate 2. Rewards Gift Certificate Trip to Boracay for two $1,302 x 7 $9,114 x 56 P510,384 Total Costs No cost incurred

P510,384 5,000

Cost of gift certificate P5,000 Cost of Airfare for two P10,680 Cost of Accommodation 5,000 Cost of Land and Water Transportation for two + 600 P16,280

16,280 P531,664

II. Pricing Programs According to the survey conducted by the Asia-Pacific Centre for Research for Maersk Sealand last November, Maersk is perceived to be at par with other main liners in terms of price. Currently, Maersk Sealand uses cost-based and competition-based pricing. On the other hand, since Maersk Sealand has a reputation of providing quality and reliable service, value-based pricing is recommended to justify their high price with their quality service. The high prices should reflect the level of quality of service provided. In this way, for some customers, price will then become a search attribute in their assessment of quality. However, this pricing strategy will only be successful if there is a clear association between the price and the value that customers actually receive. Therefore, Maersk Sealand should provide more information to existing and potential customers about their unique value-added services. Only then will customers be able to differentiate their service from competitors. Maersk Sealand can also discount prices for large volumes of shipments. This will be profitable for both parties the customer benefits from lower prices while the company may enjoy lower costs from economies of scale. Customer discounts can also be offered when two or more services are purchased (i.e., shipping and trucking/or other logistic services). A flat-rate pricing can also be employed for those customers who regularly have large volumes of shipments throughout the year. In this case, there should be a contract quoting a fixed price in advance of service delivery to avoid any surprises. The risk though is transferred from the customer to the company in the event that the service involves more costs than what was expected. Nonetheless, this is an effective strategy since shipping industrys prices are unpredictable and also, costs are controlled. More so, the company will have an estimated

number of volumes of shipments for the year and an assured allocation of export shipments; thus, more growth in profits. IV. Marketing Communications A. Advertising Program Competitive intensity and customer expectations are increasing in nearly all service industries. Thus, success lies not only in providing existing services well but also in creating new approaches to services. Because the outcome and process aspects of a service often

combine to create the experience and benefits obtained by customers, both aspects must be addressed in a new service development and marketing communications program. Marketing communications between Maersk Sealand and their customers and prospects can take many forms, some of them highly creative. In a competitive environment, effective communications play a vital role in marketing strategy, moving new customers through the purchase decision process and helping to reinforce brand preference among existing customers. Communication efforts serve not only to attract new users but also to maintain contact with the companys existing customers and build relationships with them. Reinforcing loyalty and securing repeat sales are usually central to Maersks long-term profitability. Existing

customers should never be taken for granted. The communication plan that will be implemented is based from thorough research, surveys and interviews of top exporters, associations and organizations. 1. Objectives To make at least 60 percent of the target market aware and informed of the services provided by Maersk Sealand. To persuade 70 percent of the target market that Maersk Sealand offers the best solution to their business needs, relative to the offerings of competing firms.

 To sustain or maintain the support and loyalty of the target market of Maersk Sealand. 2. Target Audience/s The primary target markets of the campaign are exporters who mainly transport goods to the United States, Europe, Middle East, Australia and New Zealand. These companies usually export commodities such as food (e.g., fruits and marine products), furnitures, garments, and handicrafts. They usually have regular shipments in large quantities. The secondary target markets of the campaign are exporters who mainly transport goods to closer trade lanes such as Intra-Asia. Similarly, these companies also export commodities such as food (e.g., fruits and marine products), furnitures, garments, and handicrafts. They also have regular shipments in large quantities. 3. Creative approach Creative Objectives To inform and educate prospective customers about Maersk Sealand, their brand promises, and the relevant features of the services that Maersk Sealand offers. To persuade the target market that specific benefits are gained from using the services provided by Maersk Sealand, relative to the offerings of competing firms. To remind customers and prospects of service availability and motivate them to use the services of Maersk Sealand. Consumer Promise It is difficult to look for a perfect shipping line that is reliable and trustworthy and at the same time, will suit the varying business needs of exporters today. With Maersk Sealand, they are assured that their business needs will be addressed accordingly and with the best guarantee that their goods will reach its destination at the fastest time and in optimal condition. Maersk Sealand promises to provide the best cargo transportation solution for all the business needs of

their customers (i.e., increased access, greater flexibility, reduced production lead-times, access to quality containers). More importantly, Maersk Sealand is continuously searching for means to reduce costs while maintaining the standard of quality and efficiency. These are the factors that make Maersk Sealand a successful and reputable brand in the industry today. Support With advanced technology and better communication, business has become increasingly global. Customers will need a trustworthy and reliable partner in the transportation of their goods. Shipping liners are prone to fortuitous events such as natural calamities, unforeseen circumstances and uncontrollable conditions. Therefore, it is best to have a clear understanding of the various shipping services and solutions available for the customers business needs at the forefront of providing total quality, service, and reliability is Maersk Sealand. It is best to choose the right shipping liner that will give that assurance of consistently having safe and secured operations to protect its customers at a fairly reasonable rate. Efforts to increase the use of Maersk Sealands services are indeed good social and economic investments. Brand Personality Businesses are overloaded with information about products and services. They cannot reevaluate products every time they make a buying decision. To simplify the buying process, customers position products, services, and companies in their minds. A services position is the complex set of perceptions, impressions, and feelings that customers hold for the product or service compared with competing products and services. Customers position product and

