World Maritime University The Maritime Commons: Digital Repository of the World Maritime University World Maritime University Dissertations Dissertations 2001 Comparative analysis for choosing a single gateway of seafreight in Scandinavia : a project for Schenker International Van Vinh Thai World Maritime University Follow this and additional works at: http://commons.wmu.se/all_dissertations Recommended Citation Thai, Van Vinh, "Comparative analysis for choosing a single gateway of seafreight in Scandinavia : a project for Schenker International" (2001). World Maritime University Dissertations. 168. http://commons.wmu.se/all_dissertations/168 This Dissertation is brought to you courtesy of Maritime Commons. Open Access items may be downloaded for non-commercial, fair use academic purposes. No items may be hosted on another server or web site without express written permission from the World Maritime University. For more information, please contact [email protected]. WORLD MARITIME UNIVERSITY Malmö, Sweden COMPARATIVE ANALYSIS FOR CHOOSING A SINGLE GATEWAY OF SEAFREIGHT AND AIRFREIGHT IN SCANDINAVIA - A project for Schenker International – By THAI VAN VINH Vietnam A dissertation submitted to the World Maritime University in partial fulfillment of the requirements for the award of the degree of MASTER OF SCIENCE In MARITIME AFFAIRS (Port Management) 2001 Copyright Thai Van Vinh, 2001 DECLARATION I certify that all the material in this dissertation that is only my own work has been identified, and that no material is included for which a degree has previously been conferred on me. The contents of this dissertation reflect my own personal views, and are not necessarily endorsed by the University. …………………………………….. (Signature) ……………………………………. (Date) Supervised by: Dr. Shuo Ma Position: Vice Rector and Academic Dean/Professor of Shipping Management and Port Management Institution/organization: World Maritime University Assessor: Dr. Bernard Francou Position: Professor of Port Management Institution/organization: World Maritime University Co-assessor: Mr. Gerhardt Muller Position: Professor of Marine Transportation Department. Institution/organization: US Merchant Marine Academy, Kings Point, New York ii ACKNOWLEDGEMENTS It would not have been possible for this study to be compiled and completed without the great help and assistance of a number of people and organizations to whom I would like to sincerely express my indebted acknowledgements: G First, to my beloved mother, my dear girlfriend and my relatives who have always been encouraging and inspiring me in my life, G To the German organization "Carl Duisberg Gesellschaft" (CDG), which financed my studies at WMU, G To WMU itself and its staff for accepting me as a student and providing me not only professional knowledge but also international friendship and solidarity, G To Professor Shuo Ma for accepting to instruct and supervise my modest work as well as providing me with his fatherly valuable and esteemed advice and guidance, G To Captain Jan Horck, Professor Bernard Francou and Professor Patrick Donner for their great assistance, advice and encouragement, G To Professor Gerhardt Muller as the external assessor of this study, G To WMU’s library staff, especially Mrs. Cecilia Denne and Mrs. Susan Wangeci- Eklöw for their help and counsel in library research, G To WMU’s English lecturers, Mr. Clive Cole and especially Mrs. Inger Battista for their guidance and language correction of this study, G To Mr. Philip Moding as WMU’s visiting Professor for his valuable and kind- hearted guidance and assistance since the project was still an inception, G To Mr. Jan Nordh, Head of the Business Processes Development Department at Schenker, for his great help, guidance and kindness, G To Mr. Carsten Jorgensen, Mr. Peter Lindgren, Mr. Erik Lenormand, Ms. Yurina Sedano Garcia and others of Schenker International and Schenker Land Transport for their kind co-operation and assistance, G And finally, to all my international friends from Tanzania, Indonesia, Bangladesh, Ethiopia, Sri Lanka, China, Cape Verde… for sharing knowledge and for their help and encouragement during my stay at WMU. Long live our international friendship! iii ABSTRACT Title of Dissertation: Comparative analysis for choosing a single gateway of seafreight and airfreight in Scandinavia - A project for Schenker International Degree: MSc The research paper is the study of the choice of location for a regional gateway/distribution center of sea-freight and airfreight, inbound and outbound cargo flows in the whole Nordic region of Germany-based freight forwarding, logistics service company Schenker International by analyzing a number of considerations and comparing possible alternative locations. The right choice of