freight movement

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Members: Juan Carlos Calderón Raúl Escalante Lilibeth Nuñez Deyanira Nuñez Jubert Sanchez Fernando Quezada Ports as elements in value-driven chain systems Lecturer: Max Galarza GRADE:9,5

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Page 1: Freight movement

Members:• Juan Carlos Calderón• Raúl Escalante• Lilibeth Nuñez• Deyanira Nuñez• Jubert Sanchez• Fernando Quezada

Ports as elements in value-driven chain systems

Lecturer: Max Galarza

GRADE:9,5

Page 2: Freight movement

WHY DOES THE FREIGHT MOVE?Freight moves between firms at supply and demand locations, and the movement results from a commercial or market transaction in which supply satisfies demand via the price mechanism. Firms will not enter the market transaction unless they derive competitive advantage from so doing. Competitive advantage does not necessarily mean the maximization of proits; advantage will be gained in the long run at break-even or better than break-even, acceptable profits.

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Firm A will derive value from the transaction or utility, or satisfaction often measured in terms of consumer surplus. Not surprisingly, Firm B will not enter the market either unless it derives utility or competitive advantage from so doing.

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FREIGHT MOVEMENT PATHWAYS

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• Figure 1 is a simple representation of freight pathways between an export firm (Firm A in Market 1) and another firm (Firm B), an importing firm in an international market (M2).

• The exporter has a choice of routes, modes and carriers to any one of three ports (P1, P2, P3); each port has a number of shipping operations linking the only importing port (P4); and the port is linked to the importing firm by one route, although there may be a number of operators on that route.

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COMPETITIVE ADVANTAGE

• An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. There can be many types of competitive advantages including the firm's cost structure, product offerings, distribution network and customer support.

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• Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

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Freight movement pathwaysFreight movement pathways depends on the interactions between equipment, infrastructure, and facilities. The vehicles and equipment that move freight range from aircraft and ocean-going vessels for international transport, to train and trucks for interstate transport, and smaller trucks/vans for in-state operations.

International Freight pathways capture the movement of goods between countries, and may be carried out by truck, rail, or ship. Examples of these pathways include transporting containers from a port terminal to a distribution center via rail or trucks.

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Shipping firms are in the business of moving freight. They contract with the buyer or seller (either directly or indirectly); they intervene, in effect, between the buyer and the seller as a third party and the price of their intervention is met, or redistributed, from the price paid by the customer. Freight moves only because in so doing it offers value and competitive advantage - to the shipper, to the buyer and to the service provider.

Firm A in Market 1 (export firm) sells to Firm B in Market 2 (importing firm); and product (freight) moves along logistics pathways, in this case including landside modes and through ports in shipping networks (ports like Guayaquil, Esmeraldas, La Libertad, etc)Freight and logistics are an indispensable component of economic activity. New industries are dependent upon efficient and low cost transport, and improved logistics can transform the economy.

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SOURCES• Robinson, Ross. (2002). Ports as elements in value-driven chain systems: the

new paradigm. Maritime Policy & Management. //dx.doi.org/10.1080/03088830210132623

• Porter, Michael. (1990). The competitive advantage of nations. New York: Free Press.

• Hayden, Raymond. (November, 2015). Defining Competitive Advantage For Shipping Lines An Alternate View. Water Transportation. http://www.rhayden.us/water-transportation/defining-competitive-advantage-for-shipping-lines-an-alternate-view.html