analysis of pakistani shipping industry

Shipping Industry

Why we chose this industry?

• Importance• History• Research methodology• Human Resource

Adil Yousuf

• Porter’s modelHassan Khan

• SWOT analysis• RecommendationsSaad Burney

Overview

Interviewed the key personnel manger, Shehrayar Hassan and the Executive Director Administration Brig. Rashid Siddiqi

Conducted a survey •Questioned twenty employees (both off-shore and on-shore) to find HR and job related information•Literature review

Research methodology

No informal sector One organization namely the PNSC The rest are foreign shipping companies like

DHL Global Forwarding and Maersk that handle 87% of Pakistan’s sea trading needs .

Structure of the industry

Post independence1950s

• Private ship owners built the national fleet from scratch that is nothing was inherited from the British

1960s

• In 1963 National Shipping Corporation(NSC) was formed

• Indo-Pak War in 1965 resulted in rerouting of ships due to security concerns

1970s

• 1971: Creation of Bangladesh reduced merchant marine ships from 71 to 57

• 1974:Shipping was nationalized. 9 private shipping companies were merged to form Pakistan shipping Corporation.

• 25+26 ships=51 ships• Merger in 1979 PSC+NSC=PNSC

History of the shipping industry

Significance of the industry

393.2 million rupees were paid

in taxes gainful utilization

of 1000 km of coastline.

Helps in foreign exchange savings

500000$/year

Since 90% of world trade is

carried through oceans therefore shipping industry is playing a vital

role in world economics. More than 95 per cent

of the total freight trade of Pakistan

is seaborne. “PNSC handles 13

% of it”

PNSC alone Provides

employment to 1112 people out of this 50% are

unskilled.and salaries of 940.2million

rupees were paid in the year 2011

National Flag carrier of Pakistan.

Engaged in transportation of

dry bulk and liquid cargoes globally

Management offices are located

in Karachi, Pakistan and are

listed on the Karachi Stock

Exchange since 1980

PNSC has 18 subsidiary companies

PNSC is an autonomous corporation

Functions under the overall control of the Ministry of

Ports and Shipping , GOP.

It manages a fleet of 09 ships, real

estate and a repair workshop. 

Pakistan National Shipping Corporation

The Corporation is undertaking three main functions. These are:

I. Fleet OperationsII. Real EstateIII. Workshops

FUNCTIONS OF PNSC

OBJECTIVES OF PNSC

Carriage of National Trade by sea. Strategic Considerations.

Freight ships stability

Foreign Exchange Savings.

Managers at all levels must be qualified (have a degree in engineering or business administration) and have experience in relevant field.

Separate middle level on-shore and off-shore managers.

Strategic decisions made by top level management.

The rest by dept. heads.

Pyramid structure of management

“Untrained professionals mainly from Navy, Police and Army have lost some 64 large ocean-going ships lost due to

sinking and have caused colossal losses due to Inexperienced

administration and misuse of funds”

PNSC and its journey through the grey areas

Porters Model

Human resourceA survey

Employees questioned

Middle level managerTop level managerLower level managerNon-managers

Sample details

Q. How would you rate on a scale of 1 to 10, 1 being the least dissatisfying and 10 the most dissatisfying, the following factors are associated with job dissatisfaction?

Excessive pressure.____ Non-flexible timings.____ Lack of appreciation or rewards on good performance.____ Lack of additional benefits like being given a car and free

fuel.___ Lack of life or medical insurance.___ Longer than stated working hours.____ Sexual harassment.____ Not being able to carry weapons to defend myself in the

case of pirates attacking my ship.____ No being able to be with family because of long sea

journeys.________

The question asked

Top level Managers

Middle level managers

First-line managers

Non-managers

0 5 101520253035404550

Long working hours

not being able to be with family for long time

not being able to carry weapons

Sexual harassment

Lack of additional benefits

Lack of appreci-ation

Non-flexible tim-ings

Excessive pressure

Job dissatisfaction

PNSC has HR department and it has proper recruitment policies that are always followed.

