Pestel and Porter Five Force Analysis of Container Line Shipping Industry in India

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  • Topic: A. P. Moller-Maersk Group, Ship, Shipping
  • Pages : 19 (7055 words )
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  • Published : July 25, 2010
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Analysis of “Shipping Industry” in India
Business Group: Container Line

Compiled by:
Ashok Lalwani


There are many factors which directly or indirectly affect the present day businesses like government policies, regulations, laws, human rights, competition, technology, international organisations, world trade bodies, child labour, minimum wage, pollution, accidents, risks, violence, security, labour, supplies etc. Therefore it becomes important for every business to determine these various factors and plan their strategies accordingly to survive against all such odds. But practically it is virtually impossible to consider all such individual factors and therefore specific models exists like PESTEL and Porter five forces which are applied available to determine the external and internal environments factors affecting the shipping industry in India, the same are applied here. Overall shipping industry in India is very large in size and volume, therefore “Container Line” business group has been taken for discussion under this study. Container line business involves hiring, transportation, repairs and movement of containers by exporters, trader or agents for transportation of goods to any foreign destination against agreed freight rates. The reason for choosing this industry as part of study is due to enormous support being given by government of India to promote foreign trade for the economic development, as well as my personal experience of 5 years in shipping industry under AP Moller Maersk Group gave me thrust to explore more about this industry.

* First we will analyse the overall industry using PESTEL analysis which refers to factors like Political, Economic, Social, Technological, Environmental and Legal factors than;

* We will analyse the companies working under this industry using Porter’s Five Forces model which are threat of new entrant, threat of substitution, power of buyers, power of sellers and competitive rivalry. First three main competitors of this industry according to market share are Maersk Group (21%), Mediterranean Shipping Company (14%) and American Presidential Lines (9%).

PESTEL – Political Factors:

Shipping industry in India is administered by central government through “Ministry of Shipping” with the sole responsibility to formulate policies, programmes and their implementation. Each port is governed under Indian Ports Act’ 1980 and Major Port Trust Act’ 1963 and administered individually by board of trustees under direct orders from central government. Political factors are important here due to immense involvement of government in this industry. Appointment of Custom House Agents: “Customs House Agent (CHA) is a person who is licensed to act as an agent for transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs station”. These agents are governed by “Customs House Agents Licensing Regulations, 1984” which involve responsibilities like filing bills of entry, shipping bills, submitting documents, helping in examination of goods, payment of duty on behalf of principal, storage and movement of goods. They act as an intermediary between importer, exporter, clearing agent and custom house due to high involvement and technical nature of work involved in connection with clearance of cargo. These agents are appointed after clearing minimum laid criteria’s like minimum qualification as graduation, practical working experience in customs for 3 years, holder of pass in Form G as employee of company, reliability of applicant, financial soundness and completion of oral and written examination with maximum 3 attempts. Infrastructure Development: Maritime Transport is a critical infrastructure for the social and economic development of a country. It influences the pace, structure and pattern of development. 90% of India foreign trade is carried out by sea, in contrast its existing port infrastructure...
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