ACKNOWLEDGEMENT

Success is a host of hard work. Behind the success of any endeavor is the inspiration. This project owes its own success to many people.

Firstly I would like to thank Capt.Sudjir Kumar, honorable G.M and Mr.Bhushan (D.G.M) for giving me an opportunity to work in Maxicon container line, whose invaluable support and guidance helped me in every aspect of this project.

I would like to extend my thanks to Mr. Ram (B.M), Mr. Vilas, Ms.Celina and the entire staff members of Maxicon container Line for their expert guidance and encouragement they have given me in spite of their demanding schedule. Their informal discussion and constructive criticism has helped this project a rewarding experience for me.

I am thankful to __________________ for his priceless and valuable inputs that helped me to frame the essence of this project and my Co-coordinator Ms.Betty Sibil, whose valuable co-ordination and guidelines helped me to complete this project as per required norms.

I whole heartedly thank my college librarian and computer laboratory staff whose fulsome support cannot be circumscribed.

Lastly I would like to thank each and every individual who directly or indirectly has assisted me in collecting the date and defining a proper structure for my project.

1

DECLARATION

I ______________, student of PGDM (IB) declares that the work done on the project entitled “______________________________” is original. Any references used in this report have been duly acknowledged.

The study of the project is thereby the copyright of the author. This report shall not be published without the prior permission of the author.

To the best of my knowledge and being the subject matter presented here is original and has not be submitted to any other authority or university till date.

2

TABLE OF CONTENTS

ACKNOWLEDGEMENT

CERTIFICATE BY COMPANY

DECLARATION BY THE STUDENT

Chapter 1: Introduction……………………………………………………………...……1

Objective of the study…………………………………………………………2

Need of the project………………………………………………………….…3

Scope of the project…………………………………………………………....4

Research methodology………………………………………………………...5

Limitations of the project……………………………………………………..6

Chapter 2: Company Profile………………………………………………………………7

Organization Chart……………………………………………………………8

Benefits given by company……………………………………………………9

Chapter 3: Theoretical Background

Product life cycle………………………………………………11 Boston consulting group matrix……………………………...12 SWOT analysis………………………………………………...13 PEST analysis………………………………………………….14 Porters five force model……………………………………….15

Data analysis & interpretations

Part 1

Product life cycle of the company…………………………….18 The BCG matrix of the containers…………………………...19 SWOT analysis of the company………………………………20 Porters five force model……………………………………….21

3

Part 2

Project on East Africa(Mombasa)……………………………23 Export and import of goods to Mombasa……………………24 Commodities to east Africa(Mombasa)……………………....25 Route preferred by existing companies dealing in Africa…..26 Problems faced by existing companies……………………….27 Mombasa acts as a gateway for other inland destination…...28 Charges of inland destination…………………………….…...29 Documentation required………………………………………30 Competitors matrix……………………………………………31

Part 3 Marketing strategies…………………………………………..32 PEST analysis of Africa………………………………………33 Demerits of doing business in Africa………………………...34

Chapter 4: Findings………………………………………………………………………..35

Suggestions / Recommendations……………………………………………..36

Bibliography…………………………………………………………………..37

Annexure

Questionnaires………………………………………………...38 Container corporation of India limited……………………...39 Form type 13…………………………………………………..40 Vessel planning sheet………………………………………….41

4

CHAPTER 1:

INTRODUCTION:

This project is about a continental based study i.e. east Africa with reference to Mombasa and the

inland destination one can reach after reaching Mombasa. This continental based study was done

after learning the various operations and working of different department of Maxicon container

line. To make in-depth analysis of the company, analytical tools were used like PLC, BCG

MATRIX, SWOT ANALYSIS and PORTERS FIVE FORCE MODEL OF THE COMPANY.

The main aim of the company is to continue to grow further as the company is in the growth stage

for this purpose the 4 P’s of MARKETING MIX can be used in order to retain the existing

customer and MARKET PENETRATION strategy can be used to capture new customers.

In order to study east African region (Mombasa), questionnaire was prepared and survey was

conducted in reputed shipping companies who are existing players in African region (Mombasa),

with the help of this survey details like major commodities imported and exported, routes referred

by liners to reach Africa, problems faced while dealing with Mombasa port, facilities provided by

the port, tentative rates these details were known. Apart from this to study risk likely to be faced

by the company i.e. PEST analysis was done. As the company has to start up a new sector various

marketing strategy that the company can implement are listed.

COMPETITOR’S ANALYSIS has been done in order to understand their market share and also detail analysis is done about the liners who are providing service to Mombasa port, factors like transhipment route and number of calls on port is important from the point of view of NVOCC to know because they don’t have their own vessel, they have to approach these liners for booking the slot.

Mombasa (East Africa) - A new destination for business

As Kenya is a developing country, in terms of TEUS Mombasa port ranks second i.e after Durban. Since 2005 imports in Mombasa are rising continuously, the weight of goods imported in containers has risen by 55% since 2005. Inefficiency of port operations and constraints on capacity was threatening the growth of ports in Kenya. But now due to action and measures taken by KPA (Kenya port authority) the situation is gradually improving the is improvement seen in the port performance due to various port reform by the government and its also becoming an attractive place for business man to setup their units

5

INDUSTRY OVERVIEW

Containerization is a system of multimodal freight transport using standard ISO containers that

can be loaded and sealed intact onto container ships, railroad cars, planes and trucks. The

introduction of containers resulted in vast improvements in port handling efficiency, thus lowering

costs and helping lower freight charges and in turn, boosting trade flows. Almost every

manufactured product humans consumed spends some time in a container. Container handling

equipments is an important innovation in 20th century.

Containerization in India

Container service in India was started in 1966 and initially containers with payload of 5 tonne

were introduced. The Indian Railway first started container service between Mumbai and

Ahmadabad in 1968.However slowlyrailway tracks were developed to adopt large sizes containers

of 20” ft and 40”ft length. Till the growth of container, traffic was very slow. In 1988 CONCOR

under the ministry was formed to look after container traffic in India. This resulted in speedier

development of container handling and movement facilities in country at various locations. The

growth rate during last few years observes in container traffic in India is more than 20%.

IN India ,containerization contributes about24% to total cargo by 2010-11.The robust growth of

India’s manufacturing industry has pushed up India’s containerisation.India’s containerisation has

over 70% of total exported cargo and around 40% imported cargo. The government of India has

pushed a policy of developing a number of inland container Depots and container freight stations

to facilitate modal interchanged and distribution of cargo and most importantly to avoid awkward

customs procedure from the waterfront.

Shipping companies especially container shipping company deals with hundreds of shippers,

consignees, forwarders etc. providing the line with modest margins. It has a huge network of

Agents worldwide. Having a worldwide coverage is extremely important.

Every container has their own identification number and the most important is a steel plate on the

left door un the back side of the container on which it is mentioned that ‘approval for transport

under seal. Details like manufacturer, container no.type, date of manufacturing, place of

manufacturing, capacity, and size etc.is mentioned.

6

Below diagram shows the classification of shipping industry according to their functionality.

Main-line operator (MLO):

These MLO has own vessels as well as containers. This MLO has a very strong hold on shipping

industry. They don’t have to depend on others for vessel slot, but other container carrier,

forwarding agent are strongly depend on these MLO.MLO can carry any cargo in a bulk therefore

it’s cost is less as compare to carrying it via containers carrier (NVOCC).This is the reason why

MLO has very upper hand in the market.

Multi-modal Transport Operator (MTO):

These are registered with the Directorate General of Shipping in India as a Multimodal transport

operator. They operate as a MTO (Multi-modal Transport Operator) and specialize in providing

shipping services to various destinations on door delivery basis.

Non-vessel operating common carrier (NVOCC):

Non-vessel operating common carrier -- they're kind of like subcontractors for shipping. They

book large quantities of space on ships and sell smaller quantities of space to shippers. They also

consolidate multiple shipments into one container load that moves under one bill of lading..