Hiring is done like in any other firm although political pressure is always there.

Every job has unique requirements. It does send employees abroad. Last yr

0 and year before that 3 were sent abroad

It has a program of staff development in which job rotation, seminars, workshops are held by instructors.

General findings from surveys

PNSC has paid for its employees receiving degree in Marine engineering from NED.

PNSC does fire inefficient employees but still it has more than needed employees.

It has 1112 employees (off-shore and on-shore). 50% of these are unskilled.

During the past 2 years 30 to 40 employees were hired (onshore)

Most recruits are graduates.

%age hired from business schools=1 %age hired from medical universities=0% %age hired from engineering universities primarily

NED= 3 to 4% More people are preferred from armed forces

specifically Navy. Appraisal reports are used for employee

evaluation. Most think they are VALUED AS EMPLOYEES and

were unwilling to switch jobs if offered a higher pay.

For most employees shipping wasn’t first choice

Continued

Factor conditions

• Strategic location • Equipment• Blessed with long warm water coastline with

3 deep sea ports .

Deep sea Ports

Port Qasim Karachi Port Gawadar Port

Ports in Pakistan

Major ports • Karachi Port• Port Muhammad Bin Qasim• Gwadar PortSmall Ports • Jiwani • Pasni • Ormara• Kalmat• Keti bander

Length of Pakistani coastline : 1100 km

Length of Indian coastline : 7517 km

PORT QASIM:FACTS• Geography : 45 km Navigational channel that

can accommodate 75000 DWT • Located between Phitti ,Kadiro , Gharo Creeks• Pakistans first industrial and commercial port• Handles 35 % of seaborne trade • Named after general Mohammed Qasim of 712

CE• Pakistan’s first industrial and commercial port• Handles 35 % of seaborne trade

BERTH OPERATIONS AT PQ ACTUAL NO.OF BERTHS

SHIPS HANDLED IN 2010-2011

Marginal Wharf(1-4)

4 124

QICT(5-7) 3 627

Iron Ore and Coal Berth

1 17

FOTCO 1 166

Engro Vopak 1 123

PROGAS (LPG) 1 8

LCT 1 138

FAP 2 26

1229

TARIFF AT PQ

Cargo handled at Mumbai port over the last 5 years (‘000 Tonnes)

35.1 M

51.8 M54.5 M 54.5 M

CARGO TRAFFIC–A COMPARISONYEAR PORT QASIM MUMBAI PORT

2005 - 2006 1051 6787

2006- 2007 1155 6088

2007 - 2008 1139 6150

2008 - 2009 1230 5620

2009 - 2010 1187 5820

2010 - 2011 1240 5622

Traffic at Indian Ports –a comparison

Industrial and Commercial projects

• KESC thermal power • Indus motor automobile plant• Engro asahi polymer plant • ICI PPTA plant• Bin qasim fertilizer plant • Awam palm oil refinery • Mapak edible oil refinery • BOC gases

KARACHI PORT -FACTS

Pakistan’s largest and busiest port Operational since 1854 Operated by Karachi Port Trust Handles 65% of Pakistan’s seaborne trade Annual cargo tonnage 25 million metric tons Annual container volume 2.3 million TEUs

Berths at Karachi PortBerth activity

West wharf

13 berths + KICT

East wharf

17 berths +PICT

Liquid cargo berths

3 oil piers

BERTH OPERATIONS AT KARACHI PORT BERTH BERTH NUMBER

EAST WHARF 1 - 17 Off which 6 – 9 is PICT

JUNA BANDER 18 - 23

WEST WHARF 24 – 30 Off which 28 – 30 is KICT

OIL PIERS OP 1 ,OP 2 ,OP 3

KPT Tariff

Upcoming Projects • An increase the handling capacity of KICT from 300,000 TEUs to 400,000

TEUs per annum• Two new berths at KICT with 14 metres depth alongside and an additional

