Great Lakes Carrier

Great Lakes Carriers:

I. Major Facts

The Great Lakes Carrier (GLC) was founded in 1940 with one ship hauling coal and iron ore from the mines along the Great Lakes to several steel mills. Since then, the company has expanded and is now servicing the Great Lakes with a fleet of 12 vessels. However, the demand for the movement of both commodities has decreased during the past decade. In order to increase business, Ben and Kate (president and vice-president), visited every major port on the Great Lakes for future opportunities to increase the company's overall productivity as well as to explore a possibility of potential demand for container ship operation including shipping with RFID tags.

II. Major Problem

The current GLC vessels would be unable to handle that type of operation, and could not be retrofitted for container operations. That would result in investing new vessels with a maximum carrying capacity of 1,000 containers, due to the size limitations imposed by the lock on the Saint Lawrence Seaway. This has created yet another problem, because the typical oceangoing container ship has a minimum carrying capacity of 2,500 containers. A meeting with the port directors confirmed that the volume of grain and iron ore being handled by GLC has declined, and it was predicted that the decline will continue for at least the next five years. As a result of the declining volumes, the GLC will face a significant decline in revenue. The transit time for container operation would be slightly more, but with competitive prices and due to RFID technology it would be premium service and accurate inventory.

III. Possible Solutions

A:

Just like any other business, GLC will have to collect and analyze the marketing needed to successfully compete with any other water carriers. According to the text, there is a lack of container ship service on the Great Lakes and by proper analysis and marketing strategies; GLC could sum up the market by providing such services. Prices need to be competitive with any other mode of transportation and outstanding customer service needs to be provided at all times. Water carriers have low fixed costs and high variable costs, especially when the port terminals are not well maintained. According to our text, due to the public aid of the construction of ports, terminals, canals, and other like services with public funds opens new markets and sources of revenue for water carriers (Coyle, page 266).

B:

GLC's vessels cannot be retrofitted for container operations and new vessels have to be purchased in order to run this operation successfully. The initial costs of new vessels will be high, but necessary, to move containers from one location to another. The new vessels will be able to have a maximum carrying capacity of about 1,000 containers, which will allow the company to move a lot more produce on the Great Lakes. According to our textbook, water carriers can transport approximately 50 times more containers than a single rail car or tractor trailer (Coyle, page 262). Through proper coordination and the building of strong relationships with other modes of transportation, the GLC could result in quicker and more efficient transport of freight. Eventually by increasing the volume of shipped goods and services, the revenue will increase as well.

C:

In order to provide premium services, GLC need to invest in RFID tags and software. RFID technology will GLC allow to have unequalled visibility of shipment containers, coupled with improved customer service. By using the RFID tags it will allow easy tracking of containers and allow the authorized user to track the container and its location. Also, if the RFID tag is labeled correctly, it will show the inventory of each container. RFID tags can greatly reduce the loss or misplacement of goods, minimize shrinkage, and provide additional security for tagged items. By pairing the asset to its owner and/or a location, the RFID tag can send instant alerts if an asset is moved out of a location without its owner, or moved to a prohibited location. The tag provides not only an audit trail of asset movement but also availability. This service will give GLC customer's the security and a piece of mind when shipping their cargo.

IV. Choice and Rationale:

The recommendation to GLC would be to consider all three possible solutions to initiate the container ship service on the Great Lakes. By careful considerations, by investing into the new vessels, and by implementing the RFID technology, GLC would be able to offer the best, efficient, and secure service to their customers. It would cost GLC quite a bit of money to invest into new vessels, RFID technology, labor and wages; however, in the long run the business could have opportunity to expand the container traffic between the US and the EU.

V. Implementation:

The six steps of the decision making process is to define the problem, develop alternatives, evaluate the alternatives, make the decision, implement the solution and monitor the solution. Since GLC's confirmed decrease of the volume of grain and iron ore handled, a change needs to be made quickly in order to avoid the closing of the business. The lack of container ship service on the Great Lakes gives GLC a great opportunity to invest into the business. By buying new vessels and offering the RFID technology to their customers, the investment costs will be high at first, however their services will be more attractive to their customers and offers them the opportunity to ship more cargo at one time. GLC will have the opportunity to create more jobs in their immediate area, due to the increased numbers of containers being shipped, increased sailing schedules and more employees needed to operate the equipment needed to move the containers from one location to another. Maybe in the near future, GLC will be able to expand the container traffic between the