Freight forwarder:

Freight forwarders are the one who neither has its own vessel nor containers. They provide a

whole range of additional services to keep up competition in the market and provide services like

export advice, export transportation, storage, order pick-up.

7

FIG 1.1

NEED OF PROJECT:

TO AVOID THE NORMAL PRODUCT LIFE CYCLE, AND KEEP GROWING AFTER THE GROWTH

STAGE.

Below dig. represent company’s (Maxicon container Line) current status as well as the estimated

future view.

{A} Standard PLC {B} Present stage

{C} Estimated Future stage

As shown in the above fig {B} Maxicon container line is now at the maturity stage .Our need of the project is to take Maxicon to fig {c}. i.e. to avoid the cycle shown in fig. {A} .so to avoid the decline stage after maturity stage and to keep growing further as shown in fig{C}. the company has to adopt some of the marketing strategy which is suggested in the latter part of a project.

8

FIG 1.2 FIG 1.3

FIG 1 .4

OBJECTIVE:

To study operations of the company and make in-depth analysis of the company by using analytical tools like BCG MATRIX etc.

To find out opportunities and risk involved for a company while dealing in East African region(Mombasa Port) after studying the present status of a company

To do competitor analysis as a part of benchmarking procedure which can be useful for NVOCC to enter East African region(specially Mombasa port)

SCOPE OF THE PROJECT:

To make an in-depth study of inland destination (inland haulage) via Mombasa, and find out what are the commodities exported and imported specifically in these areas, also finding out the effective route and the cost of reaching to East Africa is an important part of this project. Finding out the key players i.e. details of importer and exporters in east Africa, working on the strategies to enter West Africa and compete with liners who are dominating in West Africa is an idea behind making this project.

This projects scope is not limited to that of East Africa and West Africa only, but a similar study can be helpful to find new markets i.e. after South Africa the very next growing market will be CIS nations, to explore opportunities and study various problems that company will face while doing business in CIS nations.

9

RESEARCH METHODOLOGY:

Data has been collected from primary as well as secondary sources:

a. Primary – Data required for the study is collected first hand i.e. after preparing the questionnaire, conducted a market survey in companies dealing in south Africa and by experience survey working on job for two months, during summer project 2010(observation).

b. Secondary- website of the organisation, Company records, port authority of Kenya (hand book), published books

Information so collected has been put in to draw logical conclusion.

Data mining is done.Data be adequately analyzed, explained and presented in chart

All findings are presented unambiguously and all conclusions be justified by sufficient evidence.

Issues and problem have been found by personal discussion with seniors in the company.

Finally report has been written.

Tools for data collection:

Questionnaire Based Interview Method:

The questions are crafted in a way to generate as many information aspossible with minimum effort on respondent’s part.

Sampling:

The sample size of 15 companies who are already doing business in Africa.

10

LIMITATION OF THE PROJECT:

Data sample is small perhaps the universal replications may not produce similar result.

Two months period was insufficient to understand the organizational operations and design the assigned project

Sometimes due to lack of time the respondent may not have given reliable information

Data privacy was maintained by a company while giving the data

11

CHAPTER 2:

The company profile and details of company network and the structure of the company

is as follows

COMPANY PROFILE:

MAXICON CONTAINER LINE

Head Quarter Singapore

Business Type Business service ( Transportations)

Product/Services Shipping Line, Container Carrier

No. of Employees 65

Main Market Southeast Asia, Middle East, Gulf Countries,

Main Branches Mumbai,Chennai,Bangalore,NewDelhi,KolkataSingapore,

Portklang,Pasirgudang,Chittagong,Dhaka,Dubai,China

ABOUT A COMPANY:

Maxicon Container Line" is one of the largest Shipping Lines in India in the private sector,

the largest container carrier from India to Bangladesh, ranks in the top three "SOC"

players in Chennai Port , sole operator of containers in Paradip, and the fastest

growing operator to Bangladesh from China.

Maxicon was established on 1st August 2003 in Chennai's busy business centre. The road

map was laid with the resources of three people, 80 old & rickety containers, and an

elegant office. The journey of five years till 1st Aug 2009 has produced an inventory of

11,000 plus containers, number of chartered vessels, own offices premises in Mumbai.

12

Chennai, Singapore, Portklang and other international locations with 200

Maxiconians all over the places.

It serves over 60 locations across Asia - China on the Far East & north and Iraq on the

far west.

Maxicon rides on the success of India, the prosperity of China, the Petrol dollar

economies of the Persian Gulf, the emerging strengths of South Asian countries, the

inherent talents & simplicities in the people of Bangladesh, the precious produce of

the people of Myanmar, the centrality of Srilanka, and the emerging trade bridge of

Pakistan with India. They aim to share our prosperity in the regions we operate through our

honest services.

VISION : To be largest leading regional container line through its pledge

“COMMITTED TO SERVE

MISION : To provide unparalleled quality service.

13

SERVICE NETWORK:

The company provides their container service at various locations across the world as shown in the diagram below

14

FIG 5

ORGANISATIONAL CHART

15

C.E.O

G.M

D.G.M

HUMAN RESOURCE

DEPARTMENT HEAD

ADMINISTRATOR & IT

TRADEOPERATIONSFINANCE & ACCOUNTS

MARKETING

EXECUTIVE

FUNCTIONING OF A VARIOUS DEPARTMENTS:

EXPORT DEPT:

A) EXPORT PROCEDURE:

1) First of all marketing person of NVOCC will finalize the deal with the partly

(Exporter/CHA) and inform the service centre for issuing the delivery order.

2) NVOCC will take the advance list from the party in which the details of the cargo will be

mentioned on that

3) After that NVOCC will make the export loading list and give it to the vessel operator and

vessel operator give it to port authority for preplanning of the container.

4) NVOCC will send a pre-alert to their respective overseas counterpart.

a) In case of factory stuffing, the cargo is stuffed in the factory/manufacturing unit in the

presence of customs and after that they collect the form 13 from the NVOCC office by the

submission of delivery order (D.O) for gate-in the container.

1. C.L.P 2. RETURN AFTER ENDORSEMENT (CUSTOM)

3. C.L.P by driver

4) RETURN AFTER ENDORSEMENT (PORT)

16

PORTC.F.S

MUMBAI AGENT

C.F.S

b) In case of Dock-stuffing – The cargo is stuffed into the CFS (Container Freight Station).

Shipping Bill and invoice is submitted by CHA to the NVOCC office and on the basis of that the

cargo is stuffed in the container. Custom will give CLP (Container Loading Plan) to the NVOCC

agent who stuffed the cargo in the container. There are 4 copies of CLP and after NVOCC agent

will take the endorsement of all the concerned authorities of customs. One copy of CLP will be

kept by NVOCC agent as a proof that they stuffed the cargo and three copies of CLP is submitted

to the CHA in CFS. Out of three the original copy will be given to trolley driver who carry the

containers to the port. After that by the endorsement from the port that original copy again returns

back to NVOCC office as a proof that the containers had been handed over to the port.

c) In case of an ICD (Inland Container Depot), if the cargo is to be sent from Delhi to Singapore,

then exporter will talk to the NVOCC agent of Delhi and after that they will confirm the details of

the container and the schedule of the vessel from the NVOCC agent of Mumbai. After that

NVOCC agent will update the container to the port. NVOCC agent of the Delhi will send Railway

Receipt (RR) and two copies of the shipping bill will be submitted to customs, another copy is

used for filing EGM (Export General Manifest) by NVOCC within 7 days.

NVOCC will take loading confirmation from vessel operator which is known as TDR

(Terminal Departure Report) an after that one copy of TDR will be sent to port of destination

and another copy submitted to the party.

Exporter will submit Invoice, packing list and ARE -1 to the NVOCC office and on the basis

of that Bill of Lading will be issued and given to exporter. After that bill of lading and loading

confirmation will be sent to the overseas counterpart.

The party will submit shipping bill to the NVOCC office and on the basis of that EGM will be

filed within three days.

EGM is made in two forms one in form of floppy and another one in hard copy. There are five

copies of EGM (hard copy) and each copy will be submitted to customs, MCD, Vessel

surveyor and department of customs.