100,000 m² terminal/stacking area• A new bulk cargo terminal at East Wharf• Reconstruction of the oldest oil pier to allow tankers of 90,000 metric tons

deadweight (DWT) to berth• A new 100-acre (0.4 km2) cargo village to cater for containers and general

and bulk cargo• Reconstruction of the 100-year old NMB Wharf to enhance the berthing of

passenger vessels• The purchase of a new dredger, two hopper barges, two harbour tugs, two

water barges, an anchor hoist vessel, two pilot boats, and a dredger tender• A 500-foot (150 m) high Port Tower for commercial and recreational use

including a revolving restaurant• The construction of a 500 acre (2 km²) Port Town with 13,000 homes for

port workers at nearby Hawkes Bay• A new Port Club at China Creek adjacent to the East Wharf• On November 9, 2007, the Karachi Port Trust signed a US$1 billion

agreement with Hutchison Port Holdings to construct a new terminal called the "Pakistan Deep Water Container Port”, which would begin operations by 2010, and would have ten berths capable of handling Super Post Panamax container ships.[

GWADAR PORT

GWADAR PORT

It will act as catalyst for large number of related projects like:• Trans-shipment of bulk cargo • Oil storage, refinery and petrochemicals• Export processing and industrial zones • Export of minerals/livestock • Services (hotels, accommodation, tourism)

GWADAR PORT INFRASTRUCTURE 3 multipurpose 4.5 km long approach

channel dredged to 13.5m - 14.5m Terminal infrastructure, cargo handling

equipment, pilot boats, tugs, survey vessels etc.

Port can handle 50,000 DWT vessels.

EQUIPMENTSHIP TO SHORE

REACH STACKER

RUBBER TYRE GANTRY

EMPTY HANDLER

EQUIPMENT QICT PICT KICT

STS 9 6 7

RTG 27 20 23

Reach stacker 11 21 21

Empty handler 3 4 2

Fork lifter 1 1 1

QICT – FACTS• Largest port

privatization projects in Pakistan

• QICT operates at berth 5-9 at Port Qasim

• First and only terminal to achieve ISO 9001:2000 for information security management

• First terminal in the SUB CONTINENT to achieve ISO 28000:2007 certification for supply chain management

• Operating under the IC3 program

QICT – FACTS • Productivity : has

capacity of 850,000TEUs

• Total terminal size : 30 hectares

• Yard stacking area: 25 hectares

• Berth length :1327m • Only 13 km away from

national highway and connected to 6 railway lines

PICT –Facts and Figures • PICT operates at berth

no . 6-9 at Karachi Port • Productivity : Handles

50 container vessels per month

• PICT handled over 669,806 TEUs in 2011

• Night navigation available

• Only port infrastructure whose shares are quoted on the KSE.

Other Facilities at PICT PICT Power House

caters for the entire domestic and commercial power needs of the Terminal

Present Capacity is 10 mega watts, with eight diesel generators of 1.2MW each

Security at PICT • A state-of-the-art container scanner which

provides horizontal and vertical images (side and top views)

• rapid inspection of containers for detecting contrabands and undeclared items

• Latest technology of X-Ray Accelerator• Electron Beam Energy: 6MeV (Million Electron

Volts)• Beam penetration is through 340mm steel• Radio Activity Monitors for detection of

radioactive substances

KICT• Operations began in 1998• Operates at berth 28 – 30• Member of Hutchison Port holdings (worlds

leading port developer)• KICT is an ISPS code compliant and is ISO

9001:2008 certified. • located at the threshold of three strategic

regions – South, Central and West Asia• KICT has an ideal location and provides

shipping connections to leading hub ports in Asia ,middle east , Europe and north America

KICT – IT Facilities

• First terminal to implement Pakistan Automated Customs Clearance Systems(PACCS)

• KICT’s operating system was designed by Navis Corp EXPRESS database software interface

• Allows for real time communications• KICT’s site provides up to date information

on vessel container status and vessel schedule

STRATEGY STRUCTURE AND RIVALRYWhen shipping a product overseas, the exporter must be aware of• Packaging• Labeling • Documentation• Insurance requirements.