services with or without the help of marketers. But Maersk Sealand should not want to leave their services positions to chance. They must plan positions that will give their services the

greatest advantage in selected target markets, and they must design marketing mixes to create these planned positions. Maersk Sealand will be epitomized in this campaign in three words, total quality, service and reliability. That is, Maersk Sealand will be personified as the leading global carrier particularly in the Philippines providing second-to-none transportation solutions and creating opportunities in global commerce, relative to the offerings of their competitors. Ultimately, Maersk Sealand is the perfect business partner you have always wanted. Tone and Mood The tone and mood of the advertising will be simple but having high or strong audience impact. Shipping needs are beginning to change. In the past few years, there has been an influx of exporters in the industry and at the same time, intensifying competition in the industry. Being an international brand, Maersk Sealand should above all think global and act local. With this in mind, the proposed advertising strategy will move towards marketing business relationships. Most companies give too much emphasis on making a sale. More than just expanding sales, we want to give more emphasis on maintaining profitable long-term business relationships with customers by creating superior customer value and satisfaction through Maersk Sealands total quality, service, and reliability. Creative Execution Our advertising execution will not be too bold. It will be simple and clear cut. With Maersk Sealand, doing business has never been this smooth-sailing. With a caption that says, we are the perfect business partner that you have always wanted. The entire campaign highlights the value of developing brand loyalty through better and long-term business relationships. We want to create, maintain and enhance strong relationships

with customers and other stakeholders. Therefore, the goal of this campaign is oriented towards the long-term. The goal is to deliver long-term value to businesses, and the measure of success is long-term customer satisfaction and loyalty. Our strategy requires that all of the companys departments work together with marketing as a team to serve the customers business needs. Relationship marketing is based on the premise that important accounts need focused and ongoing attention. It involves building relationships at many levels economic, social, technical, and legal resulting in high customer loyalty. In many cases, the company is not seeking simply a sale. More than anything else, it aims to target a major customer that it would like to win and keep. The company would like to show their customers that it has the capabilities to serve their business over the long haul, in a mutually profitable relationship. It must be realized that when operating in maturing markets and facing stiffer competition, it costs a lot more to wrest new customers from competitors than to keep current customers. The campaign will relay the message that Maersk Sealand is best for your business. That is, Maersk Sealand is the only choice to be considered as your business partner. 4. Material requirements The ads will be generated primarily through the use of a software called Adobe Photoshop. Old and new pictures will be used for the ads. The printing for the ads will be outsourced for better and quality resolution. 5. Media planning Media Mix The campaign will make use of non-traditional advertisements such as brochures, emailing lists, directories, broadsheets like Malaya and Port Calls, and journals/magazines like Am-Cham Business Journal (American Chamber of Commerce of the Philippines), ECCPs

Business Review (European Chamber of Commerce of the Philippines), Philippine Business and Logistic Power Ads. a) American Chamber of Commerce of the Philippines Publication The Am-Cham Business journal is a monthly, general business magazine circulated worldwide containing business updates, corporate information, current trends in the different industries and the general business outlook within the Philippines. Am-Cham members are some of the top business minds in the Philippines. They are the movers, shakers and top decision makers in Metro Manila. b) European Chamber of Commerce of the Philippines Publication Business Review The Business Review is a bimonthly magazine containing reports on the most recent economic activities in Europe and the Philippines. It addresses issues affecting business, provides information on the activities of the ECCP and its committees and offers advertising opportunities. Readers and subscribers of the magazine include ECCP members (top European and Philippine corporations), which currently stands well at 726 companies, CEOs and senior executives, government agencies, diplomatic missions and international organizations, individual European and Philippine subscribers, foreign-based companies and organizations, purchasers, researchers and academicians, and students. Philippine-European Business Directory The Philippine-European Business Directory (PEBD) is a unique resource publication to: identify whos who in the Philippines with regard to European business, promote the business of ECCP members and advertisers, provide easy access to products and services

offered by ECCP members, generate business contacts among ECCP members and clients, have a handy reference on Philippine-European business performance. c) Philippine Business Magazine With a growing number of readers and subscribers, the Philippine Business is published six times a year by the Makati Business Club to answer the demands of a business magazine to present a clear and in-depth view of business developments in the country. It contains news and information on the Philippine economy, with a strong focus on investments, trade, economic forecasts, growth sectors, regional reports, and entrepreneurs. Complimentary issues are distributed to top and senior corporate executives, investors and entrepreneurs, fund managers and policy and decision makers with a keen interest in the business and economic affairs of the country. Its international readers include foreign business/industry associations, private