After filing the EGM customs will release the EP (Export Promotion) copy.

17

FIG 7

EXPORT CYCLE:

1. ORDER 8. LOADING CONFIRMATION

2. DELIVERY ORDER

INVOICE, ARE-1 6. TDR AFTER 3. EXPORT PACKING LIST SAILING VESSEL LIST

5. SUBMISSION

ISSUE OF INVOICE, 4. EXPORT PACKING LIST, LOADING LIST

ARE-1, SHIPPING BILL.

9. ENDORSED SHIPPING BILL

10. EGM(FLOPPY & HARD COPY) ISSUE EP COPY

18

SHIPPER

CHA

SHIPPING BILL

MUMBAI OFFICE

VESSEL OPERATOR

DRI

MCD

VESSEL SURVEYOR

CUSTOM

VESSEL AGENT

PORT

PORT AUTHORITY

VESSEL OPERATOR

OVERSEAS OFFICE

MUMBAI OFFICE

SHIPPER

E

G

M

H

ARD

COPY

7. R

e l

e a

s e

d

B /

L

IMPORT DEPT:

B. IMPORT:

1) NVOCC will get an pre-alert from overseas counterpart and on the basis of that IGM is filed

(Import general Manifesto) is filed to the customs. NVOCC will prepare two forms of IGM

(floppy and hard copy)

2) Vessel agent will give the item no. and both the forms of IGM (FORM III) are submitted to the

vessel agent.

3) Vessel agent will submit IGM 9 floppy) to the customs and after getting the IGM no. from the

custom, they submit IGM (Hard copy) before 24 hours of arrival of the vessel.

4) NVOCC agent will file CMC (Container Monitoring Cell) to the custom that the same no. of

containers will be exported within six months.

4. I.G.M. No.

3. I.G.M. (FLOPPY)

5. I.G.M. (Hardcopy)

2. IGM

6. Job Order

1. Pre-alert 7. Containers

19

MUMBAI AGENT

VESSEL OPERATOR

OVERSEAS AGENT

CUSTOMS

C.F.S

PORT

FIG 8

FIG 9

5) Bill of Entry will be issued by the custom after submission of Invoice, Packing List and Bill of

Lading which gives the detail information of the import cargoes. Three days are free after arrival

of the vessel at the port and after that demerge will charged by the port.

6) A) In case of Dock destuffing:

Importer will submit Bill Of Entry, Invoice, Packing List and Bill Of Lading to the CHA

and after that CHA will submit these documents to the NVOCC office. On the basis of that they

give the job order to the CFS and CFS will bring the containers from the ports. After that when

the importer will make all the payments to the NVOCC then they issue the delivery order to the

importer/CHA for taking cargo from CFS.

B) In case of factory destuffing:

Bill Of Entry, Invoice, Packing List and Bill Of Lading will be submitted to NVOCC

office and on the basis of that they issue the job order.

1. B/L 2. B/L

3. Bill of Entry

4. B/E, B/L

5. Job Order

Factory Dock

20

OVERSEAS

AGENT

MUMBAI CONSIGNEE

CUSTOM

MUMBAI CONSIGNEE

MUMBAI

NVOCC

C.F.S

C) In case of ICD:

If cargo came from Singapore and has to be sent for Delhi, then after movement of cargo from

Port (JNPT) to Delhi, the NVOCC agent will collect the Railway Receipt (R.R) from

CONCOR/ICD which is the confirmation of cargo to be sent by rail from port to Delhi. And after

that the NVOCC agent will inform their agent in Delhi that cargoes is discharged from port for

Delhi and they submit the one copy of R.R to NVOCC office for updating their container status.

NVOCC then file IGM to the custom through vessel agent. Custom will form the T/P

(Transshipment Permit) and give it to the port. ICD, NVOCC. NVOCC will take out the hard copy

of T/P and take endorsement from the custom. After they sent the T/P along with IGM to ICD of

final destination.

21

VESSEL

OPERATOR

MUMBAI

AGENT

OVERSEAS

AGENT

PORT

DESTINATION

ICD

ICDMUMBAI

agent

4. ISSUING OF T/P

CUSTOM

1. PRE- ALERT

2. SUBMISSION

of igm

3. IGM FILLING

5. T/P + IGM

FIG 10

MARKETING DEPT:

Marketing department plays a vital role in the company. This department directly co-ordinate or communicate with the party (CHA/Exporter/Shipper). The marketing person gets the rate from Trade department and on the basis of the rate given they negotiate with the customers, if any additional discount is given to the customer it has be reported and confirmed with the trade head before finalizing the deal. After receiving booking confirmation the marketing person has to report the company, because as soon has the booking confirmation is received the vessel planning has to done.

Marketing person must be knowledgeable about following areas:

Areas of operation The marketing person has to be well versed with the service network and the areas or region in which company deals or provide services. It is also important for a marketing person to know about the procedure and documentation required. He should have details of the inventory availability of the company. Freight Rate (Own and Competitors) A freight rate is a price at which a certain cargo/freight is delivered from one point to another. Marketing executive keeps the track on freights rate charged by other competitors and then decide their own freight rates. Vessel Schedule The arrival and departure dates are shown in the vessel schedule. Accordingly the marketing executive works on planning out the containers to be loaded in which vessel and on which date depending on the availability of slot space.

Inventory of containers

Containers are loaded & discharged on ships from port to port depending upon export/import of cargo at ports. Inventory of containers have to be maintained to meet supply/demand of cargo.

Container Details (Types and Dimensions)

Marketing executive has the complete knowledge about the dimensions and type of the containers. Depending on this the executive decides which cargo to be loaded in which container.

22

FIG 11

Once booking confirmation will be done by the party then marketing department will order to NVOCC office to give Delivery Order as shown in the diagram below.

Marketing person generally prefer to go to CHA because they have lots of knowledge and contacts with Exporter. If marketing person directly goes to the exporter then he misses out the remaining exporter which is in contact of CHA.

The role of a Marketing Executive is to establish a strong relationship between their client ‘products or services and the market place that they are targeting with the ultimate objective of enhancing the profile of the brand and encouraging customer loyalty.  They will conduct detailed analysis of competitor and market activities and develop marketing strategies that are aimed at achieving optimum brand positioning and effective pricing.

A Marketing Executive is responsible for managing close relationships with their clients to ensure that they have a full understanding of their brand and its future direction. They may be

23

MARKETINGPERSON

NVOCCPARTY

FIG 12

Booking confirmatio

Delivery Order

required to work extra hours in the run up to a campaign launch and travel may be involved in order to participate in exhibitions and product launches.

Marketing executives contribute to and develop integrated marketing campaigns. Tasks typically involve:

Liaising and networking with a range of stakeholders, e.g. customers, colleagues, suppliers and partner organizations;

Communicating with target audiences and managing customer relationships; Arranging for the effective distribution of marketing materials; Maintaining and updating customer databases Organizing and attending events such as conferences, seminars, receptions and exhibitions; Sourcing and securing sponsorship; Conducting market research such as customer questionnaires and focus groups; Contributing to and developing marketing plans and strategies; Managing budgets; Evaluating marketing campaigns; Monitoring competitor activity Supporting the marketing manager and other colleagues.

Apart from these activities the marketing person is responsible to deal with shut-out problems

i.e. shut-out of containers from the vessel due to problems like overload and other vessel related

problems, during this period the marketing executive should see the type of cargo in the container

because if the cargo is perishable in nature and if that container is shut-out the damages loss have

to be beard by the company, hence care should be taken during shut-out and right decision should

be taken about which container is to be kept out. These shut-out containers should be immediately

planned on next vessel.