location will have significant meanings to the company since it affects the company’s competitive advantages through optimized cargo routing and handling, cost-saving… A brief look on fundamental concepts of logistics is introduced at the beginning to place academic grounds for the study. The question of whether it is advisable to have a single gateway/distribution center for the whole Nordic region is answered after examining current tendencies in European logistics and analyzing historical, economic and social perspectives of the Nordic region. The research is then dealing with the issue of site selection for the regional gateway/distribution center. This is solved from two sequential levels: from general geographical area to specific site within the chosen area. =In the first level, the centre of gravity principle is applied to pinpoint the general geographical area of the regional gateway. =In the second level, the minimum integration of total distance transport with relevant volumes principle in combination with the centre of gravity iv principle or least total distribution cost principle is deployed after analyzing the company’s operating practices and data to build the excel-based simulation. A number of recommendations will also be made in the last chapter concerning the application of the study for the best use of it. KEY WORDS: logistics, distribution center, centre of gravity, Schenker International, Scandinavia, sea-freight, airfreight. v TABLE OF CONTENTS Page Declaration ii Acknowledgments Iii Abstract iv Table of Contents vi List of Tables ix List of Figures x List of Abbreviations xii 1. Introduction 1 1.1 Background 1 1.2 Problem definition at Schenker International 2 1.3 Objectives of the study 2 1.4 Scope of the study 3 1.5 Research methodology 5 1.6 Limitations 5 2. Tendencies of logistics and distribution in Europe and the need for a regional distribution center for the Nordic region 6 2.1 Basic concepts about logistics and distribution 6 2.1.1 Concept of logistics and physical distribution 6 2.1.1.1 Logistics and logistics components 6 2.1.1.2 What is physical distribution? 8 2.1.2 The total distribution cost concept 8 2.1.3 Nodes and links 9 2.1.4 Warehouses and distribution centers 10 2.1.4.1 Definition of warehouse and distribution center 10 2.1.4.2 The importance of depots rationalization and location 12 2.2 Tendencies of logistics and distribution in Europe 13 2.2.1 Growing concentration through mergers, acquisitions and alliances 13 2.2.2 Tendency of outsourcing logistics and distribution from manufacturers 16 vi 2.2.3 Consolidation trend in production, logistics and distribution 19 2.3 Nordic region as a single market 22 2.3.1 From historical perspective 22 2.3.2 From economic perspective 23 2.3.3 From social perspective 26 3. Dianogsis of location for the Nordic regional gateway/distribution center from the general geographical area level 27 3.1 Principle of centre of gravity 27 3.1.1 Centre of gravity in physics 27 3.1.2 Application of CoG in shaping the general geographical area of the gateway for the optimization of transport logistics 29 3.2 Choosing future regional gateway for the Nordic region from general geographical level by the application of CoG 29 3.2.1 Population distribution 29 3.2.2 Population growth 34 3.3 The Öresund region as the place for Nordic regional distribution center 36 3.3.1 Geographical location 36 3.3.2 Population and labor force 37 3.3.3 Economic indicators 38 3.3.4 Infrastructure 39 3.3.5 Education, research and development (R & D) 42 4. Current operating practices of Schenker International in the Nordic region and alternative locations for the regional distribution center 43 4.1 Introduction about Schenker International and its parent company 43 4.1.1 History of the company 44 4.1.2 Key figures of Schenker AG 44 4.1.3 Schenker International in the Nordic region 44 4.2 Current distribution patterns being deployed 45 4.2.1 For Sweden 46 4.2.2 For Denmark 46 4.2.3 For Norway 47 4.2.4 For Finland 47 4.3 Customer service levels 48 4.4 Economic implications of current distribution patterns 49 vii 4.5 Alternatives identifications 51 4.5.1 Customers proximity 51 4.5.2 Seaports and airports services 58 4.5.2.1 Airport services 58 4.5.2.2 Seaport services 60 5. Optimization of location for the regional gateway/distribution center of Schenker International from specific site selection level 64 5.1 Business-environment related considerations 64 5.2 Optimization of location from different alternatives 65 5.2.1 Theoretical model for specific site selection within a chosen general geographical area 66 5.2.2 Basic prerequisites for the simulation 69 5.2.3 Optimization by excel-based simulation 70 5.2.3.1 Solution for seaports/airports used 70 5.2.3.2 How is the integration