companies/industry leaders and business councils while its domestic readers include local business/industry associations, private companies/industry leaders, foreign embassies in the Philippines, deluxe hotels and resorts, banking and financial institutions, and

bookstores/newsstands. It is also distributed at key business conferences and investment missions that visit the country. The magazine is well received overseas and in the Philippines and there is a continuing request from readers for copies. Copies of the magazine can also be found at selected bookstores and newsstands in Metro Manila and in major cities nationwide. d) Logistics Power Ads Logistics Power Ads is a fortnightly news magazine that provides its readers helpful information and accurate news to help them find a better and more feasible solution to their logistics needs. Circulation comes out twice a month, specifically every first and third weeks of

the month. It is the ultimate channel of information in a format that welcomes a mixture of subject matters, which includes logistics solutions, work enrichment, customs practices, travel and leisure, a comprehensive network directory, and current affairs where people from the industry share their opinions on certain topics, issues or concerns, whether it be inside or outside the transport industry. Furthermore, it reflects a personal glimpse of the key figures behind the industry, by featuring and highlighting their pursuits in further improving their businesses. And more importantly, it serves as the window to freight logistics as it accents updates and developments on the industry, as well as up-to-date information on the different companies that make up the cargo transport business. It is the vital link that laces up its broad range of readers/subscribers who are members of the different sectors of the industry from International and Domestic Sea Freight and Airfreight Forwarders, International and Domestic Shipping Lines, Maritime Manpower Agencies, Shipbuilding Agencies, Customs Brokers, Trucking Companies, to exporters as well as various associations/organizations/agencies. e) Malaya and Port Calls Malaya has a section attributed to the shipping business particularly published schedules and rates of various shipping companies. On the other hand, Port Calls is a newspaper circulated primarily for the purpose of those in the shipping industry. Media Rationale The non-traditional advertisements will be placed and distributed in strategic locations and publications that are visible and accessible to the target market. As researched, readership for the above-mentioned journals/magazines are primarily senior management or top decision makers of mid- to large-sized firms actively involved in

exporting and importing, as well as the service industries supporting their efforts.

These

companies represent the fastest growing sector of the economy in terms of revenues and job growth and therefore, assuring Maersk Sealand the coverage of multinational companies and the largest exporters. Brochures will also be distributed to the top exporters of different commodities. Brochures could be easily mailed and distributed to the persons-in-charge or marketing officers of the targeted companies. Brochures contain direct information and updates about Maersk Sealand, which could be easily understood and recalled by the target audience. E-mailing lists will be sent out as well. This would not incur any costs. Lists will include members of various associations/organizations such as CITEM, PHILEXPORT, American and European Chamber of Commerce of the Philippines among others. Media Plan a) Print Ads in Several Journals/Magazines and Broadsheets To reach the target market, print ads will be strategically placed in several business and trade journals/magazines and broadsheets. b) Brochures Brochures could be easily distributed to the target market, both existing and potential customers of Maersk Sealand. It also contains direct messages, which could be easily understood and recalled by the target audience, about the facilities and services Maersk Sealand offers. Media Schedule
Advertising Materials Print Ads in Journals/Magazines Frequency To have print ads for the offpeak seasons of Maersk Sealand Locations AmCham Business Journal, ECCP Business Review, Logistic Power Ads,

and broadsheets Brochures E-mail lists

in any of the aforementioned magazines. 1,000 pcs. To send our e-mail updates about Maersk Sealands activities, services, etc.

Philippine Business Magazine, Port Calls, Malaya Distributed to existing and potential businesses/customers. E-groups of various associations/organizations and e-mails of existing customer base

Allocation of Advertising Budget a) Publications

Circulation Magazines: AmCham Business Journal ECCP Business Review Logistic Power Ads Philippine Business Magazine Port Calls Malaya 5,000 copies Initial production of 1,000 copies 5,000 copies 5,000 copies 15,000 copies Approx. 50,000 copies Full Page FC (inside) Full Page (inside) Full Page (inside) Full Page Full Page 1/4 Page (1 color) P11,120/month P30,780 for 6 issues P30,000/half mo. P55,000/issue P6,118/half mo. P28,860/day 4 months (Feb., April, July, Oct.) 3 months (April, June, Oct.) 2/mo. for 4 months (Feb., April, July, Oct.) 3 issues P180,000 P30,780 P240,000 P165,000 Position Rate Frequency Total cost

2/mo. for 5 months (Feb., P61,180 April, June, Aug., Oct.) Every Monday for 3 months (April, P346,320 June, Oct.) TOTAL EXPENSE: P1,023,280

b) Brochures
Location / Purpose Philippines/For information and updates Number of Brochures 1,000 Cost / Brochure Total Cost

P4.50 P4,500.00 TOTAL EXPENSE: P4,500.00

B. Promotions Program 1. Objectives To increase awareness and loyalty of the brand. To expand the existing customer base of Maersk Sealand.