24

TRADE DEPARTMENT:

Trade department focuses on the following areas:

1) Inventory 2) Rate3) Weekly report4) Slot sharing 5) Other reports

Inventory : The company has its own software i.e container tracking system/software, one can get all the information like location, current details of movement of container by making use of this software. With the help of this Inventory details import and export of container can be planned. The movement of container is done on FIFO basis (First in first out) Rate: Trade department has a power to fix the final rate, taking into account all the factors i.e cost to be incurred plus the profit margin the rate is given to the marketing department. The trade department has to negotiate with the feeder operator to get the best deal. The rates are revised weekly or it mostly depends on fluctuation of currency

Factors to be considered while calculating rate:1) Slot rate2) T.H.C3) Freight

For Example: If container is exported from NSA to Chittagong via Colombo, the rate is 250$ which is divided as follows:

SLOT RATE T.H.C. FREIGHT

25

100 75 75 250

Repairs: It is the responsibility of the trade department to maintain the containers in good condition and carry out repairs regularly. It is important to take into consideration the cost of repairs and accordingly decide whether to repair it or purchase a new one if the repair turns out to be more expensive.If container is damaged during voyage it is the repair charges are to be collected from the consignee on approval of Depo-Incharge.

Weekly report: The company has the trade department only in Mumbai, so all the branches /agent submit their weekly report along with competitors report at Mumbai office. The report has details of market rates at different location.

Slot sharing: Slot is a vessel space for keeping containers on board.Slot:

1 2

3 4

There are different slot operators on a single vessel, these operators share the vessel space, here the department plays a vital role in selecting the slot operator who will give them the best rate.

Other reports : i. MOM report (minutes of meeting): This report gives the details for daily inventory update.

ii. Monthly report: this report gives information of containers exported during the month.

26

FIG 13

FIG 14

HUMAN RESOURCE:

The people that staff and operate an organization as contrasted with the financial and material

resources of an organization. Human resource is also the organizational function that deals with

the people and issues related to people such as compensation, hiring, performance management

and training.

Human Resource can provide an important competitive advantage. Human resource program can

allow employees to:

Compete effectively for top performing employees, even in tighter labour markets.

Manage labour cost consistent with the economic performance

Retain the employees over the long period of time and allow them to mature in their

chosen careers by gaining skills and experience

Offer innovative products and services that your competitors don’t have because you

have better employees working in a more productive environment.

The HR functions with the sole goal of motivating and encouraging the employees to prove their

mettle and add value to the company. This is achieved via various management processes like

workforce planning and recruitment, induction and orientation of hired task-force and employee

training, administration and appraisals.

The Human Resource Department is responsible for:

Understanding and relating to employees as individuals, thus identifying individual

needs and career goals.

Developing positive interactions between workers, to ensure collated and

Constructive enterprise productivity and development of a uniform organizational culture.

Identify areas that suffer lack of knowledge and insufficient training, and accordingly

provide remedial measures in the form of workshops and seminars.

Generate a rostrum for all employees to express their goals and provide the necessary

27

resources to accomplish professional and personal agendas, essentially in that order.

Innovate new operating practices to minimize risk and generate an overall sense of

belonging and accountability.

Recruiting the required workforce and making provisions for expressed and promised

payroll and benefits.

Implementing resource strategies to subsequently create and sustain competitive

advantage.

Empowerment of the organization, to successfully meet strategic goals by managing

Staff effectively

The human resources advantage of pre- employment screening are reduces risk of negligent

hiring, ensures a safe work environment, minimizes employees theft and fraud, exposes

misrepresentations, insight into past behavior, preserves the integrity and image of the company,

reduced the training costs.

To provide employers cost effective, reliable, trustworthy information and resources necessary

for making informed, professional employment decisions while focusing on expediency and

accuracy.

HR organizational structure is the framework within a human resources department that divides

the decision making function within HR into specific groups with common job functions.

Examples of the internal structure may be payroll, recruiting, benefits administration, time and

staffing, records, etc.

The HR organizational structure allows groups to work together within their functional

description to manage task within HR organization. Each division may have a manager or team

lead depending on the size of the organization to coordinate efforts and perform reporting task.

In smaller companies, there may be only few employees in HR handling multiple tasks.

28

BENEFITS GIVEN BY THE COMPANY:

Gain Valuable Work Experience:

The company provided the opportunity to gain hands on work experience that you just can’t

get in the classroom.

Career Exploration and Decision-Making:

Learnt about how to implement various strategies and use it in critical areas to explore

business opportunities.

Gain Confidence:

In the process of completing the projects, it helped us to develop t organizational and research

skills, develop better communication with their peers and adults, and often work the team

while seeing the positive effect of their work.

Apply Classroom Knowledge:

Learnt about how to implement various strategy and use it in critical areas to explore business

opportunities.Learnt about how to analyze data, enhanced data analysis techniques.

Enhance our academic study by trying out in a “real world” context what we have learned in

the classroom.

Networking Opportunities:

Company gave us opportunity to meet various people to gain practical knowledge.

During the market research we meet various executives of other companies.

Practical experience:

Practically saw the operational processes at Nhava- Sheva, where actually saw the stuffing and

destuffing process.

Apart from learning we got opportunity to work i.e. make Delivery order (D.O.) and released

bill of lading to customers.

Learning through work:

Got opportunity to learn the working of various departments. Achieve personal growth and

build confidence to take on new challenges.

Test the water:

Before getting into the real world we got the practical experience about the work culture of the

organization. We got the chance to gain valuable insight into the working world.

29

As it is flat organization, the major benefit was we could consult the right person for the right

problem. Even the C.E.O. of the company assisted us whenever we had any problem while

doing the project.

CHAPTER 3:

THEORETICAL BACKGROUND:

ANALYTICAL TOOLS USED:

SWOT ANALYSIS:

A scan of the internal and external environment is an important part of the strategic

planning process The SWOT analysis provided information that is helpful in matching

the firm's resources and capabilities to the competitive environment in which it operates.

BCG MATRIX

BCG Matrix was useful to differentiate company’s different products i.e. different types of

containers according to there market share and market growth. It gave us an idea about the

most revenue generator product (STAR), consistently well performing product (CASH

COW) and other product such as Poor performer (DOG) and a new Product (?) of a

company.

PRODUCT LIFE CYCLE

Product life cycle (PLC) has to do with the life of a product in the market with respect to

business/commercial costs and sales measures. It helps us to know from our project point

of view that where Maxicon does stands out in the market at current stage

PORTERS FIVE FORCES MODEL

The Porter's 5 Forces tool is a simple but powerful tool for understanding where power lies

in a business situation. This was useful to us to understand both the strength of a current

competitive position, and the strength of a position Maxicon looking to move into.

PEST ANALYSIS

30

PEST Analysis gave very vital information about the political, Economic, Social and

technical environment of an African region as well as far as our project were concerned.

CHAPTER 4:

DATA ANALYSIS: (PART 1)

This chapter includes all the analytical tools used to study the company (Maxicon container Line) in detail

and the data which is received from the survey conducted is tabulated and converted into charts.

PRODUCT LIFE CYCLE (FOR MAXICON CONTAINER LINE)

Product life cycle (PLC) was used to find the current position of the company and take necessary

decision regarding the product development and to meet the growing market needs and to find

new market in case the product is saturated in one market.

INTRODUCTORY STAGE

The company was established in the year 2003. Its headquarter is in Singapore. It was operated

from its headquarters at early stage. Maxicon was very much successful at introduction stage due

to its various strategies, like that of Marketing, Administrative, etc. In very short span of time,

31

FIG 15

market started recognizing the company due to its portable and affordable services across certain

nations. Now the company is doing its operations in most of the international locations through

branch offices.

GROWTH STAGE:

Since then (after introduction stage) company has grown over the period of 6-7 years. During this

growth stage they served 60 locations across Asia from China on Far East to Iraq on west. They

were successful in many countries for providing its container services, so that it was known to be

the largest container carrier from India to Bangladesh. At this stage they were providing services

for 20”/40”GP, Flat Rack containers which was a need for shipping markets at that time as the

country’s Export started gearing up.

MATURITY STAGE:

At today’s date Company is at maturity stage. This is so because of increase in competition in

shipping arena. Presence of a lot of competitors (NVOCC) made companies to make business at

very less profit margin. Also the absence of introducing new container services is one of the

reasons of being it at a maturity stage.

