Challenges Faced by Maritime and Logistics Management Organizations

This paper discusses the external issues faced by modern business organizations in the maritime industry in terms of managing logistics and the supply chain. It covers the impact of legislations, rising fuel costs, lack of funds for technology and innovation, environmental concerns, and their impact on management.

Running head: MARITIME AND LOGISTICS MANAGEMENT
Maritime and Logistics Management
Name of the Student
Name of the University
Author Note

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Introduction:
It is observed that the business conduction of the modern business organizations is
notably influenced with effective delivery of the products. The effective and efficient supply
of the raw materials is seen to be notably crucial in terms of producing quality products and
services for the customers (Qrunfleh and Tarafdar 2014). The value of the efficient supply
chain and improved management of the logistics is considerable for the senior level
management of the modern business organizations as that enable them to acquire the
customer loyalty with the production of the improved products and the services (Elrod,
Murray and Bande 2013). The paper is focused in the description of the external issues that
the modern business organizations of the maritime industry are facing in terms of managing
the logistics and the supply chain.
Issues faced by the organizations operating in the maritime shipping and logistics
management:
One of the major challenges for the organizations of the mentioned industry is
evaluated to be Impact of the Legislations. The modern business organizations operating in
the maritime shipping and logistics management industry are significantly affected with the
strict implementation of the international rules and regulations. It is seen that the legislations
for the protection of the International borders in the modern generation is significantly strong
and the violation of the legislations is associated with significant amount of punishment in the
form of the monetary penalisation, capturing of personnel and vehicles (Cullinane and
Bergqvist 2014). Many of the business organizations operating in the mentioned industry are
facing the impact of the strict legislations which forced them to minimize their business
operations (Cullinane and Bergqvist 2014).

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Apart from the strict implementation of the international legislations, the increasing
cost of the fuel of the ships is also considered to be a prime concern of the modern business
organizations. The significant increment in the prices of the fuel is responsible for the
increment of the transportation cost of the materials and the manufactured products. This
plays a crucial role in the increment of the operational cost of the companies. The increasing
rate of the fuel has the potential to suspend or minimize the usual operations of the business
organizations operating in the mentioned industry (Van Hassel et al. 2016). With the
increasing fuel and the operational cost of the transportation, the organizations are observed
to implement higher pricing of their services over the customer organizations and that forces
many of the customer organizations to compromise the fluency of the operations.
Average annual OPEC crude oil price from 2016 to 2018 (in U.S. dollars per barrel)
2016 2017 2018
40.68 52.51 69.52
(Information Courtesy: Statista.com. 2019)
Brent Crude oil prices from 2016 to 2018 (in U.S. dollars per barrel)
2016 2017 2018
43.74 54.15 71.19
(Information Courtesy: Statista.com. 2019)
The next challenge for the organizations is the lack of funds for the application of
Technology and Innovation. It is seen that the mentioned industry is able to experience
notable amount of presence of the technological and innovative concepts in the recent times
for the better and effective management of the operations. The application of the technology

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in the safety procedures of the ships in during the adverse weather is considered to be a major
step in the safe business conduction in the mentioned industry. Adding to this, the rapid
progress of the technology and the changes are assessed to be difficult to implement for many
of the business organizations due to the lack of funding (Rivas-Hermann, Köhler and
Scheepens 2015). Hence the business improvement is witnessed to be significantly restricted
as the organizations are unable to take the advantage of the technology for the betterment of
their business performance with a precise on the safety of the operations. However, the
application of the technology in the mentioned business sector has the potential to offer
significant amount of ease in the operations and that for majority of the modern business
organizations is significantly tempting.
As an immediate impact of the rising cost of the fuel, greater credit crisis and the
inflationary demand are considered to affect the local and the global economy in significant
manner. Apart from the impact of the economy, many of the organizations of the mentioned
industry is seen to suffer due to the increment of the compliance regulations and the demand
crisis. Apart from that, the shortage of the efficient employees in the mentioned industry is
observed to be a prime concern of many of the business organization as well. It is seen that,
the industry is notably affected with the hiring and the retention of the employees and that is
pretty evident in case of the operators or officers of the ships. One of the major reason of the
decreasing number of the efficient employees in the mentioned industry is observed to be the
homesickness of the employees and the operators or officers of the ships. Along with that, the
concern regarding the lower wages and the ineffective rewarding policy applicable for the
employees of the industry is observed to be significant reason for the shortage of the efficient
employees in the mentioned industry.
Along with the mentioned issues, the business conduction of many of the
organizations of the industry are seen to be affected with the environmental concerns of the

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local and national governments and international regulatory agencies. The international
legislations regarding the emission of the toxic elements along with the harmful substances
into the water is observed to be a major concern for many of the organizations (Makkonen
and Repka 2016). The implementation of the legislations for controlling the environment is
observed to force the organizations to add multiple number of precautionary gears for the
effective management of the toxic elements of the wastages. Hence the organizations are
observed to face increased financial costing which has the potential to affect the financial
feasibility of the organizations operating in the mentioned industry.
Impact on Management:
As mentioned earlier, the business conduction of the organizations is seen to face the
impact of the above mentioned issues in a significant manner and that leads to minimization
of the usual operations for the organization. Adding to this, many of the organizations of the
mentioned industry are also observed to suspend their operations as an attempt to cope up
with the impact of the above mentioned issues and as a result, the management of the
organizations are observed to face financial crisis.
Conclusion:
On a concluding note, the impact of the strict implementation of the legislations is in
need to be managed by the organizations as the intensity of the government in implementing
them will not be reduced. However, the organizations have the possibility to meet the
concerns regarding the management of the incorporation of the technology and the innovative
ideas into their services. Adding to this, the formation of effective rewarding policy and
efficient pay structure will be of great significance for the organizations in improving their
operations.

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References:
Cullinane, K. and Bergqvist, R., 2014. Emission control areas and their impact on maritime
transport.
Elrod, C., Murray, S. and Bande, S., 2013. A review of performance metrics for supply chain
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Makkonen, T. and Repka, S., 2016. The innovation inducement impact of environmental
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Qrunfleh, S. and Tarafdar, M., 2014. Supply chain information systems strategy: Impacts on
supply chain performance and firm performance. International Journal of Production
Economics, 147, pp.340-350.
Rivas-Hermann, R., Köhler, J. and Scheepens, A.E., 2015. Innovation in product and services
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Cleaner Production, 106, pp.443-454.
Statista.com. 2019. • Statista - The Statistics Portal for Market Data, Market Research and
Market Studies. [online] Available at: https://www.statista.com
Van Hassel, E., Meersman, H., Van de Voorde, E. and Vanelslander, T., 2016. Impact of
scale increase of container ships on the generalised chain cost. Maritime Policy &
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