To encourage more use of the services provided by Maersk Sealand. 2. Specify whether for consumer or trade The sales promotion program is focused on trade. Sales promotions are primarily targeted towards businesses particularly the exporters; more than anything else, advertising programs will be primarily directed towards developing better and long-term relationships with businesses. In line with the advertising programs, sales promotion programs are meant to do the same. 3. Strategies Tie-ups Ship to Fly High. Maersk Sealand will tie-up with an airline to have a frequent shipper program that offers free flights around the world. This promotion can help the company increase their market share, encourage sales on long hauls, gain more direct shippers and obtain customer loyalty. In addition, this promotion is a perfect fit to the businesses of the customers of Maersk Sealand who are mostly exporters and importers involved in international markets and with the assumption that they are frequent travelers. Through the tie-up, the company can receive a 25 percent discount on airfare tickets. Shippers can accumulate miles from their container shipments with Maersk Sealand. The accumulation of miles achieved will correspond to a particular free travel destination. Earning miles will be based on the type of container used and the destination of cargos.
Trade Lane Asia, Australia, New Zealand, Middle East Europe, Transpacific Miles Earned as a Percentage of Actual Miles Shipped TEUs FEUs Reefer 100% 125% 150% 100% 150% 175%

Partial Services and its Distances

Routes Manila Abu Dhabi Manila Cairo Manila Bangok Manila Dharan Manila Dubai Manila Fukuoka Manila Hong Kong Manila Honululu Manila Kota Kinabalu Manila Kuala Lumpur Manila Kuching

Miles 4,373 5,760 1,368 4,609 4,295 1,445 702 5,296 682 1,542 1,159

Routes Manila Los Angeles Manila Osaka Manila Pusan Manila Riyadh Manila San Francisco Manila Seoul Manila Singapore Manila Jakarta Manila Sydney Manila Taipei Manila Tokyo Manila Vancouver

Miles 7,337 1,664 1,515 4,835 7,009 1,631 1,481 2,038 3,892 731 349 1,874

The table below shows the miles that the client needs for free round-trip international awards with an airline.
Between Manila and

Between Cebu and

San Francisco

Ho Chi Minh

Los Angeles

Hong Kong

Melbourne

Vancouver

Singapore

Honolulu

Shanghai

Bangkok

Fukuoka

Xiamen

Sydney

Riyadh

Jakarta

Tokyo

Osaka

International Flights

Economy Class Mabuhay Class First Class

150,000 250,000 -

200,000 350,000 -

400,000 650,000 -

450,000 750,000 -

500,000 750,000 1,050,000

600,000 900,000 1,250,000

200,000 350,000 -

* These accrual miles are based on the usual frequent flyers program for airlines and were multiplied by 10, as one account can carry as many containers as it can for each transaction.

Miles shall expire at the end of 3 years after the approval of miles earned through eligible transactions. Miles from one customer account cannot be combined with another account. Each customer must earn their own miles.

The customer must present his Maersk Miles card (given by the company) for verification of the accounts balance and valid company ID upon the presentation of the Bill of Lading to ensure automatic crediting of miles. Miles earned by the customer shall be reflected in the customers quarterly Maersk Activity Statement, which is usually sent whenever there are posted transactions within the quarter. This will help them track their accumulated miles and see the progress towards reaching a preferred destination. For the customers convenience, accounts as well as the miles needed to reach a particular destination can be checked online.

Osaka

Tokyo

Taipei

Guam

Pusan

Seoul

Seoul

 Customers can claim their travel awards from the ticket office of the participating airline by first reserving a ticket in the airline reservation office whether by phone, the Internet or personally. The tickets are subject to the availability of seats and flight schedules.

Customers shall be required to pick up their award tickets at any participating airline ticket office, 3 days after booking the ticket. Failure to pick up the tickets will result in the cancellation of their bookings. When applicable, the award tickets can also be delivered with additional delivery charge, depending on the location. Furthermore, to avoid rush processing fees, customers must book and claim the tickets 10 days prior to the flight departure schedule. Moreover, additional miles can be earned by booking online with the use of their accounts. This will encourage clients to use the online services of Maersk Sealand, which will be more convenient for both parties. The table below shows the estimated costs that can be incurred by Maersk Sealand for the airfare tickets:
Destination Hong Kong, Taipei, Xiamen Japan, Thailand, Guam, Korea, Singapore Melbourne, Sydney Honolulu Riyadh Los Angeles, San Francisco, Vancouver Estimated No. of Free Flights Costs Economy Mabuhay First 10 8 $3.600 8 6 $5,600 5 2 $4,900 2 1 0 $1,800 1 1 $1,000 2 1 1 $3,760 TOTAL: $20,660 x 56 = P1,156,960 less 25% = P867,720