TO AVOID DECLINE STAGE:

After maturity stage, the product life can go into 2 ways, either it will goes to the decline

stage or can go to growth stage if sustainable measures are taken. In case of Maxicon, in order

to avoid this decline stage the company needs to grow further, and this can be done through

“DIVERSIFICATION” in different areas such as:

1) Logistic solution

2) Start a new sector or service to untouched ports.

3) MLO operator

4) Supply Chain management

Maxicon has to apply backward integration policy to start Supply Chain Management and Logistic

solution, Whereas Forward integration to become MLO operator.

32

MARKET PENETRATION STRATEGY can be used at this stage of PLC, DEMAND is expected

to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase

significantly as price decline. This can be done to increase the customer by lowering the price i.e

reducing freight charges, giving additional benefits like free days (detention period). At this stage

more market share can be gained by merging with the same line of company, merging will

weakened competitors.

Product: New product need to be added at this stage, increase in fleet by adding different

types of container in order to become self-sufficient, so that the customer will not have to go to

the other company for the service which is not available at Maxicon.

Prices: Price can be reduce to capture the market. Price wars may occur at this stage because

the competitors will also reduce the price to survive in the market.

Promotion: Heavy competitive advertising and extensive promotions should be done with the

objective of getting existing customers to switch (for their repeat purchases)

Process: the documentation process can be improved by designing a software which will

enableto give quick service to the customer

BRAND STRATEGY:

In the early part of the maturity stage, the key objective is to enact strategies that enable a product

to survive in the face of strong competition driven by lessening of demand. In fact, marketers may

be happy following a Status Quo strategy that is intended to just maintain their market position.

Unfortunately, this may prove difficult as this stage, often called the “shakeout stage”, leads to

many products failing or being absorbed by competitors (i.e., companies merge, products are

sold).

In order to survive, marketers may need to resort to tactics designed to "steal customers" from

others which often involves significant price promotions (e.g., heavy discounting) or strong

33

promotions intended to improve image or solidify a niche. Marketers who have avoided

competing on price may be in a better position to weather the storm if they have convinced the

market they offer special features that few others offer. This can be the case if the company can

successfully established a strong position in a niche market.

BCG MATRIX:

BCG Matrix was used to differentiate company’s different products i.e. Different types of

containers according to their market share and market growth. It gave a clear outlook about the

most revenue generator product (STAR), consistently well performing product (CASH COW) and

other product such as Poor performer (DOG) and new Product (?) of a company which the

company is planning to introduce shortly

34FIG 16

Placing products in the BCG matrix results in 4 categories in a portfolio of a company:

BCG STARS (high growth, high market share)

Stars are defined by having high market share in a growing market. Open top, Break-bulk and Flat racks are star product because whenever these products are used they bring in maximum revenue for the company. These products are the leaders in the business but still need a lot of support from promotion. If market share is kept, these products are likely to grow into cash cows.

BCG CASH COWS (low growth, high market share)

Cash cows are in a position of high market share in a mature market. Containers like 20”GP, 40”GP. 40”HC have achieved competitive advantage in the market, and they generate a lot of cash flow on regular basis. Investments into these products will increase cash flow more. The promotion expenditure for these products is low as they are well established in the market

BCG DOGS (low growth, low market share)

Dogs are in low growth markets and have low market share. Reefer container comes under these categories, as these containers are very expensive and the cost of maintenance for these containers is very high, whenever these containers are used they do not contribute to the profit and many a time the maintenance of containers is so high that it results into loss.

 BCG QUESTION MARKS (high growth, low market share).

Question marks are new products where company have yet to discover them.The strategy to enter east African market is to adopt these products like flat bed, special equipment/ project vehicles as in African sector there is a demand for products like cars, buses and project cargo as many of infrastructural projects have been started in Africa, to meet these demand the company will have to introduce these types of containers. These products need to increase their market share quickly or they become dogs. The best way to handle Question marks is to invest heavily in them to gain market share.

35

SWOT ANALYSIS (MAXICON)

A scan of the internal and external environment is an important part of the strategic planning process. The SWOT analysis provided information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates.

STRENGTHS:

The company has grown tremendously within short span of about 5 to 6 years

The company is actively engaged in opening new sectors and reaching other far east untouched ports for bringing a new business.

The services provided by the company are at Competitive market rates

The company has designed its own software (tracking system), and presently involved in designing software for other shipping companies.

WEAKNESSES:

The business is entirely dependent on slot availability from slot operator

Lack of awareness about company’s brand name resulted due to less efforts on advertising.

Shortage of inventory and most of the containers is on lease basis

The rates are frequently fluctuating i.e weekly basis due to fluctuation in currency and market condition

Dependency on agents in sectors where the company do not have its own office

36

OPPORTUNITIES:

Diversification in areas like supply-chain, logistics and to be a MLO is possible

A company can look for more sophisticated and advanced IGM and EGM software

Opportunity to make contract with slot operator for regular services

Due to his strong hold in the NVOCC area ,a company can afford to have mergers and acquisition with other companies to weaken the competition and be the leader.

THREATS:

Competitors i.e. other leading NVOCC and also freight forwarders

Overseas agents who can misuses the companies containers

There is a greater possibility to lose containers at risky ports

If margin drope down there is chance of winding up of a company

37

PORTERS FIVE FORCE MODEL:

The Porter's 5 Forces tool is a powerful tool for understanding where power lies in a business

situation. This was useful to us to understand both the strength of a current competitive position,

and the strength of a position Maxicon looking to move into.

THREAT OF ENTRY: (HIGH)

INDUSTRY GROWTH- INCREASED VOLUME OF WORLD TRADE:

The continued strong growth of world trade and continued growth in outsourcing of production to lower cost jurisdiction, is resulting in the strong growth in world container volumes. This increase in the cargo flow act as an incentive to attract the new entrants into container shipping industry.

HIGH SCALE THRESHOLD:

Container shipping is, by its nature, an industry with a very high fixed costs and assets specificity requiring companies to seek high economies of scale. The large quantity of capital necessary to enter the container industry constitutes tremendous barriers to entry.

GOVERNMENT ASSISTANCE TO CARRIER:

The container shipping industry has two properties that invite the government attention which contributes to increased threat of industry entry from the government inspired or assisted lines,

38

FIG 22

particularly from the developed countries. Firstly, because international transportation is priced in US dollars, it generates large cash flow of hard currency. Secondly, many government views it is as strategic industry that is vital in order to get product produced within the country to their international market.

EASY ACCESS TO DISTRIBUTION CHANNEL:

There are very few distribution channels in the industry. Container services are either related directly through the carriers own in-house sales force or sold wholesales through freight forwarders.

In conclusion threat from a new entrant is high due to above reasons.

THREAT OF SUBSTITUTES: (LOW)

OCEAN TRANSPORT IS THE LOWEST COST MODE OF TRANSPORT:

There are only few substitutes for the ocean container transport. While there are other modes of transport, the fact that ocean freight offers the lowest unit cost means that heavy and voluminous goods have little option other than to move via sea as they would otherwise not be economically tradable.

FOREIGN DIRECT INVESTMENT INCREASES THE LOCAL MANUFACTIRING: FDI has the effect that manufacturing is done locally as a result of FDI being used to set up

plants and manufacturing facilities close to the market they serve. This results in the reduction of goods being sourced from overseas manufacturing facilities and thereby reduced volume of container movements.

In conclusion threat from substitutes for container shipping is low as it is the lowest cost method for moving manufacturing goods over great distances.

THREAT OF SUPPLIERS :( HIGH)

LOW THREAT OF VERTICAL FORWARD INTEGRATION:

Liners shipping has many diverse inputs, from bunkers fuel to ports of load and discharge to trucking and rail services to provide intermodal services. Given the high fixed cost of industry and scale barriers to entry the investments would be vast with very little of the overall demand being secured for the supplier.

DIVERSE NUMBER OF GEOGRAPHICALLY DISPERSED SUPPLIERS :

As mentioned, ocean carriers are serviced by variety of vendor firms and services. The comparatively small size of the various local suppliers versus the carrier creates market power in favor of the carrier, which thereby diminishes supplier power.

