Four ways a shipping company can stand out

Shipping is a market where the freight rate is set largely outside any single company's control. The cargo a tanker carries on a voyage looks much like the cargo a competing tanker carries on the same route, and the rate moves with supply and demand across the whole fleet. In that setting, price competition offers little room to manoeuvre. Goulielmos and Plomaritou, in a 2014 paper in the British Journal of Economics, Management and Trade examining shipping marketing strategy through the lens of complexity theory, argue that differentiation exists in shipping precisely to reduce competition on the freight rate. A firm that can establish a genuine point of difference removes itself, at least partly, from a contest it cannot win on price alone.

Their review identifies four named routes to differentiation, each illustrated by a leading firm. Price differentiation, by contrast, barely applies to the sector at all. The four routes are worth setting out plainly, because three of them share a feature that the fourth does not.

The four routes, and what each one costs

The first route is qualitative differentiation, built on technology and service quality. Goulielmos and Plomaritou point to APL and its early use of electronic data interchange to give customers better information and smoother handling. The second is geographical differentiation, built on the reach of a route network. Maersk is the exemplar here, with a line system covering more origin and destination pairs than rivals can match. The third is personnel and crew differentiation, built on the calibre of seafarers and shore staff. The authors cite the Clipper Group and its investment in training and simulation centres as the mark of a firm competing on the people who run its ships.

The fourth route is image differentiation. The exemplar the authors give is Tanker Pacific Management, which they describe as having built a position on a reputation for being a reliable and responsible operator. The difference is not a faster terminal connection or a denser sailing schedule. It is what charterers, brokers, financiers and regulators believe about the company before any commercial conversation begins.

Reading the four together brings out the point. Qualitative, geographical and personnel differentiation all rest on heavy and continuing capital. Information systems and service technology have to be bought, integrated and renewed. A route network is a function of vessels, agencies and port relationships accumulated over years. A training and simulation infrastructure is a standing cost carried whether or not a given quarter rewards it. Each of these is a real source of advantage, and each is largely closed to a firm that does not already have the balance sheet to fund it.

Image and reputation differentiation does not share that profile. It draws on the conduct a company already has and on the record it has already built. Establishing it does not require a new fleet, a new terminal footprint or a new academy. It requires that the conduct and the record be made legible to the people who decide where cargo and capital go.

Differentiation is a single choice, and it has to be seen

Goulielmos and Plomaritou make a second observation that constrains the first. A firm can realistically lead in only one of these areas. Spreading effort across all four dilutes each of them and leaves the company without a clear position anywhere. The discipline is to choose the one defensible difference and commit to it.

The authors then note a gap between intention and effect. Across the firms they reviewed, only a very small share had a strategy that was understood and respected by their own employees or by the public. Most were faulted for a lack of clarity and originality. A company may hold a real advantage and still fail to convert it, because the advantage is not articulated in a form that anyone outside the firm can perceive.

This is where the framing offered by Gronroos becomes useful. His services marketing triangle separates external marketing, which makes promises to the market, from internal marketing, which enables the staff to deliver on them, and interactive marketing, which keeps the promise at the point of contact. A reputation lives in all three. It is enabled inside the company, kept in daily operations, and made into a position only when it is communicated outward. A difference that is real but never expressed externally completes two sides of the triangle and stops short of the third. Goulielmos and Plomaritou also caution that the marketing mix is dynamic, with the appropriate emphasis shifting across the industry and product life cycle, so the work of expressing a position is continuous and never a one-time exercise.

The implication for how a shipping company presents itself

For a maritime company weighing where to invest in standing apart, the analysis sorts the four routes by accessibility. Three of them demand capital that most operators do not have spare. Image and reputation is the route open to the broadest range of firms, including those that cannot fund a fleet expansion or a training centre, because it is built from conduct already in place and draws little on assets still to be acquired.

That route carries its own condition. A reputation that is not presented is not a market position. It governs nothing about how a charterer ranks two bids or how a financier reads a counterparty, because it never reaches them. The medium through which a shipping company presents itself is its public face: the brand it maintains, the website that forms its first impression for most counterparties, and the content and record it chooses to publish. These are the instruments that take an internal quality and put it where the market can see it.

The combined lesson from Goulielmos and Plomaritou and from Gronroos is therefore practical for any firm short of capital but holding a real record. Pick the one difference that can be defended, accept that for most operators that difference is reputation, and treat its expression as the actual work. The firms the authors fault are not the ones without an advantage. They are the ones whose advantage stays invisible. Differentiation that cannot be seen does not differentiate.