Sponsorships Sponsorships are non-anonymous financial or other kinds of contribution from Maersk Sealand to persons, organizations, institutions, activities or events given with the aim of increasing the knowledge, awareness of and/or supporting the brand. Sponsorship is advertising that seeks to establish a deeper association and integration between the advertiser and Maersk Sealand, often involving coordinated beyond-the-banner placements. Examples of sponsorships will vary widely, as the whole point is to establish a more unique advertising opportunity than afforded by typical rotating advertisements. They may include several fixed ad placements with

tie-ups with a well-known brand (somehow related to the business of shipping or exporting/importing; e.g., Dole, Del Monte, P&G, etc.), advertorials, trade fairs and symposiums, social events, or anything the advertiser and Maersk Sealand can agree on. An average of 6 sponsorships will be given for each year, depending upon the allocation of the budget for sponsorships. Sponsorships attempt to deliver more than a "drive by" impression. Sponsors seek to tap into Maersk Sealand's goodwill and establish credibility in their target market. Sales Calls MVP Accounts (Maersks Valuable People Accounts). A sales call is when a sales representative of Maersk Sealand either personally visits or does a telephone call to existing and potential customers. It is one good way of communicating and keeping in touch with customers. The sales representative informs and updates the customer about Maersk Sealands current services and activities. Free Maersk items such as ballpens, umbrellas, notebooks, t-shirts, bags, and caps will be given every other month. The Maersk items are simply tokens of appreciation for the customers continued support and loyalty. It is another way of further promoting and advertising the brand. That is, if we were to assume that customers will make full use of the Maersk items. Since businesses are interrelated, it is likely that the business contacts of existing customers are not any different from Maersk Sealands target market. Sales calls will be conducted at least once or twice a month to continuously remind and update accounts and more importantly, so as to better satisfy the changing business needs of customers. 4. Coverage Sales promotion programs expand to existing and potential customers of Maersk Sealand.

5. Promo costing
Type of Promotion Tie-ups (Ship to Fly High) Promotional Materials Maersk Miles Card Brochures Air fares (with the tie-up, air fares will have 25% discounts) Sponsorship Contributions Maersk Ballpen Maersk Umbrella Maersk Notebook Maersk T-shirt Maersk Bag Maersk Cap Computation Cost per card P1.50 Multiplied by approx. no. x 200 of cards Cost per brochure P4.50 Multiplied by approx. no. x 200 of customers Total estimated air fares P867,720 Total Costs P300 P900 P867,720 Budget per sponsorship P25,000 Multiplied by no. of x 6 P150,000 maximum sponsorships Cost per ballpen P15 Cost per umbrella 60 Cost per notebook 40 Cost per t-shirt 115 Cost per bag 135 Cost per cap 75 P440 Multiplied by no. x 200 P88,000 of customers TOTAL: P1,106,920

Sponsorships

Sales Calls (MVP Accounts)

6. Promo schedule
Type of Promotion Tie-ups (Ship to Fly High) Sponsorships Sales Calls (MVP Accounts) Duration January-December 2005 January-December 2005 January-December 2005

C. Public Relations Program 1. Objectives To maintain contact with existing customers, providing updates and further education on how to obtain the best results from Maersk Sealands services in light of the customers business needs. To strengthen the image and awareness of the brand globally and locally. To create goodwill for the brand, especially among the target market. To maintain a strong and good relationship with customers and employees.

2. Strategies

Education and Training Seminars/Programs Maersk 101. To provide support, training and educational programs for different industries that have potential for exports; such industries will include furnitures, handicrafts, agriculture and fishing. Education and training is imperative for the company as it continues to implement and update its business operations worldwide and more importantly, to help in the development of Philippine industries and to make Philippine goods known worldwide. Free seminars will be held for exporters as well as for local workers/employees in their respective industries. This will be beneficial not only for Maersk but more importantly, for the economy as well. There will be an estimated number of 60 to 70 participants.

Members of various organizations and associations of different industries will be invited to the seminar. The seminars will tackle on development programs for a specific industry with potential for growth and international export. There will be four seminars which will be held every other month starting May up to November of 2005. The venue for the seminars will be held at Maersk Sealands office in Makati.

2 to 3 professionals or personalities will be asked to speak and share their valuable knowledge, expertise and insights in a given industry. To minimize costs, invitations will be simple and will not be outsourced. Invitations will be in the form of a letter, using Maersk Sealands letterhead or stationery. E-mails will be sent as well to inform and remind the participants about the upcoming seminars. Annual Event Maersk Charity Ball 2005. It is but fitting to end the year with a big bang. Maersk will invite their customers to celebrate a new year for a better and stronger relationship. There is more reason to celebrate because the proceeds of this event will go to various charitable and socio-civic institutions/organizations.

A charity ball will be held on December 17, 2005 as a culmination of the year 2005.