ROLE OF FREIGHT FORWARDERS Agent for the exporter Licensed by Federal Maritime Commission to

handle ocean freight. Help exporters in preparing price quotations

PACKAGING

Breakage Moisture Pilferage Excess weight.

LABELLING Meet shipping regulations Ensure proper handling Conceal the identity of the contents Help receivers identify shipments Insure compliance with environmental and

safety standards.

LABELLING ..CONT Country of origin Weight marking (in pounds and in

kilograms) Number of packages and size of cases (in

inches and centimeters) Handling marks (international pictorial

symbols); Cautionary markings, such as "This Side Up" or "Use No Hooks"

Labels for hazardous materials

INSURANCE Damaging weather conditions Rough handling by carriers Pilferage Shipments by sea are covered by marine

cargo insurance.

PNSC FLEET STRENGTH• COMBI VESSELS

Vessel name Dead weight

Gross tonnage

• SARGODHA,ISLAMABAD,MULTAN

18242 12395

TANKERSVESSEL NAME DEADWEIGHT GROSS

TONNAGE

QUETTA,LAHORE,KARACHI 107,018 58,118

BULK CARRIERSVESSEL NAME DEADWEIG

HTGROSS TONNAGE

KAGHANCHITRALMALAKANDHYDRABADSIBI

• 65 ,716 MT

• 46,710 MT

• 76,830 MT

• 52,951 MT

• 28,442 MT

• 36,098 MT• 26,395 MT• 40,040 MT• 29,365 MT• 17,018 MT

Fuel prices are rising hence causing cost of shipping to rise and so important to find alternatives.

“Our job is to provide good shipping services not to make ships , companies in US do this and they are researching in using biogas or solar and wind power for moving ships”

ALTERNATIVE SOURCES OF ENERGY

Points worthy of being mentioned.: Government not investing Reason: it is not a sick industry Implementation of landlord port concept Govt. regrets privatizing Resumption of shipping between India and Pakistan. Shipping is a capital intensive industry and the Government

alone cannot meet this sector’srequirements because of financial constraints and other

development priorities. Considering this aspect, anumber of incentives have been offered to encourage the

participation of the private sector 1975 Indo-Pak shipping protocol LETTERS OF APPOINTMENT TO LOCALS AT GWADAR-PORT

Government policies

SWOT ANALYSIS

STRENGTHS

• Pakistan’s geographical

location

• Three ports: KPT

Port Qasim Gwadar

• PNSC: Old company Experienced

staff Policy on

website

WEAKNESSES

• Shipment delays• Lack of facilities for

night navigation• Private investors

discouraged to invest• Inefficient post custom

clearance procedures• Corruption

• No effort on training and increasing

technical knowledge• Foreign companies

• Large vessels cannot be accommodated

• Higher age of fleet• PNSC:

Over-staffed Government forces to

do some tasks

Political pressure No containerized

vessels

THREATS

• Shipping industry down –

global threat• High duty and

taxes from the government• Political

instability and corruption

• Many countries are limiting

imports• Poor image of

our country• Increasing price

of oil• Increased

freight charges• Loss of foreign

exchange• Capital intensive industry

OPPORTUNITIES

• Geostrategic location of

Pakistan

• Gwadar port

• Investment opportunities

at ports

• PNSC:PNSC set to buy 5

new vesselsCan get into LNG Joint venture

with PSO PARCO joint

venture

RECOMMENDATIONS

• Government should attract

private investment

• PNSC needs to increase its

fleet strength• Port facilities

should be improved to

accommodate ships with

deeper draft• More terminals

• Integrated Cargo Container

Control (IC3) facility at more

terminals• Oil pollution

control equipment

THANK YOU!