In conclusion the supplier power is high given the geographical dispersed nature of industry and the relatively large size of carrier in comparison to them.

39

BUYER POWER: (HIGH)

DIVERSED NUMBER OF VARYING SIZED BUYERS:

The fact the there are vast number of various diverse shippers of different sizes located all over the world would indicate that buyer power is low. Even the largest customers of containers carriers represent a small percentage of its overall book ok business on global level, although this picture can change at local and regional level.

LOW THREAT OF BACKWARD VERTICAL INTEGRATION:

Given the fragmented and highly competitive nature of container shipping business there is little to gain for shippers to vertically integrate backward in ocean transport. Again high fixed cost and assets act as deterrent to vertical integration by buyers.

LOW BUYER SWITCHING COSTS:

Container shipping is increasingly viewed as a homogenous commodity by shippers and this together with the fragmented nature of the industry and large number of competitors result in very low switching costs on the part of customers.In conclusion the market power of buyers is relatively high. This is largely due to the fact that the switching costs between the services of different carriers are low.

INDUSTRY COMPETITION :( HIGH)

INCREASED VOLUME OF WORLD TRADE:

Trade liberalization reduced the barriers to international trade and economic development fuelled an expansion of the amount of goods produced and traded. This increase in the large volume of trade reduces the rivalry as the amount of cargo to compete over is increasingly rapidly.

CYCLIC DEMAND:

The volume of trade is directly related to the health of world economy. When the world economy is in recession volumes of trade falls and vice versa during economic upswings. This results in the large swing of profitability for carriers.

LOW SWITCHING COSTS:

Given the low level of product differentiation between the core services of the carriers, the switching cost associated with changing carriers are very low. the situation is similar to switching from use of one airline to another.

40

In conclusion, the container shipping industry is characterized by intense rivalry and the cyclic nature of the industry contributes strongly to this.

41

Port of Mombasa:

The port of Mombasa lies on a coralline island linked by causeway, ferry and bridge to Kenya’s mainland, in a bay off the Indian ocean, the port of Mombasa is a contemporary deep water p[ort and a market for Kenya’s agricultural products, much of which is exported along with products from Uganda and Tanzania.

The second biggest city in Kenya and headquarters for the Mombasa district, the port of Mombasa contains both an international port and airport, and it is central for coastal tourism in the country.

42

PART 2: THE PROJECT ON MOMBASA (EAST AFRICA)

Major industries in the port of Mombasa include metal works, sugar, processors, fertilizers manufactures, cement works and oil refining.

The port of Mombasa is Kenya’s only deepwater port. It serves a fast expanding and economically dynamic nation of about 40 million inhabitants. Moreover, Mombasa is effectively the only deepwater gateway for Uganda, Rwanda, southern Sudan, and parts of many other land-locked states beyond Kenya’s borders.

Established on 20th January 1978 through an act of parliament, the port of Mombasa is the second largest port in terms of tonnage and containers handled after Durban. Total cargo traffic through the port averages 14 million tones a year. After Durban Mombasa is the best connected port in the region, with 17 shipping lines calling and direct connectivity to over 80 ports. Mombasa serves the hinterland markets of Kenya, Uganda, Rwanda, Burundi, Eastern Democratic Republic of Congo, Northern Tanzania, Southern Sudan and Ethiopia.

MOMBASA PORT DETAILS:

It includes Kilindini harbour, Port reitz, the Old Port and port Tudor. it is the main outlet for the

landlocked east African countries of Uganda, Rwanda Burundi and DRC.

Accommodations:

The port has two harbour s.Kalindini Harbour on the southwest side of Mombasa Island and, on

the east side of the island, Mombasa Old port. Deepwater quays totalling 3.044 meters with depth

of 9.45 meters to 10.8 meters. Berths are numbered from 1 to 18.Two berths for handling

bulk/bagged cement at Mbaraki, 315 meters length, 10.50 meters depth.

In addition there are North and South lighter age wharves with a length of 412 meters, berth 9

caters for the loading of soda ash by conveyor belt.

Airport :

Moi international Airport, Mombasa 6 km.

Anchourages: It is a fine sheltered harbour with anchourages for oceangoing vessel of between 6-

12 meters draught .Anchourages for coasters and feeder vessel is also available.

Authority:

43

Kenya port Authority (KPA)

PO Box 95009, Mombasa

Email: md @kpa.co.ke

Container and Ro-Ro facilities:

Mainly at berths 16, 17, 18 with the back-up area for stacking and handling containers.Ro-Ro

facilities available at berths 5 and 13

Cranes:

Quays and port areas are served by travelling cranes from 5-20 tonnes,

Three electrical portal cranes with a capacity of 5-20 tonnes

11 mobile cranes.

Two rail-mounted gantry cranes

Cruise terminal :

It is generally accommodated at berths 1 and 2.

Development:

Reclamation of four hectares of land to serve as a paved back up area for container handling on

birth 18.

Construction of anew depot outside port ares on a 45 acre site to serve as a container freight

stations.

Extension of a bulk hadlingwharf at Mbaraki.

A rail link from the Dongo Kundu sectios of the harbour to the mainland is to be constructed

Largest Vessel:

The port can accommodate vessel upto 13.25 meters draught and 259 meters LOA.

Pilotage:

It is compulsory for all vessel except pleasure boats and small fishing vessel. VHF channel 16 and

12.

44

Stacking:

Total stacking area at the container terminal is 137000 square meters

Storage:

There are 8 main transit shed with a total floor area of 62890 square metres and three other transit

sheds with a total floor of 36953 square metres.

The following is a data collected through open ended questionnaire. The data collected is

tabulated and converted into pie-chart, bar chart etc.

Finding for African market

Mombasa port is definitely a smarter choice to do business in east African region due to its

connectivity with other countries. Though a lot of improvement is required in infrastructure

and port facilities to attract exporters from an around the world.

45

Percentage of export and import in African sector: Below diagram gives information about the

percentage of export and import to and from Mombasa port

Finding:

As seen in above pie chart we can say that there is 100% export from Nava-sheva to east Africa (Mombasa) but the imports from Mombasa to Nava-sheva is only 60% and 40% of the containers have to be brought back Repo (empty), this is due shortage of cargo to be brought into India.The reason why the containers have to be brought back empty is because Africa is a developing country and the capacity of the country to produce and export the cargo is very less.

46

FIG 23

Commodities exported to east Africa: Below diagram shows the percentage distribution of commodities exported to Mombasa port (East Africa).

Finding:

Out of the total export from nava-sheva to east Africa 40% of the commodity is pharmaceuticals 20% is dyes 15% engineering goods and project items as there are many on going projects in east Africa 7% are chemicals and remaining are food products which are mostly given as free from us under……..now a days buses (TATA )and car are also exported.

TOTAL IMPORT MARKET (2009)

Below diagram shows the imports (in TEUS) from various regions at Mombasa port)

POD: (TO EAST AFRICA)

47

FIG 24

FIG 25

MARKET2009

CHINA/FAR EAST/S.E ASIA 62387

NHAVA SHEVA 28608

JEBEL ALI 22251

TOTAL PER ANNUM 113246

Commodities imported from east Africa: Following are the commodities imported from East Africa at large amount:

Finding:

Out of the total commodity imported from east Africa 25% are logs(wood) 10% is animal bone powder with is used foe tooth paste 18% is soda ash with is used for glass 15% gold 10% coffee/cocobeans 20%metals and other seasonal commodities.

