Great Lakes

Topics: Costs, Variable cost, Bulk cargo Pages: 2 (710 words) Published: February 1, 2011
Case Study 8-1 Great Lakes Carriers

OVERVIEW:
With the demand for Great Lakes Carrier’s traditional commodities of iron ore and grain movement on a constant decline, Great Lakes Carrier is in need of a new market for its bulk cargo business to stay in business.

CASE QUESTIONS:
1 When considering a new business venture, Great Lakes Carriers (GLC) will need to gather vital marketing data to support the transition. Issues to consider would include: will the current market support a new waterway carrier? What percentage of the market will support fixed shipping and receiving schedules and do not require express shipments? How many containers are needed to support this new business for front and back haul service? Would GLC better serve the market with intermediate origin-destination pairs better than weekly sailing schedules? What percentage of the market is interested and has a need for the transportation of high dollar freight and would support the implantation of RFID tag systems? Are most companies equipped to load and service waterway vessels? 2 When considering entrance into the new market, there are several initial and long term costs that should be explored. Because the current vessels cannot be converted to container vessels, an additional fleet will be necessary. In addition to the vessels and cranes, other equipment may need to be added to the company’s inventory. Some fixed costs on the waterways associated with the new vessels may increase due to the size and function of these new vessels. Labor rates and contracts may also change with the nature of the new business. Variable cost is also a factor when considering new bulk materials that involve, for example, the transportation of hazardous materials and containment. 3 With the geographical location of GLC, weather may pose a problem to the logistical supply chain. Ports may be denied access due to ice and possible high winds that affect the water level and the docking of container...
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