Sponsorships will be solicited from large corporations and organizations to fund this event. This will be a black-tie affair. Aside from the invitations, there will be tickets which will be priced at P750 each. Half of the proceeds will be donated to various charitable institutions/organizations. Artists and band performers will be hired to provide for the entertainment.

Newsletters Maersk Local Connection. Maersk Sealand should make widespread use of direct mail promotions for cross-selling (persuading existing customers to use additional services) and for building customer loyalty. Therefore, Maersk Sealand should mail annual or monthly

reminders and updates to businesses, their customers and stakeholders as well as periodic account statements which will include a brief newsletter or printed customized information on each statement as a means of keeping in touch with existing customers and promoting new services. Maersk Sealand should also remember to acknowledge special events like customers birthdays and anniversaries. Newsletters are a cost-effective way of reaching large segments of the target market. Maersk Sealand should publish a quarterly newsletter for clients, prospects, and the media. Newsletters will contain updated information, notices, news, and activities of Maersk Sealand. Both texts and pictures should be used in Maersk Sealands newsletters. Newsletters will be sent to clients for the months of January, April, August, and December.

A newsletter program will build brand awareness for Maersk Sealand through consistent contact and updates while at the same time, maintaining existing customer interest. 3. PR Materials and Costing
Seminar and Training Program Computation Cost per handout P0.50 Multiplied by no. of pages, x 5 multiplied by approx. no. of participants, multiplied x 70 by no. of seminars x 4 Speakers (2-3) Budget per class P2,000 Multiplied by no. x 4 of seminars Snacks/Food Budget per class P4,000 Multiplied by no. x 4 of seminars Invitations Cost per invitation P.50 Multiplied by x 70 estimated no. of invitations and no. x 4 of seminars Seminar AVP Aids Budget per class P1,500 Multiplied by no. x 4 of seminars Miscellaneous Budget per class P3,500 Multiplied by no. x 4 of seminars Expenses Manuals/Handouts Total Costs P700

P8,000 P16,000

P140

P6,000 P14,000 TOTAL: P44,840

Expenses Tarpaulin 5x20 yards Invitations Food with hotel function room Entertainment Audio-Visual and Light Equipment Souvenirs Miscellaneous

Annual Event Computation Cost per tarpaulin P22,500 Multiplied by no. of x 2 banners Cost per invitation P15 Multiplied by no. x 200 of guests Cost per plate P900 Multiplied by approx. x 200 of guests Total budget for P50,000 Artists/performers/band Budget for AVP P50,000 Cost per souvenir Multiplied by approx. no. of guests Budget for the event P30 x 200 P50,000

Total Costs P 45,000 P3,000 P180,000 P50,000 P50,000 P6,000 P50,000 TOTAL: P384,000

Expenses Printing Mailing

Newsletters Computation Cost per newsletter P3.50 Multiplied by approx. x 200 no. of copies Cost per mail P5 Multiplied by approx. x 200 no. of mails

Total Costs P700 P1,000 TOTAL: P1,700

4. Schedule
Seminar and Training Program Schedule Date Activities Four weeks before the seminar Planning of Seminar Program and Schedule Three weeks before the seminar Secure a seminar venue Three weeks before the seminar Look for possible speakers for seminar Two weeks before the seminar Printing of manuals/handouts to be used Two weeks before the seminar Dissemination of invitations May 2005 1st seminar: A Future for the Furniture Industry July 2005 2nd seminar: Handy-crafting the Filipino Dream September 2005 3rd seminar: Harvesting (Ober da Bakod) Agri November 2005 4th seminar: Wheres the Big Fish? Fishing Annual Event Schedule Activities Event planning Reserve Hotel Ballroom Look for Sponsorships Have souvenirs made Hire entertainers/performers Printing of invitations Dissemination of invitations Have a meeting with production staff to finalize details and program of the event

Date Six months before Five months before Four months before Three months before One month before Three weeks before Two weeks before One week before

D. Advocacy Program Advocacy programs adopted by Maersk Sealand supports socially responsible messages, activities, or causes and is concerned with the propagation of ideas and elucidation of social issues of public importance in a manner that supports the position and interest of the company.

Currently, Maersk Sealands advocacy campaigns are primarily sponsoring the shipments of some medical missions (i.e. World Diabetics Foundation) and donating containers to a dental association. Maersk Sealand should continue to implement existing advocacy campaigns and adopt new campaigns to promote the causes they believe in. 1. Strategies Protect and Promote our Seas Campaign An advocacy campaign that can be adapted by Maersk Sealand is the promotion of environmental protection and regeneration. Such advocacy campaigns can advance the concept of "constant care," which is a fundamentally guiding principle in Maersk Sealands business thinking and actions. Since the beginning, Maersk Sealand has always had the belief of protecting the environment therefore it would be fitting to advance the cause of Protect Our Seas. Protect Our Seas can be implemented through tie-ups with various environmental organizations such as the World Wildlife Fund, Coral Reef Alliance (CORAL), Ocean Heritage Foundation, Greenpeace International and International Marinelife Alliance to name a few. Examples of executable programs are saving the coral reefs, education and prevention of the harmful effects of oil spills, cleaning the seas, and protecting the seas wildlife. Through partnerships with various environmental organizations, Maersk Sealand ensures total responsibility in managing their global operations, especially with respect to the environment. Maersk Sealand should continually strive to be an industry leader in this regard by initiating and implementing preventative measures onboard, on land and in all its activities. The campaign will implemented for the whole month of June 2005. Maersks Lend a Helping Hand (Sponsoring other Shipments)