TOTAL EXPORT MARKET (2009)

POD: (FROM EAST AFRICA)

48

FIG 26

FIG 28

MARKET 2009

CHINA/FAR EAST/S.E. ASIA 8503

INDIAN SUB CONTINENT 6789

MIDDLE EAST 1029

TOTAL PER ANNUM 16321

MAJOR IMPORT COMMODITIES AND THEIR SEASONALITY (port of Mombasa)

Below diagram gives information about seasonality of the goods. Different types of commodities are generally transported during the mentioned calendar period

Finding:

The demand for these goods increases during a particular month; these are some of the seasonal goods imported in east Africa. Apart from these there is a regular supply of food products which is sponsored by United Aid (USA)

49

FIG 27

COMMODITY SEASONS

Manufactured Goods Sep/Mar

Machinery Jul/Jan

Used clothing Jan/Dec

Automobiles Jan/Dec

Transport Equipments Aug/Jan

Crude Oil Oct/Apr

Food Stuff Oct/Feb

Sugar Jan/Dec

Construction Material Jul/Dec

Consumer Goods Jul/Sep

Industrial Raw material Jan/Dec

Computer and Accessories Jul/Sep

Route preferred by existing companies dealing in Africa: Below diagram shows the percentage distribution of the transhipment port followed by the liner companies.

Many of the companies prefer direct shipment i.e from Nava sheva to Mombasa as it takes around 13-14 days e.g. CMA-CGM where as indirect is done to meet the customers required and also to avoid repo of containers For e.g.: while importing from Mombasa one does get 100% import direct to India, as there is demand for scrap items from Mombasa to middle east countries (Dubai) the cargo is brought from there and then from Dubai another cargo to loaded and brought to India.

Finding:

The route preferred by most of the liner companies (Vessel owner) is via transhipment port Salalah is around 60%. Mearsk line follows salalah port. 20% of the liners follow via Colombo port, while 15% of liners for eg.MOL follow transhipment via Colombo.

50

FIG 29

TENTATIVE RATES:

FOR 2O”FT- 1100$-1200$

FOR 4O”FT-2200$-2300$

These rates are likely to fall further in the short-run. The approx rate would be 950$ for 20”FT container.

The Significance of the Port:

The Port of Mombasa is the largest in East Africa and a vital gateway for imports to Kenya and its neighbouring countries. (fig 1)

The imports that pass through the port of Mombasa are critical to Kenya’s economic growth, and to the economic well-being of its neighbours. Liquid bulk items, mostly petroleum, oil and lubricants, are the single greatest import item by weight. Without these imports, Kenya’s economy (and most other countries of the EAC), which depends on imports for all of its petroleum needs, would grind to a halt. The next four largest items by weight, maize clinker, wheat, iron and steel, are critical in meeting the country’s food needs and in supporting its vibrant construction industry.

51

MOMBASA ACTS AS A GATEWAY FOR OTHER INLAND DESTINATION: Below is the diagrammatic representation of countries that can be reach after reaching Mombasa port

(Fig 31)

52

MOMBASA

UGANDA

RWANDA

BURUNDI

TANZANIA

ETHOPIA

SUDAN

OF ALL THE IMPORTS TO MOMBASA, NEARLY 72 % ARE DESTINED TO KENYAN MARKET, WITH REMAINDER TRANSITING TO NUMBER OF NEIGHBOUR COUNTRIES.

The below chart shows the contribution Mombasa port makes to the total time it takes to transport goods to Nairobi, Kampala and Kigali respectively from the moment they arrive at the port. It shoes the country wise distribution of transit time to reach to desired locations within East Africa.Charges of inland destination: Below diagram shows the various inland destination charges that has to be paid by the exporter. This charges are based on the gross weight of the cargo.

NOTE:

The above mentioned rates are of the year 2008, there is a slight change in the rates in the year 2009 because of infrastructure development and also increase in frequency of services by rail, road and also the rate may vary depending on current market condition.

53

INLAND AFRICAN DESTINATION

ROUTING VIA MOMBASA BY ROAD

COUNTRY DESTINATION

RATES20" ST 40'' ST

WT. UPTO 13.5 TON

WT. UPTO 24 TON

WT. UPTO 27 TON

CONGO

BUKAVU $5,006 $8,256 $9156GOMA $4,907 $8,006 $9056

LUMUMBASHI $5,256 $8714 $9776LIKASI $5,256 $8996 $10156

BURUNDI BUJUMBURA $4,056 $6356 $7256

MALAWILLILONGWYE $4,291 $6206 $7561

BLANTYRE $4,206 $6511 $7956

ZAMBIA

LUSAKA $4,076 $6706 $7356KITWE $4,076 $6736 $7356NDOLA $4,076 $6736 $7356KABWE $4,076 $6736 $7356

CHINGOLA $4,076 $6736 $7356KALULUSHI $4,076 $6736 $7356

UGANDA KAMPALA $4,286 $6406 $7406

Documentation required:

Customs Information and Document Requirements

The local clearing practice is as follows;

ENTRY

• Shipping line to lodge manifest before ship arrival with KRA and the port/KPA.

• Clearing agent to electronically lodge an entry with customs (takes max 2 days to be

approved/cleared)

• Clearing agent to secure and pay port charges, after which they get a Mombasa Port Release

Order (MPRO). (this process also takes max 2 days)

• Clearing agent then clears cargo through KEBS, KEPHIS and port health (1 day)

• Cargo is then ready for delivery after physical verification by customs officers upon discharge

ex ship.

EXIT

All imports are normally cleared from customs on presentation of the following

documents (please note that not all of the following documents may be required):

• Two original Bills of Lading, one ‘no charge’ invoice / supplier invoice / packing list

• Certificate of Origin and Certificate of Conformity (not required by UN agencies)

• Fumigation Certificate, a Phytosanitary Certificate and a Plant Import Permit (PIP)

• Rail Consignment Note (RCN - for rail transport)

• Ministry of Finance Duty/Tax Exemption Letter (food imports)

• Customs Import Entry Form C63

• Conversion into Home Use Letter (only in case that the Duty & Tax Exemption Letter is not

timely received, where the cargo is temporarily cleared in transit)

• Certificate of Manufacture / Expiry Date

54

COMPETITORS MATRIX:

This chapter includes detailed competitor’s analysis and their market share in east African region and also the frequency of calls they make to African ports

Below diagram shows the full TEUS exported by various liner from Mombasa container terminal in 2009

Finding:

From the above diagram it is clear that MAERSK line has exported largest amount of TEUS as compare to others. There strong hold in the liner business for a long period from port of Mombasa gave them an extra age over the other liners from an industry. While other competitors like those of LNL and HHL have less export from Mombasa port.

MAERSK line has the largest market share of around 28% in an export from Mombasa port as compare to others.TSL has a lowest market share. Big liners such as MAERSK and MSC create barriers for a potentially new entrant which is a prime reason of having an unequal market size distribution among the companies.

55

FIG 34

Below diagram shows the full TEUS imported by various liner from Mombasa container terminal in 2009

Finding:

Above diagram shows that liners such as MSC, MAE and PIL have a tough competition for import TEUS from Mombasa port. Flexibility in freight rate is one of the reasons to this cut-throat competition. Working with a minimal margin gives them upper hand over those of a small liner companies.

Finding:

MAERSK and SAFMARINE have around similar market share of imports (19%) which was a highest for any liner in the year 2009.Therefore it is clear from the diagram that there exist wide gap between the big, established liners and potentially smaller liner companies.

56

FIG 35

FIGF 36

S

Below diagram shows the percentage share of the top 10 customers/exporters to the Mombasa who are involve in exporting goods to East Africa port.

Finding:

Konkola copper mines is an top exporter for Mombasa port in the year 2009 who was having market share of around 22% in the year 2009.It clearly shows that copper was exported at a large amount.

57

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MARKETING STRATEGIES:

Since Maxicon is going for the expansion in new area, marketing plays the vital role in the success

of the project. Through marketing strategies the Maxicon can concentrate its limited resources on

the greatest opportunities to increase sales and achieve a sustainable growth.

There are two types of marketing strategies that can be used.

1) DIRECT MARKETING:

Direct marketing is the use of consumer direct (CD) channels to reach and deliver goods and

services to the customers without using marketing middlemen. Direct marketing is a form of

advertising that reaches its audience without using traditional formal channels of advertising, such

as TV, newspapers or radio. Businesses communicate straight to the consumer with advertising

techniques such as fliers, catalogue distribution, promotional letters, and street advertising.