As mentioned earlier, Maersk Sealand is currently engaged in sponsoring the shipments of some medical missions such as the World Diabetics Foundation. Aside from medical missions, Maersk Sealand can also sponsor other shipments like food items and non-food commodities particularly for relief dispensing organizations; books and other educational, scientific, or cultural materials; essential machinery, equipment, and spare parts; other essential consumer goods not available locally in times of calamities and/or fortuitous events. Maersk Sealand can assist the non-profit, socio-civic, religious, and charitable organizations. An average of 3 sponsored shipments will be given for the year, depending upon the allocation of the budget. Extending and expanding their program of sponsoring the shipments of some missions dedicated to helping those that are in need will not only benefit the community but also Maersk Sealands corporate reputation worldwide. 2. Advocacy Costing
Advocacy Campaign Advocacy Materials Posters (23x33) Tarpaulin (5x20 yards) Flyers T-shirts Maersk Save our Seas Pin Miscellaneous Brochures Sponsorship Contributions Computation Total Costs P15,000

Protect and Promote Our Seas Campaign

Maersk Lend a Hand Sponsorship

Cost per poster P30 Multiplied by no. of posters, x 125 multiplied by no. of events x 4 Cost per tarpaulin P22,500 P90,000 Multiplied by no. x 1 of banners, multiplied by no. events x 4 Cost per flyer P2 P800 Multiplied by no. of flyers, x 400 multiplied by no. of events Cost per shirt P35 P17,500 Multiplied by no. of shirts x 500 Cost per pin P10 P10,000 Multiplied by no. of pins x 1,000 Budget for the campaign P50,000 P50,000 Cost per brochure P4 P800 Multiplied by no. x 200 of brochures Budget per sponsorship P80,000 P240,000 Multiplied by average x 3 no. of sponsorships TOTAL: P424,100

3. Advocacy Schedule
Protect and Promote Our Seas Campaign Schedule Date Activities Six months before Campaign planning Five months before Look for tie-ups Two months before Printing of campaign materials Three weeks before Information dissemination through e-mails Two weeks before Dissemination of flyers and putting up of posters One week before Have a meeting with management staff to finalize details and program of the event March 5-6, 2005 Save the Coral Reef Week 1. clean up drive (scuba dive to clean) 2. scuba diving to appreciate the beauty of corals June 4-5, 2005 Save our Shorelines Week September 3-4, 2005 Save the Marine Life Week 1. release of marine animals to the seas 2. fishing activity (no to dynamite fishing) 3. feed and swim with the dolphins November 5-6, 2005 Lifelong Commitment to the Protection of Our Seas 1. Maersk Lifelong Commitment Pins 2. Environmental Education (e.g., talks)

CHAPTER 6 INVESTMENT PLANS AND PROFITABILITY ESTIMATES The investment plans for the strategies suggested by the group is presented in the table below. With all these strategies enumerated, the group estimated the costs and benefits to sales of these strategies. The total cost of the marketing strategies will be approximately equal to P3,631,004 while the benefit to sales is estimated at P74,214,000. The breakdown for the cost and benefit to sales is shown in the table below:
Table of Investment Plans and Profitability Estimates Total Cost Per Total Benefit Costs Marketing to Sales Program (A) (B) P60,000 P50,000 P510,384 P21,280 P1,023,280 P4,500 P868,920 P150,000 P88,000 P44,840 P384,000 P1,700 P183,300 P240,800 P60,000 P50,000 P531,664 P1,027,780 P2,890,440 ---P51,038,400 P4,817,400

Particulars

Net Benefit to Sales Per Marketing Program (B - A) P2,830,440 (P50,000) 50,506,736 P3,789,620

Service Development Program Expense Update and development of website Sustainable Competitive Advantage Expense Survey Sales Force Expenses Commission for bringing in new clients Prizes Advertising Program Expense Print Ads (Journal/Magazines/Broadsheets) Brochures Sales Promotion Program Expense Tie-ups (Ship to Fly High) Sponsorships Sales Calls (MVP Accounts) Public Relations Program Expense Education&Training Seminars (Maersk 101) Annual Event (Maersk Charity Ball 2005) Newsletters Advocacy Program Expense Protect the Seas Campaign Sponsoring other Shipments TOTAL:

P1,106,920

P13,540,800

P12,433,880

P430,540

P1,926,960

P1,496,420

P424,100 P3,631,004

---P74,214,000

(P424,100) P70,582,996

The computation for the benefit to sales is shown below where there are some assumptions made:
Activity a) Update and development New of website Old b) Sales Target c) Advertising Programs d) Promotions Programs New Old New Old New Old Clients 70 300 --300 70 300 70 300 70 300 % of clients 3% 3% --10% 5% 5% 10% 15% 2% 2% Average no. of TEUs* 160 160 --160 160 160 160 160 160 160 Average Payment** Sales

e) Public Programs

Relation New Old

P 1,627.50 P 546,840 1,627.5 2,343,600 0 ----P 1,627.50 P 7,812,000 P 1,627.50 P 911,400 1,627.5 3,906,000 0 P 1,627.50 P 1,627.5 1,822,800 0 11,718,00 0 P 1,627.50 P 1,627.5 364,560 0 1,562,400

* Average # of TEUs are derived from the market share from Chapter 3. **Average payment is the average of Maersk Sealand pricing.

Commission for Sales Executives for Bringing in New Customers Ave. Price No. Of New Volume Teus* No. Of Sales Benefit To Sales Customers* Force Transpacific $3000 2 8 7 $336,000 Europe $1850 2 8 7 $207,200 Intra-Asia $625 2 8 7 $70,000 Middle East $1462.50 2 8 7 $163,800 ANZ $1200 2 8 7 $134,400 TOTAL AMOUNT: $911,400 x 56 = P51,038,400/yr. *These figures are assumptions. **The average price is based on the current prices of Maersk Sealand.
Trade Lane

CHAPTER 7 EVALUATION AND MONITORING OF RESULTS Maersk Sealand will evaluate results of their sales force, advertising, promotion, public relations and advocacy programs following the schedule hereafter: For the Sales Force incentive programs, which will be implemented for the whole year of 2005, the company will assess the effectiveness of the program through sales monitoring, whether or not there is an increase in sales. For the Ship to Fly High programs, which will be implemented for the whole year of 2005, the company will conduct meetings with area sales coordinators so as to evaluate the performance of the programs. Meetings will be done at the last week of each month. The company will assess if the sales targets were attained and how much of the target was achieved. For the MVP Accounts program, meetings with the sales department will be done every end of the month. This is to assess if the promotion is doing well and if target sales are achieved and more importantly, if relationships with the clients are improved. Meanwhile, the sponsorships program will be evaluated every other month, and the sales discounts program will be evaluated every end of the month. This is to determine the effectiveness of the promotions on sales. For the advertising activities that have been employed, the company will conduct a survey to help assess if there really has been an increase in the awareness of the target market based on the objectives of the program. The survey will determine if people became aware of the brand and its services, and if they perceive Maersk Sealand as a total quality brand. The survey will be conducted at the end of the year after all advertising activities have been

implemented. For the PR programs, the success of Maersk 101 will be evaluated one week after every seminar to be able to adjust and implement changes for the next seminars, Maersk Charity Ball 2005 will be evaluated a month after the event while the Maersk-Filipinas News Connection will be evaluated by conducting meetings three weeks after every issue sent to the customers. Focus Group Discussions will be utilized in determining success or failure of the said programs. This helps assess product visibility within the target market. The company will evaluate the effectiveness of employed marketing strategies by analyzing sales before, during, and after the implementation of marketing programs so that the company can determine if sales increased or decreased.
Programs Sales Force Print Advertising Journal/Magazine, broadsheet Tie-ups (Ship to Fly High) Sponsorships Sales Discounts Sales Calls (MVP Accounts) PR-Education /Training Seminars/Programs (Maersk 101) PR-Annual Event (Maersk Charity Ball 2005) PR-Newsletters (Maersk Local Connection) Advocacy-Protect and Promote our Seas Campaign Advocacy-Sponsoring Table 7.1 Evaluation Schedule Objectives Evaluation Tool To determine the effectiveness of - sales monitoring sales targets and incentive programs in terms of increase in sales To determine the effectiveness of the -survey print ads through increase brand -FGD awareness and sales -research To determine the effectiveness of the -sales monitoring promotion in terms of increase in sales To determine the effectiveness of the -sales monitoring promotion through increase in sales and customer preference of the brand To determine the effectiveness of the -sales monitoring promotion through increase in sales To determine the effectiveness of the -sales monitoring promotion through increase in sales. To determine the effectiveness of the -sales monitoring program through increase in brand -E-commerce awareness. To determine effectiveness of the -survey event through increase in brand -FGD awareness To determine effectiveness in -survey awareness through increase in brand -FGD visibility To determine increase in awareness -survey through brand visibility -FGD To determine increase in awareness -survey Schedule -once a month -end of the year -last week of each month -end of every other month -every end of the month -every end of the month -one week after every seminar -one month after the event -three weeks after every issue sent -one week after the campaign (1st wk of July) -one week after

other shipments

through brand visibility

-FGD

every sponsored shipment