The different types of direct marketing are:

Direct mail:

Direct mail marketing means sending an offer, announcement, reminder or other item to an

individual consumer. Using highly selective mailing lists, marketing executive can send out mails

to the existing clients and customers. CDs, DVDs and computer discs van also be used to convey

the message to the clients.

Catalogue marketing:

In catalogue marketing, companies may send full line merchandise catalogue, specialty consumer

catalogue and business catalogue, usually in print form but also sometimes as CDs, videos or

online. The success of catalogue business strategy depends on managing lists carefully to avoid

duplication or bad debts, controlling inventory carefully, offering quality merchandise so returns

are low.

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Telemarketing:

Telemarketing is the use of the telephone and calls centres to attract prospects, sell to existing

customers and provide service by taking orders and answering questions. Telemarketing helps the

companies increase revenue, reduce selling costs, and improve customer satisfaction.

Print Media:

Print media is one of the easiest ways to get notice. Newspapers and magazines can de used as

medium of marketing. (Exim) newspaper is used by every shipping company hence rigorous

marketing through ads can be done.

2) INTERACTIVE MARKETING:

Interactive Marketing refers to the evolving trend in marketing whereby marketing has moved

from a transaction-based effort to a conversation. Interactive marketing is not synonymous with

online marketing, although interactive marketing processes are facilitated by internet technology.

Interactive Marketing is the evolution of marketing where the consumer is empowered, entrusted,

and recruited to aid in the strategy.

Placing ads and promotion online:

Maxicon has already designed website where it express their purpose, history, products and vision.

Ads and promotion of the new product should be carefully done so that the message is properly

conveyed to visitors.

Word of Mouth:

Social networks, such as Myspace and Facebook, have become an important force in both

business to consumer and business to business marketing .Key aspect in social networks in word

of mouth and number of conservations and communication between different parties.

Buzz and Viral Marketing:

Some marketers highlight two particular forms of word of mouth- buzz and viral marketing. Buzz

marketing generates excitement, creates publicity and conveys new relevant brand related brand

related information through unexpected or even outrageous means.

Viral marketing is another form of word of mouth, or word of mouse that encourages consumers

to pass along company-developed products and services.

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These are the types of risk to be considered before starting up business Mombasa (East Africa)

PEST ANALYSIS

PEST Analysis helped in studying the various risk i.e the political, Economic, Social and technical risk of an African region

POLITICAL

Strong political will to develop Mombasa town to a modern town Political redirection is needed to find the resources to fulfill town vision The citizenry participation levels are still low Risk of military invasion Politically instable The powers and authority of the President of the African Parliament derive from the

Constitutive Act Corrupt government that have often committed serious human rights violation

ECONOMICAL:

It has abundant natural resources Worlds poorest and most underdeveloped continent Lack of access to foreign capital 80.5% of the Sub-Saharan Africa population was living on less than $2.50 (PPP) a day in

2005 The industrial establishment in a country is an engine for the regional economy There is a need to facilitate the real economic growth and development arena through

infrastructure.Social

The social situation is supportive with low crime levels in the town when compared with other towns

State of education is being jeopardized by the social ills like culture reversals and drug and substances etc.

the spread of deadly diseases and viruses (notably HIV/AIDS and malaria) Poverty, illiteracy, malnutrition and inadequate water supply and sanitation, as well as poor

health are the various problems people of Mombasa are facing.

Technological

There have been modest attempts at computerizing the departments, there still doesn’t exist a fully

The GIS section is committed more to the tracking of revenue notably, the ground rates Technical up gradation in the Planning and Architecture department, social services

department

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CHAPTER 4:

FINDINGS:

CUSTOM CLERANCE PROBLEM:

The containers on the receipt at the port are unloaded from the ship and taken to the container

freight stations. For taking these containers out of the ICD for the delivery to the consignees,

custom clearance is required. For this purpose the following documents are required to the

customs:

a. Certificate of Origin

b. Original B/L or AWB

c. Original Invoice

d. Pre-shipment Inspection (PSI) certificate

e. Packing List / Cargo Manifest

f. Customs Import Entry Form C63

g. Ship's agent Delivery Order

h. Mombasa Port Release Order (MPRO)

These documents are required for import of all type of cargo. In case, if any of the above

documents are not in proper form, or could not be submitted to the authorities, delay could

occur in the clearance of the cargos.Occasionally there will be delay in receipt of the bill of

lading from the shipping agents and there will be delay in clearance.

STORAGE SPACE INSUFFICIENT:

When the containers are unloaded, they are stacked in 4 tiers in the ICD. There is

insufficiency of the container storage space. The problem that arises is that unless the

container cleared from the top, the containers which are to be handled urgently and which

happen to be in last or first tier, have to wait till the container in the upper tiers are cleared.

This takes considerable time and delays the handling of the containers.

BERTHING PROBLEM:

Berthing is one of the key problems faced by the shippers in the Africa. As there are not

enough berth available at Mombasa port in comparison to the vessels that arrives at the port.

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This lead to more delay in loading and unloading of the cargo at port area and results into

price hike.

SECURITY PROBLEM WHILE DEALING IN AFRICAN MARKET:

The security problems which Kenya faces are immense. It has long, remote borders with

Tanzania, Uganda, Sudan, Somalia and Ethiopia. These are hard to police for a country with

limited financial and human resources to commit to border patrols. Many times these shippers

are insecure because the whole containers are robbed by the thefts resulting in the delay of the

delivery of the goods.

PIRATES :

Pirates are another problem faced by the shipping company while dealing with the African

market. The border with Somalia is particularly troublesome for the country

INFRASTRUCTURE PROBLEM IN AFRICA:

Mombasa port is the most important centre pot for the whole East African region but its

performance hitherto has been dismal, with unacceptable delays in turnaround times. for

example, insufficient and unreliable supplies of electricity, it can have an equally detrimental

impact upon trade.

While major international ports aim to turn around cargo within 24 hours, the Kenya Ports

Authority (KPA), which manages Mombasa, has recently set a more modest target of four

days, although some containers are still likely to take weeks during busy periods.

In an effort to correct such problems the government and the KPA are implementing a three-

pronged strategy to quicken processing times: new equipment is being purchased to speed up

dockside processing; the KPA is attempting to introduce greater use of IT to remove some

administrative delays and in the longer term, a second terminal is planned

ENTRY BARRIERS BY LINERS, DIFFICULT FOR NVOCC TO ENTER

AFRICAN MARKET:

Liners are not letting the NVOCC to get into the untapped market of Africa. They knew that

African market has huge opportunities as compared to other nations. Even during the

recession the only market that made profit was the African market. Liners know that if 63

NVOCC enter in this market there would be huge competition, hence they are not providing

the slot space to the NVOCC to upload their containers frequently.

EXPORTS ARE LESS FROM AFRICA:

Following are the some of the reasons for less export from Africa.

a. Documentation procedures take nearly four times longer than developed countries, while

customs and ports procedures and inland transit take three times longer.

b. While all types of delays and foreign tariffs reduce exports; inland-transit delays have the

largest negative impact on new products’ export values.

c. Uncertainty in road transport has a negative and significant effect on exports. Uncertainty in

documentation times may be less important because in many cases documents can be

prepared in advance.

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Recommendation:

1) The company should start charging depreciation on containers either on fixed instalment

method or reducing balance method, which will help the company to deal with rising

container prices.

2) The company should get certified with the ISO, this will create a brand image in the market.

3) Motivational factors should be adopted by the company to encourage the employees such as

Employee of the month, performance based incentives.

4) As there is growing demand of container in the market, the company can start its own trading

business.

5) The company should make more promotional investment in order to achieve long term

benefits.

6) Mombasa port is definitely a smarter choice to do business in east African region due to its

connectivity with other countries. Though a lot of improvement is required in infrastructure

and port facilities to attract exporters from an around the world.

7) From the data analysis tools is used it is clear that Maxicon has very strong as an NVOCC and

therefore it capture the other market it should diversify its business.

8) From the competitors analysis it is clear that NVOCC can compete with big liner only after

making strong relationship with overseas agents

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